Tip of the Spear Ventures

A Family Office that behaves like Venture Capital | Private Equity | Business Consulting

entrepreneur

30 Days to ETA | Day #10 – ETA Culture

By

In our last post in this 30 Days to ETA series, we discussed your ETA Mission, Vision, & Values (You can read the previous post by CLICKING HERE). Having clarity in the Entrepreneurship Through Acquisition strategy is paramount, and nothing signals that more than your identification of where you want to go with your future business. In this post, we’re going to explore the backbone of how you will get to that future destination via ETA Culture. ETA Culture is your business’ values and culture that will shape owner-employee relations. The business that has outstanding values and inviting culture can help bring top dollar at the time you want to eventually sell… Enjoy!

30 Days to ETA - ETA Culture

Attend Webinar Workshop: 30 Days to ETA

The ETA Culture of Helping

I once met with a small business owner as part of our Mergers & Acquisitions initiative at Tip of the Spear Ventures. From all outward appearances and secured financial information received, this was a very successful organization and I was looking forward to meeting with the owner. They employed several technology advancements (rare for a small business), and these served as their differentiators in the market. On top of the entity/individual credentials, the organization was referred to me by a colleague with whom I’d been looking to do a project together with.

It appeared to be great all the way around! Great company doing great work referred to me by a great person. And then I walked into their office. Actually, let me backup and share that I couldn’t get into their office at 7:45am. I come from one of those “To be early is on time, to be on time is to be late” cultures. Our meeting was at 8:00am and I typically show up fifteen minutes early. However, when I got to their office the doors were locked. Located in an urban-sprawl setting, I initially thought this was a security reason (Yes, it was a sketchy part of town!) But surely the owner knew I was arriving and would either be there himself or have alerted his staff. Surely not!

On top of the owner not being ready for my arrival, my colleague was running late. I called him and found out that there was an employee in the building and that he’d have them come unlock the door so as to let me in. They arrived at the door, unlocked it, and looked totally inconvenienced by the whole process/procedure as I stood there without them so much as addressing me (No “Good morning” – No nothing!) I said thank you and asked where we’d be meeting. Their overall lack of hospitality was unbelievable. On top of this one individual who should never be public-facing I found the office in total disarray – Trash cans overflowing, disorganization everywhere you looked, and dirty. The final straw was an etched pillow on a chair in the entryway that said on it, “I’m not always a Bitch… Just kidding, go f—- yourself!”

I left the office. Meeting over. ETA exploration done. The ETA Culture of helping was not present, and neither would I be! Everyone has been to a store/place of business and been shrugged off by an uncaring employee. We’ve all seen the dark side of business customer service and it stems from ETA Culture.

You can feel the difference between exciting companies and those with discontent, unmotivated cultures in ETA due diligence. Know that the companies with happy, motivated cultures have significant value, both today and in the future.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

ETA Culture and Leadership

I’ve worked with hundreds of business owners over the years, and most of those owners want to talk about money or the problems they’re having with employees. They’ll talk about how to gain more customers and more market share. Yet, I can count on one hand the conversations brought up by business owners about values and culture. Sure, they want to talk about owner-employee relations, and they love to complain about poor employee work ethic or disrespectful employees, rather than asking me how to add value to their team or improve employee morale.

Owners focus on their own grievances rather than how to rectify employee grievances. Oftentimes, those business owners feel they get a bad rap with employees who mistake their drive for greed. They think that all the proprietors care about is money or the next big sale, and the team members hold an unfounded grudge against the owners. Rather than working hard to change employee misconceptions and rebuild owner-employee relations, owners tend to play the victim.

Additionally, those business owners complain about feeling used. A “friend” will call them up and want “free advice.” He’ll pick their brain and secure their professional knowledge and then never talk to them again (or will outreach when the wheels have fallen off the vehicle and they’re in real trouble). That “friend” will ask for discounts just because they went to the same school, and while none of us likes to feel used or abused, Acquisition Entrepreneurs need to know that they shouldn’t feel taken advantage of, and neither should their team members. I’m convinced after working with over 1,000+ leaders in organizations all across the USA and internationally that bad employee problems stem from culture problems, and those stem from leader problems.

