Experts in each of those three areas shared the lessons they’ve picked during a March panel at the Minneapolis Club, jointly sponsored by Upsize and Rick Brimacomb’s Club Entrepreneur.
Whether it’s implementing the Entrepreneurial Operating System (EOS), protecting intellectual property or figuring out how to exit gracefully and with the maximum profit possible, it’s easier to learn from others’ mistakes than experiencing them yourself.
Ouch — costliest mistakes
The owner of a local brewery recently came up with its name and filed the paperwork to protect it, only to have the application denied when it was discovered that a Canadian wine company used the same name on its bottles.
Trademark laws, says Stephen Baird, who at the time of the discussion was chair of the brand management group with Winthrop & Weinstine (he has since moved to a new firm), are broad enough where wine and beer can be construed as overlapping enough products where having two companies sporting the same name could result in confusion.
“Entrepreneurs, when they are starting out, are understandably wanting to do as much as they can on their own,” he says. “I’ll pick up a lot of clients after they’ve tried to go down a path and run into a brick wall or fallen into a ditch.”
In this particular case, the business owner saw that refusal and sought out the owner of the wine company in Canada to see if they would be willing to consent.
“I always tell business owners don’t ask for permission unless you are prepared to live with no and then follow that,” he adds. A law firm can “start to identify scabs that might be associated with those rights” or find other leverage points that may convince the winery to go along.
“That never happens right out of the chute,” Baird says. “There is no incentive to say ‘yes.’ Why would I limit my rights just to be nice?”
Julie Keyes, owner of exit planning consultancy KeyeStrategies, grew up in an entrepreneurial family and has seen a lot, both first- and second-hand. She cautioned attendees to be careful about taking on a lot of debt to finance growth.
“We always had a cash rich business. I didn’t believe in debt,” she says. “I still don’t believe in debt. … I saw too many companies go down because they had too much debt. There are times when you do need to utilize lines of credit and other people’s money. I try to help my clients think that through and make good decisions about money.”
She’s also seen a lot of business owners overvalue their companies as they are getting ready to sell. Keeping a regular eye on valuations is key to avoiding that disappointment.
“It ends up they need to stay engaged in the business and grow in the business longer than they planned to,” Keyes says.
With EOS, one of the biggest problems arises when there isn’t someone within the organization to keep the visionary – often times the founder with a wandering attention span – focused and accountable to the business’ plan for success, says Chris Naylor, a certified EOS implementer and founder of B. Better Success Coaching LLC.
Naylor cited Walt Disney Co. as an example. Walt was a genius, but he needed his brother, Roy, to come along and systemize his ideas before the company thrived.
“We need that integrator to keep holding us accountable, to keep us focused on the plan,” she says. “They couldn’t be more opposite roles. To be able to go toe-to-toe with a strong visionary it takes a strong integrator. It’s not just an admin person doing your bidding, it’s someone who can really push back.”
One key is building teams
Each panelist indicated that finding the right partners to move forward with growth in an intelligent manner is a key to success.
That means both internally and externally. Having the right people on staff and in the proper roles to best capitalize on their strengths, is vital, Naylor says, adding that success starts with a great leadership team that can pull that entire workforce together.
“As the leadership team goes, so goes the rest of the organization,” she says. “If the leadership team doesn’t trust each other, people can’t be open and honest.”
Externally, both Keyes and Baird argue for establishing a team of strong advisers early on.
Keyes acknowledges that when running her first business, she did not have a great advisory group.
“The term business coach or business adviser wasn’t very popular in those days,” she says. “You didn’t really hear a lot about people who did work like that. You certainly didn’t hear about exit planners. If I could do it over again. I think I would make sure I have someone on the outside who is a fit for me.”
Often times, she says, owners don’t know where to start the search for qualified assistance. So, they end up calling their CPA.
“The CPA is someone who needs to be on that exit planning team, but there are other people who need to be on that exit planning team,” Keyes says. “And there needs to be someone who drives the process.”
Baird says that team of outside advisers should include an intellectual property attorney who can proactively ensure that names, designs, products and other distinguishing features are protected.
It’s even more important today, during a time when people are searching the Internet regularly, proactively looking for people infringing their marks.
“If you haven’t done the proper things to clear the name before you launch, it’s so much easier for companies who are actively looking for targets to enforce their trademark right,” he says. “You are visible in ways you weren’t before. Companies need to bear that in mind.”
One other thing: start early, Keyes says. “I find business owners have resistance to working with people they don’t know. I think it’s important to establish those relationships as early as possible.”
Factors for success
As part of the team, Baird says, an IP attorney can not only protect a company from losing money on picking a previously protected name, but can also start adding value by helping identify and protect other property that sets the organization apart.
“It’s important upfront to think about an IP audit so the company can identify what are the intangible assets the company has, what is the secret sauce that makes your business different from others, and what would really bother you if a competitor started to do,” he says.
Naylor has identified three factors that will help EOS businesses gain the traction they are seeking. The first is building a great culture. Some organizations do it so well that even tight labor markets aren’t a problem.
“They might even have a talent pipeline, where you don’t have to worry about hiring people because there are people sitting in jobs at other companies waiting for an opening in your company,” she says.
The second factor is establishing core processes, something small businesses are more known for not doing. But it’s vital, Naylor says, to create checklists that will help drive consistency in performance management, onboarding new hires and other areas of the business.
Finally, she says, organizations need to get past “death by meeting,” where time is wasted, there never is an agenda, there’s no end time and nobody is held accountable on action items.
EOS calls for weekly 90-minute meeting that are well organized, kept on track and lead to a well-informed, cohesive workforce.
“If you can nail these three in small businesses you will gain the traction you are looking for,” Naylor says.
For Keyes, talking with owners about selling or otherwise transitioning their business is about more than making sure they have their finances, management team and other financial factors in order. The process also includes discussions of what the future will look like. Often entrepreneurs have not taken a lot of time to figure out how they plan to remain relevant after moving on from the company they built.
“Many owners have a hard time looking into the future and imagining what their life would be like without their business,” she says. “If you talk to any investment banker or business broker out there, they will tell you they’ve had deals where the owner actually sabotaged their own deal because they are afraid.”
By Andrew Tellijohn
Photographs by Tom Dunn
CONTACT THE EXPERTS
STEPHEN BAIRD, formerly with Winthrop & Weinstine, can now be reached at: 612.259.9718; bairds@gtlaw.com; www.gtlaw.com.
JULIE KEYES owns KeyeStrategies: 763.350.5563; julie@keyestrategies.com; www.keyestrategies.com.
CHRIS NAYLOR is a certified EOS implementor, founder of B. Better Success Coaching LLC and owner of OECS Workplace Safety Experts: 612.802.9137; chris@b-betternow.com; www.b-betternow.com.
MICHAEL OLSEN is an intellectual property attorney with Winthrop & Weinstine: 612.604.6718; molsen@winthrop.com; www.winthrop.com
