Managing Your Business | Martin Willoughby

29 Feb 2016

Sticky Post By overseer Posted in Business Development, Decision Making, Entrepreneurship, Managing Your Business, Uncategorized Permalink

HOW TO VETT A BUSINESS OPPORTUNITY

Sticky Post By overseer On February 29, 2016

Like other high-income earners, physicians are often sought after sources of angel investment funds for start-up or growing businesses. I am often asked to review and analyze these business opportunities for physician clients.? In this article, I am summarizing the key considerations for evaluating potential investment business opportunities in startups or growth companies.

Vision, Values, and Strategy

Can the company?s management articulate a clear vision and strategy for the company? In other words, do they know what they stand for, and do they have a plan for where they are going?? Many companies suffer from a lack of focus.? Research supports that companies with a narrowly focused strategy will generally outperform the competition.? I am wary of any company that can?t clearly articulate their value proposition in the marketplace in 30 seconds or less.? I also look for whether management and employees are all in sync on the company?s vision and strategy.? Many companies overlook the creation of a value statement.? I prefer companies that know what they stand for.? Difficult times will face every organization.? Value statements that have real meaning and adoption provide anchors during turbulent times.

Execution

This is one of the hardest things to actually find out in due diligence, but probably the most important.? Here, I am trying to determine whether the management team can actually execute the company?s strategy.? Many people confuse effort and activity with execution.? Successful companies have high functioning teams that execute with purpose and passion to get things done.? I ask questions about how management creates accountability in the organization or look for examples of past execution to try and determine whether the management is execution-oriented.? Other clues to whether a management team can execute is the level of organization, timeliness, and if they are goal oriented.? I like to see clear written goals and action plans.

Products/Markets

People raising money for a company should have a clear command of the marketplace they are competing in and how their products and services stack up against the competition.? Is the company swimming in the ?red ocean? of a very competitive market or the ?blue ocean? of new and untapped markets??? If they are in a very competitive market, then can they clearly articulate why their product/service is differentiated from the competition?? In a new market, how are they pricing their products and gauging the overall market opportunity?? Many companies venture out and find that their market is actually much smaller than they thought. It is helpful if the company?s industry has solid data on size and growth.? High growth companies need large and growing markets to thrive.? I look closely at the price sensitivity of the products/services and the barrier to entry of other people to compete.?? I also prefer recurring revenue companies versus companies that only have one-time sales.? Is the company a one trick pony or is there a pipeline of other products/services?

Management

No matter how good the products and services a company may offer, ultimately the success of a business depends on the quality of the people. ??When you invest in a company, you are really investing in the management team.? Most companies in early funding stages lack a complete management team. I try to determine the strengths and weaknesses of the management group, and I want to understand how they will shore up the deficiencies in the short term and what their long-term plans are for fully staffing the management team. ??Does the management group complement each other or is there too much overlap?? Are any of the founders part of the management that may soon have to be replaced?? Replacing a management team member can be a time consuming distraction for a company.? I prefer managers who have experienced both success and failure.? We all know we learn more from our mistakes than our successes.? I would prefer that a management team not learn their failure lessons with my investment.? Great managers are great leaders.?? They are high performers and can attract top talent.? I have found that the best leaders are great coaches and know how to get the most from their employees.?? You want to avoid know-it-all?s and micro-managers because they will ultimately prove to be poor leaders and will run off talented employees.

What is the Exit?

Most investors eventually want their money back out of the company in a reasonable amount of time.? A typical time horizon is 5-7 years.? What are the long terms plans of the company?? Are the founders creating a lifestyle business or a high growth company??? Typically, lifestyle companies will have slower growth but greater profitability.? High growth companies, often referred to as gazelles, usually focus on top line revenue growth.? These companies will typically lose money at first.? I look carefully at the ?burn rate? of these type companies and want to understand when profitability will occur.? It is critically important that the owners and management all be in sync on the trajectory of the company and the goals for exit.

The Deal

Ultimately, the opportunity to own part of the company must be for the right price tag. ?All pro-formas tend to look alike with slow growth in the early years and then the proverbial ?hockey-stick?? high growth in the later years.? The investment and corresponding ownership should be reasonable based on very conservative financial projections. There are also a number of ways to creatively structure a deal to provide additional risk mitigation for investors.? In addition, the legal terms and conditions of the corporate documents you will be signing are a major factor to consider.? Structuring the financial deal and key terms and conditions will be explored in more detail in a future column.

While this is an abbreviated list of due diligence considerations when vetting investment opportunities, hopefully it will provide you a framework to begin to consider future investment deals.? For an easy checklist summarizing these points and others, feel free to email me, and I will send you a copy.?? Good luck in your investment future!

