Succession Secrets

I had coffee this morning with a successful entrepreneur, who recently went through a sales process with a private equity group, only to see the deal go up in smoke in the 11th hour. Perhaps surprisingly, my CEO friend decided to keep the business and make it even better and even embark on an acquisition spree that the private equity group wanted to lead. Tune into today’s show about how entrepreneurs view their business, what they like and hate about it and how it influences their decision whether to sell or keep it.   Your succession is success!  

People tend to look to their peers for ideas. Especially their industry peers, as they assume that the best of them have become successful by having developed best practices.  In reality, there is an infinite potential for new ideas, however, advanced the industry.  And the easiest place to find good ideas that work is t look at other industries.  By travelling outside your industry, you can pick up well-tested ideas that no one is using in your market.  You have the chance to become an industry innovator and leader just by copying these ideas. In today's Succession Secrets show, I explore this concept popularized by famed marketing guru, Jay Abraham.  Examples include cloud software companies that have copied utilities, multi-family apartment rental businesses that have adopted pricing practices from the airline industry and FEDEX, which emulated the hub-and-spoke system of the Federal Reserves to invent overnight shipping. Listen to today’s episode to find out about the marketing techniques I imported int

When I was a kid, my dad used to tell me “don’t try to ride two horses with one a*s”.  Recently I have noticed that I am trying to ride not just two, but four horses. (Not mentioning my personal life, which is probably is at least another horse or two).   My horses are coaching groups and individuals, publishing my daily Succession Secrets podcast show, gearing up to become a public speaker and growing my coaching business.  I feel I should prioritize, but I have no heart to kick out any of the horses from under me. I called my father to try to make sense of this conundrum, who further confused me with another proverb, he had heard from his boss as a young MD and researcher: “To be successful, you have to swallow it all”. I.e., he had to treat his patients, write his doctorate, carry out research and teach at the university, if he was to become a top heart specialist. Was my dad talking from both side of his mouth? Read the show transcripts on http://entrepcoaches.com. Your succession is succes

I recently bumped into a fund manager friend, whom I will call Bill. He told me that people don’t appreciate anymore the “buy-and-hold-forever” philosophy of his fund. I inquired about an example when they did appreciate that in the past. He mentioned about the exiting owner of a contracting company, which chose his fund over a competing strategic buyer, as they offered a “long term future” for his employees. (On further inquiry, it turned out that the seller cheated key staff members out of their exit bonus, after closing – hardly a sign of concern for the welfare of these employees.) So why is the GOOD reason for the sale, not necessary the REAL reason, and why is it important to find out? Furthermore, what will be Bill’s real differentiator, if “buy-and –hold-forever” has fizzled out? Tune into the show to find out. Search for “Succession Secrets” on iTunes or the Podbean app. Your succession is success!

I identified 5 major variables to the succession decision. Today’s episode is about discussing these. The first variable is the trigger. There are three triggers to transition, including (1) a compelling alternative future for the business owner / leader (another career, post-entrepreneurial pursuits, etc.); (2) her potential inability to continue running the business (ill health, unsustainable/loss making business); and (3) a potential case of burnout (able to continue, but no more steam in the engine). The next variable is whether the leader can afford to exit. Can he retire? Does he have an alternative income opportunity? Is the business sellable? The third variable is whether the business is ready to be transitioned. It may not be able to carry the cost of new management. The successor(s) may or may not be ready to take over. Is know-how of the business institutionalized (“processized”, documented)? The fourth variable is whether the business owner or leader can secure her net worth locked up

Today I am answering Mark’s question from Henrico, VA. Business owners often grapple with the dilemma whether to promote an existing employee or business partner or bring someone from outside to succeed them. Surprise, surprise… it depends. Some of the variables are the type of culture the business have, the sensitivity of staff members to a transition, the time needed to groom a successor, any skill gaps the company have and the potential for an outside successor to bring a book or business or open a new market and the plans of the owner to cash out of the company at the time of the succession transition or shortly thereafter. One thing is certain. A successor is necessary in most cases for a reasonable chance of doing a liquidity transaction with a third party. Tune into the show for the details. Thanks for listening to the show! Your succession is success!

