Last year the world changed for most business leaders. Remember how good a president and manager you were and how successful you seemed to be?

Up until several months ago we were all playing a game, “basketball” if you will. We knew the rules and had the skills to win. We were cruising towards a wonderful retirement.

Then the world suddenly changed. As we started to shake off the shock and got our bearings, we realized we were not on a basketball court anymore but rather on a slab of ice.

The new game was called “hockey”.  The playing field was suddenly different and we didn’t quite get the rules.  Now we had to put on helmets and elbow pads and veer into the “corners” of the business world. We started to get banged up and bruised up and things got a whole lot tougher if not nearly impossible.

Many of us had our lines of credit cut or closed, the ones you need to survive the lean times. Plus the bank still wanted you to pay your bills.

Sales decreased by some 40 to 60 per cent. You did your best with retained earnings, savings and loans from family members to keep afloat. You cut expenses to the bone yet wondered if your taxes and costs were still going to rise.

Those of us in the last third of our lives realized we suddenly had to learn a new sport. In this game we found out we no longer had the right players, skills or resources to win. Now it was time to transform the team to compete in a new arena.

Battered and beaten we must now ask ourselves, so what are our options?

Do nothing and adopt a wait and see attitude. You could stay the course, do nothing new, and hope the game changes back to basketball. Risky and unlikely for the foreseeable future, but it could happen.

Re-tool and start over. Are you ready to learn “hockey” and get comfortable on a hockey rink? Can you learn the skills, source and/or retain talent for the new game? It may take up to 5 to 10 years to get back to where you were one to two years ago.  If you are in your fifties or sixties is this how you want to spend the next five to ten years of your life? Perhaps this could make you feel young again.

Sell your company. Sell NOW? You could take the next 12 to 18 months to position your team on the new field, with the new rules and get maximum value for your company. Securing the right help could make it happen.

Hire a professional manager. You could still plan on playing golf, traveling and/or spending more time with your family. Putting the right coach and management team in place that knows how the new game is played, is a real possibility. Once you have the players onboard you might even consider an ESOP and create a long-term sale process where both you and your employees emerge victorious.

Consider these possibilities. Time, money, talent and the marketplace are your empowering variables. I believe the right answer is to pick one and stick to it.

John Daley is CEO of the Daley Group, LLC in Chesterfield, MO. The Daley Group, LLC is a highly valued resource focusing on sourcing capital,  M&A and business growth for middle market companies. They study M&A and growth challenges and then identify, implement and measure solutions for their clients. For additional information call 636-527-7627 or email JRD@DaleyInstitute.com.

John R. Daley

June 19, 2009

Seasoned companies either fail during a recession, ownership transition or during growth.
 

So we have survived the economic collapse.  We are battered and torn, less talent, less capacity, reduced cash reserves and fewer customers buying less… but we are still upright!  Just anemic.  We get to choose how this continues.
 

The next potential cliff to beat will be the growth and hyper inflation phase.  In order to compete we will have to reinvent ourselves to make up for lost sales due to customer value changes.  Customer buying patterns are probably changed for the long term.   Markets are consolidating and evolving. We have to reinvent our offering to earn business.  That means market analysis is required which takes time, talent and money. Our cash reserves were used to make up for a loss of 40 to 60 percent of our normal profits so we have to rebuild our reserves.   Inflation will mean that the reduced cash reserves you have will be worth less.  Bank loans are few and far between even if you had predicable sales and assets in demand.  Asset based loans are available at about 8 to 12 percent if you have unencumbered assets and predictable cash flow.  Mezzanine loans are available at about 16 to 18%, Wow! They do have a place.
 

We are truly back to the basics of lending:  Appropriate Collateral, Target Market, Competitive Advantage, Strong Business Plan and a Strong Management Team that can deliver despite the market challenges.  Money is available for those prepared and that know where to look. 
Some of us are about to run a marathon and we are anemic.  We just have difficulty admitting we don’t know what we don’t know. 
 

During this recovery the strong and financially well off companies will be sourcing contractor and employee top talent, preparing for growth.  Some are planning to grow organically and some are shopping for deals on capacity, customer lists, mergers and acquisitions.   The best are analyzing the markets to see were their capabilities will earn them profitable sales.  Where can they pick off weaker players?  Our freshman year of business school we were taught that was called asset and resource reallocation to more efficient uses. We will truly see who has what it takes and chooses success.
 

The bottom line is you will either be a more efficient and stronger competitor or have more efficient stronger competitors.  You will either have cash, talent and capacity to compete or you will be running the marathon anemic.  The next few months will truly tell who will survive and thrive!
 

My take away from all this besides all of the above, never forget the cycles, they are just like the seasons, plan for them!

Add page to favoritesBy Martha Beck from O, The Oprah Magazine, April 2009

"You make the world a better place

by making yourself a better person."

-- Scott Sorrell

"Confidence and enthusiasm are the greatest sales producers

in any kind of economy."

