Will the strategy succeed? Is this the right move at the right time? I know we CEOs have all spent many nights pondering these questions and weighing the possible outcomes. Overall, it can
be a complex endeavor.
There are a variety of variables and unique circumstances that come into play for any business, but here’s a simple equation that can be a handy part of your decision-making process when assessing the probability of success for a strategy:
Confidence in our people x confidence in our strategy x the level of coordinated activity = our probability of success
The equation’s value rests on your ability to be honest. Your evaluations need to be fair and realistic to provide the best data. If you aren’t fully confident in an area, that’s OK. It’s about making the best decisions for your company and your people — and that requires honesty.
Let’s look at each part of the equation:
Ask: What is my level of confidence in their ability to successfully execute the strategy?
Honestly assess: While we all would like to automatically say we have 100 percent confidence in everyone at every instance, in reality, the percentage may be lower for a number of reasons.
Perhaps the responsible leader is new and relatively inexperienced. Or maybe the team already has a full strategic workload with little excess capacity to engage in a new strategy.
Ask: What is my level of confidence in the strategy?
Honestly assess: Not all strategies are created equal. The origins and the completeness of a strategy will determine the level of confidence in the strategy itself. Consider the process and if it was created by the boss, visionaries or tacticians? Is it proactive or reactive?
Ask: What is my confidence in the level of coordinated activity associated with the strategy?
Honestly assess: All too often, great strategies and great people are handcuffed by the lack of coordinated activities. Before you can execute a strategy well, you may need to stop doing something else to create the strategic bandwidth to embrace the level of coordinated activity necessary for strategic success.
Now, let’s take a look at an example:
People: Let’s say you have a new leader and a fairly busy group. You decide your confidence in your people under these circumstances is at 90 percent.
Strategy: You have a great go-to-market strategy created by a visionary process. The only shortfall is the financials rely heavily on estimates, so your confidence is at 90 percent.
Activity: You believe the activity level is very high, but it lacks a certain level of management coordination, slowing success. It could be something as simple as an uncoordinated order entry process. Under these circumstances, let’s assess your level of confidence at 90 percent.
So here we go — what is our probability of success? At first blush, it looks like a 90 percent average. That’s an A- or a B+. Sounds good, right?
The reality is different, and here’s what you need to remember: Shortcomings, however small, tend to multiply quickly in business. This becomes clear when we work our equation: 90 percent x 90 percent x 90 percent = 72.9 percent. The probability of success is actually a very low C-.
We have to make the best decisions we can for our people, and this equation can help us evaluate our circumstances and chart our course.
Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information, visit www.fona.com.
When the housing market changed, Fran Broude rallied her team at Coldwell Banker Residential Brokerage Chicago/MilwaukeeWritten by Mark G Scott
Fran Broude looked at the business of buying and selling homes in 2008 and saw nothing but change ahead.
The economy and the real estate market were both in steep decline. Consumers were left in a state of great uncertainty trying to figure out how to move forward with their plans or determine if those plans were still even feasible.
“We had to take a step back,” says Broude, president and COO for Coldwell Banker Residential Brokerage Chicago/Milwaukee. “We had to go through some of the same hard decisions and thought processes that our consumers were going through.”
As a leader in the real estate game, Broude had two levels of customers. There were the consumers who looked to buy and sell homes, and then there were the agents who help those consumers get their homes bought and sold.
In order to achieve success for both groups, Broude felt it was time to take a deeper look at how her Coldwell Banker division worked and how it could better meet customer needs.
“We had to realize and effect some efficiency in our own organization,” Broude says. “But at the same time, and more critically, we had to be able to redirect our resources to providing marketing platforms, tools and programs that would best enhance our agents’ ability to support and provide exemplary service to the consumers, the home buyers and sellers.”
One of the advantages that Broude believed was in her team’s favor was brand recognition.
“People were feeling much more attracted to companies with a strong brand recognition who were considered a trusted resource,” Broude says. “Coldwell Banker has been helping people buy and sell homes for more than 100 years. Consumers and agents wanted to be with companies that would be there during the challenge and in the future.”
It was certainly a positive message from which to draw strength, but it wasn’t enough to solve every concern facing her team. Processes still needed to be modified or changed and 3,300 agents and 250 employees needed to feel good about those changes.
“It’s always a little unsettling to find out your office structure is changing, your facility is changing, where it’s going to be located is changing or what combination of sales associates there will be is changing,” Broude says. “We didn’t just make those decisions and say, ‘Let’s do it.’ We made those decisions with a lot of careful evaluation of what would be the most positive.”
Broude was confident that with the right approach, her team would see the challenges as an opportunity to do their jobs better than they ever had.
Engage people in the process
One of the key things that needed to change was the company’s marketing platform and the tools that were rapidly becoming commonplace in the way people went about buying and selling their homes.
“The leadership team and I really had to make sure that the programs and tools we were focusing on were prioritized and meeting the needs of our agents in their attempt to provide good service,” Broude says. “It was a really big undertaking.”
In addition, the composition of offices needed to be analyzed and the company’s website needed to provide a better consumer experience.
“The driving force behind why someone was selling a home starting in 2008 was very different,” Broude says. “So we had to step back and say, ‘Is this superior agent value proposition, does it really fit the needs of our sales associates in providing superior service or do we need to refine it?’”
