By Lyle R. Hill
She was adorable … all four feet, two inches of her. She had large brown eyes, a cute little smile and long chestnut hair neatly braided into perfect pigtails with pink bows. Her name was Rhonda … Rhonda Sue … and the reason she was in my office on this Saturday morning was to interview me.
“Well now, Rhonda Sue,” I began, “your father tells me that you need to interview a business-type per-son in order to earn some type of Girl Scout badge or something.”
“Yes, Mr. Hill. In order to earn our Private Equity badge, we have to meet and interview an executive about their business. My father suggested you.”“I’m honored,” I replied. “And might I add that your father is one of our very best technicians. But I don’t recall my little girls working on a Mergers and Acquisitions badge when they were scouts.”
“Well, you see, Mr. Hill,” she explained, “we’re a very progressive troop and Mrs. Cline, our troop leader, says girls need to be prepared for the real world they’ll face as women.”
“Okay then,” I said, “let’s get on with the interview and see if we can help you get that little badge.”
“Great,” she replied. “I have kind of a three-part question.”
“Fire away,” I said.
“What do you think are the three most important components of a successful business?”I decided to keep my answer simple, so this sweet little munchkin would understand it.
“Well, Rhonda Sue, it all begins with sales. Yes, indeed, there is an old saying that goes, nothing happens until someone sells something.”
She looked puzzled. Maybe I was going too fast. “Is there a problem?” I asked.
“Well,” she said, “Mrs. Cline … did I tell you she’s also a CPA … she says that sales just for the sake of sales are like a cancer on many business-es. The heart of the matter is profit margin. How profitable are those sales? Are you properly managing your sales mix? And Mr. Hill, do you know your break-even point?”
“Let’s move on. In addition to sales, what is the second component?”
“I guess it would be operations,” I continued. “That’s the part of the business that produces and installs the products for our customers. We’ve got really good people here. This is where your father works.”
“I’m sure,” Rhonda said, “that you have performance standards for these individuals. How do they com-pare to your industry’s averages? What were last year’s sales per employee? Do you have a program for ongoing productivity improvement?”
“Rhonda,” I asked, “do you girls still sell those little boxes of cookies?”
“Yes, we do,” she replied. “We recently introduced a whole new line of gluten-free products in response to our market research. Of course we now outsource most of our production to a number of new, high-efficiency vendors. Mar-gins have never been better. But, please, Mr. Hill, continue.”
“Well, Rhonda Sue,” I said, “the third component is finance and administration, with particular emphasis on proper financial planning and control.”
She looked less than pleased with this answer.“I’m sure you know what your ROI and ROE were for last year,” she started, “but were they accept-able to you? How did you compare with other companies in your field or industrial category? What per-cent of receivables have you historically written off?”
“Tell me, Rhonda Sue, do you still wear those cute little green uniforms?”
“Not our troop,” she replied. “We wear olive-colored blazers and khaki slacks. But, Mr. Hill, can I get to the point?”
“Of course, Rhonda. What is it?”
“Our troop has been studying your industry for some time now and we know it is struggling so I’d like to ask if you’d be willing to sell your business.”
“To the Girl Scouts? You gotta be kidding!” I replied, nearly falling out of my chair.
“I’ll keep it simple so YOU under-stand,” she continued. “We know that your industry suffers due to low barriers of entry, cut-throat competitors and customers that will do anything and go anywhere to get a cheaper price. So, we think the time is right to buy you out.”
“But, if this industry is so bad, why do you want to get into it?” I asked.
“We don’t,” she replied. “But, we think your building would make a perfect location for a cookie distribution center and besides … I could knock off my Hostile Take-over badge at the same time.”
LYLE R. HILL has more than 42 years of experience in and around the auto glass industry. He is currently the direct-ing manager of Keytech North America, and is president of Glass.com®.
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