Posts

Five Ways To Increase Value For A Merger, Acquisition, Or Succession

By David Shaffer MBA , Sr. Consultant, Practice Head for M&A and ERP/MRP

We recently did an Open Line on this topic with David, so please click on the link for the slides/audio:
Keeping on Track Open Line – M & A and Succession Planning – 5 Top Things to Consider with guest, David Shaffer.
Please click on the website link or copy/paste the full link into your internet browser: https://recordings.join.me/IyY5elXeoEGX8niO7Cw5-g

Does your business serve you or do you serve your business?

“Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it, with a full understanding of why it is absolutely necessary for you to do so.”

Those are the words of bestselling business author Michael E. Gerber, who wrote The E-Myth Revisited.

For the better part of 40 years, Gerber has been encouraging business owners to work “on, not in” their business. Gerber firmly believes every company should be built as a product to sell.

Are you building a business you can sell? More important, are you optimizing the value of that business for a sale, merger, or succession plan?

What Is Your Current State Of Mind?

Which of the following statements best describes your current state of mind as the business owner:

• I have been working in my business for many years and I am ready to explore alternatives.
• I had hoped that my family would continue the legacy but there is little interest.
• I struggle with balancing the cash flow and need capital infusion to keep going.
• My team continues to point to having to upgrade my use of information systems
• My key team members are in the same age bracket as me and not certain they can move into leadership.
• My competitors are constantly focusing on their growth and my opportunities are being pressured to reduce margins.

For some business owners, all six of the above statements apply to their situation.

Five Action Steps To Assess Your Current Situation And Start Toward Value Creation

The following five action steps are designed to help you assess your situation. The steps also provide an outline for making your business more valuable.

Step One. Review, update, or create a strategic business plan that well defines your business.

By JESHOOTS.COM

Do you have a strategic plan that well defines your business? Because any potential buyer is going to want to see what is the business, what is the mission, what are the vision, what are the values of that business.

Do a detailed SWOT (strength, weakness, opportunities and threats) analysis so that it’s well defined. Outline the structure or organization that is in place that you can show a potential buyer. Or, analyze internally how you can extricate yourself from the business.

Step Two. Review your financial reporting to assure a proper representation of cash management.

The second step, which is critical, is your financial reporting. Are you able to provide accurate historical financial reporting? Can you determine your EBITDA, which is your bottom-line profitability?

When I value a business, I look at the EBITDA, which is the earnings before interest, tax, depreciation, and amortization (that funny money that helps you pay less in taxes). When interest, taxes, depreciation, and amortization are removed it becomes the true bottom line.

Within each industry there is multiple of earnings defined by the industry to calculate business value. The more you have exclusivity within the industry, the higher the multiple. You multiply those two numbers together and it gives you a good idea of the value of the business.

Step Three. Complete an objective assessment of your organization.

Can you explain to potential buyers your mission and vision? Do you have clear goals, objectives, systems, and policies?

When we go in to work with a client, we assess where they are today, what they’re looking to achieve in the longer term, and then where do the gaps exist. Following that we work with the company to put in place the appropriate steps to close the gap and create more value.

Step Four. Assess your role as business owner.

When we work a business, next we ask the owner to really take a look at themselves and where are they as far as key responsibilities. Do they have a transition plan to move out of the business? Are they communicating internally to keep personnel?
One of the things I see a lot in an acquisition is when a buyer says to the owner selling the business that it appears to be very dependent upon you. Then they say, “We’re going to put in place a three-year plan where over a three year period we’re going to buy out your business, but you need to be around for three years and hit certain objectives.

Well, if you’re a driven type personality and you’ve been successfully running your business for years, the last thing you want is someone externally telling you how to run your business.

That’s why we work with owners to extricate themselves from the business before the sale. That way they do not have to stick around as an employee for several years.

Step Five. Engage with experienced support team.

By Nick Fewings

Getting ready for a sale, merger or succession plan is not something for the do-it-yourselfer. This is probably a once in a lifetime transaction for you. This is the time to do some due diligence and get a team of trusted advisors on your side.

The trusted advisors you engage should have experience both on the operations and financial side. The objective, regardless of the exit path you choose, is to create value in the business. In many acquisitions there are tax ramifications, shelters, and potential benefits. The use of a qualified tax advisor will help uncover both opportunities and potential liabilities. Engaging a firm to complete financial due diligence and identify target markets reduces time and helps create a realistic value proposition.

Indeed, if Gerber is correct and your business is a product to be sold, you should work on the business, so you realize the best price. Here is a case in point about family business owners who sought help.

More Cash Flow And Time To Enjoy Life

Once I worked with a family-owned business and both principals were about to turn 60. They were at a crossroads as business owners. The dilemma was; should they stay or should they go?

This couple were the overstressed owners of a privately owned manufacturing company. When I was introduced to them they were looking to make changes in their internal information systems from a very archaic system to a new one.