As tough as all those changes were to confront, the challenge of composing a response was equally daunting. How do you approach your people who have been trained to do something one way and now need to completely change course?
“You almost have to over-communicate in a very reassuring way,” Broude says. “All good leaders, it mandates that you get people to feel good about change. You present the change that is needed and you get them to feel good about it. It doesn’t always work, but it never works when you don’t articulate it or communicate it clearly and with passion about why it’s the right decision.”
Broude didn’t want to push through changes without discussing it with as many people in the organization as she could and explaining why the changes needed to be made. So she and her leadership team embarked on a mission to do just that.
“I’m a big believer in listening to the field, listening to what they have to say and making sure they know you are listening to what they have to say,” Broude says. “Then we’ll reconvene and talk about common threads. So we divided up the list and reached out and asked, ‘What are your biggest challenges? How are you dealing with them? What do you need from us?’”
Broude and her leadership team committed to take what they heard to heart and promptly respond to what they had learned. They enlisted people with expertise in certain areas of real estate to talk more deeply about changes that were being made. And they worked hard to provide statistics and data that would give their teams the latest on what was happening in the housing market.
“The whole team embarked on a lot of coaching to provide more dialogue about pricing and positioning their home the right way for sale,” Broude says. “It was almost a back-to-the-basics, but the basics had changed a bit. We instilled a lot of confidence in the sales associates and employees.
“We were aware of what was happening, we understood what they were dealing with and we were supporting their efforts by bringing everything we could to them to have those conversations.”
Explain the why
When you’re talking about changes and disrupting the routines of your employees, you need to demonstrate why you’re doing it. It’s one thing to talk about why these changes are going to help your business and your customers, but you also need to recognize that it’s going to affect your employees.
“We made decisions with a lot of careful evaluation of what would be the positive,” Broude says. “For example, if we were going to move an office and reduce the size or merge two offices together, it wasn’t with the intention that the overall goal be a smaller office. There was always a component that provided more resources and support for the agents.
“So by reducing the size of an office or merging two offices, we could provide a much higher level of staff support in an office for everybody.”
When you take the time to get into the thought processes and the reasons behind a change, you stand a better chance of getting support.
“Most people — if you have a trusting relationship — they’ll at least give you the opportunity to get through it,” Broude says.
It gets back to the idea that as a leader, you can’t just think about making your company attractive to your external customers. You’ve got to work just as hard at selling it to your internal customers, the employees who you hire to work for you.
“We have one common goal and that is to create raving fans within our organization,” Broude says. “We want them to experience an excellent customer experience as often as possible so that they can feel good about the experience they provide for people who buy and sell homes. It was just a lot of team effort and communication and execution of plans that continually had to be evolving.”
Broude feels the responsibility of being the leader of her team and demonstrates it through her availability to that team anytime, anywhere.
“To a fault, I’m probably the most accessible person,” Broude says. “I get a lot of crazy communication through emails all days of the week and at all times and I always respond very promptly.
“I’m a member of this company in many of the same ways everybody else is. I provide leadership, vision and a platform that people want to believe in and follow. Whenever you get far away from what people are dealing with in your organization and how what you’re driving is affecting them, you’re really not very effective as a leader.”
The numbers show Broude’s team is adapting well to the changes. Her regions saw an increase in volume of 25.6 percent to $7.2 billion in 2012.
“The bar rose for everybody,” Broude says. “We set a much higher standard of service within the organization and a much higher acceptable limit of production for our agents and everybody rose to the occasion. The aftermath of that now that the market is performing even more differently has helped position us to deal with that change to a much greater degree of success.”
How to reach: Coldwell Banker Residential Brokerage Chicago/Milwaukee, (847) 313-6500
The Broude File
President and COO
Coldwell Banker Residential Brokerage Chicago/Milwaukee
Education: Bachelor’s in business administration, University of Miami, Coral Gables, Fla.
What was your first job? When I was in sixth grade, I partnered with a young girlfriend and we ran a small children’s day care center. We took all the neighborhood kids for three or four hours a day, five days a week. We collaborated with the kids to sings songs, do artwork out of twigs and leaves, and teach some interpersonal skills.
We had a lot of fun. At the end of the summer, we would take the pot of money and decide what portion of that money would go to materials for the following year and what portion of the money was our pay.
One of my little students, now a CPA, recently sent me a copy of their “Play Skool Degree” and wanted to see how I was doing. It was a great experience. We needed to have a plan, and we needed to be able to manage the personalities of close to 40 children that were anywhere from 2½ to 7 years old. It was very rewarding.
Who do you admire most? I aspire to live every day in my business life and to some degree in my personal life by the words of Maya Angelou who always says it’s not what you say or what you do, but it’s how you make people feel. That’s a huge, strong core value of mine.
Get your facts straight.
Explain why you’re changing.
Treat employees as customers.
Businesses with many variable-hour and part-time employees are developing new strategies to address the employer mandate in the Patient Protection and Affordable Care Act (PPACA).
Although implementation of the mandate has been delayed until 2015, companies continue to work on ways to avoid penalties when enforcement kicks in, says Daniel Meracle, a partner at Benefitdecisions, Inc.
