Why Your Business Needs A Succession And/Or Exit Plan

While reading the September 2019 edition of INC Magazine, I was surprised to learn that a small percentage (21%) of the companies in the 2019 INC 5000 have list succession plans, and an even smaller percentage (12%), have a plan but have not identified successors.   Therefore, two-thirds of the fastest growing private companies in America are at risk of a major disastrous, disruptive event.  While the INC 5000 companies have grown extraordinarily fast, in most other respects they are typical of the general private business landscape in the USA, and probably the world.  I’m guessing that at least two-thirds of you don’t have a succession plan.  That adds up to a lot of potential clients for me and my ActionCOACH colleagues.

Why do you need a succession plan?  There are numerous reasons, some of which include:

  • As mentioned in my blog Why You Should Prepare Your Business To Be Sold dated 10/23/2018, A business that is designed and built for the owner’s exit will provide protection to the business’ team and the owner’s family. There are too many instances of businesses that failed after an owner’s disability or death.  The potential for destruction of value, jobs and fortunes is reason enough for you to prepare your business for your exit.”
  • A long time ago, a very wise insurance broker explained that a business owner in their forties or fifties is eight times more likely to become disabled than to pass away before retiring.
  • A business that is prepared for succession and owner exit is a stronger business.
  • If at some time in the future you sell your business to outside potential buyers, they will be attracted by the increased potential to retain the company’s human capital.
  • If at some time in the future you sell the company to your employees, the key employees are more likely to remain. The result is a company with a much greater potential for longevity and ability to retire the financing used to purchase the business.
  • For all these reasons a business that is prepared for succession and owner exit is a more profitable, valuable business.

One of the main focuses of the ActionCOACH coaching process is planning.  Among the many types of plans our clients have is a succession plan and, depending upon their age, an exit plan.  If you wish to protect your business should you become incapacitated or prepare your business for your exit and earn more money until you decide it is time to exit, my colleagues and I are ready to assist you.

The Golf Ball and How Nike Missed The Boat

Leading up to the 2000 US Open tournament, virtually all the golf balls in use, especially by professionals, were of wound construction.  Top of the line balls had balata covers which better golfers beat to shreds.  Tour pros routinely used six balls per round.  The exception was a Titleist ball with an Elastomer cover, the Titleist Professional, which closely resembled the Tour Balata, but with a more resilient cover.

At the beginning of the 2000 season, Tiger Woods, who was a Nike athlete was using the Titleist Professional ball.  Nike in partnership with Bridgestone Golf was prototyping a ball called the Nike Tour Accuracy, which Tiger call “My Ball”, planned for release at the beginning of the 2001 PGA Tour season.  In early 2000 Tiger had narrowed the prototype field down to two versions.  After some additional testing, the final version of the ball was brought to Hamburg for testing during practice rounds at the 2000 Deutsche Bank-SAP Open.  In a wind-swept heavy rain, Tiger hit a drive from the first tee with the Titleist Professional ball that the wind caught and push into the rough.  Tiger next hit the Nike prototype on the same starting line. The Nike ball moved about five yards in the wind and stopped in the middle of the fairway.  In May 2000, Tiger switched to the Nike ball, ahead of the original schedule.  Starting with the 2000 US Open, Tiger won his “Tiger Slam” with “My Ball” and changed the golf ball industry in the process.

What does this have to do with business?  During that period, Tiger Woods was the most influential golfer in the world.  That influence resulted in a complete move away from wound golf balls to the new two- and three-piece balls.  To quote Tiger;

“I won four majors with that ball, and the rest is history because wound-ball technology is gone.  Everyone switched.”

Unfortunately, Nike was totally unprepared to capitalize on Tiger’s success using the Nike Tour Accuracy golf ball.  Kel Devlin, Nike’s global director of sports marketing still ponders the circumstances around the ball.

