This is the first of a three-part series on running a family business profitably and equitably. Over the past 27 years, I’ve worked with hundreds of family businesses. Even though the industries differ, the challenges surrounding them are very common. In the next three columns, I will draw attention to the three most critical topics that all family businesses need to address for both profitability and family bliss.
Corporations use boardrooms to create initiatives, develop strategies and settle disputes (among other things). Family businesses frequently use kitchen tables, backyard decks and hospital waiting rooms to do all of those, including determining perpetuation and ownership. The biggest problem I’ve encountered in working with countless family businesses — regardless of success level — is that they don’t treat themselves as a corporation, but rather an amalgamation of family members that all have an interest (and often an agenda) for the family business. Without a process and culture of a corporation, at its best it’s adequate, but not as efficient as it could be. At its worst, it’s a dreadful comedy of errors that merges the Corleone family and Modern Family.
Family businesses are typically founded by someone with skill and passion around a service product and the courage of entrepreneurship. At certain points in the life cycle of the business, spouses, children, siblings and in-laws are inserted into the mix. Frankly, that’s one of the ways that this country has grown and prospered. The problem is that, unlike major corporations that require it, the process of developing and implementing “rules of engagement” around succession, company shares, employment, and individual rights gets tossed to the back of the priority list. They tend to rear their ugly heads at the worst possible moments, leaving the family members scratching theirs.
So without belaboring this issue any further, allow me to dive into ways that any family business can rapidly improve the easily fragile dynamics of their business. It simply falls under the heading of “going corporate.”
Far too many family businesses treat the business — and each other — like family. That’s fine for the Thanksgiving gathering but not for the non-family member employees, the customers, and the partners. Here are my Seven Simple Rules for Converting From Family to Company:
1. The CEO rules. In any corporation, there is a boss: the CEO. Your family business requires a boss. It’s where the proverbial “buck stops.” It’s the final say; the vision; the voice. It might also be the father, brother, sister, son or daughter. Everyone must disengage the familial relationship and respect the position and person in charge.
2. Family members must get a job. The best dynamics I’ve seen are when family members must get a job outside before being eligible to join the family business. This improves diversity of thinking; reduces entitlement; accelerates skill development; and improves profitability.
3. Create a clear path for perpetuation. This is all about “inheritance.” There must be clarity around succession. Having this conversation in the midst of a crisis hurts the entire company. Because this can often be an emotional and difficult conversation, I recommend hiring a facilitator to help with the process.
4. Never talk about the family outside of the family. Don Corleone made this clear in his family business; you should, too. None of the employees care about the family dynamics. In fact, it makes them uncomfortable. Someone should be able to walk into a business and not be able to identify that it has multiple family members.
5. No perks allowed. My wife worked for a family-owned bank 30 years ago. She recalled to me the founder/chairman’s wife being incensed when her adult son was properly charged overdraft fees, and then insisted they be waived. I’m pretty sure that advocacy was never passed on to the other customers. While this example sounds extreme, what seemingly unobtrusive perks are taken in a family business that can lead to discontent from employees or customers?
6. Preparation for the separation. Ever see the founder “retire” but keep coming back and giving “suggestions?” The irony is often the successor to the patriarch takes the company to greater heights! There must be corporate rules about interference from retired family members, regardless of what their role was. The company must prepare and set policy on this and then communicate it.
7. Perfect the balancing act. As much as “going corporate” relates directly to the business environment, likewise it pertains to family time. There should be a clear delineation and rules about what is appropriate in family gatherings. Just like employees don’t want to hear about your family issues, family members not involved in the business don’t care to hear about the business. In addition, everyone needs a break from the business to secure a strong life balance. Employees get to do it; so should you.
Bonus: You can still enjoy a “family atmosphere” by acting like a corporation. In fact, it’s more likely to be achieved that way!
It doesn’t matter if you’re five or 50 employees in a family business. Do yourself, your employees and your profitability a favor by acting like a corporation. You might be amazed at the results of reduced drama, increased engagement, less strife, improved employee morale, and more enjoyable family gatherings. Owning a family business is a wonderful thing as long as its shadow doesn’t own you.
