The Fear of the Dreaded Phone Call

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“What motivated you to sell your business when you did?” I asked.

“You’ll understand this when I say it.” He replied. “The fear of the dreaded phone call….The factory blew up. Someone was killed or maimed by some of the dangerous equipment we run. The president quit. The employees are unionizing. You know.

Those things that could go wrong that would fundamentally and dramatically change everything.”

These are lurking gremlins. which every entrepreneur or business owner fears but keeps under control by having insurance, safety policies, positive employee practices, training and regular meetings with key people. Like the midway arcade game in which you have to whack all the gophers that just keep coming back up, these kinds of issues are ones that are dealt with by business owners on a continuous basis. When I talked with T.B.* about selling his business, I perceived that somewhere along the way the gremlins got bigger.

Frank was on a five-year track to sell his business when he received an offer in year four. “Why did you sell?” I asked him.

“It wasn’t what I was looking for, but I was afraid the market might drop and it could be worth less a year later.”

We are motivated to act either to gain a benefit or to avoid a loss. In the cases of the people I am interviewing who have sold their businesses, the majority have sold to avoid a loss. In some cases, fear had become a stronger force in their life than their former optimism, confidence and strength and they wanted to sell before it was too late. Before something goes wrong that they can’t fix. Before their company loses value. Before their health goes.

In some cases it is a healthy fear. Things can go wrong and if they have stopped doing the things that made the business successful or have lost their spark, they should either sell before the business slides backwards or they should pull themselves up by their bootstraps and get it back on track.

The problem with selling when you are acting from a state of fear or pessimism is that you are likely to make mistakes. You may truncate the process because you are uncomfortable with that emotional state and want it to go away. You may accept a lower price than you should. You may not consider other options that could provide a better deal for you, your employees and your family. You might react versus being proactive in managing the process.

Fear tends to come from a real or perceived lack of control. The antidote for fear is confidence. If you have done your homework, watched the trends and know that the timing is right, then you can sell from a position of confidence, not fear.

* The names of the individuals in this article have been changed to protect their privacy.

Don’t Walk Away From Your Business

Kurt (not his real name) has a problem that is so common it’s scary. He’s in his mid-fifties and he’s burnt out. His company is barely paying him a salary, never mind a return on his investment. His perception of the value of his business is so low that he wouldn’t even give it away to his senior manager because he feels it would be a liability, not an opportunity.

Kurt looked defeated as he wondered out loud, “should I just walk away from my business and lock the doors or hang on for another year and try to ride out this current economic storm? If I walk now,” he added, “I would still have a little cash in the bank. If I go another year without getting some good sales, I could lose everything and end up in the hole. Not my idea of ‘Freedom 55’.”

The optimistic side of me wanted to encourage him to hang in there, “this too shall pass.” But without a plan, a change in his attitude and some energetic action applied to the problem, it wasn’t likely to get better in the next twelve months. He is not alone. The economic reality ensures that companies that were not well managed in good times are in real trouble now.

 For some, cutting their losses and walking away may be the best option. The increasing number of business bankruptcies is a sign that many are doing just that. For others, that option is one they will fight to the end because they see it as a failure and don’t want to be stuck with that label.

If you are in a critical situation like this, here are some steps you can take that will help you through this difficult time:

Start with your attitude. Remind yourself of all you’ve already achieved. You have experienced many successes and have come a long way from where you started. You have provided employment for people, been a good corporate citizen, and provided a valuable service or product to your clients. Don’t let the current external circumstances diminish your self-worth. As one entrepreneur who sold his business said to me, “Remember, you are not your business and your business is not you. It’s not personal.”

Manage your stress. Get more exercise. Eat smart. Get plenty of rest. Rebuild your strength and resilience. It’s hard to fight when you are exhausted and sick.

Get support from those who care about you and will remind you that you are a good person and that you can manage your way through this challenging time.

If money is tight, speak to your suppliers and ask for some terms and leeway to pay them back. With a proactive approach you are more likely to get co-operation than if you try to hide.

Cut all unnecessary expenses – anything that isn’t going to positively affect your bottom line in the next 12 months.

Assess your people. If someone isn’t pulling their weight and adding value, pull the plug. Do it sooner rather than later.

