Shifting Five Thoughts for a More Strategic Mindset
We’ve talked about the transition workplaces are going through – from employees resigning in record numbers to the emphasis on employee experiences to the shift in hiring philosophies that prioritize skills over experience. Many employers are working diligently to fill the consequential gaps from those who left and advance those who stayed. And while those who are advancing are eager for the new challenge, the question begging an answer is – do they have the right strategic mindset to successfully transition into their new roles?
Becoming a strategic leader is about much more than the new title or position. It is about broadening the employee’s perspective from focusing exclusively on one area of expertise to focusing on the organization’s bigger, future picture. A strategic mindset simply cannot have a narrow focus.
Many avoid the transition from task oriented to strategy oriented when making this move. And it’s not that surprising. Task oriented roles and responsibilities are often more fulfilling in the day-to-day. There is instant gratification in many instances, as checking tasks off a list can be very satisfying. In contrast, you generally do not see the needle moving from a strategic perspective until months or even years later. And, as a society overall, we tend not to favor delayed gratification. However, to successfully make this transition, the strategic, broad, forward-thinking mindset must be embraced wholeheartedly.
Crossroads to Shift Your Thinking
For those who are at this crossroads, here are five shifts you can make today to begin having a more strategic mindset:
1. Think long-term instead of short-term. Instead of looking at your daily list and identifying what tasks you can cross off, think about the organization’s future. Ask yourself:
What are the possibilities for the future?
What are the opportunities available?
Where do we want to be as an organization in one year? What about in five years?
What can we do today to help us get there?
2. Think bigger rather than smaller. Think about how the tasks on those daily lists impact the company’s overall strategy. Are the things getting done today aligning to the company’s strategy and future plans? What are the long-term impacts of decisions that are being made and actions being taken today?
3. Think about opportunities instead of challenges. Some of the most innovative solutions (in any industry) have been brought about during tough times. It is only when we can no longer do the things we’ve always done that we begin to scratch the surface of alternative methods. And often, those alternatives open various new doors of opportunity that would have otherwise remained closed.
4. Think about future trends, not just the here and now. Join think tanks or find other resources that focus on market research. Ask yourself:
What is happening the industry?
What is happening in the marketplace overall?
How will the events and trends outside of the organization impact the organization’s future?
5. Think about spending time on strategic planning, not just current responsibilities. This is often the biggest challenge for leaders. As noted in a Harvard Business Review article, “How can you avoid getting overwhelmed by day-to-day tasks that feel so urgent, at the expense of game-changing initiatives that are truly important?”
Higher-level strategic thinking needs time, space, and dedicated focus. The most effective strategic leaders recognize this and block time on their calendars consistently to devote to strategic planning.
Cultivating a strategic mindset is crucial for those transitioning into a leadership role. It’s not always easy, but it is attainable by shifting these thoughts. Barker Associates provides strategic guidance to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
I often get asked about why companies should outsource CFO services. As small- to medium-sized businesses grow, they need additional financial resources, including data and expertise to help them better understand the company’s financial health, plan where they can feasibly go based on that health, and improve performance overall. In the past, many companies reaching this phase would bring on a full-time Chief Financial Officer (CFO). But, as we all know, times change … and so do needs and resources. Now, more businesses are deciding to forgo the large salary expense and still get the expertise by outsourcing those financial services.
You may need high-level financial strategy, but you may not need, or maybe you can’t afford, a full-time employee. Essentially, the finance function of your company can be outsourced to a third-party service provider who acts in the same capacity as a CFO. You gain expert financial insights, advice, skills, and resources that will help you grow your business, without the huge paycheck that historically goes with it.
Why Outsource to a CFO? The reasons you may decide the time is right to get someone in your financial corner are plentiful. However, as I touched on above, your company experiencing rapid growth, such as the development of new products or market expansion, is one of the most common reasons. Growth like that needs cash for manufacturing, distributing, and marketing. Does the company have enough? Where will it get the money from over time? These are the questions a CFO can help you answer.
Other reasons to bring on an outsourced CFO include resolving a financial challenge (cash flow, inefficient processes), scaling systems to handle the complex transactions aligned with rapid growth, and needing an accurate, up-to-date financial forecast for budgeting, restructuring, or funding purposes. These major decisions and company crossroads require a financial expert that many companies do not have on staff.