24 Feb 2016

Sticky Post By overseer Posted in Attitude, Business Development, Creativity at Work, Culture and Worldview, Managing Your Business Permalink

WORK LIFE BALANCE IN YOUR ORGANIZATION

Sticky Post By overseer On February 24, 2016

Every organization wants ?A? players on its team.? Further, a company?s ability to get maximum performance from the minimum amount of staff is always a great challenge.? In the war for talent in the 1990?s, many companies embraced a variety of work-life balance initiatives to recruit and keep top employees.? While foosball tables, gyms, and onsite daycares may not be in vogue anymore, employers are still facing a new generation of workers with different views and expectations about work and life balance.?? The lines between work life and personal life are not as clear as they used to be.?

During these lean times, it would be easy for management to take the position ?my employees should just be thankful they have a job.??? While that may be the reality, it is also shortsighted.? Decisions made now will impact the long-term performance of your company, especially as we companies continue to?pull out of the previous?recession.? Studies consistently show that most companies only tap a small percentage of the true potential of their employees.? For years, forward thinking organizations having been experimenting with how to harness the potential of their teams through work-life balance initiatives.? For those innovative organizations, this often results in being named to ?Best Places to Work? lists.? Interestingly, studies have shown that public companies named to these type lists have outperformed the overall market.

One example of a Mississippi firm employing these type initiatives is Grantham Poole, a sixty five employee public accounting firm based in Jackson.?? The norm for years in the world of accounting has been for employees to slave away long hours during the long spring tax season which usually runs from the beginning of January through April 15th.? Recognizing that this can have a detrimental impact on both employees and their families, the firm tried a bold initiative last year to limit everyone to 45 hour work weeks and only 4 pre-specified work Saturdays during tax season.?? According to one of the founding partners, Jim Poole, ?we wanted to pro-actively improve the quality of life for our employees which has resulted in a more balanced and happier workforce.?? Poole acknowledged that the shift has not been easy and has taken a lot of commitment from the firm to try and create workflow that is more evenly distributed throughout the year.? Poole further noted that ?we have been pleased with the results and believe that it is helping us attract and keep talented workers.?

As more jobs are based on intellectual know-how and service standards, creating win-win partnerships with employees will be critical.? Many pioneering companies in the work-life arena found that even though they were putting in good programs it still was not creating the intended results.? The problem is that work-life balance programs are not ?one size fits all.?? It really involves a dual commitment from employees and employers.? I believe that successful companies should be creative and innovative in their work-life structure and in return expect employees to contribute maximum effort to achieving the company goals.? On a practical note, a best practice that is evolving is to make training courses relevant to both life and work.? Research indicates that strategies for time management, planning, etc. that can be taught from a whole life perspective significantly increase adoption and execution in the workplace.

For employers, these type work-life changes may mean breaking with years of habit.? As Grantham Poole demonstrated in tackling the longstanding tradition of working brutal hours during tax season, positive change can be made with winning results.? As your company is looking for that competitive edge, perhaps it is time to honestly think about the output of your team and the opportunities to improve performance and attitude with some bold work-life initiatives.

Companies that do will be best poised for the continued challenges of 21st century employment.

22 Feb 2016

Sticky Post By overseer Posted in Business, Business Development, Managing Your Business, Motivation and Encouragement Permalink

GETTING THE EDGE

Sticky Post By overseer On February 22, 2016

Did you get skip that workout you planned to do today or indulge a little extra at that meal last night?

Did you opt to put off that important customer feedback project that you had been planning to launch?

These are just a few of the many minor decisions we make everyday in our lives and business, and they usually don?t have immediate consequences.? If I choose to skip my exercise today, there probably is not a significant effect on my health.? If I skip the entire week, I am probably just fine. In fact, if I skip a whole month of exercise, there is probably not a consequence except that my pants may fit a little tighter. However, in time, the daily decision to not exercise will catch up with me.? It may be years down the road, but my decisions regarding my health habits will have a compounding effect on my life ? either for better or worse.? My point is not to create guilt or motivate exercise fanatics, but to simply point out an important concept that relates directly to our success in business: we are the sum of decisions.

It has been said that if you want to understand where you are today, then you should examine your daily habits in the past.

If you want to understand your future, then you should examine what your daily habits are today.

These principles apply in our businesses as well as in our personal lives. We are always trying to get a leg up on our competition.? We read books, go to seminars, learn knew skills, work harder and faster ? all to try and inch out our competition in an ultra-competitive global marketplace.?? These are all important parts of building a successful business. ?For entrepreneurs desiring to build successful companies, there is another key ingredient that is often overlooked ? the ?Slight Edge.” ?Jeff Olson, in his book The Slight Edge, points out that the keys to your personal and business success are the things you do every single day, the things that don?t look dramatic or like they matter.? He argues that the little daily decisions not only make a difference ? they make all the difference.? The Slight Edge is simply a commitment to making the right choices day in and day out in your life and business.? It is a philosophy that helps us understand that we make decisions knowing that the results are long term.? We know that in time, if we make the right choices, our lives and businesses will be better off.

