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What Dolly Parton Can Teach Business Owners

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I was watching the Dolly Parton biography today on the Biography channel. I knew Dolly Parton is one of the most prolific song writers in the world but there was a lot I did not know.

Parton was born in 1946 at Sevierville, Tennessee, the fourth of twelve children born to Robert Lee Parton and Avie Lee Owens. Dollyt is perhaps the most-honored female country performer of all time. She holds 25 U.S. gold, platinum and multi-platinum honors from the RIAA. She has seen 25 songs reach No. 1 on the Billboard country charts, a record for a female artist. She has 41 career top 10 country albums, a record for any artist, and 110 career charted singles over the past 40 years. All inclusive sales of singles, albums, hit’s collections, paid digital downloads and compilation usage during Parton’s career have reportedly reached 100 million records around the world. Via WikiPedia.

Not bad for a girl from the Smokey Mountains of Tennessee.

True to Her Ideals

In 1974 Dolly was presented with an opportunity to have Elvis Presley cut her song “I Will Always Love You” she turned them down because they wanted to own at least half of the publishing rights. Dolly turned Elvis down because the song had already been published and was a proven hit. People in the business thought she was nuts after all this was Elvis Presley.

In 1992 Dolly was surprised to learn that Whitney Houston recorded the song as a soundtrack for the movie ‘The Bodyguard’. Whitney made the song her own and it became the number one hit for 14 weeks, which was a record at the time. How many millions of dollars do you think it was worth not have sold half the rights of “I Will Always Love You” to Elvis?

Dolly was never worried about the money. Sure she had hard times starting out but she says, “I just want to be the best that I can be.” and “I want to own as much of myself as I can.”

Down To Earth

Her charity work is not well known but one of her passions is the Imagination Library where preschool children in more than 40 states get books. The first book that every child gets is “The Little Engine that Could” as it is one of Dolly’s favorites and as the meaning of the book says ‘you can be anything you want to be’.

What We Can Learn from Dolly

Dare to be different. Dare to be yourself. If you have the ability to make a difference in someone’s life you should.

The easy way is not always the best. Own what you create and you have options and control of your future.

Words to live by indeed. Thanks Dolly.

Reduce the Risk of Buying a Business

Locating a business to buy is a time consuming process. By the time you find a good candidate you have likely met with the seller and will be anxious to get the deal done. Slow down. There are way more reasons to slow down than there are to be in a hurry.

Beware of the 10 Day Due Diligence Period

Typically, sellers and brokers insist on a due diligence period of 10 days. That not enough time to do a quality review of the business. By pushing for a short timeline they thwart any chance you have to conduct a thorough review of the business. Negotiate for a 30 day Due Diligence period, it will allow you to get to know the business, observe a full monthly cycle, and time to do some planning.

After all, if you are the right buyer the seller should be more than willing to give you thirty days. However, if the seller is accepting offers from multiple buyers and the other buyers have agreed to a 10 day due diligence period you will have to make a decision whether or not you wish to continue under those circumstances.

Should you decide to continue, the seller is going to require ‘earnest money’ (typically 10% of the selling price) which is placed in trust with his attorney and returned if the deal falls through. Make sure you use a proper Letter of Intent (LOI) or Offer to Purchase (OTP) prepared by an attorney with experience in this area.

Slow Down You May Be Moving Too Fast

In my book Tips and Traps When Buying a Business I provide detailed strategies, tactics, and guidelines to help you locate, negotiate, and buy a business without using a broker or classified ads.

If you have been able to negotiate a 30 day Due Diligence period, your first step is to gather as much as you can about the business, decide if you still want to buy the business, and then formulate your plan for buying the business.

When a Business Broker is the Intermediary

If you found this company through a classified ad, online ‘business for sale’, or business broker you will want to adjust your strategy. One of the reasons sellers use brokers is to try and set up competitive bidding to ensure the seller gets as much as possible from the sale. Using classified ads (newspapers or the Internet) is not in the buyers best interest. My book Tips and Traps When Buying a Business explains the process, provides the strategies, and coaches you through the entire undertaking step-by-step.