How an Outsourced CFO Helps An outsourced CFO will take their knowledge and broad experience to analyze the company’s financial picture and provide strategic planning and solutions to move forward with the best financial footing. Equally important, they will help ensure the company has the checks and balances needed to keep stakeholders accountable as the company grows. For example, if the company needs to secure additional funding, prepare for a merger or acquisition, or increase oversight to minimize the risk of fraud.
While each set of circumstances and needs vary, an outsourced CFO can:
Develop a financial roadmap to navigate the company’s future
Help make the numbers more understandable
Help overcome obstacles to business growth
Implement reporting for financial and accounting functions
Oversee financial controls
Identify weaknesses and capitalize on strengths
Develop KPIs and metrics
Develop forecasting and budgeting models
Provide strategies to move forward
Put accounting and reporting systems into place
Provide regular financial reporting
Manage cash flow
Help acquire funding from investors
The End Benefits of Outsourcing a CFO It’s appropriate that the largest benefit of outsourcing a CFO is cost savings. And while many people believe that the costs are actually higher, according to an article in Forbes, the idea that outsourcing is too expensive is a fallacy. In the article, they compare the salaries of full-time CFOs (companies with approximately $10 million in revenue) to the costs of outsourcing. The full-time CFO earned about $200,000 to $250,000 per year as a base, plus bonuses, benefits, taxes, overhead, and long-term incentives (equity), adding up to $300,000-$400,000 per year or more. However, an outsourced CFO for the same size company averaged $7,500 per month, or $90,000 per year (assuming they were retained every month, all year, which is not always the case). The outsourced CFO was about a quarter of the cost of the full-time CFO (at the higher end).
In addition to the cost savings, an outsourced CFO provides access to a financial expert with various experiences, and the flexibility to utilize that expertise only as needed. The relationship can start part-time or be project based and, as the company grows, so can the services and time. But in either case, you can get back to the business of your business.
Barker Associates provides outsourced CFO services to companies of all sizes. We can provide the higher level of financial analysis and strategy your company needs to get to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
We’ve been inundated with various headlines regarding the Great Resignation. And while they all have different perspectives, one commonality exists – the value placed on employee experience. Employees are making it very clear that while money is important, it isn’t everything. They want to be valued and appreciated, and find meaning in their work and in those with whom they collaborate.
According to a recent Gallup survey, the percentage of engaged workers declined in 2021 for the first year in more than a decade, in large part because organizations have forgotten about the basics. “Among the engagement elements Gallup measures, the greatest declines were in clarity of expectations, having the right materials and equipment, and the opportunity for workers to do what they do best. These elements are foundational to employee engagement.”
For employers, prioritizing the employee experience has arguably never been as important as it is right now.
What Exactly is Employee Experience?
Think of the employee experience as a journey that includes every interaction and observation during an employee’s lifecycle with your company — from recruitment and onboarding to development and retention to exit. It encompasses all that they encounter and observe during that lifecycle, including their role, workspace, leader, team, and company culture. At their foundation, employee experiences should be aligned with the company’s purpose, values, and mission, and have the full support of leadership at every level.
Why Should You Care?
I don’t know of any leader who would object to decreased absenteeism, low turnover rates, or increased productivity. And these are all very valid reasons that every leader should care about employee experience. In fact, it should be given the same time, attention, and resources as launching a new product or service.
An enhanced employee experience results in increased engagement, a stronger company culture and brand, growth, and better customer service. Think of it this way – your employees are on the frontlines of customer experience, helping to build and represent your brand. And whether they have a positive or negative experience at work each day will invariably impact these crucial relationships, and by extension, your company.
Additionally, as we discussed in At the Intersection of the Great Resignation, Professional Services, and Those Who Stayed, the employees who did not join the Great Resignation are burnt out and often feel underappreciated. These employees, who have more leverage than ever before, could still choose to leave in search of something better, and that often means a better employee experience. However, if their leaders are proactive and look at this instead as an opportunity to enhance employee experience before it’s too late, those employees are more likely to stay. Simply, companies who place value on employee experience have a significant competitive advantage over others who don’t.
