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Perspective

Direction

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Without direction, how do you know where you’re going? And we’ve acknowledged many times in this weekly commentary, if you don’t know where you’re going how would you know if you’ve gotten there?

Who sets the direction for your business? Without direction and a charted course, your business is akin to a rudderless boat, just floating along aimlessly. While “floating along aimlessly” sounds like a great vacation, it is most definitely not a strategy for your business.

Direction is set by the leadership team within the business. Big or small, any business without solid leadership, visionary decisive leadership, will find it very difficult to achieve its full potential.

This is why great leaders are well known, highly regarded, and abundantly compensated.

This reality crosses into all aspects of life, not just business. Sports, politics, religion, even in households, the same can be said. Every organization, even volunteer advocacy and/or charity groups have a designated leader…someone who sets the direction for the organization, or in the case where there is a board of directors (or something similar) the leader is accountable for the execution of the strategy and direction for the organization.

Nowhere is the accountability of the leader more public than in professional team sports. Anyone who is fan of any team sport can think of a time where their favorite team, or another team in the league, has went through the turmoil of having a talent laden roster of athletes that habitually fails to succeed. Often, all it takes is a change in leadership, the head coach or general manager for example, and the team begins to win. The leadership can also be identified in the locker room among the players; adding a player with tremendous leadership attributes can be as beneficial as cutting a player who brings a toxicity to the locker room. As fans, we all witness these personnel transactions and then complain or celebrate accordingly (depending on our own view of the matter) but it is a test of the team’s leadership to make the decisions to essentially “fire” a coach or player who may be popular from the outside looking in, but is a detriment from the inside looking out.

This example applies to your business as well. While it may be hard to justify letting go of a star member of your team, if that individual is not conducive to team harmony and progress it falls on the leader to make, or not make, the hard decision. Either way, the leader has provided a clear message to the entire team through their (in)action.

What is even harder is when the person that needs to be let go it the leader himself! Are you holding your team back from achieving their full potential? How would you even know if you are? Could you handle hearing that the problem is you, or would pride get in the way? It is a wise and humble leader who recognizes that the best move for the organization might be to fire herself.

Plan for Prosperity

Whether you believe that leaders are born or leaders are made, an organization without a leader is an organization without direction. Without direction, a business lacks purpose. Without purpose, a business lacks the ability to make progress. Without progress, a business becomes redundant. Look no further than Kodak or Blockbuster Video for real life examples.

As the leader of my own business, I hold the accountability for decisions (good or bad,) results (good or bad,) and overall direction & strategy. As the leader, it is up to me to adapt when things change because, as they say, “The only constant is business is ‘change’.”

growth kills

Growth Kills

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We’ve all heard the anecdote “Speed Kills” as it was used to advise drivers to slow down. Former Canadian Football League (CFL) player Jason Armstead had “speed” and “kills” tattooed on the back of his left and right calf; as one of the fastest players in the league during his playing days, Armstead’s speed as a wide receiver and returner could kill the opposing team’s chances of winning.

But who has ever heard of “Growth Kills”?

I have written about it in this commentary and spoken about it at industry events: business can grow itself to death.

When a business pursues expansion at a pace that exceeds:

  1. Management’s ability to manage the growth,
  2. The business’ ability to finance the growth, or
  3. The market’s ability to consume the growth…

…we have an entity that has likely grown itself to bankruptcy, or the very brink of bankruptcy.

We’ve all seen it. A couple years of back to back successes, and owners feel invincible! The next thing you know, there is new equipment and buildings being added to the operation, fancy vacations being planned, and new personal expenditures (like houses, RV’s, and vehicles) being made like the lotto has just been won. Everyone who sees this opulence must surely believe that this business is very successful.

If owners (managers) are ill-equipped for the rapid success they’ve enjoyed, there is a likelihood that less-than-ideal decisions will be made in the future. As Marshall Goldsmith titled his bestselling book, What Got Your Here Won’t Get You There. Management has to keep up with the change that sustainable growth requires. This could include new knowledge/strategy/execution in areas like cash management, human resources, marketing, etc. Growth kills when management’s ability is stagnant in the face of growing complexity in business.

