2/29/12

Relationships

Loving & Business (Part 14)


Relationships are at the heart of every business. It is the interaction between people, the discovery of needs and wants as well as the solving of problems that builds and binds the relationships we enjoy and call business. It is easy to think of stories that profile great relationships.
  • A Regional CEO of a grocery store chain frequently stops a customer in one of their stores and give the customers a few business cards which are actually coupons for $3.00 off the purchase. Rather than just handing out the cards, he invites the customer to have a cup of coffee with him at the coffee shop located in the store. Over coffee, he learns a lot about the customer’s experience, needs and wants. Each time the shopper feels important and flattered, usually relaying the story to others and making that store the preferred place for groceries. It is now a relationship with not only the CEO but, more importantly, with the company.
  • REI engages their customers in a 360 degree relationship experience that creates loyalty and sales. The company excites the experience of the enthusiast through the dreamers with expertise, quality and branding of a lifestyle and adventure. The value component is driven not only through a product selection that aligns with their mission, but also with giving customers the opportunity to actually participate in the company. It is hard to be a great relationship company if your employees are not a part of the relationship formula. The company is rated as one of the 100 best places to work by Fortune Magazine.

Even in the most automated supply chain sales processes, it all starts with a business relationship. The business relationships built in our companies, through our companies and because of our companies are assets that must be protected, nurtured and grown. Relationships should be enhanced rather than managed through databases, CRM systems and data mining. The vibrancy and value of these databases come through the actual touches with the customer not the listing of their data.

Newer technologies now begin to factor in behavioral patterns that indicate the propensity to purchase a product or service, and may even offer it automatically. The customer who buys as a result may purchase one time but will evaluate the experience on the basis of that one transaction. If the experience is favorable, they may buy again, but may not explore other company offerings without more interaction. Expansion of the customer’s experience and ultimately purchases comes through developing a relationship, which in almost all cases requires interaction between people and developed by people.

We are seeing more companies take advantage of live chats as a way of facilitating the communications and building relationships. Some augment that with text messages, social media exchanges and other vehicles of engagement and interaction. All of these build relationships and require interaction.

The Loving and Business series blog has taken a look at people, practices and behaviors profiling loving and business throughout February. All of these point back to relationships being the heart of business.

2/28/12

Sales Meeting 101

Loving & Business (Part 13)



Harold, the business owner mentioned in the last post, A Business Hub for Virtual Work, was very creative with ways to drive culture and a sense of belonging to everyone in his company whether they were office based or virtual. Dealing with the space issue created another challenge as well as an opportunity.

Utilizing the hoteling strategy, making the facility into a business hub, the large training room/media center and meeting room were now booked a lot of the time with either people using the hoteling services or businesses and groups from the community. It was wonderful that his parking lot always looked full and there was a lot of activity. The bottom line impact had been better than he expected as the room that had gotten used one or twice a week was about 80% of capacity booking. By having people there and a lot of traffic, it was a natural, subtle but present marketing vehicle for his company and sales. The benefits certainly outweighed the challenge of having space available.

Harold felt that having regular meetings was not only an important method of sharing information but it also brought people together, sharing, getting to know each other and creating a better, friendlier and more cohesive business environment. It was a part of their culture.

Like many of his peer companies. Harold had witnessed a decline in attendance at meetings over the years, in part because people were unwilling to let go of any business opportunity in the tight market, but also because most people felt that any information and meeting notes would be posted on the company intranet. The very tools and efficiencies he had put in place to aid communications were working against bringing people together. He decided to go back to Sales Meeting 101.

First chapter – The KISS Principle – translated to Keep it Simple and Short.
Second Chapter – Feed Them And They Will Come.
Third Chapter - WII-FM – It Isn’t About You.
Fourth Chapter – Fun and Engagement.

As he started reading the chapter – there it was, the missing element. He had been doing everything to push to them and not pull them to the meeting. They were not engaged and the intranet certainly did not share the fun or camaraderie that was being missed. It brought back memories of some of his best meetings ever, which in some cases were now long ago and few people with the company now would have ever experienced those meetings. They were not only fun, but people wanted to be there, wanted to celebrate being a part of the company and the successes that had been realized. Sure there was information delivered, but that was a part of the mechanics rather than defining the meeting. He and everyone loved those meetings and it showed in the business, creating a culture of strength.

Putting his creativity to work, he determined that once a month there would be a meeting that would be one to be remembered and drive the things he knew would be important. Since his space was in use most of the time, he started to look in the community and to his vendors for space that would fit the requirements of convenience while creating a different, destination type venue. The first thing that he did was determine a theme for each of 10 monthly meetings. He decided that the mid-year meeting would take place at their annual outing. The Annual Awards and Celebration would be the 12th meeting. As he thought about the calendar, he decided to consider options to include the charity event they hosted as another part of the meeting calendar. Having several of the meetings as a part of a larger event meant that the social component would be fulfilled and the information could be taken care of minimally, supported by handouts and the intranet. Those meetings would also focus on celebrating achievement which fit right into his plan.

Each week in the office, via staff and through the intranet, clues were dropped as to the location of the meeting that month so that there was a buzz of guessing and greater interaction among everyone in person, via text, email, phone, voice mail notes and any other type of communication. He even started an internal blog to drive conversation.

