Selling A Small Business

This week I have to enter into negotiations to buy a small business. The other side believes that it's worth a lot more than it is. It's my job to convince them that it's worth what are willing to pay. Unfortunately, its often difficult to explain the true value of a business to small business owners, who have invested the proverbial blood, sweat and tears.

The numbers, including some industry standards, show that we are paying the correct price (half of what they are asking). The seller, however, is uninformed of these methods and thus wants a higher price. Small businesses such as this are prone to overvaluing the effort they put into the business. What they often don't understand is that the more valuable they personally are to a business, the less the business is worth. Its simple, once the owner leaves, the value leaves with them. Kinda selfish really.

A small business owner should try to make the business run without them. Its the logic behind systematization. Makes it easier to sell. As Michael Gerber says in the E-myth, there are only two reasons for a business, to sell it or franchise it.

A Cool Business Model

From Tim Ferris's book, The Four-hour Workweek.

Here is a cool new business model made possible by the internet. Steps are listed below:

1. Be a specialist/expert at something.
2. Build a DVD explaining how to do it.
3. Outsource the manufacturing of it.
4. Sell it over the Internet.

Easy. If need be, replace DVD with website, newsletter, whatever. Its easy and cheap and if its good, you can reach a lot of people without a lot of expenditure.

Next project: My mom teaches ballroom dancing for people in wheelchairs. How-to DVD will be coming for Christmas.

A Constant Reminder

Although my dad will surely role his eyes (thinks I can be a bit dramatic) I will go ahead with this blog. I read this theme in two separate books and one speech by Steve Jobs, all within the span of a few days. (Thanks Allen and Tyson!!)

The theme is that death is a constant companion.

It follows you wherever you go, all your life. You cannot outrun it or hide from it. It is always there, ever patient, ever ready. In the light of this, knowing that you could go at any second most things seem not so important. Is it important that you get that new ipod? Or that when you go to clubs you dont meet anyone? Just doesnt seem that important, does it? Family, loyal friends, work that lets you contribute to the world - these are the important things.

Its not simple enough to live life as though you may die tomorrow. I dont plan on dying tomorrow, nor the next day or a long while after that. But I could. So why be scared/intimidated/timid/content - there is so much to do...

Words For The Ages

Some words that you use as a teenager/young adult are cool. However, once you enter the business world, some of these words have to leave your vocabulary lest you run the risk of sounding immature - and believe me, immature is almost as bad as dumb. These words and their replacements are listed below:

Old Word: Awesome (or Sweet!) - Replace with: Great.
Old Word: Seems - Replace with: Appears.
Old Word: Cool - Replace with: Excellent.
Old Word: Fun - Replace with: Interesting.
Old Word: Cops, 5-0, pigs - Replace with: Police (they arent your enemy anymore, they protect you)
Old Word: A'ight - Replace with: Yes.
Old Word: Bi'atch - Replace with: ...(silence)...

Of course there are some words you dont get rid of: Boo-yah (always sounds cool), HOT (useful for so many things) and my personal favorite - Badonkadonk.

Adherence

The more books I read, the more complicated things seem to become. My brain cant handle it. Its like the more clothes I buy, the more complicated it becomes to choose what to wear. The more furniture I buy, the more cluttered my apartment became. The more dishes I buy the more I have to clean (not true, but it feels that way). The more girls I date...uh...err..nevermind.

Its like single variable calculus was easy. Multi-variable calculus no way! Impossible!

I always thought the more I read on business, in all of its categories, the better I would be at business. Not true. I think that people with the most success have a few principles that they adhere to strictly. Seems to make sense that I should have mine:

1. Underpromise/Overdeliver

2. Be impeccable with my word. (Do what I say I will when I say I will do it!)

3. Listen to myself.

The first is obvious but tough. You want to get people excited, hell, get yourself excited. But its important to manage expectations. The second is, in my opinion, the most important for business. Its a function of trust, the most important thing in a relationship. Business is about relationships. The third is less obvious than the first two but equally advantageous to implement. Its the times when I have walked an others path and gone astray. When I listen to myself, I have no regrets. No regrets means higher and more solidified self-confidence.

I will add more as time goes on and my experience widens. A lot of trouble in my life could have been avoided by adhering to the above.

The Four Agreements, By Miguel Ruiz

1. Don't Take Anything Personally -What this does is protect you from taking offence when none was meant. Although it may seem passive and is if you are letting people "get away with something" thats not the case.

2. Be Impeccable With Your Word - simpel as dont say things about people that you wouldnt say to their face. Heck, dont say anything mean at all. Be honest with yourself and others. Do as you say you will.

3. Dont Make Assumptions - Sometimes you will be called upon to make judgements, get as much information as possible. If you must react, give the benefit of the doubt.

4. Always Do Your Best - Always. Give your all.

These four laws work in conjunction with each other; like the spokes on a wheel, they work best together.

