When good things happen to small businesses, they tend to run out of cash. Between customers who pay slowly, vendors who want to be paid fast, marketing and building your team, growth is expensive. If you’ve been successful growing your business, you’re eventually going to need more money, and a banker is often your best source of funds.

A banker is a business person just like you, someone you are going to want to develop a strong relationship with. They rent money from their depositors and the federal government and loan it to you for a profit. Just like you, they need to make good business decisions and do business with people they can depend on. They, too, are looking for companies to do business with, companies with opportunity for growth.

Now is the time to write a business plan for your banker.

Understand the Risks

It’s impossible to run a business without making assumptions, and it’s foolish to assume you will always be right. The good news is bankers are in the risk business. They don’t want to lose money, and they do take risks — risks they understand, risks that will help the borrower, risks with good odds of paying off.

Plan for the unexpected and be prepared when your assumptions don’t pan out. Don’t bet the farm on one idea, and be prepared to be flexible. The last thing a banker wants to do is enter into a business transaction with someone who doesn’t understand the risks of their own business.

Bob Stackhouse, a former banker who has packaged or approved 3,000 business loans, says, “The biggest overriding thing is to understand the risk of your business and communicate that you understand that risk. Then talk about what you are doing about it.” If your business plan does nothing else, make sure it covers this area.

Talk about your expectations and the risks you’re aware of, explain what you are doing about them now as well as backup plans. Describe choices you will make if things don’t go exactly as expected, and don’t make the mistake of ignoring the obvious. Show that you know what’s going on and are in control. The trick is to demonstrate you understand your risks and are prepared to manage them.

Plan for SMART growth

Because you are talking to your banker about lending you money, you need to create a clear understanding of what you want to use it for and why it’s a good idea. Paint a word picture of what you want to do and the benefits it will bring. Describe your next steps through strategic objectives.

A good strategic objective will help you be clear about what you are trying to accomplish by describing the value your actions will bring, how you will measure that value, and how long it will take to achieve it. The objective demonstrates foresight and clarity on your part and creates a sense of confidence in your preparation for the next steps on your journey.

Another critical process is to identify the two or three magic business numbers. Every business has them, and they aren’t sales or gross profit. Those are important measures, but they can’t alert you to problems until it is too late to do something about them.

The numbers you are looking for are more subtle, more hidden. These numbers will give you an instant sense of how the business is functioning moment to moment. Maybe it is the time between repeat orders, average order size or number of line items, or maybe it’s the number of daily inquiries on a product or service.

Make sure you know those numbers and explain why they are your key indicators. Those are the numbers you will need to be watching constantly and be prepared to react to if they start to head in the wrong direction.

Bottom line: Show that you are in control of your business, not the other way around.

Financials

“Financial projections are all about assumptions and looking at how they will unfold over time,” Stackhouse says. “People do the unfolding but fail to elaborate on their assumptions. Without ‘full-bodied assumptions,’ financial projections mean nothing.”

Make sure your numbers match up, that you can get where you are headed on the path you have chosen and things are all in sync. Don’t make the mistake of setting up a scenario in which you can’t get there from here.

“P&L (profit and loss) projections need to reconcile to historical balance sheets, otherwise the full financial projection cannot possibly come true,” Stackhouse adds.

Treat your projections as an extension of these assumptions. This means you begin by creating what you expect will happen (business events), then explain how things will look financially if the events happen as expected.

Other Key Areas

Every business plan has several sections, and those described above are certainly critical. But don’t neglect other details. “Market research is important,” says Renee Bonzell, a commercial loan oficer with Wells Fargo. “You need to prove you can speak to your customer base and the trends in your market. You need to be strong in your product or service and describe it well. You also want to be able to compare yourself to your competitors.”

The moral of this story? Know your business and be sure your plan has a logical flow. When you approach a bank for a loan, it’s just like asking a pretty girl to the prom. Don’t try to pretend to be something you are not. Make sure your plan is honest and real, be yourself, and enjoy the dance.

One reason people ask if you have a business plan is because they don’t understand your business. You might not care if asked by a stranger, but what if the question came from an employee? You would be surprised how poorly your staff understands why clients keep coming back and buying.

Why Do I Need a Business Plan?

Writing a business plan will help you think through all the scenarios you might face during the course of a current business cycle. For example, you might ask, are we at risk of losing any major clients? Is one of our market segments facing a financial downturn? What opportunities are we missing?