As sales grow, there is a need for more investment in the business (Eg. property/plant/equipment; labor; technology, etc.) to support the demand. That investment requires capital. Whether the capital is borrowed or sourced from within the business (usually taken out of working capital) has a major effect on the sustainability of the investment. Growth kills when, without a “home-run” or two, investment is pursued to the point that financing is maxed out and working capital is depleted.

What happens when more product is produced than the market can consume? A shift is made, and what once may have been a specialty item is now offered at a lower and lower price until supply has been consumed (see the “model year blowout” and virtually every car dealership every year.) A business that has enjoyed significant growth may decide to increase production based on past sales growth. Such a decision usually requires investment in the business (see the previous paragraph) and investment in inventory. Whether that inventory is raw material, or finished product remaining unsold, it is tying up working capital. How long can a business hold inventory before it converts that inventory to cash? If working capital is been reduced (see paragraph above) the answer is: not long.
Maybe the business is in a service industry. While there likely isn’t any inventory to have to manage, ramping up capacity (hiring & training staff, acquiring tools & equipment for staff, etc.) requires investment. These investments also carry an overhead expense (salaries & wages, utilities, depreciation, etc.) which becomes harder to pay for when market uptake is satiated. Growth kills when we assume the market will sustain our rapid growth for us.

Plan for Prosperity

What led to the recent success in business? Was it deliberate, planned, and executed…was it intentional growth? We recently discussed the ramifications of unintentional growth. Maybe this article should be titled (Unintentional) Growth Kills, but that probably would not have captured enough attention for you to even read it.

Growth Kills when the growth was unintentional and leads the ownership/management group to ignore the reality that (almost) all industries are cyclical. To say timing is everything does not give credit to important factors like strategy and execution, however an adequate strategy will give consideration to timing (to implement the growth strategy.)

It’s all connected. There is no magic bullet; one thing alone does not make success, and if it does, it’s “luck” and it’s short term because luck isn’t sustainable.

Shaking Hands

The Power of a Network

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Networking…it is critical to the success of many businesses. Numerous companies have become global juggernauts just by being a networking platform (Ref. LinkedIn, Facebook.) “Social Media” is built on connecting people in one way or another.

However, nothing replaces person to person interaction.

Recently, the Canadian Association of Farm Advisors (CAFA) hosted a conference in Regina. It was the first that CAFA has held in Regina in 5 years. The topic was “what the top farms are doing” in the face of current challenges and opportunities. Nine different presentations filled the agenda on all of the most critical topics that farming businesses must manage. Coincidentally, the topics are very similar to those of businesses in other industries.

Easily half of the people in attendance were people I had not met prior to this event. The feedback from attendees was very positive on not only the quality of the content presented, but also of the people in attendance. Many new connections were made.

Clients have expressed to me that one of the many benefits I bring to their business is a network of experts whose expertise is different than mine: lawyers, accountants, lenders, marketers, etc. I give much of the credit for that to the opportunities created by having membership in a professional organization. It is still up to me to make the most of the opportunity, but the organization does provide an open door.

It is from this networking that I have compiled a list of experts who I trust will do good work for my clients.

On the other side of the argument, many people take the position that they won’t refer their customer to anyone for fear of that referral not doing right by their customer and reflecting poorly on them for making the referral. While I cannot argue with emotion like that, I will suggest then that you do a better job of networking so that you have greater confidence in the people to whom you are referring your customers. If you leave your customer to find their own expert elsewhere, that person might be referring your customer to someone other than you!

Plan for Prosperity

In our ever connected world, it is more and more important to develop business relationships that are complimentary and mutually beneficial. We cannot be an expert at everything our clients need; trying to do so would make us generalists and leave us unlikely to truly satisfy any of our clients’ needs. Whereas if we remain a specialist with a developed network of other specialists whose expertise is different, yet complimentary, to our own, then we are better able to provide value to our clients in a variety of ways.

