Posts Tagged ‘Small Business’

Richard Martin’s Monday Morning Brilliant Manoeuvres — 27 May 2013

Posted: May 27, 2013 in Leadership
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Brilliant Manoeuvre
Act on what you can influence and control at this time.

Discussion
“If only I had complete control of the situation I could do something to improve it.” Unfortunately no one, not even the most powerful CEO, can ever have complete control of a business situation. It’s critical that managers and executives at all levels of a company identify what they control and what they don’t. They must resolve to act on those things they control while influencing those they don’t. I’m working with a company and this is exactly what I’ve told one of the managers who is responsible for one of its divisions. He’s been recommending a de facto merger with another division for over a year, in the interests of increasing efficiency and effectiveness and improving performance. However, it’s taking too long in his eyes. I asked him to take a serious look at what can be done to integrate operations and sales with the other division without changing the legal or organizational structure of either. In other words, what positive actions can he take now to improve the situation based on what he and his colleague in the other division can control? They’ve decided on a common plan and will start implementing it as soon as possible. They don’t have to wait for permission; they are fully capable of making these improvements now. It may not be the ultimate solution, but it’s the best one at this time.

Tip
Time is the ultimate resource. Brute speed can compensate for time and resource limitations. It can also provide a surprise factor that’s crucial to business success.

Richard Martin is a consultant, speaker, and executive coach. He brings his military and business leadership and management experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2013 Richard Martin. Reproduction and quotes are permitted with proper attribution.

Becoming Self-Employed or Starting a Small Business: What Are Some of the Financial Considerations?

Posted: September 18, 2012 in Uncategorized
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Anyone who wishes to become self-employed or start a business should consider the following key financial points, which is where many self-employed people have avoidable problems:

  • Whether you choose to consider yourself in business or simply self-employed, the market will consider you nonetheless to be in business. As a result, you have no choice but to think like a business owner and entrepreneur at all times.
  • A business with a great product but poor marketing will likely fail. On the other hand, a business with a so-so product but great marketing stands a much better chance of thriving. Consequently, as a business owner, you must continually invest in marketing and selling. At the beginning, this is more about time and effort than big bucks, but the tendency is to skimp on these as they can be hard. It takes sustained effort and perseverance to create the demand for your products and services (which is what marketing is) and to face refusals and obstacles as you start promoting and selling. The investment is psychological and physical, but it is real nonetheless.
  • Keep a tap on your ego. Ego is what leads people to buy a Mercedes as a company car at the beginning, rather than, say, a Honda. There will always be time for that later, once you’ve got better cash flow and are a going concern.
  • You should pare your fixed expenses to the minimum and transform fixed expenses into variable expenses. Do you really need to rent an office with a receptionist, or can you work out of a home office. The cash flow savings are significant as can be the tax implications. You also save on commuting in terms of time and money.
  • Build a safety net in the form of savings, commercial insurance (as relevant), supplementary health insurance, income replacement insurance, and catastrophic illness insurance.
  • Be prepared to invest in yourself and in time-saving approaches. For instance, you need regular professional development, professional memberships, and professional advisors (e.g. accountant). You also must consider the time value of your work and other activities. For instance, time spent doing household chores can be better spent marketing and selling for your business. It can be an investment to hire someone to do these while you invest your time and effort in your business.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

Family Ties that Bind

Posted: April 16, 2012 in Uncategorized
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Tolstoy’s novel Anna Karenina starts with one of the most famous lines in all of modern literature: “All happy families are alike; each unhappy family is unhappy in its own way.” In the case of family businesses though, we can safely assert that most of the unhappy ones tend also to be unhappy in the same way. It usually boils down to who gets how much and who is in charge of what.

When the founder of a company brings family members into the business, this can increase the potential for internal conflict by a significant factor. One of the most common manifestations of this phenomenon occurs when the owner—usually, but not always, the father—offers management positions to some or all of his children. When the children are also part owners of the business, the problems compound. And when the company transitions to new leadership, as when the founder retires and selects one of the siblings to run the company, the potential for conflict goes through the roof.

Here is a case in point from my own consulting practice. A younger sibling was appointed as general manager of a small company while an older sibling continued in a subordinate managerial position within the structure. The older sibling was somewhat miffed at not being considered for a higher position, especially that of general manager. The older sibling was starting to take out that frustration on the younger sibling. Conversely, the younger one was starting to act in a dictatorial manner in order to make clear to everyone “who the boss is.” A rivalry that had been seething beneath the surface for years now had the potential to erupt into a volcano of disruption that the company could ill afford.

The younger sibling had the foresight to get my advice about managing the working relationship. My advice was simple: “You are the boss, so act like it. That doesn’t mean to be insensitive or harsh, but you are the one who has to answer to ownership for the company’s results, not your sibling. We need to talk together to ensure that you both know where you stand and the dynamics of your personal relationship don’t hinder the dynamics of your business relationship.” Is that a tall order? Perhaps, but what are the alternatives?

The key method I advocate for dealing with these issues is what I call ‘The Outsider Test of Behavior.’ Simply put, if a family member is behaving or performing in a manner that would be deemed unacceptable for an employee or manager that doesn’t have a familial relationship with the company’s ownership or senior leadership, then that behavior or performance is probably unacceptable, even though that person is one of the family.

