Manager

In Business with Children – a Succession Story

Now that people are living longer, healthier lives, they are no longer willing to give up the reins of the family business sometimes even into their 80’s. That puts the next generation into their 50’s and 60’s. How do they plan for their retirement?

Jeff and his sister want to take over the family business from mom & dad who are in their 70’s. Mom & dad show no signs of letting go. Jeff is in his 50’s and wants to move the business along into the 21st century, increase revenues and provide for his own future. So, how does he fire mom & dad? People talking

Jeff is sensitive to the fact that his parents founded the business and are just as emotionally attached to it as they are
financially. They never set money aside for retirement and even though they take 8 weeks off in the winter to warmer climates, they still run the show from southern latitudes. Jeff feels like he can never assume full control. His sister is marginally interested in the future but deep down expects Jeff to take care of that. Another brother who is not involved with the business  lives on the west coast.

This scenario plays itself out too often. There have been few to no conversations about the ‘when mom & dad get older’; they’ve never initiated the conversation because they are living day to day until some outside force imposes a change. Many times, the younger generation doesn’t want to offend the parents and create a morbid discussion about “when you die”. So it is left untouched until it is too late. What is the best option in these cases?

It’s time for a talk around the campfire. A skilled business coach with the gift of sensitivity can bring this discussion to light with the entire family involved. In the scenario above, all members of the family, even the one not involved in the business, must participate in the conversation. After all, he is set to inherit a part of the net worth even if the other two siblings buy the business. ‘Ouch!’ Really? He’s ever done anything for the business. But, he is an equal sibling. You may think he deserves none of it, but he thinks differently. It may not be an equal share, but it’s still a share.

If this is being handled when it’s too late (death of a parent or both), this can get ugly. But if it is handled while they are still around, they can have input. The screaming can happen before the will is executed instead of after and normally it is split on a more even keel. There’s something about the parents not being around that elevates the conversation and settlement to an ugly level.

When the succession planning is done ahead with a third party leading the discussion, it is easier to discuss with a business consultant in the room. A good business consultant will regulate the conversation and bring the greed and control levers to a neutral position with thoughtfulness. All parties need to benefit in some form. Telling your parents that it is “time to step aside and let us take over” is usually realized by parents during the course of the conversations, making the end result easier.

So don’t wait until it’s too late. Find someone with the gift of compassion and start thinking of this 5 years ahead, make that 10 years ahead. Begin preparing the business for the change and for mom & dad to step aside. They’ll feel respected and appreciated for how it was done and will be prepared to make the move much easier.

Leading Edge Business Strategies, LLC is a consulting firm for small business. Paul Beaudette is the President and has over 30 years of successful business experience leading companies to sustainable profits, new growth strategies and business sustainability.

Small Business vs. Unlimited Guarantees

“Is the customer is always right”?

In reality, is the customer always right? No, not really. Many customers have taken advantage of that adage and have started using it to get something for nothing.

This mindset has occurred as corporations  have extended warrantees for longer terms and in some instances for a lifetime. The wording of such warrantees varies as to what constitutes a guarantee-able cause. Some are unconditional.

Why have companies made these promises to repair or replace their goods with such risk? Well, they either believe their products will last that long, they are desperate to compete on something other than price or they are playing the odds that most people will not return their purchases. All of these have associated costs that you pay for upon purchase.

What has gotten customers (a minority that is growing) to this point? Why are customers willing to lie to get “free stuff”? Retail clerks tell stories of products returned way past their guarantee expiration and with elevated tones decry the failure of the products until they have talked to higher ups and gotten what they want. Are their claims legit? Sometimes yes and sometimes no. They just know that if they scream loud enough they’ll get what they want.

With online and telephone (mail order) purchasing, it gets even worse. Without face to face contact on a return, theReturns line elevation of tone, the assertiveness of conversation and the “I won’t take no for an answer” speech can become
belligerent and often does. Lacking eye contact and the emotional connection of a personal conversation, the clerk on the other end of the line seems less human. Getting your way results in a freebie. The caller goes away swinging high fives while the clerk on the other end feels diminished, defeated and demoralized. After all, this is the company he works for, the products he believes in resulting in a desire for combat pay.