I was brought in to work as a conduit between the owners and their operational team and the software firm. Because of my background in manufacturing operations and systems, I was very much involved in helping with the implementation, project management. and delivery of that information system.

However, further exploration and understanding of the business demonstrated that there was more than the existence of an archaic system problem. What we determined is that the information systems brought with it a need to align the organization and the best practices because the ownership was considering two options.

Option one was to sell the business, and option two was to retain the business. Neither option sounded attractive.

Both owners were heavily involved in day-to-day operations. Collectively they were involved in the manufacturing and delivering of products and overseeing the sales team as well as overseeing all of the human resources and finances of the company.

By PublicCo

Through the work that I did outside of the systems, we restructured the entire organization where we brought in interim sales management. We took one of the key operation people, promoted him to chief operating officer, put in place a dotted line between him and the sales team.

We brought in and developed a key accounting person to oversee all of the receivables, payables, and general ledger. Then we put together an advisory team that included myself with the owners. And through the implementation of the new system, we put in place dashboards to monitor the management of the system.

The net result was we increased the value of the company by 10% in the first year simply by having visibility into the profitability of the company. We had no need other than to bring in an interim sales manager to increase our expenses on personnel. We uncovered that their sales team was really one of customer service as opposed to new account sales.

We were able to reduce the outside sales team by two individuals, which represented 60% of their sales team. We added in customer service in-house at a far less expense. The whole process took 20 months.

The moral of the story: the owners now have more cash flow and time to enjoy life. The were able to purchase a second home outside of the state. They travel on a regular basis. Recently they sent me an email saying that they were on a two-week vacation and the company is running.

Now they are also entertaining a potential sale. But at this stage, they are less stressed over the sale because they know they’re making money and they’re not involved on the day-to-day operations of the business.

Conclusion

Whether the decision is to sell the business or retain, the creation of value is always a benefit. Whether it stays with ownership or enhances the sales, it is a cornerstone best practice.

If you are open to a conversation about mergers and succession, improving manufacturing workflow or if you are a service company taking a look at various ways to improve efficiencies, or how our in-depth work style and personality assessment could help to hire the right person and understand how to best work with the candidate from day one as well as gaining insights of your team, please contact us at 310-453-6556, extension 410.

If you would like additional information on this topic or others, please contact Lighthouse Consulting Partners LLC, Santa Monica, CA, (310) 453-6556, pattyc@lighthouseconsulting.com & our website: www.lighthouseconsulting.com.

David Shaffer, MBA , Sr. Consultant, is our practice head for our Business Consulting For Higher Productivity Division and for our ERP and M&A practice. He is recognized for his ability to effectively integrate all aspects of the business, including financial management, information systems, infrastructure, sales management, sales strategies, and operations. David assists companies from planning through operational and business process improvement opportunities to the selection and integration of management information systems solutions. His range of company support includes start-ups through Fortune 500 firms.

Lighthouse Consulting Partners, LLC Divisions

Testing Division provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCP can test in 19 different languages, skills testing, domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication.

Business Consulting for Higher Productivity Division provides stress & time management workshops, sales & customer service training and negotiation skills, leadership training, market research, staff planning, operations, ERP/MRP selection and implementation, refining a remote work force, M&A including due diligence – success planning – value creation and much more.

To order the books, “Cracking the Personality Code”, “Cracking the Business Code” and “Cracking the High-Performance Team Code”, please go to www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Partners, LLC to reproduce any portion provided in this article. © 2024

Now is the Time to Prepare for the Uptick In 2025: Leveraging Opportunity & Setting Your Direction

By David Shaffer, MBA, Sr. Consultant

News item: Economists, investors and the Federal Reserve have sounded alarm bells for months that a recession could come later this year. According to CNN, here are predictions from three financial institutions:

by Thomas Breher

• Bank of America CEO Brian Moynihan told CNN that he believes the US economy could tip into a recession early next year.
• Vanguard economists wrote in their mid-year outlook that they see a high probability of recession, and the “odds have risen that it could be delayed from 2023 to 2024.”
• JPMorgan Chase economists said that there could be a “synchronized global downturn sometime in 2024.”

Investors and economists last year predicted that the US could enter a recession in early 2023, after the Fed set out on its aggressive interest rate hiking campaign to tame inflation.

As we enter the fourth quarter of 2023, most organizations turn their attention to reviewing the success/issues of the current year and try to determine the appropriate focus for the upcoming year and beyond.

With uncertainty comes opportunity if a company can define strategies that incorporate its strengths and recognizes its weaknesses.

With political uncertainty and the rebound from Covid-19, this year more than ever companies are looking into the mirror to see how best to position for uncertainty. This becomes the element of strategic planning that focuses on a realistic assessment of the current environment and a projection of what an optimal future target operating model should look like.

The process of strategic planning we recommend provides an initial, objective assessment and facilitates the strategic planning necessary to meet future opportunities. This planning should focus on the definition and implementation of critical initiatives that project alternatives based upon projected potential scenarios.

