Don’t miss your Exit

Exit StrategyMy first question in any business conversion: “What is your Exit Strategy?” Without that answer our chat has no path, is without direction and has little to no success upon its conclusion. One definition of “Exit Strategy” is defined by John Hawkey, the author of Exit Strategy Planning: Grooming Your Business for Sale or Succession, “An exit strategy is a means of leaving one’s current situation, either after a predetermined objective has been achieved, or as a strategy to mitigate failure.”

People start companies for different reasons which can influence their exit strategy. The truth is that many small business owners have no exit strategy for their businesses in the event of their disability, retirement, or death. It isn’t surprising small business owners focus their energies on business survival, future growth, and even remaining active in business after retirement. However, a business exit strategy not only means having a plan for the unexpected, including financial hardship, injury, disability and even death, it also means having a plan for the succession or transfer of ownership of your business when it comes time to hang up your hat and retire. Some plans may include:

– Selling a portion of your company in the public markets in an IPO.

– Having another company purchase your business, a “strategic acquisition.”

– Make the business your “cash cow” by finding someone you trust to run it for you.

– Selling the company to the next generation, also known as a “management buyout.”

– The often-overlooked exit strategy of simply to shutting down, closing the business doors, and liquidating remaining assets.

For some, an exit strategy sounds negative. Actually, the best reason for an exit strategy is to plan how to optimize a good situation, rather than get out of a bad one. This allows you to run your business and focus efforts on things that make it more appealing and compelling to the short list of acquirers or buyers. Success starts with a plan that may include creating a peer board, upgrading financial reporting systems, or defining internal operations and training manuals.

Once your exit plan is defined, your marketing approach will need some tweaking. Marketing your company for growth is slightly different than the approach needed in presenting it to potential strategic buyers or investors. First things first; make sure you fully understand and can explain where you are right now. What customers do you have and how do they behave? What marketing are you doing, and what’s working? What’s happening in the marketplace and what are your competitors doing? What marketing methods are available?

Planning your exit is a big undertaking that affects employees, your business structure, its assets, and your tax obligation. Before you embark on your exit strategy, be sure to engage your lawyer and even a business evaluation expert like myself.  That way, you will be sure that you have explored all the options available to you.


Troy Selberg


All companies that grow really big do so in only one-way: people recommend the product or service to other people, sometimes through ads and ideally, through person-to-person recommendations. And the only way to generate sustained exponential growth is to make whatever you’re making sufficiently better, sometimes better than the competition, and in some cases, better than your company’s own last version.  For example, refer-a-friend-to-earn-credits programs can work–if the product is good enough to recommend anyway.  But that kind of program can fail for most startups because the product isn’t good enough yet or the sales team has over committed, setting expectations so high the production team fails and under-delivers.

I have mentored literally hundreds of business owners and almost every time I see a business not performing it is primarily because they are not spending enough time on relationship building. Whatever you provide, competition offers it too (or will) and your prospects will do business with the providers that hold the best reputation. I am shocked at how many business owners do not invest in marketing their reputation. Let’s look at an example: the relationships you have with your suppliers. These vendor partners come into your business daily, they have meaningful relationships with your staff. They know your strengths and weaknesses better than most. Your business must have tens to hundreds of them and you will completely transform your business when you begin to look at them as an extension of your marketing team. Trust me; they leave your business and talk to others about what is going on within your company. Your suppliers are a very effective and meaningful part of spreading the good word and growing your business. Why?? Because it benefits them, too. It’s the very definition of a mutually-beneficial relationship.

I think another very fruitful way of spreading the good word and growing your business is conducted in the cul-de-sack of neighborhoods around the country, when neighbors get together at weekend BBQs or moms who chat while they get the kids together to play. Yes, your spouses and neighbors are also an extension of your sales and marketing team! Almost no one wants to see you succeed more than your family, friends and neighbors. Everybody likes to be associated with a stunningly successful person, and they will, sometimes inadvertently help you become that very stunning success. Even the neighborhood guys boosting about your company’s great products and services at poker night while enjoying a cold beverage is powerful. In fact, this is the MOST powerful form of marketing. You know your friends and neighbors and trust them more than you trust a marketing campaign. These one-on-one encounters will boost sales far more than any sales team looking for new business.

What this means is that if you want to be a great company some day, you have to eventually build something so good that people will recommend it to their friends and families.  No growth hack, brilliant marketing idea, or sales team can save you long term if you don’t have a sufficiently great product.

“Do what you say and say what you do!” Word of mouth sells product and grows sustaining business relationships

What is Six Sigma?