All of the themes gave a clue but not specifics about the content or the speakers that would be at the meeting. Some of the themes he came up with were:
  • Money in the bank – the meeting was held at a local bank.
  • Back to School – held in a local school.
  • Art in the Park – Held in a park.
  • Showtime – Held at a movie theater.
It did not take long for attendance, excitement and anticipation to build.

Different people came forward asking to organize a meeting. The other meetings he held online through a virtual meeting room with small groups of sales people that would have common interests, objectives or experience.

The new strategy really brought back the love to the business meeting and the profits came rolling in from the new use of the former meeting room.

2/24/12

A Business Hub for Virtual Work

Loving & Business (Part 12)



One of the greatest challenges currently, with so many people working outside of an office or company environment, is keeping the sense of touch, community and belonging. It is not isolated to any one industry, although the challenges are different for a company that is locally based vs. regional, national or even international.

All companies have experienced this with cost pressures related to size of the physical footprint, cost of gas and time for commuters. Internet access, shared data and communications options have erased many of the former barriers that used to necessitate bricks and sticks. Even the consumer, in many industries, is able to interact with the company online, rarely, if ever, visiting in person. Business models have changed including many new business models that have a minimal physical footprint if any.

Small companies, where the individuals interact frequently, do not face the challenge of maintaining vibrancy and culture in the same way that larger companies do. Perhaps some of the most challenged are sales companies. Sales people by nature are highly social and perform at their best in a highly interactive environment. They enjoy and appreciate recognition from not only executives in the company, but their peers as well. Their competitive nature is important not only in beating the competition but also winning accolades for top performance, creativity and or initiatives within the company.

So in a world of text, emails, social media exchanges, online information and reduced personal interaction, how do you create a vibrant magnetic culture that attracts, motivates and feeds the best talent? How do you really enable the touch and interactivity? Harold, one company owner, has found several ways to deal with the challenges a growing virtual work culture brought.

Harold is the owner of a sales organization with over one hundred 1099 sales people. The only employees are in support roles. His company is well known for their market presence, expertise, industry tenure and ability to put together sales. With a market share that hovers between 46 – 48% in a good sized city, his company is considered to be number one and absolutely dominated the market on their side of town. A number of years ago, he built the office space he currently occupies to be the best in the area, providing the business and professional accoutrements for the best in the business. There are private, semi-private and group work spaces, state of the art technology is found throughout. It is an inviting and impressive building. When designing the building, he wanted to make sure that there was privacy but not isolation. Traffic patterns and locations of common elements made interaction easy without being forced or work compromised. The 1099 sales people paid desk, management and usage fees in return for high commission splits. Many, with the slowdown in the economy, saw moving their offices home as a cost savings that made sense with little potential impact to their earnings or ability to earn.
That decision changed the dynamics for Harold in that he had a lot of space and significantly reduced people using and paying for it. The other thing that changed was the busy noise that had been an enjoyable backdrop was gone and with it a part of the culture that had been built with the activity and exchanges between people who now did not even pick up their mail.

After some thought, he knew that unless he could bring the vibrancy back, some of the people staying would reconsider their decision.

While hoteling is certainly not a new concept, he decided to explore the options that it could present not only for his own sales team but also types of business professionals in related and non-related businesses. He examined the common areas for better ways to use and monetize these and literally turned what had been built for his company into a community business center.

Some of his support staff is now re-allocated to work in and for the business community rather than just his company. He has set up some business services that are for sale to those using space under the hoteling arrangement. He already had all of the front desk staff, the technology and the space. So there were really no costs for infrastructure changes and he is now making money off his space with a waiting list of people wanting space and services. His own sales staff has grown to almost 150 people who want to be in the company where the action is.

What is interesting is that his company changed from a business destination to a business hub. Harold’s story is really one of bringing loving and business together. He found that people want to come in and meet, work and have a business community that is full of activity and life. I suspect that as more people work from home, there will be more community hubs created much like this one.

2/23/12

Pocket Full of Sunshine

Loving & Business (Part 11)



I met a woman who worked incredibly hard and held a very difficult position in her company. To meet her you would never know it, as there was always a smile and a warm greeting whether she knew you personally, professionally or maybe not at all. No matter what, when you were in Jill’s presence, you instantly felt like a friend not that you were talking to the CEO of a major company.

I did not see her often, maybe once every few years but her reaction was still as if we had just seen each other yesterday. She was truly blessed not only with an excellent memory but also the ability to put something that was personal or meaningful in each conversation she had.

It was interesting that when she was promoted to the role, many doubted that she could possibly succeed the iconic person she was replacing. There were rumors floating suggesting that her rise could not be attributed to her business talents and skills since she was not well known in the company, let alone in the competitive world.

She chose a different tactic, using not only professionalism, intelligence and talent but, more importantly, relationship skills and the ability to be genuine as she interacted. This leveled the playing field instantly as the people she would normally have been compared with, while great with relationships, lacked the personalized warmth and reaching out, rather than simply receiving those she met.

