How IEs 'Think Outside of the Box'

Just as many people are creatures of habit, many businesses are operated in a similar manner. During the next few weeks, I will list a few examples of how several hourly consulting projects have helped organizations increase their productivity and their profits.

Here is one of our hourly engagements:

• An electronics distributor's CEO had not intended to micro-manage his staff and employees, but he had allowed everyone to approach him for answers from the outset. After several years, he felt he could no longer 'get away' for more than a few hours at a time, since the employees depended on him for every decision.

The solution was quite simple; implementing it proved a bit more difficult. The CEO had inadvertently trained his employees to question their own decisions, prompting them to rely on him. Much of this behavior evolved from the firm's entrepreneurial beginnings. Getting the CEO to step back and allow them to not only make decisions, but take responsibility for them required adjustments on both sides.

We began the process by taking the CEO out of the office for a few hours each week, providing coaching to him and reviewing his strategic plan. The employees were instructed not to contact him during that period, but to resolve any problems or conflicts in his absence. Meanwhile, we met with the employees on a variety of issues. After a few weeks, the CEO felt comfortable enough to attend a full day seminar off-site. The employees gained confidence in supervising themselves during that time, and wrote reports on actions taken in the CEO's absence. The CEO read the reports, and was impressed by the results.

Over time, managers began to manage, and the CEO had a few subordinates reporting to him, rather than impromptu employee meetings all day long. The extra time gained allowed him to focus on expanding the business and other strategic areas. And the entire atmosphere became less stressful for everyone.

While the lesson here would appear to be straightforward and part of Business 101, it reflects a situation that we see repeated in numerous organizations, both for-profit and non-profit. Not every company CEO, owner, or manager is a born leader. We work closely with these individuals and organizations to help transform mere mortals into productive and respected leaders.

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IE Helps Firm With Successful Exit Strategy

There is a life cycle attached to every commercial venture. Like any story, there is a beginning, a middle, and an ending. In business ventures, the serial entrepreneur understands this axiom, but many others find it difficult to grasp.

After nearly fifty years, the owners of a mid-sized manufacturing business decided to walk away from the company that they had founded. It was one that they had dreamed about starting while in college, and essentially began in the workshop of one of their parent's homes. Like most inventors, they began by tinkering with a device that would enable them and others to perform tasks more easily and efficiently. They succeeded in creating a tool and realized that it would also have a marketable value to others. When they started prospecting for customers, the inventors/entrepreneurs discovered the paradox of the business world...cash flow. They had orders in hand, but not enough money to produce and ship the orders. Banks weren't interested in loaning them money, because there was little collateral and the risk was too great. The new businessmen became creative with their financing, and along with funds from friends and family, they received advances from their customers...in exchange for a discount. The business took off.

Over the years, the company grew from the workshop to a leased building, then to several separate buildings spread over the community. After twenty years, they were able to acquire a large parcel of land, and consolidate all of their operations into one campus. Their manufacturing business had grown to the point that they were exporting their products to locations around the world, and their domestic base was solid, due in part to a productive sales channel. Their balance sheet was strong, and they had no long-term debt. One of the partners decided to sell his interest to his life-long friend and partner, and after thirty years in the venture, took an early retirement.

During the next ten year period, the business began to change somewhat. The daughter of the remaining founder had become active in the management of the business after she completed college, and the skills required to keep the business moving forward had changed drastically from its inception. As the father and founder took a less active role, the daughter's responsibilities increased. By the time she turned thirty, her own desire to raise a family was taking precedent. It was at that point that she sat down with her father to discuss the future of the business. The decision was made to look for a buyer.

Entrepreneurs and artists have a few things in common. They each create something, but many are ultimately faced with having to surrender part of their creation to someone else. The artist sells the painting to an appreciative customer. The entrepreneur must decide whether or not to close the business or to sell it to someone else. In deciding to sell, the owners of this firm entered into an era of uncertainty. How does one retain the existing employees or attract new ones when the future of the business is unresolved? Many employees felt comfortable with the owners/managers...would they feel the same with new ownership? And how does the company attract new talent, if only to disclose that a commitment is fluid?

To handle the transition, an interim management team was retained to not only manage the day-to-day operations, but to also negotiate the sale and continuance of the business. This allowed the owners to slowly transition out while the IEs executed the plan. The IEs disposed of the non-performing assets and slow moving inventory, and increased earnings. They negotiated the sale of an overseas location to a foreign distributor who agreed to retain the employees. The IEs looked at M&A prospects, but eventually found a private equity firm interested in acquiring the company for cash. It was a win-win for everyone, and the IEs stayed onboard during the change of ownership and assisted with the recruitment of new management.

GM
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