“If we had enough capacity, and I could have gotten the sports marketing folks and Phil [Knight] to buy into the bigger program … if we’d had the ball available to any Tour player who wanted it four weeks earlier than we did …”

Result?  Nike is no longer in the golf ball business and Titleist continues as the far and away best-selling brand of golf balls.

So, I ask you the same question I ask of most of my clients when they are about to begin a new strategy or marketing program,

“What if this works?”

When you do something new, do you prepare for success?  If you are launching a new product or item, do you arrange for timely delivery of inventory on a just-in-time basis?  If you are launching a new service, has your team been fully trained to consistently deliver the service up to the quality you require, while continuing to support (not losing) your existing loyal clients?  To successfully scale your business, it is essential to ask these questions and many more as part of your planning and implementation process.

My ActionCOACH colleagues and I are expert at assisting clients just like you in the development of new products and services and business growth.

*Based on an article in the June 2019 edition of Golf Magazine.

A BFO About Planning

This blog was originally posted 1/7/2018 at actioncoachmichaelbreitman.com

I had a major comeuppance and Blinding Flash of the Obvious (BFO) this morning related to one of my monthly activities, instigated by a Darren Hardy video I watched yesterday.  During my holiday break the week between Christmas and New Year’s, I worked on a few administrative tasks in advance of their normal schedule.  Among them was a look at my Accounts Receivable (A/R) aging.  I printed the A/R Summary Aging Report from QuickBooks and thought about how I wanted to collect from each of the few past due client in the report.  After deciding on several different collection strategies based on the past due amount, age and client situation, I put a code next to each past due client.   For example; some were going to receive a statement via email followed by a call, a few would get a mailed statement and a call, etc.  I must admit, I was very proud of myself for addressing this unpleasant, but necessary task earlier than usual.

This morning, almost two week later, I realized that after planning my collection strategies, I put my collection plan into my A/R folder without implementing it!  My BFO:

Planning to do something, and knowing how it will be accomplished ….

Is Not The Same As Actually Doing It!

There is no doubt that planning is essential, as the saying goes, “Failing to Plan is Planning to Fail.”  However, failing to work the plan is actual failure.

In Darren Hardy’s video, he presented a weekly Sunday Planning System (http://dh.darrenhardy.com/win-the-week).  As he explains during the video, he was given the system by a billionaire he was introduced to a few years ago.  In addition to the Sunday Planning System, the billionaire told him that in order to focus and maximize his effectiveness and results, he works on one, and only one major item per day.  He addresses that item until it is complete.  Based on this system, and my BFO, my plan going forward is to plan and finish whenever possible.  No more plan, put aside to finish later.  By the way, Darren Hardy is one of the keynote speakers at the 2018 Business Excellence Forum and Awards (http://www.thebusinessexcellenceforums.com/events/?event_id1=7) February 18th to 20th in San Diego.

As we begin 2018, I encourage you to plan and act to achieve your goals.  My ActionCOACH colleagues and I are presenting GrowthCLUB 90-day planning workshops in the coming weeks.  These powerful and very effective workshops will accelerate your journey to massive results in your business and life.  Plan to register, attend and implement your ActionPLAN.

Some Thoughts About Direct to Consumer Startups

I just finished reading a very insightful article entitled The Race To Reinvent Everything by Tom Foster in the May 2018 edition of INC Magazine.  The article is about direct-to-consumer (DTC) startups, companies that are emulating the Warby-Parker model for many other product categories.  Products currently offered by more than 400 DTC startups range from bras to tampons.  While the article made many interesting points about the challenges and opportunities these startups are faced with, two points resonated with me.
  1. Not All Products Offer the Same Opportunities – Warby-Parker has been extremely successful due to two main factors:
    1. They offer superior value to their customers. Warby is selling a formerly $500.00 item for less than $100.00
    2. This value proposition enabled their customers to own many pairs of glasses, converting a category that was a necessity into a fashion category

The article went on to compare several other products where either the value proposition is not strong enough (sofas), the category is flooded with many DTC startups (Razors), or the major players in the marketplace have the technical resources to jump into the category on a DTC basis in addition to their customary channels of distribution (Razors again).  If you are considering starting a DTC company, you must carefully consider your proposed value proposition along with product costs, including sales and marketing.  Further, this article is a strong primer on the DTC landscape.

