When we have just acquired a business, it can be easy to dive into transforming and growing it immediately. However, this episode’s guest, Jennifer Goldman of Jennifer Goldman Consulting, is all about the opposite. In fact, she tells you to stop and start by doing nothing other than developing what she calls a “simmer pot”. Domenic Rinaldi uncovers what this means as he and Jennifer go right into the things you need to go over with your business operations and develop a roadmap for changes. Don’t let the excitement force you to make hasty decisions. Take a step back and take the time to assess the business. Follow along to this conversation to know the steps to take before diving in deep.
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Jennifer Goldman: Grow Your Business From A Simmer Pot
If you’ve acquired a business and you have all these great ideas to transform and grow the business immediately, our guest, Jen Goldman of Jennifer Goldman Consulting would tell you to stop and start by doing nothing other than developing what she calls a simmer pot. What’s a simmer pot? It’s a list of observations about how the business operates inside and out. From there, you can start to develop a roadmap for changes in which tasks should get priority status. It seems simple enough, but it’s so hard to do as a new business owner. You’re required to take a back seat and take time to assess a business when you’ve got all this energy and excitement about owning this new business or integrating it into your existing business. It is a critical stage because up until now and up until the time that you acquire a business, all of your diligence work has been from afar.
This is the first opportunity to get a look under the covers of the business and see what’s truly happening. Jen also shares her IDEOs framework, which will help you identify areas in the business to potentially integrate things like processes and tasks or functions, delegate things that maybe the previous owner was doing that you shouldn’t be doing, or you’ve had managers or executives doing that their people should be doing so you can free them up. Opportunity to eliminate things that are not adding value to the business. Perhaps it’s an opportunity to outsource some functions. You need some real expertise and you don’t have it in-house and perhaps outsourcing might make the most sense. It’s also an opportunity to look at your staff and maybe recalibrate what’s happening with the staff.
If you’re thinking about buying a business or growing your existing business through acquisition, you will definitely want to read this episode with Jen Goldman. Before we get into the episode, if you want to avoid common deal pitfalls and the risk of losing substantial dollars, you need to know how ready you are to buy a business. Because I believe proper preparation is so critical to your deal success, we have published several free resources to help you be better prepared. You can access these resources on our website at K2Adviser.com/resources. Being prepared is critical to ensuring that you maximize returns and minimize risks. Thank you for being here and I hope you enjoy the episode.
Jen, welcome. It’s nice to have you here.
Thank you. I’m glad to be here.Focus on productivity, profitability, and growth. Click To Tweet
We’re going to talk a bit about what new business owners should be thinking about when they first acquire and take over a business and maybe even unpack some of the things operationally, they can think about in diligence. This is an important topic, but before we dive in, how about a little bit of background on yourself and a quick bio?
I’m born and bred in Buffalo, New York, and a daughter of educators who had entrepreneurial blood and left Buffalo for Boston, Massachusetts in my early twenties. From there, I jumped around a couple of companies. I worked with venture capitalists, I worked with small and large businesses and now I’m a consultant to micro and small businesses.
You’ve been at all levels of the spectrum in the business world and I know you’ve been doing this for quite some time and successful. In the environment that we’re in, lots of folks are finding themselves dislocated, furloughed, laid off or their compensation has changed considerably and acquiring a business has become a real possibility for a lot of these folks. Maybe not one that they wanted to pursue immediately, but they’re being forced to do it. For new business owners and I know you’ve had the opportunity to work with a couple of folks who acquired a business and help them get their arms around. I want to dive into what should new business owners be thinking about when they first acquire a business, because you’ve got all of these things that you can do and you have all this energy and you want to do everything, but where do you start?
I use words or letters. I call it the PPPG and I’m sure you’ve heard of this. There are four areas. We focus on the people, productivity, profitability and growth. Trying to keep that three Ps and a G, organized. When I mean people, I mean two sets of people. The people that come with the business because you might inherit employees or contractors and the customers that come with the business. I want to be clear. You want to understand what you will be inheriting in terms of culture, mood, style, expectations, compensation and productivity. You want to know the tech stack. What are you going to be inheriting? What’s working? What’s not working? How are people able to focus on the highest value types of efforts in the business?