Big business created this practice

Companies have that right to offer any extended warrantees they wish. The do need to live up to them. They also need to spell them out completely. If a $10 billion company makes $800 million in profits, they can afford to risk a 7-9% return rate without affecting the bottom line much. They may get added business because of their warranty which will more than make up for the return rate. Returns may be resold at discounted prices if not damaged.

How can I as a small business compete?

Small businesses that resell products can live by their product manufacturers’ warrantees. If they provide an installation of the products, they should warranty the installation as well or declare in the terms that installation is not included. Some manufacturers offer some compensation for re-installation of their products at a pre-negotiated discounted rate if failure occurs. For large failures, say an entire commercial HVAC system, a negotiation with the manufacturer should be executed in order to not put a small business under financial duress.

Are customers ‘entitled’ to warranty freebies?

  • Customers returning products claiming failure, defective performance or damaged items are entitled to a replacement or repair per the warranty terms. If cash refunds are available, they should be spelled out in the terms. Many products are replacement or repair only.
  • Returns PolicyCustomer honesty is important. If the customer is lying about the performance of the product, they damaged the product themselves or misrepresented how they received the product, the conversations become ugly. Situations such as these need to be protected under the warranty terms and conditions.
  • Don’t offer cash back unless there is proof of purchase/receipt and the time elapsed is limited.  Most people don’t read warrantees until they need to use them, so make sure you’ve covered your company.
  • Do the math. What exactly is it costing to accept, say 8%, of sold products back? In your calculations, figure the labor, postage/trucking etc. as well. What handling will be needed afterwards to re-sell, re-condition, liquidate or dispose of the item? Whatever the average cost is, include it in the sale of the product after deducting the re-sale. If the cost is high, manage your warranty terms carefully.
  • In the case of service-only businesses, call-backs are costly. Sending a technician, installer, service person back to a customer has hidden costs. Not only is the employee time lost, the transportation costs (mileage, time), that tech’s billable time is lost, parts replacements and the lost confidence in your business’ ability to do the job right the first time is now questioned. Remember that customers talk and one bad experience gets shared many times over.

Returned sales cost small businesses thousands of dollars each year. If they aren’t accounted for ahead of time, they come off the bottom line. It is possible to protect yourself by planning ahead. Do the math and protect your profits.

Leadership from Gratitude

Not Management by Ego

by Paul Beaudette

The presidential candidates, Republican or Democrat, have all demonstrated one thing in common. An oversized ego is prevalent when you run for president.

After all, what are you selling? YOU! You are selling yourself to the people of the United States. How you go about it determines how much of a narcissist you are. We have seen extreme levels of narcissism, ego-centricity, pomposity and vanity, and these came from one candidate.

In business, managers, leaders and office holders often have the ego-driven need to attain such a position and then bask in the glory of “I’m in charge”. To a new manager, what may have formerly been co-workers, are now employees and the responsibility of this new manager. The transition has to be handled carefully and responsibly to maintain a working relationship, yet achieve the level of respect and allegiance that the manager seeks from the employee and vice versa.

egomaniac

Strong manager egos often displace the actual message being transmitted. Your title isn’t your role, your role is your title.

If the manager’s ego takes over, the relationship becomes one of title, not role. Too often, you’ll see people promoted to positions that they are not trained for because they are family, or a friend of the big boss and feel they are ‘owed’ that position. The damage potential that this has to the workers will begin to trickle down to customers and diminish customer loyalty. Employees begin feeling used, threatened and hurt. Turnover increases and the constant flow of new people begins to affect the bottom line. Morale is destroyed and theft and misuse of company property appears. Customers vanish.

How do you keep this from happening? Here are some suggestions:

