Excellent Leaders: Common Threads

Posted on August 23, 2012 by in Blog

What’s the best leadership style?

There is no best leadership style. The styles of great leaders is widely variable. Just compare the Dalai Lama to General George Patton. Both great leaders, but vastly different styles.

What’s my style?

We each have our own innate, internal combination of leadership styles. For example, the Birkman assessment tool defines three management/leader styles: Knowledge Specialist, Directive Management, and Delegative Management. Other tools or approaches define these in different ways. A good leader has an understanding of the styles they use, and has figured out how to make it work best for them.

Do some styles work better in certain situation?

Yes, in a nutshell. Some styles tend to work better than others in some situations, industries, firms, or with a particular mix of individuals.

Give an example of styles.

For example, my style is a combination of nearly total delegation (give the authority and trust to others, and let them “run with the ball”) and to lead by example through knowledge (using my knowledge, and staying well-informed). I have learned over the years the benefits and risks of my particular leadership and managerial style combination, and have worked to mitigate those risks.

What are typical traits of successful leaders?

Very difficult to define a concise, compact of leadership traits, as there are many. I provide a brief list in the next section.

Are you born a great leader, or can you become one?

Your natural, most comfortable leadership style(s) are primarily innate, as are some of your personal traits. This means you may or may not be suitable as a leader or manager, or at least in a particular industry or over a particular group of folks. However, many of the traits I’ll list below are skills that can be acquired, to a large extent, by studying other great leaders or if you have a strong desire to modify your behavior.

Leadership Traits

As I mentioned above, it is very difficult to define a complete and concise list of traits of excellent leaders. But, I think the list below is a great place to start.

  • Positive, upbeat attitude.
  • Sense of purpose. Not someone who’s necessarily always in a hurry, but someone who is purposeful in what they do.
  • Sense of humor.
  • Ability to delegate, but follow-up (trust, but verify).
  • Continual learner.
  • Willing to take risks, and to make mistakes (and to accept mistakes from those around him or her). Learns from mistakes.
  • Is ethical. Always, in every decision.
  • Is gracious to all those that he or she comes in contact with; from the janitor, to the waiter, with other employees, to other business leaders.
  • Makes time for long-term strategic planning.
  • Leads by example, and sets a good example for others to follow and see.
  • Doesn’t “drop the ball,” follows-up on promises and actions.
  • Mentors those around him or her.
  • Stands behind fellow managers, teammates, friends. Especially in difficult times.
  • Doesn’t hold a grudge, lets bygones be bygones.
  • Studies other successful leaders, is interested in learning and is open to leveraging other leadership and management techniques and approaches.

How Do I Know It Is Time To Sell My Company?

Posted on August 20, 2012 by in Blog

by Robert Contaldo
Principal in the Chicago office of Corporate Finance Associates

Selling your business, which is perhaps your largest asset, can be a difficult decision. It has been part of you and part of your family. It has been good to you like an old friend. You have loved it – you have cursed it – you have nurtured it, you have seen it from birth through the teen years and into maturity. Unlike us, it can live for generations – though the time will come when it must change hands.

When the cycle of business and our personal circumstances begin to herald the transition, it should be addressed in order to realize the financial security for which it was created.

After 30 years of selling companies, I have found that it is near impossible to convince a business owner to sell until the business and personal reasons align. But once they do, no good ever comes from delaying a sale.

So – here are ten points to consider when deciding whether or not it is time to sell your business:

1) The Thrill Is Gone

We all go through seasons in life. Young business owners focus on raising a family, planning for the future and striving for a financially secure retirement. To that end, fighting the battles and making the sacrifices are necessary and expected as part of growing a business. However, there comes a time when a business owner does not care to take the business any further. The battles and victories that at one time were energizing have now lost their importance, and have become somewhat boring and wearisome. The focus shifts to more time off, warmer weather, grandkids, or more leisure time activites. Many business owners want to pursue a new direction in life that satisfies a greater personal or community need.

2) Your Marketplace Is Changing

Businesses that do not change will ultimately fade away. Change requires new market direction, more equipment, more people, new technology, expand facilities, and other capital investment. Market changes can include more complexities involving government regulations, taxes, banking, certification requirements, customer reporting requirements, foreign competition that threatens margins and customers seeking fewer suppliers and lower costs. Many times the direction is clear, but the mind, body, and emotions are not willing to embrace change.

