Six Reasons Why CEOs Need a Coach with Strategic Business Experience

 Six Reasons Why CEOs Need a Coach with Strategic Business Experience

[Editor's Note: Over many years leading and working with lower middle market companies, I have seen - first-hand- the benefits and significant advantages for CEOs who have a a coach with strategic business experience. Coaches with relevant business experience can understand when things look too good to be true. They also understand that a good strategy well-executed beats n excellent strategy poorly-executed every time. -dpm]

The role of a CEO, especially in competitive markets, is one of immense responsibility, requiring a blend of strategic vision, operational expertise, and strong leadership skills. For many CEOs, particularly those leading lower middle market companies, the challenges can be overwhelming. This is where a coach can make a significant difference - a coach with real business experience. Here are six reasons:

1.     Understanding of the CEO Role -The demands of the CEO role are unique and multifaceted, requiring a delicate balance of strategic thinking, operational oversight, leadership, and empathy. A coach with business experience understands these demands intimately because they’ve likely held similar roles or worked closely. This understanding means that the coach can identify with the CEO’s challenges and provide support that is both relevant and impactful. They know what it’s like to be in the CEO’s shoes and can offer guidance on how to handle the pressure, manage competing priorities, and lead a team effectively. This empathy and understanding make the coaching relationship more meaningful and effective.

 

2.     Relevant Insights and Practical Advice -A coach with business experience brings practical knowledge and insights that are directly applicable to the challenges a CEO faces. This experience means the coach has likely encountered similar situations, whether it’s managing cash flow during a downturn, leading a company through a merger, or building a successful leadership team. This real-world experience allows the coach to offer practical advice rather than theoretical solutions. For example, when a CEO is considering an acquisition, a coach with business experience can provide guidance based on their own experiences with M&A, highlighting potential pitfalls and best practices. This level of insight is invaluable in helping CEOs make informed decisions that are grounded in reality, not just in theory.

 

3.     Strategic Perspective and Vision -One of the most critical roles of a CEO is to set the strategic direction for the company. A coach with business experience, especially that of strategic planning and execution, can provide invaluable support in this area by offering a strategic perspective that is informed by years of experience. A strategic business coach can help the CEO see the bigger picture, anticipate industry trends, and identify opportunities for growth. They can also provide a fresh, external perspective that challenges the CEO’s assumptions and encourages them to think outside the box. They can also help the CEO align their strategic vision with the company’s operational capabilities, ensuring that the strategy is not only ambitious but also realistic and achievable.

 

4.     Credibility and Trust – Lower Middle market CEOs tend to have a good “B.S. Sensor.” For a coaching relationship to be successful, there must be a foundation of trust and credibility. CEOs are more likely to trust and respect a coach who has walked the walk—someone who has faced similar business challenges and has a track record of success. A coach with business experience brings a level of credibility that is difficult to achieve otherwise. They can speak the same language as the CEO, understand the nuances of the industry, and provide advice that is both relevant and actionable. This credibility fosters a deeper level of trust, which is essential for a productive coaching relationship. When a CEO knows that their coach has faced and overcome similar challenges, they are more likely to take their advice seriously and implement their recommendations. This trust is crucial for the CEO’s growth and the overall success of the coaching process.

 

5.     Ability to Challenge and Inspire Growth -A coach’s role is not just to provide advice but also to challenge the CEO to grow and develop as a leader. A coach with business experience is particularly well-equipped to do this because they understand what it takes to succeed in the business world and can push the CEO to reach their full potential. Many times, this involves challenging the CEO to think more critically about their decisions, encouraging them to take calculated risks, or helping them develop new skills. Because the coach has firsthand experience in business, they know when to push and when to support, helping the CEO to grow in a way that is both challenging and achievable.

 

6.     Network and Resources - A coach with a background in business likely brings a valuable network of contacts and resources that can benefit the CEO and the company. This network might include potential business partners, industry experts, or even other CEOs who can provide additional support and insights. Having access to this network provides added value by opening new opportunities for the CEO, whether it’s through partnerships, collaborations, or simply learning from the experiences of others. A coach with business experience can also connect the CEO with relevant resources, such as industry” intel,” training programs, or tools that can help them improve their performance.

Having a coach with business experience can make all the difference. Such a coach brings practical insights, credibility, strategic perspective, and the ability to challenge and inspire growth. They understand the unique demands of the CEO role and can provide the guidance and support needed to navigate the complexities of the business world successfully. becoming a crucial partner in the CEO’s journey to success.