When is your next networking opportunity? I’m always interested in expanding my network; give me a call for a coffee sometime!

 

Vision

Vision

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Where are you looking?

As an entrepreneur, there are numerous issues clamoring for your attention. Which ones get your time and focus?

If your business is a vehicle hurtling down the highway, where are you sitting in the vehicle and where are you looking?

  1. Driver’s Seat
    The now defunct automaker, Pontiac, once used the tag line “Built for Drivers.” Many years ago, a good friend owned a Pontiac Grand Prix. As I got in, and looked for the seat adjustments, I found that there were not many and they were manually controlled; whereas his driver’s seat had full power adjustment and more. As I poked fun at the lack of amenities in his car, he casually fired back, “Built for drivers.”
    The driver’s seat is command central. There is little that cannot be controlled from the driver’s seat, and practically nothing can be controlled elsewhere which is not controllable from the driver’s seat. The control is centered here.
    In your business, the metaphor of the driver’s seat is not just a seat for one (I am sure you do not want a culture of autocracy in your business). With whom are you sharing control? Do you all have the same goal for where the business is going, or are you all tugging at the wheel trying to change direction, arguing over heat versus air conditioning, or fiddling with the radio?
    Maybe you are sitting in the passenger seat, providing navigation assistance and influencing the decisions of those in the driver’s seat? Just be aware that if you are in the passenger seat, it takes a more concerted effort to see what the driver sees. Read on…
  2. Dashboard
    Truck DashbaordThe more comprehensive the dashboard, the better. Personally, I am highly frustrated at vehicle dashboards that have only three gauges and a plethora of warning lights. By the time any of those warning lights appear, it’s too late, the damage has been done. Whereas a a dashboard full of gauges allows me to monitor all the critical functions of my vehicle (my business.) My ideal dashboard looks more like this photo.
    Are you looking at your dashboard? Is your dashboard full of gauges or warning lights? If you have ignored the gauges, you will still get a warning light (and possibly an alarm) indicating your working capital is depleted, your staff is unproductive (maybe even leaving your employ), or your overhead has gotten out of control. These alarms could come from your banker, your key managers, or your accountant. But once the alarm has sounded, is it too late? It is much easier to proactively respond to an overheating engine by watching the gauge on the dashboard rather than getting an alarm telling you “it’s too late, now pull over and stop.”
  3. Rear View Mirror
    While most drivers fail to look in their rear view mirror enough, entrepreneurs tend to look there too much. While it is human nature that our past experiences shape our future decisions, it is impossible to move forward if you are only looking back. (Notwithstanding, I continue to be amazed at how many drivers do not look back, even when their vehicle is in reverse!)
    Take a look back regularly. Acknowledge the decisions that created the path left behind. Learn from them. Make better decisions going forward.
  4. Out the Windshield
    New drivers tend to look down the hood of their vehicle at the road immediately in front of them. By doing so, they often fail to recognize a hazard up ahead. This practice can result in severe reaction to avoid a hazard which may put the vehicle out of control which may result to a collision, injury, or worse.
    New entrepreneurs often have the same behavior: they tend to look only at what is immediately in front of them. Like the new driver, this can result in extreme adjustments from a reaction to avoid a hazard whether perceived or real. Does this apply only to new entrepreneurs? Sadly, no.
    By keeping your eyes up and on the road ahead, the driver can identify potential hazards early and adjust strategically. She can scan the landscape to the left and right for wildlife and intersecting traffic. Doing so allows her to be prepared to respond quickly and accurately versus panicked and severely.

Plan for Prosperity

Whether you sit in the driver’s seat or the passenger’s seat, you have the best perspective to see what is ahead. Discuss the observation and decide how to respond. (Vision/Strategy)
There is a reason the rear view mirror is a fraction of the size of the windshield. Use each of them accordingly. (Progress)
Build yourself a dashboard that allows you to quickly and easily monitor the most critical functions at a glance. This dashboard information is only useful if current and accurate. (Monitor & Control)

Where are you looking?

