What does YOUR Year End Review Look Like?

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The year end brings a perfect time to take a clear look back to see what worked and what didn’t in your business.  Too many times, senior leaders look at “did we hit our number?” as the all consuming barometer.  That is absolutely critical.  It’s also dangerous if that’s the only thing that’s reviewed with a magnifying glass. 

Start at the basics to ground you in the brutal economic truth.

  • Are your sales & profits up or down?  How close to your budget?

  • Are you getting better at what you do?  Usually your margin %’s are an indicator here, all things being equal (input costs, pricing), margins moving north indicate productivity improvements and/or favorable mix.  Sometimes businesses plan them up or down based on op ex investments, so margins relative to expectations are the critical view.

  • In almost all cases, up beats down…….but in my experience, businesses that can not grow margin rates over time are forced to grow the topline at accelerated rates, and that can be expensive for shareholders if it’s not done organically (ie via acquisition).  Growing margin rates and top-line revenue are obviously not mutually exclusive, doing both is where it’s at.

 

Investment & Focus areas

  • People/Team?  (new hires, promotions, existing employees), how have you done? 

    • Are key individuals getting significantly better, or are they treading water?
    • How much did you spend on training?  Did you see an impact?  If not, why?
  • Culture? 

    • Overall workforce engagement (morale) and ownership of outcomes and common definition of a great future.  What have you spent against this?  What was your ROI, or if too difficult to measure, would you repeat it?
    • What’s your turnover rate and is it better or worse?
    • What’s your safety record?
    • What are your quality defects?
    • Are you happy with the results orientation of the business among your people?  Or do they have just a cursory view of business performance and their respective role in improving it?
    • Is recruiting becoming easier because your existing workforce is turning into the company’s best advocates?
  • What does your business pipeline look like going into the new year? (Customers)

    • How strong are you with your existing customers?  Are they growing as a group, flat or declining?  What are their intentions going forward?
    • Strong enough to recover from key customer losses and still grow?
    • How does your innovation stack up?  Are the new products/services in development likely to pull margins up or down, or are you doing more of the same?
    • Are you telling your story (marketing) effectively and attracting people to YOU?  Have you embraced the world of digital or still part of the masses that think it doesn’t apply to you?
  • Process Improvements?  All areas of business have a process, whether well defined or not. 

    • Have you analyzed your key business processes to look for improvement?
    • What’s your key business process where the management team comes together?  How strong?
  • Equipment?  Better, more efficient, safe equipment, or more total capacity….

  • Technology? 

    • Still stuck in a world of cocktail napkins or contemplating a real company system?  Or are you stuck in a world of spreadsheets where power users get it, others struggle?
  • Last, is your company stronger financially at the end of 2016 vs. the start of it?  Multiple metrics for this, but your balance sheet ratios of liquidity, debt coverage, shareholder equity and cash are all good indicators.  NOTE:  All of these metrics are the outcomes of everything above

[Continue Reading…]

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Why Labor Day is My Favorite Holiday

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A 2011 Harris Poll Caught my eye, ranking America’s favorite Holidays, and then segmenting that info by generation and gender.

I’ll admit it:  Labor Day is MY favorite Holiday.

In the past I’ve called it Under-rated.  Misunderstood.  Now I’ll just call it my favorite.

Religious convictions aside, I have to wonder why it doesn’t crack the top 5, at least in 2011 it did not (it ranked #8).

  • Economic pressure?

  • No religious affiliation?

  • End of something great (summer)?

  • The stigma associated with “WORK?”  It’s a four letter word not just literally, but metaphorically.

Who knows.  And really, who cares!  People have the right to call whatever holiday is their favorite.

Here are my reasons, kind of off the top of my head.

  1. It has been said that the greatest social program known to man and government is a job.  AGREE.

  2. All jobs, regardless of pay matter.  If you think hard enough, many of your values and life lessons can trace back to your early years working.

  3. When you receive compensation for anything (products, hours, etc) you are exchanging one thing of value for another.  This exchange system is as old as the dawn of civilization.  There’s something special about anything that goes back centuries.

  4. There’s something democratic about capitalism.  The free enterprise system, with all its flaws tends to find a price/value for all jobs in demand.  The greater the demand, lower the supply, the higher the price.  These laws almost always ring true.

  5. The USA is a country of immigrants.  Not a debate.  Immigrants come to the USA in search of a better life.  What was tops on their mind to do that?  A JOB.

  6. Our economy moves at light speed.  A profession today could be wiped out in 2 years for a number of reasons.  That creates risk.  It also creates opportunity.  Either way, it should keep you on your toes.

