Category Archives: management

It takes a conversation

Not a lecture

communicate“What we’ve got here is a failure to communicate,” followed by the evil warden delivering a severe blow to drive the message into the dumb prisoner’s thick skull. Maybe it works in the movies.

But the approach is probably as useless as raising the volume or relentlessly repeating the same message. If you do not have engagement with your audience, the message will not resonate. They may seem receptive, even enthusiastic, but nothing changes unless you get commitment to the objectives, the plan and the expected action for each participant.

Don’t lecture to a passive listener. You’re wasting everybody’s time. Nodding and taking notes may be a positive sign, but it is not enough. You need personal commitment. Yes, I understand. Yes, I will do that.

Start a conversation. Ask questions and listen attentively yourself. Adapt your pitch, presentation, or plan and check if they really understand. What are they going to do differently? What are you going to do differently, now that you have their input? When and how?

Two-way communication is always better than a lecture, if you really want to change behavior and improve performance.

Even if you only want to inform, advise or inspire, like this article. Feedback and comments start the conversation and make us both better.

Be better. Do better.

Your Uncle Ralph, Del Chatterson

Visit LearningEntrepreneurship.com or contact DirectTech Solutions at www.DirectTech.ca for assistance on your strategic business issues, growth and profit improvement plans or your exit strategies.

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Participative management

You cannot fake it

meetingIs your business run democratically? Probably not. Employees do not get to vote, managers are supposed to be responsible and make consistently good decisions. Let’s not confuse them with too many contrary, ill-informed opinions. We have seen too many unhappy conclusions from democratic decision-making lately.

It is easier to accept your role as lonely leader and try to be the gentle and wise, all-knowing autocratic decision-maker. “I am the owner, so I get to decide.” That’s true, but you will make better decisions with relevant input from the troops.

It’s called participative management. It means soliciting input before decisions are made and plans are set. It means seeking feedback on current operations and on the results from new initiatives. It cannot be a token effort with input that is subsequently ignored. It needs to be sincere and must include setting realistic expectations and responding promptly to suggestions, questions and complaints.

You will find that early participation in new initiatives will help develop better implementation plans and gain the support and commitment of the people required to deliver results.

Be better. Do better.

Your Uncle Ralph, Del Chatterson 

Visit LearningEntrepreneurship.com or contact DirectTech Solutions at www.DirectTech.ca for assistance on your strategic business issues, growth and profit improvement plans or your exit strategies.

Join our mailing list at LearningEntrepreneurship.com for ideas, information and inspiration for entrepreneurs.

Read more articles at:Learning Entrepreneurship Blogs. 

Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

Make work fun

A simple principle for good management

Make work fun. It really is that simple. Don’t make it more complicated.

I know, it is more complicated, but let’s try to simplify good management down to one guiding principle.

Your job as a manager is to ensure that your employees are working effectively to meet the department’s and the company’s objectives. It requires that individual objectives be in line with the objectives of the business.

happy winnerHaving fun is one objective that we can all agree on. Especially if we accept that making money is fun! For both the employee and the business.

Don’t make it more complicated. Take a look at what you have to change or fix, so that work is more fun. Provide leadership, remove obstacles, give recognition. Everything else will take care of itself. They will get the job done and meet their objectives. And you will meet yours.

All the while, everybody is having fun. See, it really is that simple.

Be better. Do better.

Your Uncle Ralph, Del Chatterson

Visit LearningEntrepreneurship.com or contact DirectTech Solutions at www.DirectTech.ca for assistance on your strategic business issues, growth and profit improvement plans or your exit strategies.

Join our mailing list at LearningEntrepreneurship.com for ideas, information and inspiration for entrepreneurs.

Read more articles at:Learning Entrepreneurship Blogs. 

Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

Alternative Facts

Or alternative conclusions?

FactsWe seem to be learning from the current political debate that not only is it OK to invent alternative facts, (what we used to call lying), but that they are useful to explain and justify bad ideas. It may have proven to be effective in political campaigns, but it is definitely not recommended for subsequently making good management decisions.

In government and business, we will eventually have to deal with the real facts. Both those that help us define the problem and those that help us understand the consequences of our decisions and actions.

But even if we agree on the facts, the answers are not obvious. Alternative conclusions are still possible. And some people will be determined to ignore the facts and continue to rely on their pre-conceived notions.

There is a lot of research and commentary explaining our universal human tendency toward confirmation bias. That is, our consistent unquestioning acceptance of evidence that confirms our established beliefs and our equally stubborn denial of those that contradict our beliefs. Or as my mother wisely observed during my own brief venture into political campaigning over fifteen years ago, “There is no use in confusing them with the facts, they’ve already made up their minds.”

Important to remember though that the phenomenon applies to us all, not just those on the other side of the argument.