Adding Value

Sub-Topics of Growth (Part 3)

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In this final installment of our discussion on the multifaceted growth opportunities that exist in your business, we will touch on Information Management and Management Capacity. One more time, here is another look at the graphic that has laid out the basis of our conversation.

Facets of Growth 1 Information Management

This refers to the information that you need to run your business day to day, month to month, year to year, production cycle to production cycle, project start to project end, etc. Whatever the scope and duration required for your specific business is subjective and will be determined by you and the needs of your business. Have you given much thought to the type of information you need, what form you need it in, and how often you need it? Far too many businesses have not given this question sufficient thought.

How does a business make important decisions without sufficient information? Has your lender ever granted you new or additional credit without sufficient information? Of course they haven’t! Doing so increases risk, and banks are exceptional at managing risk.

Depending on your business and the industry in which you operate, the information you deem most critical will be different from others. For example, a business in the service industry may need to track client contacts per employee per day whereas a business in the construction industry may want to track re-work (work that needs to be redone because it wasn’t right the first time.) Critical information that is industry agnostic would include current and accurate information on liquidity, productivity, and profitability.

What systems do you currently use to compile your business information? Remember, systems do what they were designed to do, so if your system is not providing you with the results you want then there is a flaw in your system! Taking a look at the graphic below, your management information system(s) should collect raw data from business operations (whatever business, whatever Information Managementindustry) and produce the data into a useful form, typically a report of your preference, so that management can analyze the results of what has happened in your business over the last period of time (week, month, quarter, etc.) Business decisions get made which affect operations, and those decisions get made anyway, even if out of necessity. So why not make informed decisions that are impactful, progressive, and positive?

If working capital is tight, would it be helpful to learn that your customers take 3 weeks longer to pay that you thought? If profitability is not meeting expectations, would it help to know that profit margins have been shrinking? If productivity is under budget, would it help to know that employee sick days have been on the rise? What you think are problems in your business (tight working capital, shrinking profit margins, decreased productivity) are actually symptoms of the real problem (which in this case could be lengthy accounts receivable, poor inventory control, or lack of staff morale…)

If you are going to step up from trying to treat the symptom by first learning what actually is the problem, then you need good management information.

Management Capacity

Coming from the farm and having spent most of my professional career working in agriculture, I often get asked a specific question by people who grew up on farms in the ’50s or ’60s but have left the farm as young adults and never got involved in farming. They ask, “These farms are getting bigger and bigger; how big is too big?” My response is, “I can tell you exactly when. It’s when the farm has expanded beyond the owner’s/manager’s ability to manage it! For some, that is 40,000 acres; for others, it’s 400 acres.”
**NB: Not looking at corporate city limits but actual development, 40,000 acres is slightly less than the size of Regina, Saskatchewan. In contrast, 400 acres is approximately the area used by the Tor Hill Golf Course.

Management Capacity Business owners/managers (these roles are not synonymous, by the way) must be proficient in many different aspects of their business. One might say that business owners “need to wear many hats.” Being an expert in the work your business does is important, but if that is where your capacity ends, then you surely have “fallen prey to The Fatal Assumption” that Michael Gerber wrote about in The E-Myth Revisited. Just to name a few, strategist, controller, marketer, recruiter, trainer, collector, innovator, and leader are but a smattering of the hats a business owner must wear at some point or another. If your capacity while wearing any of those hats is less than “expert”, then you might be inhibiting growth!

“Do what you do best, and get help for the rest™” is a cornerstone of my advisory work with clients, and as such, I’ve trademarked it. If we spent our entire lives trying to improve on our weaknesses, we would reach the end of our lives with a bunch of strong weaknesses. However, if we spend our lives utilizing our strengths and utilizing the strengths of others in areas we are weak, then we create a synergy that provides incredible leverage not only for our business, but for ourselves and the people we have hired!

Take a moment this week to perform a self-audit on where your capacity is reaching its limit. Growth is about breaking through limitations, and this becomes an exceptional opportunity for growth, both in your person and in your business.