On the profitability, that’s looking at P&Ls. It’s looking at balance sheets and understanding what you’re inheriting and look for patterns. That’s important to see, like past revenue, growth and in dips and also on expenses. On growth, what are you inheriting in terms of online presence and the cyclical nature of growth? Some businesses have those ups and downs throughout a given year, pre-COVID and you got to know what you’re getting into and when you’re buying in on terms of growth.
When I work with people who are looking to buy a business, they do a lot of due diligence. It’s in a condensed period of time. It might be over a 90, 120-day period and it’s from a distance. They’re not in the business diving in and diligence. They’re gathering information, they’re talking to the owner, maybe some key players and doing some research on the market. They buy the business and they walk in day one. They’ve got these preconceived notions about the business and about how it operates and the opportunities. Should people act on that immediately or what should they do to validate what they learned? How should people approach what they’ve learned in diligence when they first take over?
The first is, you don’t want to act right away and that’s hard because you walk in with all this energy, enthusiasm and you already have a vision in your head as an owner and leader. I believe in science. I have names for everything called the simmer pot, everything that comes to mind. Things that you want to do, things that you see and areas that need attention. I believe in fully documenting that into a living breathing document. I use a project management software for this with businesses and start brain dumping because the minute you start doing that, you will naturally prioritize. Sometimes the priorities are based on pain points around people. That always creates a culture. It could be a culture issue. That might rise to the top in terms of priority scheme. I would never say on day number one or day number five to jump in and start doing it. Unless something is super obvious, you have the whole team’s buy-in and they’ve been waiting for it and it’s a quick, easy, cheap win, then go for it, but other than that, start throwing everything in the simmer pot.
It’s human nature to come in and want to move the needle and improve things. Is there a recommended timeframe for people should use this simmer pot? Is there a period of time that you recommend and are there questions and things that people should be doing during that timeframe that can make a big difference?
I usually say fifteen days for things to simmer unless there’s some major burning issue that you come in and you know right away has to be taken care of. Almost always, unless you’re doing heart surgery, no one’s going to die. You’ve got to take that fifteen days. In those fifteen days, what I always recommend is getting a clear understanding of roles and responsibilities. When you’re inheriting a business more often than not, you’re inheriting people with it and everybody wants to know where they stand and where you stand. If you’re that owner, you got to be pretty clear about what your roles and responsibilities are going to be and what theirs are. I don’t believe in dumping this all on the buyer. I believe that everyone on the team should pitch in and cross communicate.
It’s a one-page exercise of writing out roles, responsibilities and even employee goals and owner goals. That’s a big one. The other one I would do in the first fifteen days is clearly understanding how everybody’s operating, how do you do that visually and quickly? I believe in tech mapping and tech data flows. I think tech is integral in any business. It doesn’t matter what it is. Understanding who’s doing what and who’s leaning on the technology to do what. If you can get that done in the first fifteen days, that’s spectacular.
I can imagine between the simmer pot and the tech mapping, as an owner, you’re probably going to have pages of notes, and now you’ve got to distill down where do you go focus? What moves the needle the most? In your experience, are there 2 or 3 things in a business where you can move the needle quickly and substantially that maybe people don’t think about on a day-in, day-out basis?When you're inheriting a business, more often than not, you're inheriting people with it. Click To Tweet
I find the rules and responsibilities is a mind-blowing exercise. The amount of empowerment that comes out of that, the amount of people that step up and help to move the business forward and up is phenomenal because they want their leader to tell them what to do. By doing that, it opens the game for high capacity, high productivity and high collaboration, at least that’s what I’ve always found, especially with smaller businesses where everybody’s talking often and a lot. That’s what I see as being the biggest win.
Can you give us an example of that where you work with somebody on the roles and responsibilities, and what did that look like? What was the outcome of that exercise?
