cash

cash

by scott pickard

Cash is king, as the old saying goes. It is the one resource a company cannot survive without for any length of time until the doors are closed, voluntarily or involuntarily, which is why the CEO must find or develop a method to reliably understand and predict the company’s current and future ability to generate the cash it needs to pay all of its bills.

Forecasting cash flow is much easier than it used to be, thanks to the convenient number-crunching power of PCs and spreadsheet software which allows one to build an Integrated Spreadsheet which links a projected balance sheet and income statement for the business. The Integrated Spreadsheet is a tool that will give any CEO the positive direct control they must have over the financial rudder of the business.

A wise time investment for CEO’s
A company’s cash flow at any point in time is a juxtaposition of payables, receivables, debt service, capital expenditures, sales/repurchases of stock, and other factors. An Integrated Spreadsheet handles this complex financial interaction with electronic precision. Using this tool, a CEO can more carefully predict where the company is heading. That’s powerful planning and peace of mind for the executive/owner that shoulders the burden of consistently meeting payroll and staying current with suppliers on all bills.

  • The Integrated Spreadsheet gives the CEO a rational way to appropriately pace capital expenditures, quarterly (or even monthly) bonus payments, and sweeps of excess cash into less liquid but higher-returning financial instruments at the earliest possible time.
  • The Integrated Spreadsheet allows the CEO to look at the effect on cash from big-picture business initiatives such as acquiring a new business, selling off a division, developing and staffing a new department, or launching a new product line.
  • Using an Integrated Spreadsheet helps the CEO disclose mistakes that are sometimes made in monthly financial statements from either miscoding or a faulty accounting interpretation of a particular transaction.
  • With an Integrated Spreadsheet the company always has a three-year plan that is built on actual operating numbers, but fine-tuned to reflect management’s best judgment of future revenues and expenses.
  • The Integrated Spreadsheet can easily generate an unlimited number of graphs to analyze past performance and predict future performance which is often the most effective way to communicate financial data to employees, directors, shareholders, and the bank.
  • An Integrated Spreadsheet will demonstrate to the bank, board, and investors that the financial management and budgeting of the company is under control which promotes confidence in the officers and the business by its internal and external constituents.

DIY

Assuming the user knows their way around a spreadsheet and double- entry accrual accounting, the structure of an Integrated Spreadsheet can be set up in a few hours. It will take a day or so to input the previous twelve months of operating data; a day to input informed estimates of revenues, expenses, and capital expenditures for the next twelve months and to fine-tune those estimates; and a day to train all users who will have access to the Integrated Spreadsheet.

If the CEO cannot spare the time, this task can be delegated to inside accounting staff or subcontracted to an outside accountant or consultant. If this project is delegated, it is still important that the CEO be trained in the use of the Integrated Spreadsheet so that he or she can perform what-if analyses and generally watch over the constantly revising forecast of the financials of the business, a function that should be owned by the CEO. Financial forecasting involves hundreds of experience-based estimates of highest-probable outcomes of revenues, expenses, capital expenditures, debt service, equity inflows and outflows, extraordinary gains and losses, and other income and expenses, by someone that has the overview of the business. The CEO has this overview as it is part of the responsibility of the position.

Basic structure of the integrated spreadsheet
It is important for the user to have a general understanding of how the spreadsheet is laid out and functions. The integrated spreadsheet has three major components:

  • Balance Sheet
  • Income Statement
  • Cash flow adjustment

These three components are linked or integrated so that they balance or tie out in accrual accounting terms. These integrated accounts are highlighted in various colors as shown on the diagram below:

cashflow

The major points of integration are identified by the matching colors. For example, the link between “depreciation” on the balance sheet and “depreciation expense” on the income statement is shown in brown, since these two entries must be identical in double-entry accrual accounting. There are in fact numerous links between the income statement and the balance sheet as a result of the double-entry methodology. The beauty of the spreadsheet is it affords the user the flexibility to add/subtract/modify at will and build increasing sophistication into the integrated spreadsheet enabling a more realistic modeling of the financial dynamics of the business.