“Can You Pass the Turkey … And How Much Money Did We Make Last Month?” The Pitfalls of a Family Member Investor
Ahhh the holidays are among us again (I have no idea how!). Next week, most of us will gather to give thanks for all that we have, as we sit around a table full of turkey, stuffing, sweet potatoes, gratitude, and laughter. And if you’re an entrepreneur with a family member investor in your business, that table may also be filled with some difficult questions, uncomfortable conversations, and awkward silence.
As an entrepreneur, starting a new business is about excitement, courage, and dreams on one hand and anxiety, uncertainty, and often, a lack of funds on the other. And when it comes time to getting those funds, some look to their inner circles first. In many instances, it’s the only viable option, and family and friends become the lifeblood of the new venture. In fact, it has been noted that over one-third of startups have raised money from friends and family – to the tune of $60 billion per year.
Family Member Investors – Some Advantages; Some Pitfalls
There are, of course, several advantages to having a family member invest in your business. First, he or she knows you personally and is likely investing in you more than your venture. This level of trust and familiarity is something you won’t have with other investors.
A family member or friend will also likely be more flexible with the terms of the deal (although, as discussed below, there needs to be strict boundaries). They may agree to a lower rate on return, longer repayment terms and a lower interest rate (if debt is part of the deal), and less equity, and/or have fewer overall demands.
While the above factors can be extremely advantageous to any start-up, issues often arise when the disruptions of an early-stage venture cause entrepreneurs to mismanage these relationships, including overpromising, undervaluing, and lacking communication overall. Additionally, the family member investor may begin to think that they are entitled to everything under the sun, including every piece of information and much more of the money.
How to Avoid that Uncomfortable Conversation over Turkey
You’ve decided to move forward with a family member or friend investor. So, what can you do to have a nice Thanksgiving? First, awareness of the potential pitfalls of having those closest to you invest in your business is key. Most of what you can do comes down to communication and keeping them well informed not only about the business decisions you’re making, but also about how you are allocating the money. With that in mind, here are some tips:
Always treat your family member or friend just as you would any other investor.
Provide a well-thought-out and strategic business plan for them to review.
Stay confident, but don’t overpromise. Enthusiasm is great; overpromising is not. They need to understand the risks (hint: put them in writing).
Set boundaries on both sides. Yes, they’re family and friends, but now they’re also investors. There needs to be some boundaries. Remember – keeping them informed does not mean unfettered access to you or your business.
Don’t take money from those who can’t really afford it (even if they want to give it to you). This investment should never come from their life savings or retirement accounts, which will create an enormous amount of pressure on you. The question should be – What can they afford to lose?
Invest yourself. Family and friends (and any investor, for that matter) want to see you have skin in the game.
Don’t take money from family to invest in your business (especially a C Corporation) and then use that money to pay personal expenses.
Set up a meeting to discuss the specific conditions and expectations of the investment. Some questions to consider:
Is the money an investment, a loan, or a gift?
Are they getting equity? If so, how much?
How are you valuing the company?
What rights do they have with regard to decisions and to information?
How is the money going to be used – product development, marketing, salaries?
Clearly agree on everything, and put it in writing (preferably drafted and/or reviewed by attorneys on both sides).
Set regular meetings to keep your investor informed (at intervals decided upon in your agreement).
Keep with the data and the facts. Don’t embellish.
Provide them with all relevant information – they should know about the struggles, just as much as the successes.
These practices will let your investors know you’ve thought things through, while giving them the satisfaction that they’ve helped make a real difference in your business. But, at the end of the day, before you decide to go down this road, consider if you want your investors asking you questions about business as you carve your turkey next year.
Barker Associates has extensive experience in investor deals and management. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Attention CFOs: Financial Targets Don’t Motivate Employees Tips on Motivation Minus the Numbers
Without a doubt, as CFOs, our language is the language of numbers. Simply, numbers make sense. So, it’s probably no surprise that we use them more often than other people. And while it seems intuitive to us that numbers are a great way to motivate employees, that thought process tends to be counterintuitive to others.
