Monthly Archives: March 2011

Put Yourself in the Position of Today’s Midsized Family Owned Businesses

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In many ways, it has never been easy to lead a midsized family owned business. You aren’t courted like major corporations to come or stay in a state. And you no longer qualify for most of the services that are available to micro-sized companies or start ups. There are very few incentives, (if any) even during more stable economic times, for you to invest in new technology, develop innovative new products, or create new jobs.  Most of the time, there are disincentives to growing your business that come in the form of regulations, mandates, or taxes that erroneously define you as a millionaire.  Even when and how leadership is passed onto the next generation is driven by how estate taxes work rather than when it’s right for you.

Family owned businesses carry all of the burdens that every other business has PLUS the responsibility for the family’s past, present and future. The roles often feel like being “stewards” for the family in addition to titles like Plant Manager or VP of Sales. Family businesses face the added layer of questions like “Why should we pay the underperforming cousin the same salary as the overachieving sibling?” and “How can I get my sister to stop telling me what to do and just do her job?”

So, consider what it feels like these days.  Most midsized companies have had a rough couple of years, and it feels like their bankers are on their backs. If they wanted to make a change, where could they get the financing?  There’s clearly a reluctance to resort to private investors outside the family.

And how many leaders of midsized family owned businesses are Baby Boomers who are waffling back and forth about continuing to work long hard hours and wishing they could just retire?  How many have been struggling over the past few years to make ends meet?  The next generation looks at them and asks, “Why should I work as hard as you guys have all of these years only to end up tired, angry, and worried about your retirement?”  If they try to sell their businesses, what kinds of prices could they actually get?

The thing is…if a state cannot figure out how to encourage the heart of its economy, its midsized mostly family owned businesses, to keep growing their companies, that state is destined to have a very very strained economy for a long long time.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™. Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

Does Your Strategic Planning Process Make You Money Right Away?

If the leaders of your family business have been postponing the strategic planning retreat because “we have real work to do” or “we don’t have the money to do that right now” or “we don’t dare add anything to our hectic schedules” there could be something wrong—strategically–that leaves your business too busy and so cash tight.

Rethink how you do strategic planning. It should really be strategic thinking, and then implementation planning.

There could be a chronic recurring problem that is causing the hectic schedules or tight cash flow.  One of the clients of my strategic advisory firm clearly has been experiencing high turnover for several years.  It would be a disservice to them if they/we don’t address that issue during the upcoming strategic planning retreat.  And, if–no when–we solve that issue, the strategic planning retreat will have made that company money.

That’s only one way to approach your strategic planning in a way that MAKES your company money.

Maybe your company has some communication issues, lack of coordination and cooperation between departments, confusing roles, or limited accountability.  You know the list.  Why not approach strategic planning in a way that strengthens teamwork? Those symptoms are draining your efficiency and shrinking your profitability on a daily basis.  You could use the strategic planning process to stop the bleeding.

Maybe your company has dated products or services.  Many marketplaces are experiencing rapid change.  It can be tough to keep up.  Competitors may be encroaching on what used to be your turf.  If so, it would make sense to begin your strategic planning process with some market research.  One of our clients did not know that their largest corporate clients have been quietly shifting their purchases away from them to minority owned vendors. Another did not know that several of their customers actually wonder why they charge so much less than their competitors. We all need current information to make important decisions and it doesn’t necessarily require a long expensive process or analysis paralysis. You could be making very expensive guesses based on old information.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

 

 

Don’t Dwell on a Big Problem…Face It!

I think I have concluded that whenever a management team is tiptoeing around a major subject, they are wasting time, digging a deeper hole, and inviting trouble.

A few of our growth financing clients have been experiencing tightened cash flow, and their managers are trying their very best to withhold that fact from employees.  The thing is…the employees can tell that cash is tight.  They aren’t in a coma.  Some purchases that used to be made without hesitation now involve multiple steps of authorization. The expressions on the managers’ faces convey concern. Duh!  Withholding information is actually adding to employee concerns.  When folks are worried, they tend to imagine that the situation is worse than it really is. Rumors, fretting, game playing fill the void.

I was diagnosed with breast cancer last July.  Folks, I didn’t want to have to talk openly about the need for surgery followed by daily radiation treatments.  But my employees would worry much more if I suddenly became secretive. We didn’t dwell on the subject.  We just dealt with it.  And one of the reasons I am OK (and I am OK) is that my employees had sufficient information to be less worried, less distracted, and less afraid to just talk.

A few of our growth planning clients have been experiencing some difficulties figuring out all of the details of succession within their families.  Hey, it’s not easy!  And candidly sharing the personal details of private family-only negotiations is not an option for most families.  But, even with the succession topic, it pays to find ways to report progress, consistent participation in a process, and convey commitment to a smooth transition for the company.