8 rules to live by that will help you survive- even thrive- in 2009

Months before President Obama took the oath of office he began assembling an inner circle of advisors. He and his transition team painstakingly pored over the qualifications of candidates to identify the strongest leaders for cabinet posts. In methodically vetting future leaders of his administration, President Obama demonstrated that he understands the law of the inner circle: A leader's potential is determined by those closest to him or her.

Past presidents have learned the hard way that failures of a leader's trusted advisors can bring disaster. During the Clinton administration, investigations into the conduct of five cabinet members eroded public perception of the President's judgment. The indictments and allegations gave ammunition to Clinton's foes and cast doubts on his character, especially after the Monica Lewinsky scandal came to light.

Likewise, President George W. Bush faced embarrassment when the man he appointed as head of FEMA, Michael D. Brown, failed to provide strong federal leadership in the aftermath Hurricane Katrina. Inexperienced in emergency management, Brown was overwhelmed by the crisis. During the height of the disaster, he fretted about finding a dogsitter and fussed about his attire. His unpreparedness and inaction left the Bush Administration vulnerable to scathing accusations of neglect and indifference.

Five questions to ask when forming your inner circle:

Do they display exemplary character in everything they do?

We see this at the Daley Institute in a small scale compared to a whole country. For example, when we started with one of our clients we described the culture as “Toxic”. People at all levels of this company were posturing to take out their “adversaries”. Everyone was taking “poison” and bitter. We made some changes to silence the trouble makers (purveyors of poison) who had no interest in the success of the company. We improved systems and processes minimizing scrap and maximizing quality output. Four months later an employee’s wife came in and said her husband actually came home happy every night and she enjoyed their talks. What happened, she asked? We all worked together for the good of all. Management and workers began communicating and working through issues. The company is continually improving its health.

“If you don’t like something Change it!
If you can’t change it Change your attitude.” Maya Angelou

We usually retain most employees and managers by getting them to communicate, realistically understand each other’s role, risk and reward. We get buy in on vision and goals. We eliminate the peddlers of “poison”. Amazing things happen.

Who is “we” in the original question… Americans! Let’s think about that statement for a minute.

We have survived two world wars and an attack on us at home on 9/11. That’s just recent. We have survived weather challenges. We have survived economic challenging cycles. I would suggest to you that we are our biggest enemy.

Let me suggest that we not take “poison” or feed “poison” to the country by trying to take out the Democrats and liberals in the next elections.  We can work with the Democrats like we thought they should have with President Bush and the Republican leaders in Congress. We can negotiate from our principles and values finding middle ground. Why find middle ground? Because about 40% of this country is liberal leaning and about 40% of our country is conservative leaning and about 20% are in the middle. We have a belief at the Daley Institute: “None of us are as good as all of us!” I would suggest that the USA should have the same belief.

So, I’m suggesting we show the rest of the country how to fight for the whole country. Let’s fight for appropriate taxes and laws to keep our economy in harmony. I’m assuming we all want jobs and money to pay for our bills. Let’s fight against high taxes, government bail outs and give away programs that will harm our kid’s future. If our economy is healthy and prosperous the government will have to tax less to pay for our governmental bills. But let’s respect our fellow Americans that lean towards the center and liberal perspective. We are all a valuable part of our society.

I believe the government is quickly learning that if the American public sits on their hands in fear all the actions of the government is useless. The best the Democrats can do is blame the Republicans and vice versa. So “we the people” need to rebuild our country and our economy and stop looking to Washington.

• Banks are not lending so businesses are concerned about liquidity and consumers are worried about the businesses.  
• Consumers are not spending because they have no confidence in current and future cash flow.
• Will they be able to pay their bills next month?
• People are being laid off and their retirement investments are seriously diminished. This is more of a worry than the value of their house.
• People being laid off feeds the fear of the consumer which makes them want to spend less.
• Businesses are concerned about the ability to fund short term cash flow and roll over long term debt. So they are letting employees go to mitigate the risk.
• Sales for businesses are dropping because of consumer spending so they are laying off employees.

Does anyone else see a vicious cycle here?  How will the government assure businesses of liquidity availability.  How will governent assure consumers of long term jobs?  It appears to me the solution is in getting the businesses funded and healthy so employees (consumers) feel comfortable enough to start consuming so the businesses can stay healthy. We need to communicate without the hate and anger and with all of our best interest in mind. We need to understand our roles, risks and rewards we chose and contribute to the best of each of our abilities.

“Ask not what your country can do for you; ask what you can do for your country”.
John F Kennedy, President, USA

I believe it was Warren Buffet who said “There are two kinds of welfare, one comes from the government and one comes from the trust department of a bank, they are both destructive!”

So I humbly suggest that we do not take “poison” or give “poison” hoping are opponents die. Continue to turn off the talking heads and hateful biased media and entertainment industry regardless of your political persuasion. If you think it’s biased turn it off! Take control of your mind and attitude.