It also helps to solidify your thinking on potential process improvements, growth strategies and contingency plans.

The mere act of writing a business plan will give you a great deal of clarity and enhance your ability to talk about your business to others.

Jim Horan, speaker, consultant and author of “The One Page Business Plan,” says “The strongest evidence of someone’s ability to think is their ability to write. All the in-the-moment spontaneous demands really don’t allow for deep thinking, and when we plan we tend to function the same way. Planning can be a catalyst for deep thinking.”

You need a business plan because everyone in your organization needs a clear image of what your business is all about. Writing a business plan provides a level of intimacy that can come only through thoughtful reflection and analysis. The kind of deep thinking that will help you communicate what your business is and does succinctly and concisely, in a manner that is compelling and makes people sit up and pay attention.

Writing a business plan takes time, thought and energy. It requires focus and commitment. It often requires doing things you don’t like doing, facing realities you don’t want to face, and finding solutions to problems that have no answers.

But there is good news. A business plan can be a wonderful recruiting tool for both employees and customers. You can create leverage with your suppliers and strategies for partnering that will take you and your business to the next level. You have answers to the hard questions whenever they arise, and you can react quickly without making foolish mistakes or losing opportunities. You are prepared to succeed.

Take four uninterrupted hours in the next week to write a paper about your competitors. Do some research — use the library, magazines, newspapers and the Internet. Identify their products and services, list the benefits each of you enjoy and script out answers to the question “Why should I buy from you instead of them?”

You will come up with some of the most energizing and creative ideas you have had in years for launching a new initiative or marketing campaign. You may come up with new products, services or markets. Bottom line, you will uncover more new ways to make money and increase sales than you have had in the past four years, all from just four hours of thinking and writing.

Components of the Plan

If you do decide to embark on this journey and actually start writing a plan you can use, the first rule is to get something down on paper. Perfection is not the goal, nor do you have time for it. The goal is to stimulate your brain and connect more deeply with your business so you can talk about it more effectively with others.

Here are the critical components you will need to complete:

• An executive summary that describes your history, products, key clients, market segments and the value you bring to them, your mission, values and long-term goals — and fits on just one page.
• A detailed review of your competition
• A detailed review of your sales and marketing strategies
• A detailed review of your products and services and why clients should buy them
• A detailed description of your organizational structure, departments, and key personnel and the short- and long-term goals of each
• A financial history and forecast of future performance.

If you can get your “new” plan 85 percent complete and accurate, you are exactly where you need to be at this point.

Putting the Plan to Work

Now that you have your plan, it’s time to start reaping the benefits. Start by distributing it to everyone on your staff and asking for input on what should be added, removed or changed. Find out what they like and don’t like, what makes sense and what doesn’t, what they agree with and disagree with. Then make some changes and send it around again. If your staff is looking at the plan and contributing to it, they are thinking about your business in a way they don’t often have opportunity to.

AB Consulting Inc. president Anna Bifano said, “Companies of all sizes from Fortune 100 firms to mom and pop (stores) have one thing in common, people who are trying to do their best, they just need guidance and direction. Those included in the planning process have ownership of what is expected of them. That is where the business plan has connectivity.”

Your job now is to get your business documented and create a business plan to use every day for making decisions and keeping your team focused. Share it with your staff and get them involved in making it come to life.

Look for people that want to take responsibility for certain components of it and give them a chance to lead. You will be surprised at the results.

As critical as a leader is to an organization, without a team of talented, knowledgeable people behind him or her, there would be no company.

The relationships, knowledge and experience that reside in the minds of staff are what make an organization. Yet turnover is a constant in doing business, and maintaining that talented, knowledgeable team is a factor leaders deal with daily.

In these times of perpetual change fueled by technology and the Internet, leaders who aren’t preparing for transition are courting adversity.

People get bored, lose focus and feel unchallenged or underappreciated. Whether driven by retirement or the need for change, when staff moves on, you often lose your best and brightest.

So how do you capture the knowledge they have accumulated, retain relationships they have developed and transfer the skills they have mastered? Should you simply look for replacements or is this a good time to look at organizational structure and re-evaluate job responsibilities? When a staff member leaves, is it a problem or an opportunity?

