Rose Matlock Consulting

Posts Tagged ‘business planning’

     Two children visiting a petting zoo with their parents.  Both of them dutifully hold out their hands to receive snacks to feed the inquisitive goats, sheep, chickens and rabbits who roamed aimlessly around the pen.  What an idyllic scene, yes?  As the children entered the pen they each went their own direction.  The first little boy, followed closely by his mother, approached a goat and began to feed him single bites.  The goat eagerly took each one, softly nuzzling the young child.  Mother smiled and the boy was delighted.

     The second little boy strode valiantly towards a different goat.  He too offered up single bites and the goat took them.  However, for reasons that may never be clear, the goat grew impatient with the morseled approach and in his hasty move to grab the rest of the snack, bit the young boy drawing blood.  The young child screamed in shock more than agony.  The father rushed forward, pulling his son into his arms, quickly joined by mom, and they both reassured and soothed the boy, telling him he was safe now, the bad goat could not get to him anymore.  Read the rest of this entry »

Jim Collins, celebrated business professor, researcher, author and all around smart guy, published an article over 10 years ago that resonates deeply in today’s tight credit environment.  For those that know me, I have been talking for the last 12 months about how the change in the economy is not necessarily as intuitive as previous recessions.  We will be entering a period of lower credit availability.  In other words, there will be less money,  thus individuals and business’ will become much more picky about what they choose to buy or invest in. 

The takeaway for business is to think critically about what products and services they are putting into the market.  Are you targeting your most profitable client?  Is it a sustainable advantage?  What would happen if you had to re-price to the down side by 5%?  10%?  Worse yet, how about 50%?  Answers to these questions are best viewed use a blank sheet or Greenfield approach.  Collins, in building off this analysis advocated by management guru Peter Drucker, argues that you need to challenge yourself with what you might need to “un-plug”.  Companies and individuals simply cannot be all things, at all times to all people.  Attempting to do that or worse yet, failing to move on to the new expected product or service evolution can lead to irrelevance or failure in a blink of an eye.   

In a contrasting example, I watched one company grow from zero to $10 million in revenues almost overnight, based on the founder’s ability to create revolutionary products. Unfortunately, the company stalled out and was eventually acquired, because it never made the transition from being a company with an innovative founder to being an innovative company. The founder tried to solve the company’s problems by working extra hours on new products—in short, by more doing…he should have done less, which would have forced the company to become innovative independent of his genius. – Jim Collins

What do you need to un-plug from in 2010?  Given the chance to start from scratch, with what you know now…what would you do differently?  Do not be afraid of the answers because no one said the changes had to be implemented overnight but with reality based assessments here, you can build a rock solid implementation plan for the future..

The latest issue of Nevada Business had an engaging article about the issue of business sale and disposition.  During our challenging business environment we find ourselves in, the already daunting process of defining retirement goals, identifying the best transition strategy and then deciding what’s next has been magnified.

James Newman, attorney at Holland and Hart and Howard Olson of M3 Planning lay out the most common ways closely held business’ are transitioned:

• Simply selling the business;
• Taking the company public
• Securing a strategic partner
• Merging with another company
• Transfer ownership to a family member
• Sell to employees or other owners
• Liquidate

Each of these approaches has their own benefits and risks and should be evaluated not just in a financial light but also an emotional.  True, some strategies will produce more payoff than others but it is how the owner and proprietor feels that often carries the most weight.  Is this business a function of many years of sweat equity, a reflection of the owner’s passion for many decades, perhaps a family name involved?  If any of these are true, merging or partnering may not be the best outcome as autonomy may be lost.  As Newman states:

It may sound odd, but when you plan your exit, it’s also important to know what kind of deal or deal terms you don’t want. This way if someone presents you with something you can’t live with, you can simply move on

On the other hand, if the business is more detached and has simply been a source of income, then going public, selling to others (family or not) or even liquidation might be just the trick.  As I said, the key to each of these is too evaluate not just the financial implications but the emotional ones as well.  One would be wise to also consider if they desire any ongoing involvement with the business as a manager, consultant or another position. 

At Rose Matlock Consulting, we recommend confronting the issues of business transition at least five years in advance.  This allows you and your team enough time to determine your ideal point of arrival (POA) in five years and begin to move your business processes, hiring, management and strategic planning into alignment.  Organizations that do this, not only lessen their own stress about change but also identify potential buyers as well. 

Are you looking for advice about how to prepare your company for your retirement?  Sale?  Or just reaching the next level? 

Call today at 623.521.0875 or email at chris@rosemaltock.com

The Bureau of Labor Statistics announced today that US employers had only lost a net of 11,000 jobs in November.  This contrast with the 110,00 to 125,000 that economist had expected.  From coast to coast and CNBC to Fox Business Network shouts of joy were echoed.  It also happened that President Obama had a scheduled speech in Allentown, PA to discuss the issue of employment and what the federal government might be able to contribute to help the situation:

“The direction is clear,” Obama said. “When you think about how this year began … today’s report is a welcome sign that there are better days ahead.” – USA Today

So, have we turned the corner?  Is this now the fast track to better days ahead?  Can we all come out of our collective bunkers and resume our ways of prolific spending, consuming and unmitigated economic growth?  Not so fast…

What is being little reported is that in the month of November, 100,000 people STOPPED looking for work.  The tricky thing about employment statistics is they are comprised of multiple pieces of data.  It is not an issue of straight arithmetic but instead an ever changing universe of potential jobs, current jobs, seasonal work, etc.  In this case, the improvement in unemployment is largely a result of a small cities worth of people give up the fight to find new work.  How is that a good sign?  Millions more are only getting part-time employment when they desire fulltime.  Overall, 8 million people have lost their jobs in the last 18 months.

Over and over, we have been told that the US economy is a function of consumer behavior.  Nearly 70% of it in fact.  How can we have robust GDP growth in the future, if we maintain a 10% to 11% unemployment rate into the future?  Perhaps an even more salient issue is how can we continue to consume when much of the last decade’s growth was a result of cheap money and lax lending?  The economy does not rebound based on the stock market or asset bubbles.  Instead, real increases in productivity and employment are supposed to be the pre-cursor to a run up in asset prices.  Price refelct an increase in value and that is not what we have been witnessing for the last 6 months.

American business’ need to continue to stay conservative in planning for cash flow and inventory.  Focus on getting he most out of what you have, exploit opportunities in the market when they present themselves but do not be lured by the siren song of Wall Street right now and its predictions of a quick recovery.

Business planning can be one of the most rewarding experiences…but sometimes for all the wrong reasons.  As we look towards 2010, we calm ourselves with the certainty that things will follow the “plan”, that sales will be on “plan”, that the prescribed behaviors of the “plan” will work but as often as not, the “plan” ends up being little more than an exercise in futility because well…that’s not how things unfold.  However, that doesn’t mean planning cannot be useful.

As the attached link to a recent Mckinsey article shows, instead of a simple, one dimensional static plan, consider using scenarios to think through a variety of outcomes.  Use these exercise to strengthen core systems, seek new competencies where needed and press your advantage when apparent.

This year, make your business planning count!

Mckinsey Quarterly