Stephen H Baum Leadership

Jim Blasingame’s Small Business Advocate is a treasure: ideas, best practices and lots mo6re in the form of radio interviews, a website and archives. So when he asks me to spend time with him, I always look forward to it (August 25 at 0826 Eastern).

Two topics come to mind:

1. Good moves in uncertain times (really knowing your competitive advantage and building from strength)
2. When “The Vision Thing” Matters Most: in a down economy

In this post, I will deal with the first topic (stay tuned for a second post).

Business owners are always having to live with uncertainty. But the level of uncertainty now is very high in terms of credit availability, cost of capital, ability to raise equity investment, customer appetite for new offerings and much more. Yet, the best of the best make good moves in uncertain times.

Two of my Vistage International Chief Executive Group (Vistage icon elsewhere on this site) illustrate this ability.

One has made two acquisitions in the past year and rejected one possibility. He has acquired smaller competitors at distressed prices. Since they are peers, he has been able to develop a detailed due diligence process built on his detailed knowledge of the business and a superior evaluation process (how much money can we make with the combined companies if we are smart about what we don’t need? how much should we pay for this acquisition?).  His is a B2B service with a terrific technology platform. The acquisitions have yielded new customer lists, diversity of his “footprint” toward national coverage and high margin leverage for his already built capacity — almost no fixed cost from growth and a relatively low marginal cost.

The other has a professional service business. For some years, his firm has acknowledged the need for scale in order to be at the table with much larger competitors when a large prospective client seeks new service provider. Over the past year, negotiations with more than one possible merger partner finally yielded a deal with a firm that will bring not only scale (the combined firm could soon be nearly twice his firm’s past revenues) but also new areas of practice and coverage of a contiguous geography. My view is that there is never a merger of equals and this case is no exception. My member’s firm is stronger in many ways and though there will be a equitable, fair and considerate approach to governance and accountability, his firm is clearly leading because of its highly developed professional practices and great financial strength. Again, a good move in uncertain times, building on strengths.

Places to visit:

small business advocate

stephen h baum leadership (click on vistage icon)