Book Club #39: Value Control by Ron Kleier

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Book Club #39: Value Control by Ron KleierIf the author’s name sounds familiar, it’s not a mistake. Ron Kleier is a familiar face around the Apex Business Advisors offices and we’re pleased to be featuring his book, Value Control: Selling Your Business for the Best Price and Terms Using the Controlled Auction Process.

It’s a mouthful of a title, and we’ve addressed controlled auctions in a previous article. The real value of Ron’s book is to orient first-time sellers to some general and specific things to keep in mind as you prepare to sell a business. Each chapter even features “key takeaways” so that you can use the text as a workbook to get your business ready to sell.

Important Points

The text isn’t long. You can get through it in half an afternoon (slightly longer if you are making notes about your business along the way) so there’s no need for us to cover everything in the book. Here are some points Ron makes that we never tire of talking about:

  • Selling a business is one of the most emotional things you will ever go through, even if you don’t consider yourself an emotional person. But the price has nothing to do with your emotions or what you think your “blood, sweat, and tears” are worth. The market and the bank and the SBA only care about one thing: a professional valuation. That valuation is derived from clean books and tax returns.
  • Confidentiality is key. Do not assume the possible behavior of your employees were they to find out about a sale. We’ve seen this lesson ignored too many times to count and the overwhelming majority of the time, it means a business doesn’t sell.
  • Don’t try to time the market. While you want to sell when the business is flourishing and the economy and industry are doing well, don’t wait for those conditions if you’re ready to sell. Sell when you’re ready, not when you hope the market will match your readiness.
  • You might be ready to go to Bora Bora, but buyers can sometimes be spooked by a seller who wants to turn over the keys and never be heard from again. Ensuring a smooth transition, whether that be 9 days, 90 days, or 9 months is peace of mind to a buyer. Put yourself in their shoes.
  • Don’t undervalue cultural fit. You should be mentally invested in the business succeeding even when it’s not your concern anymore. You likely have valued team members who will continue on and you might even have a small percentage of the sale in a seller note which will come due in a couple of years. The more culturally aligned with a buyer a seller is, the likelier that diligence and closing will go smoothly, and transition and growth will happen even after you’re no longer involved.

Ron being Ron, he also featured some others in the Apex team in the text. Doug Hubler wrote the Foreword and Debbie Small and Valerie Vaughn, among others, offer some stories from the trenches.

If you want some other tips not covered in the book, feel free to reach out and speak to Ron or anyone else on our team.

Book Club #38: The Psychology of Money, by Morgan Housel

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Book Club #38: The Psychology of Money, by Morgan HouselOh, brother, not another book about money!

We understand. It’s a topic that many like to write about but so few of those writers often deliver really worthwhile ideas. Morgan Housel’s The Psychology of Money, however, is an exception to that rule.

Rather than offering “how to” advice on what to do with money, Housel instead challenges the way we may think about money, offering helpful reframes in place of platitudes.

Luck

We’ve often heard variations of the same theme when entrepreneurs share their “I made it” stories: work really hard, then you’ll make it. Very few entrepreneurs actually articulate that often, a big, lucky break made a huge difference.

Local entrepreneur Danny O’Neill of the Roasterie, however, is one of those people. A story he often shares is that during an internal crisis due to an earthquake at one of its headquarters, his bank managed to “forget” about his mortgage payment for about three months. That happened to also coincide with a cash crunch the Roasterie faced. By the time the bank called asking for its money, the Roasterie had weathered the storm and Danny had the money to pay what he owed. “But for that earthquake…” he often muses.

While it may be true that, “the harder I work, the luckier I get,” sometimes business owners get lucky and need to be more honest about that because it’s not replicable. You can sometimes do everything right but still miss that bit of luck necessary to help your business turn that corner, and other times you were doing everything wrong, but a bit of luck saved you.

Enough

A very famous story that Vanguard founder John Bogle retold at the beginning of his book Enough relates to author Kurt Vonnegut. They were at a billionaire’s party and Vonnegut told his friend and fellow author Joseph Heller that the billionaire made more in a single day than Heller had earned from Catch-22, ever.

