Yesterday a client said, “We’re too small. We can’t afford consulting. We make less than $1M in annual revenue. We build decks and patios. This business pays the bills. I guess it’s my retirement plan…”
Sound familiar?
Yikes. It sounds short-sighted and dangerous to me!
People provide solutions… and customers buy solutions. That’s the bottom line.
This business leader does not ONLY build decks and patios… Not really. That would be short-sighted. He creates “outdoor living experiences for loved ones.” Something remarkable.
How much would you invest in a backyard party for your child’s birthday? Or your family reunion? Or your weekend football game party? Or that special bottle of wine or bourbon?
If you invested $30,000 into an outdoor living redesign, wouldn’t you expect decades of priceless experiences with your loved ones? That solution is priceless.
Case Study: Joe
A second business leader said, “I don’t think I have anything valuable, so when I retire, I’ll just let it shut down.”
I asked, “What’s your annual revenue and earnings?”
He said, “Our revenue is about $1m/ year and I make about $250,000 year. Everything else goes back into capital expenses and employee compensation. We’ve had a good life. I’ve raised my family.”
I asked, “What if you assumed 4x earnings, and someone offered you $1,000,000 to buy your business next week? Would you retire?”
FACT: Most business leaders don’t know their value and succession options.
Market Analysis Figure 1:
Check out these details… do they look familiar to you?
Segment
Annual Revenue
Avg. No. of Employees
Avg. No. of Owners
FTEs
Strengths
Weaknesses
Key Problems
Small Family-Owned
Less than $1M
10-50
2-3
5-25
Strong community ties, family unity
Limited resources, dependency on few customers
Lack of growth strategy, succession planning
In every corner of the world, in every business sector, small businesses define the success of every economy. They are the social fabric of communities. They define success. They create over 65% of jobs and GDP in the US, and a higher percentage in Asia.
Most of the time, business leaders quietly pass on their business to family members or capable leaders. Sometimes there is conflict because of bad communication. Those succession planning discussions require expert advising from consultants.
“Do-It-Yourself” consulting or “Consulting From a Book” always leads to failure. Don’t waste your time or money.
I hire experts to build outdoor living experiences. Or to do any plumbing, electrical, legal, and financial work. Don’t you hire similar experts?
Market Analysis Figure 2:
How much would you expect to invest in a consulting solution?
Consulting Needs
Consulting Fee Range (Phase 1)
Consulting Fee Range (Phase 2+)
Representative Business Types
% of U.S. Economy, approx. #
Familiar Family-Owned Businesses
Business planning, succession and leadership coaching
$5,000 – $15,000
$10,000 – $25,000 annually
Local restaurants, niche retail, craft breweries
~10%, 3.1M
Zabar’s (NYC), King’s Hawaiian, Goorin Bros.
There’s no need for confusion about pricing. That approach only leads to distrust.
• Consulting Needs are problems that require external solutions, such as conflict resolution, strategic planning, or leadership coaching.
• Consulting Fee Range (Phase 1: Initial Discovery/Assessment) includes the initial consulting phase, such as discovery, assessments, and strategic recommendations.
• Consulting Fee Range (Phase 2+: Annual Consulting Phases) covers ongoing consulting needs in subsequent phases, including implementation of solutions, leadership coaching, and strategic execution over a year or more.
Back to the first example of the business leader named Joe, who doesn’t know the actual value of his business. Joe has three options:
No investment in consulting. When Joe retires the business dies.
Small investment in consulting, $15,000- 40,000 over 12 months. When Joe retires the succession plan may enable the business to continue.
Larger investment in consulting, $75,000 – 200,000 over 5 years. When Joe retires the succession plan may provide over $1,000,000 in real value to the owners or their benefactors. The community retains jobs. The business legacy may continue for generations.
Sound familiar?
The solution for most family-owned business leaders is NOT venture capital or private equity investors. They will extract value and disappear within 3-5 years. That would be short-sighted and dangerous.
The solution is to invest in consulting solutions, such as “family capital for loved ones.”
Succession Advisory Teams
The only way to win a football game is expertise on the offensive team, the defensive team, and the special teams. Each team measures success differently to “put points on the board” or “hold them to three downs” or “run it back.”
In the same way, a Succession Advisory Team brings multi-disciplinary experts together to achieve a win.