Most of us have seen the chart that shows us that if we start investing a few dollars in our early twenties and stick with it, then we will retire with lots of money.? These charts, which are often used by financial planners, illustrate the powerful principle of compound interest. When you look at the chart, it appears that you are making great progress for a number of years, but over time, the true power of compounding becomes evident.? For entrepreneurs, the key is to begin making good daily choices with your time and priorities early. Don?t let everyday distractions deter you away from doing the rights things for your business.? I often see companies ignore basic corporate housekeeping and other similar non-revenue producing activities in order to deal with urgent, but usually unimportant, issues.? While there is no immediate consequence to your business for skipping over these often seemingly mundane details, they can have long term consequences.? Often, when a company gets ready to sell or raise money and the microscope is turned on their business through due diligence, the compounding effect of poor habits in these areas truly come to light.

Most ?overnight? success stories are actually the result of years of hard work and effort.

We became spoiled in the dot-com era of companies starting up and then selling out for millions.? We need to be reminded that companies such as Starbucks, which has over 13,000+ stores in 39 countries, only had 165 stores after being in business 21 years.? The Slight Edge is no ?get-rich-quick? scheme. It is an invaluable philosophy to apply in your business to develop positive daily habits which will help maximize its potential to become a fast growth venture.

08 Feb 2016

Sticky Post By overseer Posted in Business Development, Entrepreneurship, Lean Startup, Managing Your Business Permalink

HOW TO VETT YOUR NEXT BUSINESS IDEA

Sticky Post By overseer On February 8, 2016

Entrepreneurs are people with big dreams and ambitious goals. They pour their time, energy, and resources into their business ventures in hopes of success. Unfortunately, the odds are stacked against most of them reaching their destination. Statistically, we know that most will fail within the first five years.? However, there are some people who defy the odds and somehow achieve success as serial entrepreneurs.?? Are some people just born with the Midas touch?? What is it that people like Sir Richard Branson, founder of the Virgin Group, Ltd, have that gives them the ability to repeatedly strike gold in the cut-throat marketplace?

While there is no one magic bullet, there do appear to be some consistent themes.? One quality worth noting is the ability to critically vet business ideas to make sure the new venture has a fighting chance.? This takes rigorous analysis and the ability to honestly and objectively review the idea and the entrepreneur?s own ability to execute.

Clark Love, a native Mississippian, has achieved the goal that most entrepreneurs only dream about ? he has successfully started a business, grown it, and sold out to a larger company. Love, a graduate of Ole Miss and Northwestern?s Kellogg School of Management, started Forest One, Inc. (later renamed Lanworth, Inc.) in 2000 at the age of 28.? Lanworth is an information technology company providing consulting services, applications development, and software to the forest products, environmental, and land management industries.? Love originally founded Lanworth with his college friend Dr. Henry Jones and grew the company to be a multi-million dollar enterprise with the main offices being in Jackson and Chicago.? In 2007, The Westervelt Company acquired Lanworth.

While Love achieved his goals for Lanworth, he has not remained idle.? His entrepreneurial drive has already rekindled as he in the process of launching several new ventures. Love?s analytical training as an engineer in college, his experience as a consultant with Accenture, and his ?real world? experience with Lanworth and other startups has allowed him to develop a framework for analyzing new business opportunities.? His checklist for a new business venture includes the following requirements:

Have a Cause

The product or service offered by the business should move people. ?Love added, ?It doesn?t need to move everyone, just the segment of customers I plan to go after and the people I will hire.? You want a business people will put their hearts and soul into.?

Know Your First 3 Customer?s By Name

An entrepreneur should know by name the first 3 customers for the product or services the business will offer.?? Many people have ideas about what will work in the marketplace yet they have never actually vetted the idea with a potential customer.? You need to know if anyone will actually buy your product or pay for your service.

Build a Recurring Revenue Model

A large majority of the revenue should be recurring so the business does not have to start from scratch each year.? Having a solid financial base of recurring revenue allows for more growth opportunities.

Be Passionate about Your Industry and Customers

Love noted, ?Starting a company is incredibly hard, harder than most people realize.? Pay and economic reward are not enough ? you really need to have a passion for the business and serve customers that you actually care about.?? This passion serves as the ?pull through? that helps you get through the difficult times as an entrepreneur.

This checklist can serve as a useful tool in analyzing any new business opportunity.?? I believe that serial entrepreneurs like Clark Love will play an integral part in Mississippi?s future in creating jobs and opportunities for Mississippians.? Hopefully, we can collectively make Mississippi, Tennessee, and the Mid-South attractive places for entrepreneurs to invest their passion and energy into creating world class businesses.

27 Jan 2016

Sticky Post By overseer Posted in Business Development, Leadership, Managing Your Business Permalink

ARE YOU CONTINUALLY IMPROVING YOUR BUSINESS?

Sticky Post By overseer On January 27, 2016

Is your organization getting better all the time??