Heller responded, “Yes, but I have something he will never have — enough.”

We often talk about the fact that business owners, when it comes time to sell, often share numbers that don’t have relation to reality.

“That’s what I need to retire, so it needs to be worth that.”

“That’s 30 years of blood, sweat, and tears, so that’s what it’s worth to me.”

“Well, it has to be worth that because (trusted advisor who has never bought or sold a business in his/her life) told me.”

The reality is that more business owners need to think about what is “enough” for them. That “enough” should, advisedly, be an after-tax number. Then, they should engineer their businesses so that they will sell for at least that amount. Anything more will be enjoyable gravy.

Getting vs Keeping

Housel also talks about the fact that what it takes to acquire wealth is not at all the same skill set as what it takes to keep wealth. Indeed, one has only to see the number of great fortunes casually lost over the years by successive generations to see that the skill of keeping wealth is perhaps the most necessary of all.

The same is true in business. As you build up, you take risks, try everything, and work endless hours. This is not only commendable but often necessary.

But as your business matures, you still need to take risks but need to also mitigate those risks properly. You do need to try everything, but you need to always start from a base of what consistently works. And you do need to work those endless hours that entrepreneurs often do, but that should also be accompanied by plenty of sleep and some serious vacations.

What got you here won’t get you there, in money, in business, and in life.

It’s Different this Time

Housel says that “it’s different this time” might be four of the most dangerous words in investing. But business owners should also feel that way about economic downturns. Whether it’s a pandemic that no one planned for or one of the seeming cyclical downturns that happened in America in the last 30 years, when you start to feel and hear rumors of a recession, you need to take precautions as a business owner.

Yes, there are arguments that cautious behavior can make a recession happen that might have otherwise been staved off, but no one can really argue that cautious behavior of business owners is what crashes economies. At best, it’s a slowing down, and if an economy crashes simply for slowing down, it’s not a healthy economy anyway.

Use the lessons you learned from the last economic downturn when you see another one brewing. There’s very little downside to a bit of caution when the skies seem dark.

Did you enjoy this review? We’ve got dozens more in our book club category.

Book Club #37: The E-Myth Revisted by Michael Gerber

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Book Club #37: The E-Myth Revisted by Michael GerberThe Entrepreneurial Myth, or E-Myth for short, is a term coined by Michael Gerber that describes the misconceptions that most beginner entrepreneurs have when they start on the road to creating their own business. Gerber has parlayed his success with the first book, The E-Myth, into an entire series that either simplifies or dives deeper into the concepts of the E-Myth, even delving into specific career fields and industries.

The E-Myth Revisited is an attempt to update the original book and provide more concise answers for the beginner entrepreneur. The primary focus of the author is to answer what to do when your passion project is no longer your passion.

The Apex Book Club previously covered Michael Gerber’s book Beyond the E-Myth, about building a business so that it is ready to sell at a time of your choosing, specifically because it is built to be scalable and therefore a prudent investment opportunity for any potential buyers.

Before we scale, we must be personally satisfied with our investments in the business, whether they be financial, energy, or time investments.

What does a business owner do when they have lost the drive to grow the business, and it is yet to have become marketable to buyers? They look inward.

The E-Myth Archetypes

Creating a business typically arises from a desire to work for oneself or turn a passion into a profit. Of all the books written about starting your own business, 99.9% of them would agree that you need to maintain passion for what you are doing to overcome the ups and downs of owning your own business.

So what is the secret to keeping passion in a business that will envelop so much of your daily life?

You need to understand the three archetypes of a business owner that exist, define which type you want to be, and then act accordingly. That means hiring others to fulfill the remaining roles of the business.

If you choose to be The Entrepreneur of the triumvirate, you need to be prepared to handle driving the business forward as your primary responsibility. But you also need to have a capable Manager to manage the business and a skillful Technician to make things happen from the nuts and bolts side of the business. Otherwise, you will find yourself wearing many hats and looking great in none of them.

