Think Big and Small: How to prepare your company for real growth and an opportunity to sell

Growing your business takes discipline and creativity. You have to serve like a compassionate operator while at the same time thinking like a buyer. The very best companies build their business in a manner that creates real value. This value should be perceived by customers, employees, as well as potential buyers who may want to acquire your company down the road. In all successful merger and acquisition events, buyers look for certain items to ensure they are purchasing a strong and well managed company. Consider these three value drivers and you will realize significant growth, financial success, long term sustainability, and optimum value at the time of sale.

1. Build a strong support team.

 Together we win!

Together we win!

Most companies are too reliant on the personality and drive of a strong leader. Great companies that are poised for growth and a possible financial transaction rely far beyond a single strong leader and ensure their success by building a strong leadership team. In order to really be a great company, you must hire people who can run with your ideas. These people are generally more expensive to hire but yield great long-term results. It is important to remember that a strong team will require a strong commitment to additional financial resources. Once you give them room to run and the resources they need, you will experience growth like never before.

2. Be certain that you have a strong and discernible differentiation.

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Being different in your industry is difficult to do but it is what makes you special. Great companies take time to consider what it is that makes them special. When considering your specialization, think with your heart and not your checkbook. When putting your heart before your wallet, you will find your true self and your team will gladly follow. Start by putting yourself in the shoes of your customers, clients, or patrons and you will quickly find your strong and discernible differentiation. If your employees don’t know what your differentiation is, then you do not yet have one.


3. Track your important measurables.

Great companies and their leadership teams are not afraid to measure their processes and results. The best companies hold each member of the organization accountable to the critical things that support your differentiation. Don’t be afraid to be at risk. Make sure everyone, from the CEO to the newest employee, knows what is expected and is accountable to results. Once you receive results that support your differentiation, make certain to celebrate those successes with all of your team members.

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Once you have considered these value drivers and employed strategies to ensure their success, you are well on your way to building a strong and sustainable company. You now have a story that is easy to share with prospective customers, clients, or patrons, as well as potential buyers. A great company uses a strong mind and a tender heart to build and celebrate a successful enterprise.

A Baker's Dozen: Business Truths that Business Schools Don't Teach

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Business schools will teach you theory and practice, but insight into the real business world comes from experience. Most students agree that business school taught them little about the process of establishing a new business, finding sources of capital, recruiting and hiring employees, and how to beat larger competitors. Here's a handful of business truths that you didn't learn in business school.  

  1. Luck is real; the best take advantage of it.                You may or may not believe in luck, but chance is real.  You might just be in the right place at the right time when an opportunity comes your way.   That opportunity might make you radically successful.  Lucky people are those that are aware of chance happenings and are prepared to take advantage of them.  You do this by preparing your mind to be open to things that are different than your preconceived notions.  In other words: be open-minded.  

  2. You may need a “get out of jail free” card.                                  During the course of your career, you may connect with or partner with people that make poor decisions.  Those poor decisions might lead to big problems that you had nothing to do with.  However, as an equity participant you could be equally at risk.  You might need to be proactive if problems arise and trade information for a get out of jail free card.  I have one from 2001 and it is very valuable to me.  

  3. Relationships are your best and most valuable asset.                                                Industries, business, and times change.   You may have a thriving business today that is worthless in five years.  The one thing you can always leverage for new business in the future is your positive relationships.  Therefore, protect your relationships like they are gold...because they are.  

  4. You should be able to get a million-dollar loan in 5 minutes.                                          Great business people have banking relationships in which you build trust over time.  You should get to the point where your bank trusts your integrity so that you could borrow any amount of money on your reputation and your current cash flow alone.  Banks bank people, not companies.

  5. Calculating the cost of capital is not as important as calculating the cost of “no capital.” There are a lot of things you do in b-school to pass a test that you won't need in real life.  Calculating the cost of capital is somewhat valuable, but understanding the weakness of having no capital is critical.  You must constantly be looking for sources of capital to keep your business growing.  You should have several options should a need for capital arise.  If you have no capital when you need it; it is completely your fault.

  6. Every payroll dollar must have a measurable outcome.                                                    When you hire an employee, or offer someone a job, you should trade that wage for measurable results.  This is not always easy.  Consider all the ways the employee makes an impact in the organization.  Connect actions to results you can track and report. Remember; what you measure you will get.  

