My Thoughts by Rick Stephens

Taking it to the Bank

Posted in General Business by Rick on the October 31st, 2006

I was watching an episode of Grey’s Anatomy the other night and one of the characters had received a check from a patient that had died. The amount of the check was $8,700,000. Throughout the entire show her roommates kept encouraging her to deposit the check but she kept procrastinating taking it to the bank. Although she kept telling people she was now a millionaire, she was not. Being a millionaire was certainly within her reach, but she just never could take the final step necessary to make it real. When the show ended, she placed the check on a bulletin board and left it there. Her millions, though only a trip to the bank away, were nothing more than a piece of paper with a stick-pin in it.

It occurred to me that many business owners do the same thing everyday. Their dreams are right in front of them, simply a trip to the bank away, but for some reason they just don’t take the final step necessary to make it real. They would rather procrastinate than do what is necessary to reach their goal. Maybe it’s the fear of success that prevents them from taking the step. It could be that they don’t understand how close they are, or maybe they would rather imagine the dream than live it.

Here’s an example. I spoke to a business owner last week who was ready to retire and move out of the day to day operation of his business. We discussed how to do that. We could locate a talented manager to run the business, start examining the books to get a better handle on income and expenses, begin reducing unnecessary inventory, work on reducing long term liabilities, and properly valuate assets. Within a year or so, the business could be sold and a nice retirement for the owner would be realized. The owner leaned back in his chair with his hands behind his head, in that posture one takes when they daydream. In a minute or two he looked at me and said, “Well, perhaps I’ll take a look at doing that next year.” At that moment, though his retirement was only a drive to the bank away, he pinned the check to the bulletin board, and went on with his normal routine.

What about your dream? Are you taking it to the bank, or Is it pinned to the bulletin board?

To Your Success -

Rick's Signature

Good Goodwill

Posted in General Business,Selling Your Business by Rick on the October 24th, 2006

I have spoken to several business owners recently who have said to me that they would like to position the company for sale within the next 3 to 5 years. All of these businesses were financially strong with revenues in excess of $3 million a year.

After speaking with them for awhile, each of them made another interesting comment. They said that they were not interested in growing because they would then have to hire and manage supervisors and additional employees and that would be too much trouble. It would also cause them to lose touch with their customers, which gave them a competitive advantage in the area of Customer Service and Quality Control.

I asked each of them how much the company would be worth without them being there. They all agreed that it would be worth less than their financials indicated, because they were the company. My next question; “So if you go away for a long period of time, what would happen to the business?” Again the answer was basically the same, “It would begin to lose money.”

Can you see the problem here? How can these successful entrepreneurs position their business for sale if all of the Goodwill is positioned on their shoulders? It will be very difficult at best.

So, I respectfully suggested to each of them that they were not doing themselves a favor by staying so close to the business. It was imperative that they start today putting processes in place to allow others (Yes, they may need to hire supervisors and more employees) to run the business. This was not going to happen in just a few months. It could in fact take the entire 3 to 5 years to reach this objective.

If you intend to sell your business and make what it is worth, don’t get caught with the goodwill in your court. Give it to the business.

To Your Success -

Rick's Signature

Road Signs To Success

Posted in General Business by Rick on the October 18th, 2006

The other day I was driving my wife to the super Wal-Mart that she likes to visit. On the way I said, “Let me show you a short cut that will cut off about 2 miles and maybe 5 or 6 minutes of driving time each way.”

I then proceeded to turn down this obscure road and in just a few seconds we re-entered the main road. We had indeed cut off about 2 miles of driving. My wife said, “Do you just drive around looking for strange roads and follow them to see where they go.” “No”, I said, “But I do pay attention to road signs and when I see two that appear to be the same road, I will make an educated assumption that the road will lead to the same place where I saw the other sign.”

Business is much like this. We must keep our eyes open and look for the relationship between signs. When we see them we can feel reasonably sure that the two are connected. By looking for these short cuts in business we can leap ahead of our competition.

Here is an example of what I mean. Suppose you had an Automobile Window Tinting shop. You could spend thousands of dollars on various advertising to get a new customer to come through the door or you could look for the connecting signs. A Windshield Repair shop probably meets with the same types of customers that you meet with. If you could establish a relationship with the Windshield Repair business so that they would refer their customers who need window tinting to you, and you would in turn, refer those who need windshields repaired to them, do you think your walk in business would improve? Probably, and how much would it cost? Nothing more than a few business cards and a solid business relationship between the two companies.

That’s how you connect the signs in business.

To Your Success,

Rick's Signature

SWOT Your Competition

Posted in General Business by Rick on the October 9th, 2006

One of the first things I like to do with a new client is to go through a process called SWOT Analysis. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis is a technique business owners can use to evaluate areas within their operation that can be leveraged for competitive gain or focused upon to improve the business.

When you identify your Strengths, you are bringing into focus that which will give you an advantage over your competitors. Use these strengths as often as possible to improve your competitive edge.

Identifying Weaknesses can stifle and intimidate some people. We don’t like to look at our faults so we tend to minimize them. Be brutally honest with yourself. Recognize that you have strengths that can be used to overcome any shortcomings.

Opportunities are all around us. Don’t let your competitors have an advantage by not reviewing and acting upon opportunities as they present themselves.

What do we mean by Threats? Well, to some it could mean that your competition is closing in on your customer base. To others it could mean that government regulations are restricting some areas of your business. Whatever they are, identify them.

SWOT Analysis will help you see how you are positioned within your industry. Work on strengthening your weakness and removing your threats. At the same time, use your strengths to act upon your opportunities.

There is no better way to improve your business than to look at yourself in the mirror. Utilize SWOT Analysis at least twice per year. Document your findings and then update your vision and business plan accordingly. What? You don’t have a vision or business plan! Put that down as a weakness.

To Your Success –

Rick Stephens Signature

The Process of Processes

Posted in General Business by Rick on the October 2nd, 2006

I speak to my clients on a regular basis about the importance of having specific processes to guide the activities of their business. Processes keep you from having to spend time making decisions about things that come up routinely. It also insures that when something goes wrong, your company is in a position to identify and correct it quickly and that the right choices are being made with or without you being there.

Your business cannot have enough processes. I don’t mean to say that you should create processes for the sake of creating processes, but if it is something you must deal with either routinely or otherwise in your business, a process, or procedure for addressing it is imperative.

The creation of procedures is an ongoing activity. It is unlikely that you will be able to identify all required procedures at one sitting, so you should plan on this being a lifestyle and a commitment that you make to the business.

My lawn service recently failed to mow my back yard after mowing my front yard because the crew did not have my gate combination. I have been a customer for years with the same lock, but the lawn service came real close to losing a long term customer simply because the crew did not have a procedure in place to address this minor problem.

Sometimes a concept like this can be made clearer by exaggerating it. Take a look at NASA for example. They have millions of processes in place that are examined by thousands of people constantly when they are ready to launch a space shuttle. If they miss a procedure someone dies. Your business may not have as grave a result for not having a procedure in place or failing to follow it, but proportional results will occur on a smaller scale. You lose customers.

Create a book of procedures. Add to it until everything you do is documented. A lack of procedures may not kill your customers, but it has been known to kill a lot of companies. Don’t let it be yours.

To Your Success,

Rick's Signature