Working to Live and Living to Live

Most business owners don’t get into a business to work more hours for less money than they may have made in their previous careers as employees. They want to create and build a successful business that provides for them financially and gives them the freedom to live a life not chained to a desk or a storefront.

One only needs to look at the meteoric success of Tim Ferriss’s The 4-Hour Workweek to understand that people of an entrepreneurial mindset are looking for less time at maintenance work, and more time doing inspiring work. Or maybe they just want to get away from the people or roles they don’t like.

Simplifying your business start-up can be achieved by either buying into a franchise or buying an existing business that has been proven as a good investment. You remove the need to design an entire business strategy platform from scratch, saving hundreds of hours that would be better spent on the profitability of the business, or life outside of the business. Yes we are brokers who want to help you buy and sell businesses, but many of us have built businesses ourselves so we know it’s almost always better to buy than to build.

The E-Myth Revisited is a very helpful book for those who have started their own business but are questioning what they have gotten themselves into. The key focus of the book is to help you take a breath, delve deep into what you want your role to be, and then delegate the rest through either employment, partnership, or a renewed drive and purpose.

If you are looking to skip the start-up and buy into a business that has already proven itself, give us a call. It’s what we do.

Book Club #36 : Getting Things Done by David Allen

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Book Club #36 : Getting Things Done by David AllenGetting Things Done by productivity expert David Allen is a book that cannot be read without the reader battling their desire to put it down and to start putting into action its productivity lessons.

It is precisely because the book gets to the heart of how to unlock one’s own productivity that the reader also cannot come away from the book without knowing that there exists a productivity guide which, with rare possible exception, truly works.

In short, Getting Things Done teaches the reader first how to think about thinking about getting things done, and then how to implement a process which is intuitive with the way people actually achieve productivity.

Whilst framed as a book for businessmen, managers, and entrepreneurs seeking efficiency and control of their working lives, the book also places an emphasis on being productive in all aspects of one’s life (for example, if the entrepreneur has forgotten to do a personal errand this will inevitably create discord in their work life as well).

Someday, Maybe

The reader will gain a clearer understanding of the limited ability of the human mind towards organizing tasks without external aid. For example, an individual may daydream about going on holiday for years without ever doing so. All the while a “go on holiday” note may have been gathering dust on a dream board somewhere in their home. There may come a time when they finally do decide to go, but only when there is little time left, with a “now-or-never” ultimatum attached to what should be an otherwise invigorating vacation.

Seemingly useful productivity habits such as creating ”’to-do lists” are revealed for the productivity roadblocks they are. To-do lists list tasks to be done, such as: “Sales Report.”

This task, at face value, does not define the actionable next steps. If these steps aren’t defined, then the individual faced with the task will not think through what those steps need to be until they cannot put the task off any longer.

One cannot do “sales report” but one can do “Define the purpose of the sales report.”

Each actionable step of the task can be broken down to its individual action.

For example, for “sales report,” it could be:

  1. Define the purpose of the sales report
  2. Gather Data
  3. Choose a Reporting Period
  4. Organize Data

And so on, until the actionable steps are defined so that there is full clarity about what needs to be done in order to see the task through to completion. Through creating these kinds of actionable task lists, the task doer will inevitably feel an urge to set upon the task immediately now that the thinking about the task has been done externally (put on paper, or in a word document, etc) to a sufficient level of scrutiny.

Our lives require a robust productivity system

There wouldn’t be a need for Getting Things Done if productivity relied only on clarifying the next actionable steps of a task. New tasks can present themselves to us at any time, and there are large portions of our lives where we must be somewhere (a doctor’s appointment, a wedding, etc), meaning our time for getting things done is limited.

As business professionals our success is often met with more work, not less. There are other books that explore the idea of freeing up one’s time whilst growing one’s business (such as The E-Myth Revisted by Michael Gerber). David Allen’s Getting Things Done offers the reader a “stuff” collection system which can be used to define and decide how best to see tasks through to completion. “Stuff” is defined as anything which we need to get done. Once the reader has digested the book’s wisdom once, there is a readily available “map” of David Allen’s entire productivity process to refer to for a quick refresher.

