Kerri, Author at This Way Out Group - Page 18 of 25
When you get ready to sell your business, the value of the business must be in the business to be monetized and for a buyer to see the value without your active involvement.
Before you can sell the business for maximum value, you must transfer all your knowledge and wisdom into your team, systems, procedures to carry on prosperously in your absence.
For each challenge listed below, here’s what you need to do:
The whole business is in your head – only in your head
You must share every idea, policy, system, process, key, password, contract, etc with your management team. You may give specific tasks and responsibilities to specific people or you can appoint a successor to take on your operational role
Don’t know how to plan, when to plan, when to find time to plan.
You must delegate day to day operations and make time to plan strategically. Get training, hire an advisor, or hire a temporary COO to get plans in place
No marketing plan, sales plan, financial plan or operating plans – except in your head
Get all these plans out of your head an on paper and assigned to different people to implement and achieve the goals in each area. Delegate responsibility for each area of your business to someone, not you. Make them operationally responsible, not you.
Don’t know how to automate or outsource
Exit planning is a great incentive to learn to automate and outsource to get more done, cheaper, not by you. Start by automating just one task. Start outsourcing by hiring an individual or a company to take over just one task or project on your To-Do list.
Decide no new tasks will get added to you To-Do list – instead you will always seek to delegate, automate or outsource first.
No operating procedures
Create an Operations Manual. Buyers expect to be able to read your operations manual, instead of calling you for each procedure. Every time you do something that is a process or procedure, write it down. Every time you document or record how you do something, you are adding value to the business. Start by simply taking notes on an index card for each task, process, system, tool you use.
No contingency plans
A contingency plan is like a security blanket for your business. It protects you, your business, your team and your customers. It also demonstrates to your buyer how valuable your business is that you are willing to protect everything that can be considered unique systems, models or intellectual property. You must lay out your emergency plans for fire, flood, other natural disasters, loss of power, computer crash, password security, data security and redundancy, safety and OSHA policies, backup procedures for when each person is on vacation or ill, etc.
No exit strategy in place
You must choose to take action to explore and consider exit options that would suit you. Take responsibility for ensuring the longevity of your company, the legacy you can leave, and providing ongoing employment security for your team. By following an exit plan you will be in control of when you exit, on what terms and the valuation you will receive to fund your reinvention
Keep all expertise in the owners/ executives heads and private files
You must start sharing your knowledge and wisdom in the business and about the business. You will maximize the value you will receive at exit, only if you transfer all of your knowledge and wisdom about the business to your team.
Everything on this list is a challenge all owners face to some degree. You can share your knowledge, understanding, wisdom and guidance willingly with your team and make your business an attractive buy at a premium price. Or you can horde all your knowledge, resist potential buyers’ due diligence efforts to understand the value in your business, and struggle to sell the business for a fair return.
The good news is that we can all learn new mindset/attitudes and beliefs, we can all learn new skill sets, and we can all learn new information combined with experience to produce the knowledge we need.
When you decide to exit your business, and walk away from the business you built that you’ve owned from inception, you need three pillars to your foundation to make a successful exit.
They are your:
- Skill Set
Here’s a definition of knowledge in the context of the three pillars we are discussing: Mindset, Skill set and Knowledge.
Knowledge of your business is the combination of information you have or acquire, which is applied through the filter of your experience and expertise in your profession or industry.
Information + Experience = Knowledge
Knowledge + Insight = Wisdom
Attitudes/mindset are often ignored in what is needed to learn to achieve your goals. Your attitudes are the most important of all learning components because your attitude/your mindset is the gatekeeper that determines how well you acquire, master and apply any skill set and knowledge.
From all your experience and expertise in your own industry, you have amassed a body of knowledge that likely puts you in the category of a master.
When you integrate your knowledge with the insights gleaned from all your experience and research, you have built up unrivaled wisdom in your specialty.
Now, however, in terms of your Knowledge, do you experience any of the following in your business?