In my experience as an investment banker, business owners often did not understand how to negotiate the sale of their business. Many of them thought that negotiation is about pressuring people to give up most of their upside to make the transaction sweeter for them. This is the so called win-lose strategy. It can work in situations where one party holds all the cards and the other is forced to deal, such as in near-bankruptcy cases. In most M&A deals however, the parties will not do a transaction at any price, unless it benefits them. In these cases a win-win strategy is more appropriate, where both parties needs and constraints are recognized. In today’s episode I discuss the critical elements to negotiating an advantageous deal for your team, by understanding the needs of the other party and helping them get what they want. I also talk about why proposals must be based on logic and how to avoid making one that terminates discussions at the outset. Tune into the Succession Secrets show and if yo

I would like to share with you a simple recipe that I used to generate revenue and kick-start my business when times were bleak.  It is about setting a target, reverse engineering the input actions required to reach that target and to execute those actions. It’s easier said than done, as an entrepreneur is faced with constant distractions from the outside as well as from her own curious and excitement seeking mind. It is all too easy to be seduced by the next shiny object of an idea.  On today’s show I make the case against creativity and ideas. They are important, but at times of emergency, they can be counterproductive. Tune in to listen to what happened to my investment banking business when we got closed out of our market overnight. How we scrambled to stay in business and rebuild our project portfolio, so that we could stay afloat and give ourselves a chance to return to profitability. Thanks for listening and if you enjoy the show, please review and rate us on iTunes. It helps us get higher

Did you ever waver whether to be “tough” with people when they did not perform to your expectations? Worrying that they would leave and you might have to pick up their tasks and look for new employees who might not end up any better? In today’s show I make the case for setting boundaries and high expectation for people.  How to be tough on them, still keep them and turn them into high performers.  How to dangle the carrot too so that they have a reason to stay beyond the pay check. I share the story of a former colleague and a good friend Peter, whom I was tough with early on his career and he ended up becoming a stellar performer and when we parted ways he became a venture-backed entrepreneur. Thanks for listening and please review or rate us on iTunes. Your succession is success.

What can go wrong with succession. Today, I am answering Jeremy’s (North Chesterfield, VA) question, from the perspective of business owners and leaders. I believe there are four common reasons: Hoping that you get lucky Looking for your alter ego Trying to mentor successors on your own Relying on the successor for your pension As you may surmise from the above bullets, succession is not a slam-dunk. The biggest mistake people make is that it is about finding the perfect successor who will run the business as well, or better than the founder.  A better approach is to think about the organization first and the people second. Even if you found the perfect candidate, she or he will still be human and can be poached, get full of themselves and slack off in the comfort of a nice salary and the corner office. Tune into the show to listen to the details.  And please don’t forget to review the show on iTunes. It will help it reach more of us succession seekers. Your succession is success.

Many founders believe that bringing on an investor is a great idea. They see it as a “seal of approval” that they have a valuable business and they might also enjoy the security of a salary or making money from offloading a few shares. Bringing on a VC or Private Equity investor can, of course be justified when the company needs to scale quickly to preempt the competition from catching up with the idea, or when there is only profitable room for a single player in a niche. On the other hand too many founder give up too much for too little when they raise money from professional investors. In today’s show, we discuss what investors bring, what they say they bring and what they definitely don’t bring. The answers might surprise you. Listen to the show to learn the pitfalls of having a professional investor and what alternatives are available to avoid bringing one on. Tune in on iTunes and leave a review, if you like the show. Your succession is success!

We can be driven by different forces to get to the next level.  Some people are primarily driven from a situation, a job they can’t grow any more in, or a position that doesn’t fulfill them, or a boss who is a jerk.  Others are motivated by a desire to fulfill a specific ambition. I believe the “away motivation” can be very powerful, as it is usually triggered by pain, while “towards motivation” requires desire.  In fact, “desire-pull” is less powerful for most people, while extremely strong for a select few.   In today’s show I discuss the differences in the two sentiments, explain why “driven away” is much more frequent than  “pull towards” and I make the case for why DESIRE is the biggest talent one can possibly have. Tune into the show and – if you like it – please rate us on iTunes. It will help us get the word out. Your succession is success!

Listen to my story of working on selling an old-fashioned metal fabrication business, representing an obnoxious business owner. I resented that man, as he appeared to be undermining the negotiations at every turn, with his distrusting and apparently poisonous attitude. He sensed that I disagreed with him and started to suspect me of having ulterior motives in this deal, out of alignment with the ownership group.  He was not leading it but was an influential player of a group of engineer-owners and I realized that I had to return into his confidence if I wanted to salvage the deal.   Tune into the show to find out how I managed this feat, while maintaining my integrity and how it can help you serve and sell to difficult people. Your succession is success!