I’ve posted a power point presentation on prezi that leads you through the basic construction of the integrated spreadsheet. The secret sauce in this process is the synching of a cash flow adjustment (plug) at the bottom of the spreadsheet below the income statement as shown in the diagram below:

2slides

By wiring together these key accounts to calculate the actual cash flow for each month, this will cause what’s known as a circular calculation in the spreadsheet which is normally a no-no, but in this case it is a good thing! The user simply needs to go into “settings” and set the automatic calculation to 100 iterations and the spreadsheet will automatically recalculate and balance the statements after each new value entry to a cell.

Using the tool

Once the integrated spreadsheet is set up, using it effectively involves inputting the actuals from each monthly financial statement as they occur and reforecasting the numbers going forward from the most recent actuals. This process repeats itself every month — inputting the most recent actuals and reforecasting ahead — and as each month goes by and the user gains experience in using the spreadsheet and making experience-based judgments of how the numbers will track, the integrated spreadsheet becomes an expert system that does a better job over time of forecasting the financial fortunes (or misfortunes) of the company. The key point is that all of this boils down to one most important account: cash flow.

Once the process of updating actuals and forecasting ahead is complete,
the CEO looks at the impact on cash and then develops a financing plan
that optimizes the uses of working capital in the next six months and beyond.
If the projected cash flow shows surpluses being generated, the CEO can
decide how that excess cash could be used today and in the coming months
to:

  • Reduce payables
  • Reduce long-term debt
  • Make capital expenditures
  • Make other long-term investments

If the projected cash flow is negative, the CEO must plan for how the
minimum working capital requirements for the business will be generated to
carry the company through tight cash periods by a combination of:

  • Drawing down cash surpluses
  • Deferring certain operating and capital expenditures
  • Extending the payables cycle for a brief period within acceptable bounds
  • Making a draw on an operating line of credit
  • Securing additional long-term financing
  • Raising equity capital through the sale of common or preferred shares

Summary

If the CEO can build the integrated spreadsheet for the business and start using it each month ( if not each day), learning by doing is the most efficient user’s manual. The CEO will quickly discover the many dimensions of value that are derived from the integrated spreadsheet aside from the very tangible value of forecasting cash flow. The integrated spreadsheet causes the user to think about every aspect of the business, across all accounts, across time, across strategies, by looking back to look forward. And at the end of the exercise instead of saying, “I hope we’ll have the money in the bank when we need it,” the CEO can say, “We expect to have the cash we need, and here’s how.”

That’s powerful business confidence!

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Seven Excuses CEOs Cite for Not Creating a Board of Directors

board

by scott pickard

No company is too small to create a board of directors, and no company is too large and sophisticated that it cannot improve upon its board because directors have the potential to add significant value to management and the company in countless ways.

Here’s how:

  • Directors can give good advice insiders might not hear otherwise.
  • Directors can be frank in a way employees won’t or can’t.
  • Directors ask, “Why would you do that?”
  • Directors help management network into important strategic resources such as partners, talent, capital, and markets.
  • Directors bring new ideas.
  • Directors double-check management’s plans and make them accountable.
  • Directors check for compliance to ethics, laws, regulations, and just plain common sense and good judgment.
  • Directors bring experience – they’ve been there, done that, and there’s no sense reinventing the wheel because that consumes time and money; and, there’s no sense in making mistakes because that’s painful.
  • Directors pitch in and help during periods of rapid growth or crisis.

That said…excuses, excuses

There is no good argument (generally) against using a board of directors, yet owners and CEOs continue to cite the following excuses:

1. I don’t have enough time

There are certain high-leverage activities for CEOs and owners that they must put at the top of their priority list because even though these tasks do take valuable time to plan, prepare, and execute (e.g., financial audits; a strategic planning retreat; a performance review with a key employee; a board of directors meeting), these activities hold the potential to make a substantial positive impact for the business. Executing these high-leverage tasks as a business leader is simply something you have to do, so you make the time.