Before Finalizing The Deal

Before you sign and accept the Letter of Intent or Offer to Purchase take time to map out at least three strategies including:

The Deal: following the due diligence period you will need to make a decision to proceed with the purchase as outlined in the LOI, decline to buy the business, or re-negotiate some of the terms. Reasons to bail on a deal can include anything from the purchase price, payment terms, or other issues identified during the Due Diligence period.

Takeover/Transition Plan: create a plan for the first 90 days with an eye to making the transition as painless and smooth as possible. This will require some time to prepare and document your business, marketing, and transition plan.

First Year: identify the goals and objectives you want to accomplish in the first year. Be as specific as possible, most goals can be expressed as numbers: e.g., sales, percentage income by product or service group, expected return on investments. Other legitimate goals can include:

• Improve customer service.
• Renovate premises.
• Add new products or services.
• Reduce costs.

Now is the time to put your own mark on the business. Your goals should be specific and measurable.

Create two sets of goals: short term and long term. Short-term goals can range from 6 to 12 months while long-range goals can be 2 to 5 years. Create a list of goals with a brief description of action items. Since you are buying an existing business, you should put an emphasis on your short-term goals. You should include important milestones, including notifying customers of the change of ownership, special marketing campaigns, and staff meetings.

Allow yourself a period of adjustment and extra time for customer communications, meetings with suppliers, and staff.

Avoid Three Goal Setting Traps

I think there are three reasons people have a negative view toward goal setting:

1. Setting unrealistic goals or timelines.
2. Not being clear about the ‘cost’ of attaining a goal.
3. Not being willing to do enough work or pay the price to achieve the goal. Anyone who has accomplished great things in this world achieved their results at a price. Their achievement was paid for with the currency of dedication and consistency.

Identify the ‘results’ you want, be prepared to pay the price of hard work, and then set your goals after you are absolutely sure this is the right business to buy.

Test Drive Your Dream Job, A Vacation With a Difference

If you have been thinking about a starting or buying a business and are not sure if the move is right for you there is a new concept by Vocation Vacations that can place you in a short term job. Finally, you can test drive your dream job and your boss does not need to know. Try-it-out and learn what the business is all about before you ‘risk it all’. Wish I had come up with the idea.

What Happened to Kelly Purdue from The Apprentice?

Whatever happened to Kelly Purdue of The Apprentice fame? In February 2006 he left the Trump Organization to pursue his own interests. Kelly’s website describes him as an entrepreneur, leader, VC, and author.

He also wrote a book: Take Command: 10 Leadership Principles I Learned in the Military and Put to Work for Donald Trump. In the book he devotes a chapter to each of the 10 principles which are Duty, Impeccability, Passion, Perseverance, Planning, Teamwork, Loyalty, Flexibility, Selfless Service, and Integrity.

If anyone has read Kelly’s book, please let us know what you thought of it .

Barter, Trade and Bootstrapping – Can You Get People to Work for Free?

Bootstrapping is as old as business itself. Whether you are trading your products for services or goods you need Forbes ran an interesting article about How to Get People to Work For Free.

If you have a product or service that is unique, popular, or all-the-rage you have a great opportunity to barter for the services or goods you need to operate your business, saving your precious cash. They key is to offer real value and have something people need or use already.

Remember, you still have to sell yourself and the goods/services because you really want people to be excited about your little company as that can quickly trun into a strong word-of-mouth endorsement that brings you more business. The more consumable, cool, and rare your offering the better.

For an enterprising young company with a solid concept bootstrapping offers a great opportunity. Exhibit inspiration, originality, and resourcefulness. The Forbes article provides a actual example of a company actually growing using this technique.

