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Half Empty or Half Full? Who Cares!

I constantly see the sayings “Is your cup half empty” or “Is your cup half full”. There are many variations to these, all with the purpose of determining whether you are optimistic or pessimistic. While I think that, as a leader, it is important to know how you naturally perceive things, it is just as important to take the next step and ask the question “Why isn’t the cup full and what are we going to do to fill it back up?”

Why perception is important?

As a leader, you need to understand how you and each of your team members perceive things. If you are naturally pessimistic and you surround yourself with like-minded individuals, you are probably going to see your environment in a less-than-positive manner. The same if you are naturally optimistic. I want to stress that I firmly believe you should embrace who you are. If you are naturally pessimistic or optimistic, understand that and work with it. Create a team that balances your natural perception.

You’ve observed, now act!

How many times does your organization encounter a difficult situation and then nothing happens? I see situations like this frequently and too many times there is a lack of action because the team is too focused on why they are in the situation. They spend a lot of time working through the cup half empty / cup half full debate. While it is important to understand the situation, once you have defined it you need to create your strategy. Then act!

It’s overflowing!

The next time you encounter a difficult situation, I encourage you to not spend too much time defining the situation and spend more time on planning how to move forward and fill the glass back up. Rally your team around creating a strategy to not only fill up your cup, but make it overflow – then you will need a bigger cup! Then you can have a heated debate with your team on whether your new cup is half empty or half full!

Getting stuck in these situations is a very common problem for businesses of all sizes. Sometimes, a new perspective helps get things started. Please contact me if you would like a confidential, no obligation conversation about your cup.

 

 

Buying A Business – Part Two

In Buying A Business – Part One, I gave an overview on identifying the type of business you want to buy, searching for available businesses, and then a not-so-subtle tip that it will take time and hard work to actually close on the business you are pursuing. There are a few more areas in the process that I’ll cover in this post. As a reminder, these posts are not meant to be an all-inclusive primer on buying a business, but a high-level overview on some of my learnings as I’ve gone through the process multiple times.

Circle The Wagons

As soon as you start the process of buying a business, you should begin to identify your trusted advisers and vendors. Here is a short list of some of the most important connections for you to make. Each transaction is different, so you will want to evaluate your situation and identify any others you may need.

Accountant   An accountant is a great person to review your opportunities. They have seen many successful and unsuccessful business over the years and are well-equipped to give you advice on the financial health of the business. Also, you should decide if you are you going to do your own bookkeeping? If not, you will need to identify who is going to do it. If you are, it’s still a great idea to have a trusted financial adviser in your corner to help review your efforts and possibly prepare your necessary tax submissions. This is a critical area for the long-term success of your venture and is not an area to take shortcuts or try to save a few dollars.

Attorney   A strong deal lawyer is worth their weight in gold, especially if you can find one that will protect your interests without flooding your deal in paperwork. One of your decisions could be whether you want to go with a big or small firm. The benefits of a large firm are they can throw a lot of resources at a deal and make things happen quickly, which you will pay for. The benefits of a small firm is possibly a lower bill and personalized service. There are pros and cons to both options and I’ve seen success using both. The best advice I can give you is to get referrals from trusted advisers and go with the lawyer you connect with and understands what you are trying to achieve.

Financing   How are you financing your deal? Are you considering an SBA loan, a conventional loan, or other alternatives for your deal? There are many options for deal financing. Some will make more sense than others, depending on your financial situation, deal size, and type of business you are acquiring. Like other areas, the more homework you do ahead of time, the better. The worst time to start looking for financing is after you have made an offer. I highly encourage you to do a lot of homework in this area as soon as you start looking for a business. Until you know what financing you have available you will not know what price range to look at or what to offer. The other thing to keep in mind is that financing should not be a cookie cutter approach – financing a deal can be an art and use a lot of imagination and creativity.

These are just a few of the important connections you should make when you start your search. Depending on the type of business you buy you may need other resources like Information Technology, Marketing, Banking, etc. These will be valuable resources even after you close on your business.