2. I can’t afford it

The cost and complexity of a board of directors scales to the size of the company. In a large or public company you can expect to attract sophisticated directors and they will expect a compensation package commensurate with company size and the commitment required.

But if you are a start-up company and only a few people are involved, you most likely won’t be attracting public company directors that expect big fees. But you can attract successful local people that were once in your shoes and know what it’s like to start and build a company and they’d be pleased to serve on your board as a way to give back – sometimes only for the price of a dinner and a few beers.

3. I don’t know anyone to ask

Many people say this initially but if they take a few minutes to reflect, they can always think of someone to invite to be a director. Also, they usually know someone who could be an intermediary to a director candidate. Good intermediaries can be a friend; a relative; a business colleague; your accountant, attorney, or banker; a professor; the Chamber of Commerce; a valued and trusted key supplier or client.

There are also organizations that foster better corporate governance and directorship that can match directors looking for board assignments with companies looking for good directors. For larger companies there are search firms that specialize in recruiting directors to large and public boards.

4. I don’t know what value they would bring – I know what to do

An executive with this kind of attitude most likely feels this way about many things, not just a board of directors. This kind of insulated, ivory-tower attitude only limits new opportunities for management and the company.

The objective evidence indicates that boards do provide real value to management and shareholders. However, it is true that boards also hold the potential to screw up royally and there are many examples of that from both for-profit and nonprofit boards, big to small. But that is not because the value proposition of a board is not valid, only that those particular boards were dysfunctional and acted irresponsibly. The overwhelming majority of boards do great work for their constituents.

5. I don’t want anybody to know what we’re doing

It’s a valid concern for many companies, but you cannot operate inside a top-security box forever. You need a few select trusted advisers that you can lean on and use as sounding boards so that your thinking and decision making does not become inbred and myopic. Directors can give you fresh and unbiased insights and they will respect and maintain the confidentiality of your plans and intellectual property.

6. I don’t know how to set up and manage a board

If you can create, manage, and grow a company, you can create and manage a board. Most attorneys are very helpful in making sure you cover the legal basics. Experienced directors themselves will be very helpful and patient as you proceed and learn on the job.

There’s a wealth of good books and training programs at your disposal. In essence, a board meeting is just like any other meeting where you set a prioritized agenda, meet, discuss, and get things done.

7. I don’t want any outsiders involved – this is a family business

It is a truism that there is family, and then there is everyone else. Experienced directors understand this as it relates to the dynamics of a family business board, and still you would be surprised how effective (and refreshing!) an outside director can be inside a tight-knit family business and board.

Family members are constrained in so many ways from being totally honest with each other. The outside director is unconstrained and sometimes the only one to tell it like it is. This can be an invaluable resource for a family business.

Just do it

If you’ve been dragging your feet to develop a board, just get on with it.

At the outset of building a board you will find that you can learn quickly with the help of the directors themselves. In a year’s time you will be the expert. You will find that your directors may refer you to other non-competitor CEOs who are looking for good board members. This is one of the primary ways the community of directors populate their ranks.

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Board of Directors


Why is this guy the #1 ranked CEO in the world?

