Giving up on the 1-Yard Line: Finding triumph over mistakes that companies make

This article was published by CMC Canada in the Summer 2019 issue of Consult.

In my many years as a business advisor and venture capitalist, I have seen companies make a lot of mistakes.  There have certainly been successes, but mistakes, unfortunately, are a lot more common.  Some of the ones that are the most damaging are those that are analogous to “giving up on the 1-yard line”, where after a prolonged period of time of working, pushing forward, and focusing on their game, a company’s leadership throws up its collective hands and says, “I’m done”.  Why is this so harmful?

First, this situation tends to occur when facing challenging tasks that are integral to the success of a company; examples include areas such as properly conducted business planning, implementation of fundamental systems and processes, and successfully attracting financial and strategic partners.  Appropriately addressing these areas tends to take far more work than business leaders anticipate; they also represent initiatives that might be entirely new.  As a result, the keen enthusiasm that is apparent when a project begins tends to fade to an attitude of “we don’t need to work this hard”.

Second, companies sometimes have difficulty focusing on priorities, as key areas tend to be far less glamorous that the “fun” aspects of being in business, such as designing a new logo, touring office space options, or chatting up prospective partners that the company has little potential of actually attracting.  Days get filled with these activities, that are more about busy-ness and less about results, decreasing the amount of available time to focus on the real work that needs to get done.  This is a hard lesson that business leaders tend to discover far too late, and can be as damaging as losing key customers or running out of money.  Full stop.

A better approach is recognizing that advisors who have “been there” and “done that” are in a unique position to provide the important leverage that companies need, to ensure that they are focusing on the right things, conducting their work at a quality level, and not running out of steam.  How can this be achieved?

  • Priorities are not always obvious. Amazing, but true.  Business leaders can get so caught up in the challenges of running the company on a day-to-day basis, dealing with staff members, and responding to customer needs that they are unsure (or unaware) about the steps that should be taken to make meaningful progress on a corporate level and might lack the experience of what is required in order to do so.  Advisors can play a key role by identifying and prioritizing task items and keeping the implementation process on track.  All of these areas are common pitfalls and represent the difference between starting something and actually getting it done (activity does not equate to meaningful progress).
  • Experienced advisors are the “acid test”. Advisors with a strong experience and qualification base understand where important initiatives need to “get to”, such as what financial partners need to know in order to make a decision.  Companies tend to take the view that “what we provide to them will be good enough”, failing to understand the woeful inadequacy of this approach.  Using raising capital or financing as an example, experienced financial partners have typically reviewed more opportunities than they can count and operate in an environment of limited money and an investment mandate that guides selection.  They very quickly slot opportunities into a category, and chances are, it won’t be the “yes” file.  Experienced advisors have a skillset that is extremely valuable; one that can help a company put its best foot forward and anticipate what is required in order to get to a successful outcome.  Be sure to probe an advisor’s qualifications to ensure that they are the right fit for the particular initiative at hand.
  • Utilize skill to get there, faster and better. Teams who spend the whole game running around on the field, for the sake of running around, don’t win very many games.  Coaches of successful teams know how and when to utilize resources in a manner where they can make the best contribution, including recognizing that there are times when specialized help is needed.  This is where an experienced advisor can play an important role, providing the necessary expertise to quarterback complicated plays and get to the endzone more quickly.  Business leaders sometimes do not appreciate the value of resources with the right experience; this fact tends to get reinforced in times of poor advice, from those who are not qualified to help, or when receiving no assistance at all.  A company might not recognize the weaknesses that result, but the external party that they are trying to impress likely does.

These lessons might seem relatively straightforward, but reality reflects something quite different, as fumbles and mishaps in all of these areas, and numerous others, are quite common.  What can make a big difference is perspective; stepping back to see how far an initiative has come, the relatively short journey that remains, its level of priority, and what success requires.  If business leaders did this more often, there would be far fewer companies walking off the field with only one yard left to go.

A World Away from Yesterday

This article was published by CMC Canada.

There was a time when it was a given that a family business would be passed from one generation to the next; in many cases, it was just a matter of time.  Over the course of 20 or 30 years in business, things changed, but not at the pace or in the manner that has been the case over the past few years.

