Lee and I met in a prayer meeting 14 years ago. Six of us prayed over Lee’s health in Dr. Stanley’s prayer closet. God healed him the next day through an uneventful and successful heart surgery. We became fast friends, as Lee served on our Atlanta Crown City Team and currently serves on our Ministry Ventures Board of Directors. He and his wife Kay were childhood friends who grew up in the Midwest. They have an adult son John. Lee’s business was the second largest correspondence school in America. He and his brother-in-law sold to a group of venture capitalists three years ago.
With permission we have listed below Lee’s very thoughtful response to three business related questions…
1. What advice would you give a young business leader looking to start a business?
Research the business type, understanding the need for the product or service. Do you buy something already started which provides cash flow or start from scratch? How long will it take to get a positive cash flow? What is the competition doing? Is there a need for more similar businesses or will you provide a different approach or product? What finances will be required to start and sustain the early development of the business? Can you start this by yourself or will you need help? If you need help, identify the expertise needed, identify when you can bring them on, part-time or full time, salaries/benefits needed, and then hire only the best. Identify whether family members can do some of the services until you can hire it out or until it outgrows their ability. Prepare to work eighty hours or more per week. If you start with a partnership, be sure you are equally yoked in your ethics and standards. One person needs to be in charge of daily decisions or at least divide up responsibilities and then review what was done regularly. Whoever is in charge of the cash flow must be trustworthy and be held accountable for every transaction. Get help from legal and accounting in setting up the company. Be sure to put aside money for taxes as you go. Have a fall back plan. Seek a mentor who can advise you along the way, possibly a group of like business leaders. Pray, pray, pray.
2. How did you keep integrity a priority in your business? Examples?
Pray together. Find accountability partners. Pay all invoices or debts on time. Keep a close eye on the books…income and expenses, and adjust as needed. In the beginning do it weekly, then less often as you grow. Let employees know the ethical standards you expect from each of them. That includes the way they speak to each other on the job and especially to the customers. When a customer has a problem, always solve it to their satisfaction, knowing that it is easier to keep a customer than to find a new one. Don’t allow your employees to see you violate one of your standards, because they will follow the leader. Your customers should always see the benefits of your product or service or they won’t be repeat customers. Treat your employees with respect. Be firm but consistent with your standards. Continue to work hard and motivate your employees. Pray, pray, pray.
3. The sale of your business was unique? What was your strategy?
We had grown our business for about sixteen years and for a number of reasons thought it was time for us to sell. We had become very successful by most measures but knew we could not continue to run the business forever. We knew what we’d receive the first time of sale for eighty-five percent of the company might be all we would ever receive, so the first sale amount had to be enough for us to retire on. We knew we did not know what a more sophisticated organization might be able to do with our organization, but hoped the fifteen percent might develop into something more. It took a lot of effort working with a business broker, lawyers and accountants to find a buyer and come to an agreement which kept us out of any financial responsibility if the company failed, but would gain if the company later sold for more. We did think one of us might have to sign a work contract to agree to run the company for one to two years before a willing buyer would buy us. Many advisors told us to sell for stock, but we wanted a guaranteed minimum amount of cash. We knew several business sellers where the stock deal did not work out. But we were blessed by what happened next. Neither of us had to be involved in the day-to-day operations of the company, but one of us was on the board so that we would know what was happening with the company. Two years later, the company was sold for six times what we had been paid originally, so we were then out of the enterprise all together with money in the bank.
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