The following is the thoughts and analysis of Frank Williamson, the CEO of Oaklyn Consulting, a consulting firm that helps closely held businesses and nonprofits with a company’s sale, mergers, acquisitions, capital-raising, investor relations, succession, and other strategic corporate finance decisions.
It’s good to be the boss. Or is it? Despite the freedom that leading a company offers, the work of a small business owner can be exhausting — and might feel unending.
Owners who manage their businesses need to maintain a constant focus on keeping existing clients and employees happy, maintaining a pipeline of new prospects, and continuing to turn a profit, all on top of the various other little responsibilities that inevitably pop up. While they might aspire to do the serious long-term planning that might help to grow their business, it can be understandably hard to find the time.
As a result, some entrepreneurs begin to ponder whether being an employee wasn’t so bad after all — and how they might go about selling their business if they decided to take that leap. One option is to accomplish two tasks at once: finding a buyer for their company who would also hire them in a management role.
For a buyer who is already interested in the company, hiring a talented executive, or even an entire management team, might be an unanticipated bonus. It’s not uncommon for companies large or small to have gaps in their leadership team, and experienced people with deep industry knowledge aren’t always easy to come by.
Necessary steps for the owner
While a management team can contribute to the sales process by keeping the company running smoothly, the lion’s share of the work of selling an owner-managed business falls to the business owner — often in collaboration with outside consultants.
First, before they go too far down the road with a prospect, owners might need to do a mental check-in to make sure they’re truly comfortable with the loss of control that they’ll experience as an employee. Some people pursue company ownership because they don’t like taking orders, and as the boss, they’re as essential as they want to be. Returning to outside employment means that somebody else will be calling the shots, and the decisions made might not always be the ones the former owner would choose. As a list of serious prospects starts to develop, one important factor to consider is how well buyer and seller get along personally, since the sale would initiate an ongoing working relationship.
Owners can play an important role in making prospective buyers aware of their interest in being acquired. This can be made easier if they have a talent for networking or are already on a friendly basis with their competitors. They can also cast a net toward large clients or companies they themselves are clients of, either of whom might see the strategic benefit of a business combination.
Once conversations with prospective buyers begin, owners also need to participate actively in the sales process. This isn’t always as natural a transition as one might think. Although successful entrepreneurs generally don’t get to where they are without some sales abilities, not all of them are able to view their business with the necessary level of detachment to craft a compelling story to potential buyers. If they’re able to do that, owners can often be their business’s best advocate, combining a big-picture vision with important specifics drawn from their deep experience — including who their customer base would be and how their deal pipeline would work.
The role of the management team
If an owner has made the decision to sell their company, the executive team, to some degree, is just along for the ride. But they can still play an important role in making the company sale go as well as possible, and potentially also affect what happens next.
An experienced, well-oiled management team might be one reason an acquirer looks to buy a company. So, if an owner expresses a desire to sell the company, the most helpful thing team members can do is to think imaginatively about how they can contribute to the company’s ongoing success throughout the sales process. By working together as a high-performing unit, team members can help the company owner make a strong case for bringing them along as part of the deal.
After the sale
After locating a serious buyer and agreeing on the terms of a deal, the now-former company owner, maybe along with her management team, will be stepping into a new and unfamiliar work environment — one that could remain stable for years, or might be short-lived if the new owners are in the practice of buying and selling frequently.
The owner will likely be walking away from the sale with enough financial flexibility to maintain their standard of living, even if a new job is short-lived. That financial situation might not be true of other executive team members, so they should factor that into their decision to continue along with the owner in the newly combined company. However, if the conditions are right, a company sale could offer both the owner and executive team an opportunity to move into a rewarding new phase of their careers.
Keep your company’s operations lean by following these proven strategies
(BUSINESS) Keeping your operations lean means more than saving money, it means accomplishing more in less time.
The past two years have been challenging, not just economically, but also politically and socially as well. While it would be nice to think that things are looking up, in reality, the problems never end. Taking a minimalist approach to your business, AKA keeping it lean, can help you weather the future to be more successful.
Here are some tips to help you trim the fat without putting profits above people.
Artificial intelligence frees up human resources. AI can manage many routine elements of your business, giving your team time to focus on important tasks that can’t be delegated to machines. This challenges your top performers to function at higher levels, which can only benefit your business.
Consider remote working
Whether you rent or own your property, it’s expensive to keep an office open. As we learned in the pandemic, many jobs can be done just as effectively from home as the workplace. Going remote can save you money, even if you help your team outfit their home office for safety and efficiency.
