Small Business Consulting - Chicago Area

2010-07-19T08:00:00.002-05:00

“You can’t manage what you can’t measure.”

“What gets measured, gets done.”

Those are two complimentary management axioms, and they both happen to be true.

Take the first, “You can’t manage what you can’t measure.” It’s pretty hard to argue with that. For instance, how could we manage our receivables without a measurement of some kind. We couldn’t. So we manage them by “days outstanding” . . . 30, 45, 60 days, or whatever the standard for your company is. You can’t manage to a specific result unless the result is specific and measurable. Or consider how you manage your payroll. You might have a target for how much overtime will be allowed for any given pay period. Or you might want to keep your total payroll below a certain percentage of sales. Again, there must be a specific, measurable goal.

Then take a look at the second axiom, “What gets measured gets done.” Without specific measurements, goals become fuzzy and lack commitment. Let’s say, for instance, you announce that you want the company to grow next year. That’s great, but without a specific target, that could mean anything. Are we trying to grow by one dollar? By a million dollars? By 20%? And obviously, the goal has to be tracked and communicated regularly. If you aren’t telling your people where you are against the goal you have set, they will assume that you’re not tracking the goal, that you’re not paying attention, or that the goal just isn’t all that important. Besides, if they aren’t being told regularly how they’re doing against the goal, how can they possibly help you achieve it?

Some goals can be tracked straight off your standard financial reports. Others may require a more creative approach. This is where Key Performance Indicators (KPIs) can be very useful. For example, if you’re a service company, you might want to track the number of complaints you receive per $1000 of revenue as a quality control measure.

The point is, if something is important enough to be set out as a goal or objective, then it is important enough to carry specific measurements of success, and important enough to regularly communicate those measurements to your people. Otherwise, what you’ve got is not a goal at all . . . it’s just a wish.

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

Fully Utilize Your Technologies

2010-06-28T08:00:00.000-05:00

“Wealth continually grows from multiplying existing resources using existing technologies.”
-Paul Pilzer

Paul Pilzer is an American economist and best-selling author who promotes the notion that economic progress and wealth are driven by technology. New technologies will continue to feed economic growth, but in Pilzer’s view, a lot of growth can come from properly utilizing the technologies we’ve already got.

Most technologies used in small business are vastly underutilized, particularly where software is concerned. We tend to learn what we need to learn in order to accomplish a certain task. We don’t look any further to see what else the program might do for us. Then, when we are faced with a new task, we whip out our trusty software manual and figure out how to do that. So we tend to use our technologies in small bites without understanding their full potential.

How might you improve efficiency and productivity if you more fully utilized the technologies you’ve already got? How might you use those technologies to better serve your customers?

Here’s a thought. Let’s say you’re using some very common software products like Word, Excel, PowerPoint, Outlook, ACT!, and QuickBooks. In your Accounting Department, even if you have only a single bookkeeper, challenge him or her to find one new thing in QuickBooks each month . . . a new tool, utility, or capability that would benefit the company and/or your customers. Find someone in the Sales Department who likes techie stuff and challenge him or her to do the same with ACT! And so on with all the technologies the company uses. Obviously, when something new is discovered, it needs to be taught and passed along to the other users of that technology.

The technologies we have available to us today are so powerful and so versatile that they can help drive a business forward more quickly and more sure-footedly than ever before.
Pilzer teaches us that these technologies are resources we should not ignore . . . that we should embrace them and use them to their fullest potential.

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

What Causes Sales?

2010-06-21T08:00:00.001-05:00

Just about every business tracks its sales in some way or another. But not all of them track what causes sales. Curious, don’t you think? If we know what causes sales, we can do more of that (whatever “that” is), and our sales will go up. So why wouldn’t we want to track what causes sales?

In some cases, it’s pretty easy to see what causes sales. A company that relies heavily on telemarketing knows that if a salesperson makes 100 calls, he or she will reach the correct decision-maker 35 times, and of those, 10 will result in an appointment. Of the 10 appointments, 4 will result in a sale. So it’s simple. Calls cause sales. So if you want more sales, just make more calls.

Another company, in the construction business, consistently wins 16% of all the bids it submits. Want more sales? Just submit more bids.

A gourmet restaurant noticed that whenever a newspaper or magazine gave them a favorable review, their reservation calls surged. So they redirected money from their advertising budget and hired a public relations firm.

But what causes sales is not always so apparent.

Consider a business that advertises heavily in a variety of different mediums but can’t track which mediums are working and which are not. As a department store mogul once famously said, “I figure only half of my advertising works for me, but I don’t know which half.”

Or worse yet, consider the business that depends on referrals to bring customers to its door. Typically they will say, “We don’t know. People just come to us.” What they should be saying to themselves is, “If we’re a referral business, how can we drive referrals?” Maybe they should intensify their networking activities, or maybe they try offering an incentive of some kind for past customers to refer new business.

The point is, we can’t drive sales unless we know the root activity that starts the sales ball rolling. What causes sales is different for every business, and in some cases where the sales driver is not obvious, it may take some creativity and effort to find it, but it can always be found. And once you find it, you will have the tool you need to set a sales pace that’s appropriate for your business.

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

Learn to Delegate

2010-06-14T08:00:00.001-05:00

I’ve written about delegation before, but I continue to think about it because so many small business owners don’t do it very well.

Entrepreneurs often like to pull all the significant levers in the business and push all the important buttons. They built the business and know the critical parts of it better than anyone, so they don’t hand off any core decisions, responsibilities, or activities to anyone else. Yet by failing to delegate, the owner is unable to keep good people and unable to grow the business beyond his or her personal limitations. In the end, it’s a trust issue. What if I do hand off something important to someone else and they screw it up?

Here’s a way to limit your risk and gradually learn to delegate effectively.

Divide the all the company’s identifiable, distinct decisions, responsibilities, or activities into three categories: A, B, and C. When you assign an A responsibility to someone, instruct that person that this responsibility is theirs and theirs alone. They should just go ahead and carry it out. Don’t call, don’t write, don’t report to me when you’ve done it. Just do it.

When giving out a B responsibility, you instruct that person that this is still a responsibility that is theirs, but you want to be consulted before they pull the trigger on it.

You can show your subordinates a list of C responsibilities, but you don’t give those out. Those are the decisions, responsibilities, or activities that you will continue to reserve for yourself.

If this is done in a clear, well-defined way, you will have drawn very effective boundaries for your people. You shouldn’t have anyone going off the reservation and doing things they have no authority to do. In short, you maintain control. But better yet, you begin a process of delegation that can grow over time. Again, this is a trust issue. So you build trust as you see how effectively your subordinates handle the responsibilities you’ve given them. Then more of your C responsibilities can become B responsibilities and given to someone else. Likewise, a B can be transformed into an A.

This is an evolutionary way to build delegation into your company’s culture. Ultimately, your subordinates will be doing the things they are qualified to do, and you’ll be left with only those things that truly belong on your plate.

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

A Word About Management Training

2010-06-07T08:00:00.001-05:00

I was in a conversation recently with a guy who works for a technology company, and during the course of the conversation, the subject of “training” came up. He said that his company has a training budget for their technicians, but not for their managers. He said he knows this because he wanted to attend a management seminar, but the owner of the company denied his request. When he pressed the owner about it, the owner said, “We don’t have any budget for management training. We don’t believe in management training here.”

