Segueway to Success
Listen at – Business Do’s and Don’ts Part 2 – Segueway to Success
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By: Brent Hamachek and Tom Kuchan
Segueway Solutions
At Segueway, the principals have over 50 years of combined business experience across more than 40 industries and covering five continents. That experience has drawn us into many complex situations of all types. We have watched businesses be born, we have watched them grow and live productive lives, and we have watched them die. From our vast array of experiences we have observed many re-occurring signs of success and of failure.
Join us on Wednesday, January 23, 2013 at 15:00 CST as we continue our discussion, Our Do’s and Don’ts for Business Success:
- Have humility. Too often the business owner who started their company from scratch is not willing or able to admit they have made mistakes or that they need help. Feeling that they were the ones who accomplished everything that made their company successful in the first place, they cannot bring themselves to admit that what lies in front of them requires outside or “new” resources. This can cause them to wait too long before making the necessary adjustments. Remember, you can’t save your face and your ass at the same time.
- Don’t insist on trying to save a bad business venture at the expense of a successful one. Often a company can be enjoying great success in one aspect of their business and begin to experience failure in another. The typical response to this is to devote increasing levels of resources to try to prop up or salvage the poorly performing one. This is always at the expense, and usually to the detriment, of the healthy part of the entity. When something isn’t working while other things are you should look at cutting your losses on the bad and expanding the good. This principle is so often violated that it seems it must be counter intuitive.
- Don’t over complicate your capital structure. When companies are starting out, there is a tendency to try to take advantage of every stylized capital raising trick in the book. Options, warrants, non-dilution provisions, multiple preferred layers, complex conversion or exit formulas all come into play. Invariably what winds up happening is that if the company is initially successful and then needs subsequent capital raises they find their hands tied by some of the onerous provisions they built into their initial capitalization structure. Keep your capitalization simple and remember that equity is the most expensive, not the least expensive, way to fund your business.
- When you decide to “partner” with other businesses you need to force yourself to trust them. This does not mean recklessly divulge your trade secrets. What it means is that too often a company will enter into some sort of “joint venture” arrangement with another company but then begin to act as if they are distrustful of the other party. Not only does this doom your project to failure, it can also cost you your customer along the way.
- You are in business to make money, not to be a “collector.” Very often business people, especially during successful times, will use their prosperity to “collect” things that they find interesting, prestigious, ‘maybe-valuable-later’, good deals, etc. This diversion of operating funds out of your work in process and normal cash flow cycle cannot be replaced and one small disruption can then be catastrophic instead of incidental. “Collection” items need to be budgeted from surplus only and not haphazardly acquired.
- Never underestimate how much damage a bad manager can do to your operation. A person in a position of authority, who is not performing or worse, performing subversively, can damage morale and client relations so rapidly you might not be able to recover. We once witnessed a new business that opened with tremendous fanfare and accolades end up closing in 9 months due in large part to a bad manager.
- If you are going to fire someone eventually, fire them right away. Every excuse you can come up with to delay the firing of someone you know has to go eventually provides them with another day to do exactly the kind of damage that has caused you to conclude they have to be let go in the first place. Then, when you do let them go, the damage is far worse. Avoiding uncomfortable situations is cocktail party etiquette. It has no place in the business world. Let them go.
- Understand your break-even points and your contribution margin; everyone is a manufacturer! The number of times we have encountered business owners who do not know their breakeven point are too numerous to mention. How on earth can you operate your business without knowing when you begin to make money? The answer is you can’t; the business is operating you.
- When you hire outside professionals, especially lawyers and accountants, remember you did not just sign away your obligation to think for yourself. Be an active participant in your own business problem! Hiring a professional means you acquire expertise in their realm, it doesn’t mean they share your business knowledge, wisdom or perspective. Weigh all advice thoughtfully but make you own decisions.
- In sales we are taught that when selling to someone we focus on, and differentiate between a) What we want to sell them b) What they need us to sell them, and c) What they actually want. We try to artfully surf between the three. Remember, in this economy we primarily need to focus on the one that isn’t on that list; What are they willing to pay for? More than ever we need to be attuned to budgets, initiatives and sudden imperatives belonging to the buying customer. This applies whether selling retail or business-to-business.
- Bankers are not your business partners. Their commercials are all well produced and usually have a great jingle. All the ads talk about how they understand your business and how they want to be more than just your banker. Be careful and ask yourself one question: Am I my banker’s business partner?
- When it comes to discussing their financial position (business or personal), EVERYBODY lies! They might lie up, they might lie down; they might lie big, they might lie little; they might lie compositionally; they might lie out of deceit; they might lie out of neglect, omission or embarrassment but they ALWAYS lie. Don’t ever count on what you are told, in voice or in print, about the financial condition of a business colleague.
- Finally, when you hear something or encounter a situation that just doesn’t make business sense when compared to all of the accumulated experience and knowledge you’ve acquired, TRUST YOUR INSTINCTS. Something isn’t right. Do not ignore the subliminal, haunting indicators of danger and proceed as if they didn’t exist.
We hope you find these tips helpful and take them to heart. Behind each point is at least one, but usually more, story that supports the tip. While every situation is unique and requires your analysis before acting, remember that business principles are timeless and consistent. It is their application that becomes intricate.
Our “Segueway to Success” show airs each Wednesday at 15:00 Central Time on www.blogtalkradio.com
Segueway Solutions – http://www.seguewaysolutions.com/
+1 (847) 778-9474
Brent E. Hamachek spent the first 15 years of his professional life in banking, working in 6 different sectors including audit, credit and 9 years as a commercial banker.
After commercial banking, Brent formed Segueway Solutions in 2000 in order to assist privately held companies in transition. To date, he has worked in 40 different industries and has served in the capacity of CEO, CFO & EVP Sales for clients. Brent is a sought after consultant, speaker and trainer offering national and foreign expertise to clients.
brent@SeguewaySolutions.com
Tom Kuchan is a proven leader in global business expansion and effectiveness, risk management, finance and operations with experience in both Fortune 50 and entrepreneurial environments. He has a proven record of defining strategic objectives, translating them into operational tasks, and leading their implementation in diverse geographies and cultures across the globe.
Tom has lived overseas for over twenty years, including Switzerland, Germany and the United Arab Emirates, and has worked extensively across Europe, Latin America, Africa, the Middle East, and Asia.
tom@SeguewaySolutions.com
www.linkedlocalnetwork.com