A friend of mine owns a few businesses, and he’s so embarrassed about the high turnover behind him, he can’t think straight when the subject is even mentioned.  If he is that easily upset about the mere mention of the topic, OF COURSE his employees know that there has been high turnover.  OF COURSE they know he can’t seem to move beyond being embarrassed.  OF COURSE the employees know they have to work around the problem.  They don’t have what I call “situational permission” to actually solve it.  And if he doesn’t get out of his own way soon, OF COURSE his major customers will also know that his companies have high turnover. He is quickly losing a major point of leverage that will make his negotiations with vendors, customers, and/or employees much more difficult.

As CHER’s character said to Nicholas Cage’s character in the movie MOONSTRUCK…”SNAP OUT OF IT!”

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

 

 

Are Plateaus Even More Stubborn for Family Owned Businesses?

Sometimes your business just hovers around the same size for several years.  Yes, the economy or increased competition could be factors, but, more often than not, a stubborn plateau can be traced to internal issues like executive leadership, the decision-making process, or span of control.

Think back.  You remember that one classic plateau exists at around 5-7 employees.  The business is still defined around the career, skills, availability and preferences of one key person.  The next plateau often develops between 25 and 28 employees when those companies reach the limitations of their home grown management teams.

One approach to lift off of the stubborn 25-28 person plateau is to consider what the business would be like with 40 people.  Which new positions would exist at 40 people that would have undoubtedly helped the company grow from 25 to 40 people?  Often it is roles like Controller or Chief Financial Officer.  Sometimes it is a real Operations Officer or IT expert.  Sometimes it’s an experienced Marketing Director instead of continuing to rely on an overworked marketing coordinator.  The clear pattern is the introduction of new expertise.

A similar technique can help companies that have hit the 60-63 employee plateau.  Thinking through the roles at 100 employees tends to surface discussions about the role played by field supervisors, branch managers, trainers, product developers, etc.

Is bringing in new expertise difficult for your family business? If you are being honest with yourselves, the answer to that question may be YES.

-“We are in charge!  If we bring in a non-family member to be our CFO, how will our decision making be impacted?”

-“No one can understand our clients as well as we do.  We have generations of experience.  How would a marketing expert make us more money?”

-“That sounds expensive! We’re not large enough to hire someone to only focus on IT.  In our family, we all pitch in.  Hey, Dad is still proud of the fact that he sometimes empties the trash.  Should we bring on people who view themselves as specialists?”

If any of these statements sound familiar to you, maybe it’s time to openly discuss what your business might be like 50-60% larger than it is today. Maybe a few of your young relatives will begin to perceive future career opportunities in the family business and consider higher education, more training or different careers as a result of that discussion.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

When the “Internal Sale” is a Bigger Challenge than Winning Over Customers

The business development director speaks with prospects and customers and feels that folks have been candid with him. He is convinced he has heard a pattern of need.  He wants the company to provide a new product/service for the customers. And he is excited!

He comes to an executive team meeting enthusiastic about the new idea. But then he feels punched in the gut by the negative response.

How can we afford to do THAT?

I sure hope you didn’t promise anyone that we can do THAT right away!

How many people said they wanted it anyway?

Oh, THEM…they always want more and more.  And then they don’t want to pay more.

It can be more difficult to sell a new product/service idea within your own company than to convince customers to buy it. This problem exists in lots of midsized privately held companies, but is even more prevalent in family owned businesses.  Like most problems, the solution depends on the source of the problem.

If the negative reaction reflects a fear of failure, it pays for the business development director to take the new idea to each executive one at a time.  That way, each person can think through and discuss concerns and not feel put on the spot.  Plus the business development director can convey that his confidence in each person is one reason he is excited that customers have expressed an interest in something new.

If the negative reaction flows from concerns about money, discussing costs and ROI with the CFO before bringing a proposal to the executive team could diffuse worries.

Sometimes the negativity stems from long term memory about previous times when the business development director was excited…only to find out that customers didn’t really want what he was proposing.  Some executive teams hold grudges or never forgive past mistakes. If that’s true in your company, the business development director probably must directly and calmly convey how the current proposal is different (without being defensive).

Remember, negativity is often fueled by group dynamics.  No good idea is worth making your business colleagues look bad, feel incompetent, or become embarrassed. If you have an exciting idea for which you are invested in an affirmative response, take the time to do individual discussions, anticipate/ address objections, ask for assistance…and resist the temptation to become strident, adversarial or defensive.

Aldonna R. Ambler, CMC, CSP has earned the right to be called The Growth Strategist™. She has won over two dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across four recessions.  Her midsized B-to-B service, technology and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search, etc.) help midsized companies in Achieving Accelerated Growth With Sustained Profitability®. Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer online radio program Growth Strategist Radio Show, at www.GrowthStrategistRadioShow.com, that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy of the week. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

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