First of all, everything that I do is one page. When you talk about pages of documents, I don’t believe in that. I believe in role charting, which is literally, if you could visualize this, think of like an Excel spreadsheet and tiles and in each tile, it lists an area of the business and the decision-maker for that area and who’s the doer. It’s clear on one page. By doing that exercise, it frees up people underneath the owner and the leader to do and not worry about being penalized for doing or taking something forward and moving it to the finish line.
People are afraid when a new buyer comes in, that they might step over the line and they might do something that the buyer didn’t want them to do. The minute you clarify in the role chart, who’s the decision-maker for each area of the business and the buyer says, “You go with this. You’ve been doing this and I’m good for you to run,” and it’s documented, that gives the freedom for people to run with ideas and initiatives that they were doing before the buyer came in. The buyer and this instance of my story felt freed up from the beginning to focus on the vision of the business.
They didn’t come in feeling like they had to dig deep into marketing and deep into operations and all the other areas because as soon as they did this exercise, they realize their new people had it. They could focus on the vision and the growth and that allowed for 32% growth in the first year. It was a massive kick up. This was a business that had rolling revenues of about $1.5 million of reoccurring revenue. That was a big boost. Usually, when a buyer comes in, it’s getting settled in and you don’t see that in the first year. It wasn’t that difficult to do, because again, that buyer was freed up immediately by knowing the roles of responsibilities, who’s taking lead and who was allowed to do their thing, which is to vision the company forward.
I would’ve never thought the answer to the question I was asking would be roles and responsibilities. I would naturally think we were going to marketing, technology, productivity or lots of other places. It seems so basic but something that you could easily overlook. It also follows a common theme that we talk about a lot with owners of businesses, which is if you want to improve the value of your business, one of the key ways to do that is to remove yourself from a lot of the pieces of the business so that you could focus on working on the business and not in the business. I think it goes hand in hand with the roles and responsibilities.
I think we undersell the idea of the empowerment of the people. What I have seen over and over in a business is that when the people in the house in the business feel clear about their purpose and what they’re doing, that oozes out into the community. Whether you’re a community, regional or national business or international, there’s no question that if you feel as an employee at whatever level, empowered and in control and doing well, it goes across the phone line. It goes across the video line. It comes out in the outward communication. Most businesses don’t believe me unless they’ve been through it before. The owners and the buyers don’t believe it and when that happens, they’re like, “I bought an X business. How did that happen?” I’m like, “I don’t know what to tell you. It’s magic.”
When I think about the positions I held early in my career, when I was empowered, it was both scary but exciting. Somebody was giving you the opportunity to go make something happen. It’s a bit scary because you’re worried that you’re going to mess it up and all the things that could happen, but at the same time, it’s exciting. It frees you up to go to express yourself. Let’s talk about owners. I know that one of the things that you do a lot of is that you’ll work with owners on operations techniques to free them up from being overloaded on a day-in day-out basis. It sounds like roles and responsibilities are clearly one of those. What other things can an owner do to free themselves up and in the process, probably build a lot of value in the business and self-satisfaction?
I think that owners have trouble saying no sometimes. This concept of, Greg McKeown’s Essentialism, the idea of time blocking. I suggest that an owner brings it one step further and they put in a call scheduling system into play because it holds them accountable to where their focus should be. We can talk all we want about focus, blocking and habits, but sometimes we need a little help forming those habits or holding us accountable. To me, the scheduling system has been something that I’ve put in for every single business and owner, regardless of the type of business that they’re in.
Can you talk a little bit more about that? What exactly is it?