I was shocked. Not shocked that his company doesn’t offer any management training because, unfortunately, that’s a fairly commonplace condition in smaller companies, but shocked that the owner would say it in such a casual, matter-of-fact way. Obviously, this owner either doesn’t believe that managing takes much skill, or he believes that managers somehow manage well instinctively. Either way, he’s wrong.

Management training isn’t and shouldn’t be the private preserve of large corporations. Small companies might not have the resources to run big, formal programs, but with very little expense, they can still offer effective management training. For instance, I know of a small company that has a book club composed of the CEO and his managers. They agree on a business subject they want to explore, select a book on that subject, then spend an hour each week discussing a chapter. The CEO doesn’t always lead the discussion. He takes a turn, but so does everyone else in the group. As a result, the management team gets excited about various business concepts, has a good learning experience, and bonds more firmly as a group. And the only cost is for a few books.

I know a company owner who likes to hold “lunch and learns.” He sets aside periodic lunch hours for his managers and orders in pizza or sandwiches. He then invites someone from the outside to give a brief presentation and then entertain Q&A. This outsider might be his banker, his lawyer, his CPA, or a whole host of other friends, colleagues, and acquaintances in his rolodex who have some business expertise to share with his managers. And it only costs the price of a lunch.

Small business owners often complain that they can’t afford management training, but usually they can. Just because you don’t have the money for fancy executive seminars doesn’t mean you should just give up on management training. As I’ve tried to illustrate above, there are lots of ways to deliver very effective, but inexpensive, management training. It just takes a little creativity and a commitment to doing it.

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

The Risk of Doing Nothing

2010-05-31T08:00:00.002-05:00

“A ship in port is safe, but that’s not what ships are built for.”

Many companies that survive an economic downturn do it by cutting everything that doesn’t keep the lights on and the doors open. In that condition, they are treading water. They may avoid catastrophe, but they’re not going anywhere. The company is set on “idle.”

Allowing the company to idle until the trouble passes might be the right thing to do, but sometimes companies continue to idle even though the worst of the trouble has passed. Why? In most cases, it’s because the CEO doesn’t trust that business conditions are really improving. Maybe we’re experiencing only a brief lull in the storm before it resumes its full fury.

People . . . and therefore, the corporations they create . . . are at their core, cautious and conservative. We have a sense that doing nothing is a safe bet. It’s not. Doing nothing is a conscious choice, and it may not be the safe choice. Our business history is littered with examples of companies standing by while smart, aggressive competitors swooped in to grab market share and competitive advantage.

Obviously, perilous economic times call for some degree of caution. But beware of too much caution. If you keep your ship in port too long, you’ll wake up one morning to find all the cargo is being carried by a competitor’s ship.

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

Building Happiness at Work

2010-05-24T08:00:00.003-05:00

A friend of mine used to call it the “hum level.” It’s the palpable feel of energy when you walk into a workplace. If people are talking and laughing and generally engaged with one another, the “hum level” is high. If the place is quiet as a church, nobody’s talking, and everybody has their face buried in whatever task they are doing, the “hum level” is low.

When people are happy at work, they are more productive, they interact with customers more positively, and there is less turnover. So what causes happiness at work? A lot of things. We talked about 12 factors that contribute to job satisfaction last week. But there are a couple of key components.

The first is very simple. Do I like the people I work with, and do they like me? That doesn’t mean that I’m best buddies with everyone in the place. It just means that on a whole, I enjoy being with my co-workers and am comfortable that I fit in. That’s why it’s so critical to hire well. One vocal malcontent can poison the atmosphere for everyone.

The second is my boss . . . not necessarily the CEO, but my direct supervisor. Does he or she take an active interest in me as a person . . . my family, my interests away from work . . . or am I just another head count? Is my supervisor accessible and is he or she committed to helping me be successful in my work?

Not very long ago, happiness in the workplace wasn’t discussed much in American business. After all, we’re not running a playground here, right? We’re here to do a job, and if that makes you unhappy, that’s your problem. But as it turns out, happiness at work isn’t some crazy, pie-in-the-sky notion. If it increases productivity, increases customer satisfaction, and decreases turnover, it’s just good business.

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

12 Critical Questions

2010-05-17T08:00:00.003-05:00

Last time, we met Marcus Buckingham, a senior researcher at the Gallup Organization, and discussed his findings in his excellent book, “Now Discover Your Strengths.”

He has more to offer us.

Buckingham says a workforce can be divided into three categories: people who are loyal and productive, or “engaged,” those who are just treading water or “not engaged,” and those who are malcontents or “actively disengaged.” There are 12 simple questions the answers to which, he says, determine whether employees are engaged, not engaged, or actively disengaged at work.

1) Do I know what is expected of me at work?
2) Do I have the materials and equipment that I need in order to do my work right?
3) At work, do I have the opportunity to do what I do best every day?
4) In the past seven days, have I received recognition or praise for doing good work?
5) Does my supervisor, or someone at work, seem to care about me as a person?
6) Is there someone at work who encourages my development?
7) At work, do my opinions seem to count?
8) Does the mission or purpose of my company make me feel that my job is important?
9) Are my coworkers committed to doing quality work?
10) Do I have a best friend at work?
11) In the past six months, has someone at work talked to me about my progress?
12) This past year, have I had opportunities at work to learn and grow?

Obviously, the more of these questions an employee can answer in the affirmative, the more he or she will gravitate toward “engaged.” The fewer an employee can answer in the affirmative, the more he or she will gravitate toward either “not engaged” or “actively disengaged.”

Do you know where your employees fall on this continuum from “engaged” to “actively disengaged?” If not, you should find out. The very act of asking the 12 questions may move some employees a few notches closer to “engaged.”

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

Now, Discover Your Strengths

2010-05-10T08:00:00.002-05:00

In his excellent book, “Now Discover Your Strengths,” author Marcus Buckingham and co-author Donald Clifton discuss the work they did for The Gallup Organization to find out what makes successful people successful. What do those successful people have in common that makes them high achievers?

So they sifted through over two million interviews that Gallup had conducted over the years. Two million! The interviewees were doctors, lawyers, policemen, and firemen, white collar and blue collar alike, from many different occupations. The only thing they had in common was that they were successful at whatever work they did. Buckingham and Clifton wanted to find out why. Here’s what they learned.

Successful people understand their own strengths, and they work to nuture those strengths, focus on them, and leverage them. They don’t spend a lot of time trying to shore up their weaknesses.

In our culture, if a child is really talented at math and science, let’s say, but struggles with English and history, what do we do? We get that child a tutor or Mom and Dad work with the child to improve in English and history. Buckingham and Clifton would argue that it makes more sense to invest that extra effort in math and science. That’s where the child’s natural talent lies, so we should work to develop that talent to its utmost.

The lesson for those of us in business is two-fold. First, look at ourselves. Are we wasting time struggling with activities that we’re just not very good at? If so, wouldn’t we make a bigger contribution to the company if we off loaded that stuff we don’t do very well to someone else and focused on things where we really excel?

Second, look at your employees. When you identify someone who is not performing well, consider the possibility that they have been put in a position where they are unable to use their real strengths. Instead of trying to give that person remedial help in an effort to make him or her better at the job, maybe you should ask if the job could be modified to take advantage of the person’s strengths, or if not, maybe those strengths would make the greatest contribution to the company in another job.