Opportunity for change

Issues and opportunities are two sides of the same coin. What matters is the attitude and how the leader chooses to prepare for these inevitable changes. Loss of senior staff due to baby boomer retirement is a hot topic in business and government, but few companies are taking the necessary steps to mitigate their risk.

Maureen Gorsen, director of the California Department of Toxic Substances Control, is currently facing this situation. “We hired a lot of people between 1984 and 1987. All those people who really understand the issues of hazardous waste and know how to clean up sites are about to retire. How can we get a Vulcan mind meld of the institutional knowledge to occur?”

She said the remaining staff is “not used to thinking for themselves or analyzing; they are used to following instructions and implementing someone else’s plan.”

Rather than fight a losing battle, Gorsen took a step back and analyzed the situation, looking for ways to change more than just staff.

Her analysis produced an excellent alternative. Rather than focusing on clean up, Gorsen’s department is targeting a whole new area — manufacturing and the sources of toxic waste.

“Now that we are moving up the chain towards the design of products, we can broaden the set of skills and areas (we need to recruit), so more people are attracted to coming to work here.”

Look before you leap

Consultant Alan Weiss, author of “Million Dollar Consulting,” tells a story about a utility client he worked with years ago. The utility made significant strides in technology and became much more efficient, leaving it staff-heavy.

Management’s first thought was to offer early retirement. When Weiss researched the strategy, he found that “every high-wire rigger in the company would have left. They climbed poles during ice storms, and technology would never have been able to do that! It would have shut the company down.

“If enough good people that deal with your customers leave, even the largest firms can be shut down.” That underscores the critical nature of succession planning and being prepared for tomorrow today.

For any number of reasons businesses lose staff from time to time. Companies that prepare for that transition will survive the change.

In fact, preparing for this inevitability best positions them to use the transitions to re-evaluate their organization and its structure, to change roles and responsibilities, to adjust systems and structure and to adapt and prepare for new ways of doing business. In doing so, they will position themselves as the type of organization tomorrow’s talent will focus on when choosing their career fields.

Business today is a moving target. Constant change and the unbelievably fast pace in which we operate magnifies mistakes and makes recovery more difficult. Strategic planning and critical thinking are mandatory for today’s leaders.

One of the most intelligent steps you can take as an organization’s leader is to examine your company objectively. Evaluate the positions and areas that are most vulnerable. Look for ways to cross-train, update operations and make the organization a more desirable place to work.

If you don’t, you may be out looking for a job yourself in the not-too-distant future.

You wake up early and go in to work. You’re usually first to arrive, and you like it that way – it is the only time you can get any real work done. As the clock ticks and the sun rises, staff starts arriving and phones begin to ring. It won’t be long before someone walks in to your office with a problem they need solved, and that’s when your day will end.

When you go home that evening, a different thought pops into your head: “When will this get easier? When will I be able to have a more normal life?”

The corner you feel painted into is a familiar place for small-business owners. Your success is obvious, your pain is hidden, yet it can feel like prison. J. Paul Getty once said, “If you get up early, work late, and pay your taxes, you will get ahead — if you strike oil.” The job of the small-business owner is a difficult one, a road that most are not suited for. But you made it, you succeeded and built something you are proud of. You just want a break, some relief from the pressure of the daily grind.

Problem is, how do you take a break without the business falling apart?

The First Lesson

No good business depends on one person for success. Even though you built it, you are just one person and cannot shoulder the load by yourself. You need to change the way you manage and lead. You have staff; you are the person who hired them, and now it is time to put them to work. I can hear the complaints as I write – “They don’t have the knowledge, they don’t have the expertise, it’s not their business and they won’t have the dedication. Who is in here first thing in the morning getting work done, who solves the problems all day long? Me! How can I put that responsibility on their shoulders and expect the business to survive?”

You clearly have a dilemma, a valid one, and what you might not recognize is that you are trying to have your cake and eat it, too. Either you did a lousy job of hiring people, or you have great staff. If you did a lousy job of hiring your staff, you know how to fix that. If you have great staff, you’d better start trusting them.

Untapped Gold Mine

Quality people need to be challenged. They won’t tolerate being unchallenged or treated like they aren’t competent for very long. It’s your job to put your staff to work. I don’t mean the mechanical components of your business; I mean the strategic ones, such as creating ideas and putting them into action, as well as giving your employees the responsibility to make decisions and the authority to act on them.