Management and Best Practices CEO CEOs make 300X more than workers, but are they doing 300X the work? performance evaluation What are the metrics for the top performing CEOs? > Board  Is the CEO in touch with the employee rank and file?  Does the CEO have employees' respect? Does the board require the CEO to complete a self-evaluation?  Has the board benchmarked the strategic performance of CEOs at peer companies?  Is the board responsive to the concerns of shareholders about the effectiveness and responsiveness of management?  On what grounds is the board considering firing the CEO? (a) poor company performance; (b) strategic disagreement with the board; (c) personality clashes; (d) consolidation of control due to merger; (e) unwillingness of CEO to comply with a board mandate; (f) personal problems; (g) illegal/improper behavior succession Promoting insiders is a strategy to maintain consistency, whereas hiring outsiders is a strategy for change. Sessions Has the board challenged the heir-apparent to be compared against external candidates?  Has the board been able to observe and evaluate the heir-apparent in representative trial assignments?  Is competition among internal candidates getting out of hand?  Does the board have a healthy collaboration with the incumbent CEO in the succession process?  Has the board established clear performance benchmarks and an exit timetable for the incumbent CEO?  Is the incumbent CEO attracting, hiring, and developing key employees worthy of succession candidacy?  Is there a turnover problem with top management candidates?  Does the incumbent CEO restrict access by the board to top management?  Should the board consider removing the incumbent CEO from the board?  Is the board developing and maintaining a familiarity with top succession candidates within and external to the company?  Is retirement of the incumbent CEO being delayed by lack of a successor? For the incumbent CEO close to retirement, has the board structured a compensation package to incentivize cooperation with a successful transition? interim CEO Does the board have a plan for an interim CEO in the event of a sudden and unexpected departure or death of the CEO? Does the board need to consider an outside turnaround specialist to manage the current crisis in the company? interviews Are we getting continuous improvement after each interview process? | interviews: Conversations from the Corner Office | videos: CEOcast  books/movies, articles, blogs: Steve Jobs: book, movie | CEO Succession Carey | Effective Succession Planning Rothwell Intersections | Poverty/income gap

CEOs Out of Bounds

Social Organization and Change Leadership Lead by example.  Can companies still rely on a single individual at the top to handle the complexity and uncertainty of the global environment? in general: accountability: The buck stops here. Truman | anti-leadership: despotism | bios: Amazing People Library | greatness: about | journals: Leader to Leader | narcissistic leaders | team of rivals | toxic leaders | training: disneyinstitute, Salzburg Global Seminar       charisma: research: measurement | visualization empowerment: thinkingmanagers | quotes: woopidoo | self-management: morningstarco | situational leadership heroes: As a leader, are you passionate and focus on a few key principles which you will not sacrifice under any circumstances?  How strong is your willpower?  Does your willpower have staying power?  Can you weather a long storm?  Can you effectively communicate your key principles?  Are you getting the message across?  Do you strive for generosity, nobility, humility, and strength of character? | recognition: Carnegie Hero Fund | Finding A Hero Amid Fading Memories humility: The true leader sits side-by-side with his brother and sister, content that his fame and fortune is a bonus in his daily life, and never expecting special treatment but always appreciative when it comes his way. sp wisdom: A skillful leader can use a light touch to solve a vexing problem. Miller | clinical wisdom nursing | quotes: www.wisdomquotes.com | National Urban Fellows books, articles, forums: CEOs Out of Bounds sp > CEO | Good Boss, Bad Boss Sutton | Heroes Johnson | Heroes of History Durant | How to Win Friends and Influence People Carnegie | Leadership Ensembles Thomas | Made to Stick Heath | Making Your Case: The Art of Persuading Judges Scalia | On Becoming a Leader Bennis | On Leadership Gardner | Renaissance Weekend | Start with Why Sinek | Strengths-Based Leadership | The Age of Lincoln Burton | The First 90 Days Watkins | The Last Lecture Pausch | The Little Big Things Peters | The Starfish and the Spider Brafman | transparency: Maverick!, TED Talk Semler big ideas | Tribes: We Need You to Lead Us Godin | What to Ask the Person in the Mirror Kaplan

 

by scott pickard

Sport plays an important part in the lives of many business leaders. Nothing can make the juices flow like sinking a 30-foot birdie putt to win the match or setting a personal record in the local 10K run. Risking, winning and losing, playing, pushing personal limits – all are tonics for the chief executive, but they require “getting in the game.”

For Dick Jorgensen, Red Cashion, and Tom Dooley, getting in the game was a way of life. During their days as NFL Referees,  they were chief executives of successful corporations, but on the weekends they exchanged their business suits for “zebra suits” to become NFL referees. Whether on the field or off, these CEOs shared an uncommon passion to perform their best.

