Rick Baker Thought Posts
Left Menu Space Holder

About the author

Name of author Rick Baker, P.Eng.

E-mail me Send mail
Follow me LinkedIn Twitter

Search

Calendar

<<  March 2024  >>
MoTuWeThFrSaSu
26272829123
45678910
11121314151617
18192021222324
25262728293031
1234567

View posts in large calendar

Recent Comments

Comment RSS

Willing suspension of disbelief: an entrepreneurial phenomenon

by Rick Baker
On Oct 2, 2014

From Wikipedia...

Suspension of disbelief or willing suspension of disbelief is a term coined in 1817 by the poet and aesthetic philosopher Samuel Taylor Coleridge, who suggested that if a writer could infuse a "human interest and a semblance of truth" into a fantastic tale, the reader would suspend judgement concerning the implausibility of the narrative.

Suspension of disbelief often applies to fictional works of the action, comedy, fantasy, and horror genres. Cognitive estrangement in fiction involves using a person's ignorance or lack of knowledge to promote suspension of disbelief.

The phrase "suspension of disbelief" came to be used more loosely in the later 20th century, often used to imply that the burden was on the reader, rather than the writer, to achieve it. This might be used to refer to the willingness of the audience to overlook the limitations of a medium, so that these do not interfere with the acceptance of those premises. These fictional premises may also lend to the engagement of the mind and perhaps proposition of thoughts, ideas, art and theories. [1] Suspension of disbelief is often an essential element for a magic act or a circus sideshow act. For example, an audience is not expected to actually believe that a woman is cut in half or transforms into a gorilla [2] in order to enjoy the performance.

***

Now, Suspension of Disbelief is not limited to fiction entertainment.

Suspension of Disbelief happens day after day in business...entrepreneurs do it repeatedly.

Entrepreneurs create and believe fantastic stories around their visions and goals. 

And from time to time, other people suspend their doubts and embrace entrepreneurs' fantastic visions and goals.

Then things really happen and every once in a while truth becomes more fantastic than fiction.

Driving Business Value

by Rick Baker
On Dec 2, 2013

A business owner drives business value by understanding self and understanding others, exercising self-control and influencing others to do the same, focusing on talents and strengths, planning the work and working the plan, making errors and learning from those errors, achieving small successes and converting them into larger successes, communicating in magnetic ways, and by continuously driving to deliver value to other people.

Understanding self and understanding others is important because it is the ‘grounding’ that helps the business owner gain other people’s respect and allows the owner to have self-motivated followers. We cannot motivate other people. However, we can demotivate other people. People who do not understand self and understand others inevitably, through ignorance, do things that demotivate other people. There is much more to be gained, however, reducing the likelihood of demotivating other people is, alone, a sufficient reason to understanding self and others.

Exercising self-control and influencing others to do the same is important because people react poorly to people who illustrate a lack of self-control. Sometimes, people are frustrated and demotivated by others’ lack of self-control. Other times, they are annoyed and angered. Either way, flight or fight, people do not do what bosses want them to do when bosses show them a lack of self-control. A business owner will not be able to influence behaviour in a constructive way if he or she lacks self-control.

Focusing on talents and strengths is important because everyone has talents and strengths and everyone has lack of talent and weakness in other areas. The greater the talents and strengths in one area the greater the lack of talent and weakness in other areas. Business owners succeed when they obtain the help of talented, strong performers. They have greater success when they put energy to best use by allowing people to unleash performance with their strengths. They have even greater success when they don’t waste energy forcing people to perform against their weaknesses.

Planning the work and working the plan is important because it allows the business owner to illustrate cause and effect. Repeated cycles of cause-and-effect confirm the repeatability of the work done at the business. The greater the repeatability the greater the value in the business. Also, the greater the repeatability the greater the scalability…the simpler the training…etc. One Hit Wonders do not have much resale value. Businesses that can illustrate a successful, sustained track record do.

Making errors and learning from those errors is important because (1) making errors proves you are innovative and (2) learning from your errors proves you are open-minded and change-tolerant. School of Hard Knocks education is of great value. Innovation is fundamental to surviving and thriving. Adaptation is the route to sustainability.

Achieving small successes and converting them into larger successes is important because it proves an understanding of leverage and the ability to take advantage of leverage. At Spirited Leaders, we have a philosophy – task-multiing is better than multi-tasking. Task-multiing is all about leverage, scalability, institutionalizing, efficiency and effectiveness…all excellent value-injection processes.

Communicating in magnetic ways is important because poor communication wastes and negates energy by distracting people from the business’s goals while magnetic communication injects a booster shot of energy and solidifies self-motivation. Magnetic communication engages and empowers. Magnetic communication is simple, clear, and laced with energy and enthusiasm…forward-driving enthusiasm. Magnetic communication is the key to the right business culture.

Continuously driving to deliver value to other people is important because it energizes people by providing quality shareholder experiences, quality employment experiences, quality purchasing and payment experiences, quality sales and collection experiences and all of these quality experiences are taken home to families at the end of the workday. Quality experiences spread. Quality experiences are contagious.

