Funny, But True: Give a Second Thought to That Second Chance

You have an employee who makes a big mistake, but comes to you to admit it and offers a solution. So, you forgive him and move on. We all mess up sometimes, and this employee handled it correctly. You give him a second chance.

As Warren Buffett said, “I make plenty of mistakes and I’ll make plenty more mistakes, too. You’ve just got to make sure that the right things overcome the wrong ones.”

But some mistakes aren’t forgivable and employees who make them don’t deserve a second chance.

publishing-scamI once worked with a company whose sales manager was running a scheme. He would sell their widgets to a customer who was a partner in his crime. After the sale, the sales manager would issue a credit, reducing the price of each widget by $1 to that customer. The sales manager and the customer split the extra $1.

The scheme went undetected and over time amassed both the sales manager and the accounts receivable manager a lot of money.

The fraud was only detected because the sales manager accidentally sent a credit to the wrong company, which reported the error. The fraud was uncovered and both managers were fired. But they were not prosecuted for their crimes. (I always advise business owners to prosecute thieves. Read more about that in “Why You Should Always Prosecute Fraud”)

And it turns out the sales manager was actually really good at sales, and once he left, sales declined 25 percent. The CEO couldn’t find a suitable replacement in the following year, so what did he do? He hired back the thieving sales manager.

The CEO’s explanation? While the sales manager never paid any of the money back, he said he was sorry. During that past year, he had found God, repented his sins and begged for forgiveness as a friend and long-term employee.

He lasted six months, until he moved. To jail. Where he was sent for stealing again.

Beyond the obvious lessons of prosecuting fraud and not rehiring people who steal, the other lesson is that some people deserve a second chance and some don’t. As a business owner/CEO you need to know the difference.

 

 

 

5 Mistakes to Avoid When Selling a Business

Most likely the biggest financial transaction you’ll ever be involved with, selling a business the right way is crucial to your future financial health and the continuation of a business that you’d like to see succeed.

Selling your business is literally, a Big Deal. Here are some mistakes to avoid when selling yours.

1. Identifying the best buyer early and negotiating only with that entity

Wow, that was easy. You’ve already found a buyer and now you just need to negotiate on price. You’ve told all the other potential buyers the business is sold. So many things can happen to derail a deal — problems with financing, inability to come to terms on the value of your company, negotiations that lead nowhere. Sometimes the buyer changes his mind and walks away from the deal.

photoA friend of mine has a big rock in his office with block letters on it that read, “Nothing is set in stone.”  Remember that when negotiating the sale of your business and keep your options open when identifying and negotiating with buyers.

2. Considering only the dollar amount when looking at offers

If this is a business you started, or a family business you took over, chances are you care a lot about its ability to thrive. And its reputation. As Warren Buffet said, “It takes 20 years to build a reputation and only five minutes to ruin it. If you think about that, you will do things differently.”

If you care about continuing the reputation you’ve built up for your company, take a deep dive into the culture and reputation of the companies looking to buy yours.

3. Handling the sale yourself

The saying goes that a man who is his own lawyer has a fool for a client. I would venture to say the same thing about someone trying to sell his business on his own. You need to hire business professionals, which may include tax lawyers, business advisors and a business broker. Some people try to save money, figuring they can handle the whole thing on their own. Respect your business and your time enough to hire someone to get the best possible deal for you.

4. Setting a price based on what you think your company is worth

Although you should be aware of a general market value of your business, to get its true worth you need to go through a thorough valuation process. Hey, maybe you’ll be pleasantly surprised and find out it’s worth more than you thought.

5. Not seeing your business realistically

In a recent Dove ad, women described themselves to a forensic artist who then produced sketches from their description. The resulting sketches bore little resemblance to what the women really looked like, and were actually much less attractive. (The video has been watched 55 million times on YouTube!)

Yes, that’s on a different topic about women and their self-images. But it’s a good illustration that we don’t always see ourselves realistically. And we don’t always see our businesses for what they are either.  Dealing with daily crises and all the things that go wrong, we may sometimes overlook all the positive aspects of our business. Or on the opposite spectrum, we may be in denial about the underlying problems that will affect its value.

Jim Collins, author of “Good to Great” said, “The challenge is not just to build a company that can endure; but to build one that is worthy of enduring.”

Make sure your business endures long after you’ve moved on.

Feeling Thankful for CEOs, Companies That Get it Right

“Feeling gratitude and not expressing it is like wrapping a present and not giving it.”

  ~William Arthur Ward

In the spirit of expressing gratitude during this Thanksgiving week, I want to thank a few CEOs and companies that get it right and for whose policies I am thankful:

Delta CEO Richard Anderson, who is bringing back the traditional values of the airline company and says that we need to recognize that only companies that have a sense of integrity survive. He has a bell on his conference table and during meetings anyone who thinks a rule is being broken can ring the bell.

David Siegel, CEO of Westgate Resorts, who before the presidential election warned his 7,000 employees that they could face layoffs if Obama was re-elected. Instead he gave everyone a five percent raise.

Ninety-three billionaires have taken The Giving Pledge, including (clockwise from top left) Warren Buffett, Bill Gates, Ted Turner, George Lucas, Larry Ellison and Mayor Bloomberg.

• The department store Von Maur because it refused to bow to the Black Friday madness and is staying closed on Thanksgiving Day so its employees can enjoy the time with their families.

TOMS shoes for donating a pair of new shoes to a child in need for every pair the company sells. To date the company has given away two million pairs of shoes in 25 countries.

• Warren Buffet and Bill Gates for starting The Giving Pledge, a campaign to encourage very rich people to give most of their money to philanthropic causes. Ninety-three people have taken the pledge, representing untold billions of dollars of wealth that will go to do good in the world.

Southwest Airlines for not charging those rip-off change fees.

• Retired CEO of Xerox Corporation Anne Mulcahy. Although the company’s stock dropped 15 percent the day her appointment as CEO was announced in 2001, she led the turnaround of a company that was $18 billion in debt, on the verge of bankruptcy and facing an investigation by the SEC. Anne spent her first 90 days flying around all the country just listening to peoples’ perspective on what was wrong. By 2005, Xerox earned $978 million on $15.7 billion in revenue and had no core debt by 2006.

Here’s a quote from Anne that CEOs in the midst of trying to salvage failing companies should take to heart:

“By the time I stepped down as Xerox’s CEO in 2009 — and as chairman in January 2010 — Xerox had become the vibrant, profitable and revitalized company that it still is today. What made the difference was a strong turnaround plan, dedicated people and a firm commitment from company leaders.”

Lastly, I am thankful for all the businesses that hired me and allowed me to make a difference for companies and their employees.

And it’s thanks to them and all the lessons I’ve learned during my decades of experience that I have plenty of material for my soon-to-be-published book, “How Not to Hire a Guy Like Me.”