Most business owners would like to think that their business is always improving; however, very few people are willing to actually do the heavy lifting to create an enterprise that is systematically improving on a regular basis. In the world of manufacturing, these concepts have been around for awhile.? American consultant Edward Deming was a pioneer in? quality improvement with Japanese industry post World War II. The Japanese term kaizen has become synonymous with continues improvement and this method was popularized by Masaaki Imai in ?Kaizen: The Key to Japan?s Competitive Success.? In his book which was first published in 1986, Imai introduced the ?LEAN? philosophy to the world and shared the secrets behind the success of Toyota and other Japanese companies.

The core principle of continuous improvement is the ?self reflection? process.? This is essentially a feedback loop that requires a willingness to be brutally honest about your organization. The purpose of this process is the identification, reduction, and elimination of poor processes. Using a commonsense approach, minor improvements are continually made in small, incremental ways in the organization with a strong emphasis on the customer.

As a company successfully embraces continuous improvement then it moves from being a best practice to becoming part of the fabric of the organization. While these concepts may have originated in the manufacturing sector, they are rapidly being adopted by service businesses, particularly in health care and technology.? There is a tremendous opportunity to gain a competitive advantage by committing your company to a path of continuous improvement.

Mississippi entrepreneur Jill Beneke formed Pileum Corporation in 2002, and she has successfully built a management consulting firm by relentlessly focusing on improving her organization. Beneke worked for over twenty years in financial services, and she was Senior Vice President of the Capital Management Group for AmSouth prior to forming Pileum.? Her father was an entrepreneur as well as her husband, so it was a natural shift for Beneke to launch her own venture when the timing was right. Pileum acts as a trusted partner to companies in multiple industries to help with their information technology and their most important asset ? their data management.? Because of this critical role the company plays for its customers, Beneke and her team have to stay ahead of the constant evolution of technology and meet the real time needs of their customers.

While Pileum may not use phrases like kaizen or LEAN to describe their internal process, they are very much committed to the path of continuous improvement.? The management team and staff continually ask the question ?How can we do things better?? According to Beneke, ?our management team gets together frequently, and we are open and honest about trying to improve.? This means that we can?t be afraid to be self-critical.?? Pileum also provides a significant amount of in-house training for its employees and pays for its employees? external training and industry certifications.? Their goal as a company is to be getting better all of the time.? For Pileum, this commitment to continuous improvement has helped separate it in the marketplace and establish the company as a leading technology consulting business.? The company now has over 30 employees and services a large number of clients in the Mid-South.

If your company is not embracing the principles of continuous improvement then time is of the essence because your competition probably will be soon.? As a leader, you can demonstrate a commitment to continual improvement and set the direction of the organization.? In order to be successful, you also need buy-in of the members of your team and for them to embrace this kaizen mindset.? While dramatic changes may not occur overnight, your team will daily be embracing a way of thinking conducive for long term success.

13 Jan 2016

Sticky Post By overseer Posted in Business Development, Leadership, Managing Your Business, Motivation and Encouragement, Teamwork Permalink

THE GAMIFICATION OF WORK

Sticky Post By overseer On January 13, 2016

Picture for a moment yourself on a sunny and cool fall afternoon getting ready to watch your favorite college football team playing their biggest rival.? The stands are packed, and the crowd is ready to cheer their team on victory.? However, right before the game begins the announcer comes over the loudspeaker and says that the teams won?t be keeping score and are just going to play for fun.? How would you feel?? Would you still be as interested?? Do you think the players would give it their all or simply go through the motions?? Have you ever watched a professional All-Star game ? not exactly the highest level of intensity and effort.

It reminds me of when my kids were very young playing youth sports.? I remember coaching baseball and soccer, and I could not get my head around the fact that we were not keeping score.? I know, I know ? five year olds don?t necessarily have to be competitive warriors out there, but still, it is just not very interesting if you don?t keep score.?? You may be asking where I am going with this line of thought.? Good question!? In my 25+ years in the marketplace, I have found that most businesses operate just like my five year old soccer team ? they don?t keep score!

Sure, ultimately, all businesses get down to the bottom line.? However, in most organizations employees go through their day as if they are in the Bill Murray classic, Groundhog Day.? It is easy to fall into a rut where you feel like you are on a treadmill with no end point.? There is a recent effort to try and ?gamify? work to make it more meaningful.? While this gamification of work has become a growing trend, you don?t need high tech gadgetry to tap into the power of making work more interesting and meaningful.

Over 40 years ago, business consultant Charles Coonradt had an epiphany that led him to commit his life?s work to helping people make their work more like their recreation. He was watching a group of young men building a house that seemed to be slow and arduous work.? However, he noticed that on their lunch break these same young men engaged in heated competitions of 4 on 4 pickup basketball games.? For him, this was a paradox. ?How could they put that much energy into their recreation but not their work?? He became fascinated with the phenomena that people will work harder and expend more energy in sports and other athletic pursuits than they will at their daily jobs.?? Coonradt has several books out on this topic, but I want to highlight a few key ideas that may revolutionize how you think about your work.

