Three Key Questions When Considering the Leap to Business Ownership

three questionsThere are so many questions you might ask yourself when thinking about becoming a business owner.

In fact, we’ve addressed many of those concerns in previous articles, here and here.

But today we wanted to focus on three important ones that have to be answered.

Where will I get the money?

We’ve discussed various ways to get the money for buying a business in the past.

While it’s always best to just have a large amount of cash laying around, most of us are more likely to pull from multiple sources, including retirement accounts and SBA loans.

Exploring and understanding this step well (including a solid relationship with a banker) will give you the range of purchasing power you have. In addition, you’ll have a snapshot of the variety of businesses you could consider in that price range.

Do I buy a franchise or an existing business?

This has just as much to do with personality as anything else. Are you the sort of person who wants to follow a proven system or do you want to experiment, make mistakes (and find successes) through your own initiatives and trial and error?

Franchising offers the appeal of trial-tested methods, whereas your own business offers you flexibility and nimbleness that can’t exist at the level of a national brand.

Are the books in order?

On the broker side of the business, there’s nothing more unfortunate (or less surprising) than finding that a business doesn’t have its books in order. “Good enough” has been the standard for so many years, with no forethought of a future in which a buyer might want more than a box of receipts and incoherent financials.

A business with a solid and reliable set of books, not just for the current year, but for many years back in its history, tells you a lot about how the business is run and the priorities of the ownership and staff.

The books will show you where the opportunities and the weaknesses are. These are the medical records of that business. We try to avoid listing or representing a business that can’t supply historical financials or has troublesome tax issues. Make no mistake… you should be extra cautious when considering buying a business with those issues too.

Do you have follow up questions for any of the questions that we listed above, or any questions on any part of the buying process?  Give us a call at 913-383-2671. We’d love to help!

How SCORE Can Help You Build Your Business

mentoringSCORE, the Service Corps of Retired Executives, is a nonprofit supported by the SBA that offers counseling advice to business owners.

It’s powered by a network of 10,000 volunteers, mostly successful business owners and executives, who still love the sport of business and want a chance to help younger versions of themselves.

Because of the SBA funding and volunteer labor, a lot of this mentoring comes at no cost, whether in person at a local office, via email, or by video. They also offer workshops in person and on the web.  

While many entrepreneurs may form ad hoc advisory boards or lean on the advice of savvy investors who may be partnered with them, many more don’t really have a network to turn to in the early days.

SCORE can match that entrepreneur with someone of relevant experience or sometimes in the exact industry.  

Indeed, as you browse through the numerous success stories on their website, you get a sense of how diverse the mentorship can be… sometimes something as short as a few months, other times as long as a few years.

For example, Mutt’s Sauce was a Tennessee-based condiment company that had developed a local following. But when the recipe passed to his granddaughter after he passed away, with no other infrastructure or help, she turned to SCORE.

She got connected with someone who not only mentored her in how to start a food manufacturing business, but who also connected her with the right contacts to get her launched properly.

Sometimes it isn’t a new entrepreneur that needs mentorship, but one who has had a business for awhile and has run into a problem Karoun Yoga was just such a business, and after an initial explosion in growth, she found herself “drowning in expenses.”  

Her SCORE mentor walked her through Quickbooks so she knew her numbers better and she learned how to create financial reports that she not only understood but could use to improve her company. She also attended workshops on Google AdWords put on by her local SCORE chapter.

Even immigrants can benefit from SCORE, as Diego Tantardini discovered. He had two SCORE mentors meet with him regularly to go through numbers and helped him work on small-scale business plans, figuring out product/market fit.

What SCORE ultimately provides is trusted, dispassionate mentorship from those who’ve been there. If you’ve been wondering about mentorship as you build your company, it might be worth giving them a look.  

At Apex we can also provide you with connections to professional business coaches, networking groups, and other professionals to get you the help you need.

Is It Time to Revisit Why You’re Still Running Your Business?

As your business grows over the years, things change. You may come to find that the reasons you started the business aren’t the same reasons you’re running it now. Or even the reasons you aspire to in the years to come.

