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Recipes for Success as an Entrepreneur

Recipes for Success as an Entrepreneur

IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Oliver Kotelnikov. Mr. Kotelnikov specializes in the sale of food & beverage businesses for IBA and is a participating member of the Washington Hospitality Association.

Recipes for Success as an Entrepreneur

My father invented the working interview.  When our small family business began hiring it’s first employees, it was a way to mitigate the language barrier and find the best candidate for the job quickly.  An applicant with a polished resume and a list of culinary credentials in hand would be greeted with a handshake and a smile.

-Nice to meet you, I’m Vladimir!  Now make something.

Confusion

-What do I make?  What ingredients do I use?  Where is the…

-Use any ingredients and equipment you see.  Make your most or least favorite thing.  Make something you’ve made a 1000 times or never before.  Makes no difference to me.

Total puzzlement

-But…

-Look!  I could make 500 things out of just what you see in front of you.  I’m only asking you to make one!  Are you a baker?

-Yes!

-And this just happens to be a bakery.  Now make something…I’m busy, let me know when you’re done.

Put on the spot, many folded.  Those who didn’t usually got the job and in most cases did well for the company.

The ability to wing the interview, eyeball the recipe, shoot from the hip on the equipment budget and promote young talent to management on a gut feeling are essential entrepreneurial traits.  In a young company, an owner may need to do all of the above in the same day…or the same hour.  A set of effective hacks and shortcuts allows the jack of all trades business owner to cover all the bases and make accurate decisions quickly.

But as the business approaches maturity and continues to grow, what does the role of the owner look like and how should it change and evolve over time?

Start with the End in Mind

Determining the correct course of action in the present requires clarity on what you hope to achieve in the future, and ultimately in the end.  What will be important to you on the day you hand over the reins?   Is what you’re doing in the present keeping you on track to reach those goals?

Choose your Role

I believe that every owner owes it to the business to serve in the capacity that most benefits the company.  Accurately identifying the highest and best use of the owner’s time is a moving target that requires periodic reassessment and being mindful of the opportunity cost associated with misplacing this valuable resource.  An owner who is busy micromanaging the day to day operations and is preoccupied with the trivial is not focused on the big picture.  Looking for expansion opportunities, improving hiring and retention practices, and standardizing operations will fall by the wayside.

Make Room for Changes

Chances are there aren’t 30-40 hours of extra time on owner’s schedule to allocate towards achieving big picture goals.  Taking control of your time is as much a matter of logistics as it is of shifting perspective and beginning to prioritize the important over the urgent.  Being able to attend with focused attention to the latter requires learning to delegate the former and differentiating between the two.  Successful hiring and subsequent delegation of responsibility starts with parting with the deeply held belief that you the owner are the most qualified candidate for every position in your company.

Develop your Best Practices and Write Them Down

Entrepreneurs acquire their unique knowledge through building their businesses from the ground up and the never ending string of “baptisms by fire”.  The knowledge internalized through direct experience of hits and misses in a live setting is an invaluable collection of golden nuggets.  But leaders are not measured by their ability to accrue and harbor knowledge, but by how well they are able to organize the information into usable concepts and convey them to others.  It is no small undertaking to attempt to quantify gut feeling, convert intuition to protocol and distill everything you’ve learned through blood, sweat and tears into a document of standard operating procedure.   Developing your best practices is akin to assembling a toolbox with only the sharpest, best tools for running your business and finding a way to pass them on.   This journey will require an investment of time before it pays dividends, but it’s one worth embarking on.  The results will be nothing short of achieving the full potential of your business, insuring continued, multigenerational success and securing a legacy.

Navigating Change Successfully

Standardizing operations will free up time to attend to big picture goals, optimize for efficiency, and increased profitability in the present and prepare you for inevitable times of transition.   These events may include such undertakings as upgrading to new equipment, remodeling an existing store, expanding and growing to new locations or pursuing an exit strategy and selling the business.  Regardless of the nature of the transition, the ability of your company to continue operating at expected profitability in a state of flux will be tested.  It will also be evaluated.  A bank considering a line of credit for your remodel and new equipment will be interested in how the closure of the business for duration of construction will affect your ability to make payments on the loan.  A potential landlord may be interested in the future viability of the business model with the owner spending time away from existing stores and focused on expansion.  A buyer interested in purchasing the business and financial institution considering financing the acquisition will both evaluate the effects and consequences of a transition at the helm.  Companies that operate in accordance with an established standard operating procedures are seen as having a proven, replicable recipe for success and are viewed as more stable.

Such companies routinely command increased buyer interest and higher prices at the time of sale, are sought after by landlords, and have a much easier time attracting financing.

 

If you have questions relating to the content of this article or are interested in the process involved with selling a restaurant or food service business Oliver Kotelnikov would welcome the opportunity to talk with you.  Mr. Kotelnikov can be reached at (425) 454-3052 or oliver@ibainc.com.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.