The Pacific Northwest's Top Business Transition Professionals
With the Investment Sales Analysis (ISA) tool, I evaluate and rate 16 critical sales drivers under four categories, including: Sales Infrastructure, Sales Process, Sales Support and Sales Organizational Systems. I then can partner with owners and investors to create and execute an actionable sales plan that positions a company increased sustainable growth.
Contributed by John Lee
Selecting a successor to take over your business is serious business. The future of the company rides on it. The livelihood of the people employed depends on it. And the ability to make buyout payments to you relies on it.
In order effectively choose a successor, six aspects of a person need to be considered and evaluated:
Of course, understanding all this and ensuring a successor has all of these traits and competencies are two different things. Here are some guidelines to help evaluate a potential successor:
BUSINESS MECHANICS
Although understanding how the business works is important, it’s the easiest of the aspects to determine and/or develop. If they’ve worked for you for a while, you’ll have a pretty good idea of whether they understand the business. If they haven’t worked in the company, then have them spend time in each area of the business and see how well they do.
LEADERSHIP COMPETENCE
As an owner, a successor will (and should) spend much of their time leading rather than producing and delivering products and services. Therefore, leadership competence becomes critical for success. Fortunately, a 360 assessment will provide an objective picture of their leadership abilities and if needed, a professional executive coach can develop any areas needing improvement.
STRATEGIC THINKING
Reacting to a symptom instead of spending time understanding the underlying problem almost always leads to worse results. The best means of evaluating whether someone can think strategically is to allow them to develop strategies and present them to you. Not only will you be able to assess their abilities, but it will allow you to coach and mentor them if needed.
SOUND JUDGMENT
The only way to know if someone’s judgment is sound is to allow them to make decisions. Start with decisions that have a minimal impact on the on the business and/or can easily be corrected. As the decisions become more impactful, have them make their decisions in stages, checking in with you at each step so you can correct and mentor them before moving on to the next step.
PERSONALITY TRAITS
Before you evaluate a potential successor’s personality, you first need to decide whether the company needs an owner with the same personality as you or, at this point in the growth of the business, it requires a different type of individual. Once you’ve defined the type of personality needed, it should become fairly clear whether the individual has the needed traits. Remember, however, that unlike the other needed competencies, personality is innate and can’t be “developed”. Either they have the personality traits or they don’t.
CULTURAL FIT
Culture is defined by the values and behaviors demonstrated by the leadership of a company. If your successor doesn’t embody the culture you’ve established over the years, a different culture will emerge and the company will change. Additionally, if a leader professes to the importance of certain values but acts in a manner at odds with those values, it demonstrates a lack of integrity. Make sure your successor is living your company’s culture.
If you’d like our help evaluating and/or developing your successor, please contact us to discuss your situation.
Contributed by Michael Beck
Recently I’ve had a number of discussions with company owners and other consultants about Trump’s tariffs. Many companies are wringing their hands due to the sharply increased costs on many commodities associated with the 25% tariffs, and in some cases, the lack of availability of materials. Do these tariffs need to have that big an impact on your company or your customers?
A recent editorial in the Wall Street Journal (My Customers Don’t Pay Trump’s Tariffs – July 1, 2019 p A17), shared the experience of the CEO of a consumer-electronics company that sources 90% of their products from China. Even though his products should have a 25% tariff, the company only experienced a 2% cost increase. How can that be? His purchasing department took a proactive partnership approach to his Chinese suppliers, appealing to their best interests, and got price concessions that all but wiped out the impact of the tariffs.
There are three key elements you can use to mitigate the impact of tariffs on you and your customers:
A strong supply chain strategy is vital to reduce or even eliminate the impact of the current tariff environment. If you would like a review of your Supply Chain Strategy, give me a call.
Contributed by Rick Pay
Session 1: Business Transition Planning
Session 2: Business Transitions
Session 3: Succession Plan Applied
Contributed by Frank Dane
More and more business owners are finding that selling their company to an outsider is becoming increasingly difficult. As a result, they’re realizing that selling to a successor is the best way to receive the full value of their business when they retire. The plan will work beautifully as long as the business makes all the buyout payments. But the business’ ability to make those payments relies on the successor not screwing things up!
In order to maximize the likelihood that the successor does a good job and makes smart decisions, he or she must be developed effectively. In addition to learning about the business, they need to develop their leadership effectiveness, their strategic thinking, and their judgment. And therein lies the challenge…
It’s nearly impossible for an owner to effectively develop their own successor!
Here are the five issues that prevent an owner from properly developing their successor and what to do about it:
Interpersonal Dynamics
In order for meaningful improvement to take place, open, honest, challenging, and confidential conversations with the successor must take place. But it’s virtually impossible for a successor to be completely open, honest, and vulnerable when those conversations are with the person who will decide whether they will be taking over the company.
It’s unrealistic to expect a successor to acknowledge their shortcomings and fears in a conversation with the owner. It’s unrealistic to expect a successor to share their frustrations and dissatisfactions to that owner. And it’s unrealistic to for an owner to challenge a successor’s thinking or judgment and expect them to respond transparently and honestly.
The interpersonal dynamics between owner and successor make it nearly impossible for an owner to effectively develop his or her successor.
Blind Spots
Regardless of the number of years of experience we have, our level of intelligence, and the amount of education we’ve had, we all have blind spots. We can’t see what we’re missing. And because we have blind spots, it causes us to limit our thinking and the solutions we come up with.
In addition, when someone has spent a considerable amount of time in an industry and/or a company, they tend to develop “group think”. In other words, they tend to think about problems and seek solutions the same way others around them tend to think about and see those things. Group think limits the solutions we come up with.
Because getting past blind spots requires outside perspective, it makes it nearly impossible for an owner to effectively develop his or her successor.
Objectivity
Virtually everyone around a successor has an agenda – their co-workers, their spouse and especially the owner. They either want things to change or they want things to stay the same. They want the successor to act and make decisions in a way that gives them what they want. In order for a successor to hone their thinking and judgment, they need an unbiased sounding board.
Because getting objective perspective and having an unbiased sounding board are essential to improving a successor’s judgment and decision-making, it’s nearly impossible for an owner to effectively develop his or her successor.
Time Constraints
There’s a reason it’s called successor development and not successor training. The growth that needs to occur happens over time. It won’t take place simply by attending a workshop or reading a book. Development occurs as a successor deals with everyday issues and then gets outside perspective to shift how they lead, think, and interact.
Most owners simply don’t have the time needed to give a successor the attention required for effective development. Consequently, it’s nearly impossible for an owner to effectively develop his or her successor.
Skill Set
Let’s face it, successful business owners are pretty expert at the business of their business. They couldn’t have gotten where they are without developing that expertise. But in order for a successor to succeed in their development, they need to be coached and mentored. Mishandling this will produce mediocre results at best and may do more harm than good.
The truth is that the skills that got owners to where they are aren’t the same skills required to effectively coach and mentor a successor. By way of example, a seasoned professional executive coach goes through extensive training and years of practice to hone their coaching skills.
Because coaching and mentoring don’t come naturally to most owners, it’s nearly impossible for an owner to effectively develop his or her successor.
In summary, it’s critical for a successor to be properly developed so the business thrives after the owner leaves and all purchase payments get paid. In order to maximize the likelihood of that happening, it is essential to bring in outside expertise to help complete the development of a successor. The risk of handing your company over to a poorly prepared successor is too great to leave their development unfinished.
Contributed by Michael Beck