The Facts of Business Life (27 page)

As noted earlier, it's essentially the owner's decision to make a change that moves the business from Level 4 to Level 5, and few owners discuss it with their employees. Of course, if a current employee will be succeeding the owner, or one or more of the employees are buying the company, they will be involved. But if the decision is to sell the business, turn it over to a family member, or close it down, employees are usually left in the dark about the owner's intentions. There are basically two reasons for this. The first is that the owner doesn't want the business operation to be jeopardized or disrupted in any way. The second is that, even if the owner wants to sell or close the company, it may not be happening for years, and he or she doesn't want to erode the shared trust, or lose the momentum, focus on results, or excitement of moving the business forward.

Both of these reasons are entirely legitimate and justifiable, but it's always hard to keep a secret, and you can be sure that rumors will begin circulating almost as soon as you start working toward leaving. Obviously, rumors like these won't help the business, but what's even more important is that it rattles the confidence of those who trust you. Eventually, someone will ask you about the rumors, and you'll need an acceptable answer, because dodging the question or giving a vague answer will only generate more anxiety and add fuel to the fire. Perhaps the best way to deal with this situation is to acknowledge the rumors, say that you will be exiting at some time in the future, but not today, and then ask the questioner about his or her department or area. You must be careful, though, because the last months are important for both the buyer and the seller, and you don't want unnecessary gossip or chatter getting in the way of focusing on objectives and results.

Of course, you also have to keep in mind that not every negotiation works out, and you don't want to get excited—or get your employees excited—about selling the business only to see the deal evaporate at the bargaining table for any one of a hundred different reasons. If negotiations break down, it will be hard enough for you to refocus on business, but it will be even harder for your employees because the trust you will have accumulated over the years may have been damaged or broken in the process. And once that trust is broken, it's hard to earn back. Unfortunately, there is no way to entirely keep something like this from happening, but there are things you can do to minimize the damage and rebuild the trust.

One way to do this is to put some fun back in the business by challenging your staff's competitive nature with short-term objectives that have substantial financial rewards attached to them. This in turn will refocus your employees on the business at hand. The problem is also likely to be less severe if you have a meeting with your managers and key employees and tell them that the rumors were true but you were bound by a confidentiality clause, but that in the end it wasn't what you wanted. At that point you can pick up the pieces by refocusing the staff on what needs to be done going forward.

On a positive note, if the sale becomes a reality, one benefit of maintaining a positive relationship with your employees at Level 5 is that it provides your buyer or successor with a big advantage as he or she takes over as owner. If the customer–employee–owner dynamic is in balance, the buyer or successor will have a clear understanding of what his or her ownership role is and know what the employee and the customer expect. This can help make the transition as seamless as possible while the new owner or successor and employees get used to each other. It can also give the person replacing you not only added confidence but also a direction in which to move the business forward right from the beginning.

Although asset protection is rarely discussed as an important element in business, to the entrepreneur or owner who has suffered through continued asset write-downs it is not only a major concern but an effort that pays dividends when selling. Focusing on assets and their performance through management accountability and improved processes may not make asset write-downs completely disappear, but it can severely limit them. As this fact makes clear, owners have to focus on and gain control over their products or services, the business's tangible and intangible assets, and the customer–employee–owner dynamic if true asset protection is to be achieved.

Asset protection is not easy, and even after you feel you have it under control you have to not only continually work on it yourself but also challenge your employees to focus on and improve it. However, once asset protection becomes part of your business's DNA, it is a strong market weapon because it enables you and your employees to get the maximum out of every asset the business owns or controls, which in turn focuses the business on the opportunity the asset was bought or created for in the first place. And all of this adds up to a stronger market presence, more success, and more profits, and it does it by using a valuable weapon that only the most successful owners use.

Imagine that you're standing in the middle of an intersection with cars coming at you from every direction. It's obvious that you're in danger and that moving from the intersection is your only option. The problem, though, is that the landscape looks the same no matter which way you turn, so it's impossible to tell which road will take you where you want to go. That's what planning is about—it points the owner and the business in the right direction.

Every owner stands at this dangerous intersection, not once but many times. Some of them never make a choice, stay at the intersection, and watch their businesses die. Some guess which road to take and only find out they are on the wrong one when it's too late. And some guess right, have some initial success, and then lose their way. But there are still others who anticipate the intersection and determine beforehand which road to take, what to expect along the way, how to avoid the dangers and capitalize on the opportunities, and how to recognize and correct errors. This last group is the planners, the ones who realize that planning is one of ownership's best tools, as well as one of the best ways to put the odds of success in their favor.