Next month: Family Matters, Part 2: Why you hate your boss
© 2016 Toro Consulting, Inc. All rights reserved
I was just interviewed for a newspaper article on the topic of the dangers to 2nd and 3rd generation family small businesses. The question was – What characteristics or temperament does a second- or third-generation small-business owner need to survive? What challenges do they face?
Allow me to share my response with all of you…
- Must have worked somewhere outside the family business before coming back. Diversity, different ideas, and making it somewhere outside the family circle will all bring a perspective and depth of business acumen that often is lacking in family that never “leave the nest.”
- Must be able to effectively create a transition point from past to present. This includes past generations of family that at what time were the bosses, AND importantly the employees that have spanned generations. There needs to be clear messaging on who’s in charge.
- Must be a strong communicator and influencer.
- Must be able to separate family from business. I call it the “Godfather” trait. It’s not personal; it’s business. Not allowing family members to feel entitled, or allow them to not do good work is critical to creating a string employee culture and business reputation.
- Find expert help. Consultants, coaches, mentors, mastermind groups, executive groups, and associations all can provide help to avoid stagnation in thinking and ideas.
© 2016 Toro Consulting, Inc. All Rights Reserved
Nike just announced that they are dumping their golf product line, which means no more manufacturing of golf balls, bags, or equipment. This has stunned the golf world, especially the tour players that are under contract for them. The three biggest names that featured the equipment and the swoosh are Michelle Wie, former World #1 Rory McIlroy, and of course, the once invincible Tiger Woods. Heck, Nike even named a building on the campus after Tiger.
The fallout has created confusion among the profile athletes in the golf world, and unfortunately has cost many Nike employees that were representative of Nike Golf, their jobs. As an avid golfer – and actually a guy that plays Nike golf balls, sports a Nike golf bag, and hits a Nike driver and hybrid – I have been more than intrigued and fascinated by this sudden and unexpected turn in events. In the process of learning more, I believe there is a lesson here for small and medium size enterprises and the CEOs and Presidents that run those companies.
The golf industry is highly competitive. Nike was much more significant when Tiger was prowling in his decade long run as arguably the greatest golfer ever. However, He now has nearly a 10-year drought in winning a major championship, hasn’t won any tournament in three years, and hasn’t played due to injury in one year. Rory McIlroy hasn’t won a major since 2014 and Michelle Wie has been under-performing for over a year. This doesn’t help the brand and even though it sounds like they make a lot of money from golf, Nike has been hitting out of hazards over the last several years.
Their decision and verbiage on the press release is telling. They state that, “We’re committed to being the undisputed leader in golf footwear and apparel…” Basically, the golf equipment game was a risk they were willing to take when they had the biggest name in golf. Without him, it began not making economic sense. So they decided to “just do” what they do best. According to Trevor Edwards, president of Nike Brand. “We will achieve this by investing in performance innovation for athletes and delivering sustainable profitable growth for Nike Golf.”
They will focus on what they do best…
I talk to my clients all the time about their value proposition. The value proposition defines what you do best and how you improve the condition of others. Be it product or service, what is the one thing that you excel in? What are you the undisputed leader in doing?
Many small and medium size businesses will take forays into new ideas, new products, and new services. Innovation is great and I endorse that type of thinking. However, it better still be around your value proposition. It should still feed into what you do best. If it doesn’t, you may find that you lose a lot of time and money.
If you want to profitably grow your business, determine what you do and do more of it in a myriad of ways. Dump products or services that no longer work or showcase your value. Nike realized that the run was over. It truly ended being artificial because it was fueled by one profoundly valuable asset in Woods. Without him, they are just another “name” in the game, and well down the list. In their eyes, their value is in clothing and footwear.
Take a few minutes and look at your business. Are all your efforts focused on your value proposition and being an undisputed leader in your field or industry? Or, are you still dabbling in things that distract, confuse, or lose money? It’s better that you stay in your own fairway by improving your strengths and building a profitable and fun business.
© 2016 Toro Consulting, Inc. All Rights Reserved
As many of you know, my daughter Mindy was recently married. It turned out to be a gorgeous Seattle summer day. After the wedding, I piled in the car my other daughter Kelli and her friend Gina to head from the church to the reception at a downtown hotel. As we hit the overpass to take a left on to the freeway, we were greeted with bad news. The traffic.
Saturdays in Seattle during the summer months can often cause congestion on the freeways. Today was due to be a higher with a concert at Century Link Field. We didn’t expect a parking lot.
