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Education is critical for everyone
Sunday, February 26th, 2006

How many times do we hear high school and college athletes say that they don’t need to go excel in school because they are going to “hit the big time” with their athletic prowess?  The length of an professional athlete’s career isn’t very long.  At the end of the career, what is the athlete prepared to do?

The NFL’s off-season business training for players is a good idea because it helps the professional athletes and their families.  It is an even better idea for the message that it sends to students in college and high school.

Here is an article from the Dallas Morning News about the NFL’s program which costs $10,000 per person.  With average starting salaries of more than $230,000, NFL athletes need training to help them make good business decisions. 

Posted in Business Trends, Tips for Students | No Comments »



Diversity in business is related to diversity in academia
Saturday, February 25th, 2006

When we talk about diversity in the US, we often consider factors like age, gender, hometown, state, race, national origin, education level, schools attended, occupation, family situation, goals, prior employment, and other factors. 

We assume that differences among these factors leads to different views among and between the groups.  After all, does a college-educated caucasian male in his mid 20s who lives in a small town in Iowa see the world the same as a college-educated caucasian male in his mid 20s who lives in New York City?  A college-educated black woman in her mid 30s who lives in New York City?  A college educated Asian-American male in his mid 20s who lives in San Ramon, California? 

Survey results tell us that these individuals are likely to have different opportunities, different values, different pasts, and different views of the future.  In short, they live in different worlds.

Experience

It is easy to assume that other countries are like us.  This is a particularly easy assumption to make if the other country speaks a language that is so similar to one’s own that it often seems the only differences are those of a word or two here and there.   

Experience indicates that, in some countries, most notably those in Europe, diversity categories may not translate to different opportunities, values, pasts, or views of the future. 

Diversity in Academia

The Oregon University System Diversity Report 2005 paints a picture of a student body that is becoming more diverse.  The study defines ”diversity” to include national origin, ethnicity, cultural identity, disability, geographic diversity, age, gender, and language.

Reports from entities like the Oregon University System can help us anticipate future trends that we need to evaluate and prepare for in the business setting.  The most recent report suggests that, at least in Oregon, diversity is increasing in the student population. 

So far, the Oregon report is the only one I’ve found which is aggregated at the state level.  Schools in many states have diversity plans at the school or even by discipline.  Go here to see University of Texas’ McComb School of Business’ efforts to attract minority students into its nationally recognized program. 

Posted in Business Trends, Cultural Issues, Resources, Tips for Students | No Comments »



Business Puzzle - Delegation
Saturday, February 25th, 2006

Joe is starting a business providing consulting on IT topics.  Joe hates accounting.  Joe meets with a potential accountant for his business, Paul. 

Here are two descriptions of what happens from there: 

Choice 1:  At the meeting Paul talks about his accounting experience.  Joe does not ask specific questions about accounting.  Joe does a reference check and is told that Paul has the degrees he claims to have.  References also indicate that Paul is a really nice guy.  Joe hires Paul and tells Paul to let him know if anything comes up and that he has complete confidence in Paul’s ability.  Joe also says that Paul should let him know if anything comes up than requires Joe’s attention. 

Choice 2:  At the meeting, Joe asks questions of Paul about different accounting issues, asks specific questions about accounting issues that Joe has encountered previously, and determines that Paul understands accounting.  Joe checks Paul’s references and confirms that Paul is a CPA.  Once hired, Joe gives Paul specific tasks, oversees Paul’s work, establishes performance standards, and gives Paul more authority as Paul demonstrates that he is able to handle the work and the workload.  On a regular basis, Joe does spot checks to make sure there are no issues.  On a quarterly basis, Joe reviews Paul’s performance against the standards Joe had set.

Questions

What are the pros and cons with these choices?  Which is better?  Why?  Which approach is generally encountered?  

Posted in Business Acumen, Solving Problems | No Comments »



Job search tips 3
Friday, February 24th, 2006

Recently, I posted a couple items about job hunting, including this one. 