3) Risk Becomes a Four Letter Word

With all that needs to be done in a changing marketplace, business owners cannot afford to be squeamish when it comes to ongoing investment in the company. When one reaches the point of not making logical investments in the company or tends to count the debt rather than the probable benefit, it might be time to sell. Most business owners reach a point where they are tired of “betting the farm”, tired of personal guarantees, tired of meeting financing requirements and covenants, and worn out over protecting assets from legal liability. There comes a time when it makes sense to “take some chips off the table” and built financial firewalls.

4)  A Change Would Be Good For the Family

Many have experienced the challenges of family run business. As the succeeding generation grows into personal and business maturity, it may be time for a generational transfer of ownership. A recapitalization with a Private Equity Group as a financial partner can allow the founding shareholders to take the lion’s share of the business value in cash at closing, while the succeeding generation reinvests (through a small amount of the proceeds) for a meaningful share of the company going forward. The company would also have access to growth capital. How great would it be to again have a family relationship that is not encroached upon by business? Is the business stealing time from your kids? Are you trading memories for dollars? Many business owners have delayed a sale in spite of the concerns of a loving spouse who desires a different and better life for themselves.

5) Seller’s Market – Always

The three principal buyer groups are Private Equity Groups, strategic acquirers, and high net worth individuals.

Private Equity Groups have become the new conglomerates with overflowing levels of investment capital. With 2,500+ Private Equity Groups in the United States and a like numbre overseas, competition to buy companies remains robust among financial buyers. Multiple offers can be a reality for even some marginal or smaller companies. Premiums are being paid for companies as demand exceeds supply for those performing well in these tough economic times.

Strategic acquirers see growth through acquisitions as the preferred way to gain market share quickly, add product lines, augment human resources, enhance management, and stay competitive. Strategic acquirers flush with cash have led the charge to buy companies particularly as banking has tightened for financial buyers.

High net worth individuals and family funds can be worthy suitors. These individuals bring significant persoanl finances, outside private investment capital, experience, contacts, expertise, and many times a unique investment strategy to the mix.

6) Unusual Financial Gain

Perhaps you have been approached by a bona fide buyer who is larger, cash heavy, willing to overpay, and inebriated with the desire to own your company. (We can dream can’t we?)

7) The Business Is Growing

It seems incongruent that a business owner should consider selling when growth is accelerating, but growth can end the life of a business – fast. Cash flow becomes the monster that consumes. Even in circumstances where growth is more controlled, businesses reach a point where professional management at a higher level is demanded. The founder of the company is wise to recognize that the large business dynamic has thrust him into unfamiliar territory, requiring personnel changes, organizational upgrades and a bigger more complicated, much different way of thinking.

8) The Business Is Flat

If flat, declining, or inconsistent financial performance characterizes your business over the past several years and you just cannot seem to “crack the code”, let someone else figure it out! A strategic buyer, or an individual buyer with a dynamic skill set, or a Private Equity Group with more money and contacts might hold the key. Many business owners fail to realize that by staying in business under these circumstances, they forfeit personal income opportunities elsewhere and personal finances can be insidiously eroded.

9) Managing People Has Worn You Out

Do you long for the time when you need to only manage yourself? Are employee issues, government regulations, unions, medical insurance, profit sharing, and retirement plans driving you to the brink?

10) Personal Compelling Reasons

The reason for considering selling a business will generally transcend the enterprise value of the business (though not to minimize the value component). The fundamental checkpoint in considering the sale of a business is this: “Does this business stand in the way of doing something else with my life?”

Hopefully the decision to sell is voluntary and not due to circumstances that necessitate a sale; but in any event, an exit strategy should be considered as part of estate planning since life is uncertain. An expert team (like Forward Results) comprised of a Mergers and Acquisitions professional and financial and legal counsel is a must.

All business owners experience all or some of these points from time to time with varying intensity. When that trusted “gut” feeling indicates more than a passing notion of selling, it may be time to explore options. The reality is that more business owners have said, “I wish I had sold sooner” than “I sold too soon”.

Human Resources: The Value of Your Bench

Posted on August 18, 2012 by in Blog

Last week we had our first in a series of “Lunch & Learn” events. This event, open to business owners and select professionals, focused on human resources. Devin Hunter, Managing Partner of ProvisHR and Forward Results’ HR expert, discussed the impact your team has on your eventual exit from your company.

You can see a video of the presentation below.