American Inventor Comments, Stick It in Your Ear

American Inventor entertainment for business geeks? How to start your business without borrowing money and then you can stick it to the man.

Subscribe to the Podcast: Business Tips and Traps

Learn more about podcasting.

What Do 60 Million Americans Have In Common with You?

They need your help. Your website is not just another marketing tool. The way you use your website and the depth and breadth of information either helps or hinders your customers in making a decision. It is a decision engine. You will need to change your habits to help them. Need proof? Here it is:

The proportion of Americans online on a typical day grew from 36% of the entire adult population in January 2002 to 44% in December 2005. The number of adults who said they logged on at least once a day from home rose from 27% of American adults in January 2002 to 35% in late 2005. And for many of those users, the internet has become a crucial source of information – surveys by the Pew Internet & American Life Project show that fully 45% of internet users, or about 60 million Americans, say that the internet helped them make big decisions or negotiate their way through major episodes in their lives in the previous two years. Via Pew Research

Other crucial findings:

• Information Overwelm? Think again.: Americans do not feel overwhelmed by the amount of information to consider in making decisions. More information on your website is better as it will aid your customers.
• Customer is in Control: The internet aids decision-making by connecting people to information. Either you provide the information they need and want or your competition does.
• Convenience Matters: Broadband’s role in expanding the internet’s decision-aiding role. Good content is the new ‘King’ your ability to communicate and write has enever been more important to the success of your business.

Today 60 Million, Tomorrow…

Become an author to your customers using your website as your ‘book’. Eventually it will become a knowledge base and will transform your website from a brochure into a ‘decision engine’ and something in common – your customers trusted advisor.

How Incentives Become the Lightning Bolt to Performance

Incentives are the lightening bolts that fire your team and business building activities into effective action.

People Build Your Business

You hire good people, they know what to do and do it well, some better than others. You want to retain your best people, and motivate them to greater success.

The business starts to grow and then you get blind-sided by the departure of some of your people to a competitor, or they decide to start their own business.

You already lost a “keeper”, are feeling defensive so you decide to implement non-competition agreements. Unfortunately a non-competition agreement is negative and a defensive tactic in a battle you’ve already lost. Why not use incentives to keep them from thinking about it?

You Can Have Your Pie and Eat It Too

The real value in most businesses is in relationships, internal (the team) and external (customers, vendors, financing, contractors, labor pool). Good businesses often reach a success plateau and they start loosing good people, eroding capability, momentum, and value.

Savvy business owners start thinking of ways to keep the team together – winning. Bonus compensation and ownership – a ‘piece of the action’ comes to mind. Plus, if this makes the pie bigger, you are not actually giving up anything.

Incentives are the lightening bolts that fire your business building into effective action. Building a solid management infrastructure and execution team that is focused on the profit drivers in your business is what creates value and growth. Incentives weld your best people to your team, and keep them pulling – harder than you can push.

It’s All About Results.

Five years ago a computer reseller and services company had a great management and technical team serving fortune 500 companies in their region. They were the “dot” in “dot com”. Sales were around $5 million, and climbing – margins and profits were good. The limiting factor was attracting, and retaining sharp techies and sales people, in a highly competitive environment. ‘Have Brain Will Travel’ ruled the techs.

Towards the end of the dot com frenzy, everyone was getting stock options. So, my little client decided to offer a stock option plan like the big boys. Problem was, they had no public market for the stock to soar in. So we set up an affiliated “incentives company” that got 1/4 of the profits and equity of the business, and made shares available to key employees and contract techs, with a vesting schedule, and a way to cash out after vesting for accumulated value. Those who stayed for the eventual sale of the business made out very well.

The dot com frenzy fizzled, and it was back to bricks-and-mortar-style business-building. Five years later, the company had grown to almost $40 million in sales, and was very profitable. The owners could continue to grow the business, and pull out sizeable annual cash flow, or sell it. Two of three owners were exit-minded and a somewhat larger competitor (about $50 million sales) approached them to buy the company, and make a $100 million company.