Dick Jorgensen: Banking on the Blitz

Dick Jorgensen had the distinction of having been the head referee for 1990’s Super Bowl XXIV. It was the pinnacle of a 22-year career as an NFL referee when one considers that the officials on Super Bowl Sunday are voted the best at their position by the NFL.

Head Referee Dick Jorgensen (#60) follows San Francisco quaterback Joe Montana (#16) and the rest of the action at Sperbowl XXIV in 1990.

When he was not watching Joe Montana fade back for the bomb, Jorgensen was president of Marine Bank in Champaign, IL, a banking affiliate of the Marine Corporation with over $1 billion in assets. The bank always supported Dick’s other life as an NFL referee, as banks generally support the active community involvement of all employees.

At 56 (in 1990) and coming off recent back surgery, Dick moved a little slower than he did as captain of the University of Wisconsin’s basketball team.  He was concerned about his upcoming annual NFL physical and stress test, but he was determined to pass. He daily stretched, swam, and lifted weights – whatever it took to ensure he would get another shot at a Super Bowl. Having participated in Super Bowls VIII, XV, and XXIV, he didn’t want to pass up another opportunity to be part of “the immensity of the game.”

The rewards of a Super Bowl experience, however, aren’t without cost. The pressures of balancing a banking career and an active family life while on the road for the NFL were substantial, especially for the family left behind each weekend. “But once the kickoff comes and I get into the flow of the game,” asserted Jorgensen, “all the pressure is off. It’s exhausting, but mentally refreshing.”

Tom Dooley: Constructing a Game Plan

Tom Dooley, former CEO of R.T. Dooley Construction, says his 14 years of working out problems on an NFL football field helped him work out problems in business. “On the football field,” he observed, “you have a set of rules and a solution.” Dooley was proud of the fact that in all his years as CEO, he never had to retain an attorney to solve a legal problem!

“Nothing is black and white in business,” continued Dooley. “Everything is a compromise. On the football field, it is black and white. I can flush out every thought in the world when I’m on that field.” And like Dick Jorgensen, Tom Dooley got that same physical exhaustion but mental freshness after each game.

To make it possible for Tom to work weekends for the NFL and keep his business under control, he surrounded himself with “people smarter than I am.” And what was good for the boss was good for the troops. Business shut down every day at 11:30 am so employees could get in a vigorous noon workout at the local YMCA (the company paid every employee’s membership fee).

Dooley believed strongly in being “the best you can be.” After a lifetime of setting goals and achieving them, he still had one in his sights – to work a Super Bowl as head referee. He had a taste of Super Bowl action as a linesman at Super Bowl XV, Eagles vs Raiders, in 1981. But characteristic of every NFL referee, Dooley wanted a shot at the No. 1 position.

Red Cashion: A Variable Life

On April 21, 1990, Texas Independence Day, Red Cashion had the honor of being keynote speaker at Texas A&M’s “annual muster,” following in the footsteps of the mayor of San Antonio, the governor of Texas, and Ike Eisenhower. For a Texan, especially one that lived and worked in College Station (Aggie country), this was as big an honor as being referee at Super Bowl XX, Bears vs. Patriots, in 1986.

Speaking before students, athletes, and business people went with the territory for this NFL referee who was also chairman of ANCO insurance which he co-founded in 1966. The challenges and lessons of business and sport were inseparable for Cashion, helping him develop what he called “presence.”

Red enjoyed “being in the center of the action.” It took him 20 years of refereeing in junior high through college ranks before being accepted into the NFL where he officiated from 1972 – 1996 (25 years).

Obviously, the pressure of officiating wasn’t a problem for Cashion, having been at it for so long. He enjoyed keeping himself in shape through competitive handball. “Frankly,” he says, “I enjoy the annual NFL physical and stress test.”

The greater challenge for Cashion was making the right decision under pressure. Being an NFL referee helped him develop confidence in himself and his decisions, a quality employees respected.

