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A Mom and Dad are now in their 70s. They are still active in the business, yet the reality is they need to be stepping back and delegating more control and decisions to the three children in the business. The three kids have been a part of the business for multiple years so they know how it works and how to provide the service and deliver the product. Sounds like a great scenario, right? Well, that depends.
So often the product and service areas are running smoothly, yet the next generation doesn’t have a great grasp of the business portion.
Financials: How do you read those financials? Why is the overhead rate so important and how does that relate to cost of goods sold and profitability? Who is our banker and why is that relationship so important? How does the profitability trend? If seasonal, what is it per season? Business is math, marketing is math, team is math, sales is math, so why wouldn’t financials be math? If you don’t like math, then find someone who does and can translate it to what you can understand. As the transition begins, understanding the numbers becomes more critical than anything else. High profitability can cover up many sins, but good math can weed them out and increase profitability even more.
Management of the team: How does Mom stimulate, encourage and manage the team? Will the team be ready, willing and able to work for the next generation? Does the next generation have the leadership skills in place to be wise beyond their years? It takes five components to ensure you have the team you want:
- Leadership strength
- SMART goals for the entire team (Specific, Measurable, Achievable, Results driven and Time based)
- Consistent rules that everyone lives by and can grow by
- Right attitude
- Support for risk taking
Vision: Who will now carry the vision for the business? Who will take the trends affecting the business and start to make plans now to make the necessary course adjustments? Who balances the visionary to keep a level of reality in place? One business I worked with had an environment where the husband was the visionary. He always had new ideas, new thoughts, new opportunities that he wanted to follow. The wife was more of the money manager and brought a dose of reality to the business. She is the one who asked the hard questions regarding return on investment, the downside to an idea, etc. That is a valuable role to have in any company. However, that must be moderated with the vision that sometimes can’t be seen by anyone else. Too much caution allows opportunities to pass and therefore be missed.
My parents had one such opportunity. Dad was offered the opportunity to get in on the ground floor of a development that was taking place in the area where they lived. At the time, the area was essentially in the middle of nowhere. Actually it was in between somewhere big and somewhere else that was growing. The place in between was a risk. The cows that lived in that field were pretty content. Now today that area is a bustling, vibrant area. Dad always said that was the one that got away. This isn’t to blame Mom; she always provided that caution, yet usually went with the visionary.
The next generation needs to have the visionary and the realist. There must be compromise between the two. One without the other can run the business into the ground. The visionary without the realist who asks the hard questions creates a business that follows every new trend. Not all trends are good. The realist is usually so cautious that they never get on the upswing of the bell curve. They are the late adopters and implement something after it is mainstream, passing up the opportunity to gain a competitive edge. It is sort of like installing a fax machine in 1995 when email was becoming the predominant tool. The fax machine was leading-edge back in the 1970s and was going out of style by the time the 90s rolled around.
George loved his business. He had attended school for many years to become a good doctor, was good at medicine and followed in his family footsteps. After a number of years of hiring out the administration part of his practice, he and his wife, Katie, decided to have her become involved in the operation. She was good at working with patients, completing the administrative tasks and helping in all the ways possible. Both George and Katie were busy all day long and didn’t take time during the day to discuss business matters.
As all business owners know, it is the little things that can be the difference between peace and frustration in the daily life of business. Yet it is the little things that often don’t get addressed until they are no longer little things.
Katie wanted to start regular weekly meetings with George to discuss the business and often tried to have these discussions once they both arrived at home. George, however, did a great job (better than most) of leaving business at the office once he walked out the door. Katie figured, what better time than during the evening after dinner when the kids were doing their homework or engaging in other activities to have the office discussions. The result was friction as they both dug in their heels.
Fortunately for them, after a few months of back-and-forth discussion, they came to an agreement to go out to lunch every other week, just the two of them, to discuss business. This allowed George and Katie to address business issues during the day and enabled them to grow their business.
Boundaries are probably the most important aspect of running a successful family business without destroying relationships. It doesn’t ensure one or both parties won’t overstep the boundaries, but at least they are drawn. Boundaries are required in many areas, including between home and work, among roles within the business and between family members and employees.