  7. Leaders are people surrounded by others but feeling all alone.                                          You have heard it said, it is lonely at the top.  That statement is accurate.  As you truly lead, you hold people accountable and therefore people will distance themselves from you.  The people with the most to hide will distance themselves the furthest from you.  Be observant.  

  8. Bad sales people rely on using computers and long presentations.                                          A well-trained salesperson uses their ears to listen and understand.  A poor salesperson sells with their mouth.  Teach your team to listen and win business on only one item; trust.  

  9. Contracts are all one-sided; which side are you on?                                                    Contracts are used to protect.  Whoever writes the agreement or contract is protecting themselves first.  You must be aware that contracts only become unbiased when you balance the scales to make a win-win agreement.  Spend time reading and you will get really good at it.

  10. You can only beat competitors if you are better than them.                                                You don't have to beat your competition in every aspect of the business, but you must be better at them in something.  Do not go to the market until you truly believe that you are the best at something that is important to the client.  

  11. Meetings without clear goals are an indication of incompetence.                                    Every meeting must have goals to achieve.  Good business people have goals to achieve before they start the meeting and can clearly articulate them.  The common misconception is that getting to know each other is a good meeting strategy.  It is not.    Be specific about meeting takeaways and you will succeed.  

  12. Firing employees is not personal.                                                                                        There is a difference between the person and the work they do.  If you have to fire an employee it is because the employee made choices that caused their termination.  The decision to terminate is not fun but it is not personal.  Keep the role and the person in their proper context.  

  13. Glass conference tables intimidate opponents.                                                                      If you want to have the upper hand in every meeting, consider a glass table in which your opponent at a tough meeting is at a disadvantage.  The inability to hide nervous habits allow you to observe and to benefit.  Use every asset you have to win the day.

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Four Fun Reasons to Have an LLC

Having a limited liability company (LLC) is a great tool to have in your personal financial portfolio.  An LLC allows you to operate a business as a single person or as a group of two or more with limited risk.  An important feature of an LLC is that your risk is limited to the assets of that LLC and liability does not transfer into other companies that you may own.  You should have an LLC if you have any assets that produce ongoing revenue to you, like a rental property or if you are the owner or partial owner of a company that creates revenue or has the potential to create revenue for you.  Almost all entrepreneurs should own an LLC.  

There are several fun reasons for you to own an LLC:

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  1. Naming the LLC is fun.  LLCs have many crazy names.  There is no real rule on what to name your LLC.  You can name it anything you want because it doesn’t limit what you name your product or service.  Think of your LLC as a warehouse in which you store all your assets.  What you name that warehouse is up to you.

  2. You can take advantage of losses on your taxes.  If you have a job that pays you well and you need to pay fewer taxes, you can and should use your LLC to minimize your taxable income.  Of course, you don’t always want to lose money, but in the startup or growth phase of your “side hustle,” you may be able to write off losses in your LLC against your income from your day job.  

  3. You can write off certain expenses that you might not be able to as an employee.  Many expenses that are related to your business can be fully or partially written off.  The key is the word “related” which has a wide variety of definitions.  Items that can be written off include travel and lodging, educational materials, tools, clothing related to work, promotional materials or expenses which might include golf balls with your logo, gifts, and many more items.  Just be certain you are aware that the IRS may disagree with certain expenses and ask you for more money after you submit your return.  

  4. You can take advantage of “flow through entity” strategies.  This is a complicated strategy so you should ask your tax advisor about how to set it up and manage it.  If your advisor doesn’t know what I am talking about then you need a new advisor.  It is this simple.  You can have multiple LLCs, which might include a company that manages all your individual LLCs.  This managing entity, which you own, may charge the other entities a fee for managing them.  Fees that flow through from one entity to another can decrease your taxes because some of those dollars flow through without a taxable event.  You will want to ask a good strategist for help.

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One thing to remember is that the downside of having an LLC is that you are required to pay tax on all income for that year even if you did not yet receive that income.  You cannot carry it over to next year’s return when you get paid.  Therefore, be certain to tightly manage your receivables and that will help you fully enjoy your LLC.