Lesson #373: When to Fire Yourself as CEO?

 

Most CEOs don’t usually think about putting themselves up on the firing block, but there any many instances where you as the CEO of the business may be holding your business back.  You need to be honest in your assessment of yourself as CEO, to make sure you are in fact the right person for the job.  This post will help you identify certain scenarios where a CEO change may be necessary, even if it means you firing yourself from the job.

You No Longer Have the Right Skillsets

Most entrepreneurs are very good at taking a “piece of paper” idea, productizing it, taking it to market and getting initial traction for the business up to the first $10MM in revenues of the company’s growth curve.  That is not an easy feat, and you should be very proud of that accomplishment.  But as the company then needs to scale from $10MM to $50MM in revenues for the next phase of its growth, that typically requires a very different skillset.  Now you are talking about launching new products, new markets, international expansion, mergers and acquisitions, and other techniques that may be unfamiliar to you.

If you suddenly find yourself drowning with the new challenges of your later-stage growth, it may be the right time to find your replacement that already has those proven skills.  And you shouldn’t feel embarrassed about admitting this—you should feel empowered that you were actually smart enough to assess the situation and how best to resolve it.  You still have your equity ownership, and wouldn’t you want your stock price growth to have the highest chance for success as a shareholder?  Sometimes, that could be in the hands of somebody other than yourself.

You Have Run Out of Ideas

If your business is struggling and you have tried everything you possibly could to “right the ship”, it may simply be a function of “you don’t know, what you don’t know”.  You are only as smart as your own education and experience has made you.  But sometimes a “fresh set of eyes” is exactly what the business needs to turn it around.  That new CEO may see some easy fix, based on their past education and experiences, that was simply in your blind spot.  So, if you often find yourself scratching your head without the right answers to your business’s challenges, maybe it is time for a new CEO.

You No Longer Have the Passion For the Business

An equally important part of being successful as a CEO is having the right “fire in your belly” to succeed at all costs, no matter what challenges get thrown your way.  If you find yourself losing that passion or getting bored with the business (which can easily happen the longer you are there), it is very easy to lose focus and basically “go through the motions”, with the business “coasting” based on historical efforts and not “accelerating” with new ideas and efforts.  You are not doing your shareholders (including yourself) any favors by sticking around in this scenario.  Be smart enough to know when you have “mentally checked out” and find your replacement that is as excited about your business and its potential, as you were when you first started.

You Are Not Getting Along With Your Team

Being a successful CEO requires building a great team that is gelling well with each other.  Just like in any marriage, sometimes relationships can sour over time.  Maybe it is your fault, and you are ruffling everyone’s feathers.  Maybe its your colleagues fault, and every word out of their mouth drives you crazy.  Whatever the situation is, a business won’t thrive if the team cannot get along with each other.  Either they need to go, or you need to go, to find team members that will actually respect each other and enjoy each other’s company when “slogging through the mud” together.

You Have Lost the Confidence of Your Colleagues

Maybe you feel you are doing a good job as CEO, but if your fellow employees, partners or investors don’t think you are doing a good job.  In this scenario, maybe it is time for you to go.  This can be a really bitter pill to swallow.  You look in the mirror and see success, and your colleagues look at you and see short fallings.  But if the team has lost confidence in you, it is time to show yourself to the exit, as the team will not follow a leader that they do not think is leading them in the right direction.  And it could be better for you to step down on your own terms, than wait to get fired by your board when they have seen enough (which will be a lot harder to explain to your new employers).

Closing Thoughts

Hopefully, this post helped you complete your own self-evaluation in your role as CEO.  After reading this post, do you still think you are the right person for the job?  If so, great, it’s full steam ahead.  But if anything in this post resonated with you as “striking a chord”, it may be time to have that very difficult conversation with yourself.  Your business, team and shareholders (including yourself) will thank you!!

For future posts, follow me on Twitter at: @georgedeeb.