Go back to “business 101”. Set your goals, review your client list, talk to your clients, get referrals, talk to new prospects, network and make sales. If you became lax in your sales approach when times were better, take a sales course to learn new skills and remind yourself of the things that great salespeople do. Then do them.

If you have others who sell for you, be a leader. Act, speak and walk with confidence. Everyone is looking to you as the bell-weather for how things are going and how they will go in the future. This is not the time to look like your world is falling apart – even if it is. Take charge. Set sales expectations. Meet with your team more often. Be their strength. Affirm that yes, times are tough, but you will be in business to deliver what has been sold.

Remember, no matter how bad things get, you are in much better shape now than when you started your business with little more than a good idea, passion, and a modicum of cash. You’re smarter, more experienced, and more connected. Reignite the spark and focus your energy in the areas which need you most. With the right approach you can come out the other side stronger, leaner, smarter and more profitable so that you can get your retirement plan back on track.

Transition Requires Change

Succession

Everything changes. Are you proactive or reactive to change?

Suppose you are ready to change. You’re prepared to begin the process of transitioning your your business, roles and obligations. You’re ready to commit to a process that will enable you to exit your business in a thoughtful, planned way. How do you make it happen?

John Kotter, one of the foremost authorities on change, suggests that there are eight steps to successful negotiation of the change process. Let’s use those as a guide for gearing up to prepare your business for sale.

  • Create a sense of urgency.

A sense of urgency is required to break the inertia. When you announce you’re going to make changes get started right away. Set short term deadlines and outline actions that need to take place immediately. You, as leader, must be seen to set the pace and the expectations.

  • Pull together a guiding team.

You’re going to need people who will support you through the process and execute the actions required to make change happen. You’ll need your internal management or support team, as well as a group of advisors who will help you to set the strategy for moving forward. This is too big a job to try to do alone. You need to free up your time if you are to focus on this major project. 

  • Develop the change vision and strategy. 

Look at this from two perspectives – your personal view and that of the company. Create your vision for what you will be doing next, what you want to do and have earned the right to do. This appealing image will help propel you forward. Your vision for the business provides the essential end point to share with your team. It allows you to work backward, determining the strategy and tactics that will move the process along. 

  • Communicate for understanding.

Kotter suggests keeping it simple. Tell a story. Talk about how the change will take place, how it will affect the listeners and their positions, and how they can contribute in a positive way to the end goal. Make it memorable so that when the story is repeated, all the salient facts remain. 

  • Empower others to act.

One of the challenges facing entrepreneurs is the pressure of priorities and time. It’s a rare business owner who has time left at the end of the day to work on the business versus in the business. But that’s what you have to do. And the only way to free up your time to work on those priorities is to give away more of your current duties. Let others make mistakes – a necessary part of learning to carry more responsibility. Remove barriers.

  • Produce short term wins. 

Rather than celebrating when the job is done, celebrate initial wins as quickly as possible. If one of your first steps is a leadership training program to increase the bench strength of the team, get someone to find a resource that can help you and then make the announcement that celebrates that initial accomplishment. Congratulate the person who got it done. Only add more tasks as you complete the first ones.

  • Don’t let up.

If you’ve decided to move forward and make changes, be single-minded in your pursuit of that change. If obstacles get in the way, get around them. If the energy seems to drain out of the idea, pump it back up. If people lose interest, tell the story again and again until everyone understands that this is a non-negotiable destiny. 

  • Create a new culture.

Old habits and traditions die hard. You have to create new traditions, new ways of seeing the world, new approaches and a new culture. 

It’s interesting to look at Kotter’s model and consider it against the backdrop of the economy of the past twelve months. The economy is broken, it had to change. Just for fun, review the stages and reflect upon what our country’s leaders have done to facilitate changes that will lead to the improvement of society. Did they miss any steps?

Now look at your plan for transitioning your business from what it is today to what you want it to be. Are you missing any steps?

Who’s Accountable for Selling Your Business?

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Gord was finally ready to sell his business. He’d had enough. He was 63 years old and he felt time ticking away. Not only had his children grown up while he was working, but now his grandchildren were also missing his attention. The truth was, Gord was exhausted. By the time he finished his normal ten or eleven hour day he just didn’t have any energy left to play with his grandchildren. Even his weekends were taken up with work that he couldn’t seem to get ahead of through the week. 