KEEPING SCORE

In my teens and early twenties, I taught a great number of people how to play tennis.? I enjoyed the game and learned how to teach others at a young age.? As I would teach beginners the basics of how to hit the ball and keep a rally going, they all eventually wanted to play.? In order to do that they needed to learn how to keep score.? It was always interesting to watch how people pushed themselves harder and the competitive spirit would come out when we would keep score.? In organizations, we want to find simple and clear ways to keep score of what is important both as an organization and for the individual team members.? I have found over the years that some positions are easier to come up with the 2-3 areas to keep score. Scorekeeping should be objective and the individual employee should ideally know how to track and keep their score.? If you have not defined winning and losing for your team members then you are at risk of mediocrity.

ESTABLISHING GOALS

When a golfer goes out to play a round of golf, they usually have a score in mind they are trying to beat.? While I am a novice runner, I have come to understand a little of the lingo of competitive racers who talk about their PB (Personal Best). ?When the coach gets the basketball team together to discuss the goals for the season they focus on specific goals.? For many programs, the goal is to make it into the ?Big Dance? ? the NCAA basketball championship tournament.? I have experimented with all kinds of goals for organizations and individuals.? I have found that the best are shorter term in nature.? I find that if they are too long term then people wait until the last minute to work on them like cramming for an exam. I like clear and specific goals that ideally can be accomplished in three to six months.

PROVIDE FEEDBACK

I went to a St. Louis Cardinals exhibition game recently against the hometown Memphis Redbirds.? As I looked at the new scoreboard in the stadium, I noted how much data was readily available: the score, balls, strikes, outs, and even the speed of the last pitch.? The players get real time feedback on how they are doing and can adjust their strategy.? Unfortunately, that is often not the case in business.? I have visited with many employees who never get any feedback or maybe only once a year in a perfunctory review.? How can people improve if they don?t get constructive feedback on their performance? As leaders, we should give helpful feedback early and often if we want our team members to develop.

KNOW THE RULES

Along with teaching my tennis students how to keep score, I also taught them the rules of the game.? Without rules, it would be chaos out on the court and constant controversy.? What if you started a game and then halfway through the rules changed midway? ?How frustrating would that be?? Unfortunately, many workplaces feel that way.? The rules are not clear and may change in an instant.? Sure, there may be policies and guidelines in an employee handbook, but I am talking the day to day rules of operation.? What is expected?? What is off limits?? Too many handbooks are more driven by legal than practical considerations.? Employees want clarity and fairness.? As a leader, you have the opportunity to stomp out the ambiguity and create clear a set of rules that you expect everyone to follow.? I promise it will reduce the drama in your organization.

I hope these concepts give you some inspiration and ideas to ?gamify? your organization. ?We don?t have to watch the clock until 5:00 or wait until the weekend to enjoy a little competitive activity in our lives.? Our work can be just as invigorating and challenging if we put our minds to it.? Enjoy!

?

06 Jan 2016

Sticky Post By overseer Posted in Leadership, Managing Your Business, Motivation and Encouragement Permalink

MOTIVATING TODAY'S EMPLOYEE

Sticky Post By overseer On January 6, 2016

Have you ever stopped to really consider what motivates you or your employees?? This is a critical question for today?s companies. When I do one-on-one coaching with employers, this topic comes up a lot. For decades, most businesses have utilized extrinsic methods of motivation with the ?carrot? and the ?stick.?? This typically takes the form of bonus plans or negative reviews and firing for poor performance. The question to be asked is whether or not we are getting the desired results from these extrinsic efforts to motivate our teams.

Interestingly, recent scientific studies are challenging the way business leaders have traditionally thought about getting results. Researchers at the London School of Economics conducted an analysis of 51 separate studies on financial incentives in employment relations and found overwhelming evidence that the incentives may ?reduce an employee?s natural inclination to complete a task and derive pleasure from doing so.? According to Dr. Irlenbusch of the LSE, ?we find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace norms such as fairness.? As a consequence, the provision of incentives can result in a negative impact on overall performance.?

Author and speaker Dan Pink helps us make sense of this counterintuitive point by arguing that extrinsic rewards are only effective for left brain activities that involve rules and routine tasks such as certain types of accounting, financial analysis, or computer programming. However, there has been a major shift in many organizations to outsource as much of this routine work as possible. Therefore, many jobs today require more right brain creative problem solving skills than ever before.? The problem, as noted above, is that studies have shown that traditional incentives do not work well to motive employees tasked with right brain responsibilities.

When you look at the way most firms attempt to motivate their employees, it becomes apparent that most businesses have not caught up with these scientific discoveries.? So, what do we do to motivate today?s employees?? Leading thinkers point to the value of intrinsic rewards for work.? Pink notes three key elements for the new paradigm of employee motivation:? Autonomy, Mastery, and Purpose.