I had the opportunity to ask Jill what she did to make sure that the smile was always on her face and the warmth in her voice. She told me about her pocketful of sunshine. When starting her day, she puts six coins in her pocket, the denomination does not matter. On the way to work during her 30 – 40 minute commute, she reaches out to three people by phone. Her sole objective is to make them smile that day. They may or may not be a business contact and even if they are, no substantive business is discussed, it is reserved for a call back during her business day. The call may simply be a hi, a how are you, a birthday wish or anything else. In most cases, these are people that she does not talk to everyday at the office. When it is someone at the office, it is often a private conversation of care and concern that might be misinterpreted by observers in the normal business setting.

Each time the call is completed and Jill has “heard” the person smile on the other end of the phone, the coin goes from her pocket into a jar. On most trips three calls are made during her commute. On her way home, the same routine. The coins are donated to a charity and the amount met by several co-contributors.

When Jill was explaining this to me she said that she could choose to make business calls during that time but when she used to do that, she usually entered the office still wrapped up in whatever the issue the call dealt with. Instead, when she walks in, she is smiling almost all of the time because she has given and received three smiles, a bit of sunshine starting each day regardless of the weather, chaos before leaving or what she would face in her day. At one point, she realized that she was often carrying the weight of her day home to her family at night, so she replicated the morning routine on the way home and found herself walking in the door at home with a smile on her face and ready to be immersed in family time for a while.

While it is only six coins a day, the contributions to the charity have been significant over the years especially with the matching funds. More importantly, Jill has challenged those around her to adopt the practice, really changing the work environment and culture. Her warmth and generosity truly combines business and loving.

I am reminded of Jill and her Pocketful of Sunshine whenever I hear the song of the same title by Natasha Beddingfield.  I really admire Jill, not only for the work she does, but the investment that she makes in all of her relationships. She has certainly proven it pays off.

2/22/12

Every Day Is A Celebration

Loving & Business (Part 10)


Every day and every month has something to celebrate, whether it is within your company, family or circle of friends. Each is a reason, sometimes a little on the whimsical side, to take the time to reach out and contact someone. Perhaps you will make them smile or give them a bit of a boost in their day.

According to the site Holiday Insights, not only is February 21 Mardi Gras (Fat Tuesday) but also the date of a more obscure holiday – National Card Reading Day. The description from their site is as follows:

“Card Reading Day is a fun day. It's a day to read cards..... no more, no less. Beyond a doubt, the stationery and Ecard companies love this day. It encourages you to send cards. They like that. As we did our research, we thought we'd find some history that suggests it is a day for Tarot card readings. It very well could be. But, we found no written evidence to support our theory. What we can tell you, is that it’s very popular to send and receive cards today. In order to read a card, someone has to send one. So, get the ball rolling and send out some cards today. Chances are you will get a few back.”

So let’s just imagine that you are looking for creative ways to grow your business, whether it is in product sales, new prospective clients, recruiting or touching your sphere of influence – new reasons for contact with a something a little light-hearted mixed in can really help you engage the other person in conversation. You might want to tap into a holiday such as National Card Reading Day and send cards or eCards in celebration of the day, even to those people who are a little bit difficult to reach.

February 22, you might want to celebrate George’s Birthday – George Washington that is and maybe even leverage off some of his well-documented leadership skills. If you are looking for humor – the same date will give you choices such as Be Humble Day, Walking the Dog Day and World Thinking Day. I can imagine hundreds of ways to use celebrations to motivate, honor, build spirit and give back to the community I serve. To assist you, you will find a document compiled with something to celebrate every day on our download page.

If you do not find what you are looking for there, birthdays, anniversaries, milestones and reasons for recognition abound in your company, just waiting to be noticed. There are also fun things that you can create to build toward a celebration – whether it is work related or just for fun. There are also many service and support oriented celebrations that bring a great reflection as a community citizen. No matter what, all of these touch people and give recognition.



Everyone likes to take part in fun, especially when, perhaps, it reduces a moment of tension. Everyone likes to be recognized for not just the big things but the little ones as well. It doesn’t mean that you need to spend money as much as you need to make a personal investment to positively touch someone else.

What will you celebrate today? Who will you touch with the celebration? How many smiles will you create? Most likely, you will find that using celebrations, holidays and recognition return far more than most other investments you can make and ties loving and business together. As the old adage goes: “No one cares until they know how much you care.”

2/16/12

The Family Jewels

Loving & Family (Part 9)


When was the last time that you took a look at your company assets? If you are a family owned business, perhaps these are “the family jewels.” Like jewels or other items of value, the real value is based on how much somebody will pay to buy these assets at a specific point in time under specific terms and conditions with acceptable consideration. The valuation changes dependent on many factors related specifically to that buyer and their needs.

Determining valuation for a sale is actually a lot easier than trying to distribute value if the family owned company is being inherited, broken up or dissolved.

The challenges are not that different than the problems that farmers used to face. At one point in history and in many cultures, when the farm was passed on, the land, tools, livestock and other assets were divided among the eligible descendants. The challenge was that the divided property might not be enough to sustain a family or make a living. The heirs were destined to challenges due to the divided property. Today, many farms are treated more as a business than just a livelihood. It must be the same with a family owned company.

A prescribed method of conveying or dividing assets in a company can alleviate a lot of problems later. As stated in the blog Till Death Do Us Part, starting with the end or potential end in mind is great planning. However most people starting a company are so focused on getting started and growing the company that exit strategies are not even on the radar. It should be, as it will change the way in which you grow the company.