Cultivate the E Culture of Kindness

It goes without saying, your people in the business you secure whether it’s from acquisitions or mergers are people — Not objects. We shouldn’t follow the Instagram-narrative that we’re a self-serving culture. Instead, you as an Entrepreneur Through Acquisition should look to cultivate a culture of kindness in our company. What do I mean by kindness? Words like respect, trust, and fairness should lay the groundwork for owner-employee relations. Employees who feel appreciated, valued, well-compensated, and respected will most likely provide respectful and courteous service to your customers. Therefore, I believe that everything in our business blooms out of our values and those values reflect your culture.

3 Rules for ETA Culture Success

While you’re cultivating this harmonious ETA Culture of owner-employee respect and loyalty, as a business owner you should be on your guard against known dangers. I’ve developed three rules for ETA Culture success, and if you don’t guard against them you’ll exhibit poor culture, poor employee relations, and bad leadership.

Rule #1 – Say What You’ll Do & Do What You Say

If you tell customers that you value open communication and employee loyalty, but you do the opposite by scanning through emails on your phone when your customers or team members voice better ideas on how to operate, what good does that do for you? If you’re no willing to say what you’ll do and do what you say, you’re going to lose good team members and customers.

Rule #2 – Get Greedy

I once say a business owner that could care less about their profits or their employees, and it showed all throughout the organization. If you want to be a great Entrepreneur Through Acquisition, get greedy! Let your customers and employees know that you value them and are willing to do whatever it takes to keep them satisfied.

Rule #3 – Get Help

Entrepreneurs Through Acquisition are great at a lot of things, but building company-wide morale may not be one of your particular strengths. Know your strengths, and your weaknesses. My best advice when it comes to weakness management is to off-load the responsibility. In other words, hire someone that has your weakness as a strength of their own.

The ETA Culture Strategy

ETA Culture for owner-employee relationship success exposes your company’s core values. So how do we cultivate or build good culture habits and values within your company? We take care of our employees. Here are some ways you can build-up their morale:

  • Reward the behavior you want to encourage
  • Applaud those who portray the values you want to achieve
  • Promote positive re-enforcement instead of punishment
  • Recognize and increase responsibility
  • Be kind
  • Keep it real up in the ETA field

SUMMARY

You love the idea of being an Entrepreneur Through Acquisition. It’s a complicated landscape to try and navigate. In this post we’ve explored ETA Culture and the rules for success and strategy for making employee-owner relations a success. A company with strong values and a strong culture, one that promotes strong owner-employee relations, will make more money and more reward than a company who has poor values or culture.

Sam Palazzolo

30 Days to ETA | Day #9 – ETA Mission, Vision, & Values

By

If you are following this 30 Days to ETA series, you have built your business plan and hired the team to drive your long-term goals. In our last post, I stressed the importance of leading yourself (You can read the previous post by CLICKING HERE). One of the aspects of Entrepreneurship Through Acquisition that I find most rewarding is finding/aligning with a culture that resonates. The foundation for that culture is the ETA Mission, Vision, & Values that you profess to and the business you’re looking to acquire says they already have/stand for. So in this post, we’ll explore exactly that… Enjoy!

30 Days to ETA Mission Vision Values

Attend Webinar Workshop: 30 Days to ETA

The Light at the End of the Tunnel

The best definition of a vision statement comes from Wikipedia: “A vision statement is a company’s roadmap, indicating both what the company wants to become and guiding transformational initiatives by setting a defined direction for the company’s growth.” Since your business plan is the roadmap needed to get to your end destination (Selling your business that you’re about to acquire), I propose that the vision is the original reason you’re getting into business. The vision is the inspiration, or the big picture, that keeps you going when you inevitably get distracted (and you will get distracted along the way!) 

Bill Gates had one of the clearest vision statements or business goals I’ve seen. In an email to employees on Microsoft’s 40th anniversary, he wrote, “Early on, Paul Allen and I set the goal of a computer on every desk and in every home. It was a bold idea and a lot of people thought we were out of our minds to imagine it was possible.” Gates had a big picture in mind, and made it happen. Today, it seems like we do have at least one computer in every home and every office. Whether it’s a laptop, a desktop, a smartphone, a computerized appliance, or the like, computers are everywhere.

