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Before Selling or Exiting

June 2, 2017 by Chris Scherer Leave a Comment

Before Selling or Exiting

Most business owners hope to exit at some point. Typically, this means you, as the owner (President, CEO), are no longer there or are not there as often. Whether you plan to sell, pass it on to the next generation, or be a helicopter-CEO, there are seven things you need to do before you step away. The bad news is that you should have started this process from day one. Yes. From the day you started the business.

The good news: you are actually reading this and thinking about the steps. Your mindset (1) is the first step. If you only work ‘in’ your business and never work ‘on’ your business, then you are the business. In this scenario, when you step away, the business loses its greatest asset: You.

You have this great idea (a business), now what? If you step back and think about how you direct others, the answer is clear: processes (2) and procedures (3). Your people need some rules to play by and it is your job to provide that direction with constraints. If you fast forward to your ‘exit’, you may know exactly how everything in your business works, but you won’t be around to ensure that same outcome. Now is the time to provide guidance.

Once you actually have some traction, you will need to continually build efficiencies (4). Hopefully, you are focusing on what to improve and how to make it happen. When you’re gone, will this continue to happen?

Now that you have a business that is focused and improving, it is critical that you have the right team (5) to keep the business growing. Remember, you will be gone at some point. You’re better off building and testing your team when you’re around, and gradually step away. As your team develops, you can work from home, take a day off, and maybe even take a vacation.

As you can imagine, business owners expect profit (over time) and they don’t like surprises. Any prospective buyer (or CEO) will look at your finances (6). This is more than your balance sheet and P&L. Buyers will want to peel back the layers and look around corners.

While you may have guessed the last item, we encourage you to be diligent (after all, you will encounter due diligence) and read the full white paper.

If you are really serious, answer 20 simple questions to assess: is your business ready to be sold?

Filed Under: 1 Leadership, 1.2 Governance and Societal Responsibilities, 4 Measurement, Analysis, and Knowledge Management, 4.1a Performance Measurement, 4.1b Performance Analysis and Review, 4.1c Performance Improvement, 4.1c(2) Future Performance, 4.1c(3) Continuous Improvement and Innovation, 4.2 Knowledge Management, Information, and Information Technology, 4.2a Organizational Knowledge, 5 Workforce, 5.2 Workforce Engagement, 6 Operations, 6.1 Work Processes, 6.2 Operational Effectiveness, 7 Results, 7.2 Customer-Focused Results, 7.2a Customer Satisfaction, 7.5 Financial and Market Results, 7.5a Financial Performance, 7.5b Marketplace Performance, A.01 Systems Perspective, A.05 Organizational Learning and Agility, A.06 Focus on Success, A.08 Managing by Fact, A.11 Delivering Value and Results

The Operations Playbook

May 30, 2017 by Chris Scherer Leave a Comment

A Systematic Approach for Achieving and Maintaining Operations Excellence

We’re almost half-way through 2017. Are you working on your business or simply reacting to fires? Do you have a playbook for operations?

More than two-thirds of middle market companies (defined as annual revenue of $10 million to $1 billion) feel they “have trouble making improvements stick.” Based on experience and data (survey of 400 C-suite executives), The National Center for the Middle Market shows that companies do better, “when they approach their operations as systems, with parts or subsystems that can be fine-tuned both individually and in concert.”

Their guidance is simple:

  1. Manage Operations through Governance of the following subsystems:
    • Strategic Alignment
    • People Development
    • Daily Management
    • Problem-Solving.
  2. Stay Close to the Work through leaders (managers) who are “visible and engaged” to your operation, resulting in:
    • Faster problem-solving
    • Better understanding of customer needs.
  3. Choose an Operations Method that Works by having a formal method that is comprehensive and systematic.
  4. Share Your Strategy such that everyone’s work aligns with your mission and vision.

Each of the subsystems require attention individually and works in sync with the overall operations system:

Strategic Alignment guides employee action by setting priorities based on a clear understanding of the overall strategy. This starts from the top down and requires that leaders check in with employees to review priorities and challenge processes.

People Development enables employees to address customer needs in the operation by building their capabilities and skills. People must understand their roles and be able to perform them. The EOS (Entrepreneurial Operating System) Model sums it up this way: they get it (their role), they want it (they like and believe in what they are doing), and they have the capacity to do it. Once the people are in place, the key is building a learning organization (we will post more on this shortly).

Daily Management allows leaders to identify issues and/or gaps to get the right work done. The first step is to have visual controls to track progress and coordinate across functions. The second step is accountability. This requires knowing what each person is responsible for at any given time. The third step is “leader standard work” or “management by walking around”, which means routinely checking that the work is getting prioritized and completed.

Problem-Solving ensures that people can quickly address problems when they occur. This first requires having some system to report the ‘problem’ and then prioritize what to address first. In this process, it is critical to identify the Root Cause of the problem, a skill-set which may require training. Often, the solution may involve working across functions and levels within the organization (i.e., teamwork with transparency into roles and responsibilities).

Finally, operational excellence requires Measurement. In the survey, they identified the following metrics to judge operational excellence: Customer Satisfaction, Profit Margin Changes, Productivity Changes, Employee Satisfaction, and Employee Training Hours.

In conclusion, while middle market companies may struggle to make improvements stick and may be less inclined to formalize an operations method, they do have some advantages over larger companies. Typically, they have greater focus on customer satisfaction, and senior leadership is more involved in operations than at larger firms. Ultimately, good governance is the key to operational excellence. Know what your company is all about. Share that from the top down. Have a formal operations method and stay close to the work. Make sure your subsystems are in sync.