Use your staff and listen to them. They have good ideas and know more about what is going on then you might think. Who has more contact with your customers than your staff? Who knows more about what is going on in the market than your staff? After all, they do have a life outside work. They go to the grocery store, take vacations and talk to other parents. Their friends and neighbors know where they work and what they do. If you want to know what’s really happening, talk to your staff.

When I was running my small business, one of my greatest fears was what might happen if I trusted an employee and they cost me my business due to inexperience or lack of knowledge. After many years of struggling through the day and not having a life, I finally realized the responsibility for their success rested squarely on my shoulders. The only reason my staff needed me to solve their problems was because I refused to give them the opportunity and ability to do it themselves.

It was my job to be sure we hired the best and brightest, to create an environment where those kinds of people wanted to work, to teach them what they needed to know and to help them become emotionally invested in the business. They needed to take ownership before I could trust them to do the things I needed them to do.

A Chance to Shine

Kinko’s founder Paul Orfalea was not good in school, but he was well-known for listening whenever an employee wanted to share an idea or a solution to a problem. However, if they came to him looking for help, he would turn them away, refusing to let their problems be dumped on his desk.

Most small-business owners today take pride in the fact they can solve any problem or come up with a good idea to accomplish any goal. But stop hogging all the air in the room and give your staff a chance to shine. When Orfalea was interviewed in 2004, he said, “If I find a great idea, I work on it at the beginning, then bring other people in to make things work. Actually, I’ve always been good at getting out of work.”

If you are feeling trapped by your business, there is a way out. Learn how to delegate and mentor your staff, trust that you have made good hiring decisions and make your staff a part of the business. It will be a win, win, win for you, your staff and your customers.

As hard as it is to believe, a down economy and credit crunch makes a merger and acquisition strategy even more attractive.

When it becomes difficult for marginal players to compete, there are many viable businesses without adequate cash flow to finance their growth or operations, even though they might be profitable.

If you understand your business well enough and can recognize its strengths and weaknesses, you can easily locate other organizations cut from a different cloth, with strengths that complement your weaknesses.

Some of these other organizations are your competitors — the businesses you were battling when money was cheap and credit was easy.

The tables have turned. Your attention to detail and doing business by the book has given you the leverage. Now is the time to take advantage of it.

Talking about a merger or acquisition in today’s unfriendly economy might sound as reckless as jumping out of a plane with two good wings and a running motor, but there is truth and wisdom in this advice. There has never been a better time to consider an aggressive M&A growth strategy.

That’s right, I’m talking to you. The business owner that believes his organization is too small, doesn’t have enough cash, or simply isn’t able to navigate the waters of merger or acquisition qualifies as a viable candidate.

A few of the benefits of an M&A strategy include:

• Capturing new markets and clients
• Gaining new products and services for existing clients
• Expanding your share of client purchases
• Filling voids or weaknesses in your organization
• Learning new best practices you can use in the combined organization
• Eliminating duplication and minimizing overhead
• Creating newsworthy activity and valuable publicity.

We’ve all heard the saying, “If you aren’t growing, you are dying.” It is normal for businesses to experience phases of growth and stagnation. Every successful business wants to grow. Sometimes you have to hunker down and tend to the nuts and bolts of running your business — taking care of customers, staff and vendors.

As a leader, you must use the in-between times of grinding it out to be constantly on the lookout for new ways to generate revenue, increase your customer base, leverage your resources and increase your profits.

According to Ichak Adizes, founder and chief executive officer of management training company Adizes, “Organizations have lifecycles. … They go through the normal struggles and difficulties accompanying growth and are faced with the transitional problems of moving from one phase of development to the next. Organizations learn to deal with these problems by themselves or they develop abnormal ‘diseases’ that stymie growth.”

It is the periods when growth seems to be stifled that tend to cause the greatest frustration. “We have done so well, built such a wonderful company, why can’t we get over this hump and get to the next level?”

As organizations develop, they typically do so with a core group of people that are very similar or like-minded. Hence the business’ culture, personality and thinking become like-minded. In these instances it is common for the organization to have great strengths camouflaging weaknesses driven by the very culture they have nurtured.

For those organizations, overcoming their weaknesses can be difficult as they are built into the culture and shared by the leadership team. Rarely is one member of the team given the ability or strength to recognize and correct these problems.

An often overlooked growth strategy is one that leverages the benefits of a merger or acquisition.