ETA Mission, Vision, & Values are the cornerstones of a successful business. They need to be strategically planned and aligned during execution for success!

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Business Vision Statement Purpose

If you’ve created a business plan to prepare to acquire your future company, why do you need to stop and put your vision into words? Ultimately, keeping the “big picture” in mind inspires you and motivates your future team members. Here’s what a vision statement does:

  1. Gives the company direction
  2. Focuses the company’s future
  3. Directs decision-making
  4. Provides team alignment
  5. Allows for business evolution
  6. Shapes strategy
  7. Measures achievement

Sharing Your ETA Mission, Vision & Values

One of the hardest things Entrepreneurs Through Acquisition can be asked to do in 30 Days to ETA is sharing their ETA Mission, Vision, & Values to motivate and inspire them. I recommend using the funnel approach to keep your ETA Mission, Vision, & Values in front of your field of vision (See what I did there?) With meetings scheduled, you can systematically look backward at what you’ve accomplished or missed regarding your ETA Mission, Vision, & Values. Then, look forward to see where you are going and what you need to do regarding your ETA Mission, Vision, & Values to ensure that you get there.

Rules for Sharing Your Business Vision Statement

There are several rules, or best practices, I’d ask you to keep in mind as a part of your ETA in 30 Days journey. If the adage is rules are made to be broken, you’ll want to break these quickly/often and modify accordingly:

  1. Don’t give up control of your vision
  2. Listen to constructive team input
  3. Check egos at the door
  4. Be willing to modify your team
  5. Prepare to overcome reluctance

SUMMARY

So what’s your ETA Mission, Vision, & Values as an Acquisition Entrepreneur? Do you have a big picture Mergers & Acquisitions vision in mind? What do you want the merger or acquisition to look like? In the future, if you want to sell your business for “lots of money,” how much money is that? How old do you want to be when you sell? What kind of lifestyle do you want to live? Go ahead and paint that picture. Add in the details. Make it clear.

Your organizational mission, vision and values are integral to your business plan. Without a big picture in mind, you can’t keep your business focused on reaching its goals. You’ll spend a lot of time in the weeds, so make sure you know the layout before you begin your journey.

Sam Palazzolo

30 Days to ETA | Day #8 – Leading Yourself

By

Most recently in our 30 Days to ETA series, I’ve been dissecting the business characteristics that maximize or multiply your future company’s resale value. I’ve shared how to master competitive advantage, make your business scalable, hire a great staff, and build a cash reserve to weather the business storms (You can read the previous post by CLICKING HERE). Before leaping from our business’s acquisition to its growth phase further, I want to talk to you about leading yourself — the personal side of your business’s sustainability — Your personal sustainability: your physical well-being and how it affects your business’s value. Why? A strong mind requires a strong body to achieve the final destination of success… Enjoy!

30 Days to ETA Day 8 Leading Yourself

Attend Webinar Workshop: 30 Days to ETA

Strong Body | Strong Mind (You Need Both)

I work with a lot of entrepreneurs/leaders. They tend to fall into a couple of different camps. Camp #1 is the strong mind one. Here, the leaders believe that they are playing chess, while everyone else is playing checkers. In other words, they’re the smartest people in the room (every room!) The other camp is the one with strong bodies. These are the leaders who believe that if they simply wake up at 5:00am and workout like a Navy SEAL that they will get wherever they need to be in business/life. They are in great physical shape, and I am typically envious, but they fall short. In order to be a leader of a small business on this Entrepreneurship Through Acquisition journey you’ll need to have both strong mind and strong body.

You will have to anticipate the effects the long trip an Acquisition Entrepreneur makes when it comes to leading yourself. You have to prepare your mind and body to withstand the monotonous sitting and seemingly endless journey. Maybe you plan to entrepreneur trip with others who can take turns driving with you. Or maybe you plan stops along the way to walk around to stretch your legs and get your circulation flowing. Whatever you do, you have to take care of yourself in order to reach the destination you’ve already mapped out.

