Why Some Business Owners Think Now Is the Time to Sell

This article was originally published by the New York Times on Wed., Dec. 21, 2011.

By Katherine Reynolds Lewis

Looking back, Cyndi Finkle wishes she had sold her craft services company, Sunday Night Dinner, early in 2008 when the economy was booming. With a track record of 30 to 50 percent annual growth for each of the previous five years, it could have been a compelling transaction.

At the time, however, she was not emotionally ready to part with a business she had started in 1997 and built into one of the largest suppliers of services to television crews and casts in Los Angeles. When her husband suggested selling, “I burst into tears and looked at him as if he were telling me to cut off my arm,” Ms. Finkle said. “Then everything changed, and I realized he was right.”

But the recession hit, and Ms. Finkle’s annual revenue dropped sharply along with declining television advertising and production budgets — making it impossible for her to sell. “I’ve had to work really hard the last three years to save my company and get it back, a lot of times working for free,” she said. “It was no longer about building it, it was about keeping it going until things got better.”

A software company takes a page from Toyota's playbook

Using a combination of Toyota-inspired lean manufacturing principles and an open office atmosphere, Menlo Innovations' work environment is attracting attention.

This article was originally published by Fortune.com on Thursday, Oct. 6, 2011.

By Katherine Reynolds Lewis, contributor

FORTUNE – At most white-collar job offices around the country, workers scurry from cubicle to cubicle, speaking in hushed tones. Take a step into software firm Menlo Innovation's offices in Ann Arbor, Mich., and it's clear that this firm is more cotton mill factory floor than monastery.

Instead of rows of cubicles, visitors enter an open space that calls to mind an artist's loft or an industrial warehouse that is filled with the sound of a dozen overlapping conversations.

"A lot of people don't believe software development can be done in anything but library quiet," says CEO Rich Sheridan, during a tour of his company's space. "I have 12 years of experience that says differently."

Sheridan and his co-founders built Menlo's work culture with a great deal of intention, and with the modest aim "to end human suffering in the world as it relates to technology." The free-form floor plan was inspired by Thomas Edison's Menlo Park, N.J., laboratory, which had an open and collaborative workspace that in turn drew inspiration from the machine shops of the day.

How short-staffed companies are saving vacation this summer

With thin staffs and a slowly improving job market, employers can't just let employees take vacation whenever they want, but they also can't risk damaging morale. This summer, a few firms are getting creative.

This article was originally published by Fortune.com on Thursday, July 21, 2011.

By Katherine Reynolds Lewis, contributor

FORTUNE -- This summer, most of the outdoorsy employees at ski manufacturer Epic Planks will be getting their hands dirty in the shop, where they compress fiberglass and plastic into custom-made skis, with nary a vacation day.

But rather than cursing the Grand Rapids, Mich.-based company for their dearth of long-weekend camping trips, they're gleefully anticipating taking extra time off in the winter.

That's because founder Bill Wanrooy and his partner will double up to two weeks of vacation time that workers decide not to take in the summer, which is Epic Planks' busy time for building skis and snowboards to be sold in the fall.

Those who accepted the offer will instead enjoy up to four weeks of vacation in the winter. The idea stemmed from last summer's experience, when last-minute vacation requests left the small business so short-staffed that Wanrooy and his co-founder had to work 12-hour days, 6 or 7 days a week, to keep up with production demand.

"For all of our employees, skiing and snowboarding is their passion, so that allows them to maybe sacrifice a little bit now, but the rewards pay off later," says Wanrooy. "This is our first summer of doing it, but the reception has been great. Everybody loves it."

Epic Planks isn't the only company getting creative with summer staffing. Companies are asking employees to plan their own vacation coverage, requesting that vacationers send out memos to avoid any unwanted surprises, says Michael Erwin, senior career adviser for CareerBuilder.com. They're also cross-training employees to cover for their colleagues during time off, and bringing in temporary staff when needed.

Flexible jobs = happy worker bees?

While it's no magic bullet and comes with sacrifices from both sides, more offices across the country are offering flexible working arrangements to increase retention, productivity and morale.

This article was originally published by Fortune.com on Wednesday, April 20, 2011.

By Katherine Reynolds Lewis, contributor

When John Parry, CEO at Solix, Inc., arrives at work at around 7 a.m., the office parking lot already has some 80 cars, a testament to his employees' desire to beat rush hour by shifting their work hours earlier than the typical 9-to-5.

But none of those workers had to apply for a flexible work arrangement or win supervisory approval for a schedule change.

"We don't really care when people come in," explains Parry. "We trust Solix staff with million-dollar funding decisions, so we should trust them to work flexibly."

The Parsippany, N.J.-based process outsourcer is among a growing wave of employers that have discovered how workplaces that accommodate employees' desires for flexibility enjoy superior business results, higher productivity and greater retention.

"You see company after company that says, 'We created a more flexible workplace because the turnover level was really high,'" says Ellen Galinsky, president of the Families and Work Institute, a research and advocacy nonprofit that recently released a report on flexible workplaces in partnership with the Society for Human Resource Management.

Flexibility is almost mandatory in a 24-7 global economy, when people may be called on to work evenings in an emergency or to connect with international colleagues, says Galinsky.

Moreover, with 87% of people surveyed by FWI saying that flexibility would be important in their evaluation of a new job, it's a key element of any human resources package. That's not to say that flexibility is a magic bullet or is universally embraced in corporate America -- a whopping 60% of employees feel they don't have enough time for themselves, according to the institute's research.