As I merged into the left-had turn lane, Kelli exclaimed that she knew a back way to get to the hotel faster. She had her mobile phone GPS poised in hand and was adamant that we could get to our destination twice as fast. I took her information and quickly went into decision mode. I had about 5 seconds…I asked her one last time, “Are you sure?” she confidently said “Yes!” I made the quick turn out of my lane and down the road I was on to execute Kelli’s plan.
We then hit traffic…again. My initial response was , “great (dripping with sarcasm).” Kelli said to relax; that this was the only bad spot and it would open up. She was right. In the end, her calculations were spot on and we got their in a 200% faster time.
Here’s the moral to the story…
You make “traffic decisions” in your business almost daily. Some are more critical than others, but the process doesn’t change.
- Quickly identify the problem. Sometimes this easy (like visually seeing bad traffic), and sometimes it’s not (cash flow problems). Assess “how bad is it?” Sometimes we make a mountain out of a mole hill and sometimes it’s significant. Make a quick call.
- Get input from your leadership team. Kelli volunteered hers – do you have leaders that will do the same in a tight spot or do they wait for you? Kelli’s idea was hatched by her knowledge of the area and virtual traffic report. Where do you get your information, is it credible, and is it fast?
- Rapidly consider your options. Emphasis on rapidly. I took about three seconds. You may have five minutes or an hour; regardless smart people make fast decisions. Don’t over think, over complicate, or call for committee meeting. Do your own quick cost-benefit in your head. Ask one last time for input if you must – like I did with Kelli – and then…
- Commit to a course of action. Time means everything in business today. Speed is king, so your decision-making must also be mercurial. I’m not saying to be reckless; just to trust your gut and your information and go.
- Be patient. I almost considered turning around when I hit traffic again. Kelli encouraged me to be patient and she was right. Your decision may not yield immediate results, but be patient becasue it more than likely will.
- Be nimble. You may need to make small revisions along the way. Commit, but be willing to be flexible.
While my decision in traffic may seem to trifle compared to other weighty business matters, it was very important to us at the time. That’s the thing about being resilient; your challenges are important to you and require decisions. Learn how to react quickly and decisively and double your own results by doing so.
At the light, take that next right and step on it!
Want to learn how to be more resilient professionally and personally to grow your business more profitably and create a better life for yourself? Check out my new lifetime membership program, Unleashed Universe. Early bird discounts through August.
© 2016 Toro Consulting, Inc. All Rights Reserved
Last month, I went on my annual weekend golf outing with my high school buddies. We go somewhere new every year and play four rounds of golf, eat too much food, and generally pretend we are still in high school. At our final course this year, I went to pay for my green fees with my American Express card and the employee behind the counter said, “Sorry, you’ll have to pay with Visa or MasterCard.”
I found it odd that a golf course the caliber of this one didn’t take every single credit card on the face of the earth! I shrugged and changed cards and went to the first tee. After our round, we had our final lunch together, and as is the case with all our meals, we draw two credit cards from a hat and those two “losers” get to pay the check for the group. Unfortunately for me, this time I was one of the “losers.” When I received my check, I noticed that imprinted on the leather-bound cover was the American Express logo as the desired method of payment. This made me chuckle. Either the employee at the golf shop didn’t get the memo or they had two sets of rules for the same place.
Regardless of the reason, one thing was certain. The golf course and restaurant were sending a mixed message. One side of the company accepted a form of payment, and the other side didn’t. Is your company inadvertently sending mixed messages both internally and externally?
It’s not uncommon for companies to send out mixed messages to employees. Notwithstanding a company’s size or industry, humans are susceptible to such errors. For example:
• Inconsistent treatment of employees when it comes to promotions, pay increases, and time off
• Inconsistency regarding discipline and reasons for termination
• Inconsistent hiring practices and training
• Lack of follow-through on new procedures and practices
• Failing to properly communicate changes
• Failure to set adequate contingencies, leading to confusion and frustration in time of crisis
• Saying one thing and doing another
Don’t tell me this only happens at other companies; that you’re immune to it. I have yet to observe a company that doesn’t have at least a few inconsistencies that lead to internal strife. To fix these issues, allow me to offer some internal best practices and suggestions:
1. Don’t worry about being perfect. I talk to business owners that aspire to have a perfect culture, perfect employees, and perfect harmony. There is perfection in imperfection as long as it’s part of the humanness of a company. Take perfect out of the equation and strive for exceptional. There’s a big difference.