They recently closed the sale for a great earnings multiple. The buyer took on all the employees, sales people and contract techs. In fact, the key point in due diligence was making sure that a rather large ‘core people’ group stayed on after the acquisition.

So were did the incentives fit in? The core group was there. The company grew to $40 million through and after the dot com fizzle. For a while techs all over were looking for work, then things heated up again, and Techs started jumping in the industry. This company continued to attract, and retain the best. The incentive plan was a big factor. It put real bottom line results into the incentives company, so the stock had real value. After vesting, participants could cash out for book value. Some did along the way, but most did not. The team stayed, building the business.

The Real Difference

During due diligence, seller and buyer sizing each other up for the wedding, we discovered the real difference. The seller company was about 30% more profitable per dollar of sales than the buyer company. Both the margins and bottom line were way better.

In fact, the seller had the same bottom line on $40 million in sales as the buyer had on $50 million. Why? The two companies served the same region, sold the same computers and services, to a very similar customer mix. Each had the same kinds of techs and sales people. But, the seller paid its sales people more commission, had fewer sales people who made more sales, and management had a – ‘let’s look at it’ – approach to selling expenses and customer deal-making. It paid its techs a little better than the buyer. And, it had the incentive stock option plan that built up real value for the employees, contract techs, and sales people.

So the smaller company, paid its sales people and techs more than the buyer company, but made more money. The incentive team, played the game better, got more margin (sales and delivery, had lower operating expenses, was more effective and efficient, all-round.

The buyer’s enthusiasm was higher after due diligence. Frequently, it’s the other way around. The focus was making the deal, not beating the price down. And, the all-important ‘core people’ component? They all signed on with the buyer. After all, the incentive stock option plan worked out to a hefty signing bonus – they shared in 25% of the deal.

The buyer is rethinking its own incentives and management style after acquiring a smaller company in the same business that makes 30% more money.

How To Apply the Lessons Learned

For incentives to work, they have to be simple, understandable, and tied to performance. You have to have, and enable, a good team. In this case sales commissions were based on margin. Margins were high in a competitive market because the team sold it right, and delivered value. The techs delivered. Owner-management worked every deal, and the company. General and administrative was lean – effective. It paid off on the bottom line. When it came time to sell – solid profitability, price and incentives went hand-in-hand for the payoff.

Designing your incentives is not a cookie-cutter project. You have to fit the incentives to the people, business and the marketplace, knowing what will make your team excited. Then you have to show them why they should be so excited about this incentive plan. We usually interview key people about their expectations and what would excite them, in designing an incentive plan. If you ask them, they will tell you. When you roll out an incentive, spend the time to be sure they get it. You can tell if they do.

Find their lightening rod, and they will crank up the lightening.

Buying a Solo, Consulting, accounting, insurance business

Tips on buying a consulting, accounting, insurance, law practice or any other solo business.

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Buying a Business – Buying a Consulting or Professional Services Business

The podcast version:

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To listen to it on your iPod or MP3 Player you can subscribe and downlaod shows automatically by Subscribing via Feedburner

The challenge with buying a professional services, consulting, or solo practice is that the value of the business typically lies in the relationship between the owner and the customer. If the owner sells the business to a third party the seller is free and clear and the buyer is left to deal with the customers and a major trap that he/she may not have anticipated ??? the transference of goodwill.

Transference of Goodwill

In a professional service, consulting, or solo practice the symptom for this trap is when business drops off dramatically. There is no guarantee that the ???feelings of goodwill??? built up with years of service by the seller will transfer to the buyer. In fact, when faced with a new person (you the buyer) providing the service many customers will use it as a reason to justify moving to a new service provider or company.

