Here are two things that an effective employee training program can’t be without.

1. Employee Handbooks

We touched on why employee handbooks are crucial to success last week. A company handbook is more than likely the first thing that your new hires will read. It will outline expectations and set the tone with your company’s mission and ethics policy.

Handbooks can also increase efficiency, especially if you have role-specific guides to accompany the company manual. These role-specific guides lay out responsibilities, processes, and other details vital to performing duties well. Providing them to new hires will make it much easier to transition into a new position.

The bottom line: handbooks are a critical resource that give new hires another place to turn to should you be unavailable to answer questions, which leads me to the second feature that an effective employee training program can’t be without.

2. Good Communication

“New employees yearn for constant communication,” as Jeremy Day says.

Reflect on your first few weeks at a new job. All you wanted was for your new boss or co-workers to reassure you that you were on right track, doing things the right way. You even wanted to know if you were doing things incorrectly, so you could correct your actions and avoid disappointing everybody.

Your new hires feel exactly the same way. They want and need constructive criticism, so you must communicate often during and after training. An effective employee training program will always emphasize communication.

Plus, the more you communicate with helpful feedback, the faster a new hire will be up to speed, which gives everyone more time to do their jobs.

Foster communication by:

• Always making yourself available for questions
• Designating another colleague that the new hire can go to with questions should you be busy or out of the office for an extended period of time
• Checking in often
• Emphasizing this point: There is no such thing as a dumb question.

Bonus tip: Regina Paul suggests working with trainees one-on-one. Getting feedback from multiple people at the same time can be overwhelming for a new person, who is trying to soak up as much information as possible. Multiple people giving directions only bombards them, instead of helping them.

© 2012 Generational Equity, LLC All Rights Reserved

Are you contemplating exiting your business? There are a few things you need to know before you get started. Click here to get your free whitepaper outlining the basics of exit planning.

Strategic Investors – Why Serial Acquirers May be Interested in You

Carl Doerksen looks behind the motivation of 3M’s acquisition of Ross Reels, a Colorado-based manufacturer of fly fishing equipment and accessories. 3M, a serial acquirer (a company that make acquisitions year in, year out, regardless of economic conditions or geo-political instability.), acquired 26 companies during a 16-month period starting in January 2010.

Click here for the full article.

Private Equity Activity – Why the Middle Market is King

“Recently Pitchbook published its annual review of private equity deal making … Once again, even though we have seen it many times before, we are continually amazed at how vital a role middle-market and even lower middle-market companies play in the private equity universe.

[M]ore than 40% of the deals closed in 2011 by private equity firms were valued BELOW $50 million, and well OVER 70% were valued BELOW $250 million. This trend has held true for years. In fact, nearly 90% of the deals closed in 2009 were valued below $250 million.”

Click here for the full article.

Merger and Acquisition Activity in 2012

“Recently the Association for Corporate Growth (ACG), in conjunction with Merrill DataSite, conducted an online survey followed by in-depth interviews with M&A dealmakers…

More than 200 executives responded to the survey making it a representative sample of professionals involved in mergers and acquisitions. One of the most interesting findings of the survey is that 58% of the respondents expect to be either somewhat or much more active in acquiring companies in 2012.”

Click here for the full article and details about why the companies will make acquisitions.

© 2012 Generational Equity, LLC All Rights Reserved

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Are you considering selling your business? Then you need to know what not to do. Download a free copy of Five Mistakes to Avoid When Selling Your Company today.

2012 Economic Projections – Where the Growth Will Come From

“At the beginning of January, Pepperdine University’s Private Capital Markets Project, along with Dun & Bradstreet’s Credibility Corp., surveyed the owners of more than 3,000 small- and medium-sized companies in the U.S. regarding their collective outlook for 2012. The survey is a great snapshot of the lower-middle market since more than 70% of the respondents had revenue below $5 million.”

Click here for the full article.

Selling a Business – Part II – The Value of the Valuation

“A few weeks ago we started a series of articles about the process of selling a business. This is the second in the series and deals with the next step. As you’ll recall, the first step when selling a business is simply deciding that now is the time to sell…

After you have decided to sell your business, the vital next step is determining what your company is worth in today’s market. The “value” of your business valuation cannot be overstated. If you approach the market with no idea what your company is worth, how will you know which offers you should accept?”

Click here for the full article.

Why You An M&A Advisory Firm If You Are Selling Your Company

Carl Doerksen walks through the details of a recently announced acquisition, highlighting its complexities and why it helps to have an experienced M&A consultants and advisors on your side when negotiating with potential buyers.

Click here for the full article.