  7. Maybe I just think of “Labor” or work, as the back-bone of our country and it’s free enterprise system.  FREEDOM.  CHOICE.  Land of OPPORTUNITY.

The nightly news has always puzzled me.  The sentiment always seems to be so negative.

Personally, when I think of America I ALWAYS have a smile on my face.
  • I see so many people work, struggle, succeed, help each other, grind away, figure it out, and generally move forward.  I see people with seemingly average ability go on to be wild successful.  I see people that (on the surface) get lucky, but when you hear their story, they usually found a way to create that luck by choices they made.
  • I see people struggle to figure out how to pick up their kids at school when their employer asks them to hang in an extra hour or 2.
  • I see the overwhelming majority of people get up in the morning and WANT to put a good, honest days effort and provide for their families.  And many of these same people have a fire in their belly to improve on their current lot in life and grow, from wherever they are today.

“Work” to me is something you DO.  It’s a choice.  It’s a skill.  It’s the path to whatever life you hope to live.  Sure, Turkeys and Goblins are fun.  But if I’m going to give you my number one holiday, Labor Day gets my vote.  

 

Base: All adults (Source:  Harris Interactive, Link Below).

Generation

Gender

Echo Boomers (18-34)

Gen X

(35-46)

Baby Boomers

(47-65)

Matures

(66+)

Male

Female

Christmas

Christmas

Christmas

Christmas

Christmas

Christmas

Thanksgiving

Thanksgiving

Thanksgiving

Thanksgiving

Thanksgiving

Thanksgiving

Halloween

Halloween

Fourth of July

Fourth of July

Fourth of July

Halloween

Fourth of July

Fourth of July

Halloween

Easter

Halloween

Easter

Easter

Easter

New Years

Halloween

New Years

Fourth of July

http://www.harrisinteractive.com/NewsRoom/HarrisPolls/tabid/447/ctl/ReadCustom%20Default/mid/1508/ArticleId/878/Default.aspx

 

 

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The Power of a Text Message

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A recent text message exchange with a team member, I mentioned we should give some “thoughtful planning” to a company Labor Day celebration.  Labor Day is a time when our company comes together as one for BBQ, and since everyone is in the same place and away from the production floor, it’s a great opportunity to send and receive important messages about where we are at and where we are going.

There’s a problem, or opportunity however in this exchange, depending on your view of the world.

When asked:  “What shall we do?”  I did my best version of project management and wrote the following:

Cook.

Message.

Campaign.

Sell.

Laugh.

Eat.

Work.

Hustle.  Celebrate.

Live.  Hug.

Ball-Bust.

“That’s a rough outline.”  12 simple words.  

Text messages are great for free flow thinking, but not really project management.

For most people, this exchange can be infuriating.  For players that like to write a playbook and not just execute one that’s been handed to them, I would think this is energizing.

There’s a thing about project management I’ve learned?  It doesn’t motivate me.  But it’s important.  It breaks down a vision into concrete steps.

I always wish I had the project management skills of my sister.  She could PM her way off an island in any time-frame given.  

Sometimes, the best laid vision of success is a words picture.  As the great Stephen Covey once said:  “Start with the end in mind!”  

For me, Words help with that process.  

One of my best friends once declared in our college yearbook:  “Words are everything!”  

He’s right.

What else is “everything?”  PEOPLE.

Find people that can take an exchange like this and make a words picture a reality and you have something special.  

 

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Want to Lead? Grab a Squeegee & Make it Your Friend

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I love metaphors & symbols.  They bring a point home clearly, better than words alone can do.

You know what brings home a point even better?  ACTIONS.  The EXAMPLE you set.

In a food manufacturing facility, water on the floors tends to be all around, and it’s also a safety risk.  There’s an Old School Tool to combat water on the floor:  The Squeegee!

squeegee as a metaphor for leading

If your a leader and want something done, encouraging people to take ACTION against something important is mandatory.

“Keep the floors dry, PLEASE!”

Even more important?  Backing up your Plea with your OWN behavior.

Never let the squeegee go untouched and get lonely.  Pick it up and make it your friend.  Pull some water off the floor.  Do it daily.  More than 1x per day.  Your team will notice, then follow suit (eventually).

Grabbing a squeegee for even 30 seconds while running to your next appointment will set the tone for the troops.

Directives are always needed.  Backing up a directive with ACTION brings the importance to life.

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The Best $25 Investment In Business?

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A CAKE.  To Celebrate Birthdays.  Or ANYTHING for that matter.

There is something universally acknowledged about CAKE.  It’s what you eat when you are celebrating something special, usually a birthday.  Some things come to mind when I think about a birthday cake….