  1. Hire right. Don’t take your hiring process for granted. It’s not filling in vacant positions with bodies. Look at it from a standpoint of the customer. The customer wants a friendly personality, someone who can answer product/service/process questions and someone who can be expedient and accurate.
    1. When there is no direct contact with the customer, use the same scenario as in #1, but change the customer to a co-worker, team leader or anyone else within the company.
    2. Depending on the position being filled, you may choose to have a personality survey performed. These give you the traits of the applicant against the traits you are looking for. They provide a good indicator if a match is possible. They are also useful after hire to coach the employee to success.
  2. For Pete’s sake, don’t promote people just because they are related or a friend. Promote them because they are leaders or have the potential to become leaders. Whenever you want to fill a leadership position, interview the candidates (including internal candidates) and ask them the tough questions. Find out how they have handled stress in the past, what examples they have of conflict they have encountered in the past and what they did about it. Those experiential answers will go a long way in your decision.
  3. When the candidate’s questions revolve only around pay, company car, benefits and such; question whether they are only looking at status versus the interests of your business. Ask why the position is important to them. Question how they would change an unproductive behavior in an employee. How would they handle an irate customer with a legitimate complaint?
  4. Get a fellow team member to interview the candidate. They know what it takes to do the job and can ask pertinent questions.
  5. The ideal candidate will be someone who will do the job because he/she wants to be a part of a better business. This person will want the customers to better themselves through the interaction with your company. They will be happier, feel good and be personally productive within their own business. The manager (leader) you are looking for is someone who is personally grateful for having improved the lives of employees or customers. Their primary goal is not make themselves look better and boost their ego. It is to serve others.

The fifth concept is not common in business. In fact, it’s rare. But the end product is a person who is rewarded for having created an outstanding team of employees and extremely satisfied customers. Steven Covey would always say, “Start with then end in mind”. Well, here it is. The customer is the end and if you work your way backwards from there, you’ll find that this personality type creates the environment and attitude you need to succeed.

Paul Beaudette is a business coach and consultant. With over 30 years of ‘boots on the ground’ experience, he has made businesses successful through his leadership, controlled management style and financial acumen. “Don’t just survive, Thrive”

Leading Edge Business Strategies

7 Ways to Change Your World and Prosper

7 Ways to Change Your World and Prosper

It’s not unusual for a business owner to fall into a rut and find that things are moving along okay, but just not great. What is it that needs to change? What moves or risks need to be taken? Here are six things you can do to enter your brave new world.

It’s not a bad thing to get into the same old, same old and feel comfortable. After all, you’ve worked hard to get to where you are and now it’s comfortable, less stressful and you’ve worked out the kinks. It’s time to sail smoothly. But, as anyone knows in business, if you stay there too long, your competitors are busy dreaming up ways to beat you at your game. So, don’t hang around too long.

If you’re in a technological field, you’ll also find that you have to deal with innovation on an almost daily basis. Depending on your company structure and size, you may need one person to keep an eye on technology.

What do you do? Here’s how to change your world.

  1. Change your environment. We have a tendency to gravitate to routines as a normal practice. It helps us feel secure, keep on time and generally give us peace of mind. So, change it. If you always read the morning paper with your coffee, try reading a business magazine or a hobby blog. Reading is a necessary part of being in business, but by reading the same publications every day, you’re thinking becomes linear and you start thinking like the people you read. It is extremely important to see fresh ideas and new thoughts as often as you can.
  2. If you’re a runner, change your route. If you wear ear buds when you run, change your music, your audiobook or whatever you listen to.
  3. If you go for coffee to the same place each day, find a new location with different people. I used to stop at a coffee shop with the same customers each morning. The talk became very negative when one loud character coming in each day. He dominated the conversation and complained and mocked about other people, some were my customers. Others began joining in. I finally stopped going there and found a new place with a much more pleasant atmosphere.
  4. Re-examine your employees and see if you can switch some around to initiate some creativity with manufacturing processes, customer interactions or cost savings. Get them engaged in changing things up.
  5. Start calling on your competitors. There’s no better way to find out what they are doing then to stop in and say hi. I worked in a business where we repaired our competitors’ products. We were constantly at their locations picking up parts as they were at ours. There’s no better time to be inquisitive and find out what they are doing, sometimes just by walking in and observing.
  6. If you take the highway to work each day, try taking the secondary roads to work. There’s a lot more to see and at a lower speed, a lot more to take in. It stimulates the brain.
  7. Make new friends. Whether they be client friends or personal friends finding someone new will change the conversations and that is where differing thoughts come from.

Making changes will stimulate you into new thoughts, new ways and will enhance your prosperity in the long run. Plus it makes every day seem new and exciting! For your customers, they will see the changes they wished for. Don’t discount them, they’re looking for improvements.

Paul Beaudette is president of Leading Edge Business Strategies, a business consulting firm that assists companies in developing new sources of revenues, improving profitability and becoming financially sustainable.

5 Strategies for a Stronger Future Workforce

Ask any growing business today what their biggest challenge is and most will tell you, “Hiring”.

