Berkonomics

Why not share your liquidity success with those who got you there?

Berkonomics

So, you are close to selling your company, and counting the profits a bit early. Well, that’s human nature. Here’s a thought for you to recall later when and if the event happens. Remember those who got you there.

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Selling your business? Find the emotional buyer

Berkonomics

This is one of my favorite insights, since I lived this one in a positive exit from my computer business. Types of business buyers expanded. Most people will tell you that there are two kinds of eventual buyers for your business: financial and strategic.

Take advantage of the good times to build stakeholder loyalty.

Berkonomics

Loyalty is a hard-earned commodity. There are several times when stakeholder loyalty is tested to the limit. For employees, a late or missed payroll is the ultimate test of corporate loyalty, divorced even from an employee’s ability to make do without a paycheck.

The most satisfying life journey is never about the money.

Berkonomics

Allow me to reminisce. This is the final post of this cycle. Next week we return to the start of the journey, focusing upon the “what and how” to ignite a successful enterprise from start-up to exit. But, for this short moment…. Looking back over an entrepreneur’s journey.

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Money is not the only measure of success.

Berkonomics

I am sure you heard of Maslow’s Hierarchy of Needs that motivate our behavior, in which Abraham Maslow laid out a human’s needs – from the physiological, to safety, then love and belonging, on to esteem and finally self-actualization. A little too esoteric for you? Let’s make it more personal.

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Can you defend your pricing niche against your competition?

Berkonomics

This week, we continue our series on marketing and positioning. There can be nothing more important in your business planning that selecting the proper pricing niche, making your story clear using that niche, and the defending your position against the competition.

Faster is sometimes more valuable than better.

Berkonomics

And d oing both well usually wins the day. This is one of those arguable insights, where both sides win. Dell is a great example of emphasis upon fast, creating a customized computer in 48 hours or less, bringing in assemblies and components just-in-time to make the assembly line.

Are you the bottleneck in your organization?

Berkonomics

Close. At many board meetings, I can be counted upon to ask, “Where’s the bottleneck this month?” Senior management is usually prepared with an answer, and a good discussion of resource availability and application follows. Sometimes, the bottleneck is not so visible to the CEO.

Are you thinking of the end game when managing your business?

Berkonomics

Ever think about growing your business with the plan to sell it someday, cashing in on your hard-earned work over the years? Or if you’re an employee with stock options, are you aware of the increases in value you can make with your efforts?

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Insurance is always too expensive – until it’s needed.

Berkonomics

I expect that you have a story about how insurance saved you lots of money in your past. As usual, I have a story to make your hair stand on end. But first: here’s a fact.

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Is your company or department as efficient as it should be?

Berkonomics

Close. There is more money lost in businesses today from inefficient processes than any other single area. Yet this is not a place where most managers feel comfortable deconstructing and rebuilding.

Business risk: Bet the farm only when the crops are on fire.

Berkonomics

Close. How much risk you and your company are willing and able to tolerate over time? Most people believe that early stage companies should take risks aggressively because there is less to lose and much more to gain with each risky bet or decision.

You are watched, mostly when decisions are tough.

Berkonomics

we_are_wat we_are_watching_you. Close. If you have been in management or an entrepreneur long enough, you will have experienced the gray area of decision-making where ethics, the law, your needs and expediency all collide.

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Learn to never handle a paper or email twice

Berkonomics

Close. We all do it… to our own detriment. So, let’s make a pact that we will try, if not succeed, to handle our incoming messages more efficiently. Personal time management helps immensely to make a better manager of you and me.

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How can you let a talented employee go to pursue a new career?

Berkonomics

It is tough to lose your best employees wanting to advance their careers. Sometimes you can be the coach, helping them even if it means losing them.

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You are your company’s moral compass.

Berkonomics

Here’s yet another story that you may identify with – or have yet to experience in your business life. It’s one of those that define your leadership for all to see, sometimes based upon decisions made in the moment – such as this one. A story of a CEO’s snap judgment call.

How do you pay an early stage board?

Berkonomics

Give one percent equity to each outside board member vesting over four years of service. Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Here is my best advice, based upon many boards and many years.

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Have you been celebrating each victory?