Plan for Prosperity

Growth is about more than just size and scale, but it is about expanding. Growth is expanding our view, our skills, and our attitudes. Growth is about expanding our network, our credibility, and our place in the market.  We’ve just completed a three-part journey that coursed through the many facets of growth. In summary:

  • Your customers give your business a reason for being. How do you find them and keep them?
  • Your product or service can be your boom or bust. Are you innovating how your deliver your product/service? Where is your link in the value chain?
  • Pursuing growth from a position of financial weakness is a recipe for disaster. Are your finances putting in the position for growth, or are they hindering growth opportunities?
  • How are you investing in your people? Are they being trained? Are they provided with increasing responsibility? What type of culture does your business have?
  • Accuracy of your management information is critical. Is your information system up to par? Are you making critical decisions with outdated or inaccurate information?
  • If you are the heart and soul of your business, is your capacity in any of the critical management functions you perform a limiting factor in your business’ growth?

You business is like a tree: if it is not growing, it is dying. But unlike a tree, your business has many ways it can grow. Always grow, and grow all ways.

Adding Value

Sub-Topics of Growth (Part 2)

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As we continue our discussion on the many facets of growth (which is about far more than just “size and scale”) we will look this week at two types of capital: monetary and human. Here is another look at the graphic which provides the basis of our conversation, which, again, is not an exhaustive list within the conversation of business growth.

Facets of Growth 1Finance and Cash Flow

One of the first questions I get asked during interviews with prospective clients is usually related to cash flow or financing. As many business experts have written, these are the symptoms not the problems. Before we can understand how cash flow and financing have become an issue, we need to clarify your desired business goals.

Too often, financing is a reaction to a need or to a problem. When financing becomes the reaction to a want is when the business is beginning to create its own problems. “Needs” should be mapped out as part of a business’ 3 Year Plan. “Problems” need to be anticipated (as best as possible at the time) so that contingencies can be considered in advance. Reckless management of financing and cash flow hinders growth.

Where does your cash inflow come from? Whether it be from the sale of a product or service, or a little of both, it is important to make this obvious distinction. While it is obvious to you as the owner/manager of your business, is that obviousness directing how you invest your other resources (time, expertise, people, etc.)? At what stage of your sales process do you collect all, or part, of the payment from your customers? Does the timing of your cash inflow match your obligations for cash outflow? Insert financing…

Seeking financing when you are short of cash is reactionary. Because of the time it takes to go through the levels of due diligence that lenders must utilize before granting credit, reactionary Finance and CashFlowborrowing is challenging for everyone, borrower and banker alike. In general, seeking financing from a position of weakness usually doesn’t achieve the desired results.

The appropriate financing strategy can reduce costs (interest, fees, etc.), increase efficiency (pre-approved credit, overdraft protection, etc.), and reduce stress. Does your business have sufficient financing available to not just get you through the next production cycle but more than one production cycle? Is your business “borrowing from Peter to pay Paul?” If so, then cash flow and financing are two exceptional opportunities to seek growth.

Human Capital

We have all heard it before: hire for skill and you will fire for attitude; hire for attitude because you can train for skill. Anecdotal, yes, but incredibly accurate. Some things cannot be taught. Have you amassed a staff of people with the right skills or the right attitude? Ideally, it is both!

More anecdotes?
Middle Manager: “What if we train all our people and they leave us?”
CEO: “What if we don’t train them and they stay?”

Investing in your people is a growth strategy that is often overlooked in small business, but is par for the course in large corporations. Many large enterprises have made it a part of the corporate culture to invest in the skills of their employees. As business owners, we are often told that the best investment we can make is in ourselves, and if that is to be true, then the second best would be in our employees. How much training do your people need? Are you paying them fairly based on their experience, skill, and attitude relative to the competitive marketplace? Remember, the soon to be largest segment of the workforce, millennials, are said to place less importance on rate of pay. How are you adjusting your overall compensation strategy?