© 2012 Generational Equity, LLC All Rights Reserved

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Want to learn more about how you can best prepare your company for sale? Download a free copy of Building and Exiting a Desirable Business today.

While an out-of-date employee handbook doesn’t do much good, a fresh, information-packed guide can make a company’s employee handbook a go-to resource. To prevent the books from gathering dust in the bottom of a filing cabinet, business owners need to ensure that they give the guides formal review every six months.

Handbooks are mostly thought of as a formality for legal purposes, but they can actually be very helpful. Why else would they exist in the first place? Here are a several reasons why handbooks are important. Don’t skip No. 2 – it’s a real gem.

1. Employee handbooks are a first impression.

And you always want to make a good first impression, right? A handbook is the first thing that new hires will read after joining the company. Believe it or not, your new employees will at least glance at your handbook. Whether they read it depends on how useful it is and how much you stress its importance.

New hires will turn to company handbooks with questions about vacation days, the company mission, how complaints are handled, etc. This policy handbook needs to spell out your business’ processes and clearly convey ethics policies.

2. Employee handbooks increase efficiency.

If done right, a policy guide can save you and your employees time. Your employees can reference their book in less than a minute instead of waiting for you to get off the phone to annoyingly ask you, “Do we get MLK Day off?”

An extension of the employee handbook is a role-specific handbook. Regina Paul recommends having all employees write a book that lays out responsibilities, processes, and other details vital to performing their duties well.

Role-specific handbooks better your company. Creating a handbook helps current employees define their roles in the company, providing confirmation that what they do matters. They also allow you to identify any overlap of responsibilities and processes that need to be improved.

In the event that an employee needs to step in for another, these handbooks make it much easier for others to complete work. If someone is sick but has details in a guide, you can allow them to rest instead of bothering them with phone calls every hour about this and that. And should someone leave your company, you have documentation that will allow other employees to fill in, and it will also be helpful to the person’s replacement.

Reviewing these role-specific guides every six months are mandatory to make sure that they don’t become outdated. Some employees might need to update their books every three months.

3. Employee handbooks are vital to potential buyers.

If you ever plan on retiring or exiting your business, you will have to document everything that makes your company tick before you can find a buyer.

How disorganized would you look to a potential buyer if you don’t have a handbook or any written documentation of your business’ processes? Your company would appear chaotic, and no one wants to invest in a haphazardly run organization.

Not having work flow and processes documented could actually cause many buyers to walk away from your deal, which is the last thing you want.

Helpful resource: The U.S. Small Business Administration has several recommendations for creating employee handbooks. The SBA also has a template if you’re just getting started: Employee Handbook Template.

© 2012 Generational Equity, LLC All Rights Reserved

Are you contemplating exiting your business? There are a few things you need to know before you get started. Click here to get your free whitepaper outlining the basics of exit planning.

Generational Wealth – Your Legacy

“There is an old Scottish proverb that goes something like this: The grandfather buys, the father builds, the son sells, and the grandchild begs.

This saying is referring to the transfer of wealth from generation to generation. Sadly, as we have seen over the decades, it is often all too true. A family creates a business that is well run and profitable, and as successive generations take the reins, too often the investment and the legacy in the business is completely lost through bad management, lack of focus, and poor decision-making.”

Who is qualified to replace you as the owner of your private business? Carl Doerksen explores your options and provides tips for planning an exit strategy.

Click here for the full article.

Private Equity Activity – What it Means to You (Part II)

Pitchbook revealed acquisition activity of the 20 most active lower middle-market equity firms during 2001-2010, showing that firms were quite active during the 10-year time period. What should take away from this? Read on for the answer.

“As you begin to look for buyers for your organization, keep equity firms in mind. If you are too small to be a primary platform company, you may be the right size for an add-on to a platform.”

Click here for the full article.

Synergies Make the Deal Happen

Generational Equity recently helped Bellwyck Packaging Solutions acquire Generational Equity client Ace Packaging Limited.

“’The offer presented by Bellwyck was creative in addressing the needs of the Sellers and was structured very effectively to realize the full potential of the synergies of the companies,’ said managing director Mike Hammer.”

Click here for the full article.

© 2012 Generational Equity, LLC All Rights Reserved

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Want to learn more about how you can best prepare your company for sale? Download a free copy of Building and Exiting a Desirable Business today.

Career Builder recently surveyed 2,696 hiring managers and human resource professionals to find out more about bad hires – why companies hire subpar employees, how much it actually costs a business and characteristics of less-than-desirable workers.