What is Six Sigma?

My Disclosure: Six Sigma is not a simple system, it does not apply to every industry the same, and it can’t be taught in eight weeks for $489.00. It’s not a book, blog or video on the web.


Before, January 15, 1987, Six Sigma was solely a statistical term. Since then, the Six Sigma crusade, which began at Motorola, has spread to other industries that are continually striving for excellence. I was first introduced to the methodology in 1994 through VDO (the instrumentation company). I was trained to use Six Sigma in motorsports to set strategies, techniques, and tools for process improvement. At that time, this methodology was not used outside of manufacturing. Adapting some but not all of the processes then extended and evolved from a problem-solving technique to a quality strategy and ultimately into a sophisticated quality philosophy. These unique philosophies soon became a successful business strategy and were the turning points for NASCAR’s car of tomorrow. I have personally adapted and used these philosophies in raising two daughters, maintaining a healthy home and privately owned vehicle maintenance. I have used parts of the methodology in manufacturing hybrid buses, modifying shipping containers into useful habitable structures and to make many companies safer places to work.

Six Sigma has evolved over the last two decades and so has its definition. It has literal, conceptual, and practical definitions. As Six Sigma has evolved, there has been less emphasis on the literal definition (counting defects in products and processes) and greater emphasis on the conceptual and practical definitions. Six Sigma has grown into a full-fleged business improvement methodology that focuses an organization on:

  • Understanding and managing customer requirements
  • Aligning key business processes to achieve those requirements
  • Utilizing rigorous data analysis to minimize variation in those processes
  • Driving rapid and sustainable improvement to business processes

At the heart of the methodology is the DMAIC model for process improvement. DMAIC is commonly used by Six Sigma project teams and is an acronym for:

  • Define opportunity
  • Measure performance
  • Analyze opportunity
  • Improve performance
  • Control performance

Through my experience, I have learned that the disciplined use of metrics and application of the methodology even together are still not enough to drive desired breakthrough improvements and results that are sustainable over time. I have learned that Six Sigma is a top-down solution to help organizations:

  • Align their business strategy to critical improvement efforts
  • Mobilize teams to attack high impact projects
  • Accelerate improved business results
  • Govern efforts to ensure improvements are sustained

A Six Sigma Management System drives clarity around the business strategy and metrics that most reflect successful execution of that strategy. It provides the framework to prioritize resources for projects that will improve the metrics and it leverages leaders who will manage the efforts for rapid, sustainable, and improved business results.

In closing, Six Sigma is not a simple system, it does not apply to every industry the same, and it can’t be taught in eight weeks for $489.00. It’s not a book, blog or video on the web. It is a methodology! Something you live, breathe and use in your every thought. As cliché as it may sound, with some effort and focus you can retrain your mind and you, too, can change the world.


How much Coffee per employee?

Roasted coffee beansAn age-old office practice is chatting around the coffee machine; while coffee machines may have evolved over time, what happens around them hasn’t. Employees gather, refill coffee mugs, and engage in that old-fashioned thing: a conversation. This is why the vast majority of businesses (both small and big ones) prefer to have a coffee maker in order to keep all employees satisfied. When you see your employees gathering around the coffee machine you might think they are being unproductive, when in fact you should be thinking the opposite! This coffee machine will actually help you to gain more profit, but at what cost? This brings up the question: How much coffee per employee does it take to create a happy culture?

Coffee drinking began in the American colonies as early as 1689 in Boston, New York, and Philadelphia. In fact, the Green Dragon Coffee House of Boston was where the idea for the famous Boston Tea Party was conceived in 1773. Americans revolted against England’s tea tax, and the Continental Congress declared coffee the “Official National Beverage.” What better way to protest the unfair tea taxes imposed than to enjoy an alternate coffee beverage?

How to make the perfect cup of coffee is very controversy so here is my take: The most frequent and egregious problem is not using the right proportion of coffee to water, almost always not using enough coffee. The correct proportion to start with is 4ozs of coffee to 64ozs (1/2 gallon) of water. Others may say: exactly two (2) tablespoons (7 to 9 grams or 2 scoop of a standard coffee measure) of ground coffee beans for each six (6) ounces of water. For 4 cups (6 ounces each) of coffee, measure out 8 generous tablespoons (30 to 35 grams) of fresh ground coffee beans. Understanding that grind plays a big role, too. A coarse grind might only have a fraction of the surface area of a fine grind. And if you’re trying for ongoing, predictable results, you don’t use a small measuring device like a teaspoon… you use a larger one, like a level 1/4 cup or 1/2 cup metal measuring cup. There are lots of variables, the amount of water, the brewing method, the specific brewing device, the amount of coffee, the coarseness of the grind. Water temperature is another often overlooked factor. So basically in a nutshell, you get about 2 gals of coffee per one pound of beans.