- The whole business is in your head – only in your head.
- Don’t know how to plan, when to plan, when to find time to plan
- No marketing plan, sales plan, financial plan or operating plans – except in your head
- Don’t know how to automate or outsource
- No operating procedures
- No contingency plans
- No exit strategy in place
- Keep all expertise in the owners/ executives heads and private files
If even one of these is true for you – it is a flag of what is holding back your business from all it could be.
Indeed, in the real world, it is hard for your business to serve clients and make a profit, and address all these challenges at the same time. It’s even harder if you are still wearing all the hats in your business, because the ‘day to day doing’ – gets in the way of focusing on and making time for the visionary, strategic leadership tasks that are essential to your long term goals.
In each area where you are not an expert you always have two choices:
- Do what is necessary to acquire the mindset, skill set and knowledge to effectively deal with those obstacles or gaps.
- Hire someone to do the job for you.
When you decide to exit your business, you have the same two choices. You can take the time to become an expert in all facets of how to sell a business (very costly, time consuming and unrealistic) or hire a team of experts to make it happen so you can get out
The bottom line with automation is that you work less and make more money.
Automation tools can do the work much faster than any one person, and all at the same time.
Automation is not just for the factory floor. You can automate:
- A marketing campaign, a newsletter or autoresponder series.
- A contact management system for any size company database
- Sales scripts, sales strategy, follow-up sequence
- Ordering supplies from a vendor
- Delivery schedules and delivery routes
- Environmental factors like lights, heat, air, sprinklers, door locks, cameras, etc.
- Technology upgrades, maintenance, and backups
- Telephone answering, appointment scheduling, online ordering
Anything that can be automated can also produce a report. You can better spend your time reviewing reports and deciding how to enhance an automated process, increase its value or decrease its cost that repeating the process itself one more time.
Automation frees up your time to focus on the strategic efforts to cash out of your business when you want to.
Here are the three advantages of even the simplest level of automation:
- You will create or setup each system once – You can run it many times – like your newsletter or infinitely, like a folder for a particular RSS feed.
- For each task you identify to automate – you’ve also identified things that are duplicatable and repeatable – which means they do NOT have to be done by you – more freed up time.
- Automation de-clutters your desk, your computer desktop, your ToDo list, and as a result, frees up time and space in your head for more strategic activities.
Outsourcing, delegating and automating are skill sets that help you become a strategic entrepreneur turning your business into that wealth producing machine.
Nightingale Success is a weekly newsletter offered by Nightingale/Conant. In one issue, Tom Gegax said:
“Too often leaders who lack the time to think strategically don’t use the full potential of their employees. People who think they can do it better if they do it themselves, or feel they might lose control if they delegate, create more problems than they solve.”
A key piece of the puzzle of leading a championship team is to learn to delegate effectively so that more of the detail tasks come off your plate, and the crises don’t occur as often. Then strategic planning can take its rightful place as an important use of your time at the helm of your business since effective delegation frees you up for more important pursuits that can raise profits and prepare the business for sale.
Here is a core delegation skill set with my observations.
1. Completely Transfer Ownership – Be very clear that you have relinquished ownership, that the monkey is on their back not yours any more.
2. Explain Why – Explain to employees why they are being asked to take on the assigned task – it cultivates support, confidence and initiative.
3. Get Their Wheels Turning – You must mentor or coach the delegate to develop an effective action plan, e.g. ask good questions or leading questions.
4. Determine Deadlines – A goal without a deadline is only a dream. Agree to a firm deadline to avoid any task slipping to the bottom of the employee’s priority list.
5. Ask for a ReCap – Always double check, never assume perfect understanding. Listen carefully to what they heard – that’s what they’ll do. You may need to repeat this multiple times as each new project unfolds.
6. Monitor – Do Not Hover – When you delegate you have to let go, so don’t defeat the purpose by micromanaging unless absolutely necessary (e.g. new employee, critical path factors).