What differentiates us is our ability to recognize the resources available, integrate financial scenarios, and develop a process that provides well-defined milestones and deliverables. The planning is designed to leverage the businesses’ capabilities into value creation thereby creating future options for stakeholders and owners.

Most companies schedule their management retreat to develop and establish the strategic direction for the remainder of the year, as well as a three-to-five-year outlook.

The process, although it can contribute to team building by getting away from the daily grind, frequently does not result in strategy. That’s because what starts as a noble intention or cause ends with little to no accountability, letting life return to normal soon after the planning meeting. Effective strategic planning implementation requires accountability both in the creation and management of strategic initiatives.

Here is practical and accountable approach to effective strategic planning and implementation:

by Mario Aranda

Step One. Develop Strategic Initiatives. Many times there is confusion between what initiatives are truly strategic versus what are simply tasks and obstacles that impact the daily operating procedure.

As an example of what not to do: one company identified distribution of various financial reports as a strategic means of raising financial performance. Although the concept may sound strategic it is merely an improvement in task execution, addressing an operational issue rather than a strategy that aligns with the direction of the company.

Here is what you should do: Your strategic planning session should generate and classify two types of initiatives.

1. A few critical initiatives expected to be implemented in the short term, within the current fiscal year
2. A few growth initiatives, requiring more exploration in order to lay the foundation for future critical initiative consideration.

Organizations that define more than five to six critical initiatives are generally focused on task implementation rather than strategy. Likewise, exploration of more than two to three growth initiatives represents a strategic planning outcome that has no direction or focus.

Step Two. Assign Accountability. Once both critical and growth initiatives have been defined, individual project managers should be assigned to lead the charge, plan the implementation, drive the process and communicate the results. The use of chartering is a process commonly used by project managers that allows organizations to clearly convert strategy into action while managing accountability.

For each strategic initiative a charter is written, reported against and reviewed regularly by the management team. It is important to note that as a result of exploration efforts, growth initiatives can often become new critical initiatives that require project managers and charters.

Step Three. Build Strategic Project Charters. Multiple resources are typically used to implement each strategic initiative. However, it is essential that one individual have responsibility and accountability for each project and project charter.

The aggregate of strategic initiatives and associated charters represent the short term and long-term implementation of the key strategies. Although they are prepared and managed by different individuals, it is important that the approach is consistent.

So just what does one include in a charter? Let’s take a deeper look:

Background. Description and facts related to the problem, opportunity or situation that the project is going to address. The background lays out the context of the charter; however the details of the charter are laid out in subsequent sections. The background should refer to discussions generated during the strategic planning session.

by Skeeze

Key Challenges. In every endeavor there are generally challenges. This section provides a description of the challenges, obstacles and issues that must be overcome in order to successfully complete the charter (project) and to deliver the benefits. This is not a description of the tasks, even though carrying out the tasks may be challenging.

Project Overview And Rationale Description of what the project will accomplish at a high level, and a list of the project objectives and business benefits.
Brief example: The objective of this project is to develop and implement a new, automated sales order entry system. The new system should reduce the time to configure and enter a new order from four hours to approximately 20 minutes (objective). It will significantly reduce order entry errors, increase sales and improve customer satisfaction (benefits).

Approach. Description of how the project will be carried out: the team, methodology, and timeframe for carrying out the project. The description should be a high level and should not duplicate the list of milestones or major deliverables.

Scope. Description of the boundaries of the project: what it will and will not address.

Major Milestones. Milestones should reflect the overall approach and should cover the complete lifecycle of the project. The list of milestones does not however constitute a complete project plan. Milestones will be changed and should be updated when the project plan is completed.

Start Date: xx/xx/xxxx End Date: xx/xx/xxxx
First Major Milestone: xx/xx/xxxx
• Major Action: xx/xx/xxxx

Middle Target Date xx/xx/xxxx
• Major Action: xx/xx/xxxx
• Major Action: xx/xx/xxxx

Milestone close to completion: xx/xx/xxxx

Major Deliverables. List of specific accomplishments, documents, or other tangible outputs of the project. Deliverables are not the same as objectives or business benefits. The deliverables may duplicate some of the major milestones (i.e., the completion of a deliverable could be a milestone.)

Stakeholders and Resources

• Customer: [Group that will directly benefit from this project. Could be an internal or external customer or stakeholder group. Be specific.]
• Sponsor: [Executive who has overall responsibility for the project. Approves the charter and budget. Heads up Steering Committee as needed.]
• Project Manager: [Manager with responsibility for the leadership and day-to-day management of the project.]
• Outside Resources: [As needed.]
• Team Members: [Resources assigned to the project who will participate throughout the project. Do not include SMEs (subject matter experts) or other resources that work on specific tasks or are consulted with during the project.]