How much should a cup of coffee cost the company per employee? When Starbucks came along and ushered in the coffee revolution, they charged $3-4 for something that had previously been sold for $1-2 (and cost them about 50 cents to make). For most businesses, entering a market this way would be a sure fire way to go bust in months. The price of a cup of office coffee is influenced by a lot of factors. And one of the factors that influence it most is the material cost.

Using this specialty drink as an example, if milk costs $3 per gallon, or 2.34 cents per ounce, and a drink contains 9 ounces of milk, the milk cost will be 21.1 cents. If the drink contains one double shot of espresso and a $7.50 pound of beans makes 32 double shots, the coffee cost is 23.4 cents. 1.25 ounces of syrup that comes in a $4.50 25.4 ounce bottle costs 22.1 cents. This gives a total food cost of 66.6 cents. Cups, lids and sleeves add additional cost and if they add up to 20 cents, the total cost of the drink would be 86.6 cents.

While some commercial coffee delivery services boost savings, overall cost can be a deterrent, though: prices can range from six to 60 cents per cup, depending on the quality and the brand of coffee. This can add up: coffee services for a 50-person company, for example, can cost several hundred dollars per month, depending how much everyone drinks.

I have not giving you the answer you are looking for, but I will give you the way to find an answer for your office. “Teach a person to fish and they will never go hungry”, I always say. A systematic approach to identify and eliminate waste through continuous improvement, tools and techniques are then applied selectively to eliminate the three sources of loss: waste, variability and inflexibility.

The DMAIC (Define-Measure-Analyze-Improve-Control) Methodology is a commonly used the Six Sigma tool designed to improve an existing process.

(1) Measure: data collection of product cost and usage

(2) Analyze: statistical methods data for trends and patterns

(3) Improve: find new suppliers, control shrinkage.

(4) Control: continuous monitoring, no problem reoccurrences

This philosophy encourages people to ask questions about every process and every step along the way to creating the final product. It is about asking tougher and tougher questions until quantifiable answer can be achieved that result in a change in behavior. Such questions cannot be answered without a planned approach to solutions.

Results change cultures (not the other way around!): People need to see how their values and behaviors impact their jobs and the organization, even around the coffee machine. Employees flourish when they know they are creating goods and services of incomparable value. In the end, an organization’s employee’s happiness is an indicator of how strong its values are.

  • Business measurements drive values.
  • Values determine how people work.
  • How people work determines profitability.

Now, you tell me, “How much coffee per employee does it take to create a happy culture”?




Organizational Assessment

Organization planAre you looking into taking your company to the next level? Have you asked yourself why your company is not growing in the ways you envisioned?  An Organizational Assessments will add focus on helping your team, department, or organization better understand those issues that are supporting good performance or hindering good performance. These tools provide a leadership team with a perspective of the current reality in the team, department or organization so they can work with a consultant in designing an approach to improve organizational effectiveness. Your “Organization Assessment” can be a comprehensive examination of results achieved,

Lean deployment, and Lean maturity of the organization. In all cases, “Master Black Belt” guides site Leadership and the “Lean Deployment Team” through the “Organization Assessment” process until such time as data indicates the team is capable of “self-assessment”. Ideally during the first two years, these assessments are conducted quarterly. This is the critical phase of the transformation wherein the groundwork is laid to successfully exit the model on schedule with the Lean expertise in place to sustain the Lean efforts and supplant the consultant.

Results are examined at the “Value Stream” level. Results reported on “Quad charts” and other designated reports (metrics, financial) are used to validate a “Kaizen’s” return on investment. Some metrics, however, are often not impacted until the second year when engagement and change pace is sufficient to impact the bottom line.

The “Master Black Belt” will assist the Agency in comparing the actual Lean activities to the Lean Six Sigma Model and determining if the organization is on track and address any noted deficiencies. This group will also examine and score the cultural elements of the Organization Assessment. Leadership, empowerment, organizational structure, human resource practices and policy, and application of Lean principles are all examined. Lessons learned are captured and necessary course corrections are identified. Roadblocks are identified and assigned to the party responsible for removal or elevated to the appropriate level for resolution.

Please understand this is a top down approach and your success rate is very low if you do not have buy in before starting….