7. No Take-Backs – This is hardest for the leader who knows how to do the task in his sleep. The opportunity, when the first signs of trouble appear, is to patiently coach your employee back on track rather than usurping the project yourself.
8. Play to Each Employee’s Strong Suit – Tailor assignments to people’s strengths. Know who is a big-picture thinker and know who is superb with the details.
9. Don’t Duplicate – When you delegate, don’t overlap assigned tasks. If two or more people are involved state clearly, up front, who’s in charge.
10. Distribute Evenly – This takes some forethought, but you will build a stronger championship team if you delegate some challenges to promising less-tested people and not just rely on your star employees.
You can delegate individual tasks or you can delegate responsibility for an entire project.
The more you delegate, the more time you free up for strategic tasks, developing your leadership and visionary skill sets too.
I help clients to set up processes for everything– even if they are the only one to follow the process. By writing them down, you no longer have to reinvent them every time they must be done. And as soon as you can delegate a process, it is in place and spelled out ready to give it away.
For each system, process, procedure you can get out of your head and on paper you will gain more time, not just once but every time that process needs to be repeated. For every system, process and procedure you can standardize and document, you are adding measurable value to your business that will come back to you at the sale.
When and how long to spend on strategic planning depends on the company itself. At a minimum, any company serious about achieving goals, must allocate time for long-term planning, goal setting and review on a consistent annual basis. This project must be sacrosanct.
Especially, if you are already within the 5 year window of your target exit date, there can be no exception, no excuses for not doing strategic planning.
Your annual strategic planning should tie every goal, every system, every budget and hiring decision to your exit criteria and timeline. Following this strategic plan will help you position your company as one that ideal buyers will be eager to scoop up – maybe even before your target date.
But strategic planning is not just an annual event. You must then roll it back into goals, planning and tracking each quarter, each month and each week. At this granular level, your strategic plan will drive every decision, every expense and every task each employee works on thus increasing productivity and value daily.
To ensure your planning is done in a very comprehensive and detailed fashion consider the following guidelines. Implement your strategic planning process at each of these milestones
- In the third quarter for the following fiscal year.
- In preparation for a new major venture, for example, a new department, new product, new market channel.
- Action plans are updated to be sure objectives, responsibilities, time lines and budgets are on course.
The attorneys report that historically,
only 10% of all the deals business owners want to implement, actually get to the closing table and get done.
The list of reasons why they fail is lengthy. It comes down to the owner’s preparation and stamina in mindset and skill set to get the job done.
An implementation is the realization of an application, or execution of a plan, idea, or policy. To implement a plan (e.g., a strategic plan, an exit plan, or a succession plan) is to carry it out, to accomplish all the details of the plan. When you commit to implement a plan or strategy, it’s a commitment to ensure the fulfillment of that plan by specified concrete measures.
A strategic plan and an implementation plan are not the same thing. The strategic plan tells you what to do, why, when and the budget to do it. The implementation plan spells out the details of how, the resources, timeline, requirements, etc. They are two sides of your exit planning to think through.
The key to your successful exit is implementation. Full implementation of your desired exit option, to transition to your reinvention, requires following through on a detailed, well-constructed plan. Your exit plan has many moving parts. You must constantly orchestrate all of them. Internally, you must coordinate your team, successors, experts, vendors, clients, budgets, prices. You must align the company goals, market value and corporate objectives with your personal exit criteria and priorities. Executing your exit plan cannot be delegated or outsourced. You must take charge of every step of this implementation to ensure you get to the closing table on your terms, on your timeline.
The challenge to your successful exit is also implementation. It’s a big load. Often, most of the pieces need to stay confidential and independent of day-to-day operations. Balancing your exit with daily operational priorities can be distracting and exhausting. I believe that implementation is where most business owners buckle under and can’t get the deal done because, from their point of view, there are:
- Too many balls to keep in the air
- So many new once-in-a-lifetime decisions to make
- All the changes to make in the business, in their leadership and in their business model
- So many different experts to bring up to speed – all charging full rates
- All the contacts and negotiations that take longer than anticipated
Moreover, there’s the loneliness and isolation of working through this process which takes years, especially when you try to do it alone. Our clients at This Way Out™ Group LLC appreciate the support of a virtual partner at their side through the whole process.