Arriving at agreed conclusions even from an accepted set of facts will always remain a challenge for leaders and managers. I had a memorable lesson in that principle early in my consulting career. I was responsible for an engineering work study to analyze a production bonus system that was unsatisfactory to both the union and management at a Canadian mining operation in Ireland. After thorough analysis, we made our objective fact-based presentation to each side and were astonished to hear them both conclude what they already thought before we started, “I knew those bastards were stealing from us!”

So for good management decisions and effective leadership, it is important to start with an agreed set of facts, then apply both rational argument and appeals to emotion, if necessary. Even then, some will not be persuaded until they see the results after the fact.

So how do we develop better solutions based on rational decision making? First, check that the facts are legitimate, verified and proven. Then accept that the selection and presentation of the facts is always biased by the source and their intent to support a particular argument or point of view. Consider your own biases and how they are affecting your assessment of the facts and the source. What are the alternative explanations and potential conclusions based on the same set of facts?

Then make the choices and develop your rationale before trying to persuade anyone else of your decisions and plans. It’s never as simple as “Just the facts, sir, just the facts.”

Your Uncle Ralph, Del Chatterson

Read more at:Learning Entrepreneurship Blogs. 

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Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

Let’s be reasonable

arguingYou cannot win an argument by raising the volume.

It’s not because they cannot hear you that they are not buying it. You need to be more persuasive. They need to be more reasonable, or rational, or intelligent. Right?

Because they are clearly too emotional, ignorant or biased. Maybe. But thinking it and saying it out loud are both a mistake.

Stay calm. Listen and try not to react to the accusations that you are the one who is too emotional, ignorant or biased. Attacking the opponent’s character or explaining away objections are a sign of weak arguments. Dig a little deeper.

Where are the objections really coming from? Consider the point of view of your opponent (customer, prospect, boss or employee). Maybe they have valid input or questions that you had not considered. Maybe you are wrong and need to re-work your pitch.

If both sides are reasonable and ready to listen, you may actually both make progress.

Keep working on it.

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs

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Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available

Excuses are easy

alligator“Too busy fighting fires to do fire prevention”

“When you’re surrounded by alligators it’s hard to see a way out of the swamp.”

But there is no excuse for neglecting to manage the entrepreneur’s Challenge #1:

Balancing strategic leadership with management effectiveness.

The difference between management and strategy is the difference between engineering and philosophy.

Are you building a better solar-powered motorbike or are you developing more environmentally responsible recreation vehicles? Are you designing an appealing mobile app for grocery shopping or are you helping busy people manage their budgets better?

After you put out the next fire, or kick the next alligator away from your butt, look a little further ahead and find a safe place to build a better business.

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs

Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

 

Responding to Challenge #1:

Strategic Leadership & Management Effectiveness

Keep your Balance

balanceIt is easy for owner-managers to get pre-occupied by the daily demands for attention – chasing opportunities, resolving customer complaints, managing employee performance, satisfying business partners, governments and the bank.  Stepping back to look at the big picture and assessing performance against the original strategic plan is easily neglected.

That remains the entrepreneur’s No.1 Challenge: balancing the need for strategic leadership with the demands for operational effectiveness.

Too busy fighting fires to work on fire prevention?

To succeed in building a long-term sustainable business, it is essential that owner-managers find the appropriate balance in applying time, effort and resources to both strategic leadership and operations management.

Two issues, three steps to success

My approach to managing that balance is to apply the same three steps to each issue.

Strategic Leadership

1. Assess performance

Continuously assess market conditions, customer feedback and the competitive landscape. Check that your intended strategic positioning, branding and corporate culture are in line with current customer and employee perceptions.  Confirm that you are correctly matching your strategic and competitive advantage to market opportunities

2. Revise the plan

Review and revise, if necessary, your strategy, concept and business model.  Update your Business Plan and marketing communications strategy.

3. Make improvements

Launch the new plan internally and provide strategic direction and support to the management team. Prepare new marketing communications and sales tools and take them to market.

Management Effectiveness

1. Assess performance

 Regularly assess operating and financial performance by monitoring key indicators against your plan, industry averages and the best performers in your business.Survey employees and customers for satisfaction levels and feedback on areas for improvement.  Maintain current and effective employee performance reviews for management and staff.

2. Revise the plan

Identify deficiencies and set new objectives for performance improvements. Update the Business Plan and internal performance objectives for management and staff.

3. Make improvements

Define and develop improvement projects and provide necessary management support and resources to achieve the objectives.

A simple process, but not easy. Achieving balance in managing business strategy and effective operations is still a challenge.

But worth continuous attention.

Your Uncle Ralph, Del Chatterson

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9781496932259_COVER.inddThis article is from Chapter 4 of Uncle Ralph’s, “Don’t Do It the Hard Way”.  Read the book.