Autonomy

It is particularly apparent with the younger generations that they will be demanding more autonomy in their work life.? They will not be content to be blindly directed by management without some level of self-direction.? Employees empowered with autonomy usually have a sense ?ownership? and are more engaged.? A practical example of this is Google?s practice of allowing its engineers to spend 20% of their paid time on their own projects.? Of note is that about half of Google?s products and services have been created by employees during this autonomous work time including Gmail. In the extreme, some companies have completely gone away from schedules and allow everyone to work their own hours.? The bottom line is that autonomous workers have greater productivity and job satisfaction.? The problem is that the ?manager? mindset has been so ingrained in our business psyche that this can be a difficult shift.

Mastery

For centuries, most people either worked in agriculture or in a trade with their hands.? This usually involved years of training and experience to master a craft.? In the industrial age, we were challenged because our labor became repetitive and disconnected from the final product or service. This led to inevitable job dissatisfaction problems and poor productivity. Today is no different. We want to provide the opportunity for our employees to learn and become better at their skills and abilities.? We all tend to feel better about ourselves when we improve.? A focus on mastery allows people to once again become experts at their craft and to continually improve.? It is no wonder that most successful organizations today place a high value on the training and development of their people.

Purpose

When your work seems pointless, it is hard to become motivated to give it your best.? An effective leader knows how to bridge this gap and let each employee know how his or her contribution directly impacts the success of the organization.? I believe that as human beings we all desire to find our purpose in life.? Since work takes such a huge part of our time, it is only natural to seek meaning and purpose in our work. I strongly advocate that businesses also benefit when they have clearly stated visions and values that define who they are.? This allows employees to connect with the larger purpose of the company.

In sum, it will be imperative for businesses to embrace these scientific findings that intrinsic motivators can achieve the best organizational results.? I believe in the very near term, U.S. companies will face increased competition globally even in the right-brain work prevalent in our economy today.? Incentivizing management and workers with outdated ?carrot? and ?stick? models will lead to being left behind.? Companies that unleash the potential of their employees through intrinsic motivators such as autonomy, mastery, and purpose will lead the pack in the future.

28 Dec 2015

Sticky Post By overseer Posted in Business Development, Entrepreneurship, Managing Your Business, Structuring Your Business Permalink

5 WAYS TO RAISE CASH FOR YOUR BUSINESS

Sticky Post By overseer On December 28, 2015

For many entrepreneurs, these are trying and uncertain times. Cash is critical and many companies are facing the twin fronts of attack of vendors wanting their money up front and customers delaying payments.? All the while, employees still need their regular paychecks. Therefore, if a business is experiencing a liquidity crisis, management (and their key advisors) must act quickly to assess the situation and determine the appropriate plan of action.

The first course of action is to determine whether, and on what terms, additional cash resources might be made available.? There are a number of ways a business can free up cash.? The determination of what options to pursue will depend on the specific facts and circumstances and must take into account the health of key relationships (i.e. vendors and bankers) and the general economic climate.? Below is a list of some of the options available for entrepreneurs:

Trim the fat: Reduce overhead and cut expenses

Most businesses wisely start here because the decision to cut expenses is within the control of management and generally does not require the need to get approval from outside parties such as lenders. This cost reduction could include closing unprofitable store locations or divisions. Sound accounting and reporting makes this analysis and cost reduction process much easier.? However, from a strategic standpoint, you need to make sure the cuts are not so deep that they disrupt the business? core economic engines.

Get stingy:? Aggressively monitor collections and trade credit (especially to new customers)

A liquidity crisis often happens in an economic slow-down (like the current one we are experiencing) when all businesses are fighting over limited cash resources.? Therefore, many customers become ?slow pay? or ?no pay? and cash receipts begin to shrink. If your business is owed money, you need to obtain it.? Even if you have to bonus your collections personnel or use an outside agency, this additional cost is worth it if it brings precious cash in the door.?? Keep in mind, however, that aggressive collections also requires a balance ? you don?t want to alienate key relationships.

Consider your leverage: Cash out or refinance existing debt

If your company is paying above-market interest rates on debt or is carrying debt against assets with substantial equity, then you should exhaust every effort to refinance the debt to cash out equity or to lower its interest carry.? However, it would be better to keep above market debt (especially if is revolver with an additional room for draws), then to obtain a new loan with financial covenants that will ultimately restrict flexibility and further distress the company.? Also, the time required (and closing costs involved) must be considered in determining whether refinancing current debt is a feasible option.

Go back to the drawing board:? Seek concessions from existing creditors

If new financing is not available, then existing creditors are another option to consider.?? Keep in mind that ?creditors? includes not only traditional lenders, but also includes vendors that may provide goods and/or services on short-term credit.? Therefore, among the options for resolving a liquidity crisis is to ask vendors to extend payment terms, grant discounts, or provide other forms of relief.