You probably built your strategic plan when you launched your business. More than likely, you have not looked at it in a long time, never mind used it as a guide for building out your business. Strategy and planning add value to your business.
When you start preparing for your exit, that strategic plan and any newer versions become valuable intellectual property as well as the guiding strategy for your transition out.
Your business strategy will be a key selling feature of the business that will attract ideal buyers. It should articulate the goals, objectives and prospects of your business, and the implementation of your vision.
Your strategic plan outlines the objectives you will achieve, the order, the timeline and the tactics to be used. Your strategic plan becomes the blueprint for your company’s success and your successful exit.
Strategic Planning Benefits
Still not sold on the value of strategic planning in your company?
Some of the purposes and benefits of strategic planning include:
- Clearly defining the mission and purpose of your business
- establishing realistic goals and objectives consistent with that mission
- defining the timeline and schedule for implementation.
- Communicating those goals and objectives to all stakeholders
- prospective buyers
- Ensuring the most effective use of company resources
- Identifying Key Performance Indicators to be used to assess and measure progress
- Preparing and provide a mechanism for change [to be invoked when needed].
- Ensuring maximum efficiency, effectiveness and integration across all departments
- Providing focus and direction for all constituents
- Increasing productivity by instituting processes, procedures, tracking and measuring
- Resulting in improved communication, team cohesiveness and recognition of accomplishments when goals are reached.
- Pro-actively solving potential problems in the company before they occur
Strategy and planning add value to your business from day one. That same strategy and planning add even more value to your business when you want to monetize it to get out.
When your intention is raised to the level of a commitment to accelerate growth, maximize value in the business and make that business buyer ready; at that point, every task, goal and objectives must be tied to those clear specific objectives. It’s essential to make those objectives your priorities to make your business buyer attractive.
To Stay Focused On Your Priorities
Here are 5 simple ways to stay focused but they only work when you make these rules into habits you live by every day.
- Always tie your daily task list to your goals. If your daily tasks are not helping you develop your exit plan and bringing you closer to your transition, they are keeping you from it
- Be sure the first task you tackle each day moves you closer to achieving your biggest goals. Your biggest goals should be what helps you get out when you want to.
- Delegate what does not have to be done by you.
- Focus on what’s important to eliminate crises. Crises take you off your game to address another need on the critical path or on someone else’s priority list.
- Set time limits for every task on your list:
- to ensure you complete every task on your list
- to stay highly productive using your time wisely on every task you take on
There’s a very compatible synergy between priorities and productivity. Cultivate this kind of co-dependence and you’ll get more done.
Demonstrating and documenting productivity improvement efforts directly adds value to your team and adds value to the business itself that your prospective buyer can visibly see in action.
You instinctively know when you are being extremely productive. You get more done. You get more of the right things done. You effortlessly get the most important things done. Isn’t it when you are focused on your highest priorities?
Too often we equate productivity with being ‘busy’, ‘very busy’, ‘too busy’. It is easy to be extremely ‘busy’ reading all the newsletters in your inbox or filing away all the files and reports you’ve used all day. Instead, ask yourself:
“Is this the most valuable activity I should be doing right now?
What’s the most important thing that has to happen today
and has to be done by me?”
Busy-ness is not the same as being productive.
To get more time and achieve your goals, be sure you do two things: increase productivity in the allotted time and always address your highest priorities first.
To Increase Productivity
- Set your daily task list to address your goals first. Commit to the next step and get it done.
- Set aside a time and place to work uninterrupted (no appointments, no calls, no emails, no distractions).