Cool Websites

These websites are cool. I am surprised I had to read a book to find out about them. Seems like these should be common knowledge (or commonly used tools).

www.getfriday.com - get a virtual assistant in India to help you with a range of tasks. Cheap and apparently they are great at what they do.

www.elance.com - hire a professional website designer, engineer, you name it!

www.hotrecorder.com - record conversations over the internet. (we should all be talking over the internet anyways. 3 cents a minute!!!)

www.contactanycelebrity.com - just kind of fun.

Its hard to imagine what else is out there, but I will bet there are a lot more great sites. Please post in comments other cool websites.

Out into the unknown...

Its a funny feeling, almost like running in the dark, you don't know where you are going or whats ahead. Going out into the unknown is a frightening experience. To walk towards the light is an easy choice but to walk towards the dark - willingly - is a difficult choice. As a people our choices tend towards the known. Its why we turn on the lights, stay in jobs for years or accumulate money.

I, personally, am kind of frightened, as I stare into the darkness I feel nerves that I claimed wouldn't exist. This claim, however, was made during a time of easy choice - light. The calming words of "every door that closes another opens" and "every failure is an opportunity to learn" do nothing to reassure.

Its frustrating but also exciting in another way. It is my choice as to which it will be for me. I have looked in the mirror and realized that I am unhappy too many times. Maybe a gentle hand is pushing me in the direction I need to be going. I hope so.

"Hmm..."

I have been saying that to myself a lot lately. Its a reflective thing. I find when I am going "Hmm..." I am seeing things in a different way. Maybe its cause of new information or maybe a new insight. The latest reason is some unrest in the security of my job. It seems it was not as secure as I thought it was. Or maybe it is. Hmm...I wonder.

Sometimes its scary when you realize things arent as you thought they were. Its shocking and disturbing when it impacts something as important as your job (or marriage or health or your family or anything important to you).

Maybe you come up with an answer maybe you dont. But there is value in "Hmm...", its good to question things, to see things from a new light. Whether it builds your foundation of experience or solidifies your character. Each "Hmm..." is an opportunity to grow.

Transition Series Part 2

Which Strategy is the Right Strategy?

Wait..you mean I should have a strategy? Yup. A person without a strategy is about as good as a business without a strategy, or as lost. In this case, the strategy that the business/role requires is going to determine how you focus your learning agenda and attention.

Watkins explains that there are 4 basic business strategies:

1. Start-up
2. Turnaround
3. Sustaining Success
4. Realignment

Basic knowledge of the business and/or position you are moving into should give you a general idea of what strategy is needed (new company = start-up, failing old company = turnaround, etc). The basic checklist you want to run through for assessing the business and how your strategy fits into the business strategy, follow below:

1. (obvious) What type of situation is the business?
2. Implications for challenges/opportunities that you will confront? Start-up's challenges include creating new systems, building a team, etc.
3. Implications for learning agenda? Do you need different amounts of time with each employee?Will you likely be letting some employees go?
4. Which of your strengths are going to your greatest asset? Of your weaknesses which will be the greatest liability?
5. Prevailing frame of mind? Are you going to be on the offense (start-up) or more defense (sustaining success)?

These are the basic questions and should be expanded on. The main idea of this section is to give some thought to what type of business you are moving into. Many managers have failed because they have brought a personal strategy that doesn't fit with the business strategy.

Transition Series Part 1

Seeing as I am transitioning into a position within my company, I figured it was a good time to outline a transition framework. These frameworks and guidelines are drawn largely (if not all) from the book by Michael Watkins, The First 90 Days.

The Transition Series will look like this:

Part #1 - Don't Get Stuck In Your Old Job and Learn Fast
Part #2 - Which Strategy Is the Right Strategy?
Part #3 - Secure (and find) Early Wins
Part #4 - Negotiate Success (with your boss)
Part #5 - Achieve Alignment and Build Your Team
Part #6 - Make the Right Friends
Part #7 - Keep Your Balance (and help others)

Seven parts for seven days till I make the transition.

Part #1 - Promote Yourself and Accelerate Your Learning

A major goal in making a good transition is letting go of your previous job. It may have been a great experience or a bad experience, but what is most important is that you let go of it, mentally if not physically. Being stuck in your old role will not allow you to address the skills and focus that your new role requires.

The major goal of promoting yourself is to allow your mind to focus on the new role. We all know what it is like to enter into a relationship with someone who is still in love with an ex. It works the same for jobs.

Ask yourself:

• What has made you successful so far? Are these strengths sufficient for new job? If not, what skills do you need to develop?
• Does your new role require you to do things that in the past you haven't enjoyed doing? What is your plan for overcoming this obstacle?
• How will you mentally prepare for entering your new job and leaving your old one?

Accelerate your learning by developing a structured learning plan. The three main areas that you must focus on are as follows: Technical, Cultural and Political Knowledge. Use actionable insights as a way to speed up your learning. Develop these insights through a specific (tailored to your situation) set of questions that are standard across those whom you ask. Failure to understand any one of the three can lead to your changes meeting forceful resistance. All situations are complex, the more dimensions/angles you are able to study your particular one from, the more you will understand it.