The DREAM needs an Effective Business Plan

A business dream usually can't be executed solo. We often need to attract investors, secure lending relationships, and have a way to guide future business growth. Business plans have become the media we use at this point. Because of their importance, computer planning tools are available to assist the entrepreneur in their development.

A wonderful idea can be married with a fantastic technology to produce dismal results. For example, food is a wonderful idea. We all love food. Airplanes are a fantastic technology. The offspring of this marriage is airplane food. There is some wonderful food served in first class; however, the words "airplane food" bring to mind something uninspiring.

Business plans are a wonderful idea. Lay out in text and charts exactly what you intend to do and how you intend to get it done. Computer automation is a fantastic technology saving users untold hours of unnecessary work. But their offspring, the typical automated business plan, is as exciting as airplane food. Pity those that have to read them for a living.

How do we upgrade to first class? Our intention is not to just get by; it's to attract the best - funding, talent, clients, etc. Adequate simply will not suffice.

Business Model Generation, a technique described in the book by that name, offers an exciting and elegant place to start. A Business Model is an abstract version of the business broken down into 9 key elements. It represents the flow of people, products, ideas, information and values that drive the revenues and costs of a business. By taking time to first abstract the business dream on paper, we develop an appreciation of its inherent values and attractive features.

Now take that Business Model and apply it to a specific set of circumstances and we have the makings of something interesting. If the model is exciting, the specifics of a plan can be written (even with the assistance of computer software) so that the excitement flows through it. If the sizzle isn't there in the beginning, no computer application is going to add it. Our dreams are always exciting.

At Murphy Business, we use Business Model Generation in our Executive Advocate (sm) programs. These programs fit executive buyers to target business acquisitions that have the greatest likelihood of success for their future growth. We don't start with a business plan. There is too much unknown about our client. We start with the client's Business Model Canvas. This specific graphical representation of the Business Model becomes part of a highly profiled search criteria to find "unadvertised" potential business acquisition targets. Details of the business acquisition targets are merged with the Business Model Canvas of the client to produce a business plan with substance. Something to excite the seller, the buyer and the investors.

We have developed a Business Model Canvas for the Executive Advocate(sm) programs to illustrate the communication power of this approach. You invited to watch this 8 minute video introduction . What we discovered was the use of this tool internally has also been invaluable in helping us also communicate the value of the Executive Advocate (sm) programs to candidate clients.

Communicate the dream!


Photo credit: fsse8info

Franchise Rage: Keeping it too simple

I get to meet with Texas business owners trying to decide if they should grow or sell their business. The answer generally lies in knowing how to value the business and deciding if that's sufficient for future plans or not.

If growth through franchising appears to be attractive, we then get to work preparing the business for it. This involves defining and documenting their proven and successful business model. We also represent the most successful franchise operations, so in time we are able to bring qualified operators to the business and the operation grows territory by territory.

It would seem to be a simple thing, just follow the proven plan and success will be yours. This should be a KISS, Keep It Simple Stupid, approach to making money; however, life proves success is never that simple. The danger in a franchise strategy for growing a company is the potential for an adverse relationship to develop between the  franchisor and the franchisees. Here is how it can happen.

A franchisee's operation is struggling and the franchisor recognizes that they are trying to operate  outside the proven plan. Warnings about this issue are repeatedly given; however, the operating problems persist and eventually the new franchisee begins to attribute the problems to the franchisor's inability to help them. The two sides continue to blame each other creating a vicious cycle of further bad business. What we have is an example of a sound system being destroyed as a result of the fundamental attribute error.

This everyday error occurs whenever we think an action is being caused by the actor instead of the stage. In traffic a car suddenly cuts in front of us. Our reaction is to think that happened because there is a bad (or rude) driver in front, when in fact that driver could be skilled and polite and narrowly averted an accident by quickly changing lanes to clear a road hazard. As long as all the driving incidents are the cause of other bad drivers, better driving skills that anticipate road hazards are never developed. Instead, we develop road rage.

Blaming problems on fundamental personal attributes of either the franchisor or franchisee is not a simple answer, it's a simplistic answer. Oliver Wendell Holmes said "I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity." It is the difficult responsibility of both sides to go one step deeper into the situation and ask "Why is the proven method being altered?" What if the issue is not personal character but is the situation? It means a willingness to suspend judgment and get deeper into the complexities of the specific situation and how the model applies to it. Only after passing through this complexity it is reasonable to get back to keeping it simple.

In our process of guiding Active Investors into purchasing a new franchise, we have them contact other franchise owners to learn about their experiences. The alert Active Investor is going to ask how they handle difficulties that might make them question the plan. Is there any evidence of franchise rage?