“We’re seeing four variable-hour strategies that employers are using,” Meracle says. “Some may be against the spirit of what Congress intended when they passed PPACA, but they are within the guidelines of the law.”
Smart Business spoke with Meracle about these latest strategies for meeting PPACA requirements for variable-hour employees.
What are businesses with variable-hour employees doing to meet the PPACA mandates?
First, employers need to measure whether employees worked 30 hours a week or more, and would be considered full time for the purposes of mandatory health care benefits. The PPACA gives the ability to look back 12 months to determine if an employee has worked an average of 30 hours a week. If he or she did, the employer would be required to provide health insurance that has a minimum value and is affordable.
In the hospitality industry — restaurants and hotels — businesses historically have turnover rates of 90 percent or more within 12 months. Most employees will leave during the 12-month look back period, so employers will not have to offer health care insurance to them.
Basically, it’s a matter of tracking the hours, and several technology programs are available to manage that task. Certainly payroll companies can provide that service, as well.
Three other strategies being utilized are:
- Reducing hours below 30.
- Slash and share.
- Providing minimum essential coverage plans.
What is slash and share?
Businesses are sharing employees. A restaurant owner cuts an employee’s hours below 30 and then might share that employee with another franchise owner, who also might employ that person for less than 30 hours.
They have to be two different franchise owners; it can’t be two restaurants owned by the same person or company. It could be that one is Hardee’s and one is Jack in the Box, and the person works for 20 hours a week at each.
How does the minimum essential coverage strategy work?
Insurance companies have realized that under the strict guidelines of the PPACA minimum essential coverage is nothing more than preventive care. So businesses are offering what are nicknamed ‘skinny’ plans to employees. Making these plans available allows the business to avoid the $2,000 penalty per employee for not providing coverage.
Skinny plans cost about $40 to $50 a month, and all of that cost could be paid by the employee. If an employee declines the coverage, he or she would be subject to the $95 penalty under the individual mandate. But a young, healthy person would rather pay $95 than buy health insurance because there are no restrictions regarding pre-existing conditions. When you can join the exchange at any time, why not wait until you are sick to get coverage?
Most of these minimum essential coverage plans also are self-funded, which gets around a lot of PPACA regulations.
However, there are two caveats to taking this approach — these plans are probably not within the spirit of the law, so this option could go away with the issuance of a release from the Internal Revenue Service or Department of Health and Human Services. Also, employees can still go to the health care exchanges and get a subsidy because the plan does not provide minimum value.
If an employee gets a subsidy, the employer would pay a $3,000 penalty for that person. Still, it allows you to avoid paying $2,000 on all employees.
Of course, implementation of all of these strategies might be delayed because the employer mandate has been pushed back until 2015. But these are ways businesses are dealing with their variable-hour employees right now.
Daniel Meracle is a partner at Benefitdecisions, Inc. Reach him at (312) 376-0433 or email@example.com.
Website: To learn more about health care reform and other employee benefits issues, visit our resource center at www.benefitdecisions.com/resources.aspx.
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
When the news came out July 2 that the Affordable Care Act (ACA) employer mandate — the enforcement of the shared responsibility requirement — would be postponed until 2015, you may have felt relief. But for many large-group employers, it’s not so simple.
“This is not a reason to put your head back in the sand,” says Mark Haegele, director of sales and account management at HealthLink. “Keep your eyes open. See what’s going on. Run some cost benefit analyses of different scenarios of offering different levels of coverage, or not offering. The bulk of the health care reform law is still being implemented on Jan. 1, 2014.”
In fact, Haegele says in some instances it may make sense to follow the employer mandate now, as waiting until 2015 could cause certain problems downstream.
Smart Business spoke with Haegele about what this delay means for business owners and their employees.
What was delayed until January 2015?
The Obama administration announced a one-year delay of the requirement that insurance companies and employers report certain information about health insurance coverage offered to individuals and employees, as well as the employer mandate.
It doesn’t change anything relating to the community rating rules, the individual mandate, the $8 billion sector tax, etc. These provisions are causing employers to explore self-funding, and all are still in play for January.
In what scenario does waiting to follow the employer mandate in 2015 create problems?
Large employers — those with 50 or more employees, according to the legislation — with employees who work 30 to 39 hours who don’t receive insurance face a unique situation. These employers were expecting to either pay a penalty or the need to offer some form of coverage. Many contemplated offering minimum essential coverage plans, or skinny bones plans, that just cover prevention and wellness — no hospitalization.
Let’s say an employer has 300 employees who work 30 to 39 hours and receive no benefits, and with the delay the company doesn’t plan to offer any until 2015. These employees still must have insurance coverage to meet next year’s individual mandate.
Many also are eligible for sliding-scale subsidies on the new health care exchanges — those with an income level 400 percent or lower than the federal poverty level. In 2013, that qualifies any family of four with an annual income of less than $94,200, or $45,960 for an individual.
Fast forward to 2015, a portion of the 300 employees have gone on the exchange and gotten insurance with subsidies. Now, you want to provide pared-down benefits to avoid the employer mandate penalties, which basically strips the employees of their subsidy, possibly increasing their insurance costs and/or decreasing their coverage. This might make it worthwhile to price out minimum essential benefit plans for 2014. Otherwise, employees may believe you did this to them, causing retention problems.
