10 Business Directives for Entrepreneurs From the “Billion-dollar Repairman”

Life In The Turn Lane Cover Over the years young, aspiring entrepreneurs have been flocking to CollegePlus! for the freedom and flexibility to pursue entrepreneurial endeavors while earning their accredited degree.

In keeping with our emphasis on entrepreneurship, we’re thrilled to present this special feature article from Jim Patton.

Dubbed the “Billion-dollar Repairman,” Jim Patton is a successful Christian entrepreneur who has published his first book, Life In The Turn Lane.

Regardless of the size business you have or are considering starting, the following directives will help you achieve long-term success:

1. Create an enduring brand for your company

In the formative years, I changed our holding company’s name with each new acquisition. This created a branding problem because there was no continuity in the company name. Recognizing this deficiency, I finally settled on a permanent name—KPAC Solutions—which I have used worldwide for nearly twelve years now. The lesson to be learned is to think beyond the immediate circumstances and visualize the company you want to have ten or twenty years down the road. Your brand can be a powerful asset, so start laying the foundation now.

2. Pay attention to your competitors

The competition never seems to rest, vacation, or take a sick day. Although they probably do, you should act like they don’t. Healthy competition is good, precisely because, one way or another, it destroys complacency. It keeps us on our toes, continually looking for ways to improve what we offer our customers.

3. Make cost savings a priority

The old “twenty-eighty rule” still applies in many cases: 20 percent of the product offering accounts for 80 percent of the profitability of the entire company. If the other 80 percent of the products aren’t pulling their weight, it’s worth giving serious consideration to either reducing production of them or discontinuing them altogether. There are lots of ways a business can save money if you are willing to objectively evaluate each expenditure.

4. Treat employees fairly and with respect

Good employees are worth their weight in gold. Lots of companies say their employees are their greatest asset, but few really treat them that way. There are always exceptions, but as a general rule if you treat your employees well and with respect, they will reward you with an honest day’s work and more times than not make decisions that are in the company’s best interest.

5. Never take the last nickel lying on the table when negotiating a deal

Long after the parties have left the conference room table, the agreement will live on. If either feels cheated, that last nickel will prove to be very expensive. Besides, someday the shoe may be on the other foot, and the opposing party will remember how well or poorly they were treated. Rest assured they will treat you like you treated them days, months, or even years later.

6. Don’t let a banker or a lawyer tell you how to run your business

Regardless of how large or small your business, you are in a better position to make management decisions than your banker or lawyer. They have certain expertise, and you should consider their advice, but they normally do not have the time to invest in seeing the big picture the way you do.

7. Focus on what you do best

One of the biggest lessons my failures have taught me is the importance of finding a niche and sticking with it. The acquisition strategy KPAC uses today focuses on acquiring companies with very specific criteria. We’ve discovered a formula for success, and we’re not going to deviate from it, even if it takes years to find our next deal.

8. Offer positive incentives

In business, a negative incentive can be the kiss of death. Why would anyone pay employees less as they increase their respective sales or revenues? I’m happy to write big commission and performance checks, because the more I pay out, the more the company is making. Penalizing people for being successful simply does not make sense economically or morally.

9. Don’t put off making hard decisions

Unlike the federal government, companies can’t stay in business and spend large sums of money when running a long-term deficit. Sometimes, a business owner must have the courage to make hard, unpopular decisions to keep the company going because if the company goes under, everyone loses. It is not compassionate to run a business into the ground simply because you didn’t have the heart to cut costs and eliminate duplicate or unprofitable jobs. Whenever possible, my management team and I aim to save American jobs and make positive contributions to the economy. But that requires difficult choices and actions we sometimes wish we didn’t have to take.

10. Ask questions, and then ask some more questions

In nearly every distressed company I’ve bought, the seller has asked, in one way or another, “What can you do that we haven’t already done?” I used to secretly fear that question, but not anymore. Now, I answer with questions of my own. By the time KPAC meets with a prospective seller, we have studied financials and understand the company’s product mix, evaluated how products are sold and distributed, and learned how the organization is structured.

Jim Patton is founder and senior managing partner of KPAC Solutions, a private equity firm that acquires distressed manufacturers and turns them into profitable manufacturing powerhouses. Many have been ailing subsidiaries of Fortune-1000 firms that, in the hands of Jim and his team, become world leaders in their industries. Jim is an experienced negotiator, senior investor and founder of many acquisitions involving distressed manufacturers, distributors and construction companies on a global scale. Negotiations have involved comprehensive acquisition agreements, including long-term post-closing production agreements.

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1 comment so far - Leave a comment below

Number 5 appears to be some wise advice. It seems to me that in a negotiation it is best to take the short end of the stick in order to have very satisfied partners and good results over the long run.

Jon

— Jon Frank Tuesday, October 12, 2010 2:22 PM CDT

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