In today’s world, many are opting to completely shutter office doors, but you may be able to save money by using less space or renting out some of your office space.
Review your systems to find the fat
As your business grows (or downsizes), your systems need to change to fit how you work. Are there places where you can save money? If you’re ordering more, you may be able to ask vendors for discounts. Look for ways to bring down costs.
Talk to your team about where their workflow suffers and find solutions. An annual review through your budget with an eye on saving money can help you find those wasted dollars.
Find the balance
Operating lean doesn’t mean just saving money. It can also mean that you look at your time when deciding to pay for services. The point is to be as efficient as possible with your resources and systems, while maintaining customer service and safety. When you operate in a lean way, it sets your business up for success.
How to apply to be on a Board of Directors
(BUSINESS) What do you need to think about and explore if you want to apply for a Board of Directors? Here’s a quick rundown of what, why, and when.
What does a Board of Directors do? Investopedia explains “A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set policies for corporate management and oversight. Every public company must have a board of directors. Some private and nonprofit organizations also have a board of directors.”
It is time to have a diverse representation of thoughts, values and insights from intelligently minded people that can give you the intel you need to move forward – as they don’t have quite the same vested interests as you.
We have become the nation that works like a machine. Day in and day out we are consumed by our work (and have easy access to it with our smartphones). We do volunteer and participate in extra-curricular activities, but it’s possible that many of us have never understood or considered joining a Board of Directors. There’s a new wave of Gen Xers and Millennials that have plenty of years of life and work experience + insights that this might be the time to resurrect (or invigorate) interest.
Harvard Business Review shared a great article about identifying the FIVE key areas you would want to consider growing your knowledge if you want to join a board:
1. Financial – You need to be able to speak in numbers.
2. Strategic – You want to be able to speak to how to be strategic even if you know the numbers.
3. Relational – This is where communication is key – understanding what you want to share with others and what they are sharing with you. This is very different than being on the Operational side of things.
4. Role – You must be able to be clear and add value in your time allotted – and know where you especially add value from your skills, experiences and strengths.
5. Cultural – You must contribute the feeling that Executives can come forward to seek advice even if things aren’t going well and create that culture of collaboration.
As Charlotte Valeur, a Danish-born former investment banker who has chaired three international companies and now leads the UK’s Institute of Directors, says, “We need to help new participants from under-represented groups to develop the confidence of working on boards and to come to know that” – while boardroom capital does take effort to build – “this is not rocket science.”
NOW! The time is now for all of us to get involved in helping to create a brighter future for organizations and businesses that we care about (including if they are our own business – you may want to create a Board of Directors).
The Harvard Business Review gave great explanations of the need to diversify those that have been on the Boards to continue to strive to better represent our population as a whole. Are you ready to take on this challenge? We need you.
Average age of successful startup founders is 45, but stop stereotyping
(BUSINESS) Our culture glorifies (yet condemns?) startup founders as rich 20-somethings in hoodies, but some are a totally different type.
There’s a common misconception that startups are riddled with semi-nerdy, 20-something white dudes who do nothing but sip Nitro Brews and walk around the open office showing off the hoodie they wore yesterday. It turns out that it’s extremely rare that startup offices resemble The Social Network.
However, the academic backdrop for the real social network story (AKA Harvard), produced statistics that will serve to put the aforementioned misconception to rest. According to the Harvard Business Review, the average age of people who founded the highest-growth startups is 45. Say what?! A full-fledged adult?!
In fact, aside from the age category of 60 and over, ages 29 and younger were the smallest group of founders that are responsible for heading the highest-growth startups. I guess you can accomplish a lot when you’re not riding around the office on a scooter all day.
The study also found that older entrepreneurs are more likely to succeed. The probability of extreme startup success rises with age, at least until the late 50s. It was found that work experience plays an important role.
Many will argue, “Well, what about someone like Steve Jobs?” You could easily argue right back that it took Jobs until the age of 52 to create Apple’s most profitable product – the iPhone.
The study continues to answer questions like, why do Venture Capitalist investors bet on young founders? This goes back to the misconception at the start, and there’s a notion that youth is the key for successful entrepreneurship. Wrong.
There is also the idea that younger entrepreneurs are likely working with less financial options, so it may be common for them to take something from a VC at a lower price. As a result, they could be viewed as more of a bargain than older founders.
“The next step for researchers is to explore what exactly explains the advantage of middle-aged founders,” writes Pierre Azoulay, et al. “For example, is it due to greater access to financial resources, deeper social networks, or certain forms of experience? In the meantime, it appears that advancing age is a powerful feature, not a bug, for starting the most successful firms.”
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