When asked, “At work, do you have the opportunity to do what you do best every day?”, out of 1.7 million employees in 101 companies from 63 countries, only 20 percent answered in the affirmative. 20 percent! While that an appallingly low number, it reveals an enormous opportunity. What if we could position the other 80 percent to do what they do best every day? It boggles the mind.

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

Increasing Productivity

2010-05-03T08:00:00.002-05:00

“Increased productivity comes from continually identifying areas where you can achieve 80 percent of your results from 20 percent of your efforts.”

Vilfredo Pareto was an early twentieth century Italian economist who gave us the 80/20 rule. We hear it most commonly used in reference to sales . . . 80 percent of your business comes from 20 percent of your customers. But the mistake we often make is to spend too much time trying to get the marginal 80 percenters to perform like our superstar 20 percenters. Wouldn’t it make more sense to spend most of our time working with our superstars? After all, they “get it.” They understand and appreciate our value proposition, and if we nurture them and are attentive to their needs, they may have the potential to become even better customers.

Where else might we apply the rule? Is it possible 80 percent of our customer service headaches are coming from the bottom 20 percent of our customers? The customers accounting for the least of our sales are often the most demanding and time-consuming. It’s not a bad idea to comb through your customer list periodically looking for customers who demand significantly more service than they are worth and make them available to your competitors.

How about your employees? Think of the activities that are key to your company’s success. Do you believe that 80 percent of those key activities are being achieved by 20 percent of your workers? Again, doesn’t it make sense to invest time and resources in the 20 percenters . . . the people who are really making a difference . . . rather than spending most of your time trying to improve the 80 percenters?

It’s all about leverage. It’s about identifying the customers, employees, systems and processes that are the keys to your company’s success. It’s about making sure you’re constantly working with those keys to make them stronger and more effective. Where can you get an 80 percent result from a 20 percent effort?

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

Marketing 101d

2010-04-26T08:00:00.001-05:00

So far, we’ve discussed two fundamental marketing questions:

- What product or service do we want to sell?
- To whom do we want to sell it (who is our “prime prospect”)?

Now let’s talk about a very powerful marketing tool, price.

Too often we jump to the conclusion that our price has to be lower than the price of our competitors. Not so. Our price has to be seen as a better value than that of our competitors, but that’s not the same thing as cheaper. For instance, if our product is priced 50% higher than that of our competitor but it lasts twice as long, our product is the better value.

But price also has strategic value beyond dollars and cents. Let’s say our company makes razor blades. We can’t sell any razor blades unless our customers have the handle that holds the blades. So we can put a very low price on the handle (or even give it away) because our customer only needs one. But now we have a captive audience that will need to continue buying replacement blades for a lifetime.

Pricing has great impact on the way we offer our product or service. Maybe our competitor “bundles” the products or services we both offer . . . that is, products A, B, and C come as a set. To buy one, you have to buy them all. Our response might be to offer those products a la carte . . . you can buy one individually or in any combination you want. In similar fashion, our competitor might sell his product in packages of 10. So we might appeal to smaller users with a package of 5 or to larger users with a package of 20.

The list of pricing strategies is endless. But price (and all other marketing considerations, for that matter) needs to be set so that our sales force can sell the way our customers want to buy.

In the last several postings, we have barely scratched the surface of marketing, and there is certainly a lot more to it than the few points we have discussed. For a more in depth view of marketing, pick up a copy of “Duct Tape Marketing” by John Jantsch or “Meatball Sundae” by Seth Godin. Both are excellent books and both are aimed at small businesses who need to practice sound marketing on a limited budget.

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

Marketing 101c

2010-04-19T08:00:00.002-05:00

This is the third installment in a series of basic marketing concepts. First we described what marketing is, and what it is not. Then we talked about the problem your service or product will solve, the need it will fill, or the want it will satisfy. Now we need to talk about the “who” in the marketing equation.

Who has this problem to be solved, need to be filled, or want to be satisfied? No product has universal appeal, so we need to understand who our prime prospect (ideal customer) is. Here are some things to consider as you think about who you are trying to serve.

● Are there geographic limitations? Maybe your product or service only has value within a certain geographic area. Or you might be limited by distance. A local plumbing contractor, for example, may only be able to effectively serve customers within a 20-mile radius of his shop.

● Are there ethnic or cultural factors to be considered? Some foods, for instance, might be very popular in one culture, completely unacceptable in another.

● What about age? Does our product or service appeal equally to a 15-year old and a 55-year old?

● How about gender? Does our product or service appeal equally to men and women?

● What are my prime prospects willing to pay for my product or service?

The list goes on and on, but you get the idea. You need to know as much as possible about your prime prospects . . . who they are, where they are, what they like and don’t like, how they behave, and how they make buying decisions. And once you know everything there is to know about your ideal customer, the final key question is: are there enough of them to support my product or service?

Understanding everything you can about your ideal customer is critical. If you don’t have a clear picture of who they are, how can you reach them? How can you attract their attention? How can you tell them your product or service even exists? You can’t. So like many aspects of marketing, this may take some time, effort, and maybe money to research, but it’s worth it. Any resources spent here are miniscule compared to the expense of launching a product or service that misses the mark and ultimately fails.

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

Marketing 101b

2010-04-12T08:00:00.001-05:00

This is the second installment of a series on marketing. The first installment set the groundwork by defining what marketing is . . . and what it is not. Now we’ll dig a little deeper into some of the major components of marketing.

The foundational question for marketing is, “What product or service do we intend to offer to the marketplace?” Our product or service must solve a problem, address a need, or satisfy a want. The only reason consumers buy anything is to solve problems, address needs, or satisfy wants. So if our product or service can’t do one of those three things, we won’t have any buyers.

For instance, let’s say we want to open a restaurant. Since we’re Greek, we’ll open a Greek restaurant. There’s a large Greek population nearby and our friends all tell us we create superb Greek dishes. So the “want” we’re going to satisfy is the want for really good Greek cuisine. But wait, there are already ten Greek restaurants in the area and they all provide really good Greek cuisine. Now the question is, does the market really want an eleventh Greek restaurant? And if so, what “want” does the market expect the eleventh restaurant to satisfy that isn’t already being satisfied by the other ten.

We’ll talk about differentiating yourself from your competitors later, but for now, focus on the problem you expect to solve, the need you plan to address, or the want you intend to satisfy. This may take some market research but it’s well worth some time, effort, and even expense to get this part right, because if we get it wrong, our product or service won’t even make it out of the starting gate.

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

Marketing 101a

2010-04-05T08:00:00.003-05:00

This begins a series on marketing. I’ll dispense with the quotes I usually use because I couldn’t find any that I thought were appropriate for this discussion. If you consider yourself to be a pretty savvy marketer, this may be too elementary for you, but for everyone else, read on.

Many small business people are unsure what marketing really is. Everybody engages in marketing or they couldn’t be in business. But often, marketing activities are not done in a systematic, coordinated, strategic way. So let’s begin by talking about what marketing is . . . and what it is not.