2. Be consistent. Just like one organization should accept the same credit cards, you should be consistent with how you treat employees when it comes to benefits, pay increase opportunities, and advancement guidelines.
3. Become fluent in speaking their language. Make sure you’re clear in how you communicate your message, your priorities, changes in procedures, or anything else that requires education. It’s your message, yet you need to deliver it in way that is understood and implemented.
4. Get help. Subscribe and join associations and groups that provide information and education on human resources. Hire experts to help you navigate challenges and find solutions. Be vulnerable enough to admit that investing in help will ultimately make you a better company.
It’s also a reality that messages can get mixed up externally, just like my story depicts.
• Is your sales team making promises it can’t keep?
• Is your brand clear to your target market, or are you trying to be everything to everyone?
• Is your website current? The worst thing you can do in 21st-century marketing is becoming obsolete in a post-Yellow Pages world.
• Does your customer service team treat customers as you wish they would? How do you know?
• Are you accessible to people you most value as customers and clients?
To fix these issues, allow me to offer some external best practices and suggestions:
1. Invest time, money and resources into assuring your sales message and vision resonates with the entire operation. Sales must know what is practical for steady growth without becoming a burden to operations.
2. Create a plan to monitor your cyber presence. That includes your website and social media platforms. Respond to concerns and stay current.
3. Hire and train customer service people that like talking to people. I’m not kidding. Have you ever had a conversation with a customer service person that was surly, uninterested, or even just rude? You know what I mean then!
4. Engage your employees. Ask them for help and suggestions for improvement when it comes to your external message.
If you want to truly be significant and successful in business, you must communicate your message both internally and externally. Your employees must understand and exemplify your mission and vision. Your clients and customers need to know what you do and how you’ll help them.
It’s pretty basic, but important. Sort of like knowing which credit cards to accept, right? Make sure you keep your message clear and concise, so that your company can be Unleashed.
© 2016 Toro Consulting, Inc. All Rights Reserved
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I read this morning that professional golf superstar Rory McIlroy is skipping the upcoming Olympic games in Rio due to concerns about the Zika virus. I recently saw him interviewed and he stated how he was very eager and excited about representing his native Ireland as an Olympian. Golf hasn’t been an event in the Olympics since Theodore Roosevelt was President of the United States, and there’s no guarantee it will make the next one. Obviously, the growing concern over the virus has swayed this 27 year old who is getting married within the year to look beyond golf and glory. His legacy as a father and health of his family took precedence. He’s not the only one…
Athletes want to compete in the Olympic Games. For many, it’s the crowning achievement of their craft and because it only comes around every four years, the window of opportunity is small. What the Olympic Committee has basically created is a terrible situation where you have demand, you have ample supply, but that supply is tainted and toxic.
Consider those in the business of selling products and services to individuals and business…most likely you are one of them. Do you have a demand and supply, but make the process of buying toxic?
Certainly you aren’t dealing with a health hazard like mosquitoes and polluted water. However, your client experience may be such that they will avoid you like the Zika virus! Here are three quick ways to avoid being spurned:
- Make access to you easy. Look at your web site, social media platforms, email signatures, and digital or hard copy brochures. I’m amazed at how difficult it is to find contact information for some businesses. It should be easier than ever! And once they can find you, make the call a pleasant experience, not akin to having a tooth pulled.
- Be solutions driven. Problems happen from time to time. It’s one of the costs of doing business. Instead of fearing or dreading dealing withe them, employ people that seek the opportunity to solve problems quickly, fearlessly, and with authority. That last one is vitally important. The overwhelming majority of your clients and prospects understand that challenges and adversity occur; they simply want someone that can rapidly and professionally solve them.
- Be consistent. My experience is that consistency, even in less than perfect situations, keeps clients and customers coming back. Inconsistent policies, procedures, responses to questions, access, and products/services alienate those that want and need your help and product.
Here’s the deal…I know you’re not harmful to the health of your client, but you very well may be harmful to your business by not being cognizant of the factors that contribute to client and prospect dissatisfaction. Work to be exceptional on my three solutions I listed, and you won’t have to worry about anyone bowing out of your “event.”