Project Budget:

Training materials: $ X
Marketing materials: $ Y
Outside resources: $ Z

Assumptions, Constraints and Concerns

Business Consulting Services from Lighthouse Consulting

by rawpixel

Assumptions:

• [Events or conditions that must be in place in order for the project to start or to be completed.]
• E.g. new marketing manager must be hired and in place by no later than 6/1.

Constraints:

• [Limitations that the project must adhere to.]

Concerns:

• [Events or conditions that may occur, that would impact the successful completion of the project.]
• E.g., If the pending acquisition closes before 7/31, some of our team resources may be pulled into the integration effort.

The assumptions, constraints and concerns must be specific to the project – not conditions that are necessary for any project. Examples of conditions that should not be listed are:

• Having adequate budget, resources and strong support from leadership. (True for any project.)
• No major economics or business disruptions. (True for any project.)

Step Four. Monitor And Communicate Progress. Many organizations struggle with the implementation of key initiatives; accountability is frequently a major stumbling block. By assigning Project Managers and the consistent use of project chartering, project plans can be well defined, resourced and monitored. The aggregate results of the charters collectively address the implementation of defined key initiatives. It is customary that on a weekly basis, each Project Manager reports the status of their charter so that combined project plans are managed by a single source. That is, for quality and consistency the overall progress of the initiatives is maintained in a central repository accessible to the entire management & leadership team.

There are many ways to distill strategic planning into execution. Chartering is a great way to focus on execution while creating accountability and buy-in throughout the process.

by Hans

The Economic Outlook For An Uptick In 2025 To 2030

The US Congressional budget Office predicts the economy will continue to expand during the second half of the decade. Output should grow at an average annual rate of 2.1 percent over the 2025–2030 period—faster than the 1.8 percent average annual growth of potential output. The unemployment rate should continue to drift downward, reaching 4.4 percent by the end of 2030. Inflation should be stable during the 2025–2030 period.

If you are open to a conversation about how to develop your next strategic plan to prepare the recession and coming uptick, or how our in-depth work style and personality assessment could help your team, please contact us at 310-453-6556, extension 403 or email us at dana@lighthouseconsulting.com and our website is www.lighthouseconsulting.com.

Recent Open Line event on this Topic

We recently had an Open Line event on this topic with David Shaffer… to see the webinar, please click the link below:
Preparing for the 2024 Potentially Mild Recession & the Uptick In 2025 – Leveraging Opportunity And Setting Your Direction
https://zb0dc3.a2cdn1.secureserver.net/openline/081723/OpenLine081723.mp4

David Shaffer is our practice head for our Business Consulting For Higher Productivity Division for our ERP, M&A and process improvement practice. He is recognized for his ability to effectively integrate all aspects of the business, including financial management, information systems, infrastructure, sales management, sales strategies, and operations. David assists companies from planning through operational and business process improvement opportunities to the selection and integration of management information systems solutions. His range of company support includes start-ups through Fortune 500 firms.

Lighthouse Consulting Partners, LLC 

Testing Division provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCP can test in 19 different languages, skills testing, domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication.

Business Consulting for Higher Productivity Division provides stress & time management workshops, sales & customer service training and negotiation skills, leadership training, market research, staff planning, operations, ERP/MRP selection and implementation, refining a remote work force, M&A including due diligence – success planning – value creation and much more.

To order the books, “Cracking the Personality Code”, “Cracking the Business Code” and “Cracking the High-Performance Team Code”, please go to www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Partners, LLC to reproduce any portion provided in this article. © 2024

How To Develop The Next Generation Of Company Leaders

By David Shaffer, MBA, Sr. Consultant

Finding and keeping great employees is getting increasingly hard. Your company’s ability to fight and win the ongoing talent wars hinges on your most important asset: your leaders.

by rawpixel

According to research in the Harvard Business Review, “Leaders who prioritize relationships with their employees and lead from a place of positivity and kindness simply do better, and company culture has a bigger influence on employee well-being than salary and benefits (“The Power of Healthy Relationships at Work,” June 21, 2022).

When it comes to attracting and retaining better employees, it comes down to leaders fostering positive relationships at work. But positive leader-employee relationships do not happen by chance.

Most managers weren’t born knowing how to create those positive relationships. But your organization should not suffer while your leaders learn by trial and error. In an age when there is an ever-escalating war for the better employees, it has never been more important for a business to invest in developing leaders.

This is why CEOs of privately owned companies in the $5 million to $100 million in revenue range and division heads of global organizations need to make sure to invest in training managers.

In other words, so one day they can confidently turn over the day-to-day management of the company to the next group of leaders. Here is a comeback story of a business owner who did just that.

How Fred Developed New Leaders

This is the tale of a 48-year-old business owner named Fred (not his real name), who created a small manufacturing company with annual revenues north of $5 million. On a personal note, Fred was a spiritual man who enjoyed being an active volunteer at his church.

On the job Fred had faith in his people and believed in them to work issues out. Unfortunately, that led to him being a victim of undeserved misfortune, His people loved working for Fred and knocked themselves out for him; however, as the adage states, haste makes waste.