There are a number of solutions including:

1. Negotiating a discount with the seller to offset for lost business following the takeover.
2. Conduct an aggressive marketing and sales campaign to connect with the customers and establish your own relationship with them.
3. Keep the seller on for a year or two to help make the transition appear less dramatic.
4. Hold a percentage of the purchase price in a trust account to be used as insurance against lost revenue.

Depending on the size of the business you are buying one or all of these strategies may be needed to preserve the integrity of the business and make sure that you do not pay too much.

Buying a Business – Obstacles and Deal Breakers

This audio excerpt contains tips and traps on the obstacles and deal breakers when buying a business.

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Sales Tips-Your Customer Does Not Care About You

Your customer does not care about you, they care about themselves. The three R’s of Influence.

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Then copy the URL into your favorite podcatcher software.

The Goodwill Controversy

When you buy a business should you pay goodwill? What is goodwill? How much is too much to pay? How does your accountant view goodwill?

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Buying a Business – The Goodwill Controversy

When you buy a business should you pay goodwill? What is goodwill? How much is too much to pay? How does your accountant view goodwill?

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To listen to it on your iPod or MP3 Player you can subscribe and downlaod shows automatically by Subscribing via Feedburner

Why Sxore, Starbucks and PCs Suck

This is the first in my new podcast series of Business Tips, Traps and commentary about business. This is a rant, commentary with traps and tips peppered throughout. It will make you think and discover if your business sucks.

To subscribe top this podcast, click the “XML” icon

New Virus Found! The You Suck Virus

You suck! No this is not a post about a computer virus it is much more serious than that. I am talking about a virus that pollutes your thinking and your business. You suck! How would you like to hear that about your business, staff, or products? You might suck but no one will ever tell you. Well hang on, I am about to tell you how you can figure out if you suck or not.

The difference between mediocrity and excellence is becoming increasingly blurred. Do you really want to buy a product or service that is just average or moderate quality? No? In reality you do it everyday and you do not even realize it. Companies make millions every year selling mediocre products and services. Before you jump the gun to criticize them, you might be guilty.

To subscribe to my new Business Tips and Traps podcast, click the “XML” icon then paste the URL into your favorite podcatching software.

The Mediocre Virus

Business needs a serious operating system upgrade. We should not settle for anything but excellence. Excellence is the quality of being outstanding or extremely good whereas mediocre is moderate or average quality. When you really think about it you want excellence in everything you buy. Would you be able to spot the difference between excellence and mediocrity if you saw it?

I bet you think you could, well let???s talk computers and see what happens. Part of being ???excellent??? in business is being innovative. If you agree with that one criteria (I know there are more) then Apple is the clear winner when it comes to innovation. Companies like Dell, HP, and IBM make good computers but once you compare them to a really excellent product (like an Apple) it is easy to see the difference.

In the United States, the leaders were Dell with 32.7 percent of the market, HP with 19.2 percent, IBM with 5.6 percent and Apple (AAPL: Research, Estimates) at 3.7 percent. Source: CNN

Apple has consistently pushed the envelope with the introduction of the iPod, iMac and now the Intel based computer that can now dual boot Windows XP and Max OS X. Yes, that is right Windows on an Apple computer and hell did not freeze over. Reports are that the new Intel Apple computers run significantly quicker than current PC’s.

Excellence and Mediocrity Run Together

Starbucks Barista Solo coffee maker is actually a really good product, except for a serious design and usability flaw. Starbucks solution? Rumor has it that they plan to take it off the market. At the time of writing the Starbucks website still shows the Starbucks Barista Aroma Solo.

There are many things they could have done. They could redesign the product, do a recall, fix the problem or improve the instructions ??? I guess we will have to see whether they actually do take it off the market.

In my post Starbucks Barista Solo I Am So Dumb I detail the solution to the “coffee-all-over-the-counter” problem that is easily fixed if the manual and instructions made placement of the ‘nub’ more obvious. That is an example of corporate stupidity, and suck??? ness that should never happen. 10 months ago the Starbucks website did not have a decent contact page to complain or provide feedback or get support.