© 2016 Toro Consulting, Inc. All Rights Reserved
My June column for the Kitsap Sun’s Business Journal…
Let’s be very clear about one thing…
The most important function you perform in your company is acquisition of business. Period.
That ends my prepared comments. Questions?
Okay, allow me to elaborate. Without sales to your company (or a company you’re employed with) there can be no employee benefits, no impact to clients and customers, or no charitable donations or good works in the community. Without constant and sustainable revenue growth, your family will suffer, your anxiety level climbs, no one feels satisfaction or reward, and ultimately everyone loses the chance to benefit from what you offer.
You can’t name a business that is successful, philanthropic, or significant that doesn’t count on revenue being generated. That includes every non-profit because without fundraising, they can’t provide much needed help to those who need it.
Are we in agreement? Good. That was the easy part. Let’s discuss how you assure that your business can exponentially grow its revenue with the minimal investment of 30 minutes a day, so that you can exceed your expectations and accomplish much more for your family, employees, and the world around you.
I’m going to provide you a 5-step blueprint to either execute yourself or train your sales team to. While it seems simple enough, I will help you to also overcome critical obstacles to its success.
Step 1: Make a list of every single client you have. Divide them into current and past. Find the name of the decision maker. It doesn’t matter if they are still with the company. Include their phone number and email, as best as possible.
Step 2: Call every one of them systematically. This will be a daily function, so you don’t have to “hurry.” Call the current ones first because they know you best. Your objective is to get a testimonial and ask for a referral. Plan on 10 minutes a call.
Step 3: Once you’ve reached them, ask two main questions. First, what are some of the favorite things of doing business with you? Second, how have they been most impacted by your work together? Ask clarifying questions in return. Quantify their answers. Take copious notes and ask them if you can use their words in your marketing and website. Once you’ve gained permission, take one more step…
Step 4: Ask for a referral. Simply ask whom they know that can also benefit from the same value and experience they did.
Step 5: Add testimonials to all your marketing. Call on every referral.
That’s it. Allocate 30 minutes a day to this function. If you have a sales force, each person should do this.
Sound too simple? While I’ve omitted a lot of key language and other methodology because this is a column and not a book, the process is that simple. The biggest problem is that actually implementing this and sticking to it. Let’s consider the three key obstacles:
- Fear. Fear of rejection, of not being liked, of the uncertainty of responses all lead to not picking up the phone and calling (note I said call, not email). Your fear has no basis because these people already like you and want to help you. Stop getting in your own way.
- Ignorance. Not knowing how to respond and being unprepared lead to many trying, failing, and then giving up. This is all in the language and influencing skill. While the process is simple, training on the “how” needs to be invested in for the sake of success.
- Lack of accountability. Often, everyone is excited at the outset, but “gravitational pull” can easily take hold if someone isn’t holding people (or themselves) accountable.
Let’s fix this. The 5-step process to exponentially growing your sales works if
- You seek out help. Find experts through a variety of channels to help you train your sales people (including you) in influential language. This will increase confidence and effectiveness. The better they get, the more fun they will have and the better results you will achieve.
- You set accountability. This isn’t a dictatorship with dire consequences for not meeting quotas. Rather, it’s a professional approach to empowering and teaching. It requires a high level of trust and collaboration with the right people at the leadership position.
- You make it a priority. That means committing to investing time, finances, and resources.
- You make it fun. Whether it’s you or your sales people, the acquisition of business should be fun. You’re providing a great value of service or product to help improve someone else. Which leads to the last one…
- You provide genuine value. Sales will never be sustainable if they are manipulative. You must believe that you are providing valuable products and services and helping others. You’re just receiving equitable compensation for the tremendous value you give.
Everyone in the organization must contribute to sales, not for greed or malice, but for the opportunity to benefit others and provide for every employee and their family. Without revenue growth, stagnation sets in and the slippery slope turns into a landslide and takes out everyone that’s counting on your business.
By making the commitment to invest 30 minutes a day to my 5-step plan, you’ll be serving clients, employees, families, and the community.
Now that’s what I call an exponential return on investment!
© 2016 Toro Consulting, Inc. All Rights Reserved