Forward Results Lunch & Learn

See our upcoming “Lunch & Learns” HERE.

After 55

Posted on August 16, 2012 by in Blog

What’s Next? – New Career Horizons Redefine Business Owners’ Retirement

It’s not about the money, the power, the prestige or building a legacy anymore. That’s done. You’ve retired but you still want to work, at least part-time. Now there is nothing to stop you from doing what you really want to do, be it revisiting a childhood dream or discovering a fulfilling new passion.

From surgeon to rookie firefighter

In his late 50s, James Apesos was a successful plastic surgeon with a 30-year career that had earned him respect and a very good living.  But he found himself reminiscing about a childhood dream of becoming a fireman. As a child he was drawn to the shiny red trucks, the sound of the sirens and the vision of saving lives.  So despite his reservations about being too old, at the nudging of friends, he tried out for the local volunteer fire department. To his amazement he was welcomed with open arms and managed to pass the tough and very physical training required for the job – now as a 63 year-old official firefighter he is one of many boomers charting a unique course as reported in an ABC News.com article, The Good Life: How to Plan Your Second Act, by Claire Shipman and Ben Forer.

An ad man follows a higher calling 

“I’m the happiest I’ve ever been in my life,” says Luther Walker, a local Houstonian who was formerly the principal partner of a high flying advertising and public relations firm that served Fortune 500 companies, major players in the local business market, and national political campaigns. He had it all and for 25 years lived life in fast lane earning millions, enjoying the perks and rubbing elbows with many prominent Americans. But as he aged, he started longing for a different kind of fulfillment that he was not finding in his work anymore.  “I didn’t know what it was,” says Walker, “there was a void there and the satisfaction was gone.”

He is now Pastor Luther Walker of the United Methodist Church and spends his time serving a lower income community. Walker found that many of his former business skills came in handy in his new career whether it was the ability to listen and help members of his congregation solve problems or be a strong leader who could be counted on for support.

Because of his successful first act, Pastor Walker, like many other boomers, has the financial foundation to enjoy leisure pursuits that include travel, fine dining, golf and spending time with his family, while also being able to reap the rewards of a satisfying and rewarding second career. 

Shunning the rocking chair

Apesos and Walker are but two examples of the many boomers who have rejected the rocking chair of their parent’s generation to explore novel vocations very different from their former professions. From starting a snow sled company in Alaska to opening a surf shop in southern Florida, today’s boomers are craving the excitement and thrill of new experiences without having to worry about the earnings potential.

And if you are not up for a second career, you can always stay involved by volunteering, which happens to rank as one of the top retirement activities. Whether it is being close to something you love like nature, helping your community or favorite charity, there is nothing like the fulfillment that comes with giving of yourself while feeling passionate about what you are doing. No matter what you choose, remember – it’s never too late.

Customer Relationship Building

Posted on August 13, 2012 by in Blog

The Critical Component to Providing First Class Technical Services

Top tier technical services companies know that building strong customer relationships is a critical key to success. You can have a talented workforce and outstanding rates, but you’ll get very little business without recognizing that relationships are most important.

I’m going to discuss a number of ideas for how to build and maintain these strong relationships. Little things can add up to a lot. If you take the effort to build up relationships over time, you’ll find that this rapport will likely greatly assist you when a tough issue comes up between you and your customer.

  1. Set a High Bar. First, and most important, is to set a high bar within your organization in a couple of areas. Ethics and integrity are some of the basic building blocks of establishing trust. So don’t compromise, ever, on ethical matters. Make it a point to never, ever do something like backdating signatures. Set an example by the hours you put in at the office. Contribute to the organization by means other than managing. For example, learn in detail some of the jobs of the folks working for you. Finally, be consistent about delivering on your promises to the customer on-time or, better yet, ahead of time.

  2. Be Proactive. Learn what “keeps your customer up at night” (although this phrase is terribly overused!), and see if you can come up with ideas on how to help them. When you learn of an issue or problem, don’t just point the problem out to everyone. Come up with a set of solutions, and then when you do present the problem, do so with a set of possible solution options. At least once a year, jot down some new initiatives or goals that you might want to pursue the next year, even if they’re “outside the box.” Discuss these with your customer to see if he or she thinks these might be helpful. You’d be surprised how many senior managers don’t necessarily think strategically, so you may be helping them out by helping them think a little more longer range. Another tip, when you provide information to a customer, provide it in a means that can best be used. For example, if you know they might want to cut and paste your information into another document, don’t send it to them in PDF form. If you’re not absolutely sure they use PowerPoint, don’t send them PowerPoint specific files.