Why Companies Make Bad Hires

Let’s start with why companies make poor hiring choices. According to the survey, 38% of companies hire bad employees because the business needed to fill a position quickly. Following closely behind that is the 34% of respondents that attributed the bad hire to a mistake. Twenty-one percent of HR professionals indicated that they didn’t gather enough intelligence about the employee’s skill set.

I’m sure none of these answers surprise you, so let’s move on to the really interesting information that will make you think twice when you’re tempted to hire a subpar candidate.

What Does A Bad Hire Cost?

Due to a bad hire, 41% of companies lost worker productivity, 40% lost time due to recruiting and training another worker, and 37% lost expense recruiting and training another worker. Thirty-six percent said that bad employees also had negative impact on employee morale, and 22% revealed that poor hires had a negative impact on client solutions.

Beyond that, almost half of the respondents, 41%, said that a bad hiring decision in the last year cost them at least $25,000. Twenty-five percent of companies surveyed said that hiring the wrong person cost them at least $50,000 in the last year.

Those numbers underscore how important it is to make good hiring decisions – they directly affect your company’s bottom line.

How To Prevent A Bad Hire

Luckily, the chances of making a poor hiring decision can decrease if you take a few precautions.

Rosemary Haefner, vice president of human resources at CareerBuilder, has some tips for preventing bad hires.

• Vet candidates as thoroughly as possible.
• Introduce candidates to as many people in the department where they’ll be working as possible, especially if they will be working closely together.
• If a particular skill or program knowledge is required for the job, ask for samples of past work or even ask them to perform a test if the skill or program required is crucial for the job.

Small business expert Jay Goltz provides tips as well.

• Conduct great interviews.
• Always check ALL references.
• Give your employee a great first day on the job. This makes them confident in their decision to accept your job offer.

If you’re more of a visual person, I’ve included a nice infographic summarizing the Career Builder survey results that Mindflash put together.

Click here to see the enlarged version.

© 2012 Generational Equity, LLC All Rights Reserved

Mergers and Acquisitions in 2012

“As we have discussed in past articles, a growing number of experts are expecting the number of deals closed in 2012 to outpace 2011. If this holds true, it will represent the third straight year of increased M&A activity.

Despite the facts that 2012 is an election year and there is continued volatility in Europe, analysts believe that the fundamentals are sound enough in the U.S. to propel deal activity forward during the next 12 months.”

Click here for the full article.

Selling A Business – Part I – Deciding To Do It!

“One of the most important decisions you will make as the owner of a privately held business is about the timing related to exiting or selling your business…

It is probably the most emotional decision that many of you will ever make. Your identity (not to mention your entire net worth) is tied up in your company.

The “baby” you created decades ago is now a fully operational, profitable entity with long-term growth opportunities in front of it. However, given your age, health, and retirement desires, you may not be the best person to take the business to the next level. Coming to that realization is tough but necessary.”

Click here for the full article.

Selling Your Company – The Value of Micro Cap Funds

After detailing the Riverside Micro Cap Fund, Carl Doerksen explains why it matters to private business owners.

“Riverside is a great story because RMCF I was created just prior to the Great Recession. However, despite this really big bump in the road of investing success, RMCF I soldiered on, acquiring 20 companies over the years and generating a substantial return for its investors.

RMCF I survived and even thrived BECAUSE of its focus on the lower end of the middle market. Riverside blazed the trail in the micro-cap investing world and now there are literally dozens of firms that have funds like this. Many of them are funds that were created after the financial crisis since financing for highly leveraged, mega-deals dried up.”

Click here for the full article.

© 2012 Generational Equity, LLC All Rights Reserved

In a nutshell, inspirational leaders all start with why.

I’ve crafted a summary of his presentation below, but if you have 18 minutes, I encourage you to listen, as Simon is a great storyteller and teacher.

The Golden Circle

According to Simon, all leaders think and act the same way. To illustrate this, he created a chart dubbed the Golden Circle.

There are three layers to this circle, with the outermost ring labeled “what.” “What” refers to what companies do. This is the simplest ring. Everyone knows what products or services their companies offer. Apple makes computers. McDonald’s serves food.

The inner ring is labeled “how.” This is your unique selling proposition—how your company is different than the others, what sets you apart. Some companies can identify how they are better than the competition; some can’t. Apple’s computers are beautifully designed, simple, and user friendly.

The innermost part of the Golden Circle is the heart of inspiration and is labeled “why.” Even fewer companies can answer these questions:

• Why do we exist?
• Why should anyone care that we exist?

To put all of this in context, here is why Apple’s marketing works.

