Many of us go to work on the first day of the month believing everybody’s making a little money that day, and the next, and the next after that. Every day we make a little profit; our employees make their wages; our landlord makes some rent; our suppliers, insurance providers, utility companies, and all the people we do business with earn their daily cut.
That’s true of everyone else, but it’s not true about us.
Read More“So, what do you want?” That’s the first of three serious questions I ask prospective clients. The answer is usually missing from a conversation that goes something like this:
Client: “What do you mean?’
Me: “I mean what do you want?”
Client: “Do you mean for me or the business?”
Me: “Either or both.”
Client: “That’s hard to say... Wow, that’s a really great question….”
Read MoreIn my last article, titled “Can I Afford to Hire More People?’ (Part I), we saw how to establish a salary cap for our businesses. The salary cap is a planning number, a Key Performance Indicator (KPI), that gives us a budget number we can use to hit a profit goal.
I said that because what gets measured gets better, we also need a way to track labor productivity throughout the year. To be useful, such a number should inform our hiring decisions and provide an objective measure of the results at least monthly.
Read MoreAm I getting my money’s worth out of employees?
What employer hasn’t wondered about that on payday as wages and tax deposits suck the cash out of our bank accounts leaving barely enough to pay the premiums on the group health plan.
Even when we are well pleased with our current team, how do we know if and when we can afford to hire more people to handle a growing workload? On the one hand, we’re nervous about growing sales without the people to deliver, on the other hand we’re just as nervous about hiring new people until we have the sales to pay for them.
Read MoreOwner: “You just can’t hire good people anymore.”
Me: “Okay, but has anyone hired a good person recently, maybe even today?”
Owner: “Anyone? Well, yeah, I’m sure someone has.”
Me: “So it is possible to hire good people? It can be done.”
Read MoreMy client was on the phone with his inbound marketing advisor.
“We need a sponsor,” the advisor said. “Who could we get to distribute our content that is well known in your target market?”
My client quickly named the most influential trade association in his industry.
“It would be great to get those guys. Everybody knows them, and everyone belongs to the association or at least attends their trade shows.”
Then came the four words: “Well, let’s call ‘em.”
Read MoreIt takes courage to raise prices, and many of us are understandably reluctant to do it. I’ve heard many anecdotal stories about the dangers of price increases and lots of reasons to explain the reluctance to raise prices.
Both the stories and the rationale all boil down to one thing: We are scared we will lose sales if we raise our prices.
We don’t have to remain at the mercy of our competitors’ pricing strategies. Instead of relying on anecdotes and our assumptions about customers, we can test our pricing to find the upper limits. That’s the only way to know, yet I don’t recall ever meeting an owner who had systematically tested higher prices and measured the results.
Read MoreEdward Deming, one of the great thinkers in business management, is quoted as saying: “If you do not measure it, you cannot manage it.”* The corollary to that statement is: If we don’t manage it, everything that happens to us - good or bad - is an accident.
Key Performance Indicators, or KPIs, are the measurements Deming spoke of, and they are expressed in numbers, often in the form of ratios as “something per something.” Some of us don’t like numbers, but stick with me because KPIs are critical to business success.
Read More“So what’s the problem with getting the bids out?’ I asked.
“My customers! My team can handle all their issues, but customers always want to talk to me. In fact, since we’ve been talking, I got a message to call a guy back. Elizabeth said I was on the phone and tried to re-route the call, but he declined and wants me to call him back.
“I can’t afford to be rude and act like I’m blowing customers off, but it never stops. I can’t get anything done.”
Read MoreChange is inevitable, and it either happens to us or we influence events toward the change we want. Maybe we want relief from the tedious monotony, or the general angst, or the cash-flow or complaining customer, people issues, night-sweat worries of the status quo. On the other hand, maybe we’re doing okay, but we want to do better or to have the time and freedom to enjoy life.
Whatever our motives, as Thomas Jefferson said: “If we want something we have never had, we have to do something we have never done.”
Read MoreMost of us have taken, or are at least have heard of, the DISC personality assessment. The results show a combination of personality traits that indicate our behavioral tendencies in different situations.
Most of us who have taken the assessment find the results interesting if, for no other reason, than we enjoy learning about ourselves, but if we use it properly, we will find it to be much more than just entertainment.
Read MoreWe all know that the way to delight clients is to underpromise and overdeliver. But we also want the sale and are susceptible to overpromising in order to get it.
Overpromising doesn’t mean promising something we don’t intend to do - that’s lying. More often than not, overpromising is a sin of omission. We just don’t mention the bad stuff, and let stand the expectations they have conjured up in their imaginations. That’s true even when we don’t know exactly what those expectations are.
Read MoreJonathan: “You’d think he’d see the trash in the parking lot and pick it up.”
Me: “Why in the world would you think that? You hired him because he was the first guy through the door who would work for $11 an hour.”
If you're like most of us small business owners, you hate hiring new employees. Distractions and inconveniences make the hiring process itself annoying, but the real reason we hate it is that most new hires don't work out. It won't be long before, yet again, you'll know that they need to go.
Read MoreVirtually every business coaching client I’ve had is interested in outside investments. That’s no coincidence, because if they aren’t already interested, I encourage it.
The idea is to use the business to generate income, to use part of the income to build value in the business and part to build wealth outside the business. This is a great strategy for a number of reasons, not the least of which is that it provides a hedge against the ups and downs of the business itself.
Read MoreI suspect that most of us could use an extra $100,000 in cash. It would sure be nice to have cash to pay down the line of credit, get current with suppliers, or catch up on payroll taxes. Access to easy cash makes so-named merchant loans pretty attractive.
You know the loans, they’re the ones where they make a few cursory checks of your credit score and bank statements then wire money directly into your account. Presto, cash problems resolved (for the time being anyway).
Sounds too good to be true doesn’t it? It is.
Read MoreWhen it comes to team alignment, I can’t help but think of Alan Greenspan’s famous remark: “I know you think you understand what you thought I said, but I'm not sure you realize that what you heard is not what I meant.”
Say what?
Without looking back at it, try to repeat the quote. I’ve tried repeatedly and still can’t do it.
Read MoreBreak even sales is the point at which we’ve sold just enough to pay all of our expenses, with nothing left over for profit. In other words, it’s the point at which profit and loss equal exactly zero. It turns out that breakeven is among the most powerful tools we have for making management decisions.
I understand that a lot of us don’t like numbers, but these are just too important to ignore. If you plan on succeeding in business, suck it up. Sacrifice the few minutes it takes to understand.
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All of us in business owners are concerned with cash.
We are under constant pressure to balance a limited supply of cash with the seemingly unlimited demand from cash-consuming sinkholes such as operating expenses, accounts receivable and inventory - and that’s just normal operations.
Read MoreWe cannot afford to “settle” for substandard team members just because we are uncomfortable firing them. We cannot afford to “give them 90 more days” because that sets us back 90 days in our search for the right hire - and it sets them back 90 days in their search for the right job.
Read MoreAll of us want to build a successful business, either to reach our potential or to reduce our suffering, or both. We all want to improve our companies, but few of us devote meaningful time or attention to doing it.
First, we are so busy working in our businesses that we push it off to a “tomorrow’ that never comes, and second, we don’t really know how to go about it.
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