Is the objective of the company providing a lifestyle and wealth accumulation for the current owners or are you building value that can be transferred or sold? Your choice or one of several others will drive the accumulation and expenditure of assets in your company.

If it is lifestyle and wealth accumulation without consideration, following the point at which you exit the business you will invest in what you need to do to drive business today in the most cost efficient manner possible. Optimally, most assets or resources will be exhausted or fully utilized when you exit. You will make your wealth now, without residual considerations. If you are able to sell the company (without you), the assets or a book of business at the end, that is gravy. In this case you are going to keep the family jewels primarily to yourself and valuation of assets is primarily for insurance and financial requirements.

If you are building the company for sale or transfer, you will take a very different approach. You are investing in the value you will realize when it is sold or transferred, and earning a living while you work it. Your return on investment should be greater when everything is added, if you have built not only assets but an entity that is desirable and worth paying for.

Now each investment into an asset must not only work for your company, efficiently enabling your personal business as a part of the company, but also has to become a part of an infrastructure that can be sold that makes the entire machine work and continue to create value whether or not you are a part of the picture. In this case the family jewels are in the treasury, constantly being revalued, analyzed and considered for the value in the portfolio.

The way that you value the assets is dependent on the reason. If it is for insurance or financial reporting it is different than when you are negotiating a sale or a transfer. Your personal production and contributions to the organizations may have little if any value in a sale or a transfer if you will not be continuing with the company. If the company is being divided into components, it will have a different value per component and in total than a sale of the whole.

Keeping a watch on the value of the assets of the company will help in planning and preparation for the future state of the business and the company.

2/15/12

Till Death Do Us Part

Loving & Business (Part 8)



One of the toughest things in family businesses is having a viable exit strategy. Viable is the chosen term considering the impact on the principals, heirs and the company itself. What does life look like post-exit? How do you prepare for it? Can you really walk away? Why are you still worried?

Working with mostly family owned businesses, ranging in size from large enterprises to small Mom & Pop shops, it is perhaps one of the issues most frequently found on the back burner. If it is not a burning issue, it often is not top of the mind.

It is a little Machiavellian, but the best companies begin with the end in mind. If you know what you want to accomplish, planning for it is preparation, not cement. There will be events in the business that make you rethink what you want to have occur and must be agile enough to do the analysis and determine whether the new path is better than the ones set before. The preference is always to determine the outcome rather than have it happen to you.

Roland was always known to be ambitious, whatever goal was realized through hard work, determination and good planning. He applied the same methodology to his company and built a multi-faceted enterprise. Included in the businesses where he had controlling or 100% interest were banks, real estate companies, land holdings, a development company, a property management company, a technology company, a mortgage company, a title company, an insurance company, a call center company, two restaurants and a construction company. Many of these were held under a holding company where he was chairman of the board and several concerns he owned directly and completely. It was said that the companies where he was owner or heavily involved in were so extensive that he probably did not even know what all he owned. Within the employees, a number of family members headed up some of these companies and trusted friends and hand-picked employees the rest. Even though he had great people running most of these, being a bit of a control freak, he usually inserted himself in meetings and decisions. These were his babies. He had started with nothing and exceeded everything that anyone else had thought would be possible.

Roland did not marry until he was approaching the age when most people would retire. No heirs were produced from this marriage. He did have five sisters running some of the businesses and key operational roles, with some of their spouses employed as well. He did not see the spirit and drive in any of these. They were all worker bees, enjoying an employed role and some good investments, but had no real dream of ownership or empire building like he did. He had nieces and nephews but had never really taken the time to get to know them, even though they received generous gifts from him on special occasions.

He had put in place the mechanics to create a line of succession for leadership in each business, changing his mind frequently as evidenced by the virtual erasure marks. He had not created a successor for himself. The vision of his plan was to have the enterprise survive him and take on a life of its own. He saw a retirement that still allowed him to tinker and give advice and counsel, drawing on his experience, relationships and talent.

Finding no suitable heir to his own position he decided to open up the ownership through stock to limited investors, most who were working investors, people that had responsibility in the company and could drive key decisions for not only their part, but also as a member of the board. He hoped he would see leadership rise to the top.

One day out of the blue, a company with a lot of similarities sent a letter of intent wanting to open negotiations and due diligence to purchase the company and all entities. While this was not the original plan, analysis of this and other options quickly determined that this was the best way to accomplish his objectives. Since he still had controlling interest in each, he was able to bring the sale to closure.

Not all companies are so lucky as to have a buyer come forward or to have timing on their side. In companies where there is a small group of owners, one person may not have controlling interest. The best of these have a plan that has a buy out and valuation process for any owner who may leave the company voluntarily or involuntarily. The challenges are always in how the valuation process is preset and then executed as well as the ability to raise the funds to buy out the exiting owner. Key person life insurance often funds the buy-out in circumstances where death is the reason the owner is leaving.

So what is your plan? How will it be funded? What is the transition mechanism? Leaving these decisions until controlling circumstances take place often calls for the death of the company. Whether by change of business interests, divorce, death or anything else, have a strategy rather than waiting until death do us part.