We have certainly seen the impact of demographics and technological disruption on business succession, but there’s also considerations that relate to changes in the global economy and the financial uncertainty that continues to evolve.  Consider the following factors, in terms of their impact on both the current operations and future viability of family businesses:

Trade relations.  Recent years have brought numerous trade developments, including tariffs, disputes, and negotiation of new agreements, such as the USMCA (to replace NAFTA).  This agreement not only includes new clauses, it has also created uncertainty, given the lengthy negotiation timeframe and the fact that it is yet to be formally enacted.  In addition, ongoing trade discussions between the US and China and the friction associated with the detainment of a Huawei executive have left many countries wondering what the outcome will be, along with uncertainty associated with Brexit, the European Union, and turmoil in Venezuela.  This state of flux impacts critical areas such as business investment and growth strategies, as well as financial performance, when unexpected tariffs and trade bans come into play (the case of Canadian canola imports being halted by China is a recent example).

Ally uncertainty.  For those of us who have been on this Earth for a while, there has been relative consistency in terms of who are considered to be global allies and those who are foes to be regarded with caution.  In challenging times, it has been a given that countries such as Canada and the United States would work together with allies in Europe and the rest of the Commonwealth to protect interests and combat potential harm.  In recent years, traditional alliances have become less certain, with US leadership effectively reducing its global profile and “making nice” with questionable regimes.  Besides the obvious “headline” appeal, the reality is that economic circumstances tend to follow relationships, and when uncertainty occurs, it could translate into business risks, and sometimes, opportunities, if the situation is approached effectively.  Regardless, companies are impacted by these developments, even if they occur in faraway places (think about the realities faced by farmers and everyone who counts them as customers, when Canadian canola shipments are turned away by China).

Financial matters.  In addition to how trade, alliance, and global economic factors could impact a company, there are also matters closer to home that contribute to changing times.  Consider areas such as increasing interest rates, changes in tax legislation, and the challenges associated with access to capital.  Canadian businesses have seen significant tax changes in recent years, some proposed, some enacted.  In addition to the real life implications, business leaders have had to seek specialized advice to understand areas such as income splitting and potential clawback of the small business deduction.  Potential successors are challenged to procure the necessary capital in order to undertake a business transaction, in an investment and financing environment that has become increasingly competitive and complex, as financial partners also monitor global developments.

The bottom line is that a company must have the ability to demonstrate marketplace relevance well into the future; in the absence of doing so, there is no basis to achieve ongoing successful operations, making transition irrelevant.  Leaders of tomorrow must be able to demonstrate a viable business model, strategy, and plan to make their time at the helm worthwhile, but also to secure the necessary capital to complete a succession transaction.  Current and future family business leaders can (and should) take action now by reading Defusing the Family Business Time Bomb.  A world of opportunity (and risk) awaits!

At the Speed of Fright (I Mean, Light)

This article was published by CMC Canada.

The pace at which our world is evolving is one of those things that has become so common, we don’t always take the time to think about its impact.  Phones that are used to watch broadcast media, cars that don’t need gas or a driver to operate, personal “assistants” that can place orders on command, rockets that can essentially land themselves, mapping applications that make logistics a snap; these are phenomenal developments.  While these technologies and many others have made our lives easier, they have also presented significant challenges to the business community.  Consider the following:

  • Business model blow up.  The manner in which companies make money has changed dramatically in many cases, which cuts to the very heart of business; this is easily illustrated by the retail industry.  While stores used to be the primary shopping option, consumers now have access to a range of methods, including online, rapid delivery, subscription models, and mass media e-tailers.  Consumers have, in fact, come to demand these options, leaving companies to struggle to meet the pace of change, with many finding themselves in a too little, too late situation, unable to survive.  This disruption scenario is true in almost any industry.
  • Strategy break down.  In order to migrate a company through significant change, a key requirement is having a strategy that is proactive, comprehensive, and relevant.  These attributes are driven by having a thorough and timely understanding of the changes that are occurring in the external environment, including industry trends, technologies, and marketplace developments.  Too often, business leaders focus primarily on what’s occurring inside of their company, with a “they need us” mentality when it comes to customers.  This mindset is one that greatly jeopardizes the future of a company.
  • Resource reckoning.  New business models utilize resources differently; examples include the need for fewer people, different skillsets, roles that are held by technology, and utilizing strategic partnerships.  Each of these bring changes in workflow design, systems, processes, and costs (remember that costs directly impact pricing!).  Companies that do not proactively pursue the need to change how they work tend to get left behind at the worst of times, when more savvy competitors have implemented these methods, making it impossible for others to catch up and compete; which leads to this last point.
  • Financial shortfall.  Integral to a successful business is the ability to generate at least good financial performance (strong results are, of course, better), thereby creating the fuel to invest, grow, and sustain over the long term. When a company does not have the right business model, it isn’t in a position to build the appropriate strategies to utilize resources well and be competitive over the long term, which leads to poor financial results; it’s all connected.  Companies in this situation lack market relevance and are, too often, left without a future.  Think about what this means to a business leader who is depending on the transition of their company to someone else, as the basis to fund their retirement.