The Art of Stress-Free Productivity

Whilst it is too optimistic to assume the book removes stress from the art of being productive, it does explain what it is about not having a robust productivity system in place which causes us so much stress. When we have a task to do, and we haven’t defined when it needs to be done and all the actionable steps, we are forced to continually remember the task in the back of our minds lest we forget it. Because of this, our time spent not working, or working on other tasks, becomes stressful because we have not taken the time to decide what to do with the task.

Part of the genius of David Allen’s productivity system is how he creates a filing method for tasks. Collection, sorting, defining, and doing. Whether a professional chooses to take on all of the lessons from the book, or some, there is a wealth of insight to be found that is sure to bring a boost to your productivity.

Is one of the things you need to get done this year buying or selling a business? Put us at the top of your list.

Book Club #35: The Obstacle is the Way by Ryan Holiday

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Book Club #35: The Obstacle is the Way by Ryan HolidayToday’s business environment is different from anything studied or reviewed in the modern era because the times and culture we are in are significantly different than any other in the modern era. While trying to stay ahead of the curve of an economy in flux, many business owners have been looking for new ways to overcome the turbulence. However, Ryan Holiday believes that the ancient Greek and Roman philosophy of Stoicism is the approach that current and prospective business owners and sellers should adopt. His best-selling book The Obstacle is the Way dives into the lessons that can be learned from Stoicism which we can apply to challenging times, including in the world of business ownership.

Rolling with the Punches: In Three Parts

The elevator pitch of Stoicism is that it is a philosophy of life that focuses on what the individual can control. Instead of reacting to outside influence, the practitioner remains calm and focused on what they can directly influence. A calm mind is able to think logically by removing emotion from the equation. In The Obstacle is the Way, Holiday believes that you should face challenges and accept them as an opportunity to grow. Time spent complaining about actions outside of your control is time wasted. Accepting the hand you have been dealt and moving to overcome it is much more valuable.

There are three parts to the path forward when encountering any obstacle. First, your perception of the challenge is key because an accurate perception means that you can formulate a clear path forward. Once you see your path, you are able to act on it, which is the second part of Holiday’s approach. Finally, when you reach a roadblock in your path, you will have to enact sheer will to stay focused on the challenge and overcome it, and not stay fixated on what could have been or would have been. Willing yourself to remain present is the key to learning from the past and being better prepared for the future.

Best Laid Plans?

One of the challenges of acting on a plan is knowing what to do when that plan suddenly becomes inoperable. Most business owners attack a problem with a clear and consistent approach. They evaluate their options, decide on the best step forward, develop their plan to move ahead and get to work putting it in place. However, when an outside force derails your plan, how do you react? Most people try to find ways to remain with their plan. After all, they followed their processes to develop the best plan possible, so why not fight to make it work as it was designed? What is the right way to proceed?

This is where Holiday suggests accepting that what is right, is what works. Time spent worrying about deviating from a previous plan is time you could spend moving forward and learning new insights that could solve your problem. He doesn’t suggest abandoning a plan, just that you shouldn’t allow total adherence to a pre-existing plan then lead you to lose valuable time and energy by remaining static. Instead, focus on channeling your energy toward movement into a new and more flexible plan.

Where There’s A Will

The third part of Holiday’s path to accepting that the obstacle is the way is to impose your will onto the challenge at hand. But he doesn’t mean the type of will that you may hear about when a larger company bullies a smaller company into submission. What Holiday is referring to here is the Stoic will. The ability to remain resilient and flexible while maintaining quiet humility as you overcome your obstacle. Problems will occur. Plans will be affected. Nothing will run perfectly smoothly. And that is okay. If you follow the teachings of Stoicism you will accept that many problems will occur. If you believe in your business you will treat these problems as obstacles to overcome and lessons to be learned and become a better business owner for it.

The business of being in business is often a paradox. While you may strive to create structure and systems that serve as the bedrock for a stable business foundation, you will also be faced with challenges that threaten to shake your systems to the ground. You must learn to transform these random quakes into a support structure for an even stronger business. You can do this by accepting these challenges as inevitable, remaining focused only on what you can control, and seeing these events as tools and lessons to be wielded for future challenges. You will come to relish the fact that the obstacles we face are often our best teachers.