Small business people sometimes use the terms “marketing” and “sales” interchangeably as though they are two different names for the same thing. They are not. Sales and marketing are entirely different activities. A friend of mine says it this way: “The job of marketing is to deliver customers for the sales force to sell.” That’s a pretty good definition, I think.

In order to deliver customers that our sales force can sell, marketing must answer a number of fundamental but critically important questions.

- What product or service do we want the sales force to sell?
- What problem will our offering solve, what need will it fill, or what want will it satisfy?
- Who is our prime prospect (the ideal customer who has the problem, need, or want we’ve identified)?
- How do we intend to deliver our product or service? Through retail channels? Via the internet? Through distributors and wholesalers?
- Where should we set our price? That is, what is our prime prospect willing to pay for our product or service?
- Who else is already in the marketplace selling a similar product or service, and how will we differentiate ourselves from them?

The list goes on, but you get the idea. Marketing is the highest strategic activity in any company because if we get marketing wrong, it doesn’t matter how strong we are financially, how efficient we are operationally, or what a great sales force we have. If marketing is wrong, we can’t survive as a company. If we offer a product or service that doesn’t address the problem or need or want it was intended to, we won’t be able to sell it. If we offer it at too high a price, we won’t be able to sell it. In short, marketing will have failed in its mission to deliver customers.

OK, so now we know what marketing is and what it’s supposed to do. In the next few postings, we’ll explore in more detail some of the questions above that marketing needs to answer correctly.

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

Building Trust Through Honest Communication

2010-03-29T08:00:00.001-05:00

“Communication is to leadership as the swing is to golf; everyone can do it, but few do it well.”

Consistently, “being in the know” ranks near the top of employee satisfaction surveys. People want to know what’s going on around here. They want to know what their part is. They want to know how events, both good and bad, are impacting the company.

Imagine an assembly line worker at an automobile plant. His job is to insert the same size bolt into the same hole for each part that comes down the line. He doesn’t know what the part is, doesn’t know why it needs to be in the car, and doesn’t know how the car would perform without it. All he knows is that he’s supposed to put the same size bolt into each and every part that comes down the assembly line.

Now let’s assume our worker knows that the part coming down the assembly line is part of the braking system. He also knows if he inserts the bolt incorrectly, the braking system could fail and cause a collision. And let’s assume he understands that the company wants to position itself as making the safest car on the road. Doesn’t it stand to reason that under these circumstances, our worker would be more careful and more diligent in doing his job?

Your employees will help you reach your goals, but only if they know what they are. They need to know what the company is trying to do and where it’s trying to go. They need to know why their job is important and how it fits into the overall company objectives. So if the job of leadership is to get everyone efficiently and effectively pulling in the same direction, then good communication is key.

Good communication is accurate, complete, and truthful. It’s frequent and sends a consistent message. It invites feedback. And it’s offered in a variety of formats . . . newsletters, memos, all-company meetings, departmental brown bag lunches, individual 1-to-1 meetings. Longer term issues such as the company’s annual goals or its overall direction need to be constantly and consistently repeated, not only to make sure new employees get the message, but also to make sure the message is top-of-mind for existing employees. If we’re exceeding our goals, tell me so I can help celebrate. If we’re falling short of our goals, tell me that too and tell me how I can help get us back on track. If the company’s direction needs to change, tell me what the change will be, why it’s necessary, and how the change may affect my job.

There’s a temptation to withhold bad news or worse, to sugar-coat it. Always a bad idea. When you’ve got bad news to deliver, deliver it straight up. Don’t over-dramatize it, don’t dress it up. Just tell it like it is and describe how the company intends to respond. Invite suggestions and feedback. Your people can’t help you if they don’t know what’s going on.

It’s all about building trust. Employees need to know that you trust them with important company information. They also need to know that they can trust the information they are getting. If you nurture, protect, and validate that trust, you will have created a powerful leadership resource. If you have their trust, your employees will follow you almost anywhere.

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

Cash is King

2010-03-22T08:00:00.002-05:00

Is it in your organization? It should be. You should be forecasting your cash for the next thirty days, reviewing it daily, updating it weekly.

Some small business owners are unclear on the difference between “cash” and “profit.” They are totally different. You can be very profitable and still run out of cash. Likewise, you can be in a good cash position even if your financial statements are showing a loss. If you’re not clear on this, have your accountant explain it to you. But for purposes of this discussion, “cash” is the money you have immediately available . . . usually whatever you have in your checking account plus whatever you have in a bank line of credit. When you spend more money than you deposit, your cash goes down . . . you have negative cash flow and that’s bad. When you put more money into the bank than you are drawing out, you have positive cash flow and that’s good.

When you think of a cash flow forecast, think of your check book. Your check book is an historical record of what you deposited, what you spent, and what your balance was at any point in time. A cash flow forecast is the same thing except it’s predicting future deposits and withdrawals rather than recording past transactions.

So to start, you record your “opening balance” which is the cash you can access immediately as described above. Then you schedule the bills you expect to pay (including payroll, taxes, etc.) over the next thirty days and predict the receivables you will collect over the same period. Of course, your “opening balance” will go up and down during the course of the month as bills are paid and deposits are made. If you finish the month with a “closing balance” that is below your opening balance, then your cash flow for the month was negative. If your closing balance is higher, your cash flow for the month was positive.

The real value of this cash forecasting is that it allows you to closely manage your cash on a daily basis. If receivable collections don’t occur as predicted, you may elect to postpone paying some bills until the expected receivables arrive. Or if receivables arrive more quickly than expected, you may elect to accelerate some vendor payments. But most importantly, cash forecasting is an early warning system that alerts you if you are going to run out of cash and gives you time to arrange some bridge financing with your bank

Good cash management is essential to the financial health of a business. Worrying about running out of cash is one of the things that keeps small business owners awake at night. But there’s a cure for insomnia. Each day, look at how much cash you had to start the day, how much was deposited, how much was paid out, and how much cash you had at the end of the day. It can be a simple report that doesn’t take any time to generate or to read. Do it. You’ll sleep better.

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

Anticipate Your Cash Requirements

2010-03-15T08:00:00.001-05:00

“Most companies grow themselves out of business. They either can’t finance (the growth), or they can’t manage it.”

Sadly, when a business fails, it is often not because it was founded on a bad idea. It’s because it simply runs out of money. Even if the business is profitable, it can still be cash-starved out of business. How does that happen?

Several ways.

If the business is a brand new startup, the entrepreneur at the controls will often underestimate his or her expenses. It might be that s/he misunderstood the labor market and ended up having to pay more than expected for key positions. Or, the cost of raw materials or inventory might have spiked unexpectedly. Or maybe sales just didn’t ramp up as quickly as expected. The bottom line is, too many startups try to get their doors open on a shoestring. If their sales forecasts and expense projections are right on target, they may get away with it. But more often, something is overlooked or something unanticipated occurs, and before the fledgling business knows it, it’s awash in red ink.

The second problem small business owners tend to bring on themselves is trying to grow the business too quickly. In almost every case, growth is expensive. A business may need to add people or inventory or equipment or office space to handle the additional volume. An owner may try to handle growth expenses out of earnings (rather than borrowing from a bank or a private investor), but like his startup counterpart, this owner may fall victim to an overly optimistic sales forecast. When sales don’t explode as planned, we suddenly have some significant extra expenses (people, inventory, equipment or office space) without sufficient new sales to cover those expenses.