All of these things build value into business. The value exists in the people who perform the work and in the processes that help people perform the work.

 

 

Tags:

Entrepreneur Thinking | Succession

Some day you and your business will part company

by Rick Baker
On Nov 29, 2013

Some day you and your business will part company. Based on our Spirited Leaders’ experience, it appears about 2/3 of small-business owners do not realize some day they and their business will part company. While that sounds absurd, it is a reality in the small-business sector.

So, it is worth repeating: some day you and your business will part company.

Warning: harsh news to follow.

When you and your business part company you may not be aware of it…you may have succumbed to some illness and your business is no longer a priority in your mind. That happens from time to time…especially when the owner of the small business has avoided succession planning for 60 or more years.

That of course, does not have to happen. Some people experience an alternative exit…they decide why, when, and how they will exit and they create plans and perform actions that cause a smooth exit. This smooth exit involves a realization of the value embedded in their business. Money is transferred from the business bank to the owner`s personal bank…or to some other vehicle designed to minimize taxes, maximize usable money, and satisfy the needs of people.

The value embedded in the business is realized and money is transferred to the owner when the owner sells some or all of his or her ownership shares.

Beyond the money, there are many reasons why an owner may want to sell some or all of his or her ownership shares. And, there are many ways to accomplish the sale of ownership.

Two considerations to keep in mind as you grow the value in your business are WHY? and HOW?

WHY?

Why would an owner sell some or all of his or her ownership shares?

Here is a sampling of reasons why an owner might sell some or all ownership shares…


  

 

The key message is: there are good reasons to sell ownership and there are bad reasons. Here, good means higher selling price while bad means lower selling price. Higher selling price means higher return on time and effort invested; lower selling price means lower return on time and effort invested.

Of course, the amount of money received by the owner who sells shares is not the only consideration.

The other major considerations can be summed up in four words – the impact on people. This includes the impact the sale of shares will have on:

  • you, the seller…is the seller comfortable and will that comfort last?
  • your family…is your family comfortable and will that comfort last?
  • the buyer…is the buyer comfortable and will that comfort last?
  • your fellow shareholders…are they comfortable and will that comfort last?
  • your employees…are they comfortable and will that comfort last?
  • your clients…are they comfortable and will that comfort last?
  • your suppliers…are they comfortable and will that comfort last?
  • your community…are the people in the community comfortable and will that comfort last?

For many of these people, comfort will be tied to money considerations…not just direct money but indirect money. Comfort will be tied to a range of indirect-money considerations like, Will I keep my job?  Comfort will be tied to interpersonal relationship issues like, What will this place be like when the new owner injects his or her ideasNumerous other considerations will be in the minds of the stakeholders affected by the sale of ownership:

  • How will the new owner change the business?
  • When the new ownership is in place, will policies change?
  • Will payments to suppliers be affected?
  • Will product quality suffer?
  • Will the new owner close the place down and move production to the U.S.?
  • Why wasn`t I given the chance to buy those shares?

Most people tend to worry when change happens. Some of these worries are beyond the control of the person who is selling ownership shares. On the other hand, some of these worries can be alleviated if the person selling the shares wishes to do that. Succession planning and communication provide the opportunity to maximize people`s comfort levels.

Succession planning and communication: the processes that maximize both money for the person selling ownership shares and people`s comfort levels. That would be the Ideal Scenario.

The Ideal Scenario:

  • the person selling the ownership shares receives maximum money
  • the person selling the ownership shares is comfortable
  • the person buying the ownership shares feels the money spent is a good investment
  • the business continues delivering value to all stakeholders
  • all stakeholders are comfortable with the change and future prospects

As you create your succession plan, consider these things and assess how important each is to you. Consider your needs to be the highest priority: ensure your money needs are satisfied and ensure you are comfortable with the changes that will follow. Consider the needs of others.

Perhaps, you will rank other people`s needs in the following order:

  1. the needs of your family
  2. the needs of your fellow shareholders or partners
  3. the needs of the buyer
  4. the needs of your employees
  5. the needs of your clients and suppliers
  6. the needs of the people in your community

Perhaps, you will choose to plan ways to satisfy your needs and all of those other people`s needs. That would be the Ideal Scenario.

HOW?

How would you do that?

How would you satisfy all those needs? It will take time and much thought to figure out the best answers. The right approach is to start by considering your needs. One of those needs is maximizing the amount of money you receive when you sell ownership shares.

How do you do that?

In summary, you maximize the amount of money you receive by:

  1. Creating a plan to build value in your business
  2. Executing that plan, creating a track record of success….this means: having the right people in the right roles doing the right things and having top-notch processes to ensure scalability and transfer
  3. Creating a succession plan and working it so: people on your team know what success feels like, people on your team are groomed and able to take on increased responsibilities, and you are replaceable
  4. Nurturing buyers
  5. Knowing the value of your business
  6. Knowing the minimum price you will accept
  7. Being prepared and ready to sell when buyers want to buy

To whom might you sell your ownership shares?