Get a shot in the arm:? Obtain cash through an equity injection

There are many investors that are not afraid to look for value in the form of distressed companies.? However, the ?cost of equity? is often far greater than the cost of debt ? particularly in high-risk scenarios.?? Furthermore, these investors will usually want to protect their cash via a controlling economic and/or voting interest in the company.?? This option often does not sit well with management, particularly if the company is still in control of its founders.

Again, these are just a few of the many options available.? Some of the most successful companies were founded in recessions (e.g. Southwest, Microsoft, Genetech).? By proactively and realistically addressing the liquidity crunches in their businesses, hopefully many companies will weather the current storm and potentially even turn this downturn into an opportunity for growth.

Originally published in Pointe Innovation Magazine

18 Dec 2015

Sticky Post By overseer Posted in Attitude, Healthcare, Managing Your Business, Operational Excellence, Uncategorized Permalink

CREATING AN ENGAGED WORKFORCE

Sticky Post By overseer On December 18, 2015

One of the key habits of entrepreneurially minded physicians is developing an engaged workforce. The Gallup Organization has done extensive research on the engagement level of employees in organizations and the overall impact on company results.? According to Gallup?s research, engaged employees are more productive, profitable, customer-focused, safer, and less likely to leave.? In the average organization, 30% of the employees are engaged, 50% are disengaged, and 20% are actively disengaged.? In comparison, in world-class organizations, 63% of employees are engaged, 29% are disengaged, and 8% are actively disengaged.

Engaged employees are those who have a positive attitude, take personal responsibility for their actions, are passionate and committed to the company?s goals, contribute discretionary effort, and are solution oriented.? These are the ?A? players on the team. Disengaged employees are those who ?punch the clock.?? They do just enough to keep their jobs and are resistant to change.? They don?t give the organization their discretionary effort and tend to react passively to problems.? Finally, disengaged employees are those who are poison pills in the organization.? They stir up trouble and recruit others to their cause s.? They blame other people for their problems and make excuses.? They erode a company?s bottom line and bring down the morale of an organization.

Physician leaders, like other organizational leaders, spend an inordinate amount of time dealing with actively disengaged employees.? They are the squeaky wheels on the staff.?? We often are forced to ignore our engaged employees as we clean up the messes of the disengaged and actively disengaged members of our staff.? Effective leaders know how to raise the bar and increase the level of engagement of their teams.? They know how to actively listen and learn what the root causes of the problems are.? They don?t ignore issues, but instead, deal with them head on.? Leaders can raise the level of engagement by sharing a compelling vision, coaching their team members, communicating clearly, raising expectations, and insisting on accountability.

In a medical setting, a poorly engaged team can lead to disastrous results.?? Patient care and safety is obviously first and foremost.? Disengaged and actively disengaged employees are apt to ?let balls drop? that can lead to safety issues for patients.?? This could include forgetting to follow up on medications or testing, or even mishandling paperwork or other instructions.? Beyond safety issues, disengaged and actively disengaged employees project their poor attitudes to patients.? The patients (customers) have plenty of options for healthcare services.? Rude treatment by staff can run off patients in a hurry.? For better or worse, these staff team members are the front line representatives.? The quality of the patient experience will largely be dictated by the treatment from the medical staff.? The net effect is that the level of engagement of a practice?s employees has a direct impact on the bottom line.

Interestingly, Gallup?s research found that engaged organizations have 2.6 times the earnings per share growth rate compared to other lower engagement organizations in the same industry.?? The engagement level of employees has a direct impact on key performance areas including absenteeism, turnover, safety, customer satisfaction, and profitability.

Creating an engaged workforce is easier said than done.? First, sometimes we have to ?get people off the bus.?? This means we have to recognize and deal with actively disengaged people.? While some employees may be salvageable, sometimes the best thing to do is to let someone go.?? A disengaged employee is obviously not happy.? We don?t do them favors by keeping them in a miserable job.? For salvageable disengaged employees and the generally disengaged, we need to learn how to be better coaches.?? We do this by observing our employees better, questioning them to learn more about their motivations, truly listening to their responses, and giving candid feedback.? Finally, we have to rally them to action.? This means that we? establish clear expectations and standards, and I prefer to put these in writing.? It is critically important to have regular accountability meetings to track progress towards goals and expectations.

It is important to remember that employees do things for their own reasons, and not their leaders.? In the end, all motivation is self-motivation.? While we can yell, scream, and threaten someone into doing their job better, they are not going to become an engaged worker utilizing that management style. Engaged employees respond best to visionary and coaching leadership styles.? The dilemma for physicians is that they are extensively trained on their clinical skills, but not on the entrepreneurial skills of being a great leader.?? Learning to be a great leader can be accomplished by first embracing it as a real priority.? Books and podcasts can be used to grow these leadership skills.? Ultimately, it is a process that the physician must undertake in conjunction with his or her team.

