Lessons I Learned Today 5/19/09 – Free to wander off the path

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*Disowned; Is it time for the family and the business to go their separate ways? by Patricia Schiff Estess

What happens when a likely buyer offering big money approaches a family business? Business motivations aren’t the only reasons to think twice about selling the company.

Look at the business’s future and examine the foreseeable external and internal conditions that might affect it. Consider whether this is the optimal time to sell the business given its stage of development and the market. And then determine whether the succeeding generation is in place, competent and interested in taking over.

There are a number of commonly believed fictions surrounding a possible sale:

  • Fiction 1: We have to make a decision to either hold or sell as opposed to recapitalizing, considering a leveraged buyout, developing an ESOP (employee stock option plan), going public, bringing in outside management to run the business and selling some of the stock to an unrelated investor.
  • Fiction 2: We’re great negotiators, so we can easily negotiate a sale. It’s naive to think you have more expertise in this field than the professionals.
  • Fiction 3: We have a profitable business, so it should go for top. If the family is divided, it translates into a discount in the value of the business that a buyer can realize.
  • Fiction 4: Even if we don’t go through with the sale, there’s no harm in seeing what the business is worth, just in case one day we decide to sell. You risk key people leaving and setting up a competing business next door.”
  • Fiction 5: We’ll make certain our employees get a good deal. You might be able to negotiate a good deal for yourself and your employees, but you can’t expect it to hold for any length of time. Even if you and your relatives stay in the employ of the original buyer, things change once the contract has been signed.
  • Fiction 6: It won’t change our relationships with each other or the community. If you and a relative dislike each other or don’t have similar business goals, then a sale, which limits regular contact and takes you out of a partnership role, might enhance that relationship. If you enjoy and get sustenance from each other on a daily basis, you might feel a tremendous emotional loss when you no longer have that.

 

*When You Gotta Go  by Jacquelyn Lynn  

You don’t want to leave your business, but will you be ready if you have to?

You’re not ready to retire, nor are you considering selling your company-in fact, you see yourself running your venture for years to come.

So why bother with an exit strategy? For the same reason your mother always nagged you about wearing clean underwear: You just never know what might happen.

 

*Recruit a Virtual Sales Force With Your Blog by Mark Stevens

Put the internet to work for you and drive sales by connecting with your customers online.

“Hundreds of thousands of people read my blog, and then serve as virtual salespeople for me–suggesting that their friends and colleagues come into my universe and read the blog, too. I don’t control this growth; I don’t want to and, in the viral world, letting the growth flow unfettered is where the real power lies.”

To be effective, a blog must be:

  • Educational as opposed to commercial. You don’t want to sell. You want to inform (which, it just so happens, is always the best way to sell).
  • Compelling. People already have an overabundance of content to read. They will make room in their lives for you only if you are diligent in writing truly impactful blogs.
  • Frequent and timely. I think once a week is ideal; but whatever your schedule, keep to it. A blog is a periodical of sorts. It must be available on the expected pub date.

 

*How to Start a Clothing Store by Laura Tiffany

Are you fashion forward? Do you love working with the public? Then it might just be time for you to marry your fashion sense and your business sense with a retail clothing business.

“Opening an apparel store is serious business. For some of you, it may mean giving up the safety of your corporate job with its steady income, paid holidays, vacations and the opportunity for advancement. All this, and guaranteed 12- to 14-hour days.”

“Running an apparel store is more than a full-time job,” stresses Nancy Stanforth, professor of merchandising at Oklahoma State University. “Running an apparel store is something you do all day every day.”

Here is a handy set of questions that will help you determine whether fashion is indeed your forte.

  • Is this a business in which you have experience?
  • Can you live with the inherent risk in the apparel business?
  • Do you believe strongly in the apparel industry?
  • Is your niche overcrowded or dominated by a few?
  • Can you become a specialist?
  • Do you have a competitive advantage?

Do all the following before you choose a location for your apparel store:

  • Look at several locations before choosing your store site.
  • Check into any local ordinances and zoning regulations that apply.
  • Determine your store’s parking needs.
  • Decide whether the site is worth the rent.
  • Define the selling point of your store’s location.
  • Determine whether the location is an area of potential growth.
  • Define your store’s space needs.

 

*What Are Your Customers Thinking? by Jennifer Wang

There are existing technologies that businesses use to get a read on what customers are thinking.

Store design can influence what people buy. With next-generation advertising technology, you may not be able to read your customers’ minds, but you can get pretty close.

 

What I Think

I think we had a pretty good mix of articles on this day. Some dealt with good old nuts and bolts checklists of proven strategies, and some dealt with visions of the future. I love checklists for clients. Whether they follow them or not, they at least provide a frame of reference for what my clients actually do on their journey to start or run their business. They are kind of like a road map of a journey. Clients are free to wander off the path, to find better and worse ways to do things, to make mistakes and discover innovative new paths. If they get lost, however, they have a way to find their way back and figure out where they made a wrong turn.

Likewise, I like to throw at least a little future thinking at them too. No matter how solid the history of “traditional” or “standard” operating procedures, emerging technologies, “disruptive” strategies, radical shifts in the economy, an aging population, and many other factors tell me that my clients must be much more agile than were their predecessors just a few years ago.

I think that today it is more important than ever for entrepreneurs to know and understand how things have worked in the past. They must also truly have an eye for what is coming over the horizon. If they can get an early mastery of those two concepts, they have a chance of not only surviving, but of prevailing over the competition.

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If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

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Posted in Applied Entrepreneurship, business, Business interruption, crisis, etc., Business life cycle, Buying a business, entrepreneur, Family business issues, Financial security, Financing a business, Growing a business, Innovation, Perseverance, Personal happiness, Planning for a business, Recession strategies, Running a business, Starting a business, Thinking about a new business
One comment on “Lessons I Learned Today 5/19/09 – Free to wander off the path
  1. Richard says:

    Very nice blog post. I absolutely appreciate this site. Continue the good work!

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