Did you know?
- Approximately 50% of businesses fail within five years
- Over 70% of businesses are owned by Baby Boomers who are nearing retirement and most will never find a buyer
- Over 80% of these Baby Boomer Businesses are not “transaction ready”.
- Only 4-5% of businesses listed are actually sold in any one quarter (BizBuySell.com).
- Over 70% of businesses sold fail to meet the expectations of the buyer.
Every business owner thinks about exiting their business. Some hope to sell. Others may have plans for somebody to ‘take over’ (e.g., next generation; partner/co-owner; employees via employee stock ownership plans; etc.). Maybe the plan is to step away slowly and continue to take an income or profit. Regardless of the plan, the success of each is largely contingent upon the health of the business.
Any buyer will want some assurance of continuing revenue, as well as the ability to continue operations at a profit. The likelihood of recurring revenue lessens when the ‘Selling CEO’ exits and there is no team in place to drive sales. Let’s assume there is a sales and marketing team to drive revenue. Is there an operating system with the accountability in place to execute on delivering the products and services sold? Does the system measure the effectiveness of those responsible? Do you have trusted relationships with suppliers? How well documented are your systems and processes?
It might seem counterintuitive, but a good test of this happens with a passive CEO. What happens when you (the owner/CEO) take time off? Imagine taking a two-week vacation with no access to your phone or computer. Would the business thrive or would you come back to a firestorm? Take it a step further. Does your management team have a clear direction for the next 3-5 years? Are your vision, values, and goals clear? Would they share the same view of that long-term goal in your absence?
Based on our collective experience in leading Peer Advisory Boards (Mastermind Groups) and one-on-one executive coaching, if the answer is ‘no’, it’s unlikely the team will be able to provide strategic direction, much less daily tactical direction.
The following article shares similar guidance. Please tell us about your experience, as you dream about exit and begin to move closer to leaving your business.
Why Many Small Businesses Cannot Be Sold (NY TImes)
The primary goal of leadership is to have influence. Leaders should have the answers. They don’t need help. Right?
Wrong. Attaining leadership is more complicated than it might seem. How about leading through power and authority? Lead the way. This, too, has inherent limitations.
Why? What if he doesn’t know the way? What if this (whatever-it-is) has never been done? Power and authority only get you so far. They have a limited sphere of influence. They can maintain the status quo and strengthen boundaries. They might even extend borders, build strong walls, control or mitigate bad outcomes, contain and constrain you-name-it. A leader who wields power and authority to get stuff done inherently imposes his ‘way’, which is, by definition, limited.
On the other hand, the leader who has the courage to be vulnerable immediately creates opportunity for all possibilities. She opens the door to the unknown. She invites change, collaboration, discovery, evolution, growth, innovation, invention, questioning, transformation, and transparency.
The leader’s job is to enable this environment and provide a framework within which her team can influence reaching whatever goal lies ahead.
Are you courageous enough to be vulnerable?
Courtesy: Glenn Lopis at Entrepreneur
Innovation Metrics seems like a paradox. Innovation is Thinking Outside the Box, it’s spontaneous, it’s dynamic. Metrics are measurements. Not only are metrics the box, they are the specific geometry of that box.
But Innovation Metrics are valid and useful, and implementing them can give you greater insight into the mysterious black box of creativity and spontaneity that many think innovation is.
There are three basic areas to measure when doing these metrics:
The Processes lie between the inputs and the outputs, but are often the mysterious black box where innovation happens. Inputs and Outputs are more obvious thing to measure.
Start with what you have and measure those things (e.g. new people, new strategies). Measure how the new strategies are communicated throughout the firm.
Start simple. Once you begin getting insights you can make your metrics more granular. An important start to innovation metrics is deciding what to measure. You should not try to take in all the data and measure everything. Keep it simple. Do a check after a few weeks. Are we measuring the right things?
Your company is already using metrics. One of the most important aspects of using innovation metrics is having a common language in the firm around innovative processes. Think about how you can use current methodologies and their lingo and apply them to your innovation strategy.
Do not merely measure for the sake of measuring. What are the metrics telling you? If they are not telling you anything useful, get rid of them. Applying an innovation methodology means not being afraid to scrap the methodology. It is not because of fear of change, but because it isn’t relaying valuable information.
This is what Stuart Hamilton has called “The Curse of the Methodology”.
The Curse of the Methodology: Instead of having the PM work out what needs to be done and then the PM taking care of it, (all behind the scenes), there emerged methodologies (PMP or otherwise) that try to ensure that the PM follows the menu of daily activities. Don’t get me wrong, a lean methodology to enforce good governance is a good thing, but on my last engagement, every project (big or small) had to lodge a minimum of 21 documents, and often as many as 40. These documents are lengthy, repetitive, and take weeks of the PM and other team members to fill out. Then they all go into the archive where they will never be read.
In the end, the most important thing is to have a common language in the firm in which to communicate about innovation and outcomes. It does not matter as much what methodology of metrics you use as much as it matters that everyone is using the same one, with the same language, conveying the same goal.