Bow To Your Partner

You’ve found the business that meets all the parameters you previously established and you want to move forward. Now comes what I call “The Dance”. Depending on your personality, this could be the part of the process that really gets your adrenaline pumping or elevates your stress level. Usually you will be given the opportunity to meet with the Seller and ask them questions about the business. This is a great opportunity to learn about that specific business, but an even better opportunity to learn more about the Seller. Why are they selling? What type of deal structure do they prefer? What does their ideal Buyer look like? If there are multiple offers, what will they base their decision on? Don’t be afraid to ask specific questions about a deal. If it’s a question they don’t want to answer, they or their Broker will say so. If you are polite and genuinely interested, a lot of times they will give you some critical information. The key objective of this meeting is to give you enough information to decide whether you want to continue to pursue the opportunity or not. The secondary objective is to give you key information that will help you draft an offer that gives you a higher chance of acceptance, if you want to go down that road. Like other aspects of buying an acquisition, there is a little bit of an art to these meetings. If you do your homework and prepare quality questions for the meeting, you will do great.

Once you have decided to pursue the opportunity, you will need to submit a formal offer to the Seller. You will need to determine what price you want to offer and the broad terms of the deal. Depending on the Seller, the size of the deal, and a few other factors, you will probably present the Seller with a Letter of Intent or something similar. Each opportunity is different and your approach may need to be different for each one. If you are responding to a business that has been listed by an Aggregator or Broker, you will probably be competing with a few qualified buyers. You may go back and forth a few times or you may, but hopefully you will come to an initial agreement that allows you to move forward towards the actual purchase.

The Homestretch

The Seller accepted your offer. Now it’s just a matter of picking a closing date and getting the keys, right? No. You’ve still got a lot of work ahead of you. There are major things to do beyond just picking a closing date. Here are a few of the major things you will need to do to get to the closing date.

Due Diligence   You will need to perform some due diligence on the Seller’s business prior to closing. Depending on your financing, they may require some proof of this. At a minimum, you will want to do this for your own benefit. You will want to verify the validity or existence of key items that the Seller represented to you. This could include reviewing the Seller’s prior years’ tax returns to verify revenue and expenses. It could also include reviewing existing customer contracts to verify that they can be transferred or assigned to your new entity. A thorough due diligence process is vital to closing the deal and assuring you the business you are buying is worth the amount you are paying.

Finalize Financing   Your financing partner should be working closely with you at this point to make sure you are gathering the right information they need to approve your funds and make sure everything is proceeding in a timely fashion. I highly recommend communicating often with your financing partner to make sure everyone is on the same page during this whole process. You don’t want any last-minute surprises or delays that could derail your deal. Generally, these partners have a lot of these transactions under the belt and will be a huge asset to you completing the deal.

Closing Documents   While you are doing due diligence and working on your financing, you should also be working on all of the closing legal documents. In addition the the sales agreement, you may also need consulting, non-compete, and lease agreements. Whether the Seller’s attorney or your attorney is drafting these documents, you will want to thoroughly review them to make sure they encompass everything you want and need to transition the business.  If the Seller’s attorney is preparing them, you will want your own attorney to give them a thorough review. Don’t be afraid to ask for changes if you need them. This is another area that may cost some money, but you should not try to cut corners.

The process of buying a business takes a lot of flexibility, patience, and endurance.  You will be juggling a lot of different balls at the same time, but it can be one of the most gratifying and exhilarating things you go through. In my next post I will cover the important things that should happen after you take possession of your new business. That’s right – there is more work to do! In the meantime, if you have any questions or want more details about my experiences buying businesses, don’t hesitate to contact me.

 

Goal Status Check – How Are We Doing?

What is SMART?

We’re one month into 2015, which is the perfect time to evaluate the goals you set for 2015.  Earlier we talked about the importance of using SMART to make our goals.  (See Be SMART)  Below is a brief overview of what SMART means in relation to goal setting.