It’s a system like you and I both use. The concept that somebody can click on a link, let’s say it’s a call button on a website and the big banks have these now, big institutions, everybody. It feels like almost everyone does. It’s the idea that when somebody books a call with you as the owner, they’re given choices of days and times. Behind the scenes, the beauty is that those are blocks that you put into play to limit how many calls you would take during the day or on what days. This whole concept of being available 24/7, I’m not a fan. I don’t think it leaves time for the owner to work on the business and bring it forward and up. This is how we do it behind the scenes.If you're the owner, you have to be pretty clear about your and your employees’ roles and responsibilities. Click To Tweet
I do use that, and it is amazing. It frees me up and it also gives people plenty of options. If they want to reach me, they can. I have my protected times, which I need to operate my business and think about it. We’ve talked a lot about what business owners should be thinking about when they first take over a business. I want to switch over to before they acquire a business. From an operations perspective, are there techniques, things or advice that you would offer to prospective buyers on how they should assess the operations of a business? They can’t touch any field. They can’t develop a simmer list because they’re not in the business. They’re assessing it from afar. What advice would you offer to buyers who are in that situation in diligence?
First, I’d tell them to be a buyer of the product or service if they could. Ideally, let’s talk about the client experience, a customer experience, but also more importantly, what process they’re put through. One of the things that’s so important inside of a good, healthy lean business is processes. How else do you uncover that without them knowing that’s what you’re trying to do? Be the customer or the client, if you could be. It is one area to assess. If you’re in the dance of looking at business, the P&Ls, the balance sheets, looking for patterns and anomalies, that’s important. Another is experiencing people. You’ve got to know that people in the house that you might be inheriting. Finding ways to have casual conversations with them, this is difficult in COVID. We get out of this phase, it’s a matter of meeting with many people in the business as you can.
It is a difficult thing because many owners that are looking at seller business don’t want a buyer interacting with their employees. That’s a bit tricky. There are ways around that. We have seen in some cases where there’s a substantial operation, maybe a third party is retained to do an employee satisfaction survey. Nobody knows that it’s the buyer that’s doing it. It looks like the owner of the businesses doing it, but it’s for the buyer’s benefit. It’s a good way to assess what’s happening with the employee base and are they happy? Are there issues that are potentially there that are going to need to be addressed? Are there material issues that maybe would cause you to walk away from that particular opportunity? What are other things that you could think of from an operational perspective that people could do before they pull the trigger on buying a particular business?
It’s almost no different than me being a consultant and looking at a business that wants to work with me. I am looking through their online presence to their tech stack. There are so many things that you can see about their infrastructure that’s online. What are they going to give the customers if somebody becomes a customer? What’s the portal technology? What is the website technology? What do they look like on social media? That’s a sign of their internal tech as well and their use of tech. You can get a general sense of that. You’re not going to get all the tech that they don’t use but they pay for. That’s a suppressant waste for you after you buy. At that point, I feel like you’ve covered it. I go back to the three Ps and a G. Between the P&L is the people, the customer, what you see on the outside, the process, trying to go through the client experience. I think you’re going to get a general sense of the health of the business.
I want to go back to the client experience because it’s not possible for you to have a client experience with every particular type of business. You might be looking at a manufacturing business and you can’t feasibly buy or even engage in what they’re manufacturing. It’s like I mentioned earlier with employees, you can do employee satisfaction surveys. You can also do client satisfaction surveys that are masked. Nobody needs to know that you’re the prospective buyer. It’s the existing company doing a third-party validation. We had this happen on two deals that we closed. The buyer retained third parties. The seller of the business in each case had the ability to interview and approve the third party that was being hired and control the environment.
What questions were going to be asked? They got the approval. In one case, that required some negotiation because the buyer wanted to ask some questions that the seller was not comfortable with. In both cases, they got there, but they did the surveys and they were great. It turned out in both cases that clients were generally happy. They identified some areas of improvement. I tell people all the time, “That’s great. You want a business with some warts. You want a business that has areas for improvement.” If not, where are you going to take the business? How are you going to grow it? In all my years of doing this, I’ve never seen a perfect business. The only question is, are the warts and are the issues material? If they are, then maybe you need to think twice about that business. If they’re not material, there’s your opportunity for growth. Here’s your roadmap, here’s your simmer list.