We encourage you to take the Operational Excellence Questionnaire at the end of the report.

Read the full report here.

Courtesy: National Center for the Middle Market

Filed Under: 0 Organizational Profile, 0.1 Organizational Description, 0.1a Organizational Environment, 0.1a.(2) Mission, Vision, and Values, 1 Leadership, 1.1 Senior Leadership, 1.2 Governance and Societal Responsibilities, 2 Strategy, 3 Customers, 3.1 Voice of the Customer, 5 Workforce, 5.1 Workforce Environment, 5.2 Workforce Engagement, 6 Operations, 6.1 Work Processes, 6.1b Process Management, 7 Results, 7.1 Product and Process Results, 7.2 Customer-Focused Results, 7.2a Customer Satisfaction, 7.3 Workforce-Focused Results, 7.4 Leadership and Governance Results, 7.5 Financial and Market Results, 7.5a Financial Performance, 7.5b Marketplace Performance, A Core Values and Concepts, A.01 Systems Perspective, A.03 Customer-Focused Excellence, A.04 Valuing People, A.05 Organizational Learning and Agility, A.06 Focus on Success, A.08 Managing by Fact, A.10 Ethics and Transparency, A.11 Delivering Value and Results

Good News in the Middle Market

May 15, 2017 by Chris Scherer Leave a Comment

In 2017 Q1, the US Middle Market * continues its momentum from 2016, “with all measures at their highest levels since the inception of the Middle Market Indicator (MMI) in 2011.”

Revenue growth swells and hiring is on the rise. Confidence is strong and more companies are planning to spend.

Some Key Indicators:

  • Revenue Growth: 9.2% over the past 12 months (higher than any prior quarter in MMI’s history) and beating the S&P 500 (at 5.8%); up in all industries except wholesale trade
  • Hiring: 51% of middle market businesses are adding employees and only one in 10 is decreasing
  • Economic Confidence: 90% (a new high), with national confidence levels higher than local levels for the first time in MMI history
  • Investment: 64% of companies plan to make additional investments, which is relatively consistent since 2013

*The National Center for the Middle Market defines the U.S. middle market as companies with annual revenue between $10 million and $1 billion.

Courtesy middlemarketcenter.org

small business growth

Filed Under: 0 Organizational Profile, 0.1 Organizational Description, 0.1a Organizational Environment, 0.1a.(3) Workforce Profile, 0.2 Organizational Situation, 0.2a Competitive Environment, 7 Results, 7.5 Financial and Market Results, 7.5a Financial Performance, 7.5b Marketplace Performance

Categories

  • 0 Organizational Profile
  • 0.1 Organizational Description
  • 0.1a Organizational Environment
  • 0.1a.(2) Mission, Vision, and Values
  • 0.1a.(3) Workforce Profile
  • 0.1b Organizational Relationships
  • 0.1b.(1) Organizational Structure
  • 0.1b.(2) Customers and Stakeholders
  • 0.1b.(3) Suppliers and Partners
  • 0.2 Organizational Situation
  • 0.2a Competitive Environment
  • 0.2c Performance Improvement System
  • 1 Leadership
  • 1.1 Senior Leadership
  • 1.2 Governance and Societal Responsibilities
  • 2 Strategy
  • 2.2 Strategy Implementation
  • 3 Customers
  • 3.1 Voice of the Customer
  • 3.2 Customer Engagement
  • 3.2a Product Offerings and Customer Support
  • 3.2a.(1) Product Offerings
  • 3.2a.(2) Customer Support
  • 3.2a.(3) Customer Segmentation
  • 3.2b Customer Relationships
  • 3.2b.(1) Relationship Management
  • 3.2b.(2) Complaint Management
  • 4 Measurement, Analysis, and Knowledge Management
  • 4.1 Measurement, Analysis, and Improvement of Organizational Performance
  • 4.1a Performance Measurement
  • 4.1b Performance Analysis and Review
  • 4.1c Performance Improvement
  • 4.1c(1) Best Practices
  • 4.1c(2) Future Performance
  • 4.1c(3) Continuous Improvement and Innovation
  • 4.2 Knowledge Management, Information, and Information Technology
  • 4.2a Organizational Knowledge
  • 4.2b Data, Information, and Information Technology
  • 5 Workforce
  • 5.1 Workforce Environment
  • 5.2 Workforce Engagement
  • 6 Operations
  • 6.1 Work Processes
  • 6.1a Product and Process Design
  • 6.1b Process Management
  • 6.1c Innovation Management
  • 6.2 Operational Effectiveness
  • 7 Results
  • 7.1 Product and Process Results
  • 7.2 Customer-Focused Results
  • 7.2a Customer Satisfaction
  • 7.3 Workforce-Focused Results
  • 7.4 Leadership and Governance Results
  • 7.5 Financial and Market Results
  • 7.5a Financial Performance
  • 7.5b Marketplace Performance
  • A Core Values and Concepts
  • A.01 Systems Perspective
  • A.02 Visionary Leadership
  • A.03 Customer-Focused Excellence
  • A.04 Valuing People
  • A.05 Organizational Learning and Agility
  • A.06 Focus on Success
  • A.07 Managing for Innovation
  • A.08 Managing by Fact
  • A.10 Ethics and Transparency
  • A.11 Delivering Value and Results
  • Baldrige
  • FAQs – Frequently Asked Questions
  • Uncategorized

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