She is very controlling. He is always talking. She is slow to take action. He is quite a perfectionist. Are those words descriptors of you, your family members or your spouse? I know I recognize myself in at least two of those phrases. The challenge is not only our behavior, but the behavior of others. We need to understand the value of each other’s strengths and capitalize on them, not focus on the negative. Let’s look at different types of “behavior”.
She is so controlling – yet the value she brings is the ability to makes decisions quickly, achieves goals, continue to be highly productive, a great leader, risk taker, and is usually efficient and structured. Now that doesn’t sound so bad and could be these are tendencies that are needed in this business.
He is always talking to people which impacts productivity. However he is also spontaneous and loves a crowd around him, seeks out participation from others, is great at motivating the team, keeps everyone laughing, is easy to get to know and will try anything. Who wouldn’t want to be around him?
She is slow to take action and hard to adapt to new environments. However, she is also relaxed, accepting, a great listener, a fantastic team member, is great at follow up, friendly, compatible and sees the details that others don’t see which keeps us out of trouble.
He is such a perfectionist – it has to be exactly right. Yet, if I want something done right, he is the one to complete the task. He is accurate, systematized, structured, a good planner, and focuses on quality more than anyone on the team.
What one considers a benefit, another considers irritating. Think through the personalities on your team and refocus on looking at their irritating habits as strengths to appreciate!
The psychology of denial is interesting. Webster’s defines it as: a condition, in which someone will not admit that something sad, painful, etc., is true or real.
Yet, that is a state that many live in daily. They essentially lie to themselves on a regular basis and that lie becomes the truth. Where are you lying to yourself in your business?
- Business is down due to the economy – Really? Then why are your competitors doing so well?
- There aren’t any good employees – So why are there places like the Broadmoor Resort, which is a 5 star resort that seem to have quality employees (even teenagers – wow)?
- Customers only care about price – Do you buy only on price? Or will you purchase something more expensive if you see a greater value at the higher price?
Each of the above items and your Excuses (which are dressed up reasons) are part of your own denial. You don’t want anyone else to notice that you are lying – and lying to others – but mostly to yourself.
- Business is down, and it caught you by surprise; or you didn’t understand your financials, or have Key Performance Indicators in place that would have given you a heads up allowing you to adjust your business.
- There are good employees – yet your interviewing techniques, hiring & training methods are not as effective as they need to be. It may be time to look at how you invest and motive your employees too.
- Customers care about value – what kind of value are you offering your customers and what are you actually providing?
As the end of the first quarter of this year approaches, it might be a good time to ask yourself these questions and contemplate on where you are suffering from Denial and what do you need to change personally and in your business today!
Attitude is all about how you look at things. I recently took a trip to New Orleans flying through Houston. The Polar Vortex that has been hitting the US made for cancelled flights and a one day delay in actually making the trip. Then upon my arrival in Houston my connecting flight was cancelled. Rather than waiting around hoping to make it on another flight (the standby list was over 200), I chose to drive. The situations on that drive will generate some good stories during my speaking event!
That drive and the resulting situations (i.e., getting pulled over, having the road closed for 125 miles and getting detoured twice etc.) could have made for a very unhappy person who was grouchy, blaming the airlines, mad at the world and generally miserable. What I chose was the pure joy of having 6 hours to myself in a part of the country I haven’t driven before and the peacefulness of my thoughts (when I wasn’t singing at the top of my lungs to a favorite song).
The event that happened was the cancelled flight, my response was – ok now what happens. My actions created the outcome; “this is a journey and who knows where it will take me”. My response could have been much different and the outcome could have ruined the whole conference for me.
My questions to you:
- How do you respond during challenges?
- What are your first thoughts and resulting actions?
- Do you take it out on others – therefore creating a bad awful day for them?
I have learned that one great joy is to take a bad situation and NOT take it out on others. I love watching them respond when they expect you to yell and get mad. I love putting joy into their day of not having an irate customer in front of them. Now this doesn’t mean I allow them to walk on me, or am a push over (those who know me probably haven’t even dreamed of that situation.) You would be amazed at how often I then get told: Thank you for being so understanding. Thank you for your attitude.
How do YOU respond? Do YOU need to change your response to life, business, and personal situations which not only change your world – but those around you?