I suggest we put our actions where our words are and have an orderly and respectful transition of power as we profess to the world. Let’s welcome President-elect Obama and his administration and join me in saying a prayer that he leads with all our best interest in mind helping us improve the future soon for our families, fellow Americans and world. Most importantly, let’s do our part to start the economic recovery now. We can chose to continue our toxic culture or be like our client that built a culture and system that makes all stake holders proud; I voted we rebuild our great country and world together! We can lead the world out of this challenging time now!

You can say this is “pie in the sky” but the alternative is ugly and will impact our loved ones. We do it with clients and they are always amazed at the transformation of the culture, productivity, creativity and quality.

Good luck to all of us, we are building our future!

John R. Daley, CEO
The Daley Institute

John R. Daley, MIB

Business leaders should not be trying to identify the bottom.  NOW is the time to prepare for recovery!  Allow me to build my case.

Running a business is like preparing a team for the Olympics.  We have just finished our last Olympics and the next one is coming.  We are spent in some cases, some are looking back at what could have been and some are worried about how they are going to recover by the next Olympics. 

These last few months have been life changing for most of us.   Consequently your stake holders (customers, employees, vendors and investors) values, needs and desires have changed.  Is your company ready to serve the new needs, desires and values of all your stake holders?  Do you know what those new needs, desires and values even are?  Keep in mind; I’m not sure they have stopped evolving.

There are two general groups of companies.  One group is cutting people, costs including sales expenses and hoping to survive the storm.  The owners are stressed and holed up in their office.  The second group is repositioning and analyzing how their market is evolving.  They are looking for new markets to consider.  These future winners are out talking to customers, keeping themselves and their team up beat, optimistic and focused on the recovery that is coming.  They are taking talent and market share from the first group who probably won’t know till it’s too late.   It’s not too late to join the latter group.

We are looking for a recovery in about 9 to 18 months.  There is a significant amount of liquidity on the sidelines right now both, with investors and in companies.  When people decide that the recovery is real, a significant percentage of that sidelined liquidity will surge back into the market as investments and growth projects.   If you wait to start preparing for the recovery until the recovery is in place, which would be like deciding to prepare for the Olympics on opening day.  You will get run over.

Next year’s success stories are repositioning their team for a new season now.  They know this repositioning will take time and now is the perfect time to start.  Teams preparing for the Olympics spend two years or more deciding on the right place to compete, team make up, sourcing the talent and then training. 

 Analyze your market now.  Look at alternative markets that your skills and capacity might serve profitably.  Do this by using the “walking around” method.  Call and visit current and potential customers.  Ask them how their goals and challenges are changing.  Be upbeat and a great listener.  This will provide you the information you need to reevaluate your offerings and how they will be valued.  Do you need to adjust your resources to provide the new solutions the markets are looking for?

There is talent available.  Top talent is worried that they will be unemployed soon if the company can’t hold together.   Bad managers are losing or discarding good people.  Weak companies are discarding good people.  Build your best team now!

There is equipment available.  Some companies are not going to make it.  That’s called reallocation of resources, so they are more efficiently used for higher value.  This has kept our economy one of the best in the world.  There is equipment available and motivated sellers. 

We believe we have 9 to 18 months before we have a full blown recovery.  That gives you time to reposition your company and be in competition form about the right time if you start Now!

The Daley Institute and our co sponsors are hosting Business Growth Round Tables for the next 9 to 18 months.  The complete focus of the Round Tables will be identifying challenges of business leader attendees and working with each other to identify best practices.  Sponsors have all agreed there will be no sales pitches or presentations, these round tables are totally about brainstorming to help our business community be the best prepared for the next growth cycle.  There is no cost for these events at this time.  Our first Business Round Table was December 4^th sponsored by Southwest Bank.  We had 15 business owners participate and they gave it rave review.  These business owners shared great best practices.  Our next Business Round Table is December 17^th, 2008 and our cosponsor is National City Bank.  We have a few spots left.  We will announce the January Business Round Tables soon.

If you would like to cosponsor a roundtable for your community and or participate please email Sbodine@daleyinstitute.com  or call 636-527-7627 and ask for Shawn Bodine.

First, how serious are you about changing your comfort zone? It took you a long time filled with trial, error and success to get to this point.  You're successful right now at some level.  Do you have it in you to get to the next level?

If you are serious about growing your business you have two choices:
·          Changing you into what is necessary for the leadership of the next level of business
·          Finding a professional manager. 
The hardest thing for a coach is to help you be comfortable changing your behavior.  Many coaching relationships fail due to the client getting uncomfortable being outside of their comfort zone.  They may not be able to verbalize it but they will start to fight back and even end the relationship.  Can you see why I ask how serious you are about change?  I have seen owners tank their company after someone else grew sales and then left.  In most cases it results in failure not just going back to the ole company.
·          What got you here will not get you there
·          You don’t know what you don’t know 
·          You and your company are either growing or dying, there is no in between

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