Lawyers provide risk mitigation and contractual agreements. Accountants provide business valuation and options. Wealth advisors provide investment options. Business psychologists (like me) facilitate the process.
There are many opinions about the top strengths of family business leaders.
One of my recent projects answers that question.
We (Kent Rhodes, Ed.D) and I recently developed and validated a 360 assessment process for next generation family business leaders. See www.AssessNextGen.com for details. We determined the top 50 items.
Our recent research found that the number 1, top strength, or Career Catalyst for family business leaders is Item 13: “Keeps confidences about family business wealth.”
Hmmm. On a scales of 1-10 how well does your family business keep confidences about family wealth? Here are some quick thoughts about how to apply this finding to your family enterprise or family business consulting.
For more details contact Doug Gray, Ph.D. at Gray@theFBCG.com or Kent Rhodes (Ed.D.) at Rhodes@theFBCG.com
Here is the transcript for your reference and sharing:
Title: What is the most important strength for Family Business leaders?
Description on YouTube post: A quick research update from www.AssessNextGen.com. We can now answer that ancient question, “What is the most important strength of Family Business leaders?” Here are some tips for your family enterprise or consulting.
Transcript of video:
Sometimes people wonder, “what are the top competencies that family business leaders need?” And I’m happy to report some early results from the Assess Next Gen Family Business Leadership 360 assessment. This data is from 163 responses in the last few months. Here is the top score, in other words, the Career Catalyst, the behavior that is number one. I’ll give it to you and then I’m going to ask you to reflect on it.
The top score, the thing that our raters said others ought to do, is item number 13: “Keep confidences about the family business wealth.” To repeat, the most important strength of Family Business leaders is to “keep confidences about family business wealth.” What does that mean for you and your family or your enterprise?
I recently asked that question of a friend of mine, John Broons, who’s in Australia, who is pretty brilliant. And he said, “family wealth needs to be part of the conversation. It’s too often not discussed.”
I agree. We need to prepare for risks, like a transition or a succession or continuity or another line of business. And too often family members don’t have any idea of what’s next. There’s the core business. Perhaps there might be other lines of business, but family wealth conversations should definitely stay within the family.
Many of my clients have a charter or clause which states, “This is what we will say, and to whom.” They may have a conversation with the wealth advisor and estate attorney, and they may not have that conversation with somebody like me, a business consultant. The family members are the only ones who have access to that information. This is to protect them from journalists or politicians or inappropriate people seeking to learn something about that wealth. And often this confidentiality clause is written in an agreement. So we’re really talking about the two first words here…
Keep confidences. The most important strength of Family Business leaders is to keep confidences.
How do we keep confidences? I think we need to reinforce some useful guidelines. My clients require trust guidelines. Let me give you a quick example. One of my clients has eight G4 children on this side and four children on this other side. Potential conflicts, right? So they made an agreement in writing, and verbally reinforced it in every one of their meetings, about what could be shared with Doug as the family business consultant working with that G4 generation. My focus is on leadership development. Part of my job is to reinforce for them what’s confidential and what they need to keep confidential.
It’s a bit like driving a car when you’re driving down an unfamiliar road. You’ve got the white lines on the right side, the yellow lines on the left side. Like a good driver, we need to keep confidences. We don’t want to go to the edge of those lines. We don’t want to go off the center of the road. We certainly don’t want to go in the dirt or the gravel on the side.
So, my invitation is to keep confidences about family business wealth. Keep that conversation sacred. There you go. Tip of the moment.
For more details on the Assess Next Gen Leadership 360 process, see www.AssessNextGen.com
Practice leadership. Just as attorneys practice law, leaders need to practice leadership. Great leaders influence others toward a better future. Leadership requires public optimism. Narcissism. Confidence. Practice, and more practice. Every day I identify the top 8-10 people I need to influence. They may be clients, colleagues, prospects, friends, loved ones. Then I write their names on my list and practice leadership. Some require a phone call, others need a direct meeting. All on my daily target list need to know that they are important to me and my business. When I practice leadership daily, then I stay focused on my objective of being a leading provider of outcome-based leadership development solutions. You can practice leadership daily.
Doug Gray, PhD, author of Objectives and Key Results (OKR) Leadership, CEO of Action Learning Associates, has worked with over 10,000 leaders in multiple sectors since 1997.