Most people appreciate having a clear-cut goal to meet—something to strive for and work toward. However, financial targets don’t generally motivate employees in the same ways. Financial results are the outcome of hard work, performance, and productivity, not the cause of it. As such, when we focus on the numbers, employees don’t feel as if they have control over achieving that goal and ultimately begin to feel less motivated. In fact, using financial targets has actually been said to decrease morale among employees.
This is not to minimize the importance of financial targets and metrics. Let’s face it—we’re CFOs, to us, there isn’t much else that is more important. And logically, we know that if we don’t hit those numbers, we may not be able to pay those employees we’re so worried about. But just because financials are important to the company does not mean they’re an effective motivational tool for employees. Rather, if we want to motivate, we need to bolster support for our organizational purpose, emphasize the value the employees bring to it, and focus on their specific impact on customers or the community.
Three Tips to De-Emphasize the Numbers in Motivation
Reevaluate what you communicate.
Put the metrics, measurements, and dollar signs aside for the time being. Instead, communicate goals over which employees have some control. They should be able to clearly see what they can do to help achieve company goals. Of course, some numbers will likely need to be included, but be cognizant of keeping the focus where it needs to be. Increasing focus on numbers will decrease focus on what actually needs to be done and dilute the overall strategy.
Be specific and use emotion when you talk about customers and clients.
Employees are more likely to go the extra mile when relationships are built, and they can see individual, specific, and actual impacts on those relationships. They want to know what impact they are having on customers and the community. Employees want to feel good about what they are doing, so show them the impact they are making, not in the aggregate, but in specific instances.
Do not overshare every metric.
Employees generally don’t need to know every single item that is being measured regarding financial performance. When all they see is numbers, they feel as if they have to figure out how to get there when really it should be the other way around. Tell them what they have control over and then the goal that was met because of what they did to get there. Think about where you want to direct their attention and remain focused there.
A Harvard Business Review article described it best, “You cannot spreadsheet your way to passion. With ambitious goals on the horizon, it’s tempting to double-down on financial metrics. But hitting financial targets requires employees who are excited and care about their work.” This has never been as true as today. Employees want to feel appreciated by leadership. They want to have joy and pride in their work. And as we talked about previously, they are far less likely now to tolerate anything less.
Barker Associates has extensive experience in both specific CFO needs and more general leadership ones. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
What Getting Stuck in an Elevator Teaches You There are Lessons in Nearly Every Situation
I recently enjoyed a wonderful evening with some friends and family. We had a lovely dinner and then went to a show. We had purchased tickets for Hamilton years before the pandemic changed our lives, and were thrilled to finally be able to see it.
After the show, we walked blissfully back to our cars, still glowing with the excitement and contentment of a great night out. We had all parked in a parking garage that was only accessible by an elevator. We approached the elevator and were soon joined by several other people. As the doors to the elevator slowly opened, approximately twelve of us got in.
Lesson 1: Communication
We all pushed our respective parking garage levels, and continued our respective conversations. The elevator started to ascend. Suddenly, the elevator stopped, but the door did not open. My friend was next to the elevator controls and immediately hit the “open door” button. A few of us near the doors tried to nudge at the them, to no avail. We then hit the call button and reported to the person who answered that we were stuck in the elevator. He assured us that he was sending someone to help.
What we heard in that message was that someone who was capable of fixing the elevator was in the building and on their way. After a few minutes, when no one came, we called back and asked how long it would be. The person who answered said he was not sure, as he was unable to reach the mechanic. We asked a few more clarifying questions and determined that the mechanic who was “on his way” had not even yet been contacted, and we had no idea how far away from the building this person was.
Lesson 2: A Leader’s Attitude Can Change the Environment
There was no air conditioning in the elevator, and with that many people, it was very hot. Between the anxiety from learning that we were stuck in the elevator and the heat, one of the people from the other group began having a panic attack. We called the operator back and told him we had someone in distress, and to call 911. We were informed that it is against policy for them to call 911 and if we felt that was appropriate, we had to make the call ourselves. I attempted to call 911 from my phone, unsuccessfully. Thankfully, another person’s phone was able to get through.
At that point, my amazing friend Sondra (one of the strongest people I know) led us all in a standing yoga class with breathing exercises. It helped calm nerves in everyone almost immediately, and we all began to have some light conversation again. We even took a few selfies, trying desperately to lighten the mood. Even the person having the panic attack was able to relax with the breathing exercises and calm, light tone my friend used.