Human Capital matrixResponsibility and accountability are hallmarks of a great staff member. Most people crave it in their work. Sadly, many small business owners are reluctant to “let go of the reigns.” If you have managed to find good people only to wonder why they eventually left, consider how you allowed them to take on more responsibility. If they felt like they were held back, it is no wonder they would seek out a different opportunity elsewhere.

 

Peter Drucker has been credited as saying “Culture eats strategy for breakfast.” This means that even the best planned and executed strategy will fail without the appropriate culture in place. What is the culture in your organization? Is it one of respect and accountability, or is it a culture of mistrust and blame? The way to tell is to observe how people in your business respond during a time of crisis. When observing the behavior and acknowledging the type of culture in your business, remember the culture is an extension of you, as the owner/manager/leader because the culture is either from what you have tolerated or what you have set as an example in your own behavior. But do not despair! A poor culture can be changed, it just takes a lot more work and an incredible amount of consistency.

Plan for Prosperity

This week we touched on the two most powerful growth opportunities in your business: monetary capital and human capital. In reflection, remember these important points:

  1. Manage things. Lead people. Your people are not to be managed, but led. Then watch them perform.
  2. If your leadership skills are lacking, then make an investment in yourself right away. Or relinquish leadership from your duties and hire someone to do it for you.
  3. Get the right people in place before adding property, plant, or equipment. It’s far cheaper to be overstaffed for a short time than to under-service clients at anytime.
  4. Acquiring financing from a position of weakness will always be more difficult than during the execution of a strategic plan. Proactive vs. Reactive.
  5. Do not underestimate the impact of the right culture in your business. Spend a little time online reading about corporate success stories from implementing a specific focus on culture. If it can work in a large entity, it can work for you because you are much more agile as a small-to-medium sized enterprise.

 

Interruption

Interruption

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This shouldn’t be here.

It shouldn’t have gotten done.

But the thought of missing a Tuesday for the first time in 172 consecutive Tuesdays has me doing something I probably shouldn’t be doing. I should still be in bed. I’m very weak.

Actually, I should be in Boston to attend a conference I’ve been looking forward to for a year. But, illness can have a way a derailing all of our best laid plans.

Over the last week-and-a-half, both of my children have been affected by a different iteration of  the virus that is currently going around. My oldest took the least of it; my youngest was nearly hospitalized. I managed to dodge it, until I didn’t. It caught up to me on Sunday, the day that was all planned out: tidy up work before my trip and, of course, pack for the 5 day venture. As my condition worsened, I made the call at 5pm to cancel my travel plans. By 8pm, I was headed for emergency.

This has been the first time I haven’t gotten out of bed in 2 whole days since, well, that story is a little personal.

I have heard a disappointing number of business owners over the years express how they need to hold on to the reigns and keep control; their justification is that they need to be needed. They feel that their purpose is to control the business. How unfortunate.

What happens to the business of an owner with that mindset who suddenly took ill? Does the business stop? What should be told to customers, employees, suppliers?

If you are a business owner, ask yourself the following to gain some insight into your business continuity plan:

  1. Can your business run without you there every day?
  2. Is there someone, or several others, who know what you know so that your business can operate uninterrupted in your absence?
  3. Do you have health insurances (disability, long term care, critical illness) to cover your personal financial obligations during an illness so that you won’t be draining cash from your business during that time?
  4. Do your loved ones and/or your key people know who to contact and what to do in case of your severe illness or sudden passing?

As a solo-preneur, I am my business. If I’m not working it, my business stops. So for the last few days, things have stopped. Can your business afford to stop?

Plan for Prosperity

There are few guarantees in life, and yet it happens too often that we don’t plan for that which is guaranteed. Maybe us weak humans have difficulty facing our own mortality? Maybe it’s something more narcissistic? No matter what it is, we’re all going to get sick now and again (whether it’s a minor illness from which we recover or something more serious) and we are all going to die…someday. If we aren’t prepared for the inevitable, the people left behind are the ones who will be hurt the most.

