Vendor | The Barefoot Spirit

Why You Need to be Thinking About Exiting Your Business (Even If You’re Never Going to Sell)

Michael Houlihan & Bonnie Harvey — Thu, 21 Jun 2018 17:00:24 +0000

Organize your files

We often hear business owners say, “I don’t need to think about an exit strategy because I’m not going to sell my business anyway.” But they do! And here’s why: Your potential acquirer’s due diligence is the perfect way to organize your files. Period.

What kind of documents would you want to see if you were buying a business? Certainly, you’d want to make sure you didn’t get sued by any undisclosed or unsettled disputes. You’d want to know that you wouldn’t be closed down because you didn’t have the correct licenses and permits, or that they weren’t up to date. You’d want to protect your self from buyers who might claim better pricing and terms from the former owner.

What kind of records would you want to see? How about the monthly and annual sales history from the beginning? How about the chart of accounts? What about the individual sales history for every customer? How about any and all sales contracts and agreements, formal or in correspondence? And how about all of their personnel records and all their vendor and supplier contracts just to name a few? You must protect yourself!

For Your Legal Protection

As you can see, you need all this stuff to operate your own business anyway, but there’s more! When we sold our business, we were surprised by a few requests that caught us off guard. And, if we had thought about it, we really should have had those items at the ready.

Perhaps the biggest surprise was the acquirer’s request for legal sign-offs for any and all art work, like logos, labels, advertising materials, trade dress, and any other custom art to help sell our business or our products. We thought that the fact that we had hired the artists and paid them was enough. No. They wanted to protect themselves, and rightfully so, from any artist coming back and claiming ownership and exacting a big payment later. This was especially true of the label design.

Another big surprise was the disclosures. Ironically, these were to protect us from anything that could come up later that we hadn’t divulged. Well, in 20 years of business, lots of issues come up! But they are settled, solved, or satisfied, and you move on, right? No need to keep track, right? Wrong! If any of that stuff raises its ugly head later, your acquirer has grounds to come back on you. We should have been keeping some kind of a journal or file or at least tagged these kinds of correspondences and settlements, so they could be pulled out later. As it was, we had to spend 17 hrs-a-day for over a week to get them all written down.

To Help You Run Your Business

Preparing your filing system for an eventual acquisition is just good business because you need to have this stuff too. It will help you run your business, reflect on the past, and keep track of your mistakes, challenges, and solutions. It will remind you to ask for those signoffs when any art job is done. Preparing your files will remind you to keep your entitlements up to date.

Besides, you may just want to sell your business someday.

And when you do, you’ll be ready! The longer the deal takes, the less money you will make. Why? Because the word will leak out, your sales manager will quit (and may take your key buyers with them). Your staff will quit (and take their key vendors’ relationships with them), your customers will want to wait to see what the new owner will charge, and what the quality of goods and services will be. And your suppliers will reign in your credit because you are a “short timer”.

In other words, when it comes to a business sale, be prepared from day one. Make it quick and quiet! Time is Money!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Why You Need to be Thinking About Exiting Your Business (Even If You’re Never Going to Sell) appeared first on The Barefoot Spirit.

Address the Assumption Behind the Question, Don’t Just Answer the Question

Michael Houlihan & Bonnie Harvey — Thu, 25 Aug 2016 17:00:32 +0000

The purpose of a question is to solicit an answer. But an answer to what? Just the question on its face? Or the deeper misunderstanding posed by the question? In business, when you are building a team, you must pay very close attention and read between the lines to ascertain not just what your new team member is asking, but more importantly, why he or she is asking that particular question.

Often the question posed shows a giant incorrect assumption about how your business works, how the customer receives your product or service, or what the various relationships are between the critical parties in your supply and distribution channels. What happens if you give them the short answer that just addresses their immediate query? They remain off track, but now they feel validated in their erroneous assumptions, and start to take actions based on wrong judgements that can hurt your business.

That’s why we recommend that you take the time to look through a new hire’s questions to discover those wrong assumptions and correct them. This may seem tedious and you run the risk of being accused of giving a speech where a simple answer would do, but as we say, “When the cement is wet, you can move it with a trowel, but when it’s dry, you’ll need a jack hammer!”

Questions that indicate deep misunderstandings show that there’s room for improvement to your orientation and training documents. You’ve got to teach the basics. You can’t assume new team members have a good foundation in business because they worked for a big company or have a big degree. We found incredible basic misunderstandings about business from some of the apparently most qualified for the job. Many times schools and their former bosses failed to lay the proper foundations.