You only have one body and mind.. You’d better take care of them accordingly!

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Reaching a Business Acquisition State

Buying a business is hard. Making a business sellable in the end, or attractive to the market will seem harder. It takes a lot of time and energy. Strength and resolve become more important than speed. These are the keys to getting yourself into a Business Acquisition State for Mergers & Acquisitions.

If you as a small business owner haven’t adequately prepared yourself for the grueling business journey, your physical body or mental stability could give out before your company does. If you want your business to survive trials and tribulations, don’t you want to make it to the finish line with your business?

Your business’s survival, its sustainability, is one thing. Your personal sustainability is another.

Personal Versus Business Well-Being

We entrepreneurs think we can accomplish anything and everything. Business owners are notorious for burning the candle at both ends. Typically, we spend 60, 70, and 80 hours a week working on our business. Since eating, sleeping, resting, and exercising don’t appear to contribute to our business’s immediate profitability or sustainability, we don’t make them priorities in our lives. Our personal welfare becomes the sacrifice on the altar of our business.I heard a statistic that in the recent COVID-19 pandemic the average person gained 20 pounds (Scary!)

However, ignoring your needs will eventually lead to a crash within your business. Your physical body cannot sustain lack of sleep, poor diet, and constant energy consumption. When your physical body starts to break down, your mind will begin to lose its clarity and sustainability as well. With both physical and mental fatigue affecting your abilities, your business’s capability will struggle as well. How can you make logical decisions with no sleep or direct your team from a hospital bed?

Personal Sustainability Ideas for the Entrepreneur Through Acquisition

pending time taking care of your physical health and mental well-being is important. As you make business plans, gather team members, and implement systems, you also need to plan time for yourself. Don’t just make a business plan; make a personal sustainability plan. Include time to:

  1. Sleep – If you have to, write down the actual time you should be in bed at night to get the recommended eight hours of sleep your body needs. More than that, don’t bring work to bed. Leave it. Turn your phone on vibrate. You’ll accomplish more tomorrow after a good night’s sleep than you will tonight with no sleep.
  2. Eat – Plan client meetings at restaurants during lunch. Or, have a team member bring in food at a certain time each day. Let sales’ representatives provide team lunches while they teach continuing education courses or do product presentations. Don’t leave meals to chance. Know what you’ll eat and where you’ll eat each day so that you don’t forget to eat or forget to eat well.
  3. Exercise – Even if a typical gym membership is not feasible for you, movement can be. You don’t have to lift weights or run five miles a day. You just have to move. Run up and down the stairs in your building once or twice every hour. Get your blood flowing by doing some jumping jacks at your desk. Walk to the mailbox. Find times and places in your normal day to add in movement. Don’t forget that exercise has the benefit of helping you sleep better, too.
  4. Meditate – Practice yoga, pray, have quiet time, read, spend an hour with a therapist or do whatever else you can to give your mind a break from the stress of daily business. Your mind can’t refocus without rest.
  5. Relax – This isn’t the same as sleeping or meditating. To me, relaxation is time spent doing something you love to do, something that makes you happy. Whether it’s spending time on a hobby, spending a day on the lake, or going to a movie, do it. Schedule a back massage or a lunch with friends. Your happiness should contribute to your business’s success, not be a victim of it.

SUMMARY

Leading yourself seems so simple. After all, who will listen to you 100% of the time and follow your direction? The answer should be you! You may think it’s a bit ridiculous, but take it from someone who’s been in business for 25 years. You’ll take time for yourself one way or another. Either you’ll make a plan for self-care, or your body will demand care. Whether your body shuts down, the good Lord stops you, or your family demands time of you, something is going to happen. You’ll make time one way or another. Why not do it on your own accord?

Why not take a little bit of time over the next few months or year and invest in yourself, starting right now before you own your business? It really is that simple. If you are not sustainable personally, your business will never be sustainable. Your team will fall apart. Even your family could fall apart. I’ve seen it all throughout my years working with clients. I’ve seen business owners file for bankruptcy and divorce. They’ve been hospitalized or stricken with preventable diseases.