When the firefighters showed up, they worked diligently to get the door open. And soon, they were successful. Merely watching the doors open offered an incredible calming sensation. Unfortunately, it was short-lived. We soon discovered we were stuck in between floors. The firefighters were on the upper floor and determined they could not pull us up. They would have to close the doors to move the elevator to the lower floor.
Some of them stayed on the upper floor, and others took the tool they were using down to the lower floor. They then attempted to open the doors on the lower floor. This did not go as well. The firefighters began hitting the elevator forcefully to try to get the tool to work. One of them yelled with urgency to the team members that remained on the upper floor, “I can’t get it in. I cannot get the tool in.” The elevator was rocking back and forth, and the lights were flashing. It was pretty scary, and the anxiety levels were all back up to even higher than our pre-impromptu yoga class. I decided to close my eyes at that point, as it was all too much to process. The anxiety in the voices of the firemen, while we were rocking back and forth was overwhelming to us all. When they continued to yell the same thing, my friend said, “I think I’ve heard that before!” We all started laughing with that welcomed comic relief, and I remembered how important humor can be in stressful situations.
Ultimately, they got the door open and got us all off of the elevator.
Lesson 3: Be Grateful (and don’t forget about humor) … Always
When I got out and was finally able to get in my car to leave my wonderful evening (and yes, it was still wonderful – just with a twist), I felt incredibly grateful to be on my way home to my family. I was in a scary situation and I was ok. I wasn’t about to forget it. I also thought to myself, it was really hot in there, but I don’t stink!
Lessons learned from this experience –
Life is short. Make sure every day is full of what you value most.
You don’t have to be in a boardroom to learn valuable lessons … sometimes you’re in an elevator.
Communication is key in any situation. Ensure you are understanding what you are hearing and that the other person understands what you are saying.
When you are a leader, your anxiety or calmness multiplies when you communicate to others. Maintain an authentic calm demeaner, if possible, and you will see the effects in others.
As always, Barker Associates is here for any CFO services you may need (and is also happy to impart some words of wisdom from time to time!). If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
The Pandemic’s Larger Impacts on Financial Reporting It’s About Much More than a Loss of Revenue
Many people incorrectly assumed that the pandemic’s only true effect on a business’s financials was a loss (albeit often significant) of revenue. And while that assumption is not even necessarily true of every business (many did very well), Covid-19 impacted much more—not just financial performance, but also position, cashflow, and balance sheet accounts. There have been impairments to goodwill and other intangibles, effects on inventory, a change in how and when audits are conducted, and impacts to overall company strategy and goals. And these impacts are especially challenging for a company in the growth phase.
If your company is in the growth phase, it’s crucial to think about your options, understand your needs and, more significantly, how they have changed since the pandemic, what numbers are required, and to develop a new strategy. Companies in the growth phase are experiencing positive cash flow. With this increase in cash, they have the ability to repay debt, and are in a better position to seek additional capital from investors to expand their market reach. However, if the CFO hasn’t been carefully monitoring the pandemic’s impact on all aspects of the company’s financials, they likely don’t have their reporting in order to even approach potential investors.
Changing Financial Needs Means Increased Financial Monitoring
We learned fairly quickly in the beginning of the pandemic that liquidity is key to keeping a business from closing its doors in a crisis. The question that plagued many was how to increase liquidity with revenue decreasing? But those CFOs were often only considering pre-pandemic needs and observations, not the changing needs of the company in the midst of the pandemic. Auditors have noted that many accounts, including sales, inventory, and bad debt have been affected, as well as production and distribution.
First, these changing needs require a change in financial monitoring. Cash flow projections and other assumptions used to measure financial instruments pre-pandemic should be adjusted to reflect your company’s new reality. Remember that a majority of businesses have been affected in one way or another, but if that results in their lack of ability to pay you, you’re going to incur additional credit and liquidity risks, increased bad debt, and write-offs.
Cash Flow A careful analysis of your company’s cash flow can help. Some questions to consider about revenue include:
Are accounts receivable being paid?
Are past due accounts being followed up on?
Are late payment fees and interest being charged to customers (your money should not be free)?