We had a supply manager who asked repeatedly, “Why does the vendor always get the order wrong?” when the correct question was, “What do we have to do differently to reduce the likelihood of wrong orders?” This person had “a good college education” and had several jobs where it was OK to blame the other party when something went wrong – and that there was nothing he could do about it on his end.

We had a top administrator ask, “Why haven’t I had a raise in two years?” when the correct question was, “Why hasn’t our bottom line improved in two years?” This person assumed the money came from the owners, not the customers.

And we had a sales manager who asked, “Why won’t my distributer’s sales rep get the reorder?” when the correct question was, “How do we create an incentive plan that reduces out-of-stocks?” This person thought the distributer’s rep was going to perform on a new, unknown product like ours, without an additional financial consideration beyond their salary and commission.

Questions can tell you more than they ask – if you listen closely. If the question fits into the “this-doesn’t-make -any-sense-to-me” category, you’ve got the clue that you have work to do. There may not be any stupid questions, but there are some stupid answers and most of them are short. Short answers are saying, “Go away, don’t bother me!” but they are also asking for trouble down the line. Sure, workers can continue with their immediate jobs without a detailed explanation, but later they will surprise you with their deep-routed misconceptions.

Oh, and “Why do they call it duck tape? Because if it dries out, it can quack!”

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Address the Assumption Behind the Question, Don’t Just Answer the Question appeared first on The Barefoot Spirit.

Build Your Business using Guiding Principles – Part 3

Michael Houlihan & Bonnie Harvey — Sat, 16 Feb 2013 03:13:30 +0000

The salespeople who call on your business have much more to offer than the products and services they represent. They are a gold mine of information and are in a position to significantly help your business.

In this series, we have examined the guiding principles that were instrumental to our success in the belief that they will be valuable to you in your business as well. The questions we ask put you in the other guy’s shoes to help you discover how your basic attitudes and philosophies affect your important decisions and ultimately your success. Here is our third question:

3. How would you like selling to yourself? If you were a salesperson and had two clients, one who treated you with respect and dignity, and another who viewed you as a necessary evil, which one would get preferential treatment? If one client held the view that all salespeople were hucksters and tricksters, would you offer them the special deals? Or would you be more likely to tell the client who treated you with respect, the most economical ways to buy your products? If you knew significant market information affecting your industry or your customer’s business, which client would you share it with? If you could extend terms, reduce interest rates or avoid holding fees, who would you tell first, the client that took you on time, was glad to see you, and treated you like a strategic partner? Or the one who kept you waiting with the “it’s just another salesperson trying to sell me something, and they can wait,” attitude? When you look at relationships through the salesperson’s eyes, you realize how much they influence behavior. Why not treat salespeople like partners and get the edge?

We always treated our vendors and their salespeople as if they were part of our staff. We saw them as valuable allies who could significantly influence our bottom line. Here are four reasons why we wanted to be their favorite client:

Deals: The salesperson who calls on you may have special pocket deals. These are not on the price sheet but are given to the salesperson to help close new customers or gain larger orders. Often the supplier or vendor will have a close-out at a very attractive price. Give your salesperson a reason to offer these to you first!

Terms: Vendor salespersons are your advocates for better terms with their companies. Their recommendations can make all the difference, and their endorsement means they stand behind you. They know the process and can give you insights on how to maneuver successfully. When you give them respect, they will share what they know and go to bat for you!

Information: We are often too busy running our businesses to gather the latest news in our industries. Sometimes we are blindsided by a competitor’s move, a new opportunity, or a change in the laws or business practices. Your vendor’s salespeople know all about it! It is part of their job to stay on top of the ever-changing marketplace, making them a major source of information for your company.

Special Accommodations: Occasionally you will be offered an opportunity that you can’t take advantage of due to lack of supplies or terms. Your vendor’ salesperson can help, especially when it means more income for their company. Many times our vendors provided us with incredible opportunities to help us grow. They knew we would be loyal and beholding. Why? Because their salespeople were treated well by us and our staff. We made them feel important and part of our team.

Next time we will further reveal your basic guiding business principles by asking the last of the four questions, “Would you buy from yourself?”

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Build Your Business using Guiding Principles – Part 3 appeared first on The Barefoot Spirit.