Many see M&A as not being financially viable. The fact is, it isn’t really as expensive as one might think. In an acquisition, a business is buying assets, and there are many ways it can accomplish the transaction with little or no out of pocket cash. In a merger there are simpler financial implications and fewer barriers.

If you find your organization battling the current economy, think like a sumo wrestler and use your leverage. Consider exploring the possibilities of a merger or acquisition to help get over the current barriers in its lifecycle.

Can you remember anyone you fired too soon? I can’t.

I avoid the decision to fire for as long as I possibly can. It is not about being afraid, it is about being right. Replacing someone with knowledge and experience is time-consuming and expensive.

Deep down inside, everybody wants to be good at what they do. I’ve never met anyone whose goal in life was to be average or mediocre. Of course there are people who act as if mediocrity is what they aspire to, which simply means they’re doing something they don’t really care about. And that, my colleagues, is your first hint of when to fire under-performers.

The clearer you can be about what you expect from others, the more likely they are to tackle the task or turn down the job.

An effective, efficient staff is a must-have for creating profitable growth, yet it’s the staff piece that gets businesses into trouble. From Raytheon to Red Robin, a bad customer experience is extremely costly. The impact of a poor performer is catastrophic and can spread throughout your organization like the plague.

On the other hand, how do you know when the value of a poor performer is outweighed by the costs of his or her failure to perform? This Catch-22 is alive and well inside every business regardless of size or industry.

Guidelines

Design jobs to serve the needs of your business, not around the people you have to do the work.

Push people to learn and grow, to get outside their comfort zones and be creative. When you start with business needs, designing objective performance criteria becomes easy.

For example, if a need is to increase the accuracy of order fulfillment and you hire or assign someone to that job, measuring his or her performance becomes a simple task. How many errors did we have last week? How many errors did we have this week? Is that an acceptable error rate?

If you are responsible for staff in your organization, regardless of your position or authority, you must hold them accountable for basic performance goals.

Without clear guidelines of expectation coupled with accountability, performance is measured moment to moment and perceptions are built on emotion and assumption. Judging the value an employee brings to the bottom line, profits or losses, becomes open to interpretation — not the most effective way to run a business.

Hold people accountable. Make sure every individual knows what is expected of them and measure their performance against those expectations on a regular basis.

Use facts, not assumptions. If client satisfaction is a criterion, measure it with surveys and customer feedback mechanisms. Don’t go by the handful of complaints you get from vocal customers or on personal conversations with customers you enjoy talking to.

In California, state government provides volumes of legal and technical data on when and how to terminate someone. While the data is designed to protect the employee, as it should be, the employer must deal with the cost of that employee while trying to get adequate productivity to justify his or her overhead.

The task of firing an employee is one of the most unpleasant responsibilities managers, senior staff and chief executive officers must fulfill. The offensiveness of the task is rarely offset by the reason for termination.

As the boss, when you fire someone you have a dramatic impact on their life as well as the lives of others you might not even know. For those of us who have experience with this duty, reluctance to act causes stress in ourselves, the individual in question, and everyone that person works with both inside and outside the organization.

For this reason, having a clear understanding of when to act and why is often the difference between a successful organization with a positive culture and a struggling organization that exudes tension and negativity.

It’s Friday afternoon at the “19th hole” after a challenging round of golf. You overhear someone a table or two away say, “Did you know Steve is selling his business and retiring?”

Suddenly the conversation at your table is nonexistent and your entire body is tuned to the broadcast coming from that other table. As you listen for a few words to help answer your questions, you finally hear it.

Their discussion is about your nemesis, the guy you have respected and have been trying to get ahead of for years. His company’s sales are higher, and so is its profile. Finally, you might be able to beat that pesky competitor who has been a thorn in your side for so long.

Then it hits you. This is an opportunity to win over some of his customers, to convince his head of distribution to come work for you, maybe even to get his top salesperson to move to your team.

Why stop there? Why not just buy the company? You’ve wanted to open another location for years, and you lust after his office in the newer part of town. With the economy in a down cycle and the owner wanting out, you might be able to buy the company at a sale price. And your businesses are so much alike they can’t help but complement each other.

That short-sighted attitude has gotten many executives into trouble.

Finding good acquisition targets for your company is not the hard part — looking at your company objectively and without emotion is where most leaders drop the ball.

When you combine strength with strength, you get little leverage. When you combine weakness with strength, you can improve dramatically.

