Norm Brod­sky

For­get about short­cuts. Man­age for the long haul

Inc. (USA) - - CONTENTS - Norm Brod­sky (@ norm­brod­sky) is a vet­eran en­tre­pre­neur. He is the co-au­thor of Street Smarts: An All-Pur­poseTool Kit for En­trepreneurs.

Young en­trepreneurs of­ten ask me, What is the most im­por­tant thing to fo­cus on as I’m build­ing a business? I tell them, “You should build it as if you were go­ing to have it for­ever and, yet, at the same time, build it so that you could sell it to­mor­row for as much money as pos­si­ble, even if you don’t in­tend to.” They usu­ally give me a funny look and ask how they can do both. “Ac­tu­ally, they’re al­most the same,” I say.

Build­ing a com­pany to last for­ever means you don’t take short­cuts. You al­ways make de­ci­sions with the long-term health of the business fore­most in your mind. For ex­am­ple, you don’t hire sales­peo­ple from com­peti­tors. It’s a temp­ta­tion, I ad­mit, es­pe­cially when you’re just start­ing out. You think that, by hir­ing a com­peti­tor’s sales­peo­ple, you can save time and money. They’re al­ready trained, for one thing, and they know the in­dus­try. They prob­a­bly also have leads you can use. They may even be able to bring some cus­tomers with them.

I had those thoughts when I was start­ing my first business, and I learned the hard way just how mis­lead­ing they are. To be­gin with, I found that sales­peo­ple from com­peti­tors had a lot of bad habits I couldn’t change. They’d learned all the tricks of the trade, in­clud­ing the worst ones, and would do what­ever was nec­es­sary to make a quick sale. When I tried to have them take a longer view, they wouldn’t lis­ten. They thought they knew bet­ter than I did how best to get new business.

As it turned out, how­ever, they weren’t bet­ter sales­peo­ple than those I hired from out­side the in­dus­try and trained my­self. When I took on com­peti­tors’ sales­peo­ple who’d told me tales about the great things they’d done in their pre­vi­ous jobs, I learned that I shouldn’t have been so quick to be­lieve them. I also learned that any sales­per­son who be­trays a pre­vi­ous em­ployer by steal­ing cus­tomers will some­day try to do the same thing to you.

Ex­pe­ri­ences like that—and, un­for­tu­nately, there were oth­ers—taught me that it’s never a good idea to take short­cuts in business. You won’t, though, if you’re fo­cused on build­ing a com­pany that can last for­ever.

If you’re also build­ing it so you could sell it for as much money as pos­si­ble—which is ac­tu­ally a sim­i­lar idea—you’ll im­ple­ment best prac­tices. By best prac­tices, I mean things that add value to the com­pany by in­creas­ing the like­li­hood that any fu­ture owner will be able to earn the max­i­mum re­turn— even if the fu­ture owner is you. There are no short­cuts to best prac­tices, which will help your business thrive, whether or not you de­cide to sell it. One best prac­tice, for ex­am­ple, is to stay in di­rect con­tact with your cus­tomers and keep the re­la­tion­ships up to date, prefer­ably in the form of re­new­able con­tracts. Smart buy­ers will ex­am­ine those re­la­tion­ships closely, for the sim­ple rea­son that they want to be cer­tain the cus­tomers will stay with the com­pany af­ter it is sold. You would be wise to in­sist on the same level of cer­tainty in your business. It’s all too easy to let those bonds erode through ne­glect, and then dis­cover to your sur­prise that an im­por­tant cus­tomer has been lost.

An­other best prac­tice in­volves mak­ing sure you have such ac­cu­rate fi­nan­cials that banks and other out­siders can have ab­so­lute con­fi­dence in them. Ob­vi­ously, we all ben­e­fit from hav­ing good fi­nan­cials, as I’ve noted many times be­fore. But I’m talk­ing here about tak­ing it a step fur­ther and get­ting cer­ti­fied fi­nan­cials. Yes, the cer­ti­fi­ca­tion process will cost you some money and take some time, but cer­ti­fied fi­nan­cials increase the value of the com­pany. For one thing, they will make it much eas­ier for you to get a loan if you sud­denly find you need one. They also make the business a lot more at­trac­tive to po­ten­tial buy­ers.

Fol­low those two rules re­li­giously, and you’ll wind up with a well-man­aged and valu­able business that can keep grow­ing and im­prov­ing for a long time. Ig­nore them, and you’ll limit your com­pany’s abil­ity to ever reach its full po­ten­tial.

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