For a print or digital copy of Objectives + Key Results (OKR) Leadership; How to Apply Silicon Valley’s Secret Sauce to Your Career, Team or Organization, click here. This book is a great read during the holidays, as you prepare for a New Year, a New You or New Decade in 2020.
Then write a review in your favorite social media platform. Mention my title: Objectives + Key Results (OKR) Leadership; How to apply Silicon Valley’s secret sauce to your career, team or organization.
Please share these testimonials with your team or organization:
“Doug Gray makes the complex understandable. More important, he makes it doable.”
Craig E. Aronoff, Ph.D., author, Chairman and co-founder, The Family Business Consulting Group, Inc.
“Doug builds on the OKR approach with practical and valuable guidance for individuals, teams and organizations. If you plan on implementing OKRs for your organization, you need this book.”
John Mattox, PhD, author, Head of Talent Research, Metrics that Matter, Explorance
“Introducing the OKR framework has not only allowed us to align our company goals throughout the organization, but it has also provided an easy mechanism to give visibility into how we drive operational accountability.”
Justin Jude, Acting President, LKQ Corp, North America
“Finally, a much needed leadership focus on the importance of clear objectives and specific, measurable results. This book will be useful not just for the present but throughout a practitioner’s career.“
Dave Vance, PhD, author, Executive Director, Center for Talent Reporting
How to make your next proposal better than your last one.
Let’s face it, of all the skills you can bring to bear to help your clients, the limiting factor is your ability to get proposals signed. You need to make money. You want to share your genius with the world world. You need to get your proposal written and sold. You need to deliver value at each step of the sales process. Here are three great ways to write coaching proposals that sell. You can be smarter than your competitors.
Less fluff, more value. Your job is to add value and solve your client’s problems. Nothing else matters. Your model, framework, tactic or magical gifts do NOT provide value to your client. Your solution is the value. Stay focused on the results you can deliver.
2. Fewer credentials, more results. Congratulations, your certification/ degree is a huge accomplishment. But nobody understands what it means. Make sure more space is devoted to results than credentials.
3. Make it easy to understand. If your buyer has to exercise their brain to realize how good your proposal is, then you haven’t done the work required to make it great. Keep the structure simple.
The Feedback Process
EXPERT CONTRIBUTOR: Tom Stone
We all talk about feedback a lot. Most leaders think they do it well. But my opinion is that we simply don’t know how to give feedback well. The problem is our inability to give good feedback creates problems down the road.
A lack of feedback gives people unspoken approval for unacceptable behavior. This false approval encourages people to continue patterns of behavior that don’t help them or anyone else.
But it gets worse. Everyone in an organization is constantly evaluating competency. So a lack of feedback not only affects the person who needs to receive, but it also affects everybody else who knows that feedback should be given.
A leader is never out from under the microscope. Giving good feedback is one of the surest ways to encourage effective behavior and to demonstrate leadership competency. It is a skill that can be learned, and we can learn to teach it and demand it as part of our culture.
Feedback leads to learning.
The Leadership Wisdom of Dogs
EXPERT CONTRIBUTOR: Krissi Barr
The attributes, traits and characteristics that separate leaders from the rest of the pack can be clearly seen in the behavior of dogs: loyalty, perseverance, friendship, teamwork, honesty, bravery, ingenuity, playfulness, curiosity and an unflagging desire for more information.I call it the Fido Factor.
Faithful leaders earn the trust of their team and their customers by doing the right things and living up to their word.
Inspirational leaders move people to do the meaningful and the extraordinary.
Determined leaders combine perseverance with a dose of fearlessness to keep moving toward goals.
Observant leaders are committed to taking in as much information as possible in order to make the best decisions.
Our Credo: (if you like these beliefs, then you’ll love us)
1. Chaos in the marketplace for “professional coaching” can be reduced with outcome-based protocols.
2. The strengths of professional coaches (e.g., integrity, fairness, collaboration, leadership, bravery) can be leveraged to co-create the future of professional coaching.
3. Teams are stronger than individuals. Collaborative projects reduce individual risk and yield higher rewards.
4. Expert leadership coaches and authors will contribute best practices and attract more users or followers.
FACT:
There are over 50,000 “professional coaches” in a $7B global industry that lacks professionalism. Literally anyone with a business card can self-declare that they are a “professional coach.”
OPINION:
The result is chaos in the marketplace, unethical practices, and a market ripe for disruption and consolidation.
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