Demand More: Set a Higher Standard

As consumers and cistomers the greatest [ower we have is to ‘push-back’ and not accept anything unless it actually excellent. Return those products, speak up and complain. Unless we as customers demand better performance, products and services at reasonable prices it will never happen because the “You Suck!” Virus is so prevalent in all businesses from the small to the Fortune 500.

Don’t Settle, Meddle.

Ask Better Questions Audio Commentary

This is my audio commentary on How to Manage Your Time, Solve Problems, Set Priorities, and Coach Yourself – Ask Better Questions original post.

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Suspend Disbelief Commentary

This podcast is a commentary on my article that can be found at the original post Suspend Bisbelief and Doubt to Create Certainty.

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Suspend Disbelief Audio Commentary

This is an audio comment relating to my original post that was at How to Suspend Disbelief and Doubt to Create Certainty and Conviction.

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How to Manage Your Time, Solve Problems, Set Priorities, and Coach Yourself – Ask Better Questions

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Audio Commentary:

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Have you ever struggled with choosing and setting your priorities? Have you given up on time management? The life of a business owner and entrepreneur is complex.

On any particular day business owners have to deal with marketing, sales, human resources, financial management, customer service, increasing profits, systems, and strategic planning. An argument could be made that each of the areas need attention. So how in the world can a business owner stay focused and make sure that he/she is working on the right thing at any particular point of time? Ask better questions.

Questions Breakthrough Clutter and Confusion

The process of answering a question makes you dig through your personal experience and knowledge. Questions are powerful tools to help you discover the basis of the problem, issue, or situation you are dealing with. As a result you will gain a fresh perspective on your situation.

Questions for Business Owners To Create a Laser Focus

• What’s does the business need from me today? Based on my answer, what needs to change? What information do I need? What is my logical next step?
• What do I need from the business? How can I go about creating that? Who do I know that has experience dealing with this issue that I can get support from?
• Will this task take longer than 2 minutes to complete? If yes, defer until later. If not, do it now.
• Is this something I need to deal with now or can it wait? If it can wait, when would be the best time to schedule it to be worked on?
• Am I prioritizing my tasks based on my comfort zone or what the business needs to succeed?

Questions for Managing Employees

• What do you think is the most important task for you to complete today?
• What the business needs from you today is ___(task description)___ and this is why ___(state reason)___. Can you do that? Thanks.
• What is the most exciting thing that has happened since you came to work here?
• What do you need to do your job that you do not currently have and why is that important?
• If you had a magic wand that could change anything about the business or me what would it be and what would be the benefits?
• What embarrasses you about working here?
• What about your job are you most proud of?

Questions for Building Rapport with Another Business Owner

• My name is ____, you are?
• Why did you start this business?
• How did you come to know __(persons name)___?
• How long have you been in business?
• What is your favorite magazine, radio show, or podcast?
• Where are you from? Do you live in this area?
• How long have you been in business? How are things today compared to when you started?
• Who is your greatest competition? How do you compete?
• Who are your professional advisors and are you satisfied with the support you get from them?
• What are three things your business does very well? How did you come to make those strategies a priority and how do you know if they are working?

Probing Open Ended Questions Will Increase Your Effectiveness

The key to becoming more effective lies in developing the ability to ask good questions. The best question is a question that cannot be answered with a simple yes or no answer but has to be explained.

The way our brain works is when we are asked a question it searches for an answer. It will keep looking until it finds the answer. That is why questions are so powerful – they elicit information. Even if you cannot find the answer right away your brain will be activated to keep looking for an answer – no one knows everything.

You do not need to know everything – you just need to be curious and be able to ask the right question(s) because asking intelligent questions will point you in the right direction and help you find the answer.

What are your favorite questions you use to keep yourself on track and focused? How have these questions helped you?

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