Why Choose Mead Consulting for a Strategic Business Coach for your lower middle market business:

• Experience – We’ve been in your shoes - Not only have we each grown multiple businesses, but we have been coaching business leaders like you across many companies for more than two decades.
• Lower Middle Market Focus – we understand the issues unique to growing and scaling businesses of this size.
•  Strategy – we have proven strategies that work; we help you focus on the strategies that matter
• Accountability – we hold you accountable to accomplish the desired results we outline together

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The Mead Consulting Group helps dozens of companies and organizations -like yours - every year with both strategic planning & execution, and strategic business coaching. These processes have helped our clients consistently outperform their competition.

 

If you would like to discuss your situation, please contact me to set up a complimentary meeting. Dave Mead at (303)660-8135 or meaddp@meadconsultinggroup.com.

     

Ten Deadly Sins of CEOs and Business Owners¹

[Editor's Note: Being the CEO or business owner can be a lonely job. It is important to get good feedback so that you can keep a balanced perspective. Below are just ten of the deadly sins that can be committed by the guy or gal at the top. I have been at the top or owner of eight companies - and I know it's not always easy to see yourself clearly. This is a reprint of a previous Issue for Growth. I think it still holds true. As always, we welcome your comments.  - DPM]

                                                                                                                                 

Talking Too Much. You never learn by talking, but some CEOs imagine the world to be in desperate need of their constant wisdom. It is a rare subordinate who will risk stifling a CEO. Be inquisitive, ask questions, and listen at least 75% of the time.

Goals Are Too Aggressive. It is wonderful to have a BHAG (Big Hairy Audacious Goal) or vision. It's another to develop overly aggressive goals on a routine basis. Unrealistic goals "demotivate," especially when compensation is involved. One CEO expected his company to continue its 30 percent annual growth rate, not appreciating that with a larger base and a rapidly maturing market their era of high growth in that market had to end. The result discouraged managers.

Personal Power Building is More Important than Value Building. Some CEOs tend to make decisions that enhance their scope and influence, even at the expense of increasing shareholder value. This can be paradoxically true even when the CEO is a large shareholder or the business owner. Dr Robert Kuhn puts it this way: "I want a CEO whose greed exceeds his ego. Good CEOs and business owners should be motivated more by amassing wealth for their shareholders rather than by building empires for themselves."

Not Respecting or Recognizing the Ideas of Others. CEOs and business owners can be egotistical. Highly successful almost by definition, many CEOs would seem to have every right to be self-impressed. However, when you hold the top spot, puffing yourself up at the expense of subordinates impedes the organization. You benefit when your people are encouraged and empowered to generate novel ideas. Recognition of these good ideas breeds more ideas.

Not Focusing on Accountability and Execution. Some CEOs and business owners love new ideas, programs, and initiatives. They introduce change for the sake of change. One company we looked at recently had seventeen (17) major strategies for an upcoming year. Focusing on a executing well on a few carefully selected strategies, developing clear objectives, and holding managers accountable, can be the difference to success.

Managing by Summaries.  A CEO should perceive the world as it truly is; if cluttered and chaotic, so be it. When information is always "high level," predigested by staffers, a CEO may perceive an artificial world, a virtual reality as it were, of cleanly manicured lawns. Most CEOs have great instincts about their businesses, and such instincts should be nourished by raw data, like, for example, call reports of customers.

Don't Fall in Love. When you sit in the corner office, follow your head not your heart. Every business must have a strategic or financial purpose, and if a business happens to make you feel good that's fine as long as your emotional attachment doesn't interfere with your rational decision-making. CEOs are notoriously vulnerable when making acquisitions.

Feeling Invincible.  CEOs must have superb track records-some are almost unblemished -so they have a proclivity to imagine themselves as invulnerable. The natural corollary is a robust confidence, even if subconscious, that past success assures future success. I can't tell you how many dozens of CEOs I've seen who refused to sell their companies at what would turn out to be, in hindsight, their peak market values, simply because they were convinced that tomorrow's prospects would mimic yesterday's triumphs. Looking backward and looking forward, a humble, healthy respect for the subtleties of serendipity is the beginning of wisdom.

Halo Hiring. In some organizations, many of the senior executives look like the CEO. I mean this quite literally and it can be very funny. Not just obvious characteristics like gender and race, but also personal traits like size and stature, political philosophy, sporting interests, demeanor, even style of dress. In a globalized world where customers and suppliers may be very different kinds of people, it is not wise for the executives of a company to be homogeneous, and hence, uniform in their thinking.