When he returned each Monday following an NFL game, football was the topic of the day. Employees always greet him with questions about the game. Although Cashion admitted that “after a while, you forget which city you were in,” he will never forget being head referee in Super Bowls XX (1986, Bears vs Patriots) and XXX (1996, Cowboys vs. Steelers).

* * *

Note from Scott Pickard: “I wrote this feature article under assignment to Chief Executive magazine and it was subsequently published in September, 1990.  Sadly, Dick Jorgensen passed away in October, 1990.  He was a well-known personality and highly-respected leader in Champaign, IL.”

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LinkedIn posts (writing)

Particular Arts / literature Writing a writer writes in general: I write to discover what I know. O’Connor | automation: Babel Generator | buy/sell: storiad | collaboration: mixedink, The Writing Squad | content-as-a-service: Structured Information | contests: write a novel in a month |diaries: Grownups Read Things They Wrote as Kids > Radio | editing: scribendi | freelance: contently | LinkedIn: The Power of LinkedIn Posts sp | query letters | software tools: scrivener | teaching kids to write: boomwriter, 826valencia | whitepapers: template | word/character count: Text Mechanic, Word Count Tools grammar & references: citing sources: endnote, www.noodletools.com/quickcite | Common English Errors: www.wsu.edu/~brians/errors/index.html | Guide to Grammar & Writing: http://grammar.ccc.commnet.edu/grammar | Presentation Tips: http://wps.ablongman.com/ab_public_speaking_2 | Press Release Guide: www.press-release-writing.com quotes: The hardest part of writing is the first word. sp |Bartlett's Quotations: www.bartleby.com/100 | Brainy Quote: www.brainyquote.com style guides: Citation Styles: www.bedfordstmartins.com/online/citex.html | Economist Style Guide: www.economist.com/research/StyleGuide | Elements of Style: www.bartleby.com/141/index.html | skills: 15 Online Resources to Upgrade Your Writing Skills Crosby  vocabulary : Can improving your vocabulary improve your life? (a) formulate your ideas better; (b) write better papers, emails and business letters; (c) speak more precisely and persuasively; (d) comprehend more of what you read; (e) read faster because you comprehend better; (f) get better grades in school; (g) score higher on tests like the SAT, GRE, LSAT and GMAT; (h) perform better at job interviews and conferences; (i) sell yourself, your services, and your products better; (j) be more effective and successful at your job voice recognition: iPhone: siri | nuance blogs, books, movies, portals: A Moveable Feast Hemingway | On the Boulevard sp | screen writing: Barton Fink Coen | The Elements of Style Strunk | writers: Mr. Gwyn | Writer’s Digest | Writing a Winning Book Proposal

Pop-Ups and “Citizen-Sourcing”

by scott pickard

Tom Peters, famous author of In Search of Excellence, coined the phrase “fast failures” which simply means corporations using modest amounts of capital to let employees rapidly test out new concepts, versus following a traditional deliberate corporate process to vet new product and service ideas. Fast forwarding to today, the idea of the “pop-up” has steadily been gaining traction in the retail and restaurant sectors as a way to quickly test the market, introduce new products and services, and gain some quick local market awareness.

When you think about it, the pop-up has been around for a long time, we just called it a booth at a tradeshow. What’s different now is the pop-up can happen anywhere, especially outside where people are walking, browsing, and congregating. In the tradeshow model you had to attract the people to your booth (one of hundreds) in a big event center. In the pop-up model you embed your story where the people are and often you are the only show at that location.

The pop-up is not just for big corporations. Any organization and any individual can pop-up their story on a budget that ranges from a table at a flea market in a mall, to an open-air stand at an art fair in a parking lot, to something more elaborate whether it is indoors or outdoors. The pop-up enables rapid prototyping (and fast failures), market introduction and awareness, brainstorming, customer feedback, crowd sourcing (“citizen-sourcing”), and more. And because it is such a cost-effective technique, we should encourage and enable pop-ups in our communities as much as possible because what we need in our communities is new thinking that leads to new companies and new jobs which can help backfill the substantial job losses we are experiencing by disruption across all sectors.