  3. Maintain a Positive Attitude. Always work to keep a positive attitude at the office. If there’s one thing I’ve noticed about top managers and leaders, it’s their ever-consistent upbeat attitude. Humor is also important, but should not used in excess. Another factor I believe is important is being gracious, especially to your customers (and your) administrative staff. Some hiring managers I know like to take their interviewees out to lunch so they can observe how they treat wait-staff. I think this is a great idea. I know I wouldn’t want to hire a manager who doesn’t treat waiters graciously; just think how they’ll treat their fellow employees or administrative staff!

  4. Make Time to Socialize. Even if you’re not a “social butterfly,” you need to take time to socialize with your customer. This is a no-brainer for building relationships. Also, spend some time finding out their interests, personal dislikes and likes, family, and so on. Taking a true interest, and I’m not talking a superficial interest, is really crucial for building trust and a relationship. If you like to “manage by walking around,” which I happen to think is a useful technique, this is a great means, having a chance opportunity to bump into the customer and get to know them. Another technique I like to use, if appropriate for your environment, is to keep an open door policy. This is a great way to encourage customers to drop by for an unannounced visit. But if you need quiet time, it’s perfectly understandable to close the door at times or to post a nice note saying “working an important issue, please schedule an appointment with my administrative assistant” or the like.

  5. Grease the Skids. A very good approach for getting an idea or request approved by the customer, or even within your own organization, is to “work the back room.” What I really mean by this is that before you ask for a decision or approval, inform all of those who are indirectly or directly involved in the decision-making process. Sometimes this can be something as simple as letting procurement know ahead of time that you may have a rush order coming soon, or could something be as complex as trying to get buy-in ahead of time for a reorganization you’d like to make. Either way, getting consensus prior to rolling out a new idea is a great way of improving the odds getting it approved, and it’s just a good solid management technique to have in your toolbox.

  6. Present a Professional Image. Dressing appropriately for the work place shows respect, especially so if your organization is co-located with the customer. If you maintain a “front office,” then the front office should present a professional feel, should be clean and organized, and the answering of phones should be professional and with a real person if at all possible. An often-overlooked topic is the area of email. Email should be used primarily for disseminating information, not for discussions or direction for the most part. Why? I’ve seen many cases where emotions run high due to misinterpreted emails, whereas a simple visit or phone call would have prevented the situation. A few other email rules; check for spelling and grammar, don’t ever blind copy, limit your “Reply Alls” to only if absolutely necessary, and only include a person in the “To” block if they are the individual you are asking to take action or if the item is very important.

  7. Responsiveness. A great way to gain the respect of your customer is for your team to respond quickly to their phone calls or emails. I think a good goal is to always return customer calls or important emails within 90 minutes. This doesn’t mean you have to jump through hoops and resolve the situation immediately, but it does mean you’ve quickly closed the loop and that they know that you or your team has the task or request on your plate. Then, of course, you must be meticulous to follow up with whatever means you use to track actions. Another way of improving response time is to delegate decisionmaking authority to those below you as much as you can so that your customer doesn’t have a single individual to have to go to for all but the biggest decisions, approvals, or actions.

  8. Time Management. No one likes to have their time wasted. You’ll often gain a lot of respect from the customer if you take the time to respect their limited time. One of the biggest potential time wasters is unorganized or poorly run meetings. For any meeting you have, I highly recommend using the “PADL” approach. This is a technique I picked up from Time Domain CEO Ralph Petroff years ago, and it’s been a fantastic tool for me. PADL stands for Purpose, Agenda, Decision, and Length. So, for every meeting, lay out the purpose of the meeting in succinct terms, the agenda (who’s responsible for each part, and how much time they have), what is the exact decision that needs to be made at the meeting, and what is the length of the meeting. Unless there’s an overriding reason, keep meetings to a length of 45 minutes to one hour. Most topics should be able to be covered in this amount of time. Start on time, stick to the agenda, and respect folks’ time by ending on time.

Hopefully the suggestions I’ve described will give you a few ideas for improving your relationship with your customers. In technical services, and many other fields as well, customer relationships really are the key to success!