  1. Key Performance Indicators – DTC vs. Bricks and Mortar – The article mentioned some major differences between DTC and traditional retail’s ability to collect actionable KPI’s, giving the advantage to DTC. Specifically, DTC companies can capture essential KPI’s, such as customer acquisition cost, number of leads by source or campaign, and conversion rate by source or campaign more rapidly and accurately than traditional retailers.  Customer lifetime value is another very important KPI which is just as hard to predict for DTC startups as it is for traditional retailers.  However, DTC companies can have statistically valid lifetime value data sooner than traditional retailers.  The increased accuracy and timeliness of KPI’s allows DTC startups to finetune their model as early as possible.  Traditional brick and mortar retailers are faced with the need to collect these same KPI’s.  However, it can be more difficult, be less accurate and take more time for traditional retailers.  The section of the article where this is presented is a good summary of Buying Customers a book by Brad Sugars, Founder and Chairman of ActionCOACH.
Whether you are starting a direct-to-consumer or traditional retailer, you should read this article to achieve a strategic advantage over other potential startups in your planned market space.  The article contains lots of additional information you will need BEFORE you get too far on your startup journey.  My colleagues and I at ActionCOACH can further assist you in sorting out your options and planning your success.

It (Almost) Never Fails

While flossing my teeth this morning I recalled my late mother’s expression “It never fails.”  I decided to write this blog about my top three list of things that never fail, well almost never fail. Of course, top of mind and number one on the list:
  1. The last piece of dental floss in the container is too short to be useable – Unless you are a dental floss savant, this “never fails” is based on pure luck.
The second “never fails” applies to most amateur golfers:
  1. A golf ball that strikes a tree on either side of a fairway will (almost) always bounce away from that fairway – While this “never fails” has an element of luck associated with it, a golfer could improve their odds by being coached and taking lessons with a PGA professional. As their ability to hit a golf ball where they aim increases, they will reduce the number of trees hit.  By the way, a great golf KPI is number of fairways hit.
Number three on the list of “never fails” is about, unfortunately, most business owners and their businesses:
  1. A business owner without written plans will fail to reach their business and personal goals – My colleagues at ActionCOACH and I have witnessed too many businesses that have grown organically, without plans. Before I joined ActionCOACH I had several turn-around engagements.  Every company I worked to rescue exhibited a lack of planning.  The effect of lack of planning was a major reason they arrived in a turn-around situation.
Our ActionCOACH clients benefit from our planning culture.  All my clients have some, if not all of the following plans:
  • 90 Day working on the business plans
  • Classical business plans with budgets, cashflow, revenue and expense projections
  • 1, 3 and 5-year Organization Charts
  • Hiring plans with trigger benchmarks
  • Marketing plans
  • And others
As the expression goes; “If you fail to plan, you plan to fail.” The benefits of planning are numerous:
  • Plans, especially written plans, have a very high correlation with success.
  • Plans are essential if you have a team. They communicate your goals and engage your team toward goal achievement.  Simply put, plans help you, and your entire team get leverage of skills, knowledge and time.
  • Plans inoculate your business against failure. While there are no guarantees, planning certainly stacks the desk in your favor.
  • The process of producing and maintaining your plans is just as important as the actual plans. It is a major part of your responsibility as a business owner to create a success environment for you and your team.
  • And many more.
If your business is not about to require a rescue, it is not too late to become a proactive, planning high-achieving business owner with an exceptional business.  The choice is up to you, don’t plan to fail! Should you choose not to plan to fail, my colleagues and I at ActionCOACH will be happy to assist you on your path to business success.  Simply contact me or your local ActionCOACH. Finally, please let me know what some of your top “never fails” are in your comments to this blog.