Challenge #1: Strategic Leadership + Management Effectiveness

Start with a plan.

 As we started our e2eForum on a bright sunny spring morning, this was on the flipchart:

The Entrepreneur’s Challenge:

Strategic Leadership + Management Effectiveness

It is my favourite theme and I had been asked to decide on today’s discussion topic, so there it was. Some around the table had heard me rant on this subject before, so I was trying to approach it a little differently.

“Today I’m going to start by admitting to you my own biggest mistake as an entrepreneur – failing to continually think strategically. I was too often pre-occupied with operating issues and short-term problem solving. Stuck in the old dilemma of too busy fighting fires to ever work on fire prevention.”

“This was especially true in my first business, computer products distribution. There was so much detail to keep on top of – markets and technologies, customer service issues, managing employees and learning everything I had to know as a new entrepreneur about the running a business – from accounting systems and freight rates to lines of credit and payroll deductions.”

“I had all the usual excuses for being drawn into the daily crises and never getting back to the drawing board to review the original strategic plan and see if we were still on track. To be honest, our original plan was not very strategic and never looked past the first two or three years. It was only focused on making our numbers, not on strategic positioning and managing our important business relationships. We made good short-term decisions to maintain profitability and win our share of competitive battles, but did not effectively protect ourselves from conflicts with our major suppliers and were not prepared for the rapid decline in profit margins as competitors flooded the market.”

“We started business in the mid ‘80’s when IBM personal computers and the clones and compatibles were first landing on desktops everywhere – in offices, schools and homes. With our one primary product, computer monitors, we were initially competing with only about six major brand names and four other regional distributors.”

“Our customers were primarily the local computer stores that were on every second street corner and in every shopping centre. We were selling a few hundred monitors a month and average profit margins were at 12% to 14%; pretty healthy we thought. But high profits and fast growth brought a lot of competitors into the market. By the mid ‘90’s we had over forty competing brand names and at least twenty competing distributors. Profit margins in distribution slid to about 4%; no longer healthy. Our volume was up to ten times over our second or third year, but net profit was the same and we now had huge risks in inventory and receivables.”

“That’s when I made the decision to enter into the merger which would have helped us to diversify our product mix and customer portfolio and reduce the risks. Unfortunately, the merger didn’t work so we wound it down and I subsequently left the computer hardware industry about two years later. Very quickly after that consolidation eliminated most of the players in the personal computer market – only a few major brand names, three large multinational distributors and three or four national retail chains remained by the year 2000.”

“Any survivors from that era had to be very good at re-positioning their businesses to keep up with the rapid evolution of the computer business.”

“Your own business may not see rapid change like the computer industry, but I’m sure that whatever business you are in, technology and the Internet continuously affect how you do business. You have to adapt to keep up with changing competition and new customer expectations.”

“Don’t make the mistake I did of getting lost in the operating details and neglecting to raise the periscope and scan the horizon for oncoming threats or opportunities. Be prepared to respond.”

Keep your head up

“I do try to keep aware of what’s on the horizon,” said Dave, “but sometimes I have very limited choices available for my response. We expect our manufacturers to keep up with the technology and the competition and our bike dealers to do a good job of attracting customers and making the sale. As the national distributor, we provide the pipeline to market, but we need the people at both ends to work with us.”

“And it is true,” he added, “even if we’re in ‘old economy’ traditional businesses, we all have to keep up with technology – both to remain competitive and to rise to new customer expectations. The devices and applications all keep getting cheaper, easier to use and more effective at delivering the results. We simply cannot afford to stand still – the competition will beat us and the customers will leave us if we don’t keep sharpening our tools.”

Looking around the table it seemed we all agreed with Dave. Strategic vision and leadership need to be constantly applied to daily decision making.

Lack of strategic direction, in my opinion, may be the biggest mistake for entrepreneurs and can be fatal to the business.

Your Uncle Ralph, Del Chatterson

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Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

 

 

 

 

Three challenging steps to selling your business

 If you’re thinking of selling your business someday, remember it’s a long, complicated process that you should start well in advance. The recent sale of a client’s manufacturing business, reminded me once again that a successful sale requires considerable time and effort – before, during and after the deal is made. Rigorous planning and preparing for the sale, working hard to get the price and terms you want, then closing the deal and managing the transition to new ownership.

This deal began about five years ago with the casual comment, “I’m thinking it’s time to sell. What do you think my business is worth?” Always a challenging question, loaded with high expectations and a lot of ego. I did the analysis and presented my estimated range of potential values based on standard valuation techniques. As usual, the owner was disappointed that the number, but was eventually persuaded that the rationale was reasonable.

It helps to ask, “How much would you pay to buy this business if you were not already the owner?” And it also helps to remember that every investment is justified on the expected rate of return and any sale, including the equity in your business, only happens when the buyer values it more than the seller. Never when it’s the opposite.