2/14/12

For The Love of Business

Loving & Business (Part 7)


This morning I was thinking about examples of people who really love their business and what makes them successful. It is easy to understand the love of a business when it is about what you do, produce and accomplish. However, if you are growing an enterprise and working through others, the entire group of satisfiers that drive you changes from being about you to the empowerment of others. This is leadership in its highest form. People who work for and with a leader who empowers know that the ROI they gain is greater than the bottom line.

One of the people that came to mind today was Ebby Halliday, Founder and Chairman of Ebby Halliday Realtors® in Dallas, TX. Her company, established in 1945, was ranked 15th in the nation by transaction sides and 12th for sales volume by REAL Trends in the REAL Trends 500 published in May 2011. The reason that she and her company came to mind was not the size, it is the memory of what made that company different.

When I moved to the Dallas area in 1984, I interviewed with several firms to find which one I wanted to hang my license with and work in. Ebby Halliday Realtors® was a top company on the list. However, being a bit rebellious and a northerner, as soon as I heard that hosiery and skirts were a requirement in the dress code for women, I could not imagine that in the Dallas summer heat or fitting my “style”. At the time, I did not know much about the company, just what I saw and heard. In retrospect, I see the company and leadership a lot differently today than I did then.

Now, as I see it, Ebby Halliday Realtors® set itself apart from others with a branding of sharp looks and sharp people. You knew instantly when you entered a meeting who the “Ebby” people were, they dressed well and carried themselves with pride and confidence. It was not a fashion statement but rather a building of esteem and empowerment. This was at a time when the industry was filled with all kinds of polyester jackets and ensembles in golds, reds and blues all meant to be a walking business card and most looking rather frumpy after a few hours.

The dress code, whether intended or not, conveyed a professional status to these agents that drew notice. More than the notice it drew was the sense of esteem that many felt being affiliated with a large prestigious company. Because they felt like they were a part of the elite, for the most part, they took on that role and the responsibilities it brought. It was a culture of empowerment.

Perhaps more importantly, especially for the women who were coming out of traditional roles in secretarial, teaching and homemaking at that time, it was an elevation where they did not dress like they had before. While the clothes do not make the person, appearance can certainly change attitude and the passion to succeed. Ebby herself became iconic in her signature style and pursuit of business. For those who met her, there was no question that through her leadership, you were empowered to grow and succeed.

Ebby Halliday turns 101 next month. When I spoke with her assistant a bit ago, she confirmed that she is there are work. She works, not because she has to but, because she loves her business.

2/10/12

Sibling Rivalry

Loving & Business (Part 6)


You have most likely seen three of Donald Trump’s five children in the boardroom of the Apprentice show. Beyond TV, they all work in the business with significant responsibilities. In the boardroom you have little doubt that they have inherited a lot from their father. While the rivalry in that boardroom is more for TV, that is not the case in most family businesses.

No two children in any family are alike. They have different talents, skills, personalities and levels of ambition. Even though parents may want to treat their children equally, that is next to impossible in business. There are few companies that have more than one head of company role. Beyond roles, issues of rivalry arise in terms of status, distribution and contribution of money, decisions and eventually succession issues. The examples that follow illustrate some of these issues.

Company One has two sons, both raised in the family business, working since high school. The older son is more of the worker but does not invest his ego in the business. The younger is far more social. Title and position are far more important to him than the actual work. The business was left to them equally but since they have been running it, there is little equality. The older son is the President of the company which is an aggravation to the younger son. Add to the mix, the older son marries and brings his wife into the business; she too is a hard worker. The younger son’s wife has no interest in the business. As time progresses, resentment builds from the working wife at the entitlement approach the younger son and his wife take to the business. Through rough times, when money is short and salaries cannot be paid to ownership the working son and his wife take the brunt. There have been several attempts by the older brother and his wife to buy out the younger brother’s interest but the younger brother is quite comfortable with the situation. It will likely be the never ending story unless a life event changes the direction.

Company Two is very similar to Company One, having two sons and one working wife. The difference here is that both sons work, but with a tendency to build their own revenue rather than working to build the company. They consider themselves to be rainmakers. The younger son’s wife works in the business and in addition to being a producer also takes on a lot of the management duties. The disputes that arise are great in that the older son feels that his brother and wife are a package deal with no additional division of profits or salary. The older brother feels he does an equal amount of work since he takes on the bookkeeping duties. One brother is pro-growth and the other is not. As you can imagine, when faced with decisions of growth, tempers rise and nothing gets done except to widen the divide of the company. The rift threatens the family relationships and will most likely result in the company being split in two with the brothers each going in their own direction.

Company Three also has two brothers but, unlike Company One or Two, neither brother is head of the company. A partner was brought in when the company was formed who serves as president and has a one third interest in the company. The brothers have significant roles in the company but the three together operate as a board of directors making decisions. Their earnings and rewards are aligned with their roles and distribution or contribution as shareholders. A plan is in place that details distribution of the company through buy-sell options funded with key man life insurance, should something happen. They have also outlined what happens in the event of a sale, need for changed roles or in the event of a retiring owner. They act corporately on behalf of the company rather than as individual owners.