  • Specific – you need to know what you are trying to achieve
  • Measurable – you need to be able to quantify your goal
  • Attainable – you actually need to be able to reach your goal
  • Relevant – it should be important for you and your situation
  • Time-bound – your goal should have a target date

Using this as a guide to create your goals will increase your chances of success.

Goal Review

There are many factors that can affect the success or failure of each of your goals.  I will discuss a few of these and give you suggestions on how to overcome some hurdles.  Right now, let’s take a few minutes and review where you are with each of your goals.  If you wrote your goals out (if you didn’t, do so now), take out the piece of paper or open the document, put today’s date on it and write a few notes detailing where you are with achieving your goal.  Be honest.  Be candid.  Are you where you thought you would be at this point?  If yes, great job and keep up the momentum. If not, consider what happened or didn’t happen and write that down. Next, write down what you are going to do next to continue (or start) the progress on your goal.  Keep in mind that you are going to be reviewing these notes again in March.  Did that make you think differently about what you wrote?  Lastly, go to your calendar and create an appointment (with reminder) for March 3.  This will be the day you go through this entire process again.  The best way to commit to achieving your goals is to commit to reviewing your progress.

Goal Trippers

As I mentioned earlier, there are many factors that can keep you from reaching your goals.  I’m going to cover a few that are within your control and give suggestions on how to overcome them.

Lack of Commitment

When we sit down and start developing our goals, especially around the first of the year, we have the best intentions of achieving success.  We are excited, energized, and probably visualizing how things will look when we have succeeded.  Then, when the goal-setting process is over, do we file them away and get back to our day-to-day routine?  After a period of time we may remember that we have goals and work on them for a while, but then put them aside again.  Eventually, the due date has slipped by and we have completely forgotten about the goals.  While writing goals down greatly helps the chances of success, unless you regularly review your progress, the chances of success drop.  Depending on your goal and it’s timeframe, you should create a structured review of your progress.  It may be once each month or maybe it’s even weekly, but it needs to happen and you need to keep putting it in writing.

Fear of Success

Pick one of your goals and visualize how things look when you have succeeded far beyond your expectations?  How does this make you feel? Are you really excited or do you get a little nervous and feel uncomfortable?  One of the main reasons why goals are not met is because people get uncomfortable with the prospect of change.  Many people will focus on succeeding at their day-to-day tasks instead of working towards accomplishing their goals.  The day-to-day is what they are used to and is well within their comfort zone.  Getting outside of our comfort zone is not always easy, but is what it takes to attain your goals and grow your business.  While it is important for us to understand that things will change whether we want them to or not, understanding that does not always prevent it from blocking goals.  One way to handle this fear is to talk about it with others.  Whether it is in a peer group, business coach, spouse, friend or anyone else that you trust, discussing your fears and concerns is one of the best ways to get a grip on them and overcome them.  You would be surprised how differently you feel once you have this conversation.

Accountability

In my mind, one of the biggest reasons goals do not get accomplished is lack of accountability.  As a business owner, who are you accountable to, besides yourself?  Who can you confide in to help validate your progress or discuss issues?  If there is no one holding you accountable, it is so much easier to focus on the day-to-day issues and let the goals you set slide to the next year.  How often is that happening to you?  One of the best ways successful business owners handle this issue is to engage someone outside their business to help them.  This can be a mentor, peer group, or a business coach.  Someone that will collaborate with you and at the same time give you candid feedback.  If you met with this person on a routine basis, discussed your issues, and created action steps to accomplish your goals, do you think it would have an impact?

Your Next Goal

To increase the likelihood of attaining your goals, I want to give you a new goal.  Find someone that you can review your goals with on a routine business.  Make sure this is someone you can confide in and will give you honest, candid feedback on your progress.  Ideally, this person will be able to give you suggestions on how to overcome obstacles and collaborate with you on action steps for you to complete.  While I may be slightly biased (ok, a lot), a certified professional business coach might be the ideal candidate for this role.  The important thing is for you to accomplish your goals and succeed, so if you do not have access to a business coach or peer group, a mentor or trusted friend is also a good option.  Make sure you write this goal down and review it on March 3!

