Wikipedia defines a New Year’s Resolution as a commitment that an individual makes to a project or the reforming of a habit, often a lifestyle change that is generally interpreted as advantageous.
I’m actually not sure that New Year’s resolutions even work. Quitting bad habits, loosing weight, calling Mom more often and getting to church from time to time are all laudable resolutions. By no means should you forget about these.
But I’d like to plant a seed for those mid market executives that are beginning to think about 2010.
Here is my list of potential New Year’s Resolutions for the mid market executive.
1. Drop Uncle Joe as Chairman of the Board.
The best mid-market companies leverage their resources, including their Boards of Directors and Boards of Advisors. They use these business-savvy individuals as sources of wisdom and as sources of new business. All too many small and mid-market companies tend toward Boards of Directors consisting of friends and family. Your Uncle Joe may have great fishing stories to share at the board meetings, but he cannot offer the mentorship for the leadership team when tough, challenging business decisions must be made. Outside directors give businesses the opportunity to close the books every quarter, position the company for the future, talk about plans and leadership development and generally act like the big boys.
2. List the top 5 value drivers for your company.
The question middle market CEOs get asked all the time is “How big is your company?” In American business, size matters. Beyond the preoccupation with numbers and size is a much more important question, one that is rarely asked: “What impact does your company have in the marketplace?” Meaning, is the company a bit player, a role player, or the “leading man” in that space? Make sure you know what really makes your company valuable to the marketplace.
3. Schedule a vacation.
I did work recently for a company that maxed out after fifteen years in business at the $25 million mark. The three founders still can’t take vacations, because they haven’t figured out how to build effective teams, replicate themselves, or take other important steps in the value-building process. Like a lot of midmarket leaders, they struggle when it comes time to let things go. They have a deep fear that the company will go to pieces if they don’t handle everything themselves. Letting go means the ability to take a vacation, to bring in new leadership, and when the time is right, to leave. But that’s a tall order for most executives.
4. Make your strategy known.
You’ve got a new mission and direction as a result of your most recent offsite. Great! But how are you going to get word out to your thousand employees? Are you getting posters designed to illustrate your new mission/vision/purpose? Are you stuffing paycheck envelopes with a document listing the five new goals of the organization? Most mid-market companies don’t do these things. If there is a vision, the CEO fails to share it with others. Or if he does try to get the word out, he does so in what the Reverend Bill Hybels of Willow Creek Community Church calls the “Mt. Sinai approach.” Moses came down from Mt. Sinai with the two tablets denoting the Ten Commandments. That top-down approach might have worked for Moses, but it doesn’t work in today’s business climate. Keeping the strategy a secret is another recipe for trouble.
5. Make sure your company is structured correctly.
If you’re formed as an S corporation, you’ll have options when it comes time to exit. C-Corporations and Limited Liability Company (LLC) formations can be the right formation for your company but my preference is still Subchapter S. At exit time, you’ll have the option for what the IRS calls a 338(h)(10) election. This is a fancy term you may want to get smarter on, because it could save you big bucks. It is really important to make sure your legal and accounting teams walk you through this, because the benefits and burdens of a Section 338 may seriously affect the economics of a deal and may change your tax situation.
6. Identify your 3 key processes and make sure they are world class.
Far too many companies can’t figure out how to repeat what they did well. When you ask them how they won, they have no idea. They rarely run a post mortem of their winning or loosing bid with the objective of building a ‘lessons learned’ knowledge base. There are key processes that have to hum in order for you to be successful. Take a very critical look at each of the processes that are absolutely critical to your success and make it a priority to make each a differentiator.
7. Ask yourself if you’d rehire each member of your leadership team.
In Good to Great, Jim Collins offers the outstanding analogy of having the right people on the bus – the best possible mix of managers, tech people, sales and marketing folks, and so on. It’s not just about having the right people on the bus. It’s making sure that they’re also in the right seats. Ask yourself if you are settling. Look at the key positions in your company and ask yourself if you’d rehire each person on your team!
8. Think Big.
Recently, I worked with a company that was considering the purchase of a second business that would double its size. The founder of the target company wanted to retire, and it was extremely important to him to find a home for his staff. The work of the two companies was compatible, and as long as the target company’s owner ended up with his dream beach house in South Carolina, he was ready to take the deal. The deal represented a big risk for the buyer, though, not just financially but also in terms of his thought process. Excellence and comfort are usually enemies, and the owner of the acquiring company had to expand his consciousness, if you will, to allow for a new enterprise double the size of his current one. He was able to step up and make the acquisition, which was good. The problem is that post-deal integration doesn’t always get done. Business owners must have the courage to step up and make a strategic acquisition when appropriate, and they also need the skills to integrate the two companies after the deal has closed.
9. Build and execute a plan to scale the business.
It’s ironic – few people plan to fail, but even fewer plan to succeed. Companies have great ideas for success but they never ask, “What if this goes well? What infrastructure will we need? What about collateral for the sales force? What kind of credit line will we need?” Companies need to be able to scale processes, people, technology, the product or service they offer, and methods of delivery. Look at your leadership team. Can it scale? How about your channels of distribution? Your sales team? Your supply chain? We are not going to be in this recession forever and you’ve got to be ready to win.
10. Reinvent some part of your business.
Jack Welch once said that we all have to “eat change for breakfast.” This means that the only constant in the business world is continuous change. And yet, all too many companies try to live in the old world, and play by the rules that might have been in effect a decade or more ago. It just doesn’t work. Ever tried to impose a hierarchical corporate structure on employees in their twenties, today referred to as “Millennials” or Generation Y? It’s not going to work. Along the same lines, it’s easy for a non-tech-savvy CEO to say, “We don’t need to be on on LinkedIn or FaceBook or YouTube. I don’t even know anybody who goes on those places, aside from my kids.” I’ll tell you who goes on those places – your customers.