He had thought about selling his business on many occasions. He liked his business. He started it 33 years earlier and it was his baby. And he waffled between a desire to let it go and a need to hang on. The need to hang on and the day-to-day momentum of old habits were powerful currents while the thought of quitting was like paddling upstream. Was it irresponsible to quit, or not to quit? Was selling the business really ‘quitting’? The conflicting emotions paralysed him and as a result he never got past the ‘thinking about it’ stage.

In the quiet moments when his wife was off to church and he had the house to himself on a Sunday morning, flashes of insight would intrude on his thoughts and he would be consciously aware that he had to do something. It was his business. He ran it. It was his responsibility. If he didn’t take charge of the situation and initiate the actions required to sell his business, no one else would. 

Then doubts would flood in. “What do I tell my employees? Will they be able to carry it on? Who will buy this business? What’s it worth? Is it worth anything without me there to run it? If I tell my suppliers will they stop giving me credit? Will the bank pull my line of credit? Will my managers start looking for another job? Will my customers start dealing with that new place around the corner? Who knows anything about selling businesses and what will it cost to hire them? My lawyer has been on my case for a couple years to get started on this. I’m sure he’s licking his chops at the fees involved. What about taxes? What about my kids and their interest? What will I do if I’m not working? What about… The complexity and enormity of the change seemed overwhelming and so he would go back to reading the newspaper, effectively shutting down the logical side of his brain that knew his problem still lurked in the background. 

One morning he woke up from a restless sleep and knew it was time. He had to do something. As a responsible individual who prided himself on doing the right things and doing them right, he knew that putting it off any longer was being irresponsible. But now that he was ready to get started, he had no idea where to begin. His banker? His lawyer? His accountant? His financial advisor? His management consultant? He wasn’t even sure he wanted to tell his wife in case she put pressure on him to follow through on a journey that was still unknown to him.

Gord isn’t a real person, but his situation is typical and  is reflective of many entrepreneurs I’ve met who have built their business, become part of it and then have a hard time taking the next step to transition away and do something else. A few years ago, I travelled across North America on a six month sabbatical and I interviewed a number of ‘Gords’ who had sold their businesses. They had struggled with the decision – sometimes more painfully than if they were getting a divorce. They didn’t know who to talk to, who to consult, who to trust with their secret decision. 

Some, who believed it was the best decision for all involved, still felt guilty. They believed that some of their peers saw selling as a failure. They believed that their employees felt betrayed or disappointed. But in the end, they realized that it was an executive, leadership decision that had to be made and they were the only one capable of making it. 

One fact is undeniable. Your business will be sold. Some day it must happen. It will happen. With or without your consent. With or without your conscious choice. With or without you in control. When you begin to wonder if it is time, start the process, take charge. Be accountable to those you care about and who care about you.  Talk to someone you trust to help you identify the steps to the journey. 

Getting Your Business Ready for Sale

Which way do you want to go?

What’s your Strategy?
by Wayne Vanwyck

Like most entrepreneurs, John is heavily invested in his own business. He also invested, for diversity, in the stock market and, it’s no surprise, he is not too happy with the performance of those stocks. While he doesn’t have any control over the market in general, John can have a significant impact on the value of his business when it is time to retire. Many business owners like John are looking for ways to maximize the value in their business in order to offset some of their losses in other areas.

A business broker recently suggested to me that one of the most important and immediate areas a prospective seller should address, in order to build value in the company, is a formal business plan.

A business without a business plan is like a fisherman without a hook, or a rod, or a tackle box.  You can run a business without a plan, and you can certainly go fishing without a hook, but you’ll be much more successful if you have the tools of the trade. A business plan – especially one that you are following, is producing results, and shows positive projections for the future adds significant value to your business – now and when you want to sell it. It demonstrates that you know your business and have predictable patterns of success. It indicates that you have taken time to think about your business, and all the factors that go into making it strong.  It is an exercise that should be undertaken on a regular basis; when you are starting your business, growing your business, maintaining your business and preparing your business for sale. 

