“Build it and They Will Come”

The line comes from the 1989 film starring Kevin Costner as an Iowa farmer who hears voices and ends up plowing his corn field under to create a baseball diamond.  Miraculously “Shoeless” Joe Jackson and other members of the 1919 Chicago Black Sox show up, start to play baseball in the “Field of Dreams”.  Large crowds come from miles away to see the spectacle (paying a small fee surely) and Costner’s character is saved from bankruptcy.

Fade to present-day.

It’s not uncommon today to run into business people today who firmly believe that business runs in exactly this way.  You come up with a great idea for a product or service open a shop, hang a shingle, and the money will start pouring in.  In fact, as someone who has just opened up his own practice someone recently said exactly that to me – “You’ve built it, they will come!”

I’m under no such illusions.

The success of any business, new or existing, is relentless promotion work.  You have to be working harder at it than the next person.  It’s more than just building a website, maintaining a LinkedIn presence and having a nice storefront.  Your competitors are going to be out there working at taking as much of the market share as they can – yours in particular.  You need to be out there too.

Doing this properly means making a plan.  I can help you develop a plan that is specific to your business and your situation – give me a call. (And stop listening to the voices!)

When Your New Hire Doesn’t Work

You’ve done everything right, second interviews, reference checks, insightful interview questions.  Everything you read or could think of was incorporated into the recruiting process.  And yet somehow it’s just not working out.  There are many reasons why things don’t work out when you hire someone, but the most pressing issue for you is, “What can you do about it?”

The three R’s of correcting hiring issues are Re-train, Re-position and Re-place.  It’s important to realize how expensive it is to replace your new hire and what other choices should be thoroughly considered before opting to replace your prized recruit, but sometimes that’s the best option.

The response you choose is going to be a direct reflection of what you determine the problem to be. 

Is there a deficiency in skills?  This may be overcome through training if you’re sure that you have found a good fit for the rest of your team.  It’s also an opportunity for you to determine where the miscommunication happened in the selection process – was it non-specific questions or someone who has “enhanced” their qualifications?

Repositioning is another alternative when you find that the person you hire is a great fit for your team, but isn’t quite right for the position you’ve chosen for them.  For example a highly social person who has been hired for a data entry position might actually be more suited to a customer service position.  Don’t lose a good team-member just because you haven’t found the right niche for their talents!

Sometimes your new-hire just isn’t going to work.  You’re going to have to replace him.  There can be lots of different reasons for this, but in the end the key is to act quickly and decisively.  Delay can have several negative effects – other team members will see your lack of take-charge leadership, morale can take a turn for the worse, mistakes can pile up costing money to fix or even worse cost you customers or other employees.  It’s rarely easy to end someone’s employment, we’re all human after all, but delay is never the answer – get it over with and let both parties move on.

Building your team is a critical part of creating a successful business – make sure that all the parts are the right fit and in the right places!

Plain Talk About Shares

OK – so you’ve decided to incorporate (or maybe you already have) and you’re starting to work with your accountant and lawyer to set up your share structure and it’s like they’re talking an entirely different language.  “Dividends”, ”Preference”, “Non-Voting”, “Cumulative”.  What does it all mean?

Different types of shares can carry a large variety of characteristics.  These can be mixed and matched in many different combinations to achieve the goals that you and your professional support team designate. 

Shares are generally divided into two main types: Common and Preferred.

Common shares generally have a claim on the accumulated historical earnings of the company (commonly referred to as Retained Earnings) after all expenses and other claims have been satisfied, including those of the Preferred Shareholders.  They are entitled to the rewards of owning the business and generally bear the risk of it too.  This is likely what you will be issued as the owner of a brand-new company.

Preferred Shares are used in small companies for more advanced tax planning when it’s desirable to give access to the earnings of the company to parties other than the primary owner for income splitting or transitioning the business from one generation to another. 

Either type of share can have any combination of these common characteristics:

Voting rights – this determines the control of the company.  Shares can be non-voting (no say in the control of the company), full voting (one vote per share owned), or super-voting (multiple votes per share owned.)

Retractable – the company call recall the shares under specific conditions by paying a specified amount.

Redeemable – the shareholder can return the shares in exchange for other shares or a specified amount of cash under certain conditions.

Dividend Entitlement – Preferred shares often carry a prescribed dividend rate.  The company may have the option to not pay the dividend should the need arise.  If the entitlement carries forward to the following year (when the company will owe twice as much) then the dividend is said to be cumulative, if not, then the dividend is non-cumulative.

Par or Redemption Value – often used in advanced tax-planning strategies to facilitate the orderly removal of funds from the company over time.

These characteristics can be used in any number of different combinations based on your individual situation.  Thoughtful planning for long-term eventualities during the incorporation process can save the expense of redefining your share structure later. 

Working with your Chartered Accountant and lawyer will ensure you get the structure best suited for your venture – new or existing.

If you have any questions about shares or other parts of your business I would love to talk to you.

jerad@jeradlangille.ca

Screen For Skill, Interview For Personality

Putting together a highly effective team is one of the greatest challenges of owning and running a business.  I have been hiring people for various positions for over 20 years, made some great choices and made some outstanding mistakes.  Mistakes that aren’t fatal, but they have taught me some great lessons and changed the way I approach hiring.

Here are a couple of practical suggestions that I live by now.

Screen for Skill.  If you’ve ever placed an ad looking for an employee or staff member, you’ve probably also received a flood of resumes in response.  Don’t let this overwhelm you – use the resumes to create a shortlist of people who have the skill sets you need and schedule interviews from this list.

Interview for Personality.  Obviously you’re going to want to confirm the skills that were listed on the resume, but I use the interview to try and get to know the candidate on a personal level.  Ask open-ended questions and allow the interview to flow to topics that the candidate wants to talk about.  I want to get to know them as much as I can in the time we have.  To facilitate this it is important to make sure you have enough time for each interview – you can’t cram it all into 6 minutes.  Interviewing for different positions will take different amounts of time, but I wouldn’t recommend any less than 20 minutes even for an entry level position.  I want to make sure that I enjoy interacting with them, after all I’m going to be working with them.  This helps to ensure that they treat my clients and other team members well too.

Don’t Force It.  If you get to the last of the interviews on your short list and no candidate really stands out don’t force it.  Don’t hire someone that is just “OK”.  These are people you are going to spend a lot of time with and represent you to your clients.  Go through the resumes again, run the ad again, interview more people, make sure you get the best fit for your team!

The wrong team members can be a source of constant frustration and distraction, but when you get the right team together it is one of the most successful feelings in business!

Banks

Asking a bank for money is something that almost every business owner will be faced with at one time or another.  It can be a stressful and intimidating experience.  But it doesn’t have to be.

The business banker that you meet isn’t actually your enemy – they’re your friend and your advocate.  They will work with you to refine your proposal, honing it for presentation to their risk management group.

Banks are typically looking for two things – first and foremost is cash flow, collateral is secondary.  Banks don’t want to own cars, buildings or special industry equipment.  Seizing your collateral is failure for the bank – they won’t make any money auctioning off your assets.  They want the loan repaid – with interests.  So cash flow is the best place to focus your efforts when preparing your submission.  Many businesses want to focus on the product or service and the marketing plans.  This is what they’re excited about and it’s an important part of the proposal.  Cash flow is full of numbers and boring, but this is what matters most to the bank.

If you’re starting a business or expanding an existing one, I can help you put together a great presentation for the bank and work with you to secure the financing you need.