Today, my friend Paul shared some tips that he had been given in connection with his job search with his network.  Here are a few tips that I shared with Paul.  Perhaps you will find them helpful too…

  1. Look for a new job before leaving a current job.  This is true even if one wishes to relocate.  Weekend trips to become familiar with the area and interview can be beneficial. 
  2. Be selective.  Identify goals, target specific companies and positions in those companies. 
  3. Learn about a potential employer through informational interviews, research, reading the firm’s website, and networking.
  4. Check written materials to ensure proper grammar, correct spelling, action verbs, and consistent punctuation. 
  5. Explain how your background will help the potential employer meet its business objectives. 
  6. Dress appropriately and arrive a few minutes before any interviews or meetings.  
  7. Turn off and put away all electronic devices. 
  8. Treat the entire time that you are at the firm’s location or meeting with the company as a part of the interview. 
  9. Demonstrate an understanding of the business issues that are being encountered in the company at which one is applying. 
  10. Illustrate key points with appropriate examples.
  11. Demonstrate flexibility, creativity, ability to put oneself in the customers’ shoes, and loyalty. 
  12. Maintain composure.  Interviewers at some companies use ”off the wall” interviewing approaches at some companies.  When these approaches are used, employers may be judging the applicant’s professionalism and ability to deal with the unexpected. 
  13. Be yourself and be professional.  Employees spend far too much time at work to put on a charade.  It is better to be turned down at the interview stage than to be stressed because the job one gets is not a fit. 
  14. Ask appropriate questions.  Remember an employer is interviewing you and you are also interviewing the employer.  
  15. Send a thank you note.  Courtesy is an indication of professionalism.

What other suggestions do you have for job applicants?

Posted in Planning Tips, Solving Problems, Tips for Students | No Comments »



Common sense tips about valuing a business
Friday, February 24th, 2006

Over the past several months, several people have asked me how to value a business in the context of a sale.  While I have not handled the valuation of a business, it is much like the valuation of anything else…

How does one decide how much to offer on the purchase or sale of a house?  Just like one’s house, a business is worth exactly what a willing buyer and a willing seller, both of whom are free to walk away, agree that the business is worth. 

What issues arise in the context of valuations?  How to handle an owner that wants to be involved ever after the deal is completed?  What are some of the options associated with valuing a small business?  These are three excellent questions. 

Issues

In the valuation, the buyer and the seller often have differing opinions over the price and the nature of the transaction.   

In some cases, sellers are willing to forego part of the revenue so that they can make sure the buyer is aligned with their vision for the business.  Some would say this is wrong, or right.  It seems to me that each of us may have different priorities. 

At times, one may feel sympathy for the person whose interest is being acquired.  This can happen in the context of a death, for example.  It can be difficult to keep a business perspective in such situations. 

Relationships are important in two ways.  Sellers and buyers often say they want to be ”fair” or do the “right” thing.  What do these terms mean?  How are they measured? 

Some sellers are under financial pressure while others are able to walkaway from the deal.  These aspects impact the price of the business in question.

Some buyers are anxious to purchase the business while others are less serious about the deal.  This too impacts the price.

In connection with the purchase or sale of a business, one issue that arises is communication obligations.  How are customers going to be contacted and informed of the sale?  Who will be responsible for this communication?  When will the communication occur?  What will the communication say? How about suppliers or creditors?

On-going Involvement

The seller’s on-going involvement in the business after the sale is an issue for some small businesses. 

Sometimes, the seller wants to be involved.  At other times, the issue is one of necessity.  In some cases, the buyer wants the supplier to be involved for convenience.

Proceed with caution in this area.  The business is the seller’s baby.  The buyer is likely to want to make changes.  For the seller who has poured his or her heart, mind, and soul into building the business, watching changes made to one’s baby is a very painful experience.

My best advice in this area is to help the buyer, if necessary.  But if it is necessary to do so, do it as a paid consultant on an hourly/daily/weekly basis.

Options

When one is trying to value a small business, there are a host of methods for doing so.  There is no one “right” answer on the question of what a business is worth.

Business advisors such as attorneys, CPAs, economists, bankers, and experts in the business area are sometimes asked to set the price, or to help one or both parties establish a baseline price.  Sometimes, the parties simply talk through the price. 

Formulas are frequently used to justify the offer or counter- offer.  

Ideas and Experience

Have you been in the situation of selling a business or business unit?  If so and you would like to share your experiences or lessons learned, please feel free to post that information in the comments to this blog.

Posted in Business Tips | No Comments »



Flexibility helps us solve many problems
Friday, February 24th, 2006

One of the debates that people often engage in is whether to do something one way or another.  It seems to me that the key in most things is being flexible and adapting one’s approach based on the situation, the reaction of others, and our style.

That is kind of an abstract concept, so let’s talk about this in some concrete situations.