The problem in both cases is the natural optimism of the entrepreneur . . . the expectation that everything will work out somehow. The “can do” spirit and “full speed ahead” determination is what makes entrepreneurs unique and successful. But it can also get them in trouble if they don’t correctly anticipate their cash requirements.

The answer, of course, is to keep a cash reserve beyond what you believe you’ll need so that when you hit an unexpected bump in the road, it doesn’t put you out of the game. And the bigger the reserve, the better. The bigger the reserve, the bigger the bump you can hit.

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

Develop Your Own Leadership Style

2010-03-08T08:00:00.001-06:00

“The result of leadership is a group of people working toward a common goal because they want to, not because they have to.”

This is only one quote on leadership among hundreds, or more likely, thousands. There is probably no other concept in business that’s gotten as much attention as leadership. But what is it? Most of us think we know it when we see it, but it shows up in so many diverse situations and in so many different styles that it’s difficult to give it a succinct, one-size-fits-all definition.

My trusty dictionary defines leadership this way:
the position or function of a leader
the ability to lead
an act or instance of leading
the leaders of a group

Not really very helpful, is it?

I think the quote at the top is correct in terms of an outcome of leadership. The outcome has to be to give people the confidence and desire to work together toward a specific goal. But what does it look like in action? As it turns out, it has hundreds and thousands and millions of looks. That’s why it defies definition.

I believe true leadership means being authentic, being yourself. You can’t fake it. You can’t imitate someone else’s leadership style. You develop a style of leadership that reflects who you are . . . your personality, your values, your way of communicating. Great leaders come in all sorts of packages. Some are quiet and thoughtful, some are brash and commanding, some are humble, some are arrogant. They all can work. So don’t try to fit into somebody else’s package. Work on developing your own.

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

Keep Your Company on Track with Key Performance Indicators

2010-03-01T08:00:00.004-06:00

I normally begin with a “Quote of the Week,” but I wanted to talk about Key Performance Indicators (KPIs) and didn’t really have an appropriate quote for that topic. So I guess this is a “Tip of the Week.”

While monthly financial statements provide vital information to the management of a business, they have a significant flaw: they are ancient history by the time we get them. There’s not much we can do about events that shaped our financial condition when those events happened four, five or six weeks prior to our seeing the financial statements. So we really need an early warning system . . . quick snapshots so we can see, on a weekly or even daily basis, how the business is performing in key areas. These are Key Performance Indicators or KPIs.

KPIs are different for every business, but there are a few that are fairly universal. For instance, many businesses track sales on a daily or weekly basis to make sure sales are on pace to meet that month’s goal. Cash flow is critical to all businesses, so virtually all of them will watch how efficiently and effectively they are able to collect their receivables.

Then there are KPIs that are not necessarily universal. If you are a wholesaler or a distributor, you probably need a KPI to make sure inventory levels are where they should be. If you are a manufacturer, you might need a KPI to watch waste levels, or another one to watch manhours per unit produced. A service business, on the other hand, may not have inventory or waste to worry about. It may be more concerned about billable hours vs. non-billable hours, or how many proposals are going out the door per day or per week.

The point is, you need to understand what indicators are the most critical to diagnosing the health of your business. And you shouldn’t need a lot of them. If they truly are “key” indicators, you shouldn’t need more than six or eight of them. Think of it like this. Suppose you’re on vacation. You’re having a great time and you would really like to stay a few more days than you originally planned. But before you do that, you better call the office to see how things are going. When you make that call, you can ask six and only six questions to determine if you can stay a few extra days or if you need to hop the next plane home. Those questions are your KPIs. They are not intended to tell you how every last detail of the business is performing. They are only intended to tell you that the most important parts of the business are performing within tolerances, and that the business is not in any imminent danger. If the patient has a hang nail or a sore throat, that’s OK. We need to address those ailments, but the patient isn’t going die from them. But if the patient’s heart is showing danger signs . . .

KPIs can be great tools to spot and address problems early. Used correctly, they can be one of your most powerful business management resources. If you want to learn more about how to use them, pick up a copy of Kraig Kramers “CEO Tools.” He discusses KPIs at length, in easy-to-understand terms.

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

Do Your Exit Planning Now

2010-02-22T08:00:00.003-06:00

“Planning is bringing the future into the present so that you can do something about it now.”

For most small business owners, the business is their single largest asset and the one they are counting upon to fund their retirement. So wouldn’t it make sense for them to plan when and how they expect to exit the business? You would think so, but many don’t . . . at least not in a disciplined, structured way. They may have a vague notion in their head that they will sell the business for X dollars, but to whom? To an investor? To a competitor? To the employees? And how do they know they can get the price they want for the business? In many cases, they don’t know. There is often a disconnect between what the owner wants for the business and what the business is actually worth.

For example, the owner of the ABC Company has worked hard for many years to build his enterprise, and now, he’s ready to put it up for sale. He already has visions of golf, fishing, traveling the world, and living out his days in comfort. But he is shocked when an offer from a prospective buyer comes in at half of what he counted on. He is further shocked when his advisors (lawyers and accountants) advise him that it is a good offer and he should take it. Everyone is sorry that the market price for the business isn’t what he hoped, but it is what it is. What’s he to do? Postpone retirement in hopes that he can get a better price later? Or proceed with the sale and scale back his retirement plans . . . fewer creature comforts, fewer rounds of golf, and less travel? Neither choice is very appealing, but the real sad part of the story is this: he didn’t have to be in this predicament if only he had done some intelligent exit planning.

First, understand who is the most likely buyer for your type of business. Then educate yourself about how that buyer will value your business. The buyer will, of course, be interested in any hard assets owned by the business . . . real estate, inventory, equipment, and the like. He will also be interested in profitability over the past three to five years. Have earnings been growing, flat, or in decline? He will be critically interested in cash flow, and he will want to know how well your people can keep the business moving when you are no longer there. All these factors enter into placing a value on your business, and depending on the industry, there are probably many other factors as well.

The point is, if you know how the various factors combine to place a value on your business, you can work to optimize those factors so as to maximize the value of the business. And you’ll know what those factors have to be to command the price you expect for your retirement.

It’s never too early to map out your exit strategy. If you’re not planning on exiting the business for 30 years, that’s great! That means you have plenty of time to work your business plan and have it producing the results you want for your exit. Don’t wait. Do it now or you risk ending up like the ABC Company.

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

Conflict Can Be a Positive Force

2010-02-15T08:00:00.003-06:00

“No organization can make good decisions without conflict.”

“If everyone is thinking alike, someone’s not thinking.”

We tend to veer away from conflict. It can make us feel uncomfortable, or even downright shaken. It can inspire anger, anxiety, hurt feelings, and a lot of other negative outcomes. So we avoid it. We try to play nice and hope everybody else does the same. If we can’t say something nice, our mothers taught us, don’t say anything at all.

If we could create such a place . . . a place free of conflict . . . would you want to work there? Probably not because it would also be a place free of passion, free of divergent points of view, and free of lively debate. It would be pretty boring. And it wouldn’t be an industry leader, it would be at the back of the pack.