The reality is that many of the advancements that we live with today represent technologies that much of society could not have imagined even five years ago.  What will the next five years bring?  The next 10 years?  As technological advancement continues to accelerate, even the next two to three years will be highly significant.  Is your company ready to face this challenge?

Remember that challenge also brings opportunity, but only for those who are well positioned to approach it.  Learn more about the profound impact of disruption in the external environment, as well as how to take control and benefit from it by reading Defusing the Family Business Time Bomb.  The future of any company is based on its ability to continue to be relevant to the marketplace over the long term.  In today’s world, this is anything but a given.

Defusing the Family Business Time Bomb: 4 Important Threats to Understand, Now!

This article was published by CMC-Canada in the Winter, 2019 edition of Consult


The Top 4 Threats to your Family Business in 2019
Many of us are familiar with family business leaders in our community; perhaps, you were raised in this environment or are managing a company yourself.  Family businesses represent a considerable segment of the Canadian economy and have the potential to be unstoppable; where everyone works together to move forward with common purpose.  Family businesses, however, can also be plagued with the conflict and strife that tend to be associated with relationships that are close, personal, and longstanding; this reflects the other side of the coin.  By their very nature, family businesses can be tricky.

There is something more, however, that business leaders need to be concerned about; something that could impact the future of both their company and their family’s wealth, and it is simply this: Family businesses are facing the most explosive challenge in a generation.  The reason?  Seldom have so many potential threats been evident in our external environment, many of which make headlines on a daily basis.  Consider the following:

  • Demographic factors.  Experienced advisors know that the majority of aging business owners do not have a succession plan and research has supported this finding over the years.  They also do not fully appreciate the reality that there are a limited number of potential successors, in terms of those who have the necessary skills, interest, and capital to take over a company.  This fact alone has the potential to halt business transition in its tracks.
  • Disruption of key industries.  The manner in which we live has, and continues, to change.  Consumers and companies procure goods and services differently than in the past, resulting in the need for new and complex business models, many of which are supported by rapid digital and technological advancement.  Companies that do not keep up with marketplace expectations not only face declining demand, but also the risk of obsolescence, in terms of transition to someone else.  This can be a sobering and disappointing reality for many business leaders.
  • Significant change in the global economy.  The daily headlines in our world are often characterized by widespread change, including in areas such as trade, tariffs, political alliances, and business requirements.  This ongoing evolution brings uncertainty, with the potential to significantly impact a company’s planning efforts, financial results, and valuation upon transition.
  • Uncertain financial times.  Recent tax changes in a number of areas have generated many questions from family business leaders, impacting areas such as income distribution and investment opportunities.  When coupled with increasing interest rates, accessing the capital that is so integral to business growth and transition strategies could become increasingly difficult, a challenge that especially impacts young entrepreneurs and potential successors.

Any one of these developments can have a significant impact, but when combined, it could create a situation that is impossible for an unprepared company to overcome.  When these areas are considered in the context of typical family business problems, the stage is set for unprecedented challenge; one that impacts families, companies, and Canada’s business community as a whole.

The reality, however, is that many business leaders are unaware of the degree to which these factors have developed, often as a result of not spending a sufficient amount of time to fully understand the external environment, including industry and market trends and developments.  Since this is clearly a critical time for business leaders and their families, Evelyn Jacks and I decided to write our latest book, Defusing the Family Business Time Bomb.  This isn’t just another “family business book”; rather, it brings a common-sense approach to addressing the many challenges that are associated with building a company that has the potential to be sold to someone else in the future, all during highly uncertain times.

Here’s a final thought: As business leaders in great numbers face retirement, it is only the well managed and strategically positioned companies that will have relevance in the future, enabling them to be transitioned to someone else for a “good to great” level of value.  This stark reality is something that must be recognized by both founders and successors alike.

BOOK RELEASE: Defusing the Family Business Time Bomb

I’m pleased to announce the launch of my new book, Defusing the Family Business Time Bomb!  This isn’t just another family business book.  Why?  Because family businesses are facing the most explosive challenge in a generation.