Do you need to offer pre-payment discounts?
Should you look at retainers/deposits?
Do you have the capability of setting up auto-payments?
Of course, we can’t consider cash flow without considering expenses. And while there will be a decrease in some, there will be an increase in others. At a minimum, consider the following questions:
How have your office needs changed?
Do you have the ability to downsize?
How much are you saving due to decreased meal and travel expenses?
Where are these savings being utilized?
How much more are you spending on technology expenditures to maintain communications with staff and customers/clients?
Balance Sheet Accounts
Additionally, other balance sheet accounts have also been affected. One issue that warrants attention if you plan to seek outside funding is inventory needs and accessibility. With productivity and supply chains being disrupted, it may be difficult to allocate costs to inventory. There is also the issue of inventory that cannot be delivered because of travel restrictions. This also plays a significant role in the larger economic impact of decreased supply and increased demand, resulting in higher prices going forward.
Goodwill, post-retirement plans, and internal controls are other accounts/issues that require an in depth look at your financials and a pivot in business strategy, as we slowly climb out of this pandemic.
If you’re still waiting for things to get back to “normal,” and analyzing your financials based on pre-pandemic assumptions, you are not doing your business justice. You may think you have enough cash on hand or that expenses are timely being paid, but without meticulous monitoring and a true long-term plan based on our new reality, you cannot forecast or grow to the next level.
This can be overwhelming. But pivoting in your financial planning and forecasting is necessary. Barker Associates has extensive experience in financial statement analysis, plans, and forecasts. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Embracing Negotiations in Leadership How to Break Through Hesitation and Negotiate Your Best Solution
Negotiations are a crucial part of corporate strategy, but not (as some may think) merely for high-stake deals, such as mergers and acquisitions. In fact, leadership frequently requires negotiation on nearly a daily basis. And good leaders understand that negotiating is a skill that needs to be developed, just as with any other leadership attribute. Yet, many avoid it unnecessarily … and often, detrimentally. They tend to be more concerned about the objections and perceived conflict they believe negotiations brings about than with the feasible solutions they uncover. Some feel they lack the confidence to ask for what they want or need.
Underlying all of these concerns is age-old fear, and in particular, fear of failure or rejection. This is the fear that likes to stop us in our tracks, causing us to hesitate in the belief that we are safer that way. And, as we all know, the only way to grow and truly get what we want is to push that fear aside and get comfortable with being uncomfortable.
In addition to the uncertainty and fear that can arise in preparing for negotiations, the pandemic has also actually affected how we negotiate. Non-verbal communication and body language are important elements in connecting with others, especially during negotiations. However, with the increase in virtual negotiations, our view of the other person is restricted to computer screens or smartphones. Without the ability to fully see a person’s body and, more specifically, his or her subtle movements, it becomes more challenging to anticipate their acceptance or objections and proactively work toward solutions. But while their individual preferences and comfort levels may be more difficult to ascertain, they are not impossible if we remain mindful of them throughout the process.
Finding Opportunities to Negotiate
If you find yourself shying away from negotiations, it’s time to start thinking about why, and recognizing the numerous opportunities that surround you each day to do so. Like any skill, it takes practice and development. Utilizing average encounters will increase your confidence as you move into negotiations with higher stakes. Even asking for a discount on an item you are purchasing and asking your cell phone service provider for a better rate are, in fact, negotiations.
One could argue it’s not worth the effort or the time to engage in these activities, but that’s the fear talking again. Even if you don’t care about saving a few dollars at a store, the investment in building your negotiation skills and confidence is invaluable. Avoiding negotiations in these “not worth it” circumstances leads to avoiding them in other “very worth it” ones.
Going into any negotiation, you can also hone in on your skills by considering the following questions:
Is the situation fair?
Do I deserve a better outcome than the one I have been offered?
Am I feeling hesitant or confident?
How can I connect with the other person to come to a better resolution?
Tip 1: For in-person negotiations, pay close attention to the other person’s body language and try to anticipate and address objections before they ask them.
Tip 2: For virtual negotiations, take the pulse of the other person often. Repeat what they’ve said to ensure you are understanding correctly. Ask them if they have any questions throughout, and pay attention not only to their words, but to their tone.