  • The first impression of seeing the cake:  Is it chocolate?  Strawberry?  Ice cream?  Anticipation…
  • The flame of the candle and the drip of the wax.  Always a skill seeing how many you can light and the Hustle/bustle of rounding people into the room in time
  • The Singing.  I can’t sing to save my life, but I enjoy watching everyone sing Happy Birthday.  Someone is bound to ham it up
  • The blow out of the candles, and the occasional struggle to leave a couple burning.  And the ridicule that follows
  • The slicing ritual, a little different each time.  I enjoy critiquing the slicer, although some call it “ball breaking!’
  • The funny stories that usually flow while eating the cake.

One of the first of many happy memories I have at LM Foods was our first birthday celebration.

I struggle to remember the specific stories, the flavor of the cake, the time of day.  But I DO remember how my stomach felt.  Sore.  Not from the cake, from the laughter.  Better than 100 crunches.  And the knot in my shoulders loosened up for the rest of the day.  I suspect it did for my fellow team members too.  

Some businesses have more to celebrate than others.  But every business has people, and every person has a birthday.  Spend the $25.  Let them eat cake.  Enjoy the laughter.  

  • Celebrate Business with Cake!

    An LM Foods Birthday Celebration!

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Keys To the Shop: A Message of Trust

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Keys to The Shop

Do you remember what it’s like when you recieved your first set of car keys?  I remember the feeling of freedom rush over me.

What do I remember more?  When I received a key to the Liquor Store I worked at in high school.

The feelings were borderline euphoric.

  • TRUST:  Somebody (the owner) thought I was responsible enough to have it.  And use it, to open or close the shop.

  • I MATTER:  Not everyone had them, you had to be chosen.

“I got keys to the shop!”  

Some people flashed cool key chains on their car ring.  I flashed a gold commercial key to a liquor store.

This week something simple was done at my company.  Multiple office keys were made.  Everyone that works in the office is now trusted to have a key, not just the owners and a selected one or 2 people.

My only regret is that it happened on day #60 instead of day #1 of owning LM Foods.

Regrets for high action people are usually related to not moving fast enough…..  

Simple and basic.  Old School Fundamentals usually are.  

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A Leader’s Obligation: Deal With Your Employees Mental Freight Train

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One of the more anxious events in someone’s career is enduring a change of control & leadership transition.  People’s fears tend to go sky high when a new Leader takes over, with many thoughts along the lines of:

  • Will I lose my job?

  • Will they bring their own team in?

  • Will they change everything about how I do my job?

  • Will my pay/benefits be cut?

  • Will my quality of life go down/up/sideways?

It’s natural for people to let their mind race, and it may be racing in “packs” as they talk with their co-workers and supervisors.

Change is mandatory in business, but it needs to be managed aggressively.  An employee’s mind can be like a freight train when it starts to run.  A leaders role (and in my opinion, OBLIGATION) is to NOT allow it to become a freight train if it heads in the wrong direction.  It is the leader’s role to tell them….

  • What their leadership principles are (how they manage)

  • What a vision for the future could be.  Make it a better tomorrow than today

  • Start ACTING in accordance with both who you ARE and where you want to GO.  

Last, a novel concept:

Catch people doing something RIGHT.  Not wrong.  Call them in.  Celebrate it.  Make it a habit to recognize the productive behavior.  

Another reason why leaders should do this?  It feels pretty darn good for all those involved.

Recognition injects Oxygen into a culture, something a business can never have too much of.

Catch them doing something right

The Great Production Team of LM Foods, LLC, Celebrating An Everyday Positive Moment

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Organizational Culture: Not the First 90 Days, But EVERYDAY

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It has been about 3 weeks since taking over as CEO of LM Foods.  It has been an absolute blast learning the business and developing a strategy for the future.  

What was the most important factor leading up to the acquisition that leaves me in a position of optimism vs. feeling overwhelmed? 

Ditching the Data Room.  Learning from the lions by going to the jungle, not the zoo is always the best crash course. 

In the first 90 days, I have 2 core objectives:

  1. Gain a baseline for where the business is at (“Learning”)
  2. Start the process of building a Strategy.

Strategy can be fancy, complicated and many times…..academic.

Businesses don’t compete in academia, they compete in the real world, so keep it simple.  Strategy is about building a plan to WIN.  In sports, they call it a playbook.

The right Strategy/playbook is important.

Executing the Strategy/playbook is MORE important.

Something that brings Strategy AND Execution to its knees? Culture.