Berkonomics

Here comes another story. Of course. This one may be like one or more you have experienced in your company. It is a story about focus upon the customer, first.

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Any advice can be worthless, or worse.

Berkonomics

Close. Ever get bad advice? We all have in our past. Ever take that advice without question because the person giving it was an investor, a superior in rank, the chairperson of your board? I’ll bet you have at least one story of bad advice taken and being bitten as a result.

Here’s a rule for companies with outstanding loans

Berkonomics

Here is one that is so important to the continued health of a growing company that it cannot be overstated. It’s a bit complex for novices. But hang in there as I explain a bit about accounting classification of assets and liabilities. Differences between types of assets and liabilities.

Have you made the mistake of hiring too soon?

Berkonomics

Well, you may not be alone. Many executives and managers have made the mistake of using the financial and sales forecast to plan and execute hiring of new employees – so that they could be trained and up to speed when the demand arrives. The balance between preparedness and cost.

Can we have fun while doing serious work?

Berkonomics

Have you ever noticed how slow time passes when you are in a troubled environment? Conversely, sometimes you look up at the end of a great day and wonder where the time went. It’s driven from the top.

I won’t serve on a board without D&O insurance!

Berkonomics

Close. I’ve been sued as a board member too many times over the past twenty-five years of board service. Five times. Does that shock you? It does me. Entrepreneurs blaming their board for failures of a fragile, early stage company.

Everyone wants to leave a legacy.

Berkonomics

Be honest now. Have you ever thought of what legacy you’ll leave behind? If you are an entrepreneur or CEO, surely you’ve thought of how you’ll be remembered by your associates and stakeholders after you move on. Bad boss examples aren’t forgotten.

How about your board members’ time commitments?

Berkonomics

Expect a board member to give a meeting a month, emails and phone calls between. Urgent issues require more of all. Board members are usually busy people, often running other companies or serving on multiple boards.

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So, what if you run out of money?

Berkonomics

Money in the bank is like oil in the car. Certainly, you have many ways you are pulled every day, both tactical and strategic. But when money is the issue, your time, energy and focus are drained from other important areas of your life or business.

The 18-month rule and a harrowing tale

Berkonomics

It can take 18 months from initial concern about a critical employee to getting a replacement up to speed. Of course, I’ll tell another harrowing story here. But first. an old friend, Dick Tanaka, gets credit for the 18-month rule.

Entrepreneurs: Employment law is not on your side!

Berkonomics

Small companies most often scrape by with borrowed or invested funds, doing everything possible to grow and prosper with limited resources.

Hire a consultant; ignore the advice.

Berkonomics

At one time or another, most all businesses use consultants to fill the gaps in knowledge or to provide guidance for management. Consultants are good in that you can sample their work with short projects, change to other consultants quickly, and stop using them when a project is completed.

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Will your company’s sale be celebration or silence?

Berkonomics

First, there are at least three types of exits. I’ve been involved with well over twenty successful exits and four initial public offerings over the years, some of them with monstrous gains, some more modest.

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Bankers: love ’em or hate ’em. They may affect your future.

Berkonomics

Let’s get right down to it. Your banking relationship can be like a great marriage or a bad trip to the DMV. In most cases it is strictly your choice. But the results of that choice will reverberate for what could be years. For a start…. How did you open your first bank account?

Take only “smart money” investments

Berkonomics

Close. This statement could be considered controversial. We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. Now we explore the other side of that coin.

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How to cheat legally on your tax return.

Berkonomics

Close. When do you cross the line between honesty and dishonesty in tax planning? Is it ethical to allocate income between periods to take advantage of tax breaks? Can expenses be put off until the next period to increase income, or accelerated into this period by prepayment to decrease net income?

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Niche marketing works. Here’s how.

Berkonomics

Close. How many of us throw away marketing dollars because our paid efforts reach an audience that is much larger than the target or niche audience we need to reach?

Accounting: What kind of bean counter do you need?

Berkonomics

Close. Accountants are trained, certified and usually quite experienced in financial analysis, both creating and reviewing data. Bookkeepers are often trained on the job although sometimes more formally and handle the physical work of accounting for the transactions.