The reason?  While it is quite normal for a typical family business to be inundated with challenge and change, seldom have so many potential threats been evident:

  • Demographic factors.  The majority of aging Baby Boomer business owners do not have a succession plan and don’t appreciate the reality that there are a limited number of potential successors.
  • Disruption of key industries.  New, complex business models and rapid digital/technological advancement have the potential to reduce valuations and make transition to new ownership either irrelevant or much more costly.
  • Dramatic change in the global economy.  Makes strategic planning difficult, increases competition, and could escalate the cost of doing business, thereby shrinking profit margins.
  • Uncertain financial times.  Complex tax changes, restrictions to family income sprinkling, and a new clawback of the small business deduction all impact profitability, investment opportunities, and access to capital. This challenge could be especially difficult for young entrepreneurs or successors.
  • Typical family business problems.  The conflict, apathy, sudden or emerging illness, or control issues can affect relationships, decision-making and, ultimately, the health of both entities: the family and the company.

Business leaders are under siege, but do they know it?  These issues are significant and very much present in the current business environment, with additional evolution and challenges occurring with each day that passes.

Whether you are a long-time business owner getting ready to transition out or a new entrant to the “gig economy”, poised to grow and expand, you will appreciate this book for its contemporary and practical advice. It brings a common-sense approach to the challenges associated with building a company that has the potential to be sold to someone else in the future. This from two experienced authors and business leaders who have helped the owners, executives, investors, and professional advisors with whom they work to prepare for the most explosive challenge in a generation: the retirement of the Baby Boomers and transition of their companies to a new guard, who face pitfalls and opportunities of their own.

Join me and Evelyn Jacks on this important journey for your business and your family.  Order your copy here!

MEDIA: Dragons’ Den Blog Interview

Thanks to the Dragons’ Den Blog for being in touch to discuss The Worst Ways to Raise Cash as an Entrepreneur; it’s always great to share some tips and traps when it comes to building a company.

Although it’s no secret that there are various approaches than an entrepreneur could take to finance a young venture, this should be considered in a broader context. Startup companies typically receive their initial financing through “founders, family, and friends”, with perhaps some support through grant and similar programs. What tends to get lost in the process is whether or not doing so is actually a good investment.  Considering this includes determining the likelihood of: (i) the capital being repaid, at some point in time; and (ii) the return that could be generated, if any. Doing so can really only be achieved by way of developing a thorough and complete business plan, including a financial forecast for at least a three year period.

Entrepreneurs and business planning don’t always have a good partnership, however.  Business planning tends to get downplayed as “not that important” or “impossible to do for a startup”; both of which are false. When an entrepreneur prepares a business plan, they tend to insufficiently address areas that are of significance to investors, such as industry and market issues and the right business model, and instead, focus on an abundance of product and technical content.  The impact?  Little to no chance of raising investment capital.

Entrepreneurs should, instead, consider whether or not a startup is worth spending their time and money on, as it will surely take plenty of both. It is important to take the time to do so before investing one’s own capital, regardless of the source, and before asking others to do the same. As a business advisor and former venture capitalist, I have seen too many young companies that likely would not have been launched, had these questions been asked and answered in advance. Further to this point, rarely have I met an entrepreneur who actually took the time to do their business planning homework first, although I have met many who wished that they had better understood the financing implications and realistic potential of their company sooner.

Not sure how to address these important areas?  Advisors can help. Not only can they assist with putting the right business planning efforts in place, they can also help to identify opportunities to generate cash sooner, which is another area that entrepreneurs tend to miss.  Contact us to learn more.

When Canada Day is also Tariff Day

Happy Canada Day!  I’m very proud to live in such a beautiful, diverse, and well respected country.

This year, Canada Day includes all of the usual celebrations, but also a particular action that demonstrates our strength and resolve as a country; newly imposed tariffs on the United States, in response to those that have been in force against Canada and other countries since June 1st.  As indicated by both our Prime Minister and Foreign Affairs Minister, Canada had “no choice” in terms of imposing these tariffs, which represent a response in equal measure, not escalation.  Our government has also taken various steps to help industries impacted by the tariffs, including export diversification, training, and business liquidity support.

Although there are various complexities around how tariffs work, the expectation is that there will be price increases on some items, for both consumers and companies, making the need to source products that are not subject these measures of particular importance.  As there is a lot being said about the implications for consumers, let’s consider some things that Canadian businesses should be thinking about:

