The Lifecycle of Business

Pasquale Marinelli, owner of the Marinelli Bell Factory in Angone, Italy isn’t just the third, fourth or fifth generation to run his family’s business.  Marinelli Pontificia Fonderia di Campana is a company that has been in operation since 1040 A.D.  There is also evidence that bells produced in the year 1,000 were made by the Marinelli family before the business was formed.   Think about that for a minute.  Many businesses can’t survive a spat between a husband and wife, employee issues or a downturn in the economy.  Marinelli Bells have been designed, manufactured, packed and shipped to customers for a thousand years.  Even if each generation controlled the business for twenty five years, that is at least forty different configurations of ownership, management and business models that the company has had to endure to survive. 

Although Marinelli Bell has seemingly achieved business immortality, most businesses go through a normal birth to death lifecycle.  The conception phase of the business lifecycle can be the most exciting.  There is no failure in a business that exists only in the mind of the entrepreneur.  An idea for a business usually comes from some point of reference or experience of the hopeful future business owner.  Very often, businesses are started by restless or disgruntled employees who simply feel that they can do a better job of producing a product, providing a service or managing people than their current boss.  The born entrepreneur is a rare breed.  Once in a while there is the example of the kid who started mowing lawns at the age of 13 and twenty years later owns a successful landscaping company.  No matter the reason or situation that spawned the business idea, the concept or conception phase always has to take place before the wheels of action toward making the business become a reality can start turning.  The mind is the safest place for a business to exist.  There are no liability issues, regulatory controls, employee problems or taxes to pay on a business that is merely a thought.  The challenge for entrepreneurs starts the minute they relate the business idea to someone else… anyone else.  Similar to the response new couples get when they announce that they are trying to get pregnant, the future business owner experiences supporters, doubters and a whole lot of unsolicited suggestions as to how to start the business, what to call the business and how to run the business.  Going from business concept to grand opening happens in a similar time frame as the conception of a baby to its actual birth- nine months.  The reason this length of time makes sense is simple.  The business idea has to be processed and turned into a formal plan.  It needs financing, a location from which to operate, staff, inventory, etc.  Those things all take time.  If the idea continuously runs into brick walls, it fades and goes away after nine months and the business never happens.  

The birth of a business is also an exciting time just like the birth of a baby, and it marks the beginning of the realities of business ownership, both positive and negative.  Even the greatest business ideas had to be fed, changed and nurtured through their early months and years in order to become viable and self-sustaining.  Long days and sleepless nights often become the pattern of new business owners.  The danger of getting stuck in this phase of business development is real.  There is an unspoken question that will be asked of a new business owner in the first two years of operation.  Are you going to direct, control and change the business or is the business going to direct, change and control you?  Understanding the start-up phase and the requirements of a new business allows the new owner to have a specific plan and timeline for getting the business to the next level, which is self-sufficiency.

 

Once self-sufficiency has been achieved, the business is usually in the adolescent stage where it can function for the most part on its own, but can still not be left alone for extended periods of time.  This is followed by the rebellious teen years where the business has reached a level of success that affords the owners a decent lifestyle and excess profits.  The rebellion comes from employees who may feel like the owner is getting rich off of their hard work and dedication at an unfair rate.  This is a time when businesses run the risk of having employees leave to become direct competitors.  Like a teenager, they know how to do things better than the business owner and they want to test that theory.  Following the teen years comes adulthood where the business operates for a period of time with relatively few problems.  The final stage is the retirement of the founder/owner and the transition of the business to the next generation or the next owner.

 

Businesses that fail generally happen in the early stages before the business ever really gets off the ground and creates a culture.  The second most dangerous time is when the founder/owner wants to retire, but has not fully transitioned power to the next generation of owners.  This is why statistically less than 25% of businesses survive the second generation.  Each life stage of a business has unique characteristics that can be managed and leveraged to help the business achieve everlasting performance.  But, each stage also has pitfalls that can be the beginning of the end for the business.  What stage is your business in?

 

 

 

 

Why Any Business Can Benefit From A Comprehensive Analysis?

The human brain signals us to feel thirsty when our body is dehydrated.  It is a mechanism that keeps us from becoming dangerously dehydrated and experiencing serious health problems.  Business owners typically do not ask for outside help unless their business is in trouble or in transition.  Like feeling thirsty, when problems get to a point where they are noticed by employees or owners, they may have progressed to where they have damaged other parts of the business.  Sometimes in a way that is unrecoverable.  This is common in businesses where the owners "semi-retire" and still have ownership, but have taken their eyes off of the day to day operations of the business.