Fred’s business problem was wasteful rework costs in excess of 35%, which meant that millions of dollars of the products required rework. That’s a tremendous amount of dollars that had to be absorbed by the business on a regular basis.

When Fred invited me in, I did an assessment to determine the root causes of the troubles. On the basis of that review as well as doing the LCS in-depth work style and personality assessment, we identified two solutions that needed to be implemented.

“On top of the rework nightmare, sales are dropping like a stone because all of the sales are being funneled through me, and I am totally consumed by the rework issue,” said Fred. “My sales team has been reduced to being order takers, not order generators. These are good people, and I do not know what to do.”

“We can fix this, Fred,” I told him. “It’s not going to be easy because you have some blind spots. You need to make some changes, but we can tackle the two needed solutions together.”

The first solution was a lean manufacturing process, which included quality control checks throughout the manufacturing process. That way, they could identify potential defects right at the point of the defect rather than at the end when it’s delivered to the customer.

By Mihai Surdu

That may sound like a very simplistic thing to do. However, understand that within the operation, there was a need to develop leaders who understood how to schedule the projects, communicate the goals to their team, and resolve issues with the people.

We conducted workshops for each of the shop supervisors, plus the shop foreman. We also brought in the sales team to talk about effective communication between sales and operations so that we could identify where time was being spent.

The second solution was to turn over the reins to the next generation. Eventually, we removed Fred as the owner from the day-to-day operations and put in place an executive team that included sales management, supervisors, shop foremen, as well as accounting to meet on a daily on what are the issues. We also did our LCS team building program, which includes using our LCS in-depth work style and personality assessment for the staff members. This provided me with insights into how to get the most from the team members as well as with helping them to bond and communicate with each other at a whole new level.

The net result was that the rework was reduced to 5% from 35%, and sales rose by 15% because now sales were not having to deal with the quality issues that were affecting sales. And here’s the kicker, Fred was a happier owner because it allowed him more volunteer time to lead bible study sessions at the church.

Seven Steps To Develop The Next Generation

With Fred, we followed these seven steps:

Step One. Maintain the mission, vision, and values that are a part of the company. The journey begins with an assessment of the DNA of the business.

by StockSnap

Step Two. Recognize the strengths that each person brings to the company. Leadership is not a birthright; it is about potential. So, test your people to assess leadership potential. Conducting in-depth work style and personality assessments can be extremely useful.

Step Three. Understand that leadership is something that is developed. Know this: leaders are not born; leaders are trained. Never has a baby been born, and the doctor slapped his or her bottom and declared, “Now here is a future company president.” Certain positive traits develop during a person’s life, which is a gift. But just relying on gifts and not training future leaders is a bad option for small-to-midsized companies.

Step Four. Dispel the belief that the best performers make the best leaders. Don’t make the classic blunder of just thrusting top performers into leadership roles. That is a 50/50 proposition at best. Once, I was a director of business process improvement and information systems consulting at one of the big accounting firms. The philosophy within the CPA firm was that you took your top-performing senior managers who were outstanding in doing tax returns, and you, therefore, promoted them to partner. Then we came to the realization that they don’t know how to be good at business development, a key requirement of a partner.

Step Five. Allow for creativity yet stay within the values of the company. People are not robots. And nor would you want them to be.

Step Six. Train leaders throughout all levels of management or job responsibilities. If you think training is expensive, then look at the costs of not training. Trained leaders make it easier for the company to fill jobs with the right people, retain top talent, and keep employees fully engaged. Today this is no easy feat, and paying more in wages and benefits is not the answer.

Step Seven. Introduce accountability and taking responsibility. Are you familiar with the “Miracle on Ice” with the US hockey team winning the Olympic gold medal in 1980? The underdog US team beat the Russians and made it to the finals to win it all. But if you really dig into the analysis of what happened, the coaches of that team took a bunch of individuals that were stars at different levels and molded them into a team. They achieved their goal of winning a gold medal by introducing accountability and taking responsibility.

Use A Three-Phase Approach

To optimize success, companies use a three-phase approach:

by Ronald Carreño

Phase One. Company Assessment And Understanding. This starts with meetings with executives and ownership to understand the company’s mission, vision, and values. Then comes outlining a key strategy for transition and personnel development. Follow this with preparing an objective assessment of the current environment, including gaps analysis to reach the desired structure. Next, we need to get everyone on board with the changes, so we prepare a presentation for review with key personnel.

Phase Two. Conduct A Workshop On Leadership And Accountability. Begin by reviewing components of leadership. Next, cover how to create an environment of accountability. Then cover the characteristics of effective communication. This is followed by a discussion of setting and achieving goals by leveraging talent and reaching individual potential. Lead the group to understand how to achieve team effectiveness. Nothing is ever smooth, so cover how to handle and resolve conflict. Finally cover the most effective means of coaching.

