Monday, January 25, 2010

Key Management Activities

“Running a company is easy when you don’t know how, but very difficult when you do.”

Below are some activities that make running a company difficult, and tend to separate strong small business operators from those who are struggling. It is not intended to be a comprehensive list, and the list is not in any particular order. It is intended to provoke some self-analysis . . . to make you ask yourself if you are handling these activities as well as you should or if you might need to refocus on some of them.

Facing Your Problems - Do you accept responsibility for guiding your company through a changing competitive landscape, or do you blame your problems on external factors (the Chinese, the cost of energy, the economy, etc.)?

Focusing on Profit – Do you focus on top line sales growth to the detriment of bottom line profit margins? Do you excuse an erosion of your pricing with, “We’ll make it up on volume,” or “We’re doing this to gain market share,” or “We just need to get a foot in the door,” or “At least we’re covering a little overhead?”

Managing Cash – Is it King in your business? Do you carefully manage payables, receivables, and inventory to keep as much cash as possible in the business? Do your people understand the importance of managing cash and are they trained to do it effectively?

Planning – Do you have an annual plan? Do you use it throughout the year as an essential tool for managing your business?

Managing Profitability – Do you know which products (or services) are the most profitable and which are the least? Do you know which customers make you money and which do not?

Delegating Effectively – Do you surround yourself with talented people? Do you give them important responsibilities and the authority to exercise those responsibilities?

Making Decisions – Is there a decision making process in place that prevents “analysis paralysis” and assures that important decisions will be made without needless delay?

Studying Financial Statements – Do you study your financial statements each month and thoroughly understand the story they are telling? Do you share appropriate financial information with your key managers?

Using Key Performance Indicators (KPIs) – Do you use them to keep a daily/weekly hand on the pulse of the business? Do your key managers know and understand the KPIs you’re watching, and are they watching them as well? Do you chart them using a 12-month trailing average?

Communicating Effectively – Do you hold weekly 1-to-1 meetings with your key managers? Do you regularly communicate with the rest of your organization through memos or newsletters, all-company meetings, individual department meetings, or “brown bag lunches?”

For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.

Monday, January 18, 2010

Stop Doing That!

“There is no point in doing well that which you should not be doing at all.”

It’s not unusual. We just continue to do certain things in the business because we always have done them. Or we continue to do them because it would be a pain in the neck to train someone else to do them. Either way, we end up doing things that are not the highest and best use of our time. As a result, the business doesn’t get as much of our real talents as it should.

For each of your daily activities, you should ask yourself, “Am I the only person capable of doing this?” If someone else could do it (or could be trained to do it), then someone else should do it. And that someone else should be going through the same self-examination, and shedding lower level activities to someone else. In the end, all activities should be pushed down in the organization until they reach the lowest level where they can be competently done.

Or maybe there are some activities that should be scrapped altogether . . . activities that no one should be doing. Our sole reason for being in business is to serve customers, right? So for any given activity or expense, it would be reasonable to ask, “How does this benefit our customers?” If there is no customer benefit, direct or indirect, then it’s also reasonable to ask, “Why are we doing this?” Try an interesting audit. For every activity and every expense in the business, look for a corresponding customer benefit. If you find some that don’t pass the test, you will be able to save time, energy, and expense in ways that won’t affect customers.

Whether you push activities further down in the organization or discontinue them completely, it’s all about the effective use of time. It’s about making sure everyone in the organization is unburdened of work that should be accomplished at a lower level, freeing them to fully leverage their highest talents and skills.

For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.

Monday, January 11, 2010

Instill Self-Confidence in Your People

“A good leader inspires other people with confidence in the leader. A great leader inspires them with confidence in themselves.”

Over the years, I’ve been on a lot of “plant tours.” Usually, our guide is the owner or CEO or plant manager, and the focus is usually on the systems and equipment being used in each step of the manufacturing process. But awhile ago, I was on a tour that was fundamentally different in that the focus was on the people doing the work. In this case, the owner was our tour guide, and at each work station, he introduced us to whoever was operating that station. He would always introduce that person as a consummate professional saying something like, “I’d like you all to meet Harry James. Harry has been with the company for 15 years, and not only can he take this machine apart and put it back together blindfolded, he can make it do things it was never designed to do.” Then he would ask Harry to explain his work and how it fit into the overall manufacturing process. This routine was repeated again and again at each work station, and in each case, the employee spoke with authority and easy competence.

It was obvious that the company had invested a lot in training its people well. But it was also obvious that the culture in that company made people feel important, honored, and trusted. Of course, the owner was leading our tour, but I have no doubt that his people would have performed just as efficiently and effectively whether he was present or not.

If you make people understand the importance of what they do, train them to do it well, and give them positive feedback so they know they are performing at a high level (and that their performance is noticed), self-confidence inevitably follows. Self-confidence plays a huge role, not only in the employee’s effectiveness, but also in the employee’s job satisfaction. It seems to me that if the result is a more effective, content employee, then the effort to promote self-confidence in your work force is well worth the effort.

For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.

Monday, January 4, 2010

Talk Less, Listen More

“People can’t see it your way until you first see it their way.”

Listening is an essential skill whether you’re at work or at home, whether you’re the CEO or an hourly worker. Yet it’s a skill that many of us either never acquired, or have allowed to lapse. In a conversation, do you find yourself crafting your next statement of brilliant insight rather than listening to what your discussion partner is saying? Or if your discussion partner is saying something with which you strongly disagree, do you try to interrupt without letting him or her finish the thought? When your discussion partner is speaking, do you allow your gaze to drift away from him or her?

Your friends, family, co-workers, customers . . . everyone wants to be heard. And not heard in a superficial way, but genuinely heard and understood. Hearing and understanding someone does not mean you agree with them. It simply means you’re paying attention and allowing them to get their thoughts fully formed and on the table. If you don’t listen closely and you don’t allow them to fully express themselves, then what do you think happens when you speak? They don’t listen. They’re too busy thinking about how they can get your attention and complete the thoughts they believe you didn’t hear.

There’s another reason to hone our listening skills. Despite our brilliance, insightfulness, and superior intellect, people may surprise us with ideas we hadn’t considered or points of view we hadn’t appreciated. Really. It can happen, but you have to begin with an open mind.

So turn off all those other voices in your head, ignore any other distractions, and listen, truly listen and try to understand. Ask questions and test your understanding by paraphrasing what you’ve heard so your discussion partner knows you’re paying close attention. Then and only then will you be heard and understood.

For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.