Entrepreneurship

Why you need to be selling your company every day

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Originally published on August 2, 2016 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/why-you-need-to-be-selling-your-company-every-day/article31141189/

About a year ago, I was listening to a prominent accountant speak to a room full of business owners. His message was both clear and simple: “Each day you should run your business like you are in the process of trying to sell it.”

This simple message created many frowns and furrowed brows. Clearly, people in the audience wanted to respond, “But I’m not selling my business, and I don’t plan to any time soon.”

Not the point.

It doesn’t matter whether you’re thinking of selling your business. Some lucky owners get to simply pass it on to the next generation. But the real point is this: You need to think and act like you are selling your business, every day.

Why? Selling a business is an extended process, often a gruelling one. Compare it to selling a house. The first step is to “stage” the property. This means taking a hard look at your surroundings with fresh eyes, to help you recognize which furnishings and decorations add to your home’s ambience, and which are just clutter.

It’s a tough thing to do. For most people, everything in their home represents a memory or a milestone on the journey of raising a family. Prospective purchasers care nothing for memory or sentiment, seeing every unnecessary element as a flaw that diminishes the value of your home.

When you are selling a business, the process is little different. Prospective buyers go through your numbers, your assets and your records with the diligence of a home inspector. They will scrutinize your sales, margins, inventory, returns, client list, receivables and payables. They will dig through your sales history and your new product or service pipeline, looking for any irregularity, liability, trend or threat that could detract from the value they are paying for your company.

While some may see this as a tedious, time-wasting process, I see due diligence as a very positive exercise. It’s a way to identify issues before they become problems. In fact, this process shouldn’t just be limited to when you buy or sell a business. I believe that entrepreneurs should initiate a mock due-diligence process every year, preferably just before their company’s annual retreat or strategy sessions.

Think about it. Your goal as the owner or manager of a company is to increase its intrinsic value (how much the business would be worth if it were going to be sold). By rigorously and formally questioning all of your business’s habits, assumptions and processes, you’ll develop a culture that embraces change and continuous improvement – and increases the value of your business on an ongoing basis.

In my opinion, your company’s value is the single best measure of how well you are running and building your business. Value incorporates all key time horizons that buyers and evaluators employ when assessing a business – how you are running your business today, what you are doing to keep it relevant and meaningful to your customers in the short term, and how you establish and execute on your grand, long-term vision.

“When it comes time to sell their business, many business owners are surprised to receive a lower valuation than what they had expected,” notes Murad Bhimani, a Toronto-based partner with accounting firm MNP LLP. “That’s why we recommend to our clients that they should operate and build their business as though they could sell it any minute. This keeps you focused on what is critical every day, such as sound operations, diversity of customer base, building a strong management team, and proactive product development.”

If your kitchen’s ceiling is leaking, you wouldn’t wait for a home inspection to find the cause and fix it. Don’t wait to see whether your company is leaking opportunities and profits. Whether or not you’re planning to sell, take a good long look at all of your key performance indicators on a regular basis. Your bottom line (and your wallet) will thank you for it.

And some day your children may, too.

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Why getting in touch with your ‘feminine side’ is good for business

 

for Ken

 

Originally published on July 5, 2016 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/why-getting-in-touch-with-your-feminine-side-is-good-for-business/article30675493/

Sorry, men. But it looks like we are going to have to work a lot harder if we want to be successful in this new age of entrepreneurship. As the voice of the customer speaks louder and louder in the marketplace, the sound of “male authority” in choosing and driving opportunities to market seems likely to give way to better observing and listening skills.

Case in point: I sit on the Conference Board of Canada’s Council for Innovation and Commercialization. When we meet each quarter for two days of innovation talk and learning, we invite an entrepreneur into the room, to listen and learn alongside us, and also to share his or her inspiring story.

Just last month, when we were being hosted by 3M Co. at its Innovation Center in St. Paul, Minn., we were captivated by the passion and energy of Alicia Woods, chief executive officer and creator of Covergalls Inc., from Sudbury, Ont.

You may recognize Ms. Woods’s name and story from Dragons’ Den. Designing and selling coveralls that suit women’s needs and physiques, Covergalls began by serving the mining industry. In no time, Ms. Woods’s understanding that women had different needs – and tastes – from men led her into other products, from bibs and shirts to gloves and tuques. Now, her firm has also moved into forestry, energy, construction and manufacturing – and even ergonomic men’s workwear.

The first time Ms. Woods appeared on Dragons’ Den, in the fall of 2014, she slayed all five dragons – and secured a $75,000 deal from three of them (although two later dropped out during the due-diligence process). Two subsequent appearances on the show chronicled her company’s continuing growth and probably made the reluctant dragons regret their failure to ante up.

Ms. Woods similarly won over the Conference Board’s innovation experts. Picture the scenario: We were at 3M, one of the world’s consistently most successful and innovative corporations. Its innovation centre offers high-tech interactive presentations that both demonstrate 3M’s history of breakthrough products and promote the benefits of partnering with the company’s scientists and innovators.

So why did we find Ms. Woods’s presentation so compelling? She demonstrated the power of simple, observation-based innovation. You don’t need technology and science to create breakthrough innovations – just the vision to see a gap in the marketplace and the determination to keep iterating until you find a winning solution.