If the company wanted to be average, it would start with “what” in the Golden Circle and work its way inward. The marketing message would look something like this:

“We sell computers that are better because they’re beautifully designed, user friendly, and simple. Want to buy one?”

Instead, Apple leads its marketing campaigns with “why” and works its way out of the Golden Circle:

“We believe in thinking differently and challenging the status quo, so we created computers that are beautifully designed, simple, and user friendly. They just happen to be great computers. Want to buy one?”

After hearing the last sales pitch, you want to buy a new computer if you value thinking differently. Simon’s point: All great leaders start with why and work from there to inspire action.

Key Takeaway

“People don’t buy what you do; they buy why you do it.”

Simon repeats this line continuously throughout his presentation. If there’s one thing you take away from the presentation, it’s that line.

Passion is contagious. It’s contagious for your employees and it’s contagious for clients.

The goal for your business is to find other people that believe what you do. You’ll get better employees and better clients if you can.

© 2012 Generational Equity, LLC All Rights Reserved

Private Equity Investors – Why They Remain Loyal to Funds

“According to a recent survey by Coller Capital published in PE Hub, despite (or quite possibly because of) economic uncertainty, ‘a strong majority of limited partners plan to continue their steadfast commitments to private equity, with 83 percent saying they will maintain or increase their allocations to the asset class in the coming year.’”

Click here for the full article.

Optimizing Value – The Importance of Basic Financial Statements

“[I]f your financials are not professionally presented, buyers will not pay you an optimal value. In fact, many professional buyers will simply walk away from your deal due to the risk.

We understand that in these tough economic times, business owners are looking at every opportunity to cut costs. However, as the old saying goes, “Don’t be pennywise and pound foolish.” Trying to save money by reducing your accounting costs and managing your books on your own will, in the long run, end up costing you much, much more.”

Click here for the full article.

Cross-Border Deal Making – Where the Buyers Are Coming From

“Last month both The Wall Street Journal and The Economist published articles highlighting how active one country has become this year in outbound M&A. I bet many of you are assuming that the article discussed Chinese or Indian companies and their M&A activities. But that assumption is incorrect.

As it turns out, in 2011 Japan was one of the most active outbound M&A participants in the world. This can be clearly seen in the following chart from Dealogic, which tracks cross border deals by the location of the acquirers through November of last year.”

Click here for the full article with reasons why Japan is so active buying offshore acquisitions.

© 2012 Generational Equity, LLC All Rights Reserved

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Want to learn more about how you can best prepare your company for sale? Download a free copy of Building and Exiting a Desirable Business today.

1. Decrease the internal busywork for your sales staff.

Don’t bog your sales staff down with unnecessary meetings, reports, etc. The more time they spend talking to you or their direct supervisor, the less time they have to spend selling.

To cut down the busywork, you can decrease the number of meetings and reports required. If you don’t feel comfortable doing that, you can find new software that will produce the reports you’re wanting. This should increase productivity, making your staff more efficient because they have the right tools.

The classic adage here is, “Work smarter, not harder.”

2. Have your sales staff position the product or service you’re selling as a verb rather than a noun.

Geoffrey James provides this example: “Suppose your company makes glue. If you’re selling “glue” (a noun), you’ll talk about product features. If you’re selling “gluing” (a verb), you’ll talk what your offering does for your customer’s business.”

This is a good way to look at things. People always want to know what you’re going to do for them. They don’t care about the features of a product or service. They want to know how using the product or service will make their life better or easier.

3. Look for ways to upsell within your current customer base.  

There are various ways to increase the revenue coming from your current customers. One way to do this is to give them the inside scoop on upcoming sales or product launches through phone calls and emails.

Susan Ward from About.com relayed one of her buying experiences when this happened.

“Recently I was shopping at a retail housewares store. I had picked out an item and was mulling over whether to buy it or not when a salesperson came up to me and said, ‘I see you’re interested in that blender. We’re having a sale next week and all our blenders will be 20 percent off. You might want to come back then.’ Guess what? I did – and bought two other items as well.”

The employee showed Susan that he or she cared about saving her money, which increased Susan’s motivation to purchase products from that store. In the future, she’ll likely remember how well she was treated there and return to buy more goods.

You can also set up a customer rewards program. This could be as simple as punch cards (buy five products, get the sixth free) or you can create a tiered program where the more they buy in a certain time period, the higher discounts they receive.

You can also create a two-week sale that’s exclusively for your current customers. Restricted sales like this send the message that you care about them and want them to benefit from the relationship they’ve already created for you.

What are easy ways that you’ve increased sales?

© 2012 Generational Equity, LLC All Rights Reserved