Phase Three. Continued Follow-up. This is not a case of setting it and forgetting it. Schedule one-on-one coaching sessions. Conduct group meetings to share experiences. And celebrate milestones that measure achievement.

Summing It Up

In my experience, privately owned companies are looking to put in place the next level of leadership within their company.

by free photos

The main goal is to allow the existing ownership to be able to have appropriate leaders developed within the organization that allows for the owner/manager to extricate themselves from the day-to-day business and still be in a position to provide high-level feedback on what’s going on within their company.

If you are open to a conversation about how to develop your next generation of leaders, or how our in-depth work style and personality assessment could help your team, please contact us at 310-453-6556, extension 410 or email us at pattyc@lighthouseconsulting.com and our website is www.lighthouseconsulting.com.

David Shaffer is our practice head for our Business Consulting For Higher Productivity Division for our ERP, M&A and process improvement practice. He is recognized for his ability to effectively integrate all aspects of the business, including financial management, information systems, infrastructure, sales management, sales strategies, and operations. David assists companies from planning through operational and business process improvement opportunities to the selection and integration of management information systems solutions. His range of company support includes start-ups through Fortune 500 firms.

Lighthouse Consulting Partners, LLC

Testing Division provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCP can test in 19 different languages, skills testing, domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication.

Business Consulting for Higher Productivity Division provides stress & time management workshops, sales & customer service training and negotiation skills, leadership training, market research, staff planning, operations, ERP/MRP selection and implementation, refining a remote work force, M&A including due diligence – success planning – value creation and much more.

To order the books, “Cracking the Personality Code”, “Cracking the Business Code” and “Cracking the High-Performance Team Code”, please go to www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Partners, LLC to reproduce any portion provided in this article. © 2024

 

ERP Help for Companies Drowning in Data But Thirsting for Actionable Insight

By David Shaffer, ERP Practice Head, Lighthouse Consulting Services, LLC

Do you feel it is “sink or swim” with the tidal wave of data that is hitting your business? “Data, data everywhere, and not a drop to help us think” is a common lament.

by thisisengineering-raeng

But there is a tremendous opportunity you might be missing that competitors are taking advantage of, including interactive dashboards. These highlight key performance indicators – clearly and concisely – so executives can make decisions based on data and reality and not in a vacuum.

These capabilities are powering a next generation change in how the deluge of data can help you make better decisions. Consider these quick examples:

A men’s grooming product maker successfully implemented enterprise resource planning (ERP) to better track inventory and financial data.

A rapidly expanding confectioner used ERP to standardize thousands of chocolate-making processes and restructure an ineffective warehouse management system that could not keep pace.

A manufacturer of chemical products, which are used in electronics, automotive, and housing industries, implemented an ERP system to avoid human errors and to be able to automate workflows for increased productivity.

In each example, ERP was used to harness data.

Today, any business can obtain ROI with effective systems and processes that promote growth strategies.

Companies, regardless of industry, need to recognize the ever-growing need to integrate responsive information with optimal best practices within day-to-day operations. In the past, the selection of appropriate systems has been confined to those who have large budgets, resources, and time to do extensive evaluations and due diligence. That is no longer the case.

ERP Is The Mortar In The Brick Wall

To use a masonry metaphor, an ERP system is like mortar, the cement-like mixture of sand and lime that keep bricks in place. You can think of an ERP system working like the mortar that binds together the different computer systems for a large organization (your bricks). Without an ERP application, each department would have its system optimized for its specific tasks. With ERP software, each department still has its system, but all of the systems can be accessed through one application with one interface. The systems stand together like a strong brick wall.

by jonathan kemper

Please understand that the appropriate evaluation and selection of systems is equally critical and important to the success of the mid-size, growing business. Based on years of evaluation, support, and success, we have developed a proprietary process that brings the same value and benefits of past selection without introducing extensive costs. Our belief is that hard-earned dollars should be directed toward solution implementation and not toward selection.

We recommend a process that incorporates a series of integrated steps that quickly and efficiently highlight the following:

• Scenarios that mirror operations in order to test the viability of proposed solutions

• Accountability for vendors that align implementation of value applications with operational efficiencies

• Selecting software solutions that follow business processes from ordering through fulfillment rather than just specific application areas

Implementation And Project Management

To help position our clients for success, we created an ERP selection process called Quick Start, developed with the expertise of consultants who bring business and system knowledge to the selection process. Our team recognizes the value of your investment and have first-hand understanding of the impact effective systems and processes can have on meeting growth strategies.

by alexanderstein

The Quick Start process encompasses several key interrelated steps that build upon each other and are directed toward the selection and implementation of the Information System that meets your requirements. The process focuses on your unique and key business flows rather than the nice-to-see demonstrations that many vendors focus on during demonstrations.

We recommend the following steps to select an ERP system:

1. Begin The Right Way. Get a qualified consultant who has traveled this road many times. Start with an initial kickoff meeting to set expectations, including an outline of preliminary observations gathered through an interview and site walk-through evaluation process.

