Help! Our CEO needs a wake-up call. Plus, adding new investors.
My CEO Needs Help -- Now
I am a vice president at a residential mortgage brokerage. I am interested in retaining a coach or trainer for our CEO. He seems to be floundering, and I would like him to recognize this on his own, before the board intervenes. How can we get our CEO to see the light?
Hiring a coach is the leadership equivalent of putting a bottle of Scope in someone's mailbox: The recipient will likely find it more offensive than helpful. You could try seeing a coach yourself and then lauding the experience to your superior (that's called "influencing upwards" in management-speak). But short of staging an Alcoholics Anonymous-style intervention, you can't force the guy to seek professional help.
But someone needs to have a candid conversation with the CEO. Since you seem to have dealt yourself the short straw, summon all your diplomatic skills. Be straightforward but not confrontational: Identify the biggest problems (that's "areas for improvement" in management-speak) and assume at least a modicum of culpability yourself. Thus disarmed, your boss may graciously join your quest to set things right.
Messengers, of course, often end up on the wrong end of a bullet. If that worries you, try suggesting a formal review for the entire executive team -- such as a 360-degree or SWAT analysis (in which a company's stakeholders discuss "strengths, weaknesses, advantages, and threats"). Such reviews solicit constructive criticism from all quarters, which makes them hard for CEOs to dismiss. Says New York City executive coach Ben Dattner, "Any VP or CEO worth his salt would be interested in diagnostic tools like this that can generate value."
When Relatives Are Clients
I do a lot of work for the businesses of family members, and even though I give them discounts, they always put me off about paying. How can I get them to pay promptly without causing hard feelings?
Joe Fortenberry, San Angelo, Texas
Forget blood and water. What you need is ink -- the kind used to sign contracts. "I love you Aunt Ernestine -- now these are the terms and here is the payment schedule." If payment is late, ask if the job was satisfactory and offer to make reasonable adjustments on the condition that payment follows, pronto. Pat Weiler, owner of Kavanah Cards, a stationery shop in Mission, Kansas, waits two weeks before sending friends and family a polite reminder. "I always say something like, 'According to my records, I don't show payment for this. Am I incorrect?" says Weiler. After that, payment is generally prompt.
If patience and politeness don't work, end the business relationship. But the personal relationship may suffer too. After all, it's tough to sit down to Thanksgiving dinner with someone after you've sicced a collections agent on him.
Picking a Partner
A partner and I own a new company that is not yet profitable, and we need capital. We have been approached by someone who wants to invest, in exchange for an equal ownership stake and financial decision-making power. Is this a good idea?
Depends on who he is. You should probably find that out, you know. Ask for a resume that includes the names and phone numbers of past investment partners. Ask those partners for additional references. Ask for financial statements that prove he's flush enough to hold up his end. If he says no, you say no, advises William Payne, a Las Vegas-based angel investor who has helped finance 25 start-ups in 25 years. "Investors with integrity will be impressed because they know this is just good business practice," says Payne. If your research turns up anything that smells (a lawsuit, say), turn up your nose at the whole deal.
Even if your guy is golden, the deal may not be. To judge that, get a rough valuation for your company. Your accountant, lawyer, and other entrepreneurs can help figure out what your company is worth. Then consider what your suitor has to offer besides money. Does he have years of business experience? Can he add value to your board? Will he cough up again later if necessary?
Most important, don't rush in where angels like Payne warn not to tread. "A bad investor," he cautions, "is much worse than no investor at all."
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