Beware of Averages.  Averages can deceive. For example, assume that, in a pharmaceutical company, prices are declining for one-half of the drugs and increasing for the other half; the fact that the average price of all drugs has remained steady is worse than meaningless information. Strategies for drugs that kept prices steady might not work at all with those whose prices were decreasing or increasing. The same is true for net profitability on an individual customer basis. Averages hide meaningful information. The information extremes or "skew" is your friend.

Could you benefit from having a strategic business coach?  Contact me to discuss why having one of our coaches who is an experienced CEO / business owner could help you be a better leader and could make a world of difference in your company's results.  

Attributes of a Lifestyle Business or an Equity Value Business?

[Editor's Note: In the last Issues for Growth, "Which do you have - a Lifestyle Business or an Equity Value Business" we outlined the major differences between a lifestyle business and an equity value business and why it was important to be clear about the "purpose" or intent of your business because the way a business owners  approaches building a business must be very different depending on how you will define success. A number of you who have heard me speak about this issue asked me to publish the matrix of attributes comparing a lifestyle vs equity value business. So, here it is below. I hope you find it helpful.           - DPM]

 

Lifestyle Vs Equity Value Attributes Matrix 

Attribute	Lifestyle	Equity Value
Focus	Short-term Lifestyle; Run for Owner's compensation	Long-term Equity Value; sacrifice short -term comp
Pace	Owner's pace	Dictated by desired outcome
Management style	Command & Control; Centralized	Decentralized; individual decision-making
Owner Management	Can tend to be viewed as inconsistent, capricious and changing	Consistent with overall strategy and core values
Expense Control/ Spending decisions	Tightly controlled at top	Managed through approved dept budgets and policies
Outside Capital	Debt; Investors not interested; Growth may be restricted due to availability of capital	Equity investors
Empowerment	Limited; Loyalty Rewarded; Small circle of trust	Expansive; Performance rewarded; Systems to enhance empowerment
Objectives	May change at owner whim	Clearly outlined; transparent
Employee Equity	No	Yes; equity awarded
Career Development	Limited upside	Significant upside
Employee Capability	"Steady Eddies" Thrive here	High performers thrive here
Sale of Business	Usually only to Employees or Family	To third-party Buyers (Strategic or Financial)

Which Do You Have - a Lifestyle Business or an Equity Value Business? It's Important to Know the Difference

Speaking to a group of business owners about defining their business vision, I suggested that they be clear about whether they want an "equity value business" or a "lifestyle business", because the way they approach building a business must be very different depending on how they will define success.

The Lifestyle Business.

The term "lifestyle entrepreneur" was coined in 1987 by William Wetzel, a director emeritus of the Center for Venture Research at the University of New Hampshire. Mr. Wetzel was using it then to describe ventures unlikely to generate economic returns robust enough to interest outside investors. In financial jargon, "there's no upside potential for creating wealth," he explains.

 "Lifestyle ventures are usually ventures that are run by people who like being their own bosses," Wetzel says. "But they're in it for the income as well. Indeed, lifestyle entrepreneurs offer a different...view of success than those who are mainly focused on longer-term wealth accumulation.

Lifestyle businesses are businesses that are set up and run by their founders primarily with the aim of sustaining a particular level of income and little more; or to provide a foundation from which to enjoy a particular lifestyle. Some types of enterprises are more accessible than others to the would-be lifestyle business person. Those requiring extensive capital are difficult to launch and sustain on a lifestyle basis; others such as small "creative" businesses are more practical for sole practitioners or small groups such as husband-and-wife teams.

Lifestyle businesses typically have limited scalability and potential for growth. In conventional business terms, lifestyle businesses typically have limited scalability and potential for growth because such growth would impair the lifestyle for which their owner-managers set them up. However, a lifestyle business can and do win awards and provide satisfaction to its owners and customers. These are firms that depend heavily on founder skills, personality, energy, and contacts. Often their founders create them to exercise personal talent or skills, achieve a flexible schedule, work with other family members, remain in a desired geographic area, or simply to express themselves. But without the founder's deep personal involvement, such businesses are likely to, well, founder. Professional investors therefore rarely get involved with lifestyle businesses. A lifestyle business is also one that can allow the owner to call his/her own shots and to move at his/her own pace. It's a business that fits his/her current way of living rather than dictating how things ought to be done. For millions of people, these sorts of small ventures are an excellent way to "do what you love."

The Equity or Value Business.

Equity can be defined as: A company's assets, less its liabilities, which are the property of the owner or shareholders.  Popularly, equities are stocks and shares which do not pay interest at fixed rates but pay dividends based on the company's performance. The value of equities tends to rise over the long term, but in the short term they are a risk investment because prices can fall as well as rise.