Of course, most businesspeople realize that they should plan. However, the majority of owners don't do it, primarily because it's hard to do, because they don't want to put themselves in a position in which they are accountable, or because they don't want to have to force others to be accountable. These owners discount planning's importance by telling themselves there is little point in planning because, since they can't predict the future, there's no reason to plan for it. But this is a trap—and a costly one—because it puts the owner in the middle of that intersection. It's true, of course, that you can't predict the future, but you can prepare for it, and that's what planning is about.

Planning is both a science and an art. The “science” is in determining what information is needed in order to build a strong factual foundation for analysis and decision making. Such information might include, for example, what's happening in the market today, what the historical trends have been, how large the market is, who has the largest shares of it, and which businesses have been winners and losers. Gathering this kind of data will enable you to better understand the market and determine not only why the best companies are where they are but also what the less successful companies are doing, or not doing. Planning, then, is about facts and realities, not assumptions, and that means that the questions you ask are as important as the answers.

The “art” of planning is in how an owner sees the facts the “science” has uncovered and uses them to develop a plan. But that's easier said than done. And it's an effort in which experience counts. We know, for example, that economists and scientists can look at the same facts and reach conclusions that are diametrically opposed to each other. The difference in conclusions occurs because of personal bias, because some facts are ignored to prove a point, or because of a narrow focus that impacts on how the facts are interpreted. But, as an owner, you can't afford to fall into this trap because incorrect decisions have costly personal consequences. In fact, one of the main reasons businesses have boards of directors or mentors is to tap into the experience of those who have mastered the “art” of planning. Further complicating this art is the fact that the goal of planning is not to find the correct answer but rather to choose the best answer for your circumstances and your tolerance for risk.

Of course, the first step in planning is always to determine where the business is headed and what it will look like when it gets there. Once that determination has been made, planning is essentially about getting the business from where it is today to where you want it to be. Planning can be immediate, short-term, or long-term. Immediate plans are for today, this week, this month, or this quarter. Short-term plans, which are very specific, define what needs to be accomplished in anywhere between six months and three years, depending on the industry and what needs to be done. Long-term plans are less specific, and more flexible, than short-term ones. The key to planning, though, whether it's immediate or short- or long-term, is that the sum of all the parts has to add up to the long-term destination you have set.

The Benefits of Planning

• Planning forces you to choose a destination and a direction for your company, without which it is impossible to establish criteria for success and, accordingly, determine whether the activities the staff is involved in are productive or efficient.
  
• Planning helps you optimize the company's future. Because profit is the lifeblood of business, when planning focuses on profit, efficiencies are created, as is a scorecard for success and failure.
  
• Planning gives your company a purpose and directs its focus toward customers and the revenue/profit they generate.
  
• Planning generates factual information you can use to evaluate immediate and short- and long-term plans. It also exposes both the immediate realities of the market and possible future market trends.
  
• Planning gives you a marketplace advantage over your competitors who don't plan at all or don't plan well because you can use the strategic and tactical ideas that are developed to expand or protect your company's market position in both the short and the long term.
  

The Realities of Planning

• Planning relies on the other Facts of Business Life for support and implementation. Even if, for example, your company has the best-developed plan, it won't work if you don't provide leadership (Fact 1) or understand the importance of accountability and control (Fact 2). More than any other management discipline, planning exemplifies the reality that to succeed you have to be proficient in numerous leadership and management disciplines.
  
• Planning is one of the things that successful owners have in common, and the way to become successful is to do what they do.
  
• Planning means keeping up with marketplace changes, which may lead to internal changes and the employee resistance that usually goes with it.
  
• Planning can be successful only if your company has accountability and internal discipline. If you aren't prepared to captain your own ship, you may not have what it takes to be an owner.
  
• Planning, especially in the beginning, is always hard because every step is a new adventure, but it becomes easier with experience.
  
• Planning is about eliminating excuses and creating an atmosphere in which employees and the business can succeed.
  
• Planning is less about developing a plan than it is about implementing the plan and reaching the goal. The real battle doesn't start until after the plans have been made, and it's a battle that has to be fought—and won—if ownership success is to be achieved.
  
• Planning is not just something that takes place once a month, once a quarter, or once a year. Making plans and implementing them is an everyday blocking and tackling event. In other words, when it comes to planning, every day is game day.