Today’s show is about a recent experience of speaking to a group of CEOs on the topic of succession.  One of the ideas I presented turned out to be polarizing the group and generated a heated discussion.   In today’s show, I dissect this experience with the benefit of a few days of reflection and analyze the three things I have concluded to have upset some members of my audience. I also reflect about what vulnerability meant to me in that situation and how I could have reacted differently.   I have not revealed too much here, but you can find out the details by tuning into the show. Your succession is success!

In today’s show, we discuss how leaders can build up their power to persuade and influence others. Leadership is essentially selling your message and to sell anything you first have to believe in your own message with conviction. The first sale is to yourself. Listen to the show to learn how you can build credibility with your own eyes. Self-confidence and belief that will allow you to persuade and influence others with your message. I am sharing my story of how as a young fencer I admired and tried to emulate an audacious peer who competed without a shiver of self-doubt against national athletes, 10 years his seniors.    Find out how I tried to reverse engineer the secret behind Zoltan’s self-confidence to give myself an edge in my career as a banker and the limits to this strategy as a leader. I am also sharing the strategy that leaders can successfully employ to become unstoppable. See you on the show, and remember:  Your succession is success!   Visit Us: https://entrepcoaches.com/steve-preda/

In a recent Vistage meeting, my members were fuming about having to deal with complaining and negative employees. How it drains their energy and focus and pulls them into a space where they hate to be. As a result of some of them sometimes hide in their office to not have to deal with this toxicity. Sounds familiar? Tune into today’s show to find out how to turn the table on the complainers. How by refusing to play on their terms you can go from reactive to proactive mode by overpowering their negativity. You don’t have to go as far as Steve Jobs, who created a “reality distortion field” to neutralize a negative atmosphere and re-energize people around you.

Today’s question came from Mike in Richmond, VA. Mike, leadership is eternal, and the traits of future leaders will be identical to that of the past. The only thing that is changing is the media, but even there we can count on public speaking remaining relevant. Just witness the presidential race. In today’s episode, I share with you the seven most critical traits of a leader. The number one is “inspiring”, as we want our leaders to fire us up to get the work done. The second trait is “visionary”, as we must keep a tangible goal in front of us to progress. The third trait is being “articulate”. No one will listen to a message, which is not articulated clearly and compellingly. Tune into the show to find out the remaining four leadership traits and why they are important. If you would like me to answer your question, tweet it to #asksuccessionsteve, or email it to steve@entrepcoaches.com. Your Succession is Success!

This is a question from Landon, who lives in Ashland, VA. Landon, what do you mean by “transition”? Is it about firing that person, or moving him sideways or to another organization? Would he accept a lower position and lower pay or that would just make him more bitter? Why is he no longer contributing? Is it lack of skill, energy, or poor attitude? If skill, is he coachable? Can he learn new skills? If it is the energy, is it a temporary situation or an old-dog-new-tricks problem? How about the attitude problem? Is he toxic, or just down and out? In today’s episode, we discuss the three risks of firing such an employee and how to mitigate them.  We also analyze how to handle a toxic employee. Tune into the show and let me know what you think. Your Succession is Success!

In today’s episode, I answer Mark’s question from Henrico, VA. The bigger question is whether to do it or not. Then you must decide on your timing. The do or not decision depends on three things: (1) Do you have something more compelling to do, (2) Are you bored and must force yourself with an exit or succession process to move on to a new life-phase, or (3) You can’t do it anymore – ill health, burn out or diminished business prospects are in your way to carrying on. In terms of timing, on today’s show, we discuss 5 drivers that influence your decision as to when to pull the trigger. One of them if your magic number – if you have one. The cash you need to make it worth your while to hand over your baby to a buyer or successor. It may be your retirement nest egg, or the cash you need for your philanthropic endeavors or the number you think you are good for. Either way, it is helpful to have a target to work towards. Listen to today’s episode of the Succession Secrets show to find out about the oth

This question came from Shane who lives in Chesterfield, VA. The first thing to establish is how we define “qualified”.  Does qualified mean “as good as you”, or that he is “good enough to handle the role, and has the potential to succeed in it”?  The latter question is more relevant, as if he is already as good then maybe he should be promoted over your head. (Just kidding. Sort of.) The second question is whether ¬you are ready to move on so that it’s worth replacing you at that stage?  Is there a compelling opportunity that warrants your replacement?  -- If not, then this is probably not the time… yet. In today's show, we discuss how to evaluate if your successor is good enough to handle your responsibilities.  We also contrast succession in the case of an “entrepreneurial” vs. and “operating”-type role… and three techniques for accelerating succession of your “heir apparent”, if you have urgently to promote yourself to a bigger opportunity. Finally, I describe three criteria that should be con