 

How to Lose it All

Posted on August 10, 2012 by in Blog, Case Studies

Close Calls, Near Misses, or Worse – How to Lose it All

It is much easier to avoid sensitive issues like failing health or the possibility of dying rather than face them head on. But what happens to your company, your family, and your legacy if something unexpected happens to you? Is it worth jeopardizing everything you’ve worked for?

Mike R. had worked hard all his life to create a successful manufacturing business that would ensure his wife and kids were well taken care of financially.  All was going according to plan until he was diagnosed with cancer, and even worse was the fact the disease was in its final stages. Mike was faced not only with dealing with his illness, but with having to scramble to save the value of what he had created. His wife certainly didn’t know how to run the business and without a succession plan or even insurance, everything he’d worked for over 25 years would evaporate within 48 hours after his death. The best case scenario would have been an equipment auction that would have netted about 10% of the total worth. Fortunately with the help of a broker, Mike was able to secure a buyer and closed the deal a mere five days before he died. It was a close call, but in the end his legacy was intact and his family ended up with a $10 million dollar nest egg to secure their future. 

Unfortunately, many owners have not had the time that was afforded to Mike.  Some have suffered an out of the blue event that left their family facing a bleak reality. At 48 years old, Ralph F. had a bright future ahead of him.  As the inventor of the first rocking theatre seat, Ralph had made a mint with his creativity and vision. He then capitalized on his initial success and established several other businesses which were in a rapid growth phase. As he was enjoying his success with nothing but blue skies on the horizon, he was unexpectedly struck down by a fatal heart attack.  Aside from the trauma of losing Ralph, his family had to suffer the financial consequences of having a fire sale for an otherwise thriving enterprise. 

Part of the planning process is to make sure you have adequate insurance to cover the tax burden if there is a catastrophic event. In addition, a solid succession plan ensures that if something unforeseen does happen, you have management in place that can control the operations until matters can be properly sorted out. While these measures will protect you from tragic misfortune, knowing upfront that buyers will expect you to comply with a rather rigid set of rules allows you take full control of the process and your future.

Know What Your Customers Want before They Do

Posted on August 6, 2012 by in Blog

Originally posted here: 

Know What Your Customers Want before They Do

Data-Based Decisions

Posted on by in Blog

When looking at selling your company, you should always be cautious.  If you have invested much of your time and money into your company, you may be tempted to make decisions based on emotions.  Having a team of advisors can help you analyze the data and make informed decisions.  This article discusses the importance of having contrete data to reinforce your hunches.

Over the years, I’ve learned that it is far more productive to go where the data takes you than “go with your gut.” Two years into my co-founding TripAdvisor, I had a gut feeling that there was a burning need for a new feature on TripAdvisor. I was sure the masses wanted a VacationAdvisor service that would guide them through a series of questions and in turn tell them exactly where to go on their next vacation.

After six months of development, TripAdvisor launched VacationAdvisor only to find out that nobody was using it on the site. My initial urge was to double down and spend more time “working out the kinks.” But after looking at the cold hard facts and conferring with my co-founder, I realized the project was doomed.

Lessons learned? Gather data early in your start-up lifecycle and go with the hard facts. Had I spent more time surveying our customer base early in the process I would have learned that consumers didn’t want the product I thought was a sure hit. A few days of market research could have saved our company six months of development time and much wasted resources.

In fact, at CarGurus we have taken data decision making to what some might see as an extreme end. To test new ideas, we often run what we internally call the “under construction test” to gauge our audience’s interest in a new idea. For a small segment (5% or less) of one day’s worth of traffic on our site, we put up a link that invites visitors to click through to a new feature. When the consumer clicks on that link they are taken to an “under construction” page that explains that the feature is under construction.

Now, I’m sure this concept offends many product design purists. However, only 5% or less of a day’s worth of our site users even see this experiment and as such we minimize the inconvenience to our users. The data we get in return, however, is invaluable. If nobody clicks on the link/call to action for the new feature we know that nobody is interested in that new feature and we take that as evidence that the feature is not worth building saving months of development time and wasted resources.

If you have the expertise to collect data in-house, use it. Even if you are not in the online world, spend some time talking to some of your customers before embarking on a new service or product at your company. If you have vendors that can gather market intelligence, call them. Go to a reliable source to get empirical evidence at your fingertips before you make a leap. Otherwise you’re working from opinions, which are great for dinner conversation and bad for business plans. Start with the data, and you’ll have a good idea of where you’ll end.