Examples

This debate arises in many areas.  Two areas where it has arisen in my recent interactions have been in the context of networking and in the context of communications. 

Networking

There is an on-going debate over the whether it is better to have a lot of connections that one barely knows or a few connections that one knows extremely well.  Some people in online networking communities claim to network with 10,000 and 20,000 people.  Others claim that they only network with 20 people. 

Depending on one’s business model, either approach might work.    

Questions

Have you ever seen someone who just asks questions? Or someone who never asks questions?  How much fun is it to engage with either one?

With the first person, we can feel like we are on the receiving end of a machine gun shooting questions in rapid fire fashion.  With the second person, we can feel like the person we are interacting with is self-absorbed and doesn’t care about our opinions.  

Options when our approach isn’t working

Suppose that our approach in networking or questioning isn’t meeting our needs.  What can we do? It seems to me that we have a lot of options.  These options include: 

  1. Giving up and walking away
  2. Applying the same strategy and doing it harder
  3. Modifying the strategy to the opposite extreme
  4. Modifying the strategy to a lesser extent
  5. Blaming the other person for what is occurring
  6. Accepting responsibility for the issue, and trying to come up with a solution that fits the situation

Solutions

A lot of people like to be handed solutions on a silver platter.  That said, the solutions that come on silver platters tend to be a little tarnished.  Some may hit the mark.  Others are  totally off-base.  Most of the time though the solutions that are proposed when people insist on an answer without explaining their views, goals, parameters, and challenges don’t solve the problem.  Instead, these “solutions” transfer the problem to someone else or lead to a different series of problems that may be even worse than what one has to start with.

Because most of the solutions that are proposed don’t work, it is tempting to think that the problem cannot be solved or to accept conventional wisdom and try to live with the situation.  It is tempting to simply take a different approach, without considering what is occurring. 

There is a better way.  If one is trying to solve a serious business problem, the best approach when confronted with a problem is to take a step back.  We should look at what is occurring and develop a plan to address what is occurring.  Here are a few questions that can help us develop an understanding of the situation:

  1. What is occurring?
  2. When is it occurring?
  3. Who is involved?
  4. Why is it occurring?
  5. How is the situation arising?
  6. What circumstances will exist when the situation is resolved?
  7. How will we know that the situation is resolved?
  8. What steps do we need to take to get from where we are, to where we need to be?
Posted in Solving Problems | No Comments »



Answers to question 1: What does debt rating reduction at GM Mean?
Thursday, February 23rd, 2006

This post discussed the GM debt rating reduction and posed a variety of questions about what this change means.

The first questions that were posed related to whether we would want to enter into a large agreement to purchase GM’s cars and the pros/cons of such a purchase.  Here are a few ideas that one might encounter with question 1.

Comfort with Purchase

Whether one is comfortable entering into a large agreement to purchase GM cars will depend on one’s situation. 

The factors that may impact one’s decision include: 

  1. Use of the cars.  If one is purchasing them as police cars, one is likely to have a different perspective than if one is purchasing the cars for city code inspectors to drive.
  2. Supplier-provided maintenance desired.  Some customers may provide maintenance themselves.  Others will rely on the supplier for the maintenance.  If the supplier is responsible for maintenance, GM’s financial condition is likely to be more important than if the customer provides maintenance itself or uses a third party for maintenance.   
  3. Total value of the cars being considered.  If the customer perceives that the purchase is large, the customer is likely to be more concerned than if the customer perceives that the dollar value of the transaction is small.  Small and large are relative terms.
  4. Risk tolerance.  Some companies and some individuals have higher risk tolerances than others.  If one has a higer risk tolerance, one is less likely to be concerned.  The converse is also true.
  5. Nature of the transaction contemplated.  Is the customer seeing the transaction as simply buying cars, or is the customer expecting to build a relationship with GM?  Is the acquisition seen by the customer as strategic or tactical? What is the worst thing that can happen from the customer’s perspective? 

Pros

In this situation, one may be able to negotiate very attractive prices for the purchase of a fleet of vehicles.

GM may be incented to offer customers better terms than usual in order to increase revenue.

Cons

There are a variety of unknowns when one is dealing with a firm that is under financial pressure.  Some firms are forced to cut service to the point where performance under agreements is adversely impacted. 

If one is counting on trading the vehicles in to purchase additional or replacement vehicles down the road, will GM’s financial condition reduce their value?

Posted in Business Acumen, Current Events | No Comments »



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