The fact is, properly managed, conflict moves a business forward. New ideas are vetted in the heat of debate. Ideas that survive the heat give us confidence that we may actually be on to something here. Ideas that wilt under a robust discussion probably don’t deserve to see the light of day. It’s the rite of passage that separates the good ideas from the not-so-good.

So how do we manage conflict so that it’s a positive force and not a detrimental one?

It starts with the simple notion that we can disagree without being disagreeable, and we build that simple notion into our culture. Mostly that means we have to make it “safe” for people to disagree or to take opposite points of view. So we vigorously defend our own position, but we don’t assign unworthy motives to our opponent. We assume that everyone is well-intentioned and honestly motivated. When people know they can stand up and say what they believe without being castigated or impugned, guess what? They will!

As part of any good decision-making process, we need to hear a variety of opinions. We need healthy, robust debate that brings out divergent thoughts without getting personal. If we manage that well, we get everyone’s best thinking, and when the smoke clears, we’re still friends, colleagues, and members of the same team.

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

Making It Safe for Your Customers to Buy

2010-02-08T08:00:00.003-06:00

“Today’s decision makers are reassessing every spending and investment decision they make. They are looking for ways to reduce delay or cancel purchases and investment decisions, and they are seeking certainty that desired results will be achieved as planned.”

At a recent business meeting, one of the participants complained, “I’ve never seen so much indecision. Our customers just won’t pull the trigger. They get right up to the point of buying then back away, putting off the buying decision until next month or next quarter or longer.” That drew a lot of “me too” responses around the room, so it became a lengthy discussion topic. Why is this happening?

In these tough economic times, with budgets screwed down to the last dime, people are fearful. One poor buying decision could shake the whole organization and may cost jobs . . . including the job of the person who made the poor choice. So people are looking for safety . . . assurances that the product will perform as promised, that the expected ROI will be achieved, or that the anticipated cost savings will be realized. That’s not new. Sales people have always had to convince skeptical buyers that their product or service will perform as advertised. It’s the degree that has changed . . . buyers no longer want assurances, they want guarantees. They want their buying decisions to be bullet proof, and until they are, those decisions will be delayed, delayed, delayed.

So we need to make it “safe” for our customers to buy from us. How do we do that? The answer is probably different for every business, but the best example of an industry that really bent over backwards to attract skittish buyers is the auto industry. People weren’t even coming into showrooms because they were afraid of losing their jobs and of being saddled with big car payments. So what did some car companies do to make it “safe” to buy? They said, “No problem. If you lose your job, you can give us the car back.” Pretty radical stuff.

Iron clad guarantees of specific outcomes can be difficult if not impossible. There are too many variables that are outside the control of the seller. So focus on those things that are under your control and that you can guarantee. For instance, you may not be able to guarantee that a market research assignment will deliver the answers the client hopes for, but you can guarantee that you will assign your best, most senior researcher to the project, and that the answers will be accurate, validated, and above reproach. You can also guarantee the methodology that will be used to conduct the research and the controls that are in place to assure the quality of the data.

Traditionally, we probe buyers to discover where their pain is. Now it’s a little different. We have to probe for where their fear is and find ways to overcome it. The success of our sales effort depends on it.

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

Embrace Change

2010-02-01T08:00:00.004-06:00

“If there is no change, there’s no need to manage.”

What would happen in your business if one day your managers just didn’t show up? What would their subordinates do? Well, they would probably just do what they did yesterday. And if the managers still didn’t show up the following day, the subordinates would just continue doing what they had done all along. This could go on for quite awhile, and actually, things would probably run pretty smoothly.

Until something would change.

It might be a new technology, turnover of personnel, something different in the marketplace, or a new competitor . . . it could be a lot of things. But something changes and suddenly we can’t simply continue to do what we’ve been doing. We’ve got to adapt to the change, and that’s the job of management.

It’s tempting to blame outside factors when a company doesn’t perform as it should. We say, “It’s the economy,” or “It’s the high cost of energy,” or “It’s unfair competition from China,” or we make some other excuse that our company’s poor performance is somehow not our fault. But it is our fault. As business managers, it’s our job to anticipate, respond to, and adapt to change. It’s what we’re paid to do.

If we can’t compete with the Chinese on mass-produced products, maybe we change our focus to short-run, custom-made products. If the high cost of energy is hurting us, we look for conservation opportunities or introduce more energy-efficient equipment or come up with a pricing strategy to pass that cost through to our customers. The point is, it doesn’t matter whether change-induced problems are caused by external forces or not, it’s still our job as managers to solve them.

We can’t complain that it’s unfair this is happening to us and say, “Woe is us. We’re doomed!” That’s a recipe for going out of business. We need to accept change as a constant in our business lives, acknowledge our responsibility for dealing with it, and welcome it as a challenge.

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

Key Management Activities

2010-01-25T08:00:00.003-06:00

“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.

Stop Doing That!

2010-01-18T08:00:00.003-06:00

“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.

Instill Self-Confidence in Your People

2010-01-11T08:00:00.004-06:00

“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.

Talk Less, Listen More

2010-01-04T08:00:00.001-06:00

“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.

Tell Your Salespeople to Stop Selling

2009-12-28T08:00:00.002-06:00

“No one likes to be sold; everyone likes to buy.”

Professional sales people get a bad rap. Sales is an honorable profession, but it has been sullied by poor practitioners of the craft . . . sales people who are determined to make the sale regardless of the needs and wants of the customer. We’ve all run into pushy sales people who are clearly more interested in their commission than they are in helping us. So they lose our trust.

The fact is, good sales people are problem solvers. They ask questions, they listen intently to the answers, and they get a clear picture of the problem the customer is trying to solve. In some cases, the sales person may have to say, “I understand what you’re trying to do, but I don’t think our product (or service) is the right answer for you.” Of course, that loses the sale today, but it earns the respect and trust of the customer. Is that customer likely to bring you back the next time he has an appropriate need? You bet! Is s/he likely to feel comfortable referring you to others? Absolutely!

Contrast that with the poor sales person who is motivated by self-interest and will try to fit a square peg into a round hole to make the sale. S/he loses the trust of the customer, may very well lose future opportunities, and almost certainly will not get any referrals.

Hopefully, your sales people are not “selling” in the worst sense of the word. Instead they should be creating a trusting relationship, allowing the customer to buy with confidence and enthusiasm.

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

If You Don't Plan, You Plan to Fail

2009-12-21T08:00:00.002-06:00

“A goal without a plan is just a wish.”

I have talked about planning here before, but I continue to run into small business owners who seemingly just don’t get it. They don’t plan because they don’t see the value in it. So I continue to hammer away at it in hopes that the lights will come on and they will finally “get it.”

Think of a driving vacation. You can get in the car and start driving, hoping you end up someplace you’ll enjoy. Or, you can plan your trip, deciding where you want to be at the end of each day, what you want to see and do, and what your ultimate destination will be. If your goal is to have a fun vacation, which method is more likely get that result? Jump in the car and hope for the best, or plan it out?

Does a plan guarantee you’ll hit your goal? Of course not. But it does guarantee you’ll come a lot closer to your goal than you will if you try to just wing it.

We used to talk about 3-year and 5-year plans, but business conditions are changing so fast that it’s questionable how useful those longer term plans are. However, you should have some over-arching goal (i.e., we’re a $5 million company and we want to become a $20 million company). Then each annual plan should move you down that growth path at a pace that gets you there within an acceptable time frame.