If you can’t easily answer “Why are you still running your business?”, it may be a good time to revisit why you started the business in the first place. Here are a few ideas:

Because you love the industry

If you were to look at some high profile industries, like surfing, coffee, or food, outsiders might look at them and say, “It would be so cool to have a business in that industry!” But in all likelihood those outsiders don’t realize these businesses aren’t just about celebrating something really enjoyable. They also have a lot of hidden challenges and difficulties that can’t be seen.

What keeps people in many companies year after year, decade after decade, generation after generation, is a true love of the industry.  If that love is still there through all the ups and downs of growing your company, you’ve got a good “why.”

Your Business WhyBecause you have great staff

Oftentimes people spend more time with their work colleagues than they do with their families and friends. Ideally that time shouldn’t just be tolerable, but enjoyable.

Camaraderie and a respectful spirit of collaboration often make all you do feel a lot less like work. Owners who are intentional about this process have created a great workplace that makes it a joy to be part of every day.  This is another good “why.”

Because you love the challenge

All business owners know that the sport of business is a daily, often hourly challenge. It will bring out the best in you and test your IQ (emotional and actual) in ways you couldn’t imagine.

The reality is that sometimes people are business owners simply because they couldn’t find a challenging-enough job to push them on a daily basis. Pushing yourself out of your comfort zone on a daily basis is another good “why.”

These are just three reasons to help you get the conversation started within yourself if you don’t really have a grasp on the “why.” As hard as you may work, you owe it to yourself to be able to answer that question when others ask.

Why You Should Hire for Cultural Fit First

culture fitIf Millennials have added anything to the conversation around hiring these days, it’s the idea that cultural fit matters.

You shouldn’t simply hire people who are competent and willing to do the work, but also who are excited to be with you and fit well into your established company culture.

What is a cultural fit?

An employee who is a cultural fit for your company is far more likely to be a “great” employee who has a future with you rather than the “good” employee who just manages to fill a role. This is because the employee who is a cultural fit is in alignment with the goals, beliefs, and attitudes of the company itself.

Your company culture may be a mirror of its customer-facing self. For anyone who’s ever flown Southwest Airlines, for example, it’s clear that the staff knows how to have fun and that they’re given full permission by the company to do just that. If you still need convincing, check out this safety announcement from a Southwest flight attendant, delivered in late 2016.  

But perhaps your clients don’t get to see your staff in the highly personal way that Southwest employees interact with their clients. In that case, make sure you have a good sense of what the company culture is and how it impacts your company brand. If you can’t answer that right away, no worries!  Think about the top three or four behaviors that are critical for success at your firm.  That’s a good base to start from.

What are some interview approaches to use?

Hopefully, you’re not one of those employers who uses absolutely useless cliche interview questions like, “Tell me your greatest weakness,” etc. But apart from asking good and thoughtful questions, you may not realize that it’s important to ask unexpected and unusual questions as well. Here are a few suggestions:

  • What does a typical weekend look like for you?
  • What values are important to you?
  • What type of team do you thrive in?
  • Based on what you’ve seen and heard so far, how would you define our company’s culture?
  • Why does the role you’re applying for have meaning for you?

In addition to questions, perhaps consider adding a personality test to the process, or even allow for some “white space” time in the interview, where you allow the candidate to guide and even lead the discussion. See how they perform in the absence of direction.

Why does this matter?

Ultimately this is an end-to-end issue, meaning, it’s just as important for the employee to be a cultural fit for you as it is for your company to be a cultural fit for the employee. When people are aligned with the values and practices of a company, they’re less likely to see work as some disconnected part of their day: a location they go to in order to earn a paycheck.

They’ll see their work as an extension of their life. They’ll stay with you longer…and they’ll inspire employees around them to greater heights. All of these results can only enliven and strengthen your company culture.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at dhubler@kcapex.com or 913-433-2303.

Should You Have a Business Partner?