Company Four is owned by a brother and sister. There is a fairly large age disparity. The older had begun working in the family business under the father when the younger was a small child. There are two other siblings who never had an interest in the business. When the father passed, the business was fairly small so it was more of a working concern than a matter of an asset to be divided at that time. Through hard work, the company grew far beyond the father’s original vision and post-college the younger entered the business. While the rivalry here is not with animosity, it is there and mostly based in each one’s perspective of their contribution and impact. They are very different with complimentary talents. Since the older one has been in the leadership role for a very long time, there is a feeling that what had been built has been earned with years of toil whereas the younger came in as an owner and an executive. The younger one will always feel in the older one’s shadow and has chosen to focus on areas the older one does not to grow the company and establish status. While it is great that both use their talents and compliment each other, it will most likely be difficult for the younger one to take the lead role as their paths of leadership are divergent. They do have a board of directors and in some areas work corporately but, in most ways, the company operates more like a sole proprietorship. Challenges in the future will be in terms of succession, not only in this generation but also the next.

It is very difficult to have siblings work in a business equally. What may start out looking like the perfect scenario is likely to change over time. It also happens in partnerships of non-related parties. The best of all worlds is to design the company which creates an entity that all individuals work for within their roles. Contributions, investments and assets can be monetized and governed accordingly. There will always be rivalries among siblings, it is natural, but the impact to the business can be mitigated. No matter how much love there may be in the family it does not equate to love in the business.

2/9/12

Mom & Pop

Loving & Business (Part 5)


Mom and Pop businesses generally refer to smaller, family run companies, whether they are husband and wife, siblings, partners or other close groups. Small is a relative term and may not always refer to the actual smallness of businesses as much as how they were started and how they are run. Today’s story is a good illustration of Mom and Pop business, using my parent’s business as the example. Even though your company may not be in the same type of business, it has lessons that apply to all.

My parents bought a small paint and paper company while I was in college, with money that my father received as a part of severance when the mobile home factory where he worked was sold. The store was in a very small, older building on the main street that ran through Osceola, IN. Osceola at the time was basically a stop light with three corners (the fourth was a vacant lot) on US 33, hugging the railroad tracks between South Bend/Mishawaka and Elkhart. A part of the town, north of the river, seemed like a different town all together, but within the boundaries loosely considered to be the town, there were about 1,500 people. If you were to look at the business signs of the town, the names were all related to the owners. The only evidence of national branding was the type of gas carried at the town’s two gas stations. At that time, before the Internet and big box stores, people did business with people they knew and kept a lot of their business local.

Mom and Dad did not have a lot of business experience going into the venture. Mom had been a bookkeeper and a homemaker and Dad had worked a number of jobs from bartending to factory work but he had an entrepreneur’s heart, a belief that if you worked hard enough you could make great things happen and, perhaps most important of all, little if any fear. The love they had for each other would become the heart and soul of the business.

They named the business “Dangi” as a combination of Dan and Ginnie, gave the store a new look and greeted customers with bright, hopeful smiles and an excitement that could be felt in the air. Soon after opening they added carpet to their products and services. Carpet takes a lot of space, so plans were made to build a new building on the lot next door. That was a huge step in growth and belief. There is nothing like a building or growth project to literally infect everything in the business, almost like a virus it spreads. There is a lot of good that came as a result, the bank financing the loan forced them to do a business plan which had never been a consideration before. Dad being the more social one, and a bit of a story telling Irishman, told everyone he talked to about the new building. What it would mean not only for the business but the community and with a lot of pride, the legacy that would become a part of the family. It was hard to miss the new building as it was constructed since anything new in a town that small gets noticed.

Taking this giant leap forward, Mom and Dad started attending industry events to learn, network and fuel dreams about the future of their budding enterprise. They were involved in the fabric of the community belonging to the local business association, supporting the schools and sponsoring little league teams. As my younger siblings graduated from high school, they worked in the business as well. Mom and Dad’s hearts swelled with pride.

In this growth, other non-family employees were also added and the dynamics began to change a bit. We saw that people treated our Mom and Dad much as we had as kids – if you don’t get the answer you want from Mom, go to Dad or vice versa. We also saw our parents and even siblings unconsciously slip into comfort zones – Dad had no desire or interest to know anything about the books, in fact, he had never written a check. Mom not only took care of the books but the housekeeping and d├ęcor of the store. My sister was eager to gain product knowledge and delighted in her growing expertise, enjoying some outside sales, and my brother enjoyed the true customer facing side of the job – installations.

Like many Mom and Pops, growth had waves motivated by need and opportunity, they had not found the music of consistent business rhythms. There were struggles and triumphs but no matter how good or bad things were, it was theirs, loved like a child for what it was and what it could be.
Mom and Dad were like many small business owners, basically taking it one day at a time. Their dreams were not converted to plans and there was little done toward things that were far in the future like succession planning or risk mitigation.

About ten years after buying the business, they received the news that my Mom who had been the picture of health had advanced cancer. Their attention and passion turned from the business to taking care of her health and pursing with optimism a battle that could not be won.

The damage to the business was fatal. In the fifteen months that they fought the disease they could not give the business the attention needed. Their roles were vitally embedded without any way to transition to others even if there had been enough depth in staffing to take their places. If the financial hit of small business owners in a health care struggle had not been tough enough, taking them out of the business took away the income generation. Without that, inventory could not be restocked and the store showed its decline. Even though my sister and brother tried, they could not add the duties and responsibilities of my parent’s roles to their already full plates.