A comprehensive analysis of the business's current situation reveals things that have been negatively effecting the business for a long period of time, as well as things that will likely have negative effects in the future.  The current condition of the business becomes very clear and understandable once all of the facts are on the table.  Trying to solve problems or develop solutions for a business without having a comprehensive understanding of the condition of the business is like a doctor who is not all that interested in your history or your future, but prescribes medication, surgery or rehab to "fix your problems".  If your doctor does not have an interest in learning those things about you, or if you do not trust your doctor enough to be totally honest, you can expect a less than successful result. 

Some people simply do not want an honest assessment of their business, while others are rightfully skeptical as to what an "outsider" can tell them that they do not already know.  If someone avoids conversations about their own mortality, does that mean that they will live forever?  If you never go to the doctor or have regular physicals, does this mean that you must not be sick?  The other side of this equation is the business owner who listens to everyone and takes all of their advice.  I have two rules.  1.) If you are listening to everyone, then you are not really listening to anyone.  2.) If you have people that you trust, and they are able to be open and honest with you, then keep them.  The fact of the matter is that many business owner become an island, where they really have no one in their life who they either trust to be fully honest or who really understands their situation. 

Our comprehensive business analysis is specifically designed to gather vital information about the business in order for our Business Specialists to truly be an objective third party.  Although it works every time we take a business through the process, it is not for everyone.   I often get comments from business owners like "why didn't I meet you ten years ago?" or "I wish I would have done this sooner".  The reality is that the comprehensive business analysis is very powerful, but not every business owner is prepared to hear what we have to say once the analysis is complete.  Again, businesses in trouble or transition become our typical clients.  Those businesses are forced to do something different.

The Legacy Alpha program has three distinctly different services, analysis, planning and education.  We don't require long term commitments, retainers or contracts.  Instead, you don't write us a check until you can honestly say that you got the benefit that you were expecting from our services.  We are that confident in what we do and the impact of our process on your business. 

Be a Student of Your Own Performance

For fifteen years I coached high school wrestling while working as a Senior Business Analyst for three different management consulting firms, analyzing more than 700 small businesses in that time.  The combination of working with moldable, eager and energetic high school kids and then analyzing adult performance in the workplace was an incredible learning experience.  Last night I went to a high school football game.  By the end of the night it was 38 degrees with winds gusting up to 25 miles per hour.  Just two weeks ago, we were sitting at a football game in shorts and fighting off the mosquitos.  That is Minnesota. The football game featured two teams with identical 1-4 records.  As the line-ups were announced, my wife noticed that the opposing team had virtually all juniors and seniors playing, while our hometown team had a great deal of sophomores starting.  As the night went on, and the elements became more of a factor, you could see the urgency and immediacy of the game coming through in the team made up of juniors and seniors.  Psychologically sophomores tend to believe that there is a lot of time left in their career and this is just one game.  Seniors hear the clock ticking and feel the need to make the most of the opportunity that is in front of them.  The game was a virtual tie until the end of the third quarter, with each team having scored two touchdowns at that point.  The opposing team, the one with mostly juniors and seniors, pulled away at the end as our hometown team faded.  Coincidence?

The dynamic of urgency is one that is incorporated into every aspect of the Legacy Alpha program, including our unique employee incentive programs.  Becoming a student of your own performance is half of the battle.  Having the ability to be honest with yourself as to what you learn when you take a discerning look at your business is the other half.  Having a 27 year perspective on the sports teams of our hometown, I have noticed that there is always talk of the class or the group that is coming up.  "Look how good we are going to be" is the mantra.  Those teams never seem to achieve the success when they get their shot, but there is always a class coming behind them that will be "the class".  Lesson: if you can't perform with the team you have, it is unlikely that you will achieve success with the team you wish you had, or may have in the future.

In business, it very easy to wish for the past or look to the future, but the bottom line of today will be enhanced by leveraging the tools and people you have to work with today.  Are you energizing every member of your team to do the best job possible today?  If they are failing, is it their failure or the failure of management? Being a student of your business's performance starts by establishing benchmarks or a series of "should be's".  Performance is relative and very specific to your situation.  If you want the most out of your employees, they need to know what is expected of them, where they are in relation to those expectations and what's in it for them when they exceed those expectations.  Notice I did not say "if they exceed those expectations".  They always do when expected to and incented properly.  When you put an ordinary employee into a structured, goal oriented environment, you will get extraordinary employees.  If you are waiting for that "better employee" to come along, chances are they will never arrive.  If you treat your current employees like they are the ones you have always waited for, chances are they won't disappoint you.