Many business owners have used Dr. Kit Silcox’s Milestones™ program[1] as a guide for working through the process of setting up their company to succeed with a well thought out plan. It’s more than a spread sheet with numbers that you take to the bank for financing. It challenges you to think about where you are, where you are going, and how you set up your business to get there.  It’s a meticulous look at the factors that you need to put in place to grow the value of your business. A business is positioned for success when the senior management team makes good decisions, follows through, and acts upon those decisions.  

According to Dr. Silcox, a good business plan covers these topics:

  • An analysis that identifies where the organization’s greatest strengths meet its most important opportunities, as well as where its weaknesses and threats overlap. 
  • Values: the underlying principles that direct the organization’s behaviour in its dealings with customers, employees and other stakeholders. 
  • Mission: A single statement describing what ‘business’ you are in. It acts as an affirmation for the organization. 
  • Vision: A description of the organization in the future. 
  • Strategy: A statement of what the organization will become in the future, with an outline of the performance targets necessary to achieve the strategy. 
  • Market Strategy: A description of the primary client groups of the future organization and the products (goods & services) that will be offered to them. 
  • Organizational Development Strategy: The processes and systems within the organization that must change in order for the strategy to unfold. 
  • Priority Goals and Champions: Statements of specific measurable results to be achieved in the next twelve months. An assigned ‘Champion’ provides the leadership and accountability for success.
  • Communication Plan: A description of how everyone will be informed about the strategy, how it is expected to unfold and how they will benefit. 
  • Success Plan: A description of how each major goal will be accomplished. It includes a definitive statement of the goal, the benefits, the milestones (mini-goals) that will occur on the journey and the manner in which results will be measured. 
  • Strategy Action Plans: Statements of the actions that will be taken, week by week, in order to follow the plan and accomplish the goal. 
  • Periodic Success Report: A single page in which the champions can report their progress in carrying out their Success Plans. 

If one of the most important steps in preparing your business for sale is to prepare or strengthen your business plan, then the earlier you start, the earlier your business will be in shape to sell at the time and price of your choice. 


[1] For more information about Milestones 3.0, contact us at 519-654-2368 or go here for details.

The Power of Ethics

A colleague and I were reminiscing about the good old days — when a handshake (at least before COVID 19) meant something and a person’s word was their bond. If people said they were going to do something, you knew they could be depended upon for getting it done. If you lent them money, you knew they would repay it. If you gave an employee petty cash to manage, you could trust that they spent on items that were justified in the best interests of the business.

Although that’s probably still true for the majority of people, most of us have discovered that in the world there are enough cons, fraudsters and individuals practicing unethically, that we have become more cautious and less trusting. Everyday in the news we hear of people who have broken a bond of trust.

In financial services, infamous advisers like Earl Jones and Bernie Madoff have taken their clients’ money and without any qualms or adhering to their professional code of ethics, have stolen entire retirement funds from trusting clients, even their own families. Unethical politicians have abused their power and the trust given to them by their constituents; telling bald-faced lies, taking kickbacks, giving untendered contracts to friends and financial supporters, and using expense accounts as their personal piggybanks. Hypocritical religious leaders and sports coaches are caught abusing children. A surprisingly high percentage of students blatantly cheat on exams and misrepresent their resumes. What’s the world coming to?

We face ethical decisions on a daily basis. Do we pad our expense account? Do we return the money when a clerk gives us too much change or undercharges us for an item? Do we call in sick when we don’t feel like going to work? These are relatively minor offences and the “situationally ethical” individual will argue that no one is getting hurt. But that’s not true. In addition to hurting your employer or the retail company, you are hurting yourself. You are chipping away at your own integrity, and YOU know what you did.

Then, knowing yourself to be untrustworthy, you are less likely to trust others. And not trusting others makes it more difficult for others to trust you. It’s a vicious cycle.

The study of ethics is very complex, rarely black and white. There are many gray areas. But for our purposes, I’d suggest that acting with integrity, abiding by a code of ethics that you have deliberately chosen because it helps to define the difference between right and wrong, will benefit you and those around you. It makes you more believable, more trustworthy, more respected, and more credible. More likely to be successful.

Most people prefer to do business with and work with individuals they like, respect and trust.