Once Mom passed, the business died too. The love that had given it birth and stoked the passion was gone. The story and memories were a lesson for me. I was at the time living in Texas and not able to do much to help them but through them I certainly learned many lessons.

It is hard for small to medium sized businesses, especially family owned businesses, to take the time and put the infrastructure in place that will allow the business to succeed them whether it is through a sale or an heir taking the reins. The machinery of the business is the business and the passion is the fuel. Both are needed. I can replace passion but it will not help if the machinery is not there.

2/8/12

Father Knows Best

Loving & Business (Part 4)


Whether it is the patriarch or the matriarch of the company, giving up control of something in which you have invested sweat, tears and usually a lot of money is very hard. These people were often the first generation that established the company. They usually have the vision, create the mission and drive through challenges with a passion that powers the company through. They are not afraid of taking risks, often taking a cutting edge position. This is their life as some would say “come hell or high water.” It is loving and business at its best.

Most of these founders hope to pass the company to their children and potentially future generations. As they build the company, they are often the sole, or at least primary, decision makers. Hence, when they begin to bring the family into the business, it is hard to step back and allow others to become the decision makers, sitting back when they feel like they know what is best for all. In cases such as the family business described in the story that follows, there is no guarantee that the next generation is willing or able.

A family I have known for years has built a nice empire within their industry. It has, at its core, a service company that delivers licensed services to affiliate members within the territory that it has rights to. There are other related businesses within the enterprise. Over the 50 plus years the family has owned the company, growing it from concept to becoming a recognized force, it has involved every member of the family in some way. The founder and father is often considered to be an eccentric old country boy type who is often a bit outlandish, sometimes brash and for the most part loveable. There have been multiple wives over the years, each newer wife having fewer responsibilities in the company to the most recent having no impact other than producing a love child, far younger than the first five children. The first five have led an entitled life fully benefitting from their father’s success, generosity and in many cases bail outs from trouble and bad relationships.

Each of the original five have held titles and some jobs in the company, but few actually took these as much more than official duties to be attended by the family while the father made all key decisions including hiring people to carry out the work of the company. Most of the employees only saw the five when the father flew them in for a board meeting or company event.

As the father was approaching the age when many people would be thinking about retirement, he tried putting more pressure on the original five to take responsibility in the company. It did not work well at all. Worst of all they said he was the problem and too controlling. On the advice of outside professionals, he put the company in an irrevocable trust with the original five and a few business contacts on the board of trustees. Employees ran the company and supposedly went to the trustees for decisions, but in reality everyone knew the father was a phone call away and quite willing to offer advice. Things were tolerable and the father entered a phase he called retirement. He met his current wife who, a couple of years after the marriage, presented the septuagenarian with a son. None of the original five were pleased about this especially when they considered that their inheritance might be divided to cut the newest sibling in.

Since the transfer to the trust, which unfortunately occurred about the beginning of the downturn in the economy, the company has been losing ground. There is a void of leadership. Many of the staff members who were loyal and long-term were dismissed. The father technically has no control of the company within the trust, but is the first call in a crisis. Fortunately for all, he is healthy and able, but that will not last forever. The newest son will most likely not reach adulthood in time to take a leadership role and the original five are at or considering retirement themselves.

Perhaps the best thing would be to sell the company, but that really should have been done prior to the trust being set up. The value is greatly diminished and there is no real leadership and certainly no passion. There are fewer fights among the original five as their roles as trustees are well defined and limited. The father has pretty much decided that, since he cannot step in and really has no desire to work that hard again, the company will drift much like a boat without a motor.

Could things have been different? Yes, of course but often the toughest decisions are those that should be business decisions, but get derailed in family issues.

The father knows that the company will bump into a shore when its master agreement expires and there will be a transference of the assets. At that point, the company will be dissolved. All in the family will have lived well and reaped the benefits. Even though it is not his original dream, he has proven that father knows best.

2/7/12

All In The Family

Loving & Business (Part 3)


Reality TV, or so they call it, has delivered a view and variety of life from the absurd to the mundane to our homes. Included in the mix are shows like Restaurant Impossible, Pawn Stars, Shark Tank and more that portray the challenges of business. Family dynamics are often a part of the challenges portrayed.

That is not unusual since it is a dream for many families to establish a business that not only supports the family but also provides employment for the family to work together as a team toward common goals. The hope is usually that the business will do well and become a legacy that is transferred to future generations.

A few facts:

  • Family owned businesses comprise over 80% of the businesses in the US and account for 60% of the employment and 65% of all wages. 
  • Approximately 40% of family businesses will be passed to the next generation but only 40% of these will survive the second generation, 12% to the third and 3% to the fourth generation. 
  • Of the heads of these family owned businesses planning retirement, approximately 55% have not yet chosen a replacement.

Compounding the numbers are the companies owned by a husband and wife team that are seeking to retire about the same time.

