NORM BRODSKY ; STREET SMARTS
Manage for the Long Haul
Don’t be seduced by shortcuts—focus instead on these two critical goals.
(@normbrodsky) is a veteran entrepreneur.
He is the co-author of Street Smarts:
An All-PurposeTool Kit for Entrepreneurs.
me tales about the great things they’d done in their previous
jobs, I learned that I shouldn’t have been so quick to believe
them. I also learned that any salesperson who betrays a
previous employer by stealing customers will someday try
to do the same thing to you.
Experiences like that—and, unfortunately, there were
others—taught me that it’s never a good idea to take shortcuts
in business. You won’t, though, if you’re focused on building
a company that can last forever.
If you’re also building it so you could sell it for as much
money as possible—which is actually a similar idea—you’ll
implement best practices. By best practices, I mean things that
add value to the company by increasing the likelihood that
any future owner will be able to earn the maximum return—
even if the future owner is you. There are no shortcuts to best
practices, which will help your business thrive, whether or
not you decide to sell it. One best practice, for example, is
to stay in direct contact with your customers and keep the
relationships up to date, preferably in the form of renewable
contracts. Smart buyers will examine those relationships
closely, for the simple reason that they want to be certain the
customers will stay with the company after it is sold. You
would be wise to insist on the same level of certainty in your
business. It’s all too easy to let those bonds erode through
neglect, and then discover to your surprise that an important
customer has been lost.
Another best practice involves making sure you have such
accurate financials that banks and other outsiders can have
absolute confidence in them. Obviously, we all benefit from
having good financials, as I’ve noted many times before. But
I’m talking here about taking it a step further and getting
certified financials. Yes, the certification process will cost
you some money and take some time, but certified financials
increase the value of the company. For one thing, they will
make it much easier for you to get a loan if you suddenly
find you need one. They also make the business a lot more
attractive to potential buyers.
Follow those two rules religiously, and you’ll wind up with
a well-managed and valuable business that can keep growing
and improving for a long time. Ignore them, and you’ll limit
your company’s ability to ever reach its full potential.
oung entrepreneurs often
ask me, What is the most
important thing to focus on as
I’m building a business? I tell
them, “You should build it
as if you were going to have it
forever and, yet, at the same
time, build it so that you
could sell it tomorrow for
as much money as possible, even if you don’t intend to.” They
usually give me a funny look and ask how they can do both.
“Actually, they’re almost the same,” I say.
Building a company to last forever means you don’t take
shortcuts. You always make decisions with the long-term
health of the business foremost in your mind. For example, you
don’t hire salespeople from competitors. It’s a temptation, I
admit, especially when you’re just starting out. You think that,
by hiring a competitor’s salespeople, you can save time and
money. They’re already trained, for one thing, and they know
the industry. They probably also have leads you can use. They
may even be able to bring some customers with them.
I had those thoughts when I was starting my first business,
and I learned the hard way just how misleading they are. To
begin with, I found that salespeople from competitors had a lot
of bad habits I couldn’t change. They’d learned all the tricks
of the trade, including the worst ones, and would do whatever
was necessary to make a quick sale. When I tried to have them
take a longer view, they wouldn’t listen. They thought they
knew better than I did how best to get new business.
As it turned out, however, they weren’t better salespeople
than those I hired from outside the industry and trained
myself. When I took on competitors’ salespeople who’d told