Sometimes it's good to be a sellout

Sometimes it's not. How to know when to be true to your vision, and when to grow your company at any cost.

This article was originally published by Fortune.com on Friday, Feb. 25, 2011.

By Katherine Reynolds Lewis, contributor

Company founders fall into two categories, according to Noam Wasserman, an associate professor at Harvard Business School. The "king" wants to build an empire and change the world, while a "rich" founder is motivated by financial gains and unleashing a company's growth potential.

Many entrepreneurs look at company founders like Apple's (AAPL) Steve Jobs -- who managed to grow his company into a behemoth while also maintaining control -- and assume it's possible to be both a king and rich. In reality, "99% of those founders are going to be facing, at some point, a choice between one and the other," Wasserman says. "Hopefully they're picking the fork in the road that is much more consistent with what their goals and aspirations are."

It's important to understand what type you identify with most to navigate the key decisions that will arise during any entrepreneurial venture, Wasserman says. King founders find it difficult to share control and can be very stubborn when facts on the ground challenge their vision. Rich founders are motivated by the practical rewards of entrepreneurship, whether it's money or freedom, and are more likely to share control as their venture grows and changes.

In fact, Apple co-founder Steve Wozniak is a better example than Jobs of a king, motivated by a dream of bringing computing power to the masses. When Apple was about to go public, he sold his own shares below-market to the key early employees he thought should be rewarded financially, Wasserman says.

"Every entrepreneur thinks they're unique and idiosyncratic," he says. "Those very diverse people are consistently facing the same issues and same potential missteps."

Expanding management: The delicate art of sharing control

This article was originally published by Fortune.com on Monday, Jan. 24, 2011.

While the thought of sharing control of your company can be nerve-wracking, those who have been through the transition swear by having a second set of hands. As long as they're the right hands.

By Katherine Reynolds Lewis

Since founding Secure Enterprise Computing in 1998, chairman Randall Bennett has seen business boom -- and bust. But when the demand for security technology began to crest a couple years ago, he knew that he didn't want to miss the opportunity to grow his company. He also knew that to ride the wave, he'd need to expand his leadership team and share control of the business.

"You can have 100% of nothing or 50% of millions," Bennett says. "I've seen a lot of entrepreneurs fail over the years. They're not able to give up [control]."

The solution: bringing on Robert Pickens as president and chief operating officer of the Morrisville, N.C.-based firm last year. Pickens advocated a narrower strategic focus and implemented quarterly reports and a suite of metrics that give top managers an up-to-date picture of how the business is doing. With Pickens heading up operations, Bennett now has more time to develop new business and serve as the face of the company at community and industry gatherings.

Expanding the leadership team is a natural step when a company's growth outpaces the skill set or capacity of its original founders. Google's Larry Page and Sergey Brin looked to Eric Schmidt when the time was right (The company has entered a new phase, with Page soon taking the CEO reins and Schmidt moving into the executive chairman role.). Facebook's Mark Zuckerberg sought out Sheryl Sandberg. It's a tried and true part of a start-up's growth path, but it's no simple task.

"How do we make sure we preserve the culture and all the wonderful insights and talents that our founding team members were able to inject, while making sure we have a management bench that will maximize our chances of success?" asks Phil Dur, managing director at Investor Growth Capital, an expansion-stage venture firm. "You can have a good product and good market opportunity but if you don't have good management, you don't have much at all."

Making the Decision to Replace Yourself

This article was originally published by the New York Times on Thursday, Dec. 23, 2010.

In early 2008, Matt Dorey, founder and chief executive of Curve Dental, was at a loss. Three years into building a comprehensive Web-based software package for dentists, he felt the product was ready, but he was not sure how to make Curve a market leader. “The company was getting complicated,” Mr. Dorey said. “I was starting to become conscious of what I didn’t know. It was almost a feeling of loneliness.”

Then he learned of a chief executive, Jim Pack, who was looking for new opportunities after a private equity firm bought his medical-billing software company, AdvancedMD. Mr. Dorey reached out with a LinkedIn invitation. “This was someone I had been following for four years,” he recalled. “He was really open about sharing knowledge and letting us know about the challenges we face. I immediately knew there was nobody better to be the C.E.O. of this company.”

Mr. Dorey enlisted his board and top executives in a monthslong campaign to woo Mr. Pack, who ultimately agreed. Since Mr. Pack took over as chief executive in January 2009, Curve Dental has more than doubled its staff and has introduced its software to the American market, gaining share in more than 40 states and increasing its customer base fivefold. Picking the right replacement, Mr. Dorey said, “was the most important decision I’ve ever made at Curve and probably will ever make.”

Turning over your company to a successor is not to be taken lightly. And in many cases, sticking it out might be the better option, especially if you can delegate those parts of your job that have become unmanageable. But in some instances replacing yourself at the helm makes sense. Based on the experiences of small-business owners, this guide offers suggestions on how to make that decision and accomplish the transition as painlessly as possible.

HOW DO YOU KNOW? Ironically, the qualities that help you succeed as an entrepreneur — relentless optimism, willingness to tackle any challenge, a stubborn belief in yourself and your business — also make it hard to assess your own weaknesses dispassionately. But one individual rarely possesses all the varied skills and experiences needed to take a company from idea to product introduction to sales growth to institutionalizing operations. When you hit your limit, you and your company may benefit from a leader with a fresh set of eyes and a different skill set.