If you want a feel-good antidote for your bad business days, we’re always happy to provide a pick-me-up! Give us a call.

Book Club #34: How I Built This by Guy Raz

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Book Club #34: How I Built This by Guy RazBuilding A Business, Just Like Others Before You

Guy Raz would have you believe that he never intended to become an entrepreneur. He witnessed the hardships of entrepreneurship firsthand, as his parents worked tirelessly to provide stability for their family through their pursuit of the American Dream. He even admits that the decade he grew up through left a decidedly bad taste in his mouth when saying the word business. No, Raz was more interested in stories than business, and perhaps that is why he was able to identify the narrative arc that all successful businesses seem to have in common with a heroic tale. But he wanted to hear more stories and share them with others, not create his own.

Yet, through his successful podcasts and production company, that is exactly what he has done. He has leveraged his love of stories to build his businesses, almost without realizing it, and definitely in a manner that doesn’t leave him in disgust. He has worked to pull together a collection of entrepreneurial heroism, ripe with lessons of hardship, perseverance, and success (as well as failure) and shared them with the world of people who dream of the entrepreneurial path. This journey started in podcast form of the same name but over time, Raz saw the opportunity that a book full of the best examples of business heroes could provide to the dreamers who want to be entrepreneurs, but don’t really know what it takes or what to expect and so may end up being non-starters.

The Call

The entrepreneurial path is not easy for anyone, and those who go in with the idea of it being easy, unfortunately end up learning the hard way that it is decidedly not. To overcome the initial hardships, feinted success, and inevitable learning lessons, you must have the idea that the role of the entrepreneur is your calling. That your purpose in life is to solve the problems of others either through service or product. This is the only way that you can make it through the times when everyone and almost every fiber in your body is telling you that you should quit.

The Test(s)

No business gets off the ground without some tests of the owner’s willpower and stamina. Fear of failure, lack of financing, acts of God even, are but just a small sample of what an entrepreneur can face along their business owning path. With that in mind, Raz lays out the basic challenges that one might face, and goes on to illustrate the varying ways that others have overcome those challenges. He focuses on more than just perseverance in this section, instead giving you real world ideas for how others have overcome their own businesses’ tests.

The Destination

The most valuable part of the book to any newly minted entrepreneur who may read it is the last section, which focuses on getting a business owner to consider what to do when success strikes. In order to keep your success from becoming a temporary win and another example of a startup’s failure, you must understand that there is no end to an entrepreneurial endeavor, short of selling out. Knowing how to build a culture that helps the company grow, knowing when to bring in help, and yes, knowing when to sell and get out, are all questions that a successful entrepreneur may face. 

How Did vs How-To

While the book is built on a treasure trove of wonderful entrepreneurial examples, it  does seem at times as if it is only a collection of unique examples. This is not a book to read to learn the structure of entrepreneurial startup, nor is it a guide on how to be successful by following Steps A, B, and Z. The pages contain real-world examples and good meaning advice, but in the end, the book is more of a feel-good antidote for when the grind gets you down.

And sometimes, that is exactly what you need to remember your calling, and keep going.

If you want a feel-good antidote for your bad business days, we’re always happy to provide a pick-me-up! Give us a call.

Book Club #33: Atomic Habits by James Clear

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Book Club #33: Atomic Habits by James ClearHabits are powerful tools for your personal and professional development. That’s why there are so many books devoted to them. But one has emerged in recent years that helps reframe the discussion around habits to help others succeed with them where they may have previously failed: Atomic Habits by James Clear. 

Start Small, Finish Big

“Every action you take is a vote for the type of person you wish to become. No single instance will transform your beliefs, but as the votes build up, so does the evidence of your new identity…meaningful change does not require radical change. Small habits can make a meaningful difference by providing evidence of a new identity.”

Just like compounding interest in a bank account, small habits don’t just become powerful habits, they actually give you more power to make other habits which can make big changes. The power of these changes, like a snowball, is cumulative.