In the scenario outlined above, both companies appear to have consistent sales, strong customer relationships, and seem to be stuck at the same level — a common problem for companies with strong leadership and weak management. Combining these two companies through merger or acquisition might avoid leadership conflicts, but it won’t create a stronger group of managers.

The problem will only magnify itself if you choose to move forward and combine these two firms.

Integrating two different groups of people that are not used to strong leadership will have a doubled negative effect. When combined, each group will strengthen their resistance to strong leadership, and the increased size of the combined group will make strong leadership more important to the success of the organization. If this risk is not identified and resolved before any integration occurs, this one weakness could cause the organization to collapse — ruining two successful companies and putting employees out on the street in the process.

Before you embark on the journey to acquire or merge with another firm, take two steps back and ask yourself the following question: Would I buy my company if I knew what I know?

Take a close look and be honest with yourself. Understand your company’s strengths and weaknesses, don’t guess or make assumptions. Measure and gather objective evidence of what is working and what is not. Single out the biggest problem or two and be careful to avoid symptoms. For example, turnover is not a problem — it is a symptom of a larger issue.

Ask yourself what makes your company so attractive? What are its greatest strengths? Can your company share and teach those strengths to another group of people? When you have the answers to these questions, you might be ready to look at combining two different companies, systems and cultures.

Now your task is to look at your competitor’s company and ask yourself those same questions about that organization. It might even be time to have a face-to-face, open and direct conversation about it. Don’t worry about showing your hand too early. The sooner you give the impression you are serious and looking carefully at the strengths and weaknesses of the firms, the sooner the owner realizes he or she is not going to lure you into an unrealistic payday or an easy escape from the business.

The moral of this story is a simple one. You have worked hard for many years to build a successful organization. It is quite possible you have reached a plateau, and moving forward off that plateau will require something new and different, something outside the box.

In today’s economy, with every business on sale, so to speak, it might very well be the time to consider an acquisition or merger. Before you do, be sure to evaluate your own company’s strengths and weaknesses and make sure you are putting together two puzzle pieces that fit well. Otherwise the picture you end up with will not be pretty.

One of the obligations of being a leader is solving problems that inhibit or undermine growth. Problems of this nature rarely have simple solutions.

It would be easy if the answers were obvious or straightforward. That is not reality in the business world.

Options are most often an array of uniformly unpleasant choices. This is where ethics in business becomes an important consideration — when the only solutions are good yet less than ideal options that will result in some group of stakeholders being upset.

We live in a complex world where being right almost always has elements of being wrong embedded within it, where the best solutions are often harmful to someone.

As a leader, where do you go to find your way out of this maze? How do you keep everyone happy and committed to their work when there is no way to please everyone? This is the heart of ethics.

One common business practice, the referral, is fraught with land mines.

Brent Lawrence, principal of Business Law Ventures in Roseville, often receives referrals to firms considering a merger or acquisition. As Lawrence explains, “I’m faced with an ethical dilemma when I know the referral source stands to benefit monetarily if the transaction closes but, in my opinion, the deal is not good for my client.”

In his case, two professionals might disagree on the best approach for the client, and both have the clients’ best interests at heart. Because their answers are diametrically opposed, only one can be right, or the best.

It becomes impossible to know without trying both which is not an option. Once you take one path or the other, the value of the opposite approach ceases to be viable because the environment and circumstances have changed.

Tough choices

The choices we make are based on a pyramid of personal, cultural and social elements. First, values come into play — those beliefs that are most important to us as individuals. Then morals get to make their argument. Next we might consider our industry or profession and look to common standards of behavior. And finally, we decide on how we are going to personally apply our values and morals to our work.

This is the core of ethics. The ethical dilemma only exists when the choice is between two right answers. And because of the wide variety of personal values and morals, coupled with cultural and regional standards, the answers become very personal when conflict and disagreement are present.

Elisha Tropper is a mergers and acquisitions adviser with T3 Associates in New York. He points out one of the negative risks of ethics in a business environment. “Acting ethically can conflict with your job goals and responsibilities, which can make doing the right thing from an ethical perspective potentially dangerous to your career,” he says. This side effect adds an even greater impact to ethical decisions and reminds us of a well-known “Star Trek” conundrum — conflict between the good of the one and the good of the many.

