Lesson 25: Fitness
When you go to the doctor, you find out how healthy you are. When you go to the gym, you find out how fit you are. At the doctor’s office, you step on the scale to measure your weight or slide the blood pressure cuff up your arm, and everything contributes to the doctor’s evaluation of your overall health. In the gym, there is only self-evaluation. When you step off the treadmill or set the equipment down, your body tells you whether you can keep going or your tank is empty. Once your tank is empty and you have nothing left to give, then you find out your level of fitness.
When a business is sold, the seller finds out how healthy their business is, but the work began years ago as the business became fit for acquisition. What makes a business fit for acquisition? According to the HBR Guide to Buying A Small Business, the best business to acquire for ETA is an enduringly profitable small business. In chapter 10, Richard Ruback and Royce Yudkoff outline the characteristics to look for in a potential acquisition: 1) Excellent reputation, 2) No competitors, 3) Low cost/high value for customers, and 4) “Sticky” (meaning it would be difficult for the customer to switch to a competitor). Implementing these characteristics improves the fitness of your company.
The challenge with fitness is that you must return to the gym each day. If you work out every day for a year, then the day you stop training is the day you start losing your ability to perform. Routine may feel boring, but it gets results. Ruback and Yudkoff insist on finding a boring and predictable business: “You should look for what may seem to be a dull business.” These businesses have routines; these businesses have results. A business that maintains each of those four characteristics sees the results in their revenue and profit margins and ultimately the way it increases in value over time.
As excited as I am to train the next generation of skilled trade workers, I am more excited by the dynamics of the trade school industry. First, undergraduate enrollment in degree-granting post-secondary institutions fell for 10 consecutive years according to the National Center for Education Statistics presenting a growing population for whom skilled trade education would be an excellent alternative. Second, skilled trade education provides the training necessary for in-demand careers such as welding, which is an industry projected to need 90,000 new welders each year between 2023 - 2027. Third, the education process is routine by nature, which supports the enduringly profitable characteristics necessary for a business fit for acquisition.
Each week, I look at my mission, vision, and values to remind myself why I started this journey. While it feels like I have just begun, this marks the 25th edition of Nuance and I am a quarter of the way to 100. I appreciate everyone who joined in Feburary or today or somewhere in between.
Fitness is Lesson 25. Next week, I will share Lesson 26: Time.