5 Good Reasons Why People Buy a Business

Many entrepreneurs go down the path of buying a business to help jump-start their business-building efforts. But oftentimes, they don't give enough thought to "why" they are buying the business, and the long-term goals they are hoping to accomplish from this investment. Unless they are 100% clear on the "end game", they could get themselves into a situation that is not what they intended, and it could be too late to fix it once they close on the purchase. These five reasons will help you assess your acquisition goals before you get started hunting for targets, so you don't repeat the mistakes that many other entrepreneurs have made by not doing sufficient homework upfront.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #372: Stop Aiming for Perfection--As Time Kills All Deals!

Winston Churchill is famously known for saying “perfection is the enemy of progress”.  And that quote most relevantly applies in business, perhaps more than any other sector.  You may say, why is perfection a problem?  Isn’t perfection a noble goal when doing your work?  The answer is: perfection takes time, and time in the business world can often be a deal killer.  If you can produce A- work in one week and A+ work in one month, that incremental benefit of the “perfect” work product, is most certainly lost in the form of the three weeks of lost time.  When an A- is good enough to get the job done, take the win, and move on.  This post will teach you how to better keep your business running at “light speed”. 

Examples of How Perfection Can Get in The Way of Progress

There are many examples in the business world where perfection can be your enemy.  Let’s talk through a few examples.  Firstly, in your sales efforts, a client waiting an extra three weeks for your proposal, is mostly like still shopping with your competitors. Close the sale faster, to ensure that client ends up with you and not your competitor.  Secondly, when disposing of owned assets, like real estate, most often times your first offer is your most seriously interested buyer with the highest odds of getting to closing.  Don’t hold out for an even better offer that most likely will never materialize, and risk losing the “bird in hand”.  Thirdly, let’s say you are negotiating the sale of your company, don’t dig in, holding out for certain points in your contract or a certain valuation in mind.  Making a three-month sale process turn into a six month sale process will negatively wear upon the other party, potentially having them walk from the deal after the excitement of buying the company has worn off.  The examples are limitless here, but hopefully you get a better picture of how perfection can hurt you.

An M&A Case Study on How Time Can Be Your Enemy

One of my clients was recently trying to sell their business.  They started the process in February 2024 and were hoping to be done six months later in August 2024.  At every step of the process, the business owner was “over engineering” everything.  Instead of picking a business broker and attorney in a few days, he ran an exhaustive process of interviewing many prospective brokers and attorneys over several weeks, looking for the best one.  Additionally, instead of turning the sale book around in one or two rounds of comments, he required over ten rounds of comments, trying to tell the perfect story.  Furthermore, instead of having the business broker quickly start making calls to the first 200 prospective buyers on their list, this same individual kept pushing the broker for more and more names to be added to the calling list, slowing down the process as the broker needed to shift focus from starting calls to expanding the list to the requested 1,000 prospective buyers (requiring 5x as much work).  Finally, during negotiations, instead of one or two turns of the purchase agreement, he kept digging in on few deal points with over five turns of the documents, seeking “the perfect deal”.

Collectively these actions materially slowed down the process.  Then guess what happened?  Instead of being closed by the original August 2024 target date, they were still in discussions with buyers in November 2024 (three months behind plan).  And remember what happened that month? A new president was elected, one talking about his big plans to launch new tariffs on the countries where this company sourced much of its products.  All of sudden a cloud was hanging over this business and the industry, and it spooked the originally excited buyers to the point they all stopped their conversations and there were no more interested parties to sell to.  Those three lost months ended up causing the owners of the business near certainty a deal would have been closed in August 2024 and lost them millions of dollars in sale proceeds in the process. What a mess!

Know Your Goals—Knock Down Walls

You need to keep yourself accountable on what the most important goals are and manage towards those goals.  In the above case study, the primary goal was:  get the business sold in the next six months to lock in the high return on investment the owners were seeking.  Nowhere in that goal does it say have the perfect broker, perfect lawyer, perfect sale book, perfect valuation, perfect contract, etc.  Seeking perfection at every step along the way was in direct conflict to the primary goal, and now the company is paying a big price, to the point it may never be able to sell its business in the current economic climate.

