Zig When Everyone is Zagging

#inspirngbusiness

wisdom [wiz-dam] noun - a gift often gained from failure, the constant growing through the teachings of others, the lifelong nourishment of the soul and mind

I caught up with a few friends over the weekend. I wondered how the general economic narrative of business being flat and people tightening their belts reconciled with a very large crowd downing $12 craft beers and $25 Pizzas. The place was packed for a Sunday afternoon.

So I wonder if it’s a narrative and justification to throw our collective hands up in the air because we are all just tired.

Who could blame us? Since 2020 business has felt like a washing machine that oscillates between a deep turbulent wash and a fast spin dry, and then back into the wash.

I’m reminded of past ‘bad times’ when interest rates were high and the stock market crashed. When the Taxi driver tells you which shares to buy, it’s a massive ‘SELL’ signal. And when the stocks went down, it was the best time to ‘BUY’.

The opportunity is doing the opposite of what the crowd is doing.

Warren Buffet “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

“Get your business ready for sale so you don’t have to sell it.”

So, if the next 12 to 18 months is looking soft for business (let’s assume the narrative is right), what alternative approach could you have for your business?

I help business owners prepare an exit strategy so I’m going to focus on that today.

But the concept I’m about to share is universal and applies to any business owner.

The concept is “Get your business ready for sale so you don’t have to sell it.”

Imagine if you invested in the business and got it to a point that it ran itself. Would you want or need to sell it?

The panic about dropping valuations is already seeping into the conversations amongst Accountants and Business Brokers. Financial Planners are revisiting retirement strategies especially where the business is the major asset in that strategy.

There is already a race to the bottom.

So Zig. I can guarantee you that not many business owners are thinking about keeping their business.

Many are over it and the last thing they want to think about is investing another 18 months into yet another ‘strategy’.

If anything, the advice they are getting is, “Improve the profit and that will make the business more attractive”. That immediately conjures up fear in the staff about who will be the next efficiency victim.

There might even be some who think that AI is the panacea to their woes and it will be an easy $10K or $15K upgrade and the problem’s solved.

What this strategy fails to consider is Who is the business owner doing this for?

Who is going to be interested in a profitable business that requires 70 plus hours a week to manage?

The buyers of the future are saying now they want a dividend and a lifestyle. Not a job.

Shifting your mindset to “I don’t need to sell” suddenly means your business sequel looks different.

First thing to consider is your time-frame. How many years do you want to continue to work at the same pace as now?

You can imagine what you want to be doing in 3 years. Now imagine what it would be like to be the Chairperson and oversee the business. What does life look like working 1 hour a day, anywhere, and living off an annuity income (dividend)?

Can you reduce your product range and improve the efficiency and profit?

Do you wonder why that legacy product is still on the shelf?

Can you reduce customers who are not profitable?

Would you have a smile on your face when you send a polite email to the pain in the arse client and say “It’s not you, it’s me.  I think you would get more value by being serviced by someone else. And here are their details.”

Invest in your staff. When everyone is investing in technology, you are investing in developing the capacity and capability of your team.

Sure, technology might be a skill they develop to maximise its use. But it’s not the technology that is valuable, it’s how it’s used. And it frees up your time when your staff are Accountable.

In these uncertain times your staff are wondering if they will have a job next week. When you invest in them they feel safe and there is a massive deposit into the Trust Bank and the Loyalty ROI.

One story of my time in PNG shows how zigging when everyone else is zagging pays off.

The challenge I was given was to reverse the fortunes of the Property Division of a Construction company. There were 120 staff, 135 rental houses and a 50 Room Hotel and Restaurant. And I had never worked in property or hospitality. Sure why not. How hard could it be!

They hadn’t had a Manager for two years, so needless to say the place was not running smoothly.

The staff were trying really hard, but there was no guidance or support.

For the first month I did nothing. I made no changes. It drove the MD crazy as he kept asking me what the plans were. I had a few ideas but I honestly didn’t know what would work.

I needed to understand the product, the finances and most importantly the people.

The Hotel Manager was one of my ex-leadership and management program students, so she had some idea of the approach I was taking.

I also had Mama Maggie, a long time employee, who was the Office Cleaner. She was uber intelligent and she became my mentor in the organisation’s culture. I’ll come back to Maggie later.

When everyone was Zigging we Zagged.

Invest in People

My peers (4 other Division Managers) were being encouraged to be more controlling of their staff to limit mistakes.

I resisted and investing in skills development and testing capability through delegation.

There were mistakes made, but I made sure they were small learning mistakes. Again driving the MD mad. In less than 3 months the staff were confident in their ability and the mistake rate started to fall.

After 6 months they had sufficient experience in making decisions on their own that I was rarely asked to assist.

Do the opposite to the competition. Carve out a place and dominate it.

We rationalised the product mix and shifted a percentage of the houses from permanent rental and annexing them to the Hotel. This gave us a unique position offering spill accommodation for small groups.

We became an attractive alternative to NGO’s who travelled in groups. The competition was targeting high end Executive and Overseas Travellers. We were zigging.

Mama Maggie was integral to this innovation as she overheard the Hotel Manager and I discussing the positioning opportunity. Maggie suggested we look at annexing 3 of the houses. Brilliant. She ended up being promoted to the Cleaning Supervisor and one of my strongest allies.

We each made some massive deposits into the Trust Bank.

There were obviously more than just these improvements, but the concept was to free my time so I could focus on Management. As my Management time increased so did the results.

The result was we made our first profit in 2 years and I was working sensible hours.

My Peers were stuck answering questions from their staff whilst I was off playing golf with my clients. That’s my definition of Management.

It wasn’t always easy and there were plenty of times where I had to take a ‘slow down to speed up’ approach.

Hasten slowly. I had time to think about how could zig when everyone else was zagging?

So the concept is not to focus on improving profit. That’s a lazy approach and leads to just cutting costs, not increasing the value and attractiveness of the business.

Rather, wonder how you can live your life as the Chairperson of your business and retire into your business.

You then have the choice to stay and enjoy the fruits of your business or sell at a premium and enjoy the fruits of your business.