This is just a gentle reminder to take care of yourself. Be prepared for whatever comes your way. Life has a way of balancing things out, whether you plan for it or not!

Sam Palazzolo

30 Days to ETA | Day #7 – ETA Financials & Cash Flow

By

No matter how strong your 30 Days to ETA business plan is or how well you grow your team (You can read the previous post by CLICKING HERE), if your business does not have enough in its cash reserve to survive the ups and downs of the economy, black swan events, or minor financial storms selling your soon to be acquired business in the future will be a non-issue. In order to secure outside funding or know how much money you need to personally bring to the closing table, you must know how to calculate how much of a cash reserve your business needs to have on hand to withstand hard times. So in this post we’ll explore ETA Financials & Cash Flow and how they fit in with your 30 Days to ETA execution… Enjoy!

30 Days to ETA ETA Financials & Cash Flow

Attend Webinar Workshop: 30 Days to ETA

Business Owner Myth #1,001 – Easy Money and Big Spending

When I had my first company back in 1997, I had the vision of making easy money and big spending in mind (along with a lot of time off to go and pursue my golfing passion). The reality of this vision was something completely different — Long hours, extremely difficult to come by money, and I didn’t see a golf course for several years!

Maybe I was lucky. The entrepreneurs that seemed to be all around me were making significant money, and as their cash income increased so did their spending habits. Eventually, the economy changed and some of them fell on hard times. As their revenues decreased and expense structures stayed high, they soon ran into cash flow problems. Luck was not on their side after all.

The bigger the squirrel, the bigger the nut. You do want to be a big squirrel, right?

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Withstand the Economic Storms

A key, if not the key, to business survival, is to start with enough money to get through the tough times. To withstand the storms that will eventually come, we Entrepreneur Through Acquisition (ETA) business owners must build a company that has sustainability. In other words, we must have enough cash reserved to reach consistent profitability.

You may already be months or years into your business. In that case, your sustainability depends on your ability to squirrel away enough money during seasons of prosperity to survive the coming barren seasons. Inevitably, every business will face turbulent times. We Entrepreneur Through Acquisition (ETA) business owners have to build a business that can withstand the storms.

Without substantial resources to sustain profitability, businesses will most likely fail. But lack of cash can’t be the only reason companies fail. I’ve seen many clients begin a business with more cash capital than others will make in a lifetime. I’ve also seen those same clients go bankrupt and close their business doors.

What, then, causes businesses to fail? After doing my own extensive research, I there are ten top reasons small businesses fail, and you should be aware of them at the beginning of your Acquisition Entrepreneur journey.

10 Reasons Businesses Fail at ETA Financials & Cash Flow

  1. Product cost comes too close to its sale’s price.
  2. Owners’ stubbornness, perfectionism, or greed get in the way.
  3. Success happens too quickly for companies to keep up with demand.
  4. Owners with financial knowledge fail to oversee their accounts/owners without financial know-how try to handle their own accounts.
  5. Business does not have enough cash capital.
  6. The company fails to rise above mediocre customer service or product offering.
  7. Owners pay too much or too little for operational expenses like rent, equipment, and labor.
  8. Management fights amongst themselves or with employees.
  9. Owners don’t develop an exit plan.
  10. A company’s product or service becomes outdated or unnecessary in the current market.

While all ten reasons cause businesses to fail, I believe number 5 is the number one reason businesses go under. I find that many businesses simply don’t have enough cash reserves to weather storms that come.

Calculating Cash Reserves

That leads me to the next issue — Determining how much cash reserve will be enough to sustain us through the tough times.

In most circumstances, businesses can predict capital needed with a pro forma financial statement. The methodology within the hypothetical calculation applies to almost all types of businesses, so let’s go through this process together.

  • Decide how long it will take your business to move from start-up to profitability. – Let’s say it will take us two years before we become profitable.
  • Calculate anticipated recurring monthly, quarterly, and yearly expenses you will incur during that time frame. – Let’s assume we’ll spend $1,000,000 over that two year period.
  • Conservatively estimate the gross income you will receive during that time frame. – Hypothetically, we’ll earn $800,000 within that time frame.
  • Subtract the projected income from the predicted expenses to calculate the shortfall. – $1,000,00 minus $800,000 equals $200,000.