Keep Your Business Running at Light Speed

At the end of the day, when setting your priorities and managing your workload, always subscribe to the K.I.S.S. method (Keep It Simple Stupid).  Anything that overcomplicates things will make what should have been a fast and easy process, a torturous nightmare wearing down everyone that is involved in that project, from your own employees to whoever you are trying to do business with.  And when people get demotivated or tired, the easiest path those people have to make the pain stop, could end up having them walk in another direction, leaving you with a revolving door of talent and nobody wanting to work with you.  Don’t be that person, as life is too short and your business will suffer if you do.  

How do you know if this is you, and how do you manage yourself and keep yourself accountable?  I typically live by these two rules: (1) hit your preset timeline (if you are behind plan, don’t let the due date slip, you have to move faster); and (2) make no more than three changes to the same work product (if you can’t get it “close enough” after three tries you are not being effective as a communicator or you are not effectively listening to the needs of others in creating a win-win outcome for both parties).  So, anything that slows you down needs to end—move on with “good” without always seeking “great”.  Your team will thank you and your business will increase its odds of success in whatever it is trying to accomplish.

Closing Thoughts

If any of the above sounds like it could be happening in your business—by you, by your team, by other parties—the offending parties need to take a long look in the mirror and figure out how to get moving faster.  But my guess is, the offending party (which could be you), may not know they are the offending party, which is even worse.  So if you are getting feedback from your team that you are getting in the way of speed and progress—it is time to reverse course and get out of their way (that is not a time to dig-in to get your way towards perfection).  Frankly, more successful businesses are lead by the person that is perfectly happy with “breaking things” and “imperfection”, as good things typically come out of that process and quicker timeline.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] How to Hire the Right Salesperson

I was recently interviewed by ASBN, an online "television network" serving the small business community, about how how to hire the right salesperson for your business's specific needs.  This video will help you learn more about the 1,024 different types of salespeople, and the questions you need to ask during your interviews to have your salesperson hire hit the bullseye.  I thought this video turned out great, and I wanted to share it with all of you to make sure you are optimizing your hiring practices here, which will in turn optimize your revenues. I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick, Shyann Malone and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Is It Time to Fire Yourself? 5 Signs You're Holding Your Company Back

 

Most CEOs don't usually think about putting themselves up on the firing block, but there are many instances where you, as the CEO of the business, may be holding your business back. You need to be honest in your assessment of yourself as CEO, to make sure you are, in fact, the right person for the job.  This article will help you identify certain scenarios where a CEO change may be necessary, even if it means you firing yourself from the job.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at @georgedeeb.

Lesson #371: Tariffs Are Hurting My Business--Should I Cut Expenses?

 

With all the chaos in the economic and financial markets these days, largely around the impact of new tariffs, it is causing unexpected and unfortunate turmoil for many businesses today.  Businesses that used to be growing are seeing declines, and businesses that used to be generating healthy profits may now be experiencing losses.  That can be a scary time for the most seasoned executives, and even more so for startup executives living it for the first time.  This post will help you figure out how best to navigate these choppy waters.

Why is This Happening?

Tariffs are typically very bad for the economy.  Although it may raise revenues for the government in the short run, it raises the prices of goods and services that are imported from the countries in which tariffs are imposed.  And right now, tariffs of varying sizes are flying around many different countries and industries, wrapping pretty much everybody into this “dust storm”.  This means as importing costs go up with the tariff costs, either you will pass through those increases in the form of a higher selling price (which will lower demand and profits) or you will eat those increases at the original price (which will hurt your margins and profits).  Neither is a good outcome for your bottom line. 

What Are Your Options to React?

When profits are in a free fall, you really need to assess the situation and determine your best path forward.  For many, that could include dramatically lowering your cost structure with layoffs or otherwise, to help extend your cash runway so you can live to fight another day.  Whether you make these cuts, and the size of these cuts, is the conversation for today’s article.