Finding people with a combination of the right skills, the ideal personality/attitude and ambition is difficult. The unemployment rate hovers at 5% nationally and 4% locally which means fewer people are available for work. According to the Center for Workforce Research and Information, that means that in Maine, of the 675,000 people in the workforce, only 27,000 are available. That should be enough to fill the positions open; but think about the skills necessary for the jobs. Are these people qualified? Chances are since they are the last few unemployed, they lack skills.Worker & boss

Nationally and globally, the situation is very similar. The boomers are retiring, the millennial population cannot fill the need and those in between are working. Maine has not been the place for younger people to settle in. We are in an employee market. They have the upper hand of where they work, how much they make, how many hours they work and/or how long they will be with you.

Many ideas have been bantered about of how to fix this labor deficit. How do we attract young people to stay, return or move to Maine? Or is the other question, “how do we hire refugees, train them and make them productive members of our communities?”  We have spent many years discussing how to retain young people for our future workforce. Once they experience life elsewhere, especially in larger cities, they tend to find things about life there that is missing here. Maine has never had a large city. When we boast about our largest cities, we are still talking about cities that are under 100,000 people. Cities with populations over a million do have more to offer in terms of entertainment, social life and business/work opportunities.

Then we resort to our natural beauty of mountains, forests, ocean and seasons. These make us a nice place to visit. Ironically, we have refugees moving here that believe here is the best place to live in the world. They settle in, begin their own businesses, become a part of the communities they live in and afford us the opportunity to hire them. There are language and culture barriers that need to work themselves out, but any community willing to invest the time (yes, it does run into years) will soon have an added diversity and industrious employees.

Globally, the World Economic Forum (WEF) has been addressing this workforce dilemma. The challenge they have identified (which we are all familiar with) is a skills lag. The skills needed today in the modern workforce will not be the skills needed for tomorrow’s workforce. Not unlike Moore’s Law of integrated circuits doubling in capacity each year, the skills needed for 2020 will be different from those needed today (see chart).

How do we ready a workforce for skills that are dependent on future technological developments?

Top 20 Skills Chart

Here are five strategies you can start implementing today for the future:

1.      Small Businesses must emphasize employee development as a priority strategy. Employees that will be needed in the next 5 to 10 years must be planned for and pursued.  It is no longer a matter of placing ads, posting job openings or reliance on recruitment of competitor resources. Train, provide HR support and begin looking ahead.

2.      Small business manufacturers must cozy up to their equipment suppliers, learn what they see for future technological and mechanical requirements and work with them to develop their employee skills. Service businesses must do the same and keep their staffs educated on current and future software. Partnerships will form between businesses and their suppliers to educate workforces through training and maintenance.

3.      Retail businesses must adapt to transaction technology as soon as possible and work with financial institutions to assist in employee training. As Paypal advertised during the Super Bowl, the new money is paperless transactions with multiple media to accomplish it. It is a means of supplying payment equipment with appropriate guidance by vendors for retail clerks to perform safe and secure transactions that protect the end users.

4.      Educational institutions are not exempt here. From elementary to high schools, any school district that has not updated their curriculum annually is supplying unprepared graduates to the workforce. Students are far more digital than their teachers. That needs to turn around. Curricula must reflect a balance of traditional education with digital competence accelerated.

5.      Governments, both local and state must support educational changes that are coming. They can no longer react to technological changes that are archaic by the time the students graduate. Grades 1 to 12 are twelve fast years that have the potential to require a change in educational methods 4 to 5 times. Keeping up is mandatory for communities to stay afloat in the global marketplace. At all times including those of economic uncertainty and budget cuts, emphasis must be placed on education above all other needs to cultivate a community’s future prosperity.

If you are in education, you know what STEM is. While years ago, the future was in just going to college, today’s future is in Science, Technology, Engineering and Mathematics regardless of how you get there. Schools must change to adapt to the digitally enhanced way of learning. Brick and mortar institutions must adapt.

Businesses must urge their local education boards to design curricula appropriate for workforce development pertinent to their community and place education at the top of the priority list for their towns and cities.

Companies will learn that they need to become talent destinations. That will only happen when the shift to talent development becomes part of the company culture. Investments in employee development, ongoing training and broader and more creative benefits will retain the best and the brightest.  Profitability and success will depend on it.