Many companies refer to their annual plan as a budget. I suggest you lose that term in your corporate culture and substitute “profit plan.” “Budget” sounds confining, restrictive, and it’s there to restrain our spending. “Profit plan” is more positive, and it’s more descriptive of what we’re doing. It’s saying, “Here is the profit we expect to make this year, and here is how we intend to do it.”

If you’re not already doing it, start building annual profit plans that move you toward your long-term goal(s). If you embrace each year’s plan and really work it as a management tool, your company will move more sure-footedly and more profitably down the road you have chosen for it. Guaranteed.

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

Failures Are Learning Experiences

2009-12-14T08:00:00.002-06:00

“Success is not determined by the flawless execution of a plan. It is determined by how people react to failure.”

“I haven’t failed. I’ve found 10,000 ways that don’t work.”

“The way to succeed is to double your failure rate.”

“What would you attempt to do if you knew you could not fail?”

Lots of thoughts about failure, but it’s an important aspect of business life. It’s the consequence we must consider anytime we try something new. What if this new thing we’re trying doesn’t work out? What if the market doesn’t accept the new product we’re rolling out? What if we don’t reach the ambitious goals we set for ourselves next year? And sometimes, we do fail. We had what seemed like a good idea, we studied and researched it, we planned well, we executed well, but for some reason, it just didn’t work the way we thought it would.

We learn by our mistakes, don’t we? So then failures are a learning experience. They teach lessons about the business we are in and the markets we serve. Not that we should seek out failures or take them lightly when they happen, but nor should we jump out the nearest window. Successful organizations are places of learning. They get back up, brush themselves off, and say, “OK. Now what did we learn from that?” Unsuccessful organizations play the blame game and look for a scape goat.

So how do you treat failures in your organization? Not stupid mistakes or careless errors, but honest, good faith efforts that simply didn’t pan out. Is it OK to fail at your place? Do you punish those who show initiative and are willing to take a risk while rewarding those who keep their heads down and play it safe? Hopefully not.

In employee satisfaction surveys, “Being in a place where I can learn and grow” always ranks near the top of the list. So be a learning place. Treat failures, not as tragic events, but as teaching opportunities . . . lessons to be learned. You’ll attract and retain better people, and you’ll build a stronger, more dynamic organization.

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

How Good Is Good Enough?

2009-12-07T08:00:00.001-06:00

“Good enough is never good enough.”
- Jack Welch, General Electric

“When you’re better than ‘good enough,’ your price is too high.”
- Sam Bowers, business professor and lecturer

It’s hard to argue with a business legend like Jack Welch. And he’s right. We need to continuously tweek and refine our product or service to meet the changing needs of our customers or to better serve their existing needs.

But Sam Bowers is also right. Price is always part of the equation. Marketing executives deal with this every day. Yes, we have the technology to make an improvement to our product, but it will add $10,000 to the price tag. If our customers are unwilling to pay an additional $10,000 for our product, then the message is clear. The old product was good enough.

I could put higher octane gasoline in my car but it would cost more, and you know what? My owner’s manual says the car is designed to run on the lower octane gasoline, so it’s definitely good enough.

I have a wrist watch that I bought for under $100 and it keeps amazingly precise time. It never gains or loses a second. I could have spent thousands of dollars for a fancy Rolex, but all I require is dependable time keeping. So my watch is good enough.

The message is simple. We must always strive to understand and meet customer needs. But before we “surpass our customer’s expectations” (as many companies claim to do), we better look at the cost/benefit relationship from the customer’s point of view. In many cases, dependably and professionally meeting our customer’s expectations is good enough . . . particularly when “surpassing” means eroding our profit margins or raising our prices.

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

Meeting Customer Needs

2009-11-30T08:00:00.002-06:00

“The purpose of your organization is to meet customer needs. That’s the game. Profits are the score.”

That’s obvious, isn’t it? Well, it should be, but we often behave as though our customers must meet our needs. Think about it. Do you impose deadlines on your customers to make life easier for you? Are your pricing schemes aimed at getting customers to buy the way you want them to buy rather than the way they would prefer to buy? Do you try to sell your customers the products or services you want to move rather than the products or services they want to buy?

Clearly, we need to structure our organization to make it as efficient and effective as possible. But an efficient, effective organization is not at odds with meeting customer needs. The problem is change. We may have started out meeting customer needs dead on, but then their needs changed. The systems and procedures we put in place to serve the old customer needs don’t work so well with the new customer needs. But it’s expensive and time-consuming to change the way we do things, so we try to shoehorn the new customer needs into our old structure. We may get away with that for awhile, but pretty soon, someone else will figure out a better way to meet the customer needs, and then we’re out of the game.

Take an inventory of every rule and policy you have in place that affects customers. In each case, ask yourself if the rule or policy is there to serve customers or to serve you. If it’s there to serve you, it may be a red flag that we’re not serving customers as well as we might.

Better yet, have a frank discussion with your customers aimed at uncovering any unmet needs. And be open-minded with the feedback you get. Even though customers may want something that is seemingly outrageous, give serious thought to how it might be done. Remember, if you can’t figure out how to meet your customers’ needs, someone else will.

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

Get a Life!

2009-11-23T08:00:00.005-06:00

“If your business keeps you so busy that you have no time for anything else, there must be something wrong, either with you or with your business.”

Do you have time to do things you want to do outside of your business? Or, said another way, do you feel you have good “balance” in your life? Obviously, there are times when business activity is high and things can get a little hectic, but that’s not what we’re talking about here. Over the long term, are you so consumed by your business that you don’t have time for other things that are important to you?

If the answer is “yes,” you almost certainly have a problem delegating authority to others. Small business owners tend to keep all the important levers and buttons of the business under their own control. In most cases, they simply don’t trust anyone else to handle those critical functions. Yet if the owner continues to hoard all the important stuff for him or herself, there are usually some negative consequences.

One such consequence is a drain of talent from the business. People want to work where they can learn, grow, and get increasing amounts of responsibility, and if they believe they are not getting that at your company, they’ll go somewhere else.

Another consequence is owner frustration. The owner has rigged the game so that nothing of importance gets done without his or her fingerprints all over it. So s/he can never get away from work for any length of time without everything coming to a grinding halt.

The growth of the business is stifled. If the owner tries to do everything, the business stalls when it reaches his or her personal limit. There are only so many hours in a day and only so much one person can do, right?

But failing to delegate ultimately damages the value of the business. For most small business owners, the exit strategy at retirement time is to sell the business. Even though the business may be profitable, a would-be buyer will look very closely at how well the business will operate when the former owner is gone. If the buyer decides the old owner is the business . . . that he holds all the key relationships with customers and vendors, and that he is the “go to guy” for operational issues . . . the buyer will be unlikely to pay much for the business because, after all, with the old owner out of the equation, there really isn’t much of a business left. On the other hand, if the place runs like a top whether the old owner is there or not, the business will command a premium price.

So if you are in this predicament, the only way out is to begin grooming others to take on important roles of authority and leadership. If you don’t have them, find them. Bring them on board. You’ll be happier, your people will be happier, the business will operate more smoothly, and it will have greater value. What’s not to like about that?