Our projected $200,000 shortfall is the bare-bones amount of cash reserve your business will need for sustainability, for survival amidst the forthcoming storms.

Don’t stop there, though. Notice that I said “bare-bones amount.” I like to add another 20% or 30% buffer into my projected business cash needs. Therefore, if my calculations tell me I need a $200,000 cash reserve, I might want to begin with $250,000 to safeguard myself against unforeseen circumstances.

Funding the Cash Reserve

By this point, you may be saying, “How in the world can I get this much money to start my business?” If you’re already in business, you may be wondering, “Do you honestly think I’m going to be able to save that ungodly amount of money when I’m barely getting by day-to-day right now?”

This ETA Financials & Cash Flow can work. You can find funding for cash capital and cash reserve, but the funding available will most likely depend on how realistic your pro forma is. With a strong, projected financial statement, you can:

  • Apply for a bank loan or line of credit.
  • Get a loan from the Small Business Association.
  • Reach out to an outside investor, or loan shark.
  • Tap into a rich family member’s pockets.
  • Save the money yourself.
  • Sell assets you already own.

Cash in the Mattress

Since you know that cash is king in business sustainability, your goal should be to keep it — Squirrel it away. Put it in a savings account or a CD you can’t get to easily. Protect it. Invest it. Pay yourself first. Give yourself 10%, 15%, or 20% of your business’s gross income each month to create an emergency fund. This is the ETA Financials & Cash Flow strategy that I profess you partake in initially.

Then, do whatever it takes to get more customers. When times are good, pour extra income back into marketing and advertising so more people know you’re around. Furthermore, take care of the customers who come through your door so that when customers have to be stingier with their money during the rough times, they’ll come back to you instead of your competitors.

Cash Out

So if the whole point of this “30 Days to ETA” series is to buy a business to sell it, we have to focus on business sustainability. Economic storms will come. Maybe they come during natural disasters like floods, earthquakes, or tornadoes. Perhaps they come when loved ones fall ill or family members begin feuding. No matter how the storms come, we know they’re coming and we’re prepared via ETA Financials & Cash Flow.

SUMMARY

Therefore, we stabilize our business’s scalable foundations with strong management systems. Then, we recruit the best team members we can afford to build the framework of our business’s value. But if we stop there, we’ll have no safeguard against the storms. Even if we build our business on the proverbial rock, without additional cash reserves, cushions, or protections around the structure, we’ll likely still be swept away by the waves or receive a pittance in return for our investment.

Sam Palazzolo

30 Days to ETA | Day #6 – The ETA Team

By

If you’re following my 30 Days to ETA series, you know that my goal is to help you find a business to either merge with or acquire. In our last post, we explored how to add value to your company so that when it comes time to sell it, you maximize the sales price as much as possible (You can read the previous post by CLICKING HERE). In this article, we’re going to focus on what it really takes to be an Entrepreneur Through Acquisition, namely you don’t need to do it alone. Instead, you’re going to need to bring a team with you (Your ETA Team). Think of Your ETA Team as a group of specialists you hire to help you in your Mergers & Acquisitions endeavor, and you’ll want the best people on this team! We’ll also look at your organization team (Who will help you in running your business)… Enjoy!

30 Days to ETA Your ETA Team

Attend Webinar Workshop: 30 Days to ETA

Your ETA Team

When it comest to 30 Days to ETA, you know the old saying “If you want to go fast, go alone. If you want to go big, bring a team!” is 100% accurate. In my own Entrepreneurship Through Acquisition journey, I know that I thought I could do it all. However, as the Letter of Intent (LOI) was approaching expiration, I realized that there was still way too much left on the “To Do” list than I care to admit. With this in mind, you’ll want to surround yourself with subject matter experts (SME) that can conduct their own portion of the due diligence process.