If you are considering franchises, you want a successful system; but you also want a happy family.

Photo credit: star5112

Powerful Symbols of Structure

Today's performance is the result of the strategic resources we had available when we woke-up this morning. Toyota will build many more cars today than I will because they have the resources and intent to do so and I don't. On the other hand, Toyota's contribution to this posting will be a mere mention of their name. My contribution will be its creation because I have access to these resources.

Structure determines behavior. In our past we have intended certain results which has caused the accumulation of necessary resources to accomplish them. These resources for an Active Investor might include things like cash, reputation, customer base, staff, inventory, equipment, technology, supplier relationships, and so forth. What happens in the present is the unfolding result of the levels and structures of our current resources. This is why accounting and business valuations work in the present. We can accurately know our resources as they exist now. Forecasting future performance is another matter.

Financial methodologies are scalable to almost any level of detail complexity; however, they are often not well suited to deal with dynamic complexity. As we move out of the known present and into an unknowable future, resource levels will be dynamically affected. Things will generally not happen in a linear fashion like we tend to imagine. Understanding the dynamics of how we arrived at the present is far more valuable in forecasting than understanding the details. Unfortunately, the study of system dynamics is somewhat challenging (although if it's possible, an Active Investor will greatly benefit from taking a formal system dynamics course).

The rest of us take an intuitive shortcut. We look for symbols that indicate the underlying structure and use that to get clues about dynamics.

Experience in audit and business brokering have helped me develop a sense of symbols. Walking into a business the cars in the parking lot may be symbols that the owner (and therefore the business) is doing well. The maintenance is a symbol of their attention to detail. The decor may become symbolic of their perceived customer preferences.

For all the time and effort spent on marketing assets, it's often our symbols that communicate the most about us to others. They are most powerful communicators that indicate our structure and will be used by others to predict our future behaviors.

Our symbols are both advantageous and dangerous because they communicate instantly. And yet, we frequently are not even aware of what symbols we currently display. The Active Investor benefits from paying attention to them. It takes an examination of our structures to best see our symbols. By being alert to symbols in our markets, we learn both about others and how to better present ourselves.

Image credit: avixyz

Crossing a Mental Divide

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A traveler crossing the Rocky Mountains passes the Continental Divide. If they straddle this imaginary line they have an enormous, yet unseen power. Water poured on to the ground on one side will ultimately flow into the Pacific. Water poured inches away will flow into the Gulf of Mexico. This seemingly insignificant change will mandate the end result, regardless of all that happens to the water on its long journey.

This sensitivity to initial conditions is a common characteristic of natural systems. We are used to thinking about systems in more simplistic ways. A pendulum will ultimately come to rest at its lowest point, regardless of where the motion is started. There is no sensitivity to the initial conditions. It's an esy system to understand.

Because the motion of a pendulum always ends at a point, its dynamics have been called that of a point attractor. The end point doesn't attract like a magnet; but it acts that way. Next in complexity are two dimensional periodic attractors that don't end in a point, yet always repeat the same cycle. The rotation of the earth around its axis creates a daily periodic attractor. Adding a third dimension increases complexity again. The additional rotation of the earth around the sun is expressed as a torus (doughnut) attractor, which is what it looks like.

Those are the easy ones. What happens if more than 3 forces (dimensions) are in play? For most of history, these were called chaotic. They seemed to be beyond pattern or properties because of their complexity. Recent advancements in computers have enabled mathematicians to demonstrate this was a bad term. These systems do have properties, although some, like sensitivity to initial conditions, seemed strange at first. They have been called strange attractors and although they are extremely hard to visualize, understanding their emergent properties help us understand how the world really works.

Learning to appreciate both the order and the complexity of natural and social systems takes you across a mental Continental Divide. It is the single difference between developing a simple business solution versus a simplistic failure. An Active Investor develops a sense of caution and mental red lights begin to flash when any answer appear to be too quick and easy.

Getting to "what's next"

There's always a "next thing' in life. Change is so persistent we sometimes just ignore it or allow ourselves to become overwhelmed by it. Change is also where we find a great need for outside help. It's wonderful to find a mentor we can trust who has been through the change we're facing many times before.

Many professionals fit into this mentor category. As business brokers, we mentor individuals whose "next thing" is to have their own business, or a different business, or perhaps a long sought retirement. In working with our clients, the real objective is to get them to their "next thing". It's not the purchase transaction.