Key Questions You Need to Ask Yourself?

In This Reduced Economy, Will I still be Profitable?  This is a very important question.  If you think you will still be profitable, then any cuts are optional depending on how high of a profit you want the business to generate for its shareholders.  Maybe your shareholders will have a longer term perspective and will not want to “rock the boat” in the near term, if they see a viable path to recovery in the medium term.  But if you are expecting losses, cuts may be your only option, unless you are sitting on a big pile of cash that can fund your newfound cash burn rate. 

Do We Feel This is a Short-Term or Long-Term Hiccup?  If you feel the impact will be short in nature (e.g., under a year), you may have a different perspective than if you feel the impact will be longer term in nature (e.g., over a year).  But for issues like this, you don’t always have a crystal ball with which to perfectly predict the future.  So be conservative in your thinking, assume it could be much longer than you think, and build in the appropriate cash cushions into your forecasts.

How Long is My Cash Runway?  Your cash position will often dictate your best path forward.  If you have enough cash to fund the next 18-24 months in a reduced sales environment, maybe you will be okay with no changes.  But for most startups, they do not have the luxury of sitting on a lot of excess cash.  So if you are incurring newfound losses and your runway is under 12 months, it is time to start chopping, as raising funds in this economic climate will be very difficult.

How Important is It to Retain Key Talent?  In highly specialized industries, making cuts can be extra painful.  You have invested a lot of institutional knowledge into your team, and you don’t want that to walk out the door unless you really have to.  So your decision around cuts may be directly related to how hard will it be to hire their replacements down road.  But be honest with your assessments here, not everyone can be the irreplaceable “Michael Jordan” on your team.

When Should I Make Cuts?  As fast as humanly possible.  The faster you cut, the quicker you start saving your cash, which will be a hot commodity in down markets like this.

How Deep Should I Cut?  As deep as you can without putting the core of the business at risk.  More is better than less, remember the deeper the cut, the more cash you start saving, again back to that hot commodity in these markets.  In all cases, your cash runway will help you decide whether you are cutting 10%, 20%, 30% or more.  But cut enough that you don’t have to go back and cut a second time down the road.  The worse thing you can do to your staff is having them constantly worrying about the axe hanging over their heads in repetition.

How Will Cuts Impact My Culture?   Yeah, cuts are typically not good for culture building in the immediate term.  The remaining staff just watched all their friends and colleagues walk out the door under unexpected circumstances.  They will be grateful they “survived”, but they will potentially be angry with management as the ones who dropped the axe.  As long as you are 100% transparent with your team about what the situation was, how tariffs impacted the business, and that you didn’t have any other choice to save the company and their jobs. Hopefully, they are mature enough to understand the situation and culture will hopefully rebound over time.

Are There Alternatives to Cuts?  Other than raising capital, you can get creative in how cuts are implemented.  For example, let’s say you have a staff of 10 salespeople all making $50,000 base and $50,000 in commissions (at 5% of sales).  Instead of cutting 3 people to save $300,000, you could change the compensation plan for all.  You can move all ten salespeople to a “commission only” model (which keeps everyone with the company).  That puts the onus on them to sell in order to get paid any amount at a higher 10% commission.  But if they don’t sell, you don’t have the fixed overhead of their salary to pay.  This may upset all 10 people instead of upsetting the 3 that would otherwise have been cut, which may have everyone looking for the door, but it is an option.  The more you can implement a single action and be done with it, the better, as compared to solutions that drag out the pain for everyone over a longer period of time.

Closing Thoughts

Hopefully, you now have a better understanding of how to navigate the current choppy waters many of us are experiencing.  Follow the guidance in this post, and you should survive to live another day and best position the business to weather the storm until the markets start to recover.  Good luck and hang in there!  This is never an easy topic to deal with.

 

For future posts, please follow me on Twitter at: @georgedeeb.