But How?

Clear has Four Laws of Behavior Change to help readers understand how to build these habits one at a time. These are four characteristics of each habit you wish to build.

Be Obvious

Your new habits need to be obvious, not vague. You can’t simply “be a better manager” or “lose weight.” You could “become a better manager by developing stronger personal relationships with my team” or “lose five pounds in the next three months.” When working on the habit gets tough (as it inevitably will) you can always come back to the obvious goal.

Be Attractive

Clear unabashedly wants to use your body’s chemistry to help with habits. Dopamine is released not only when you experience pleasure, but even when you anticipate it. For example, gambling addicts have a dopamine spike right before they place bets, not when they win.

When your body thinks an opportunity will be rewarding, dopamine spikes in your body. But when dopamine rises, so does your motivation to act. 

Going back to our weight loss example, going to the gym may be unattractive, but watching a certain TV show may be very attractive. By making it so that you can only watch that show while at the gym, you can make your new habit attractive, as it carries a pleasure you want.

Be Easy

Complicated is the enemy of easy. When you make a habit complicated, you will make excuses not to do it. You need to build a string of successful habit performances and that’s simpler to do if the habit is easy and straightforward.

Be Satisfying 

The fourth law, be satisfying, is about repeating the cycle so that you can continue to pursue an obvious, attractive, easy habit. That feeling of making progress is in itself satisfying.

Clear also notes the importance of not breaking a habit chain. Try to keep that streak alive, but if you break it for any reason, don’t give up. Get back on track as quickly as possible.

There are many other important points Clear makes in this helpful book. To get a peek, here’s a free excerpt on the four stages of habit.

A habit many of our team has here at Apex is reading. If you liked this review, check out the others in our Book Club series.

Book Club #32: Built to Last: Successful Habits of Visionary Companies, by Jim Collins and Jerry I. Porras

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Built to LastEven though Jim Collins wrote Good to Great years after he finished Built to Last, he considers the former a prequel to the latter. It’s one thing to make a company great, but to make it a visionary one that lasts for generations, that’s an enduring accomplishment. The same research-driven conclusions frame the important lessons of this still-relevant text.

Clock Building vs Time Telling

“Having a great idea or being a charismatic visionary leader is time telling; building a company that can prosper far beyond the presence of any single leader and through multiple product life cycles is clock building.” With a business press that focuses on big personalities it’s sometimes easy to miss companies that don’t need charismatic leaders to prosper…because they’ve got a culture that survives, even thrives without needing to be pushed from the top.

This doesn’t mean that visionary leaders should be ignored. A helpful example might be Jack Welch. Welch got a lot of press in his day, but did you know that relative to his other predecessors at GE he came in second place in ROE and fifth place on average cumulative stock returns relative to the market and its biggest competitor, Westinghouse? Welch was effective…but so were his predecessors. He simply kept up with a pace that had already been set for him.

If you want to go to deeper with other examples like Welch, the authors dedicate Chapter 8 to homegrown management: Welch only ever worked at GE before ascending to CEO. His achievements are just as attributable to the culture he grew up in as his own personal skill and charisma.

BHAG

Just as many people know the term “right people on the bus” from another Collins and Porras book, they probably also know the abbreviation BHAG to stand for “big hairy audacious goal.” That term originated in this book as a characteristic of visionary companies. A couple of the BHAGs highlighted in the text include:

  • Boeing betting the farm on the 707 and 747, projects which would have ended the company if unsuccessful.
  • Sony creating a pocket radio for consumers when no one thought transistors had value outside of military applications.

A BHAG should be so clear and compelling that it requires little to no explanation and even if not fully achieved, can set the company up for a future success. The other danger of achieving a BHAG is letting complacency set in from a “we’ve arrived” mentality. Companies with no history of BHAGs don’t become generational, visionary enterprises.

