When I was in private industry I frequently assessed potential acquisition targets.  We would contact those deemed worth pursuing, and assess their interest level. Negotiations would only start if both organizations’ goals were aligned.  There was a process of evaluation on both sides; two totally different perspectives on one shared outcome.

A business is only worth what it can make.
Facts must validate value. This, in turn, requires disclosure. A seller will want to know if a prospective buyer is legitimate and can afford the acquisition. A buyer will want details of their prospect’s situation, ranging from financial performance, to key staff and suppliers, to client lists, and so on. And this, in turn, means that before entering into serious discussions both sides should protect themselves with non-disclosure agreements, prior to sharing sensitive information.

As a buyer does due diligence in learning about a prospective acquisition, the hopeful seller will ideally cooperate, so as to achieve maximum value in the sale. The importance of collaboration cannot be overstated; without it trust will break down and evidentiary facts become suspect.  This can crush any deal.

Your business’s worth will vary by industry; however in all cases it will be measured on the ability to sustain cash flow. The message for sellers: you must have a positive cash flow track record to attract top dollar—you have to back up your value with performance.

Have a continuance plan.
In the Small Medium Enterprise (SME) market, the question of positive cash flow performance requires the answer to another question: will the sale, and departure of the owner, cause customers to take their business elsewhere? This event would lower valuation. In order to mitigate this risk a seller must demonstrate their business will continue to succeed without them.

In order to preserve value and ensure your exit provides you with the reward you expect, you must put a continuance plan for your business in place. By mentoring and promoting protégés, your business’s future performance can be guaranteed, thus maximizing future exit value.

Fundamentally, your business is only worth what you prove it can make for the next owner. Start your cash flow improvement and continuance plan at least five years before your exit. Be relentless in making your business work without you.  This will make it easier for you to leave when you want.

Image courtesy of FreeDigitalPhotos.net jscreationxs

Who among us does not want to tell the boss they are wrong in pursuing a certain course of action?  How many of us have the courage and confidence to put ourselves out on the limb to suggest there are reasons to switch direction?  Did the Italian ship Captain of the doomed Costa Concordia heed the advice of his officers?   We don’t know if anybody even suggested the ship’s course was dangerous? Is it possible they may not have not wanted to for fear of  making a suggestion counter to the Captain’s?

Your organization may be experiencing “group think”  and it almost always offers an easier  way in handling life’s everyday problems.  After all it is easier to maintain the status quo and swim with the current than fight against it.

While most large organizations believe they are winning the battle for change they rarely take a temperature check from the front line.  They may let their subordinate leaders do this for them.  However  if they do not question the efficiency of current policies and protocols  how can the organization really provide top shelf service to its clients and change for the better?  I would suggest that many good ideas die a miserable death on the peer pressure floor.

How then to tap into your employees’ suggestions for a better way.  Listening to what they have to say without incrimination helps so long as you validate the legitimacy of the idea then pass it along to your higher level leaders.  If you fear passing along good ideas or suggestions then you should not be in a  leadership role.  Your responsibility is to help improve your organization.

Wake up!  Smell the coffee and find the courage to debate issues within your organization that will help improve  morale and customer relationships.

Image provided courtesy of FreeDigitalPhotos.net Stuart Miles

Leadership today is about helping all your employees meet expectations and in the process exceed company goals.

The reality is most businesses have a combination of four generations; Traditionalists, Baby Boomers, Generation X and Y making up their workforce. Each brings their individual value system which predicts behavior.  It is through  understanding each group’s individual needs that you will help lead them across the finish line.

Traditionalists comprise 14% and Boomers 39% of the current workforce[1].  Together these two groups aged 45 to 79 make up 53% of Canada’s workforce. USA stats may be similar.  Ask yourself; is the maturity and experience going to leave with them upon their exit?   The fact is with no mandatory age retirement many workers are staying on the job longer.  How do you plan to cultivate their experience?

Customers love knowledge and maturity.  Keep in mind your work demographic should mirror the population otherwise you have competing value systems.  Because  the older group is seasoned in most everything the company does you should want them to mentor and train those that follow.

Consider moving people  laterally as well as vertically so that they can grow and learn from those who have gone before.  By having your loyal boomer+ group work with tomorrow’s leadership pack you help pass along the genetics of experience and satisfy your customer experience as well.

Make everyone feel valued and motivated by bringing all groups together in mutual tasks and projects.

October is Small Business Month across Canada.  The month long awareness campaign is designed to provide encouragement to the self employed and insights to those considering it.

DID YOU KNOW?

• Small businesses (fewer than 50 employees) represent 97.8 per cent of total business establishments in Canada
• Mid-sized businesses (50-499 employees) make up 2.1% of that total
• Total number of self employed persons were 2.6 million as of December 2008

This means 2,542,800 businesses were Small Businesses (under 50) and they hosted 31.3% of the total workforce.  When combined with the mid-sized group (50-499) these Small and Medium Sized Enterprises (SMEs) accounted for 54.5% of the workforce, almost 8 Million Canadian workers.[1]  In 2010 over 900,000 of the 2.6 million self employed were women.[2]

The Small Business Profile prepared by the Canadian Federation of Independent Business goes on to state the entry rate is highest among smaller enterprises while the exit rate is the lowest. Clearly SMEs then are the engine that will reshape our economic landscape and more attention must be made to ensuring more of these businesses succeed.

As a kick starter to the month ahead here are some tips for those considering the leap into self employment:

1. Plan on having enough start-up capital to pay for equipment, and at least 6 months of  operating expenses to cover wages, rent, power, advertising etc so you have time to start earning revenue;
2. Have a personal line of credit available as a second back stop and ensure this is in place before you embark on your new enterprise;
3. If you have a significant other who is gainfully employed outside the business make sure they keep that job while you are in start-up phase and establishing a track record.  Plan on 3 years before bringing them into the business.