Just to pick one example, consider libraries which are being disrupted across the United States because of the digital revolution and declining state and municipal budgets. Public libraries across the nation are struggling to figure out how to redefine the mission of their libraries and develop a sustainable financial model.

The “elephant in the room” that people are afraid to talk about or step forward on is the question of do we still need to allocate that much space for books-on-shelves? It is such a revered and emotional tradition (some say “right” or “entitlement”) to have books-on-shelves in expansive quiet spaces, that some library directors have already lost their jobs trying to move in a different direction. But it will happen! We don’t need as much space allocated for books-on-shelves as we used to, so we will have to repurpose some amount of that library space and potentially have some of the space generate revenues which will help support the library.

A specific example of this is our own public library that has a 40,000 square-foot basement which is empty. The basement of our public library is nicer than the basement in my 90-year old home: well lit, dry, high ceilings, broadband wireless, plenty of power, smooth concrete floor, plenty of books and coffee and conference rooms and restrooms upstairs, warm in the winter and cool in the summer. That’s a lot of space to be doing nothing when the library has been running a deficit budget for the last five years.

Why not mobilize the power of the crowd (the library patrons and the community at large) by letting them pop-up their ideas in the basement?

  • Design lab
  • Media lab
  • Art studio
  • Dance studio
  • Co-working area for budding entrepreneurs
  • Fablab, makery, hackerspace
  • And the list goes on…

Basement of the library is an excellent place for a pop-up fablab.

Give them some of that empty underutilized space, support them however you can, and unleash the creative energy of citizen-sourcing in your community because no single library director or board of trustees has the all-knowing crystal ball to build a roadmap to the future for their libraries. I have much more confidence in the power of diverse thinking from citizen-sourcing than I have in a library director either afraid of losing his or her job or stubborn to change; or a politicized board of trustees nervous about community blowback. I was on our library board so I’ve seen this group-think dynamic from the inside.

The library is only one of many institutions which are being disrupted (big university is another, for example) which we need to address, but we are failing our communities if we don’t fully utilize the power of citizen-sourcing.

Pop-ups are a great way to mobilize and tap the creative and problem-solving power in our communities and get on with it!

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Finding a neutral party to facilitate a merger of two businesses

by scott pickard

I wanted to run something by you, which may or may not be something you want to do or you may not have the time. But I thought of you immediately and think that you are well suited to this task.

I have a very good long-term friend who recently asked for my help to identify someone who could facilitate a negotiation between my friend and another owner with the goal of merging their two respective businesses. They have in effect reached a “gentleman’s agreement” to merge the businesses after having teamed together on some research proposals for the last two years and been very successful doing so. They’ve been talking about this for the last two years. Now they just need a neutral facilitator who can help them close in on the best plan and legal framework for merging the two businesses into one, and that’s where you would come in.

facilitate

I can give you a few specifics:

  • These two businesses are both involved in highway pavement engineering and research.
  • One is located in Portland Oregon; and the other is located in Tampa Florida.
  • The two companies are of the same approximate size, each generating $800K – $1M per year in revenues and they are both profitable.
  • The two owners feel that the companies complement each other perfectly.
  • Both the owners and staffs are compatible and have already worked together.
  • The two owners are certainly prepared to pay the going rate for professional services of this kind.
  • I don’t think they are looking for any further capitalization, but I do know that they want to grow the merged business.

These two Owner/CEOs are looking for a trusted third-party to help them talk through the process and reach a consensus on the best way to merge their two companies from several perspectives: legal, operational, strategic, and financial/tax.

If you are willing to consider this, I would like to suggest your name because I believe you have the integrity, personality, insight, and overall business background to help them pull these pieces together and agree on a plan of action so that they can go to their respective attorneys and say, “Here’s what we want to do, draft an agreement that we can sign so we can get started.”

So, what do you think? I’ll give you a call and see if this is something you’d like to take on.

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