Emotions play a part

When talking to prospects about mergers and acquisitions, Jose Blanco, principal of the Central Valley Fund, a regional private equity firm, says merger and acquisition strategies for growth are “an emotional event for both the acquirer and target company. The deference one needs to show to both cultures is very important to a smooth transition.”

Blanco’s comment speaks to the differences between people’s values and morals, and highlights the problem in an interesting way. How can two intelligent, successful and capable leaders disagree on the decisions they must make when both see the same problem as having two different suitable solutions?

When merging two cultures, it is often easier to create a third and bring the players into that new culture than it is to force one group of individuals from their culture into another they are not familiar or comfortable with, particularly when they will be working with others who are both familiar and comfortable in their current environment.

It would be like selling your house and living there with the new owners; not a very pleasant thought for most of us.

Whether you are part of corporate America or just an observer, everyone has experienced the frustration and confusion that seems to accompany ethical dilemmas. As a leader, it is critical that you are sensitive to the nature of ethical conflicts and take the time to consider all options and points of view.

The best answers are often hidden under many layers of emotion and firmly held beliefs.

Reflect on your own experiences, talk to friends and associates, and look for information from others who have had similar experiences. Your decisions can quickly make or break your company.

As long as you make well-thought-out decisions based on your personal beliefs and can back them up, you are on the right track.

Be empathetic and understanding. Treat your people with respect and recognize they might not have the same point of view as you. After all, your goal is to maintain the health and integrity of your firm.

Sometimes that means organizations must change, and with that change, it is often in the best interests of all for people to change as well.

The past 28 years have borne witness to a blending of four generations from the global community into a single work force with a rainbow of backgrounds, knowledge and culture.

The very word “culture” strikes fear in the hearts of leaders. It’s hard to describe and has a touchy-feely connotation that scares some people. They are afraid of revealing themselves as weak or emotional beings.

In fact, culture has very little to do with emotions or feelings and everything to do with beliefs, customs, values, ethics and morals. What could be more important to a business than having a work force that shares the same sense of those attributes?

The merger and acquisition failure rate in 2005 was 91 percent. Less than 1 in 10 mergers were deemed successful by the people initiating them — a staggering number when you consider the cost. The No. 1 reason cited was a failure to consider culture when integrating two businesses.

For businesses throughout America, culture plays a vital role in their success or demise.

The problem

Hard feelings and poor execution occur when two groups of individuals with different cultures are asked to work together without any help overcoming their cultural differences. If one department is focused on risk avoidance and the other on taking risks, friction is the only option they have.

This is why a good understanding of culture is critical to leadership, management and staff, and why cultural training should be part of every organization’s orientation program regardless of size.

Many opportunities for cultural conflict exist:

• A culture of stability vs. one of change
• A culture of sales vs. one of customer service
• A culture of price vs. one of availability
• A culture of technological sophistication vs. one of dependability and familiarity
• A culture of benefits vs. one of entitlements
• A culture of command and control vs. one of hands-off management.

Culture is about how we look at our business, our roles within them and our obligations to them.

When culture is a low-level priority, turnover and customer defections rise. Politics creep into the work force, and people begin to play power games. Focus shifts from doing a good job to winning the battle of how business is done.

It becomes a battle over who will have control instead of a clash with the competition by fighting with solid business practices. It devolves into an argument of style over substance. An argument about the “how” is often subjective and can never be “won” by either side. It can only be forced down the dissidents’ throats by leadership regardless of their feelings. This does not lead to positive morale, collaboration or harmony; it leads to the death of good ideas and the best employees bailing out in favor of a healthier environment.

Symptoms of cultural conflict include the inability to execute in a timely manner, lack of involvement from all executives, poor or non-existent planning or follow-through, duplication of assets or functions and low productivity.

The solution

The good news? If you are suffering from any of these symptoms, you’re not alone. Even better, the solutions are relatively simple, though not pain-free. First, you must define the culture you want to create.

Every situation calling for cultural change has a common truth. One-third of the staff will welcome a shift, or clarification of culture. I call them the vocal supporters. One-third will be vocal dissenters and work hard to undermine any efforts to change the culture they have grown comfortable with regardless of its degree of dysfunction. And the remaining third will be the silent dissenters, the people you must win over. They are skeptical of change and tend to shy away from it; however, they are reluctant to state their position because they want to be on the winning side. If you focus on the vocal supporters, you can demonstrate success with the silent dissenters and win them over and isolate the vocal dissenters. They will eventually leave or adapt to your new culture.