Let`s assume you want to exit the business and sell all of your ownership shares. You might sell your ownership shares to:

  1. A financial buyer – a person who views your business as a good stand-alone investment
  2. A strategic buyer – a person who wants to gain advantage by meshing certain aspects of your business with other investments
  3. A family member who has been groomed to succeed you
  4. A family trust or holding company
  5. A fellow shareholder or business partner
  6. One or more of your employees
  7. A local competitor
  8. The public...i.e., go public by making a public offering
  9. Other creative options

Or, you might sell the assets in your business and shut the business down.

While it is natural to want to keep your options open, to maximize the money you receive when you exit you will need to reduce the above list to 2 or 3 possibilities. This is essential because – to maximize the proceeds from the sale you will want to strategize then take actions and the best strategies and best actions will differ depending on the target buyer. Some of the options will not apply – for example, if you do not have a family business then you can take the family-business options off the list. On the other hand, if you do have a family business then you must give the family-business options your best thoughts…before you decide to remove them from the list or decide to keep them on the list.

Tags:

Entrepreneur Thinking | Family Business and CFFB | Succession

You are in business to generate money.

by Rick Baker
On Nov 28, 2013

Yes – there are many other reasons why you are driven to be in business. Regardless, you are in business to generate money. You have set a plan for your business and those plans include the generation of money to cover costs, which will include your personal remuneration.

When all of the costs are covered there will be profit…you have planned for gross profit. Linked to that profit, you likely have planned to make bonus payments to employees, including yourself and to other owner-operators, if any. After those payments are made, the remaining profit can either be left in your business as retained earnings or it can be paid out as dividends to owners.

There are lots of choices in business.

And, business is about generating profits and personal wealth.

Don't be shy about that.

Profit is a valuable thing in business.

Be clear about that.

Talk about profit.

Talk about profit and its relationship with your other corporate Values.

Use visual tools to clarify the picture as you see it.

For example...

In summary, you have 3 ways to receive money from your business:

  1. Salary [wages],
  2. Bonus, and
  3. Dividends.

Many might view the following question as rhetorical.

Nonetheless, we will ask it:

Why would you want to receive money from your business?

The answer is: (1) to cover your current needs for money and (2) to cover your future needs for money.

Few small-business owners will argue with both those reasons.

Fewer small-business owners will do both of them.

Most small-business owners are challenged to succeed at the first one. In fact, succeeding at the first one consumes so much time and energy, most small-business owners never get around to working on the second one.

Why? 

Because most small-business owners fail to plan. When they fail to business plan they pave the path for failing to succession plan. Time spent planning and particularly time spent succession planning keeps the end-point vision front and centre in the business owner’s mind. That vision is linked to longer-term goals. So, longer-term goals are also front and centre in the business owner’s mind. When the end-point vision and long-term goals are front and centre, actions have guiding lights to follow. With guiding lights in place, the likelihood of success increases.

This is another key reason you should create a succession plan.

Separate yourself from the pack.

About the pack: Most small-business owners will be acutely aware of the need for current transfers of money from their business bank to their personal bank. They are acutely aware of the need because they know they need personal money to buy food, pay for a place to live, pay for a car…and pay for a long list of other things. Most small-business owners will expend a great deal of energy figuring out how to make these money transfers to cover their immediate, personal-money needs.

Yet, most small-business owners will expend little or no energy figuring out how to make money transfers to cover future needs. As a result, most small-business owners are ill-prepared to cover personal-emergency cash needs and even more fail to prepare for their retirement-money needs.

Increasing the likelihood of business success…that is one of the main reasons a business owner must perform succession planning. As Napoleon Hill taught in his 1937 classic ‘Think And Grow Rich’ –

“Plan Your Work and Work Your Plan.”

Tags:

Business Plan: Writing Plans | Entrepreneur Thinking | Succession | Values: Personal Values

Thought Tweet #862

by Rick Baker
On Nov 5, 2013

Thought Tweet #862 Business Valuation...difficult to have it survive the test of time...near impossible to do under dispute.

 

The Thinking Behind The Tweet

I favour Puts & Calls. Even wide-spread Puts & Calls have merit...at the least, they narrow disputes in terms of dollars...and they neuter frivolous claims.

 

Tags:

Entrepreneur Thinking | Thought Tweets

Thought Tweet #838.5

by Rick Baker
On Oct 2, 2013

Thought Tweet #838.5 Over time, entrepreneurship beats the ego down to a manageable size.

 

The Thinking Behind The Tweet

To succeed for any extended period, an entrepreneur must have a balanced ego. When an entrepreneur's ego gets out of control, sooner or later, problems begin to arrive in waves. Like water on rough stones, repeated waves of problems take the cutting edge off of an entrepreneur's ego...offering the entrepreneur the opportunity to become a business leader.

Tags:

Entrepreneur Thinking | Leaders' Thoughts | Thought Tweets

Copyright © 2012. W.F.C (Rick) Baker. All Rights Reserved.