Try a Lot of Stuff

While small business owners may be aware and comfortable with the “throw stuff against the wall and see what sticks” school of thought, they may not know that this is also a characteristic of generational visionary companies as well. Some fascinating stories in Chapter 7, which focuses on on this topic, include:

  • Johnson & Johnson received a letter from a physician complaining about patient skin irritation from certain medicated plasters (at this time that was J&J’s primary business). The company’s director of research responded by sending a packet of soothing Italian talc to apply on the skin. That same director encouraged the company to include a small can of talc for free with certain products. People started asking for the talc directly and this “accident” grew to become, at one point, 44% of J&J’s revenues.
  • In 1892 an American Express president took a European vacation and found that his letters of credit weren’t easily translatable into the cash he needed. When he returned he vowed to fix the problem, thinking that if he had challenges, what might everyday people without his connections have? The American Express Travelers Cheque was born and pointed towards the financial services future of the business, which was then operating a secured cash-shipping business.
  • How Wal-Mart greeters originated from one store manager’s concern with shoplifting: greeters made honest people feel welcome and put shoplifters on notice that someone would see them if they tried to walk out with stolen merchandise.
  • The “give it a try, and quick!” mentality at 3M that led to their adhesive tapes, waterproof sandpaper, and Post-It notes.

By focusing on empowering staff at all levels rather than trying to direct everything from the C-suite, these companies harnessed the power of their people.

Final Thoughts

There are many great lessons in the book, but perhaps the most important one for our age that has seen multiple (and persistent) scandals in an environment in which “maximizing shareholder value” has gained currency as an investing philosophy is the contrarian finding of Collins and Porras in the text: “[W]e did not find maximizing shareholder wealth or profit maximization as the dominant driving force or primary objective through the history of most of the visionary companies. They have tended to pursue a cluster of objectives, of which making money is only one — and not necessarily the primary one.” The shining example of this is the original 1943 Credo of Johnson and Johnson, referenced in Chapter 3 of this text and which J&J went back to when deciding what to do about it’s now-famous Tylenol recall, which cost the company almost $100M, but was what they considered the right thing to do. 

You can find the most recent iteration of the credo here.

We can’t pretend to be able to help you build a visionary company…that’s why you should read this book! But we can help you figure out what you need to tweak and improve in your business to take it from not sellable to sellable. Let us know how we can help.

Book Club #31: Good to Great: Why Some Companies Make the Leap and Others Don’t, by Jim Collins

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Good to GreatThere’s a reason you’ll find Jim Collins books on the shelves of many C-Suite managers: there’s helpful advice and thinking in them, particularly for large, publicly-traded companies. But in recent years some of his books, including Good to Great, have come under fire for being “wrong.” In this review we will address some of those concerns, but first, some great points that make the book worth reading.

The Right People on the Bus

If you’ve ever heard of or used this phrase, you’ve already learned one of the key lessons of Good to Great. Instead of seeking to motivate the people you already have with mission and vision, start by hiring people who buy into your mission and vision. When you’ve got the right people, you also have to make sure they are in the right seats, i.e. sometimes you have someone who is culturally aligned with you but is in a role that doesn’t leverage his/her strengths. 

Confront Brutal Facts

Collins tells a fascinating story of “short pay” in Chapter 4. Bruce Woolpert of Granite Rock allowed customers full discretionary power on how much of an invoice would be paid based on satisfaction. The customer does not need to return the product or ask for permission. He/she simply circled the offending item on the invoice, deducted the item from the total, and sent a check for the balance. “Red flag mechanisms” like these, allow companies to treat errors and problems as information (and to proactively respond in a way that shows the company values customer satisfaction above all else).

Elsewhere in this same chapter Collins underlines the importance of acknowledging shortcomings so that companies can improve. Less echo chamber, more constructive dialogue. 

Be a Hedgehog

In a chapter called The Hedgehog Concept, Collins puts forward an intersection of three areas: passion, economic engine, opportunity to be best in the world. He notes that the companies he labeled as “good to great” in his study all focused on this intersection with the simplicity and single-mindedness of a hedgehog.

The ability to be a hedgehog allows companies to not be tied to “what we’ve always done” and consider taking bets on where the market is going. One of the most shocking moves Collins documents is Kimberly-Clark’s willingness to sell all its mills in order to become the best in the world in consumer products or Walgreens’ ability to end its nostalgic food service component to focus on clustered convenience both in-store and online.