What other concerns does the delay raise?
More Americans will be accessing federal subsidies for health insurance, but the Internal Revenue Service (IRS) won’t be collecting employer mandate penalty revenue, as originally projected. With less money coming in and more going out, it may impact the ACA’s sustainability.
Originally, the ACA required insurance companies and employers to send an informational return to, for example, the IRS. This was meant to help enforce the individual mandate by offering a secondary source about whether individuals are covered by health insurance. With the delay until 2015, there is no way to match up the employer informational returns with the individual tax returns, which may make the individual mandate more difficult to enforce.
So, what are some next steps for business owners?
In addition to considering whether it’s worth offering coverage even though the penalties won’t start until 2015, you still need to implement complicated procedures that measure how many hours variable employees work on average. Companies need to work on their approach even in 2013, as transitional relief going into 2015 is more unlikely after a one-year delay. You’ll want to get it right the first time.
Mark Haegele is director, sales and account management at HealthLink. Reach him at (314) 753-2100 or firstname.lastname@example.org.
Website: Visit www.healthlink.com/key_business_trends.asp to learn more about transparency and other key health care business trends.
Insights Health Care is brought to you by HealthLink
Everyone makes mistakes, including lawyers and businesspeople drafting contracts. Usually, a simple typographical or grammatical mistake will not change the meaning of the agreement in a significant way — but what if it does?
“While Illinois courts protect the sanctity of the written word, they also recognize that people make mistakes, and they are willing to reform or rewrite the contract to conform to the parties’ agreement in certain circumstances,” says Rebekah Parker, an associate at Novack and Macey LLP.
Smart Business spoke with Parker about what to do when writing fails to reflect the parties’ agreement.
What is contract reformation?
Contract reformation is an equitable remedy that changes the language of a contract so that it conforms to the agreement actually reached by the parties but not accurately reduced to writing because of a mistake. Contract reformation cannot be used to change the terms of the deal; rather, it merely fixes a mistake so that the writing better expresses the bargain the parties reached.
Can any mistake be reformed?
No. Reformation is most appropriate for scrivener’s or drafting errors, such as erroneous numerical figures, incorrect dates or errant commas that change the meaning of a sentence.
If all contracting parties agree that a mistake has been made, they may — but do not have to — seek court intervention to reform their agreement. Or, they can voluntarily reform the contract themselves. This can be accomplished by, among other things, correcting the language on the original contract and having each party initial the revision; executing a rider to the agreement that identifies and corrects the mistake; or executing a new version of the contract that clearly states that it is intended to reform the parties’ prior agreement.
Courts encourage voluntary reformation and will usually enforce the reformed agreement should a dispute later arise.
What if the parties disagree about whether a mistake was made?
If a mistake advantages one party and disadvantages the other, it is not unusual for them to disagree as to whether a mistake was made. The disadvantaged party may need to bring a legal action for reformation, which can be combined with a claim for breach of contract — even if the breach of contract claim depends upon the contract being reformed. It is important that such a claim be brought as soon as possible after the mistake is discovered, because laches — unreasonable delay accompanied by prejudice — is a common defense to reformation.
The party seeking reformation bears the burden of proof, and it is a heavy one. In Illinois, there is a presumption that a written instrument reflects the true intention of the parties. Overcoming that presumption generally requires ‘clear and convincing evidence’ — a higher burden than the usual preponderance of the evidence standard.
Even if the party seeking to reform a contract fails to meet its heavy burden, it can still succeed on its breach of contract claim if the court finds the agreement to be ambiguous. In that case, the parties can introduce extrinsic evidence of their actual intent, and the court will interpret, rather than reform, the contract following ordinary canons of contract interpretation and applying ordinary standards of proof.
Do you have any advice for avoiding drafting errors in the first place?
Given the difficulty in reforming written contracts, it is vital to ensure that important contracts are mistake-free. Most drafting errors can be avoided by following these three tips: First, be cautious when creating a new contract from an old template. Sometimes stock language conflicts with a term agreed to by the parties.
Second, always have someone review the final draft, such as an outside counsel or businessperson, especially one who was involved in negotiating the deal or whose area of business is impacted by it.
Third, beware of grammar. Several headline-grabbing contract disasters involve something as simple as a misplaced comma. Most people do not know how to use commas properly, so keep sentence structure simple, and avoiding modifying clauses as much as possible.
Rebekah Parker is an associate at Novack and Macey LLP. Reach her at (312) 419-6900 or email@example.com.
Video: See a video of Novack and Macey’s recent network news coverage at www.novackandmacey.com/novack-and-macey-in-the-news.
Insights Legal Affairs is brought to you by Novack and Macey LLP
Executives often wonder why they need to have machinery and equipment appraised, but these appraisals are important components of business today.
“Typically, appraisals are performed because of buy/sell agreements, mergers and acquisitions, business valuations, partnership dissolutions, insurance, bankruptcy, property taxes, financing and Small Business Administration lending. Other reasons would be divorce, estate planning or other estate issues, retirement planning, cost-segregation analysis and litigation support,” says Theresa Shimansky, a manager at Cendrowski Corporate Advisors LLC.
Smart Business spoke with Shimansky about how machinery and equipment appraisals are typically handled.