An equity or value business is one where the owner intends to build real assets with a grow-able, tangible value that can be bought and sold - either as shares or the entire business. Success would be defined as the increase in value of the business over time. These businesses by definition will be built to succeed without the presence of the owner(s). In many cases, current lifestyle of the founder/owner is sacrificed in order to build significant long term value. In equity value businesses, owners focus more on building value as seen by potential buyers: sustained improvements in revenue/EBITDA, strong management team that can operate and grow the business without the owner's constant involvement,

By contrast, a lifestyle business is one where the entrepreneur seeks to generate an "adequate" income while living where s/he wants, doing what s/he loves, or having the flexibility to be around when the kids or grandkids come home from school or take long weekends in the winter to go skiing. Success would be defined as an increase in satisfaction with one's life over time.

It's imperative to decide which one you are.

These are very different scenarios. "Equity value or lifestyle" is one of those fundamental decisions you should make early in your company's history. If you're contemplating going into business with a partner, determine if you both would answer the same way. So why is it important to decide? Businesses that do not have a clear understanding of the type of business they want - and are prepared to be suffer inferior returns. Going down a path that straddles both lifestyle and equity value camps is sure to generate both lower current cash (compensation for the owners) as well as lower growth and value potential (lower equity value).

Consider one company with an innovative product in the education products space. The founder had a stated goal of building a value business. However, actions demonstrated to key employees and managers that the true motives of the founder were to facilitate the founder's lifestyle. A confused culture prevailed. Top employees and managers interested in growth left the company, leaving a cadre of lower performers, interested in maintaining the status quo. The company growth and profitability lagged and the company ceded its leadership position to more aggressive competitors. In the end this company accomplished neither growth in value nor an exceptional lifestyle for the owners.

Be honest with yourself. Be honest with yourself about your appetite for risk, your need for autonomy, your desire for current compensation. In the end, neither is good or bad. It's just, which one is for you and your business?

Next Issue: The Attributes of the Lifestyle business vs. the Equity Value business.

What are your thoughts? Share your reactions.

Strategic Coaching to Accomplish Results

David Mead

Strategic Planning & Execution, Board Member - The Mead Consulting Group

Over the past few years, I have been asked repeatedly why Mead Consulting Group does not promote the coaching we do with CEOs and business leaders. My response has typically been that it is such an overused and “abused” term. We have not wanted to be lumped into the bucket of people who bill themselves as business coaches but who have limited or no real life business experience.
For many years, helping company leaders execute and grow as leaders has been a core part of our DNA. Our entire consulting practice is built around helping companies reach the next level – helping them to get results. Leadership, communication, strategic thinking, setting priorities, motivation, team development, alignment, accountability, and personal development are all part of the process. These are developed by close interaction with our client’s leaders. We refer to it as CEO coaching or strategic coaching, but in truth it usually involves the entire senior team.

A recent conversation with a client brought back to mind my personal situation - when I was thrust into the CEO role by the death of the Founder. My best strategic coach was one of the Board members who took me under his wing. I was 27 and he was 73. He had lived quite a life, from growing and selling businesses to failed partnerships, lawsuits, large acquisitions, employee issues. He had forgotten more than most people ever experience. He was an irascible cuss and didn’t suffer any fools. I was able to leverage his failures and successes. He helped me achieve my goals, and made sure I was prepared for almost any situation that came my way. He was the person who helped me understand the importance of developing and focusing on strategic plans that can actually be executed.

I saw an article a number of years back that listed some reasons why business leaders could benefit from having an experienced strategic coach. Long ago I turned these into my own list – which I will outline below. It is this same focus that our senior consultants bring to every one of our clients.

• You gain a needed confidante
• They force you outside your comfort zone
• You get personal attention from someone who knows your business inside and out.
• You hear the hard truth - that people inside your company won’t share
• You get objective, unbiased opinions
• You learn how to turn your ideas into reality… Or hear why you are chasing too many shiny objects and need to focus
• You are held accountable for getting important things done – focus on strategic issues not what shade of mauve the office furniture will be.
• You get exposed to a huge external network
• You gain confidence in your decisions and actions

If you want more information about how we help CEOs and business leaders continue to grow and accomplish their goals, please contact me.

Why 2014-15 could be a great time to sell a lower middle market company

Why 2014-15 could be a great time to sell a 

lower middle market company

What is a lower middle market company?