New Year’s Resolutions – Be SMART

This time of year always makes me reflective on the events and activities that occurred throughout the year.  I will even look back to see how my New Year’s resolutions panned out.  Actually, maybe the better expression is how they flamed out.  Like most people, I pick one or two things to focus on and work hard to make them happen; until I see the shiny light somewhere else and instantly forget about my good intentions.  The year of 2014 was very different for me.  I picked three significant goals and vowed that 2014 would be the year I stuck to my plan.  As I look back on the year, I can honestly say that I accomplished two of my three goals.  The third goal was really unattainable and I now know it won’t happen.  I can also honestly say that out of the two accomplished goals, one was by pure luck.  That left me with one goal that I methodically worked on and accomplished successfully.  While 1 out of 3 is a great batting average, it is nowhere near the level of success I would look for in personal goal setting.  As I think about how my personal life sometimes can be used as a lesson for the business world, I realize that my resolutions did not follow the practice of creating SMART goals. SMART is the acronym for Specific, Measurable, Attainable, Relevant, and Time-bound.  Here is a quick overview of what each means.

Specific:  Your goal needs to be specific enough for you to know what you are trying to achieve.  An example of a non-specific goal is “I want to read more.”  While that is a worthwhile cause, it is hard to pinpoint what you are actually trying to accomplish.  If you read one magazine does that accomplish your goal?  A better way to say that would be “I want to read one book a month.”  That is more specific.

Measurable:  Let’s go back to the prior non-specific example of “I want to read more.”  How do you quantify more?  Like we mentioned before, does one book get you to your goal?  If we defined the goal as “I want to read one book a month”, we would know at the end of each month whether we are on track or not.  Did you read a book or not?  Pretty straightforward.

Attainable: What if your goal was “I want to achieve world peace”?  That is also a very worthwhile goal, but the problem is it is probably not attainable on a personal level.  If you want to make a positive impact that might help encourage world peace, maybe an alternative goal could be “I want to donate one hour each month to feeding the hungry”.  If your goal is not attainable, you will quickly become frustrated and focus your efforts elsewhere.

Relevant:  A goal should be important for you and your situation.  For example, if you are an accountant and your goal is “To learn how to design an eCommerce website” you might say that is not the most relevant goal for their situation.  However, if the accountant’s hobby was website building, this could be a great goal – as long as it meets the other SMART criteria.  A goal that would be easier to quantify as relevant for an accountant is “To learn all new 2015 tax code changes to help my 2016 tax preparation business”.

Time-bound:  Your goal should have a target date to help you stay focused on achieving your results.  The timeframe should be realistic based on the goal you set.  If you take our accountant’s goal of learning the new 2015 tax code changes, a target deadline of 12 months is not realistic.  First, the new tax code will not be published until later in the year – giving the accountant plenty of time to completely forget the goal.  Second, once the accountant starts working on the goal, he realistically only has a couple of months or less to get up-to-speed to help his clients.   Creating a realistic timeframe for your goal is critical to keeping you honest and on track with your objectives.

Not hitting all of my 2014 goals was not overly disappointing to me, I picked three tough goals and did not use any methodology when I set them.  The other important thing that I remind myself is that it is ok to not always hit every goal – I’m human.  However, my chances of achieving future goals will be greatly improved if I follow the simple SMART method and then hold myself accountable.  Here’s a tip that I encourage you to think about using – share your goals with someone else.  Sure, some are personal and you may want to keep them private, but if there are goals you can share with someone else, it will dramatically increase the chances of achieving that goal.  Why?  Accountability.  You will now be holding yourself accountable for your goals to the other person.  Want to improve your chances even more?  Periodically check in with that person and give them an update and discuss how things are going.  One of the best benefits of being a Business Coach is helping people attain their goals.  If you have goals that you’d like to improve their chances of being completed – give me a call.  I’m here to help you.