How can I cultivate the relationship?
How can I close the deal?
Negotiating is really about making the conscious decision to do so, rather than avoiding it all together. Be mindful about recognizing and evaluating the potential for negotiations and that it may look a bit different today than it has in the past. But underlying it all is always relationships, confidence, and the mindset to put yourself in a position to strategically approach the deal. Ask for you what you want, be fair, work through the objections, and get better outcomes.
As with any skill, the more you practice – even with “low-stake” negotiations, the stronger your skills will become. If you need guidance, Barker Associates has experience working with CEOs on negotiation strategies and skills, particularly with finances, lending, and mergers and acquisitions. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
The Real Costs of Deal Fatigue How Not Being Prepared for the Deal can Cost You the Deal
Deal fatigue is a common occurrence in the world of mergers and acquisitions. The parties involved get frustrated with the process and feel helpless that they can do anything to speed it up. Frankly, they’re fed up, and as negotiations or other processes necessary to close the deal seem to have no end in sight, one of both parties loses hope and wants to give up. For example, oftentimes, the timeframe between a Letter of Intent and the close of the deal takes too long and can result in one or more of the parties deciding they want out of the deal.
The High Costs of Deal Fatigue
The costs of deal fatigue are high and the complexities many. Not only has the company lost the proposed deal and any related funding, but there are many other associated costs of the deal falling apart, including:
Attorneys’ Fees. The funds used to pay attorneys and consultants have added up over the months (or even years) and can no longer be paid from the closing proceeds.
Impact on Operations. With the pending deal, the C-Suite has been distracted by answering due diligence questions and negotiations. And, as a result, they have not focused on the core day-to-day responsibilities of the company’s operations. This could impact many success metrics, such as ensuring customer satisfaction, building the proper pipeline of sales, managing personnel, and regularly reviewing financial data.
Personnel Problems. There is also the potential loss of personnel if they had learned of the pending transaction and decided to pursue another career opportunity. The costs of recruiting and onboarding are always high, but this has never been truer than in today’s environment, where the costs of losing personnel have skyrocketed.
Lack of Preparedness and Its Effect on Deal Fatigue
The root cause of deal fatigue is a lack of preparedness. This can begin years prior to the idea of entering any transaction whatsoever. Decisions that are made, and processes put in place, that are not healthy for the day-to-day organization can impact the company’s ability to complete a transaction. The following are a few far too common examples:
Lack of organization of legal documents and contracts. Unfortunately, this is a huge issue that has gotten worse in the digital age. Years ago, businesses would have filing cabinets full of documents, along with administrative personnel who managed those documents. There was a clear-to-follow process to make sure all contracts were executed and fully completed prior to being added to the filing cabinets.
In contrast, contracts now reside in emails and other cloud-based storage systems. They may have signatures, or they may not. In fact, most of the due diligence processes I have gone through over the past eight years are held up because the “completed and executed” contracts are not readily available or the parties involved thought the documents were executed and find that they never were.
Financial statements are not up to date and do not reconcile to the billing and sales data. The ease of use of some modern cloud-based accounting systems combined with the fact that most personnel are not taking the necessary time to reconcile as often as they should lead up to outdated, unbalanced financial statements. Imagine going into a deal only to find that their representations are based on unfounded financial principles? This could not only cost you the deal, but your reputation, credibility, and integrity. There is simply no negotiating around outdated financials.
The best way to avoid deal fatigue is to be prepared in every aspect of your business and the deal itself. This will help each step move along faster and more efficiently, reducing the overall time of the transaction. If deal fatigue starts to creep in, remind everyone involved about the mutual advantages and the reasons the deal was struck in the first place. Keeping a clear vision of the big picture helps to avoid getting stuck on the smaller details.
Are you about to go into negotiations or already experiencing deal fatigue? Barker Associates can help keep the parties and the deal on track. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Leadership – The Importance of Leading Your Mental Health First
I love people. I always have. And I am sure I always will. That being said, once I became a leader of an organization, one of the most difficult things for me to grasp was that my team, made up of colleagues who previously would join me for lunch or socialize after work hours, no longer seemed to want to be with me outside of meetings or the office. I wondered what I had done wrong … until I remembered that my new title brought along more with it than met the eye, and that it can be lonely at the top.