Regardless of your practice setting, you will likely be working with people that either work directly for you or with you.? There is no reason to allow your practice to be an ?average? organization with almost 70% of your employees disengaged.? Just imagine the patient satisfaction and enhanced profitability that you could experience if you were able to reverse that and have at least 70% of your employees be engaged.? Creating an engaged workforce is a habit that you can start today in reshaping your practice and planning for tomorrow!

11 Dec 2015

Sticky Post By overseer Posted in Business Development, Managing Your Business, Structuring Your Business, Teamwork Permalink

MULTIPLIERS

Sticky Post By overseer On December 11, 2015

Here?s the problem.? Most employers only get about 50% of the potential out of their employees. Research has validated this point.? Gallup, Inc., the national polling and consulting company, has done extensive analysis on the engagement level of employees in organizations and the overall impact on company results.? Gallup?s research showed that in the average organization, 30% of the employees are engaged, 50% are disengaged, and 20% are actively disengaged.? However, they found that in world-class organizations, 63% of the employees are engaged, 29% are disengaged, and only 8% are actively disengaged.

?Disengaged? employees are clock-punchers.? They give minimal effort and do just enough to keep their jobs.? They don?t give their employers their discretionary effort and tend to react passively to problems.? ?Actively Disengaged? employees are the poison pills in the organization.? They are the trouble-makers.? They like to stir things up.? Actively Disengaged employees blame others for their problems and make excuses.? They erode a company?s bottom line and bring down the morale of an organization.? In contrast, ?Engaged? employees have a positive attitude, take personal responsibility for their actions, and are passionate and committed to the company?s goals.? Engaged employees contribute their discretionary effort to the company, and they are solution oriented.? They are the ?A? players on the team.

It seems very obvious then that we should all try to have Engaged employees to put our companies on the path to success.? Of course, that?s easier said than done.? To have great employees, you need great leadership.? Liz Wiseman, a former global leader for Human Resource Development at Oracle, has done extensive research into the way leaders can dramatically impact the productivity and attitudes of their teams. In her recent book, Multipliers, Wiseman summarizes her findings that there is a continuum of leadership with ?Diminishers? on one end and ?Multipliers? at the other end of the spectrum.

Diminishers are the kind of people you hate to work for.? They ?diminish? the productivity and potential of their subordinates.? They are tyrants that keep everyone on edge.? They can be micro-managers that make you second-guess yourself.? They keep people in the dark and make unilateral decisions without seeking input.? Multipliers, in contrast, are great bosses.? They empower people, foster real debate and thinking, and get the most out of their employees.? Multipliers are the kind of people everyone wants to work for.

Wiseman describes Multipliers as ?genius makers.?? She rightly points out that Multipliers are not wimpy, feel-good leaders.? They are tough and demanding, but fair.? They push people to achieve their best.? Wiseman argues that we all can improve our ability to be Multipliers.? She points to five disciplines of the Multiplier: (i) attracting and optimizing talent, (ii) creating intensity that requires best thinking, (iii) extending challenges, (iv) debating decisions, and (v) creating ownership and accountability.

Wiseman?s work provides useful language to think about leadership and ideas on how to be better at getting the most out of the resources we have.? This is important given the fact that we have significant challenges in business today with limited resources.? We don?t have the luxury of having our employees operating at 50% of capacity.? The problem is that we get lulled into a sense of complacency and accept minimal performance as the standard.? The research shows that we can expect and get more.

If we are honest, we all can probably identify with both ends of this spectrum.? Even great leaders can slip into being a Diminisher on occasion.? Diminishers are usually bright people. In fact, it?s their success that usually leads to their managerial promotions.? Like the old ?Peter Principle,? people can be promoted past their level of competency and expertise. Being a great individual performer does not necessarily mean someone will automatically be a great leader.

From my perspective, Multipliers are really great coaches. As a former coach, I remember having to push my students to achieve their best.? We all have a certain amount of talent and potential waiting to be unlocked. A real coach knows how to do that.? They are demanding, but also inspiring.? They challenge you to new heights.? You don?t mind giving it your all, because you know you are on a worthy mission.

Here?s the reality.? Most managers are never really trained on how to be a great coach.? Managing can often be more about ?baby-sitting? and organizational reporting than performance optimization. I agree with Wiseman that these skills can be learned.? The question is whether it?s really worth the trouble to learn to be a Multiplier.

The good news is that the data shows tangible benefits of being a Multiplier.? Wiseman?s own research and others have shown that Multipliers get a 2x increase from their employees.? Similarly, Gallup?s clients that focused on increasing employee engagement have seen an increase of 26% in gross margin and 85% in sales growth compared to their competition.? The bottom line is that being a Multiplier can have a big impact on the real bottom line.? We all go to great lengths to try and improve our businesses.? We make significant investments in our technology, marketing, and real estate.? However, we tend to neglect the greatest asset we have ? the talent, skill, creativity, and energy of our employees.? While it?s certainly not easy, I think it?s clear that learning to be great Multipliers is one of the best investments we can make in our business.