A BFO About Planning (moved)

I had a major comeuppance and Blinding Flash of the Obvious (BFO) this morning related to one of my monthly activities, instigated by a Darren Hardy video I watched yesterday.  During my holiday break the week between Christmas and New Year’s, I worked on a few administrative tasks in advance of their normal schedule.  Among them was a look at my Accounts Receivable (A/R) aging.  I printed the A/R Summary Aging Report from QuickBooks and thought about how I wanted to collect from each of the few past due client in the report.  After deciding on several different collection strategies based on the past due amount, age and client situation, I put a code next to each past due client.   For example; some were going to receive a statement via email followed by a call, a few would get a mailed statement and a call, etc.  I must admit, I was very proud of myself for addressing this unpleasant, but necessary task earlier than usual. This morning, almost two week later, I realized that after planning my collection strategies, I put my collection plan into my A/R folder without implementing it!  My BFO:

Planning to do something, and knowing how it will be accomplished ….

Is Not The Same As Actually Doing It!

There is no doubt that planning is essential, as the saying goes, “Failing to Plan is Planning to Fail.”  However, failing to work the plan is actual failure. In Darren Hardy’s video, he presented a weekly Sunday Planning System (http://dh.darrenhardy.com/win-the-week).  As he explains during the video, he was given the system by a billionaire he was introduced to a few years ago.  In addition to the Sunday Planning System, the billionaire told him that in order to focus and maximize his effectiveness and results, he works on one, and only one major item per day.  He addresses that item until it is complete.  Based on this system, and my BFO, my plan going forward is to plan and finish whenever possible.  No more plan, put aside to finish later.  By the way, Darren Hardy is one of the keynote speakers at the 2018 Business Excellence Forum and Awards (http://www.thebusinessexcellenceforums.com/events/?event_id1=7) February 18th to 20th in San Diego. As we begin 2018, I encourage you to plan and act to achieve your goals.  My ActionCOACH colleagues and I are presenting GrowthCLUB 90-day planning workshops in the coming weeks.  These powerful and very effective workshops will accelerate your journey to massive results in your business and life.  Plan to register, attend and implement your ActionPLAN.

Are you an Entrepreneur?

My wife and I took our grandsons to see, “School of Rock” on Broadway last weekend.  There is one line in the show that struck a chord with me: “Not everyone is cut out to be a rock star, but if you are, then you’ve got to go for it.” What struck me about that line is how it directly relates to business and my coaching practice: “Not everyone is cut out to be an entrepreneur, but if you are, then you’ve got to go for it.” In my mind, there are two types of entrepreneurs; active entrepreneurs and everyone else who has a job.  In other words, we are all entrepreneurs.  The days of two-way company/employee loyalty for 30-40 years is gone.  No more gold watches and fancy retirement parties.  Like it or not, we have become a society of “Me, Inc.”  We are our own bosses. But how do you know if you are cut out to be an active entrepreneur?  Here are some questions to ask yourself:
  1. Am I comfortable with an erratic schedule? Do I have good time management skills?  As an entrepreneur, you likely won’t be working 9-5.  As you gear up, 10-12 hour days are not uncommon; you’ll spend your time networking, blogging, researching, and marketing.  You will need to work on your business every day.
  2. Can I afford it? You need a safety net.  It can take up to six months or more to start to see a steady income.  Depending on the terms of your contracts, clients can take up to three months to pay.
  3. What could I do? Two ways to go here:
    1. Skills and Talents: Evaluate your current career/work situation. Are there any skills that you can take and parlay into a business?
    2. Passion: Hobbies: many people have used their talents and created successful companies from their love of baking or knitting.
  4. What are my strengths and weaknesses? While it might be painful, ask your friends and family.  They will give you some good insight regarding how you are with people, taking initiative, or seeing a project to the end.  A word of caution here, do not let family and friends dissuade you from pursuing your dream.  Also, don’t underestimate self-assessment tools – such as the Myers-Briggs Type Indicator® or the DiSC which can provide self-awareness.
Assuming these items don’t scare you, what’s next?
  1. Plan. Our philosophy at ActionCOACH is to start planning as early as possible.  Most businesses grow organically, without planning.  Often, that leads to problems down the road.
  2. Research. Talk to other people who are already doing it.  You need to know the good, the bad, and the ugly.  Arm yourself with as much information as possible.  Additionally, there are many excellent books that address entrepreneurship as well as your area of expertise.  Never stop learning.
  3. Get all necessary certifications. The cost of the schooling may be tax deductible.
  4. Start small. Get the word out with friends and family about the service(s) or product(s) you are offering.  Word of mouth is one of the most effective marketing tools.
  5. Don’t wait until you get laid off. Lay the groundwork as soon as possible.
  6. Most important, hire an ActionCOACH to help you write a business plan, outline goals, and be the most effective president of “Me, Inc.”
Even if you decide you do not wish to be an active entrepreneur, it is necessary to take most of the steps outlined above to succeed in your career.

