Estate Planning was the key topic today – the kind of topic that eventually comes up in a family business. 

My comments will respect and guard the privacy of the client – but I will reflect on the kind of topics that must be discussed in a family business where an eventual transition from founder to successor will occur.

Estate Planning

• The client rightly is interested in models for tax efficiency in passing on the business to his successors. Should they buy in? Should they receive a gift? Is there some good combination? How can you reduce the tax hit? Is there a standard way of doing this? How do you keep the successors from a sense of entitlement? How do they earn-in? How do you keep everyone aligned and motivated?
• We discussed a family trust model in which the founder gives up or reduces control of the business in such a way that the next generation benefits gradually.
• We reviewed an estate freeze – a concept in which the current value...

Today the main topic of this work session is about building sales capacity:

• Route building software
• Market research to support sales people
• Finding great sales people
• Anticipating how to find great sales people who can sell to the next generation of customers

With a couple of minor deviations to:

• Avoiding staff turnover
• Training program for the future leaders of the business

This business has very low turnover and that is interesting. Why, I asked? 

Well, it seems that the answer is rather complicated.

• The pay scale is good but not that good. 
• The conditions in the shop are good but not that good. 
• The toleration of errors and mistakes is moderately low, but not harsh – nor is it slack.
• The training is lengthy and relaxed (“ride-alongs”, mentoring, many other good techniques, etc.) but it’s not formulaic, nor does it follow the fashionable trends in sales training (no one walks on hot coals, no one sings along to...

Today the main topics of the working session included:

1. How to integrate the newly acquired business into company operations.
2. How to position the deal as a merger to inspire and satisfy customers.
3. How to brand/rebrand the acquisition and accelerate revenue growth as it transitions to the main business.

Integrating an acquisition into the main business.

This is particularly important in the small business sector – for reasons that differ from corporate acquisitions.

• The founder should be visible in the new business.
• The founder should attend on-site regularly – e.g. one day a week for several months.
• The founder should quickly integrate operations, customer service (phone calls, route drivers, website, pricing policy, etc.) into the regular operation.
• The founder should carefully and selectively re-brand in a smooth manner so as not to spook existing customers and to reassure them that it really is “business as usual”.

...

Taking Matters into Your Own Hands:

In business the whole point is to develop your idea into something that customers want and then buy! 

What if your idea doesn’t work? What if the way your idea was to work is blocked?

Do you know when to pivot? How long do you keep pushing an idea? When is the right time to give up? And, if you give up, what do you really mean by that? Does giving up mean walking off the playing field? Does it mean putting the idea away forever? Or does it mean you figure out a way to do your own thing? 

The client made a huge decision to move on from the idea of becoming the national distributor of someone else’s product. He decided to do step #1 of a plan to manufacture and distribute his own line of blades!

I love this idea and here’s why!

After weeks and weeks of getting nowhere with the European manufacturer who seems unwilling to get rid of an underperforming national distributor, who himself says he wants to exit the...

DEAL PAPERWORK NEARLY COMPLETE:

• In today’s work session we found that the legal paperwork on the service business acquisition is at the 99% level. The next step is to send it to the bank for final financing approval. 

EUROPEAN DEAL NEARLY DEAD:

• We are also near to concluding that the Europe deal is probably dead, for two reasons. 
• One is that the current distributor is simply too busy to respond. While my client is persistent and has done everything in his power to make contact there is no point in trying to have a serious business discussion if the other person is not interested.  
• Second, the parent company seems not interested in pushing things too hard either – which is very frustrating because they must be aware that sales revenue is not what it could be. And they are definitely aware of my client’s interest.

ALTERNATIVE DEAL:

• We then did a full work session on the alternative to becoming a distributor for the...

Today’s work session was very short because of a client-scheduling situation and we only worked for a few minutes. 

We covered two points, each of which contained a valuable lesson for the business owner:

Offer to Purchase:

There is a little known legal point of which you should be aware. When you buy a business situated in a building (and you are buying the building and the business), the vendor will certainly not want you to close on one and not the other. The attorneys papering the deal will always link the commercial offer to the property offer so that one must proceed with the other, and never independently. You don’t want to end up buying the business and not the building or buying the building and not the business – unless of course that is your deliberate intention. But of course we are not talking about that. We are talking about buying an operating business with a building full of equipment and a staff that must work there. That point...

Thank you for joining me today. Read more about me here. Today’s work session focused on several topics:

Social Media

The owner’s brother is getting quite accomplished on social media. The website has been up and running for a while and the number of followers is increasing. Now the conversation is focused on driving more and more traffic to the website. The use of Instagram, Facebook, LinkedIn and Twitter is essential to this strategy. The effort is time consuming but the net effect is to draw “eyeballs” to the website. The conversation may seem esoteric at times for its choice of technical terms like: SEO (Search Engine Optimization), organic keywords, internal links, key word search, and so on.  This is all good and there really is no going back from social media.

Strategy

Today we entered a serious strategic discussion – with questions focusing on competitors. In the search for incremental customers (that is, larger blocks or...

IS IT TIME FOR A LOOK UNDER THE HOOD? 

A NOTE FROM THE CATHOLIC CEO in “late pandemic times”……………..

BUSINESS PLAN REVIEW

FINANCIAL STATEMENT REVIEW

FUTURE SCAN

12 MONTH TRAILING AVERAGE ANALYSIS 

Business lessons are sometimes learned easily. Sometimes we learn the hard way! There are business rules of thumb.

Let our team know what you think about these lessons or lessons you’ve learned. Send your comments to [email protected]. Contact me to discuss how we can help you build these into your regular daily work. There is a Catholic approach to each one!

1. Don’t run out of cash!

An old friend from Florida used to tell me (in his unique southern accent)… “Cash ain't cash unless it’s cash!” Set up a weekly dashboard that signals your cash on hand every Friday night.

2. Valuation = EBITDA times 3 to 5.

Work into your financial statements a regular way of measuring your company’s valuation. Earnings before interest, taxes, depreciation and amortization, sometimes called earnings or pre-tax revenues, multiplied by 3 to 5 is a useful multiplier and indicator of value – as are comparable sales, net present value of the...

This 25-Point Diagnostic System applies to start-ups, developing and growth businesses.  Investors and others use this to assess the state of your business.

1. Accounting Ratios

• Identify key ratios relevant to your business.
• Create dashboard metrics that interpret financial statements for you regularly (e.g. once weekly).
• Color code red light, yellow light, green light, to signal urgency.

2. Bank Relationships

• Communicate regularly with your bank with either a written report or a phone call.
• Practice instant transmission of bad news or trouble.

3. Board Governance + Advisory Boards

• Set up a board to govern.
• Learn the role of board and officer positions.
• Gain proficiency in various hats one wears as an employee and as a board member.
• Gain proficiency in forming advisory boards (short term or long term) to engage thought leaders and provide fresh input.

4. Business Plan

• Create a one-page business plan, supplemented by detailed appendices.
• Create a 12...