2. Make A List; Check It Twice. Based upon the preceding interviews and data gathering, develop and review a list of key requirements for the new system, comprising needs that are distinctive for strategic growth. Create a list of key requirements and key business scenarios. Receive suggestions based upon observations for possible operational efficiencies.

3. Set The Scenarios. Develop key business scenarios as a framework for software demonstrations Unlike most selections that focus exclusively on application capabilities, recognize that businesses rely on the flow of information across departments. Scenarios reflect overall flows from order through fulfillment.

4. Assure Accurate Scenarios. Review the key scenarios with interview participants to assure accuracy.

5. Round Up The Vendor Suspects. Distribute requirements and scenarios to select software vendors. Identify possible solutions based upon experience and software vendor feedback from distribution of requirements. Assure that vendors understand the need to demonstrate the scenarios.

6. Demo That System Please. Participate in vendor demonstrations. Obtain consultant support to help your team in evaluating the potential fit of vendors. Assure that demonstrations are addressing the scenario requirements. Consultant should assist your team to evaluate the best fit.

7. Plan The Implementation. Review the recommended implementation plan. Some negotiation is required at this point.

8. Support Project Management. Have consultant provide interface between your company software implementation team and the vendor. The consultant should support the implementation of best practices.

Final advice

The selection process must put you in control over the software vendor by assuring the proposed solution meets the process scenarios, and the consultant can help maintain that delicate balance of power. A selection process typically can be completed within an eight-to-ten-week window. Utilize consultants that are able to integrate business understanding with the value creation associated with information systems. Make sure the funds are spent on the right things, which translates to software delivery rather than consulting evaluations.

by Campaign Creators

If you are open to a conversation about an ERP system, improving manufacturing workflow, or how our in-depth work style and personality assessment could help your team, including pricing and the science behind the tests, please contact us at 310-453-6556, extension 403.

If you would like additional information on this topic or others, please contact your Human Resources department or Lighthouse Consulting Services LLC, Santa Monica, CA, (310) 453-6556, dana@lighthouseconsulting.com and our website: www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Services, LLC to reproduce any portion provided in this article. © 2022

David Shaffer, who heads up the full-service business consulting ERP practice at Lighthouse Consulting Services LLC, is recognized for his ability to effectively integrate all aspects of the business, including financial management, information systems, infrastructure, and operations. David assists companies from executive strategic planning through operational and business process improvement opportunities to the selection and integration of management information systems solutions. His range of company support includes start-ups through Fortune 500.

In addition to a full-service Business Consulting Division, Lighthouse Consulting Services, LLC provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, sales and customer service training, negotiations training, interpersonal communication, stress and time management, and leadership training.

To order the books, Cracking the Personality Code, Cracking the Business Code, and Cracking the High-Performance Team Code, please go to: www.lighthouseconsulting.com.

Improving Your Odds For A Successful Manufacturing Workflow Strategy

By David Shaffer

When it comes to succeeding with manufacturing workflow, we are drowning in data but starved for wisdom.

That thought was first put forth by futurist John Naisbitt 40 years ago in his classic book Megatrends. Naisbitt the futurist was indeed a prophet.

His prophecy is true because today even with the ever-expanding use of technology, there is an overabundance of data. The challenge is to disseminate that data into information that can be acted upon to achieve the organization’s mission.

The overall mission and foundation of business today, as it was 40 years ago and undoubtedly will be true 40 years hence, is to maximize customer service. Today this is also referred to as the customer experience.

Great business thinkers like the late Peter Drucker said that without customers, there is no business. Giving the customers what they want, when they want it and how they want it is an ongoing challenge. Simply put, keeping the customer satisfied requires improved manufacturing workflow.

Because improving your manufacturing workflow is about keeping the customer satisfied, the best manufacturers are obsessed with it. These organization’s want to make themselves as easy as possible to work with from a supply chain, distribution and services standpoint. The good news is applications including Enterprise Resource Planning (ERP) have greatly improved manufacturing workflow.

However, almost daily you can read or hear of information systems like ERP not fulfilling manufacturing workflow expectations established at the time of acquisition. In fact, despite the most diligent efforts in defining requirements, evaluating options and selecting systems, the probability of higher-than-expected investments and system implementation issues are extremely high.

If it sounds like the odds are stacked against you, there are ways to improve your odds. ERP needs to be seen as an investment, rather than an expense, and therefore you must find ways to maximize the return on investment (ROI).

How To Improve ROI

Improving your manufacturing workplace is a bet, a gamble, a wager. Author Damon Runyon once said: “The race is not always to the swift nor the battle to the strong, but that’s the way to bet.”

No business plans to lose its bet on ERP. It is fair to assume that all participants in the implementation of technology are focused upon improved manufacturing workflow results for their individual and collective departments. The aggregate of these improved results should be focused on, and result in, improved results for the company as a whole.