Therefore, if family members have an ownership stake or occupy various management positions within the company hierarchy, they still have to let whoever is in management do their job, whether those people are family members or not. They can’t just decide to change things because they happen to have a familial relationship. Nor can they question the authority of other executives and managers, reverse decisions unilaterally, or otherwise disrupt the good functioning of the company, all simply because they happen to have the ‘right’ DNA.

The company has a fiduciary responsibility to employees, clients, suppliers, and financial backers (e.g. the bank and outside investors), and family members have to work within that reality. If they are part of ownership, they can exercise their responsibilities as shareholders through the board of directors (if they are a member) or at the annual meeting, just like any other shareholder. If they are part of management, they have to exercise their managerial functions and carry out their responsibilities in the same manner as any other manager in the company, all the while respecting proper rules of authority, responsibility, and decorum. They should also be held accountable for performance and behavior just like any other member of the company.

Of course, all this assumes that the family member who is in a managerial position within a family business is actually capable of exercising the functions of that position. If not, then the CEO or senior manager overseeing that person must work with the rest of the management team, ownership, and possibly the board, to ensure that that person is either removed from a position of authority, or removed completely from the company.

All of this can be very hard on the family member who has the ultimate leadership responsibilities, whether it is still the founding family member or the one who has succeeded the founder. It can also be hard on family members who are in positions or who have ownership stakes that they feel are unjust given their status within the family or self-perceived capabilities. But like I said above, what is the alternative, run the company into the ground?

Family members who are privileged to be involved in a successful business should realize how lucky they are to be in that position. Most people aren’t born on third base, much less second or first, so the situation must be seen for what it is: a great opportunity for individual and collective growth in a win-win dynamic, not a bone of contention within a scarcity mentality.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

Leadership Principle # 5 – Make sure that your followers know your meaning and intent, and then lead them to the accomplishment of the mission

Posted: February 24, 2012 in Leadership
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This is the fifth installment in my series highlighting and discussing military leadership principles. Even though these principles have been developed over decades, and even centuries, of military practice, you will find that they are highly applicable to leaders in all walks of life, and especially business.

This principle has two main components. The first is to communicate your meaning and intent, and the second is to lead your people in carrying it them out. To do this, you first have to know what it is that YOU want to achieve. For this, you need a plan. Then you have to tell your followers or subordinates want you want to achieve, the general strategy and scheme of manoeuvre to achieve it, and then your plan to carry it out. You may have to be fairly directive, and give specific instructions to various teams or subordinate leaders, but it is usually best to give them a mission and then let them find the best way to achieve it. In the military, this is known as mission command, as opposed to directive command (where you give every detail of what to do).

Finally, once the plan is being implemented and the operation or project is underway, you have to actively lead your team. This means being at the right place and right time to make decisions, providing guidance and direction to respond to unforeseen events and conditions, correcting mistakes, and providing reinforcement to successful undertakings, encouragement, and generally stiffening resolve in the face of the inevitable obstacles and resistance. In the military, they often say that no plan survives contact with the enemy, and that is just as valid in business and in any other undertaking.

I will continue with the second group of five military leadership principles next week. Have a good weekend.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

How to Lose Opportunities

Posted: October 27, 2011 in Uncategorized
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I was called by a survey company agent yesterday on behalf of my business bank, Bank of Montreal. They did the same thing about two years, and nothing changed in my responses in those two years. Essentially, while I’m happy with the service I get when I ask for it, the bank doesn’t know I exist otherwise.

One of the questions I was asked: “Why do you say you’re not fully satisfied with Bank of Montreal’s service?” (or words to that effect) Well, for starters, no one ever contacts me, other than this campy survey every two years. If they had investigated my previous responses, they would have contacted me and asked for more details.

I have no concerns for myself, because I have a good team of advisors and I’ve educated myself to find the best financial products and services. But, for the bank, you have to ask how many opportunities they’re letting flit by. What if someone were to call me on a quarterly basis to know how things were going, to ask me if all my needs were being met? Perhaps I need business or personal insurance? Perhaps I need a different type of business credit card, or travel coverage, or a line of credit instead of a higher limit on my card? How would they know if they don’t call me up, or ask me to come and visit them so we can talk about my wants and–more importantly–my needs?

If they’re basically ignoring me, then that means they are ignoring thousands of other small business owners, consultants, professional service firms, and self-employed workers. How many opportunities are they leaving to competitors? It’s not my concern, but the fact that no bank seems to be truly interested in accompanying small business owners is indicative of what one author in the 80s called the syndrome of “towers of gold, feet of clay.” Banks are like deer in the headlamps. They are risk averse, they are slow to react, and when they do, it usually means an overreaction, such as freezing credit, even though most businesses are still good risks.

Personally, I don’t care if the Bank of Montreal gets my business or someone else’s. I chose them as a business bank when I was starting out over 5 years ago simply because they answered the phone and seemed to be genuinely interested in my business (as compared to the ridiculous hoops CIBC wanted me to jump through, for instance). They have done nothing since then to build my loyalty or to generate additional revenue by offering additional services or products. I keep my accounts there because of habit, and because they haven’t compelled me to vote with my feet.

But if someone else came a-courting, I may be tempted.

Richard Martin brings to bear his military and business leadership experience to help executives and organizations exploit change, maximize opportunities, and minimize risks.

© 2011 Richard Martin. Reproduction and quotes permitted with full and proper attribution.lk