  • Know your costs:  Too often, companies do not have a good understanding of the actual cost to deliver products and services, on a current, comprehensive, and complete basis.  Typical shortfalls include not recognizing all of the costs that should be included (such as overhead items or allocation of all labour costs) or not reflecting cost increases and other charges on an ongoing basis.  Not only does this provide a false sense of product margins, it also results in a poor basis for establishing prices.  The latter can be particularly destructive for companies, with each sale occurring at a price that is too low to support operations.
  • Identify supplier options:  Although companies might have longstanding supply and other relationships, it’s never been more important to expand the list.  Managing risk involves identifying a range of suppliers, including outside of the United States, to ensure that options can quickly be accessed, in the event that pricing or delivery terms become untenable.
  • Research market opportunities:  Tariffs can create business opportunities for Canadian companies, in situations where US goods become less price competitive.  Fulfilling market opportunities requires targeted research, and assuming that new business is no different than a company’s current customers is a recipe for disaster.  Take the time to fully understand what’s needed in order to generate success.
  • Secure necessary capital:  Business leaders don’t always remember that approaching new opportunities and generating growth require capital.  Reasons include the need to expand facilities, procure raw materials, increase distribution, hire staff, or conduct the previously mentioned research, often in advance of when sales proceeds are received.  In order to ensure a successful outcome, it’s critical to understand capital requirements, as well as the source, before approaching growth opportunities.
  • Monitor financial results:  As new business opportunities evolve, financial results must be monitored on a timely basis, to ensure that progress is on track.  In order to do so, a company must have a strong complement of fundamental systems, processes, and procedures in place, to ensure that good results and information are being generated.  This includes ensuring that the person in the senior finance role has the right qualifications, skills, and experience, particularly for a growth related company.

Putting these key areas into place generally takes longer than expected, so business leaders should be doing so now.  Advisors can be particularly helpful, including identifying market opportunities, action planning requirements, implementation options, access to partners, and tested solutions that can be fast-tracked, representing a competitive edge.  Feel free to contact us for more information during this important time in the Canadian economy.

NEWS: Executive Business Builder Program Now Available!

As the lead instructor, I’m pleased to announce that the Executive Business Builder Program is now available!

This program is designed to help business leaders build a future-ready company, including building value and best practices, through courses, mentorship, and access to a powerful network of inspirational, like-minded people.  Learn practical strategies for building a company that can generate solid performance and be positioned for transfer to someone else in the future.  Value doesn’t just happen, and leaders need to take tangible steps to enhance their company.

The first course, Strategic Business Planning, is already available, and additional courses are already in development.  Don’t miss out on this opportunity to move from business leader to business builder!

NEWS: Strategic Business Planning Course Now Available!

I’m pleased to announce the launch of my new Strategic Business Planning Course, the first course in the new Executive Business Builder Program at The Knowledge Bureau.

It might be news to a lot of CEO’s and entrepreneurs that most business plans are not prepared very well.  Although a company’s management might find the plan useful, they tend to fall well short of what external parties, such as potential financial partners, require in order to make a financing or investment decision.  This course provides sound business planning guidelines for both internal and external use, putting leaders in a better position to pursue the necessary capital to support the next level of growth.

Getting it right involves developing a thorough and complete business model, strategy, and plan (including a financial forecast), as well as preparing to make the approach to potential financial partners.  Gain insight into a range of important areas, from the perspective of a former investor, including:

  • The key sections of a business plan and what should be included
  • What to consider when building a business model
  • How to identify and select a target market(s)
  • How to select and position products and services
  • Guidelines for developing a marketing strategy
  • Developing an organizational structure, including identifying key roles
  • Guidelines for preparing a financial forecast, including assumptions
  • The perspective of external parties, such as financial partners
  • Guidelines for approaching financial partners

Details and registration are available here.  Stay tuned for additional courses in the Executive Business Builder Program!

Speaking Tour Day 4: Notes From the Road

We have completed the Western segment of the Distinguished Advisor Workshop (DAW) speaking tour and have met many talented advisors along the way.  As is the case with any session of this nature, the level of value increases when peer learning is part of the process, so your participation is appreciated!

I’ve been sharing thoughts around the topics of business transition and the next generation, as well as business continuity planning.  Some advisors who don’t work in these areas might be asking the question: why should I attend this type of session?  Here are some things to think about:

  • It’s likely that your clients are facing transition related issues, such as business transactions and succession planning.  These areas can require a lot of support to compensate for knowledge gaps, so checking in with clients on a regular basis and getting a sense of what they are up to is an important must for advisors.
  • Although you might not be the one to perform whatever transition related assistance is required, advisors should seek to have a range of skillsets within their professional network, to assist clients when needed.  Advisors that are well connected are in a position to add tremendous value to clients.
  • Those who are not up to date on client needs run the very real risk of being replaced by advisors who do a better job in this regard.  Clients expect more than just completion of the deliverable at hand, and successful advisors know how to ensure that they are providing incremental value.

Advisors can enhance their position by taking the time to understand the issues that their clients are facing, being a supportive, while objective sounding board, and making the right connections when needed.  Raise the likelihood that you are the first call that your clients make, in the comfort that, one way or another, you can help.

Join us at the remaining DAW sessions in Toronto and Ottawa to learn more; you can register here