Defining your culture

Culture begins with a common understanding of the values you stand for and the way you demonstrate those values. Bring your thought leaders together and select three to seven values you can all agree on. Share those values with the entire organization and use stories to demonstrate exactly what they mean in your business environment. It is critical that leadership and management demonstrate those values without fail.

Then you must define a mission that describes the value your organization delivers to its clients and who those clients are in the simplest, most basic form. This is the touchstone you will use for all your communications, both internal and external. It is what every job must be designed to achieve to one degree or another. You must measure the value of each employee by the degree to which their efforts support the delivery of that value to those customers.

Then look at your job descriptions and focus on goals and responsibilities, not just roles and obligations. Design performance-based objectives and build performance reviews around them. Make reviews something your staff looks forward to, not because it means a raise, but because it means they are going to learn what they can do to be a stronger contributor to the success of the organization.

Educate leadership, management and supervisors on how to manage to those performance objectives, and develop strong communication models to ensure information is shared throughout the organization in an easy, non-competitive manner. Without information, your staff is flying blind. Once staff understands how their efforts contribute to the overall success of the business, regardless of how critical or menial their job is, they will be motivated to perform — no one wants to be on the losing team.

Once you have your culture stabilized, your entire staff can work as a single unit with focus and determination. Creativity will flourish, and political jockeying will end. It’s not complicated, but it’s not easy, either. If you can fight your way through the battle to create a single culture among your staff, you are well on your way to unlimited success.

In an economy suffering from high costs, rising unemployment and tight credit, most businesses look to simply maintain profits and give up on growth. The common wisdom becomes cut costs and ride out the tough times.

I say not so fast — you might be leaving substantial opportunities on the table only to be picked up later by your competitors.

For those businesses that are healthy, regardless of the impact of current economic conditions, this is the ideal time to go after new business.

Now is when traditional strategies can be of the greatest value in driving sales growth and profits. Because of the cost-cutting measures your competitors are implementing, the soil is fertile for outreach efforts to new and prospective customers.

Right now most of those competitors are hunkering down and trying to ride out these rough times. They’re looking for costs they can cut as fast as possible without doing any immediate harm to operations, which means they’re reducing or eliminating training and marketing expenses. This leads to less exposure for them and their products in the market, and reduction of skill levels in staff who are being stretched and asked to cover more responsibilities than before due to staff reductions.

With reduced exposure from your competition, every marketing message you deliver will be more likely to be heard, and heard more clearly, making it easier to connect with.

Another interesting dynamic that occurs as a result of less marketing dollars being spent is a loss of business for most media outlets. In many situations, this increases your opportunity to get exposure in hard-to-access marketing vehicles while applying downward pressure on pricing because of reduced demand.

Allow me to paint a picture: unsatisfied customers, overworked employees, reductions in service levels and quality of deliverables, less media exposure for competition, better leverage for buying ad space, and a desire to grow profits. Sounds to me like this is about the best opportunity you could ask for if your goal is to find new customers.

Of course being careful with how you spend your cash is critical. But isn’t cash always a critical commodity? Are you more laissez faire with your money when times are good because it is flowing with less effort? No business ever went broke with cash in the bank, and cash is, as it always has been, every business’ most precious commodity. If you don’t use your cash to grow your business, you are not using your cash wisely.

Which brings me full circle back to my original point. There has never been a better time to invest in marketing than right now, when competition is weak and customers are eager for new suppliers.

There is an old joke about winking at someone in the dark. You’re the only person who knows you are interested; the person you are winking at has no clue. When you don’t market yourself, you are winking in the dark and hoping customers will stumble into you by accident.

If you truly want to increase sales and have a business that can actually turn sales into profits, now is the time to focus on operational excellence and well-designed marketing. Identify those target markets that would be best served by your business and focus your marketing on them.

Be consistent and targeted, don’t try to be all things to all people. Keep your marketing messages simple and clear. Remember we are in an economic downturn, and appeal to people’s need for value and quality. Help them understand why doing business with you might be the smartest thing they could do for themselves and their financial difficulties.

Getting value for every dollar spent is critical. Right now, when competition is struggling, you have a rare opportunity to reach out and grab new markets. Do so boldly and with wisdom.

As the economy recovers and you’re running down the home stretch toward the finish line, you just might find yourself ahead of the pack.