Pride and ego can persuade the owner to price the business much higher than any rationale buyer can see or be willing to pay.  We could look for a crazy person with lots of money, but the two are not often found together.

So, once the decision is made, what are the three steps required to sell your business?

First Step: Packaging for Sale

If we have agreed that the current valuation is not sufficient, then we have to work on short-term action to improve on the value and make the business more presentable to prospective buyers.

The value is always increased if the business can improve on net income and reduce the risk associated with sustaining it. The immediate requirements to stabilize revenue, reduce costs and clean-up the balance sheet are usually obvious, if looked at from the perspective of an outside investor. But often the most difficult and important issue to be resolved in order to enhance the value of the business is to reduce its dependency on current ownership. That may mean introducing a stronger management team and removing the owners from an active role. You cannot sell and exit the business, if it will fail immediately after you leave. (Seems obvious, I know.)

Ideally, the business should already be managed to make it as valuable as possible by continually addressing the key issues of sustaining growth, reducing risk and building a strong management team.  When those issues are all reasonably resolved and the tough questions can be answered, then you are ready to start presenting your business for sale.

Second Step: Presenting for Sale

Preparing for sale requires some strategic planning. We need to know how to present the business for sale and to which potential buyers.

Strategic buyers will always pay the best price because they will have access to synergies in reduced overhead or expanded sales that will add to their return on the investment and consequently to their perceived value. Who are they and where do we find them? Would you consider selling to a competitor? What if they plan to buy your business to close it?

Are you willing to consider passive investors who are seeking low risk returns and will probably offer the lowest price? Would a new owner-management team be a better scenario for continuity of the business and a smooth management transition?

What are your preferred terms to maximize the after-tax cash value and to accelerate the payout? What is negotiable and what is not?

When these strategic questions are answered you can prepare a marketing pitch and Offer for Sale to attract interested and qualified buyers. The package should have enough information to appeal to an investor without disclosing too much confidential or competitive information. You may even wish to remain anonymous and have the initial package presented by an agent or business broker. After the prospective interested buyer sold!has been qualified and signed a non-disclosure agreement, then a more detailed package should be available to provide the company background and financial history and support the valuation and asking price.

As proposals are exchanged and alternatives are considered, negotiations can begin. There may be several prospects that do not lead to an accepted offer, but eventually a deal gets made. Unfortunately, you’re still not done.

Third Step: Closing the Sale

The third step is closing the sale, completing the transaction and making the business transition to new management.

This final step can be a grinding process with all the conflicting, complicated and costly input of your accountants, lawyers and bankers. (Of course, they should all have had some prior warning and the chance for input before the deal is signed, but now it gets more serious.) You need the professional expertise to properly document and process the negotiated Buy/Sell Agreement to avoid any subsequent liabilities, minimize the tax consequences and maximize the cash payout. You will get conflicting advice, especially from the buyers’ advisors, as the best terms and conditions for you may not be in their best interest. More negotiating and compromises will be required.

Then, once the deal is properly documented and the closing gets done as planned, the parties can all work together on the transition to new management and ensure that the business stays on track for continued profitable growth any balance of sale gets fully paid.

Now you can make your graceful exit and focus on managing, or spending, all that cash.

Have you decided to sell? Then it’s time for you to get started on the first step.

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs. 

 Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

Earn the right to brag

It worked for me running marathons. Long after my rational brain and aching body were telling me to quit, my ego kept reminding me that I would lose all bragging rights, if I didn’t finish. I knew it was much more satisfying to work into the conversation, “Yup, the full twenty-six miles, 42.2 kilometers, and I wasn’t last. In New York there were even nine thousand runners finished behind me!” (No need to mention there were twenty-five thousand ahead of me. Just a humble telling of the facts that put you in the best light.  Getting too boastful can lead to distressing put downs, like “Did you win?”)

Pride is a great motivator.

No need to deny it; earn it and use it. Don’t exaggerate and don’t take credit where it is not your accomplishment, but if it’s true, let the world know.  Sometimes it’s not clear why we’re so proud, but if the feeling is there, share it. And if you are proud of your team, your family, your staff, or your associates, it’s worth sharing. Being recognized and appreciated is a great motivator for everyone.

What about the things we do we’re not so proud of? The question then is “Would you do that if anybody knew?” The opposite of pride is shame and it’s a good deterrent to bad behaviour if you imagine it being exposed. If you anticipate embarrassment, humiliation or loss of respect, then don’t do it.

Imagining an audience works both ways. Keep in mind that you may not be just imagining it.  In today’s over-exposed world somebody will notice, whatever you do.

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs. 

Join our mailing list for more ideas, information and inspiration for entrepreneurs. Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.