I have grown tremendously throughout my career and, through the process, have come to understand myself better. Moving from a CFO of an organization to a consultant and business owner catapulted my self-development to a new level. I have learned more about my strengths and, even more importantly, my weaknesses. Sure, I enjoy learning more about people. I ask tons of questions, not to be intrusive, but to get to know the other person better. And yes, I am an open book, even “honest to a fault,” so I had to learn to grasp that just because another person is not an open book does not mean they don’t like me.
Through this self-discovery, I am now someone who can better understand not only my own perspectives, but empathetically, those of others. I understand how much “me taking care of me” is required to be the best leader for my own organization. And I appreciate it even more after going through COVID-19.
Leading Ourselves to Better Mental Health
Recently, I listed to a great podcast that brought these points home for me. As I listened, I could completely relate to how the guest, Nick, talked about how hard his parents were on him (as my parents were on me). While it bothered him (and me) greatly in our younger years, there is nothing but acceptance and appreciation now for the person they molded me to be. Nick also talked about the feelings of isolation brought about by COVID-19 and how exhilarating it was to have the first business dinner meeting post-COVID. He was right. I’ve had a few meetings that don’t require a camera and Zoom over the past few months, and always felt like a huge weight was lifted off my shoulders in doing so. After I listened to that podcast, I made sure to book more in-person business meetings, and it has already made a difference in how I feel.
Another area of change for me has to do with my physical health. Pre-COVID, I loved group exercise. When the gyms shut down, it was incredibly difficult for me to learn how to work out on my own and to get and stay motivated. But I didn’t stay in that space. Instead, I found several sources to help me, and now I have many options to deal with stress to ensure I exercise when I travel or even when I cannot make a scheduled exercise class.
You Don’t Have to Do it Alone
I have come across some amazing resources that have helped me maintain my mental health through life’s (and a pandemic’s) transitions. I do not receive affiliate income from any of the links I share here. I am sharing them with you in the hopes I can help make your path to self-discovery less bumpy than my own.
Calm App – This has become one of my go-to apps. And I love sleep stories. By far, my favorite is Wander with Mathew McConnaughy. I also have enjoyed the guided meditations that I can use throughout the day. The music is great with coffee in the morning and they also have a selection of music to play to help you concentrate while you work.
Jill Coleman (Instagram) – I love following Jill Coleman, a business coach for fitness professionals, on Instagram. I also listen to her podcast FITBIZU. She offers great advice about mindset around eating and exercising. Her fitness programs helped me make it through COVID-19 with an actual workout plan. She also offers business advice on her podcast, including how to run a sales call.
Katie Hammill (Instagram) – I follow Katie on Instagram, and work with her to review my weekly meal plans. She taught me that one of the most important aspects of a healthy lifestyle is a meal plan. We have implemented it in my household, helping to maintain calm in our daily lives. We always have a plan for dinner, rather than having a stressful conversation at 6 p.m. about what we are going to do. Another helpful hint to reduce stress around mealtime – make sure you have all the ingredients in the household when you make your meal plan!
Kathy’s Table – Kathy’s Table provides individually proportioned meals that are healthy and gluten free. We include these in our weekly plan at least two nights a week. After two minutes in the microwave, you have a healthy, and delicious, well-balanced meal. And, maybe even better yet, clean-up is fast and easy, which also eliminates daily stress.
Our mental health is impacted by much of our daily lives, especially with all that we have been through in the past fifteen months. And as leaders, we must also recognize our own impact on the mental health of our employees, who are looking to us to lead with more confidence and less stress. We must rid ourselves of the thought process that if we work harder and longer, without any care for ourselves, we will be more effective leaders. In fact, the opposite is true. Without taking care of ourselves, we will eventually burn out, leaving our team without a leader at all.
Leadership requires accountability not only of your subordinates, but of yourself. When you are overwhelmed with so many day-to-day responsibilities you may put self-care on the back burner. If you need a leadership coach to help you with this important aspect, and you are serious about the accountability to do so, click here to schedule a 30-minute consultation at a rate of $100. We will work out the right coaching plan for you, and I will apply the $100 toward the package.