Specifically, a concise definition of measuring improved results as a positive gain in the implementation of technology. If there is nothing to gain then there is obviously no reason to change.

If you want the biggest gain, bet on quality. To all organizations, quality is what is expected. To that end, in the absence of standard operating procedures, the result is variation in process and by definition; variation is the enemy of quality. By determining the least wasteful method of performing a task, quality is improved, cost is reduced and on-time delivery is the final result. By performing a task the same way each time assures consistency and eliminates variation.

As workflows are identified and the standard operating procedures are put in place, the success of these procedures will be directly determined by how effective an organization is at answering the following questions:

• What are the required inputs?
• How were you trained?
• What do you do?
• How do you know your output is good?
• What feedback do you receive?
• Who are your customers?
• What keeps you from doing error-free work?
• What can be done to make your job easier?
• What would you change as the manager?

It is hopefully fair to assume that all employees want to do a good job and would rather do an activity right the first time and not be faced with rework or quality issues. Standard operating procedures, as information or product, are passed from one group to another allowing for consistency in both input and output, resulting in improved quality and happy customers. That is a winning parlay.

Those Pesky Competitors

For a significant number of businesses however, changes are dictated externally by competition, customers, and vendors and for publicly traded companies, possibly the shareholders. This external pressure, when coupled with potentially internal conflicting goals tends to increase anxiety levels and can further contribute to poor system selection and/or utilization. How often is it heard that if we don’t change we will lose? The Internet and e-commerce are recent examples of technology forcing many businesses to react.

One of the ways businesses have tried to deal with change and the expected pressures is through strategic planning. When done correctly, and shared appropriately throughout the organization, the strategic plan becomes a roadmap and a source of reference throughout the year. By establishing a Target Operating Model (TOM) that reflects the strategic plan, the selection of the appropriate ERP can be measured against its alignment with the TOM along with value derived.

Procedures And Policies Are Linked To ROI

It is assumed that the procedures and policies associated with a new system will be integrated as part of the implementation process. Vendors of technology and software will do their best to provide the appropriate operational training however are not generally in the business of assuring that the organizational infrastructure can absorb the change. That is left to the management and implementation team.

Recognizing that a new system carries risk as well as rewards, the management team is functioning under its’ own level of pressure and may not be the best in soothing the concerns, issues and change being felt by the employees. The good intentions associated with the new system may indeed be counterproductive without the corresponding balancing of the attitudes, goals, objectives and concerns of the people that comprise the organization.

Implementing The Strategy

Regardless of the status of the current information technology, that is utilizing an existing system or entering into the selection process of a new one, it is essential that the TOM and value to be derived are clearly defined. That is, just how will we as an organization measure the ERP value and, equally important, how will our customers measure us to decide if we are in fact successful in implementing our strategy. In addition to this measurement is the strategic plan. It must be reflective of where we want the business to be and how we will measure our success.

Finally, the integration of technology and infrastructure are essential to maintaining the balance of maximizing customer service. We must place equal emphasis on understanding and implementing positive attitude as we are in implementing technology.

Defining and achieving improved results is critical to the on-going success of most businesses. To invest hundreds of thousands of dollars in technology and systems without recognizing that tools are only as good as the operator is a formula for disappointment. It has been said that the majority.

Monitor And Communicate Progress

Many organizations struggle with the implementation of key initiatives; accountability is frequently a major stumbling block. By assigning Project Managers and the consistent use of project chartering, project plans can be well defined, resourced and monitored. The aggregate results of the charters collectively address the implementation of defined key initiatives. It is customary that on a weekly basis, each Project Manager reports the status of their charter so that combined project plans are managed by a single source. That is, for quality and consistency the overall progress of the initiatives is maintained in a central repository accessible to the entire management & leadership team.

There are many ways to distill strategic planning into execution. Chartering is a great way to focus on execution while creating accountability & buy-in throughout the process.

If you are open to a conversation about improving manufacturing workflow or how our in-depth work style and personality assessment could help your team, including pricing and the science behind the tests, please contact us at 310-453-6556, extension 403.

If you would like additional information on this topic or others, please contact your Human Resources department or Lighthouse Consulting Services LLC, Santa Monica, CA, (310) 453-6556, dana@lighthouseconsulting.com & our website: www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Services, LLC to reproduce any portion provided in this article. © 2021

David Shaffer, Senior Consultant with Lighthouse Consulting Services, LLC, is recognized for his ability to effectively integrate all aspects of business including financial management, information systems, infrastructure, sales management, sales strategies and operations. David assists companies from executive strategic planning through operational and business process improvement opportunities to the selection and integration of management information systems solutions. His range of company support includes start up through Fortune 500.

Lighthouse Consulting Services, LLC provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication, stress and time management, leadership training as well as our full-service Business Consulting Division. To order the books, Cracking the Personality Code, Cracking the Business Code, and Cracking the High-Performance Team Code, please go to: www.lighthouseconsulting.com.