- Tackle the most critical task of the day when you are at your peak for performance; often you will be most productive early in the day. In the context of exit essentials, you will ideally work on your exit plan and all aspects of it every day, first thing.
- Limit the time you expend on reading and answering email, say 30 minutes twice daily – and stick to this rule. Like a diet, you’ll see the difference over time, not overnight.
- Organize your time to group ‘like tasks’ together. For example, it’s more efficient to make all your calls/callbacks at the same time. You’re in control, and with a list of calls to make, you can more easily keep each call short and to the point.
Priorities and productivity are co-dependent objectives when you are trying to get something done. Both require focus, discipline, responsibility and accountability.
To get more time, and get more done in the time you have, you need to increase productivity.
By definition, productivity is a measure of output from a production process, per unit of input or more simply yielding results, benefits or profits. Productivity is distinct from profitability. Profitability is the net difference between revenues and expenses. However, every little improvement to productivity has a direct impact on your profitability.
Until you monetize lost productivity, nothing will change. Take a week to track how you/your team use time. Review and discuss what you find. In discussions with clients, we talk about productivity in terms of the results they need and how to get more done in less time and reduce the cost to do so. You can too, just by being more aware of it.
Here are just three examples of lost productivity:
15% of all paper handled in businesses is lost, according the Delphi Group, a Boston consultancy
30 percent of all employees’ time is spent trying to find lost documents.
Jane M. Von Bergen (Knight Ridder Newspapers), The Boston Globe, 3/21/2006
Executives waste six weeks per year searching for lost documents.
From a survey of 2,600 executives by Esselte, maker of Pendaflex and Dymo, FastCompany Magazine, 8/2004
These statistics and others like them are clear evidence that organizations of all sizes desperately need productivity training to take control and get organized.
Consider what the results would be for your business.
If you were asked about the time you spend on just four activities:
- Email and Internet Use
- Stress and Work/Life Balance
- Time and Multi-tasking
- Paper and Filing
and the dollar cost to your business’ productivity for each of these, what would the answer be? How could you increase your productivity in that area? How could you improve productivity in that area for every employee in every department?
When you look at your productivity and the team you have built around your business, can you see inefficiencies in how things get done? What is it costing you to continue to do things the same way? If you monetize that lost productivity, how would you choose to spend those resources? Getting more done? Saving time? Saving money? Increased profitability? Spending more time with friends and family? Taking that vacation?
For more ideas on how to drastically improve productivity, ask about this free whitepaper.
In isolation, goal achievement, time management and productivity are immense skill sets to master for yourself and inculcate into your team. Business owners tend to get stuck in silos of focusing on only one skill set at a time. Intention, determination and focus are essential traits to achieve your goals, most especially on the road to your exit.
The way to leverage that time, energy, commitment and focus is to integrate your work. Indeed, there’s an alternative to working on your exit goals and getting good at that at the expense of not managing your time or crashing productivity statistics. Integrate all three into systems and processes to eliminate competition.
When you synchronize achieving your exit goals, time management and productivity, here are a few things that can happen:
- Coordinated control of goals, time and priorities
- Easier delegating – assigning and accepting responsibility
- Context and incentives to master time management tools and disciplines, and productivity habits. You will more likely hit your exit milestones on schedule
- Hiring and staffing to achieve your growth projections will be based on time and productivity, not guesswork
- Even as you accelerate growth, you, as the CEO, get more time off
- Fewer detours, dead-ends, delays or do-overs, saving time and money every time and with those processes documented, they can be clearly monetized for your buyers
- Goals get clearer and timelines get tighter
- Time management skill sets gets sharper, allowing you and every team member to be more productive
- Productivity systems and habits have a context that frees up 25% of your time
- The right person is responsible for each task/project, and they are not all you, the CEO.
I believe your ultimate goal achievement lies somewhere beyond the business exit itself, fulfilling your bigger purpose, freed of day-to-day management, living the lifestyle of your dreams with much more time off. Time management is one of those critical exit skill sets to master to get it all done.