Take some of that (perceived) unpleasantness onto yourself and do this hard work so that you can save your loved ones, your employees, and your legacy the pain of trying to keep things afloat while you’re out of the picture.

growth

Prerequisites for Growth

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Last week we began a discussion on Avenues to Growth, and in introducing the concept we described how employing tactics to achieve that growth is meaningless without first defining your business goals, “your WHY”. The reason: how do you quantify actions without a desired outcome with which to measure those actions against?

Just get in your truck and drive. Go. Which way do you turn out of your driveway, or at the corner? Where are you going? After driving for an hour, aimlessly, where will you be?

It may be anecdotal, but there is truth in saying “If you don’t know where you’re going, how will you know when you get there?” Every time you get into your vehicle to drive, you have a goal of getting somewhere. It may be to the rink, the bank, or the store, but the point is you have a goal of where you want to go. And somehow, quite amazingly sometimes, you reach your declared destination.

Your business is no different.

Pursuing growth in business without defining what it is you’re trying to achieve is as fruitful as getting into your truck and driving aimlessly for an hour. You will have used up valuable resources (time, capital, fuel/energy, etc.)  and found yourself somewhere you didn’t expect to be. Then you have the challenge of figuring out what to do when you’re there. Turning the truck around and heading home is much easier than doing the same in business. Metaphor ended.

Step 1. Define your business goals for growth.

 

 

To achieve your growth goals, you will need sufficient resources. This opens up a plethora of subtopics that is suited to a separate discussion. For today, we will look at only one: financial.

Part of the activity in defining growth goals is to include discussion on the business’ financial resources. Does your business have, or can it acquire, the resources required to successfully implement the tactics that will achieve your goals?

Ask any banker, any financial analyst, and you’ll probably get a response akin to the importance of cash to your business. Cash is critical, often suggested that “cash is king.”

“Cash is not King…it’s the Ace!”

-Phil Symchych

To suggest cash is king would indicate that something else is the ace, meaning something else is more important than cash, and I’m here to tell you that cash is the lifeblood of your business and draining the cash from your business is similar to draining the blood for your body.

It’s true, cash is not king…it’s the ace.

“Growth, however, is king!”

-Kim Gerencser

By letting growth be the ace and cash be king, you’re placing growth ahead of cash; this is incredibly dangerous. Many aggressive businesses have grown themselves to the brink of bankruptcy by making this mistake. I recall dealing with some young farmers who pursued growth so rapidly that their working capital couldn’t keep up. They began borrowing more and more operating credit to keep the business afloat and found themselves using their operating line of credit to make their term loan payments (HINT: bankers get real squirrelly real fast when this happens.) This business didn’t have sufficient cash when pursuing their growth actions. They had no defined goals, only (what now appears to be) reckless abandon. They might have one year left, and if that year isn’t stellar they could be forced into liquidation.

Step 2. Compile (or acquire) sufficient resources for growth.

 

 

Because of my work in agriculture, I often get asked by non-farming people “How big is too big” when it comes to the size and scale of modern farm operations. My reply: I can tell you exactly when a farm is too big (as the audience waits with baited breath)…it’s the moment that the farm has outgrown the management ability of the manager! For some it’s 40,000 acres, for others it’s 400 acres. It all comes down to management capacity and ability.

Too often, businesses feel they must expand to remain relevant. As such, they pursue growth before they are ready. This can lead to management burnout, employee dissatisfaction, and lost customers. Consider a elementary school aged child; if that child has not successfully exhibited sufficient competence in math, reading, and writing, the child should not (by rights) be advanced to the next grade. Doing so will cause the child to be unnecessarily stressed in the next grade from having to learn new concepts before the base knowledge has been established. Such a situation can lead to all kinds of issues better left to the educational professionals. There is great similarity in the abilities of the manager in your business to the example of the school age child. Asking management to manage a business that has grown beyond their ability is a recipe for failure.

Step 3. Perform an audit of management’s ability & capacity for growth.

 

 

Plan for Prosperity

Aspirations for growth are born out of the desire for prosperity. Both must be planned. Accidental prosperity from fortuitous growth is not sustainable.