The process of getting safely to the "next thing" is the same, regardless of what area of life is involved. We first need to determine objectively where we are. Objectively probably means a second, third, or even higher opinion. This shows us our "as is" state, which is sometimes hard to see without the outside help.

Now the problem is not an unknown change. It's having to navigate a Gap between the "as is" and our "what's next." A Plan, or Gap Analysis, should make intuitive sense to us, even if it involves new and novel activities.

This is being written on Easter Sunday. The Resurrection , a plan to navigate the Gap separating God and man, is now celebrated by over 2 billion Christians around the world. I have to believe that closing Gaps and moving forward to "what's next" is the inherent pattern of all creation.

Mapping Successful Habits

Steven Covey's 7 Habit's of Highly Successful People made the connection between business success and individual habits. This week Mary White of WTC Performance Group introduced me to the simple map on the left. It's an approach to looking at how those successful habits are formed.

We sometimes find business owners who are personally ready to sell their business; however, the business isn't ready to be put on the market. It's current value isn't as much as the owner knows it could be worth. Consultants, like Mary, work with these Active Investors to close this gap.

A common mistake made by consultants and coaches is to jump in with their expertise. On the map that's moving from Step 2 to Step 3. Often, the real need is to start at Step 1. The most immediate contribution a business value consultant brings is the ability to see an issue outside of the owner's awareness. This takes daring on both the part of the consultant and the part of the owner to allow it. That's what the #1 box in the map is all about, our Unconscious Incompetence.

Once aware, it's a process to move to the Conscious Incompetence awareness in Step 2 and then the Conscious Competence of skill in Step 3. The new skills are ultimately "ours" when we finally move into Unconscious Competence, Step 4, which is Habit. 

It's all very systematic once past that first step. Having the insight and courage to know when to take that step is the hardest part.

Self Identity Theft - The Good Samaritan Revisited

The Parable of the Good Samaritan

There was a legal question about exactly who is your neighbor in the Biblical commandment to love your neighbor. The following story was provided as an answer. 

Attacked by thieves, a traveller lay injured on the roadside. Pillars of society passed by on the other side of the road, avoiding having anything to do with another's problems. Then a member of a despised minority saw the victim and stopped to help by bandaging wounds, providing lodging, and paying for future care. The question then asked was, who do you think was the traveler's neighbor?

The Darley-Bates Experiment

Divinity students at a well known seminary were asked to participate in a study. They were told to address a group of freshmen in a nearby building. Some were told to speak on the role of the professional clergy in modern society; and some were asked to speak on the Parable of the Good Samaritan.

As they walked to their appointment, each participant passed a man in obvious need of help. He was slumped over, coughing and groaning. When asked if he needed help, he would say no but appeared otherwise. Would those prepared to speak on The Good Samaritan be more likely to aid this stranger?

The Experimental Results

Studying and speaking about The Good  Samaritan made no significant difference to the seminarian's actions. Those stopping to care for the victim were about the same in each group.

There was another experimental variable. As they left the building some participants were told they were early and to go over anyway. The rest were told they were late and should hurry. This made a difference. Seminary students who believed they were late were less likely to help than those who believed they had extra time. 

A lot of well meaning business advisors recommend that clients add just 1 or 2 more activities to their schedule each day. They point out how the numbers quickly build over time. Active Investment may be a game; but it's not a numbers game. People (our neighbors in biblical terms) come to Business Owners and Professionals every day asking for our help. Our job is to have the time and capability to provide that help. It's more than quality or good customer service, it's the Active Investor's self-identity - a vision of being able to make a living helping our neighbor inspired us into our occupation in the first place. Balance is "being on the road" and yet allowing enough time to truly stop and help. 

Feedback

The difference between things that grow and things that don't is feedback. Ecology maps nature as large circles with each member feeding the next until it returns to the starting point. Salesmen know customers, through word of mouth, create more customers. In any market, buyers create sellers, who attract more buyers, who create more sellers.

For years I studied business growth. With charts and graphs I tried to discover the Philosopher's Stone that would grow any business. Marketing, Finance, HR, Engineering, Continuous Improvement were all candidates. Yet none of these necessary disciplines were by themselves sufficient to create an engine capable of growing any client's business. What is at the center of growth?

I finally found it in the study of System Dynamics. If there is positive feedback, there is growth. If there is negative feedback, there is decline. Always.

Yesterday at Starbucks in Colleyville I meet with my C-Level Consulting associates. We were discussing the importance of getting together like this. They told me how much they enjoyed one of my past series of presentations on business consulting. One of them told me he was on the file server reviewing them just this past week. He found them a source of hope and inspiration.

That was feedback. Today I start this Blog.