The family owned business is extremely important to far more than the family that owns it. It is a driver of our economy. So what separates the ones of renown, such as the empire started by Sam Walton, from the hometown entrepreneur? Are there guidelines that will create a path with a better chance for success and survivorship? How do you navigate the complexities of the relationships, emotions and responsibilities that come with the package of the family owned business?

There are answers and they are not simple. The answers exist in a matrix where scalability of concept competes with vision. An environment that is often dictated by what is happening in the life of the family, whether it is finances, marriage, divorce, kids, aging or health. All factors driving decisions regarding business. Add to the challenge issues of control, leadership, hierarchy and communications that are all skewed by the family relationships. How do you hold your significant other accountable during the day for business and say I love you as peers when you go home?

Layer on to these challenges, generational issues that may not have the eldest in the founder’s role but rather as an employee. Added issues will arise with siblings, children and more distant relatives who may also be working in the company and destined for future leadership whether it is their dream or not. Then there is also the elephant in the room – money. Income, wealth accumulation and the cost or entitlement of ownership of the company as it is passed through generations.

Most of the answers boil down to a fairly simple question. Would the same decision be made if we were not in a family owned company but, rather, making decisions based on business rationale and information without the family factor? The impact is interesting and far reaching. This one question is often the one that defines the difference between companies that, while family owned, grow beyond the family and have sustainability, transference and value that can be sold. All in the family requires the ultimate balancing act between loving and business.

This week, we will look into the family relationships, opportunities and challenges these bring and options worthy of consideration whether your company is a closely held family business or an enterprise that may have a larger base of ownership including non-family.

2/2/12

Ground Hog Day

Loving & Business (Part 2)


Today in the South, our local resident ground hog, General Beauregard Lee, did not see his shadow whereas his counterpart Punxsutawney Phil did. The legend has it that seeing his shadow predicts six more weeks of winter. What is interesting is that the current Phil is pulled out each February 2 to make his prediction and has seen his shadow 100 of the last 116 times.

General Beauregard Lee has a 94% accuracy rate. Not too amazing for either one considering the geography and the climates they are both located in.

Even though it is a bit of lighthearted fun to go through this ritual, it does bring to mind the movie Ground Hog Day in which the primary character, a meteorologist does the annual show and hates it, probably as much as the ground hogs pulled out of their comfy burrows. He gets stuck in a repeating loop of the day, every day until he finally realizes that the only way to break the cycle is to improve himself.
CLICK HERE to watch the movie trailer.
Perhaps we should use Ground Hog Day each year as a reminder that unless we love what we are doing, we will not be able to break negative cycles or change negative results. We have to not only love our business but also love what we do in our roles. Our attitude, perspective and actions invite others to, in essence, spread the love. It is much easier to want to be with or follow a person with a positive and proactive attitude.

A little self-evaluation and prioritization will help a lot with maintaining a perspective of loving your business, job and or role. Most people experiencing the Ground Hog Day phenomenon are pulled into situations that they do not like or do not want to do and really will start the day off in a rotten way. Kind of like the ground hog that did not ask to be rudely pulled out of hibernation just to see if he would see his shadow. I do not know about you, but none of these ground hog day reports I have seen show a ground hog that looks like it is thrilled with the situation. In fact we see them trying to get away, reacting aggressively to the handler and just trying to return to the burrow. The bottom line is that as long as we allow other people and situations to control our day, it will repeat and we will be stuck in Ground Hog Day.

We all need to start each day putting what we need to accomplish first, with the knowledge that there will be people and circumstances that try to pull us into Ground Hog Day. It is our choice to take control of the situation relative to the priority it deserves. We manage our day or we will be managed through our day.

I plan to celebrate today as another opportunity to realize how much I really love what I do and the business I have chosen.

Happy Ground Hog Day!

2/1/12

Loving A Plan That Comes Together

Loving & Business (Part 1)


Today is a big day at Soltys, Inc.! We opened the first room of a very unique eShoppe, opened reservations for two live virtual roundtables and announced the winners in our first online participation contest. It is a big day but we have been working toward this day for a long time.

Last May, Mallie Dein, our Director of Online Initiatives, and I outlined a plan to roll out a series of initiatives both online and offline over a year. These ranged from BHAGs (Big Hairy Audacious Goals) to smaller, more mechanical items that were needed to keep the wheels on the bus and gas in the tank. Each of these required planning, taking care of dependencies and in most cases, thinking outside of any box that had limitations.

Our plan, in short was to use as many virtual and online tools as possible to bring content, value and services to our existing customer and a growth base of customers and contacts. It is a leveraging of talent, tools, content and contacts.

There is a love, pride and a certain level of anxiousness - almost like watching a child grow, seeing them learn and accomplish new things. It is enabling, empowering and brings the opportunity to embrace what is new and reach toward the future for the next challenge and all the opportunities ahead.

Sure, some things were more challenging than first anticipated. There were hiccups that required work-arounds and new opportunities that popped up requiring consideration. Each bump in the road strengthened our awareness and knowledge bringing another type of growth.

We have a lot of work ahead, lots of initiatives and refinements to roll out. Plans to execute and new plans to be made. Even as we celebrate the milestone met in our plan today, it simply revs the engines to charge ahead and experience the taste of success again. We are loving our plan as we see it come together and feeling the love come right back in the results we achieve. Best of all, it is not the end of this love story.