A toxic culture will suck the oxygen out of the business.  A vibrant one will inject it. Cultures don’t happen by chance, they are intentional, whether you pay attention or not.

I’ve always believed in Culture.  After 3 weeks, that belief is put on steroids.  I will expand on the great Peter Drucker’s thought:

Culture eats strategy for breakfast
So while the 2 objectives (Learn & Build a Strategy)……don’t have the word “Culture” in it, there is a reason:

Building a Culture is an everyday, on-going effort, not a point in time “dive in then dive out.”

The life of an Entrepreneur, and a Leader can feel like a roller coaster.

It’s a bit ironic, I personally never liked roller coasters, with a fear of heights, the lack of control and the “whiff” of danger.

I never understood why people pay money for it!  But I love the roller coaster of business.

Business is the driver of this great country.  And when you REALLY get into a business, most would agree that CULTURE is the driver behind any great company.

Building a great culture is not easy.  Nothing great ever is.

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An Entrepreneur’s Lesson: Ditch the Data Room

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I don’t think I remember anything pleasant growing up and thinking about Homework.  Or Medicine.  Or Doctor Visits.

The entrepreneurial equivalent of Homework is a fancy term called “Due Diligence” (DD).  Think of it as homework on steroids, where $’s, jobs and cultures are all on the line when a business acquisition is taken place.  It typically happens after signing a Letter of Intent (LOI) to purchase the business, for a defined period of time, say 90 days.  

Chances are, if this business is bigger than “Mom & Pop” (say greater than a couple million in revenue), you may have access to a “Data Room.”  The Data Room should have plenty of info to do your homework on the business:

  • Financial statements, Tax records
  • Legal documentation
  • Marketing/Sales Collateral
  • Employee records, policies, grievances
  • Hard assets, including property, equipment, building info
  • Management reports:  Sales trends, costing info, customer info, suppliers, etc.

Exhaust the data room, know the info cold and keep your notebook of key questions and insights.  More importantly, give other trusted advisors access to it, you can’t catch everything in there.  Something will be viewed through a different lens, and you need that additional insight.

Then the most important lesson of them all?

Ditch the Data Room.  Quickly.  

A former colleague I had the privilege of working with had a favorite saying:

If you want to know how the lion lives, don't go to the zoo, go to the jungle.

The jungle is where the value is currently created in a business.  

It’s also the springboard, or quick sand for future value creation.

It is nearly impossible to understand a business by populating a data room with “Culture.”  By definition, culture is hard to put your finger on, but it means everything.

A toxic culture will swallow any value creation plan.  Develop a strategy early for unwinding the culture.  A few pieces I’ve written on Culture.  

The biggest challenge with assessing the culture?  It can’t happen by a simple “walk through” the operation.  You need to be imbedded, as if you worked there, so find a way to “get on the inside” as quick as possible.  

I would build into your Letter of Intent that you need at least 4 weeks inside access to the business as part of your DD, as the last and final step, and as a springboard to hit the ground running after close.  

Most owners will be hesitant here.  Stand firm anyway.  If you need to make concessions, concede the post time transition support.  If you can’t gain formal inside access as part of DD for at least a week, what does THAT say about what you are buying?  

It IS customary to have owner transition support for extended periods of time AFTER close.  The problem with this is obvious:

  1. The money is already spent.  Your investment thesis will likely change AFTER you get in the jungle.  Surprises alter ROI.
  2. What perspective will existing ownership lend AFTER the close?  THEIR perspective.  What THEY know, has already produced what’s already in the data room.

What matters is how NEW leadership will impact (good, bad) an existing culture.  The unknown for the entrepreneur is not their own leadership style, it’s the company and culture they will be inheriting.  Existing employees hold the keys to unlocking those unknowns.

On the “inside” means exactly that.  You are essentially parked inside the business, all day, full working hours.  It’s not complicated, but you need to do some basics…..

  • Invest in personal rapport first.  Get to know THEM, and start to establish trust.
  • Find the opinion leaders, connectors and people that know how the place runs, where the skeletons/challenges may be, how the morale meter registers.
  • Make sure you are listening 2x’s more than your talking.
  • Customer meetings and trade shows are the best way to go to get a feel for the “whys” behind the revenue line, so take advantage of all of those opportunities.

In short, you’re trying to find the “WHYs” behind the WHATs you learned from the data room.  Then, you’re developing your plan for the future.  Part of that plan is confronting the realities of the culture, and eliminating surprises. 

Business is fraught with opportunities to get caught up in Paralysis by Analysis.  If you’re going to be paralyzed by analysis, make sure you’re sitting in the jungle, NOT the data room.

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