But, Two Companies Went Bankrupt…

Much has been made of the fact that two companies that Collins profiled, Circuit City and Fannie Mae, have both gone belly-up, for entirely different reasons. But this isn’t a sufficient reason to discard Collins’ book, which is so extensively researched that there are over 40 pages of appendices documenting the methods and questions for its findings. It’s simply a reminder that having a great company doesn’t guarantee that you can’t fail, or that market conditions can’t suddenly and catastrophically change.

Indeed, Collins’ book takes readers on a journey, from getting the right people on the bus all the way to pushing a reinforcing flywheel of momentum that takes a company from “doing fine” to “killing it.” But practices that worked for publicly-traded businesses will work for small businesses too, especially around leadership and innovation. No matter what size your business is, if you become great, you can’t rest on your laurels. You have to always keep tweaking and refining so that complacency doesn’t set in. Greatness never rests, even though sometimes it ends.

Want some ideas on how to take your company from good to great before you exit? Let’s talk.

Book Club #30: $100M Offers: How To Make Offers So Good People Feel Stupid Saying No, by Alex Hormozi

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Book Club #30: $100M Offers: How To Make Offers So Good People Feel Stupid Saying No, by Alex HormoziAlex Hormozi begins his short book $100M Offers with a story from Jeff Bezos. In it, Bezos discusses the similarities between baseball and business, particularly the idea that you’re not going to hit a home run (or even a base hit) every time you step up to bat. But there’s a key difference. On your best at-bat in baseball you can only bring in 4 runs. But on a “grand slam” in business, you can bring in the equivalent of 1000 runs. “Big winners pay for so many experiments,” says Bezos.

Hormozi’s book is entirely oriented towards getting you that 1,000 runs for your business using what he calls “Grand Slam Offers,” offers so good that, “people feel stupid saying no” to them.

While a great deal of the book is dedicated to surgical explanations of how to craft a fantastic offer (and that’s very useful) there are some key ideas that Hormozi puts forward that give proper context for how these offers should be positioned.

Never Offer the “More for Less” Value Proposition

Hormozi notes that many players enter the marketplace and charge approximately what the competition charges, but with an extra or two in order to create the “more for less” value proposition. But this is a fool’s errand.

Not only does this indicate the simple path any future competitor of yours can take, but it’s ultimately a race to the bottom. Go the other way, Hormozi notes: charge more for more. By serving niches and serving them well, you can begin to dictate your prices instead of the market dictating your price to you.

9% Growth Should Be Standard

While most people know that the stock market grows roughly 9-10% a year, they don’t normally apply that metric to their businesses. Hormozi does. If you’re not keeping up with the growth in the market, you’re falling behind. While not everyone may like this metric, it’s certainly a hard one to disagree with.

Use Objections to Create Features

Hormozi now is in many different industries, but he started out helping gyms bring in more revenue. Hence many of his examples or templates in the book use fitness/nutrition starting points.

One of the examples he gives is the idea of getting people to eat healthier instead of going for liposuction. He then offers a whole list of objections that people might give to eating healthier. Hormozi then reframes those objections as reasons to buy.

For example, if someone says that eating healthy is “too expensive” a headline for a blog or a heading on a sales page might read:  

“How Eating Healthy Can Save You Money”

Another objection might be that it takes too much time to cook healthier food. Again, the reframe looks like:

“5 Healthy Meals You Can Make in Under 30 Minutes”

Hormozi notes that there are many different reasons that customers buy, but if even one objection they have is unaddressed, that can lead them to walk away. By anticipating every single objection they might have and reframing them as features, you build momentum towards a transaction. Since you’re not stopping/starting with objections and answers to objections, customers are free to proceed on the customer journey unimpeded towards a sale.

Hormozi’s entire book is oriented towards helping you:

  • Get more customers
  • Increase their average purchasing value
  • Increase the frequency of their purchases

If you’re looking for different ways to reframe and/or upgrade the offers you currently have, this is an excellent resource.