The beauty of businesses these days, they tout who their client base is. When I look like a top 500 or 1,000, the logos of the companies they work with are on there. There’s nothing stopping you as a buyer from calling those companies and saying, “How has been your experience working with this company?” You have every right. It’s public information so you’re allowed to ask. You can go as systematic as you’re mentioning, but you can go also as simply as reaching out to those companies and seeing what their experience was with the company you might buy. It all takes time.
Jen, this has been great. Let me give you the opportunity though if we missed anything in the discussion here to bring up some other thoughts or high-level things that prospective buyers should be thinking about either when they’re looking to buy or they’ve acquired trying to integrate and transition into the business.
The only thing that I would mention is that once a buyer is in the business, there is a mantra that I follow that I like sharing. I’m into the letters and remembering, it’s called IDEOS. This mantra is something that I’ve used for many years. What it stands for is when you look at an area of the business, you think about ways to Integrate, Delegate, Eliminate, Outsource or Staff recalibrate. Every time I’m looking with a buyer at a business, or we’re already into the business, what I’m looking for is ways to integrate, delegate, eliminate, outsource, or staff recalibrate around that area of the business. When you apply this, you constantly identify lean techniques, ways to reduce work, increased productivity and profitability. I want to share that because I always took it for granted. That’s how my brain thought. When I articulate it, I find it’s an easy one to follow. It’s helpful.
That’s a great way to think about it. I think we hit on delegate when we talked about roles and responsibilities, but that middle one, eliminate, that in my experience is one of the hardest things for people to do. I’m guilty. There were many years where there was a particular piece of our business that I couldn’t pull myself away from. There was a block. I went to a seminar and it clicked for me. We eliminated what we were doing almost immediately. We grew 20% because of it almost overnight on my own way. I’m sure you see that.
That’s why they work with us. In the end, it’s hard to see. I’ve had a coach my whole life to clear the deck and to call me out and what is essential, what’s needed and not. That simmer pot can get out of control. You always need an outside party that’s not afraid to tell you the truth. That could be a mentor, a business friend, someone with gray hair that you trust. Whatever the case is, that’s so important. The owners that stand alone will not survive. I don’t see them surviving.We undersell the idea of the empowerment of the people. Click To Tweet
Look no further than sports or the arts and actors. All those cultures have coaches, mentors and as business owners, why should we think we’re any different? We need that recalibration. It helps. Jen, that’s great. This is awesome stuff. If folks wanted to get in touch with you, how could they reach you?
They could pull up Jennifer Goldman Consulting and I’ll show up and help the ranking. Nice and easy.
Thank you again for being here. I appreciate it.
I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review out show. I look forward to seeing again on the next episode and until then, please remember that scaling, acquiring or selling a business takes time preparation and the proper knowledge.
About Jennifer Goldman
I help micro and small business leaders grow more quickly with less effort and costly mistakes. I help $250k-$10mil revenue service businesses 1) identify operations and business management improvements to reach their goals 2) apply IDEOS™ to prioritize improvement changes and eliminate the noise 3) get team buy-in to changes 4) implement and adopt techniques to feel the win of changes as quickly as possible. Click my Contact Card to schedule a call and learn how we boost People, Productivity, Profitability, and Growth. Let us help you so you can help more consumers.
I have guided hundreds of B2B and B2C firms to higher levels of sustainable revenue, profitability, and productivity. Benefits clients derive include: Business Initiative Prioritization, Organization, and Timing, Reducing Stress… Streamlining Learning Curves… Freeing Up Time… Energizing Business Growth…Fostering Cultures of Staff Engagement and Collaboration…
Personal achievements include:
- Enabled $5M in revenue growth while savings $600K in under 1 year …
- Pioneered the first and largest free directory of US-based providers to the financial industry…
- Personally built a $22M executive client base in fee-only assets at age 24…
- Selected as Board Member of VC-backed drug company at age 28…
- Vastly increased the valuation of the largest US-based multi-family office advisory firm through operational improvement implementation
- Recovered $10MIL in revenue in assets for a East Coast Bank financial services organization at age 20
- Launched the first Virtual COO service to advisory firms…
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