But who will you want on Your ETA Team? In my experience, you’ll want the following members on Your ETA Team:

  • Business Lawyer – Everyone needs a lawyer, especially when it comes to Mergers & Acquisitions. The difference between having a good one and none can be financially devastating. I know of friends who’ve signed LOIs that were intended to be intent-oriented but in reality were purchase agreements — meaning that they were on the hook for purchasing the organization regardless of due diligence findings!
  • Forensic Accountants – I’m an accountant by training, and even I recommend bringing in an accountant to do a second review of the books. Why? If the joke about CPAs around tax time is true (How many different answers will five CPAs give you on your tax questions? Six!), then having another set of eyes that can bring you a different perspective will be helpful.
  • Valuation Expert – You want a good deal when it comes to structuring your purchase. A valuation expert can provide Your ETA Team with the answers regarding what the valuation is right there/right then.
  • Buy-side Broker – I’ve often been on the Sales-side Broker situation, where no matter how “friendly” the broker was during the process, at the end of the day they worked for the seller. With this in mind, they were “selling you” the business. As an Acquisition Entrepreneur know that the broker does not represent you and is not looking out in your best interest. However, a buy-side broker will if you can find/hire one.

Go fast alone, OR go BIG with a group (i.e., the Team!)

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Building Your Business Bench

If you’re like me when I first heard the question, “How strong is your bench?”, I thought about the bench full of second-string athletes at a football, baseball, or basketball game. These strong and talented athletes are just waiting for their chance to jump into position at a moment’s notice. Coaches constantly rotate players on and off the field, or on and off the bench, to showcase and preserve the strength of their overall team.

Essentially, I’m talking about that kind of bench, but this article is about small business owners, not football coaches. There aren’t any second-string team members in business. Every player in our business has to be an all-star (A-level player). You must hire the best people you can afford.

Recruiting Your All-Star Business Team

Where do you start? Sure, you see the need to find the “right” people for your business, but how in the world are you going to make that happen? Here is the method we follow at Tip of the Spear Ventures:

  • Identify the position, or team member, that will add the most value to the business. As business owners, our personal strengths will shine. At the same time, our weaknesses may be just as glaring to those around us. In order to strengthen the areas in which I’m the weakest, I tend to look for the person who can offset my own skillset. I want to hire someone to fill in the holes I inevitably leave so that my customers see no weaknesses.
  • Recruit that team member. Once you know what position you’re attempting to fill, you want to look for that team member. Either hire an agency to conduct the talent search for you, or buck up and do it yourself. If you use an agency, decide beforehand if you want to pay a flat-rate fee for hiring services or if you want to pay on a contingency basis when you hire the agency’s chosen employee. If your small business resources are slim, then you must do your due diligence to check your applicants’ references. You’ll have to review their social media profiles, conduct interviews, discuss job requirements, and agree on pay scales.
  • Interview multiple candidates. Choose several people whose qualifications fit your job requirements. Then, let them fulfill the job they’re going to be doing so that you can compare their skill levels for specific tasks. In their working interview, give them time to mess up to see if they can acknowledge their weaknesses and make corrections. I, personally, will always choose an employee with good character over an employee with impressive skills. Skills can be taught and improved upon; character and personality cannot.
  • Get a Second (or Third) Opinion. Structure your interviews so that you, as well as no less than one other person (preferably two) interview the same individual. Questions should be similar in nature for compare/contrast amongst the interviewers and should be qualitative — not subjective — in nature.

Once you master this hiring process, whether you go through an agency or hire the individual yourself, you’re going to repeat it until you’ve built out your entire organization. Yes, I said “organization.” You can’t stop after hiring one person. You’re trying to fill your team bench because you want this business to operate autonomously without you.

SUMMARY

You’re not going to win a championship right away, and you certainly are not going to win one all by yourself. Your business won’t sell for millions in the future if you don’t surround yourself initially with Your ETA Team made up of subject matter experts (SMEs) who can help you buy the business right. Thereafter, building your business with the right people who will buy-in to your business plan and know how to implement the best management systems becomes crucial to your success. Your business will grow, and that scalability will increase your company’s sellable value.

Sam Palazzolo