Lower middle market is defined nationally as transactions between $10M and $250M in enterprise value.

  

When is a good time to sell?

CEOs and business owners routinely ask the question, When is the best time for me to sell? Is now a good time or should I wait? Truthfully, many of the folks that address that question (investment bankers, private equity professionals, financing sources) have a vested interest in having companies go to market. So business owners can be skeptical when reading optimistic projections. 

We have advised business owners for years that there are a number of factors to consider when evaluating if it is a good time to sell a business. The most important is to make sure your company is prepared, and to not wait for the "absolute best time" to sell, but to sell when the market is good. There are lots of examples of companies that have regretted not going to market in 2006-2007 because they thought the market for their company would be better in 2009 or 2010.

There are a number of factors that suggest that 2014-2015 is a terrific time for lower middle market company owners to sell.

  

1. Company results have rebounded or stabilized. Most lower middle market companies have rebounded or at least stabilized from the downturn. Even if revenue growth in some sectors is still very moderate, most companies have done an excellent job of managing expenses and increasing cash flow.

2.   Valuations are high. With stock market at record levels, the prices (multiples of EBIDA) being paid for good companies are at high levels.

3.  Interest rates are still low.This is important since the buyer of your business need to borrow for the transaction.

4.  Private equity firms have plenty of dry powder and fewer distractions from older investments. Many private equity firms spent the year in 2013 selling their portfolio companies. They now have lots of capital to invest and need to put that capital to work by buying companies. They also can focus most of their attention on looking for new opportunities.

5. Private Equity has an increased focus on lower middle market transactions. According to a recent survey  of 1000 dealmakers conducted by KPMG and Merger & Acquisitions magazine, a whopping 77% of respondents expect most of the M&A activity to fall in the lower middle market space

6. Strategic buyers still have lots of cash. Strategic buyers have been accumulating cash in record amounts as they have emerged from the downturn lean and more productive.

7.  Strategic buyers need to find new ways to grow. Sources of organic (internal) revenue growth have been difficult for most strategics. They are under pressure to acquire companies that add new products, new customers, new geographies, and new capabilities.

8. There are still more buyers than sellers in the market. The number of baby boomer business owners who are reaching retirement age is increasing daily. There will come a time when these business owners need to sell and there may well be a glut of businesses on the market. This has not happened yet. By 2016, there may be as many as 1.5 million business owners who need to sell to provide liquidity for retirement - even adjusted for new retirement expectations that changed during the recent downturn.

Are you and your company ready to go to market?

Most business owners who have executed a successful sale of their business will tell you the most important thing is: BE PREPARED.

Selling a business is very different than operating a business. As a business owner you know your industry, your product or service, your customers and your markets. Most business owners will only sell a business once in their lifetimes - and it can be by far the most important financial transaction of their lifetime.

If you would like to perform a free Self Assessment of your company's readiness to maximize value in a sales or recapitalization transaction, 

 click here (go to the bottom of the page and download the self assessment).

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The Mead Consulting Group has helped over 50 clients prepare for successful sales transactions ranging from $15M to $350M in transaction value. We help companies increase the value of their businesses leading up to a transaction, minimize the things that cause potential buyers to discount the price, prepare to best position the company, and assist the owners in building a  transaction team.

What successful business owners say about us:

 ...We could not have completed the sale of our business without the advice and guidance of The Mead Consulting Group. Their experience was critical in helping us prepare, and endure, the transaction process to a successful outcome. ...Charles M, President, Healthcare IT Company

A successful process is draining and stressful.  The Mead Consulting Group brought the experience and expertise necessary to help our team focus on the critical issues and not get caught up in the multitude of items that can derail a transaction.  Why reinvent the wheel?  We chose to take advantage of individuals who could help us understand the nuances, negotiate effectively, and close the deal. ...  CEO, Behavioral Healthcare

...We missed the opportunity to sell our family business during the last upcycle. Mead Consulting helped us grow revenue and EBITDA to record levels and guided us through the selection of a transaction team. Dave Mead and his group provided great counsel throughout the sales process, removing obstacles and firmly encouraging us to a great deal with a strategic buyer that mirrored our family business values. ...Dan M, President, Building Products Company

...I do not know why anyone would attempt to sell their business without Mead Consulting. Since they have owned and sold their own businesses, they understand the challenges of continuing to run the business while trying to sell it. Their experience kept us focused on the right things and they helped keep our transaction team well-aligned during the process. They truly act as the advocate for the CEO and owner, helping to make sure that it was the best deal for the owner. ...Ron T, CEO, Software Business