What is the useful life of an appraisal?
Generally, an appraisal is good for three years, but it depends on the current market, economy and industry. An appraisal’s useful life also depends on the availability of the type of equipment being appraised. The value can drastically change with economic factors such as supply and demand.
Is a machinery and equipment appraisal beneficial when buying or selling a business?
Absolutely. Buyers want to know the breakdown between real and personal property. This is a cost segregation analysis or study. Appraisals are completed for many reasons, but most importantly for tax reasons — breaking the assets into different categories for depreciation purposes.
What information and documentation will an appraiser require?
The appraiser will need to know the manufacturer, model, serial number and age of the equipment. This information typically can be found on a plate attached to the equipment. Mostly, it will be visible; however, sometimes locating this plate can be tricky. For example, restaurant equipment will occasionally have a kick plate covering the information plate. Machines may have the plate attached inside a compartment or near the motor, while others may not have one at all. When a machine does not have a plate, it is helpful if the owner has the original manual or sales invoice that should list most of the information.
The appraiser also needs to know about the condition, special features and upgrades. Important questions to keep in mind are:
- Does it work well?
- Has it had any major repairs or is it in need of any?
- Is it maintained according to manufacturer specifications? The appraiser may request to see maintenance logs or ask about special attachments or upgrades.
- Is its software up to date?
An appraiser will evaluate and photograph each piece of equipment. When this is not possible, appraisers will note in the report which equipment could not be visually inspected and explain they are relying on the representations of similar machines’ condition and other pertinent information.
What is a ‘qualified appraisal’?
A ‘qualified appraisal’ is clearly defined in Internal Revenue Service (IRS) Publication 561, where the appraisal:
- Is made, signed and dated by a ‘qualified appraiser’ in accordance with appraisal standards.
- Does not involve a prohibited appraisal fee.
- Includes, but is not limited to, a description of property, condition, date of value, terms of the engagement agreement, qualifications of the appraiser, method used to determine value and basis for value.
Generally, an appraisal is considered qualified if it follows the Uniform Standards of Professional Appraisal Practice, developed by the Appraisal Standards Board of the Appraisal Foundation.
What should you look for in an appraiser?
When searching for an appraiser, only use a ‘qualified appraiser.’ This is an individual, as defined by the IRS, who has earned an appraisal designation from a recognized professional organization for demonstrating competency in valuating property. Also, qualified appraisers regularly prepare appraisals for which they are compensated, and demonstrate verifiable education and experience in valuating the type of property being appraised.
Theresa Shimansky is a manager at Cendrowski Corporate Advisors LLC. Reach her at (866) 717-1607 or firstname.lastname@example.org.
Website: For additional information, please visit our website at www.cca-advisors.com.
Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC
Imagine it’s a hot day. You’re thirsty and hungry, but don’t want anything unhealthy. There aren’t many options available to meet all those needs. In the early ’70s, the concept of the smoothie was born out of this unmet need. Opened in 1973, Smoothie King Franchises Inc. was the original smoothie brand.
In 2001, Wan Kim had this same urge to find a healthy option to quench his thirst and satisfy his hunger. He had his first experience with a Smoothie King smoothie while studying at University of California at Irvine. The high quality, healthy product had him hooked immediately.
Kim was so impacted by the product that he became a Smoothie King franchisee in South Korea. Since 2003 he has owned several Smoothie King franchises, and in 2012 when the opportunity came about to own the brand, he jumped at the chance.
“I bought the company in July 2012,” says Kim, Global CEO. “I really love this brand. It’s not because I’m the owner, but because we have great products. There are a lot of changes still happening, but it’s exciting.”
Smoothie King, a 300-employee, more than $230 million organization, is now 40 years old. The brand has more than 700 stores and a presence in the United States, Korea and Singapore. Despite the company’s established age and fairly big size, a new owner and plenty of potential market opportunity leave the brand in growth mode today.
“Our next five-year growth plan is to open 1,000 stores in the U.S. and 500 outside the U.S.,” Kim says. “Last year the company did about 26 franchise openings. This year in the first quarter the company has done 40 to 45 signings.”
Kim’s experience as a franchisee and now a franchisor has given the company new life and Kim is excited about where he can bring the brand and its smoothies in the near future.
Here’s how Kim is spreading the word about Smoothie King in the U.S. and overseas.
Understand all areas of your business
Kim was a franchisee for nearly a decade in South Korea. His stores were some of the highest grossing for Smoothie King before he became CEO.
“Obviously franchisees and franchisors have some different views, but eventually the bottom line is to make a better brand,” Kim says. “The path they take can be different, so you have to keep communicating to each other and look at the bigger picture.”
Kim has a very unique advantage over numerous other franchise CEOs. He now has experience as a franchisee and a franchisor.
“I have both aspects and know what a franchise wants and needs, and I know how I need to communicate,” he says. “In any kind of business, sometimes people forget why we do it. So that’s why I keep communicating and keep telling our people why we do this business. We have a great mission and a great vision. We just have to talk about it.
“A lot of people want to make money and be comfortable and I get that and that’s very, very important, but there has to be another reason why we do this. Smoothie King is a healthy choice and our mission is to help people live a better lifestyle.”