In short, she demonstrated three of the most important qualities of the modern entrepreneur: insight, passion and empathy.

* Insight, the ability to clearly understand a situation or opportunity, is paramount. Every marketplace is crowded. A great entrepreneur looks for the cracks and crevices where opportunity is hiding, where the goliaths of industry either missed the signals or were too encumbered by process and bureaucracy to respond. The humiliation of having to wear men’s coveralls in an underground mine – unsafe because of the lumpy fit, and poorly equipped for bathroom breaks – didn’t just make Ms. Woods angry. It opened up a world of opportunity.

* Passion, of course, is the hallmark of every successful entrepreneur. It’s why you so often hear investors, such as those on Dragons’ Den, talk about investing in the person, not the company. If you are not totally engaged in your venture and ready to push through every obstacle, then the long, winding road to success will probably end in a massive sinkhole.

* Empathy is the ability to understand other people’s feelings and needs. To me, the old cliché, “I feel your pain,” is the X-factor for business success today. And as psychologist Dan Goleman, author of Emotional Intelligence, noted in a Psychology Today article, “Women tend to be better at emotional empathy than men.”

Empathy is foundational to both innovation and entrepreneurship. To find opportunities, we have to be looking with our ears and listening with our hearts. I disagree with the critics who play down market research by saying customers don’t know what they want until we give it to them. Clients may not know how to create the actual product or solution that will ease their pain points, but they are certainly the best equipped to articulate their challenges – for anyone who is willing to listen.

People who are highly attuned to the voice of customers, through emotional empathy, will feel their pain best and are most likely to solve their problem first.

Note to the guys: Instead of scoffing the next time you’re told to get in touch with your “feminine side,” it’s time to take it to the bank. If, that is, you want to remain relevant in this age of empathetic opportunity and emotion-driven entrepreneurship.

 

 

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It’s never okay to be ‘just okay’ at your job

 

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Originally published on May 2, 2016 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/its-never-okay-to-be-just-okay-at-your-job/article29807629/

If you are one of those people who gets out of bed every morning to make a difference, your commitment to entrepreneurship is alive and well. And if your energy is rooted in audacity, you’re ahead of the game. Some may consider audacity to be a negative concept associated with attitude or edge, but it’s your willingness to challenge assumptions and conventions that will catalyze innovation and business success. As entrepreneurs, if we don’t have the audacity to believe in ourselves and our ideas, who will do it for us?

Two of the biggest barriers that we face in bringing new ideas to the world are the naysayers who assert: “That’ll never work, because…,” and the faint-hearted friends who say: “You have a family to feed, your dreams will have to wait.”

But recently I heard a new declaration and it will stay with me for a long time.

First, you might remember that in a previous column, I encouraged entrepreneurs to attack their sluggish markets by attending more industry events, dinners and trade shows – to get out of the office to find new ideas and fresh prospects. I even set a personal goal of attending 50-per-cent more events this year.

Well, sitting at a recent event, I heard the story of a former entrepreneur who quit to become a manager at a large company.

Why did he make such a drastic change? His answer, “Why bother being an entrepreneur when you can work in ‘the middle’ of a big company where it’s okay to be JUST OKAY?”

Wow! I finally understood the meaning of the “frozen middle.” It’s a term often used to describe the thickest part of an organization, the forbidding wasteland where ideas go to die. Great new notions may trickle down from the top of the organization, or begin at the bottom and percolate up, but in urban business mythology, they all die in the frozen middle.

Never having worked for a multinational, I assumed the frozen middle was no more real than the Land of Oz. I mean, who would ever want a huge part of their organization to be “just OKAY”? Back when I owned a manufacturing firm, we received a large order from a major retailer. A few friends warned me, “They are going to be very demanding, and your company is going to have to be exceptional to work with them.” I shrugged my shoulders and replied, “I don’t want to own a company that is anything less than exceptional. So I see this as an opportunity to ensure that we are nothing less.”

To be clear, the frozen middle is not the fault of the middle managers, it is systemic. To quote a 2005 article from the Harvard Business Review, “the problem is the inability of the company’s middle-management team to carry it out.” Ironically, the article is entitled “Middle Management Excellence.” In it, author and consultant Jonathan Byrnes argues that the most important thing a CEO can do to maximize company performance is to build the capabilities of the middle-management team.

Great middle managers are on their way to leadership positions. They take the longer view by embracing proactivity and innovation, because they know that both the future of their company and their own future prospects depend on it. But they are hindered by archaic processes and institutional roadblocks.

For large companies that know in their hearts that their vast middle needs a defrost, it’s time for an industrial-grade heater. To create and maintain market leadership today requires a red-hot culture shift: openness to new ideas, incentives to perform and a culture of innovation that drives ideas to market. Make innovation a part of your performance reviews. Let everyone know that new ideas are the heart of your corporate culture. If middle managers see how important innovation is to the company’s leadership, they will begin to understand that the status quo is no longer worth defending. If you want intrapreneurs heating up your bottom line, you have to recognize and reward audacious behaviour.

There’s great news in this for fellow entrepreneurs. Bigger firms’ inability to pivot and develop new products and opportunities provide us the open door to break through and disturb the status quo.

Bottom line: You never know which innovation will prove to be a winner – but the act of innovation is always right. Entrepreneur or corporate behemoth, it’s never okay to be “just okay.”

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