small business

Why you need to be selling your company every day


Originally published on August 2, 2016 as a Guest Column in The Globe and Mail:

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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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:

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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Does The Wizard of Oz hold the secret to your business success?

Originally published on June 5, 2015 as a Guest Column in The Globe and Mail:

My son popped in the other day and told me that he had signed up for his first ‘group’ at university: The Graduating Class of 2020.

Impressive,” I said, “since you just received your acceptance yesterday.” He then reminded me of my own words over the years: “You’ve got to have a goal.”

Any parent reading this will recognize what a monumental moment this was for me. Not that my son was off to university, but that he had actually remembered one thing that I had said to him during his first 18 years! Actually, he went on to tell me his sub-goals. Having joined a co-op program that offers opportunities for international placements, he has mapped out the places where he hopes to visit for both work and study terms during each year of his program.

How many of you have a five-year vision for your business that includes not only strategic goals but also sub-goals – those small steps that will lead you to where you want to go?

I can honestly say that at my company, we have such a plan. As our horizon spans the next five years, I call it our 2020 Vision. But it’s not a perfect, sealed document preserved under glass for people to marvel at for the next five years.

Quite the opposite: It’s a working document, clearly and succinctly articulated on a whiteboard in plain sight. It includes the over-arching vision for the company, and highlights our five key strategic pillars which range from the high level (the refinement of corporate vision and values) to the pragmatic (revisiting the eight steps that we follow to acquire and delight customers), as well as the purely practical (upgrading our technology infrastructure).

Running an emerging boutique-sized organization, I can fully empathize with the pain you may feel when you hear the phrase ‘strategic plan.’ Sure, planning requires work. But it doesn’t have to be overwhelming. And it doesn’t have to be a static, hold-your ground plan. There will be many unpredictable elements that affect your businesses in the next week or month, let alone five years. So, your plan needs to be flexible.

This is why I break the strategy process into planning and discovery. To (over)simplify, think of it as six steps:

1. Engage in a free-flowing discussion with your senior team about your organization’s five-year goals.

2. Identify and articulate your company’s strategic pillars (exploring five top-level areas of focus is a common outcome).

3. On a board, summarize those five (or so) pillars, each in about 100 words. Have bullet-point steps under each heading, along with anticipated delivery dates and the name of the person charged with getting these things done.

4. The person-in-charge should put together a top-level plan for his or her project. Again, this doesn’t have to get cumbersome. A couple of pages can usually summarize the project’s goals, objectives, milestones, timelines, resources and desired outcomes.

5. Meet monthly with each of the project leaders – individually and as a group – to monitor progress and see where you or the full team can help out if a project starts to flounder.

6. Allow for changes, refinements and updates. How? Read on about the second element of our planning process, which we call Discovery.

Discovery acknowledges from the get-go that things are going to change. And that your organization, team and plan have to be elastic.

John Cardoso, the founder of Spyder Works, likens this part of the process to the epic journey that takes place in the 1939 film, “The Wizard of Oz.” Pushing your organization in a long-term strategic direction is akin to the film’s storyline of Dorothy embarking on an epic journey towards a defined goal: going home. During the journey, team members join her and eventually learn a lot about themselves, their potential, and their ability to cope with problems along the way.

Working together, thinking beyond tomorrow morning, galvanizes us as business teams. Learning to recognize, adapt and adopt to changes around us makes us hardy travelers and formidable competitors.

Dorothy’s journey in the movie also reminds us that we must rediscover and embrace the sense of wonder and curiosity that most of us gave up in grade school. Encourage ongoing questioning and refinements to surface organically as new evidence and opportunities arise.

This is why we double-back and add in the sixth step to the process.

6. Allow for changes, refinements and updates. To encourage creative input, I place Post-it notes and a pen beside our strategy board so that anyone can add their future-forward ideas (be they high-level or project-specific). This may sound like a minor part of the process, but it isn’t. It reminds the team that these (and all) projects are not static, but fluid. They are not perfect plans, but opportunities we have shared that we think about regularly and build on continuously.

Throughout your strategic journey, you will encounter unforeseen situations and daunting challenges, (e.g., competitors, social change, new technologies), just as Dorothy did. But the strength they gained in travelling together helped Dorothy and her unlikely leadership team discover the tools and talents they needed to reach their strategic goal. For Team Dorothy, those tools and talents included perseverance, intelligence, empathy and courage – probably the same characteristics you want to see in your own teams.

What colour is your company’s yellow brick road? Where is it going to take you? Plans can change, yes. But that is no excuse for not making them. You never know when your business will encounter lions or tigers or bears – but with a plan, you’ll see them coming a lot sooner.

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