While the company’s mission is to help people live a healthier lifestyle, Kim wanted to make sure that the company’s franchises were in good health also.
“As soon as I bought the company I looked at how many single franchisees we have, because when I was a franchisee I thought becoming a multi-unit franchisee was actually very challenging,” he says. “As a franchisor, they don’t understand what kind of challenges franchisees have when they have a second or third location.
“I started to visit some multi-unit franchisees that we have to look at what kind of system they have in place. Today, we are assembling all those systems so that whenever we have a single franchisee try to become a multi-unit franchisee we have some system to help them grow.”
Having those systems in place will become very beneficial as Kim continues to look at ways he can expand the brand.
“Right now we are in growth mode and are opening a lot of stores and also expanding into other countries,” Kim says. “When you grow, you are hiring a lot of people and when you’re expanding outside the United States you encounter different cultures. In order for me to assemble all those differences I need a really strong mission for why we do this business so that it doesn’t matter what kind of culture or background you’re from.”
Prepare for growth mode
Today, Kim is focused on growing the Smoothie King brand outside the U.S. and in the Southern parts of the U.S. where the company has a strong presence, but a lot of potential still remains.
“We want to make sure that we secure our market before we expand to a different part of the U.S.,” Kim says. “That expansion is happening in Florida, Texas, Georgia and other southern parts of the U.S. Going outside the United States we are looking at Malaysia, Indonesia, Thailand, Taiwan, Japan and the Middle East. Our goal is to open two markets this year and two more markets next year.”
Fast-paced growth like Smoothie King is expecting requires a strong culture and mission that make the company attractive anywhere it goes.
“When you are in growth mode I would advise that you want to have a really strong culture in your organization, so that whomever you hire can be blended into your culture,” he says. “You have to set up a strong mission, vision and keep communicating with your employees.”
When you take your company outside of the United States you will experience a lot of cultural difference, and you have to be prepared for it.
“A lot of times when people don’t have any experience with different cultures they will think it’s wrong, but in fact it’s different,” Kim says. “In order for you to go to other countries and do business you have to learn how to respect their culture. If you don’t respect their culture they will know immediately. You have to educate your employees.”
The vast cultural differences Smoothie King employees will experience as the brand continues to expand isn’t the only change they’ll have to accept, they’ll also have to buy into the sheer amount of growth that Kim sees in the company’s future.
“A lot of times when companies grow employees don’t really see how far we can go,” he says. “When we start to grow there is a lot of work coming in and a lot of things are changing. It is very important that I need to keep communicating with employees that we can get there, because if you don’t believe we can get there, then it’s not going to happen.”
One of the first things Kim did when he bought the company was to tell the employees about the growth plan and a lot of people didn’t buy in.
“They were thinking, ‘Oh, it’s a new owner; of course he’s going to be thinking of growth, but it’s not possible,’” he says. “So I had to keep communicating that it’s going to happen and one by one, I started to show them that this would happen and then it really happened and people believed in the plan. I know there are still people who don’t believe where we can go, so I still have to communicate.”
Kim bought the company a little more than a year ago and he is having a blast seeing the company succeed little by little.
“I tell my employees to imagine if we were the size of any big fast food company, the world could be a different place,” he says. “It’s not just about making money and having success. It’s also about influencing more and more people to live a healthier lifestyle.”
How to reach: Smoothie King Franchises Inc., (985) 635-6973 or www.smoothieking.com
Recently, I had the privilege of attending the EY World Entrepreneur Of The Year conference in Monte Carlo. I’m back to report that entrepreneurship is alive and thriving around the globe!
It was a whirlwind of a trip, packed with networking, thought-provoking panel discussions and personal interviews. We heard from a remarkable panel of speakers including Kofi Annan, former Secretary General of the United Nations and Nobel Peace Prize recipient; Sir Timothy Berners-Lee, inventor of the World Wide Web; John Cleese, award-winning actor, author, humorist and Monty Python legend; and many more.
I also had the opportunity to sit down with some of the world’s most accomplished entrepreneurs. These business leaders come from more than 60 countries that combined represent a staggering 94 percent of the global economy.
In this issue and in the months to come, you’ll learn what the world’s greatest entrepreneurs have to say about leadership, innovation, overcoming challenges, bringing their visions to life and much, much more. You’ll also hear from the leadership at EY as to the importance of celebrating entrepreneurship.
Transforming vision into reality
“Be careful about making assumptions. Those assumptions can lead you down a pretty dangerous path. It is OK to make assumptions and have confidence but you had better do your due diligence as well. An assumption is having those critical for the business make sure it is happening. I am very trusting of people and in the past have had some unfortunate instances where I did make assumptions about something and they were completely the wrong assumptions.”
Dr. Alan Ulsifer, CEO, president and chair of FYidoctors
“Growth obviously continues to be a challenge. The markets demand growth if you are a publicly traded company, and growth is a metric of how the business is doing. If you want to continue to attract the best people, attract the right sources of capital to your business, you have to demonstrate that things are going well and growth is one measure that people look to. I think that if you are a business in an established market, growth can be a challenge because those markets by and large are growing more slowly. So in order to get more rapid growth, many companies are looking at emerging markets and trying to figure out what their strategy should be for emerging markets, those that have double-digit growth potential.”
Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group EY
“One of the toughest things for me was that people have a certain image of my country, Colombia. They don’t trust a company there to have good quality and do good work, but I am very proud to offer those qualities from Colombia. It is not easy but it is something that you can accomplish. I have been down a lot of times, but the good thing I have noticed is that every time something like that happened, I have been able to obtain positive things out of it. I have been broke multiple times, but from being broke I have been able to learn from it and rebuild.
Mario Hernandez, founder and president, Mario Hernandez
Jim Turley leaves his post as Global Chairman and CEO for EY with deep admiration for the entrepreneurs who continue to use their vision and spirit of innovation to change the world.
“They have got this wonderful ability to think outside themselves, to look at the world outside these windows and see the needs that exist out there,” says Turley, who officially retired on July 1.
“Then they’ve got a vision to create a product or service or an idea to meet the need they have seen. They have got the courage to risk everything and they are as persistent as can be. Most of them fail the first time out. But they get up, clean themselves off and do it again.”
“Work carefully with a few people who get a twinkle in their eye. If you talk about your idea, some people will respond with excitement because they get it, but not everybody. Maybe you talk to 300 people and three people will get it. Work with those three people. The web took off because a few people all over the world got it. You get the support from a few people who get it and then it builds from there.”
Sir Tim Berners-Lee, creator of the World Wide Web
Corey Shapoff has a job that many would envy, booking well-known musical acts such as Maroon 5, Katy Perry, Christina Aguilera and Kelly Clarkson for live concerts and private corporate events. But he doesn’t take much time to stop and think about all the famous people on his call list.
“I’m a grinder,” says Shapoff, president and founder of SME Entertainment Group. “I’m the kind of guy who is always looking to what’s next. You’re only as good to me as your last deal.”
It’s that instinctual drive to always try to do it better that is embedded in the true entrepreneur and allows the next vision to become a reality.
“It’s hard for me to turn it off and say, ‘That’s great,’” Shapoff says. “I’m always thinking about tomorrow. You just can’t take things for granted in our business.”
“The skill sets of an entrepreneur involve understanding how to create business. So if you’re going to give back, why not work with kids who need it the most and actually teach them and help them to be entrepreneurs. That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
Amy Rosen, president and CEO, Network for Teaching Entrepreneurship
“When you’re an entrepreneur you feel like you have never met a deal that you didn’t like. You only have limited resources and limited time to be successful. You have to stay disciplined and focused and being able to say what we are not is every bit as important as being able to say what we are.”
Jim Davis, president, Chevron Energy Solutions
“It’s important that you have teamwork and all your top players are well motivated with passion, principles and values. We make sure that people know where we are going and what our main objective is for that year. We promote teamwork inside and outside the company. Our directors have to make sure they are sharing our company values and principles with each of their team members.”
Lorenzo Barrera Segovia, founder and CEO, Banco Base
“For entrepreneurs you get a great idea, you start your business and then you have to keep focused. Keep executing that idea if that idea is big enough. Never fall into the temptation of getting out of your business or change it unless it’s strategic. Secondly, try to get financing as late as you can. Never get financing as soon as you can. Thirdly, create a great team and culture, because that’s what will prevail and create value for shareholders and your community. That’s how you scale your business. The last one is to dream big.”
Martin Migoya, CEO, Globant
“It was nothing but a gut feeling. The only thing I knew was there was a big opportunity in yogurt. I grew up with yogurt. Being from Turkey yogurt was a big part of our diet. I wasn’t sure if I could do it – break through in the world of yogurt in retail.
The category was owned by two major companies; Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.
I didn’t want to do that. I wanted to go to the big retailers and be in the regular dairy aisle. That was a crazy idea and nobody thought that would go, but at least we tried. When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt, I knew it wasn’t going to be about selling, it was about making enough.”
Hamdi Ulukaya, founder, president and CEO, Chobani Inc.
One of my favorite business books, which also made it as a Broadway play and a big-screen movie, is “The Wonderful Wizard of Oz,” written by L. Frank Baum in 1900. My hero in this story is not the young orphaned Dorothy, nor the Cowardly Lion, the desperately in-need-of-some WD-40 Tin Man, nor even the Scarecrow in search of a brain.
Instead it is the Wizard. To understand why the dubious Wizard is my favorite character, one must get past the portrayal of him as scheming, phony and at times nasty.
To appreciate the man behind the curtain, recognize that he is a very effective presenter, though at times this ex-circus performer behaved a bit threatening. OK, he was a jerk, but the point of this column is to take you down the yellow brick road on the way to the enchanted Emerald City and corporate success.
From this tale there is a lesson that one can say all sorts of things, not be visible, and yet still have a meaningful impact.
Another takeaway is that playing this role provides plausible deniability. This absence of visual recognition is particularly beneficial in negotiating when you, as the boss, use a vicar, aka a mouthpiece, to speak on your behalf. This allows you to have things said to others that you as the head honcho could never utter without backing yourself into a corner.
Another plus is you can always throw your mouthpiece under the bus if necessary, of course, with his or her upfront understanding that sometimes there must be a sacrificial lamb. This is not only character-building for your stand-in, but also many times presents an unprecedented opportunity for him or her to learn in real time.