“A contract isn’t in place for when things go right.
It’s to account for the possibility that things might go wrong.”

partnershipYou can google the title of this article and you’ll find hundreds, perhaps thousands, of articles, many of which take a position as to why you should “never” have a partner or “always” have a partner.

We’re not going to do that today, not only because we think such a binary answer to a question that involves humans, who are pretty complex in general, never mind when it comes to business, isn’t useful, but also because we really want you to step back and look at the larger issues in place when you consider a business partnership.

Have an agreement in place

Figure out how decisions are going to be made, who’s going to do what, what happens in the case of a death, a sale, or someone just getting tired of it all and wanting to quit. You’ll find that just the exercise of coming to an agreement as a valuable first proof of whether you should have a partnership…and whether you should have a partnership with this particular person.

What are your track records during tough personal situations?

If you aren’t well acquainted with a possible business partner, ask to speak to former employers and close friends and ask the tough questions. Difficulties are going to arise while running your business, and you need to know what’s going to happen to this person when the going gets tough. It’s easy to say, “I’ll hang in there,” but your past performance is your best indicator of future reactions.

Do you both feel equally strong about the business?

We know that sometimes in relationships one person feels stronger than the other. Try to avoid that here. You need to find someone who is enthusiastic about the business for their own reasons, not just because they get caught up in your excitement and get pulled along in your wake.

Are you friends already?

And are you willing to possibly sacrifice this friendship for this business? This is the non-business risk that you take when getting into a partnership with a friend. Things could end very badly, ending not just your partnership and business, but a friendship too. This obviously goes back in line with everything else we’ve discussed above.

Can you do this without each other?

Do you really need a partner? Or do you just need to hustle longer and harder? Sometimes people think they need a partner, but what they really need is to contemplate if they could do the business alone and calculate the possibilities.

Remember that anyone who tells you that you should “always” or “never” have business partners is going for an easy, oversimplified answer to a complicated question. The correct answer is…It depends, just as much on you as the potential partner.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at dhubler@kcapex.com or 913-433-2303.

Extreme Ownership: Apply This Technique Today To Improve Your Business

The concept of “Extreme Ownership” was coined by former Navy SEAL Jocko Willink. Jocko spent 20 years in the SEALs and retired in 2010 after serving as the commander of a SEAL Task Unit in Iraq.

Origin of the term

During an operation in which he was the commander, there was a friendly fire incident which resulted in the death of a member of the Iraqi military at the hands of one of his own SEALs.

The operation was immediately shut down and everyone came back to base. As Jocko spoke to different troops in order to get a bird’s eye view of what had happened moment by moment, he realized that it hadn’t been one particular thing that had gone wrong, but rather a number of things.  Troops had gone to the right locations at the wrong times, or gone to the wrong locations at the right times, for example.

With less than 20 minutes to go before the briefing, Jocko realized the answer: he was the single point of failure. He was the commander of the operation and if anything bad had happened, it was down to him. What he would later go on to call Extreme Ownership was realized, and he defines it as:

An attitude of not ever making excuses or blaming others. When problems arise you take ownership and solve them.”

Jocko WillinkApplication in your Business

What Jocko experienced when he implemented this strategy in his life can have significant benefits for your business, not just because it’s unexpected, but because it causes your colleagues and staff to pause and think.

When something goes wrong with a marketing campaign, or a customer service issue, or a product launch, instead of pointing the finger at a subordinate and letting the righteous anger flow, you can say, “It was my fault.”

What you’ll find is that your staff will more than willingly refuse to allow you to take all the blame yourself, and then willingly identify ways that they could have improved.

When you create a culture in which those at the very top are willing to take the blame for mistakes, you allow and encourage your staff to strive not to make those mistakes again. The entire company can be oriented towards positive resolutions of poor outcomes, rather than playing the old blame game, which has never been listed as a business principle to be lauded.

President Truman famously had a “The Buck Stops Here” sign on his desk.  Extreme Ownership allows you to fold a tangible daily practice of that saying into your business.

Jocko Willink is on Twitter.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at dhubler@kcapex.com or 913-433-2303.