Growth is exciting, invigorating, maybe even intoxicating…especially when growth happens systemically, systematically, and successfully.

Conduct the 3 Step Growth Audit laid out above to evaluate your likelihood of successful growth. If you need some guidance, give me a call or email.

 

Coach

Who Needs a Coach?

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Muhammad Ali.

Wayne Gretzky.

Tom Brady.

Professional athletes…emphasis on “professional,” the best at what they did (do). Evoking cries of “The G.O.A.T.” which stands for “Greatest Of All Time,” these legends all used a coach.

Football teams have more coaches than they are allowed players on the field at any one time. Baseball, hockey, soccer, olympic squads, the list goes on…all have coaches.

Individual success, such as Tiger Woods, Venus Williams, Michael Phelps, even many CEOs of Fortune 500 companies, all use a coach. One of the best, if not the best coach of corporate executives, Marshall Goldsmith, uses a coach himself.

Right now, I have three. Each has a specific purpose, yet they compliment each other in how I benefit from having them. This does not include the advisers I use for accounting, legal, investments, or insurance where the number then increases to more than ten.

Back to the professional athlete, who is so skilled at what he or she does that they make a living doing it (and a exceptionally good living at that.) If you’re already top of your game, what good is a coach? If that were true, then everyone at the top of their game (see a small sample list above) would have fired their coach. Just because we might be at the top of our game doesn’t mean there is no longer room for improvement. None of us is perfect.

Can you and your business benefit from a coach? What aspects of your business could use some coaching?

Efficiency: is your efficiency all it could be? The old adage that I lean on is “You don’t know what you don’t know”, so is the perspective from an expert a worthy pursuit?
Finance: this relates to banking, borrowing, and investing. Is your approach more reactive to these important facets of your business, or do you regularly analyze your situation to proactively position you and your business? I couldn’t tell you how often I’ve seen something as simple as monthly account fees going totally unmonitored and therefore costing 2-3x what would be charged if a regular review was done.
Growth: this can take so many forms; I could write a book! Growth is not just about size and scale, there are many ways to grow (both personally and business.) If growth is your desire, considering how varied and complex growth can be, having a growth coach can save hours of stress, create multiples of efficiency, and help avoid pitfalls along the way.

The list is almost endless: from technology and social media to HR and governance/policy development, there is an expert available who is willing to help you take your business to new heights.

Plan for Prosperity

It is not reasonable to expect that you, as an entrepreneur and business owner, can know everything related to the successful operation, sustainability, and life-cycle of your business. And yet, considering that your business is the driver of your family’s lifestyle and a big part of your legacy, it is tragic to leave to chance so much of what is critical to business success.

Do what you do best, and get help for the rest.™

-Kim Gerencser

The quote above is a major cornerstone of my advisory work with clients, that’s why I’ve trademarked it. It’s been said that we can spend our entire lives trying to improve on our weaknesses and all we’ll end up with are a bunch of strong weaknesses. Whereas if we leveraged our strengths, the potential they create can grossly overshadow the drawbacks of any weaknesses…especially if we leverage others whose strengths are in the areas of our weaknesses.

 

 

Heat and Light

Heat and Light

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Heat comes from energy. Emotion creates energy. Therefore, emotion provides the heat.

But, emotion can also cloud our judgement. It can lead us to act irrationally, and even in ways we would not normally behave.

Light, however, provides perspective. By illuminating more than what is right in front of our nose, we are able to recognize more options than emotion alone would have permitted us to see.

Light is awareness. Awareness allows us to think.

Heat with no light is raw, unbridled, emotionally charged nonsense.

Light with no heat is cold, calculating, and rigid to the point of inaction.

“Logic makes us think, emotion makes us act.”

– Alan Weiss

 

Plan for Prosperity

Like everything in life, too much of anything is not a good thing. Your business needs a balance of heat and light.
You, as the business owner, no doubt, have an abundance of heat. Where do you source your light?
I, as a management adviser, am hired to provide light. That light is awareness to options and strategies that can benefit your business.

But without your heat, no amount of light will make a difference.