Perhaps the Wizard was the first behind-the-curtain decision-maker, but today this role is used frequently in business and government. In a similar vein, the “voice” of Charlie from the well-known 1970s TV series “Charlie’s Angels” was always heard, but he was never seen.
Frequently there is much to be said for using anonymity to float a trial balloon just to get a reaction. Think about a son having his mom test the waters by talking to dad before the son tells him he wants to drop out of junior high school to join the circus. Maybe that’s even how our former circus-drifter-turned-Wizard-of-Oz got his start.
In the negotiating process it is important to have a fallback when the talks hit a rough patch by instructing your vicar to backpedal, saying that he or she has just talked to the chief and the benevolent boss said, “I was overreaching with my request.”
This also serves to build a persona for the boss-behind-the-curtain as someone who is fair-minded and flexible. All the while, of course, it’s the boss who is calling the shots and maneuvering through the process without getting his or her hands dirty.
The value of using this clean-hands technique is that it enables the real decision-maker to come in as the closer who projects the voice of reason, instead of the overeager hard charger who at times seems to have gone rogue.
It actually takes a bigger person to play a secondary role behind the curtain rather than always be in the limelight. It also takes a hands-on coach and counselor to maneuver a protégé through the minefields to achieve the objective.
However, accomplishing the difficult tasks through others is true management and the No. 1 job of a leader who must be a master teacher.
After you have guided a handful of up-and-comers a few times through thorny negotiations, you will gain much more satisfaction than if you had done it yourself, while engendering the respect and gratitude of your pupils. They in turn will have learned by doing, even though they were not really steering the ship alone.
The final step is to let the subordinate take credit for getting the big job done. This will also elevate you to rock star status, at least in his or her eyes. Soon those who you’ve taught will emerge as teachers too, and the big benefit is that you will populate your organization with a stellar team of doers, not just watchers.
So, forget about the Wicked Witch of the West and move backstage for the greater good of the organization.
A few years ago, one of my friends embarked on what he deemed an ambitious, yet simple plan: Write a New York Times Best Seller.
“Ed” had reason to be optimistic: His first two books had sold well and he had successfully leveraged them to launch a burgeoning consulting practice. Ed also had a nationally known book publisher to handle distribution for this book, and he had developed a comprehensive marketing and promotions plan for the launch.
Ed felt all the pieces were in place and was sure he would succeed. His goals were two-fold: break out from the pack and grow his business, and hit the New York Times Best Seller’s list. While his head told him the first goal was more realistic, his heart was set on the second — publicly claiming it was his only true benchmark of success.
Needless to say, Ed’s book didn’t make the list. Few books do. That doesn’t mean Ed’s book was a failure. Quite the contrary, it was a huge success.
As a result of Ed’s book, he landed numerous speaking engagements with organizations and companies around the world. He began to command four- and five-figure speaking fees from those engagements, and his book was purchased and distributed to every attendee.
Further, Ed’s speaking engagements lead to dozens of private companies hiring him to provide one- and two-day seminars, where he taught executive teams how to implement the ideas he espoused in the book. Ed was also presented with numerous business opportunities for new and existing clients to tackle initiatives beyond the book’s subject matter that he had not previously considered but were related to his expertise.
Finally, Ed did sell thousands upon thousands of copies of his book in bookstores nationwide and online through booksellers like Amazon.com and BarnesAndNoble.com. His book was in the hands of the right people — and lots of them — and he had established a national profile.
Viewed through this lens, there is little doubt that Ed’s book was wildly successful — even if it wasn’t a New York Times Best Seller and even if it didn’t stack up to his primary benchmark.
This is the reality of book publishing. Each month, I speak with dozens of entrepreneurs and CEOs about their nascent book ideas and the possibility of having Smart Business Books handle development and publication of their stories and manuscripts. I begin every conversation the exact same way: “If your goal is to have a New York Times Best Seller, we’re not the right option for you.”
That’s because you should write books for the right reasons. If your only goal is getting on a best-seller’s list, then your ambitions are off the mark. Writing and publishing a book is not like a professional sports team’s season — there isn’t one winner who takes the championship and a bunch of losers who fall short. Publishing a book is not an all-or-nothing proposition.
This isn’t to say you shouldn’t aim high with your goals, and having your book become a best-seller is certainly one way to measure success. Setting reasonable expectations, however, is essential.
So why write a book?
One of the most important questions you should be able to answer when thinking about writing a book is, “Who is going to read it and why?”
As Ed’s story demonstrates, a book is a very useful business development tool. It is an immediate conversation starter, an excellent credibility builder and one heck of a leave-behind. If you’re engaged in marketing, why not capture your expertise through a book?
Another reason is to celebrate a milestone or establish a legacy piece. It could be for a 50th or 100th anniversary, or to recognize the history of an organization upon the founder’s retirement or death.
And, if you are interested in helping others succeed, a book is a great way to share your expertise or what makes you and your organization special. For example, if you’ve built an amazing corporate culture where productivity blossoms and innovation flourishes, the “how” and “why” are good subjects for a book. And if you’ve been involved with several mergers and acquisitions, consider sharing what worked and what didn’t, and the lessons learned along the way.
Whatever your story, the key is having a reason to share it with others. The bottom line: It’s your story. Make it count.