How Complex Is Your Business?

While working with one of my clients whose medical practice has been growing very rapidly, the subject of maintaining organizational focus and culture came up.  As our discussion progressed I was reminded of a few flip charts Brad Sugars, the founder and chairman of ActionCOACH, presented at one of our conferences.  Brad first drew a two person company with one direct connection between the people. That flip chart looked something like this:Two Connections The next flip chart showed a three person company that had three direct connections between the people, looking something like this:Three Connections His third flip chart was a four person company with six direct connections: Four Connections Brad’s final flip chart was of an eight person organization showing twenty eight direct connections. Eight Connections My client, with a stunned look on her face, saw this and said “No wonder I’ve had so many problems controlling the growth of my business.” Just to recap: connections table The simple formula for this is:

Direct Connections = ((Number of People * (Number of People – 1) / 2)

Using this formula it is easy to see that the level of complexity in a company grows at a much greater rate than the company’s growth rate. Is your business starting to look a little bit more complex than perhaps you realized? So how are we to grow our businesses, maintaining organizational focus and effectiveness?  There are four key things you must accomplish in order to grow in control:
  1. Have a clear company Mission, Vision and Culture (MVC) – A strong and clear MVC that is aligned and congruent with your company’s Unique Value Proposition (UVP) is the cornerstone of healthy consistent growth.
  2. Communicate and Educate – You must constantly communicate your MVC and UVP to your team, both internal and external, and to your customers, both existing and potential. You must educate new team members and potential customers about your MVC and UVP and the Why behind them (Read Simon Sinek’s book “Start With Why” for further insight).  And most importantly it is absolutely essential that you eat, sleep and breathe your MVC and UVP.
  3. Plan your organization – Although many like to promote flat organizational models, completely flat organizations quickly lose their effectiveness as they scale up. Thus it is vitally important to plan the organizational structure of your company.  At one end of the scale, completely flat will not allow for effective growth, at the other end of the scale, old fashion command and control will compromise creativity and nimbleness.
  4. Be Proactive – Most companies grow organically, without very much forethought or advanced planning. Too often companies reach the point of no return structurally and fail.  All of my clients have a vision of how their companies will be structured working backward from three to five years in the future.  You should do the same.
My ActionCOACH colleagues and I will be happy to assist you to develop your MVC, UVP and Organizational Structure, all of which will prepare your business for exceptional growth.

