THE END IS CLEAR:
A SURE PATH TO BUSINESS SUCCESS

“Begin with the end in mind” is a quote that comes from the second of Stephen Covey’s “Seven Habits of Highly Effective People.” It is based on the principle that all things are created twice: first in the mind’s eye and second in physical reality.  Early in the client / coach relationship, I find that many of the business owners I work with do not have their end in mind. It is as if they are running their business like a marathon without knowing how long it is or where the road will take them. Their actions are comparable to taking a vacation by jumping into an RV and driving down the road without knowing the direction they are headed, where they will arrive or at what cost. Starting with the end in mind means making sure that you know where you want to end up so that you can plan the means and methods by which you will reach your destination.

In 2007, ROCG, a Canadian company, conducted a study of 502 former CEOs who had transitioned from their businesses. When asked how many of them planned their exit, only nine percent (45) had taken the time to actually think about the end game and how to go about achieving it. Consequently, only 10 percent of the CEOs were happy with the outcome of their transition: i.e., the amount they received for their business and the process by which it was determined. The remaining 400 CEOs ended up being dissatisfied because they didn’t start with the end in mind.

I have the privilege of working with exciting people—entrepreneurs who are risk-takers and visionaries. They create business, products and jobs. They have an invaluable impact on the economy and their communities. They are 20, 30 or more years into their businesses when I meet them, and it is not uncommon to find them exhausted. Depending upon the economy, the competency of their leadership team and their available cash, they come to me in different mental or emotional states. Hence, early in the acquaintance I start with three questions:

The first question I typically ask is, “How financially ready are you to transition from your business?” Most of them are not ready to transition. They haven’t saved or created enough value in their business. Instead, they’ve been living a lifestyle business.

Secondly, I ask, “How mentally ready are you to leave your business?” If they don’t know what it means to be mentally ready, I inquire further:

  • Are you rich and ready to go right now?
  • Are you exhausted and saying, “Get me out at any cost!”
  • Understanding it will take time, are you willing to hunker down to save and create value?
  • Are you very well off, but still like playing the game and prefer to remain involved?

My third question is, “If you decided to leave your business right now, how ready is your business to undergo succession?” The number-one thing a leader must do to create a legacy is to prepare the business to be transitioned. If leaders do not prepare for succession, they are left with the alternative of closing their doors and selling off the assets (if they have any).

The unfortunate fact is that most owners are not mentally ready, they are not financially ready, and they don’t have a leadership team in place to continue managing the business after they exit. Consequently, they have no value to sell, which, sadly, is what happens when you fail to start with the end in mind.

As certain as death and taxes [one way or another], you will someday transition your business. Your choice is either to do it purposely or unexpectedly as a result of poor health or life-changing circumstances.  The question ultimately becomes, “What will you do about your business transition today?”

When you consider there are 28 million companies in North America, it’s astonishing how few of them create transferable economic value. Only four percent of those 28 million companies earn revenues greater than one million dollars. This may lead you to wonder, “What is a good-size company?” or “What constitutes a successful small business?” Perhaps you’d like your company to reach $10 million in revenues.  If so, you’d be among the top .04 percent. Believe it or not, less than one-half of one percent of all North American companies earn revenues beyond $10 million. Moreover, only 17,000 of them make it beyond $50 million in revenue. If your company does not generate at least $2 million in earnings before interest, taxes, depreciation and amortization (EBITDA), you will be hard pressed to find an interested buyer.

Although we currently enjoy a thriving economy, the companies that generate transferable economic value are few, primarily because the owners have not started with the end in mind. They did not consider what was necessary to scale up their business in order to create value. Either they simply got stuck or could not get their arms around their business any longer. The bottom-line: Something changed. Therefore, a great deal of opportunity for business growth and value creation remains unexplored.

There comes a time in the lifecycle of every business when an owner needs to ask, “Do I feel the need for an advisor, coach or mentor to help me take my company to the next level?” Inevitably, a well-run company will reach the point where its growth exceeds the experience or capacity of the owner and leadership team to move forward without help. The primary reasons companies become unwieldy is due to complexity. As we add employees, lines of communication grow geometrically. Growing from 50 to 100 employees is daunting, resulting in poor culture, an unengaged workforce and high turnover. New competitors with more compelling offers or better business models may suddenly appear. Cash flow may not be keeping up with revenue projections.  Any number of circumstances may trigger the need for guidance. Nobody can anticipate everything that can happen in business; we all need advice and a sounding board occasionally.

At times like these the critical question that owners need to ask themselves is, “Am I coachable?” When owners in this situation are referred to Cornerstone3, my first question to them is, “How ready are you to have someone come alongside you and work with you to take this company to the next level?” If the person is not coachable, then he or she cannot be helped, which is unfortunate for their business.  Historically, less than 20 percent of small business owners who encounter this inflection point feel compelled to reach beyond their limitations and seek advice.

Business ownership can be compared to athleticism. There are no athletes who make it to the top of their game without being coached. If you accept the necessity of a coach, the next logical question becomes, “Who should my coach be?”   For example, it is not uncommon for someone to ask me, “Why should I work with Paul Cronin and Cornerstone3?” My response is simply, “Is it a good fit—for both of us?” I interview prospective clients as much as they interview me because the Cornerstone3 brand is dependent upon our ability to create success. Therefore, our client success is a direct reflection upon us. I want to make sure that we start out with the right game plan and rules that will move their business forward to the level they aspire to achieve.

When I interview potential clients, I look for the entrepreneurs that have a fire in their belly and know that they want to “put a dent in the universe.”  They want to achieve something special and if they don’t have the end in mind, they are determined to gain clarity about it.  This is important to both of us because, in addition to accelerating their business success, we enjoy the journey.

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