Why You Need Written Plans

“Planning without Action is futile, Action without planning is fatal” Unknown

One of the most profound concepts I have embraced since joining the ActionCOACH team is the many positive results of having written plans.  It is commonly believed that those who have written plans outperform their contemporaries by a large margin.  While the often quoted alumni studies at Harvard or Yale are urban myths, one actual study conducted by Gail Matthews at Dominican University, (to you can read her research summary click here) provides empirical evidence for the effectiveness of three coaching tools:
  • Accountability,
  • Commitment and
  • Writing down one’s goals. This study demonstrates that writing one’s goal enhances goal achievement.
You may fall into the group, along with the vast majority of people, who tried writing a plan on one or two occasions only to conclude that planning does not work.  Perhaps, you bit off more than you could reasonably accomplish, set unrealistic deadlines, did not set deadlines or your plans and goals were not specific enough.  Maybe you believe or concluded that planning is useless because plans are obsolete as soon as they are finished.  Regardless of your reasons for not planning in the past, I urge you to consider planning your business and your life starting now for the following reasons and benefits. First of all, planning is an ongoing process.  The main value of planning is periodically thinking about your business and your life in an organized manner.  When a planning process is followed, several things naturally occur:
  • You attain focus – you weed out the noise that naturally occurs in your life
  • You prioritize – things in a logical order prevent you from over committing (biting off more than you can reasonably accomplish).
  • Your filters open – your conscious and subconscious mind are opened to collect the resources, knowledge and partners you need to achieve your goals
  • You communicate – a plan is a great communication tool to use when you delegate and seek assistance
  • You create a great “rallying point” for your team
As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.”  We all have only twenty four hours in a day.  Effective use of time has a direct relationship to a person’s level of success.  It is what separates the successful from the unsuccessful, in all aspects of life.  Having plans will greatly increase the results you achieve from your twenty four hours. Finally, and most importantly, most businesses develop and grow organically, with little or no planning.  Many grow and reach a “point of no return” where, for example, they may be supporting an inefficient or counter-productive structure, the right people in the wrong roles or the wrong people in the right roles, or worst of all the wrong people in the wrong roles.  Their business may not be able to adjust to current market conditions in a timely fashion.  They might have over-expanded, under-expanded, passed on a promising opportunity or pursued a disastrous opportunity.  These situations become disastrous after a business passes the point beyond which it cannot “undo” and restart without more investment of time and capital than is available.  Thus, it is essential to avoid growing organically and hitting the point of no return by adopting a planning process as early as possible and of course sticking to it.  You can either have a reactive business or a proactive business.

It Is Not Too Early To Begin 2015

As the end of 2014 approaches a little introspection is in order. As a business owner, some of your fundamental roles include:
  • coaching
  • planning
  • setting goals
  • interviewing and hiring
  • training
  • creating
  • managing
How are you doing so far this year regarding your time in these areas?  Ask yourself a few questions:
  • have you spent adequate, quality time planning the future of your business?
  • have you spent adequate time coaching and developing your team (or having it done)?
  • are you on target for all of your management and self-improvement goals?
  • have you been able to manage your attitudes consistently regardless of what was happening around you?
  • did you see change as your partner and embrace it…or has it become your adversary?
  • are you leaving any unfinished business behind as you move into the second half of the year?
  • have you been communicating your goals, strategies, plans, and objectives clearly to your team?
  • have you handled all of your team member’s challenges successfully, and in a compassionate and timely manner?
  • have you set clear goals for the rest of the year?
  • are you in touch with the realities within your organization and your marketplace?
  • if you could, would you reverse or change any of the significant decisions you made during the first half of the year?
  • if you could begin this year over again, what is one thing you would do differently?
A critical skill necessary for success as an owner is the ability to honestly evaluate your:
  • personal development progress
  • attitudes
  • skills
Work on expanding this list.  Set a target of 50 more questions that will help you get a better handle on your organization and yourself. You might think it is a little early to begin this process, since it’s only the beginning of November…but we all know it’ll be the end of the year before we know it.  How you spend the next several weeks could make or break your goals, your hopes, and the success and direction of your company for the balance of this year and planning for next year. And that’s worth thinking about…