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

Making Compensation a Non-Issue

2009-11-16T08:00:00.003-06:00

“Compensation is an equity issue. People want to know that they are being compensated fairly compared to others doing similar work within the company, and to others doing similar work in other companies. After that, it’s a non-issue.”

It really is that simple, yet we continually find ways to complicate the situation. For example, let’s say we’ve got two employees, Bob and John. Bob has been with the company for 20 years, John for only 18 months. They both do the same work and do it equally well. In many cases, Bob would be paid more (in some cases, much more) due to his long service to the company. But is that fair? Should John be punished for achieving in 18 months what it took Bob 20 years to achieve? In truth, John should probably get a bonus for getting up-to-speed so quickly.

Or how about this. Bob has a spouse and two kids to support while John is single and lives at home with his parents. Consciously or unconsciously we may pad Bob’s pay a bit because we know he has a family to feed. That may be a compassionate way to look at the situation, but is it fair? No, it’s not. If both Bob and John do the same work and do it equally well, they should be compensated equally. Their personal situations shouldn’t enter into it.

Equal pay for equal work is such a fair and equitable proposition that it’s beyond reproach. We get into trouble quickly when we try to explain why we’re not practicing equal pay for equal work . . . because frankly, there is no explanation that makes sense.

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

Aim High, But Not Too High

2009-11-09T08:00:00.002-06:00

“It’s not that our aim is too high and we miss it, but that it’s too low and we reach it.”

Michelangelo offered that advice about 500 years ago, but I think we have to be a little bit careful how we apply it in our businesses.

Clearly, setting goals that can be achieved at a walk is a bad idea. People don’t get much sense of accomplishment when the goal is too easily reached. On the other hand, setting goals too high causes another problem. People will quickly discern that goals are set absurdly high, they will become discouraged, and again they will be robbed of a sense of accomplishment.

In his excellent book, “CEO Tools,” Kriag Kramers offers an answer to this dilemma. He recommends a rigorous budget process whereby goals are demanding, but achievable. Then he suggests setting some big, over-the-top goals while clearly communicating that it’s OK if we don’t hit them. After all, we did hit our base budget goals, right? So everyone can take get a sense of accomplishment from that even if we go no further. But if we do go further, we can offer some really exciting incentives because we’re now playing with money we never expected to have in the first place.

So it’s really a perfect solution. We set tough but achievable goals so that everyone can take pride in accomplishment, but then we set some over-the-top goals, acknowledging that we probably won’t hit them, thereby eliminating any sense of fear or guilt or failure. And by the way, once you get into the over-the-top goals, have fun with them! Make it a game! Challenge one another! After all, at that stage, you truly are playing with found money.

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

Poor Employee Performance Is a Management Issue

2009-11-02T08:00:00.003-06:00

“People don’t come to work each morning to do a bad job.”

Mostly true. Sure, there’s the odd malcontent who’s mad at the world and wants to challenge authority, but as a rule, people really do want to do what’s expected of them. When they don’t perform as expected, there are generally two reasons, both of which are failures of management.
The first failure is we tried to put a round peg in a square hole. We placed someone in a role where s/he couldn’t be successful. Maybe the person didn’t have the right skills, talents, experience or personality for the job we put them in. And why would we do that? Sometimes because we’re desperate to fill a position and we think someone in that job is better than no one. Faulty logic. If the job is too important to be left vacant, then it’s too important to be done badly. Or we’ve got an opening, we like to promote from within, and we’ve got a loyal, veteran employee who we think deserves a shot at it. More faulty logic. Why reward an employee’s loyalty and hard work by putting him or her in a no-win situation?

The second failure is one of communication. Management has one picture of what a good job looks like, but unfortunately, the employee responsible for doing that job has a completely different picture. For instance, the employee knows that on-time delivery is very important to the company and spares no effort to get the product shipped as quickly as possible. S/he doesn’t understand that quality is an even higher priority with the company and that quality trumps on-time delivery. Seems like this sort of miscommunication shouldn’t happen, but it does. All the time.

The message here is this: when you have an under performing or poorly performing employee, don’t jump to the conclusion that you have a bad employee. Start with the notion that the employee wants to do a good job, but something is getting in the way. Then check to make sure s/he is fully qualified to do the job well and that s/he understands clearly what a good job looks like.

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

One of My Favorite Management Tools

2009-10-26T08:00:00.002-05:00

No quote this week. I want to offer a tip you will find useful, but I didn’t have a quote that would complement it.

One of my favorite management tools is a trailing 12-month average. If you’re familiar with this tool, stop here. You already know what I want to tell you. But if not, please read on.

Have you ever seen a chart that looks like the scribble of a 2-year old? You can’t tell if the trend is up, down, or flat? A trailing 12-month average overcomes that problem with a smooth trend line that doesn’t lie. And it works for any data you want to track . . . sales, gross profit, expenses, net profit, or any other statistical information. Here’s how.

Let’s say you want to track sales. Imagine a chart where the vertical axis is dollars or units, and the horizontal axis is months of the year. We can start in any month we like, but for this example, we’ll start in January 2007. The first point of our graph will be the sales results for January 2007 plus the preceding eleven months, totaled and divided by 12. So the sum of sales, February 2006 – January 2007 divided by 12. The next point on our graph will be February 2007 plus the preceding eleven months . . . March 2006 – February 2007, divided by 12, and so on. Each point on the graph represents the current month plus the preceding eleven months, divided by 12. You don’t really have to divide by 12 . . . the trend line will be the same whether you chart the monthly average or the entire 12-month total. But dividing by 12 gives you a monthly average that you can then compare to your actual month’s result.

Since each point on the chart represents an entire year’s worth of activity, seasonal ups and downs get leveled out as do one-time sales spikes (as for instance, a large sale that you don’t expect to repeat). As a result, you get a nice, smooth trend line that tells you clearly and honestly whether the data you’re tracking is going up, down, or flat. It’s a terrific tool to quickly and accurately identify trends that need corrective action. It’s also a tool that can be used as a budgeting or forecasting aid.

For more on this and many other management tools, I recommend “CEO Tools” by Kraig Kramers . . . it’s crammed full of useful ideas to help you improve productivity, results, and profits.

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

What Do You Tolerate?

2009-10-19T08:00:00.003-05:00

“A company’s culture is defined by what it tolerates.”

All companies have a culture. In some cases, the culture is one that has been carefully constructed and nurtured, in others, the culture has evolved haphazardly over time, but either way, a culture is present, and it is defined by what it tolerates.

Think of IBM in the early days. They wanted a culture of professionalism. Employees were expected to show up for work well-groomed and in conservative business attire. Showing up for work with unkempt hair and wearing a Bud Lite tee shirt was not tolerated.

Ritz Hotels are legendary for customer service. Employees who don’t understand and practice world-class service are not tolerated.

At a manufacturing plant, employees on the assembly line are empowered to shut down the line if they spot something wrong. In that culture, high quality is expected and nothing short of that is tolerated.

Every culture is different. For IBM, conservative dress was an important part of the culture. For a general contractor, having carpenters, electricians, and plumbers trying to put up a building in 3-piece suits would be crazy. Nursing homes don’t tolerate violence. The Marine Corps teaches it.

The point is, your culture needs to be something put in place thoughtfully and deliberately, and it must answer the question, “How do we behave around here?” You need to consider all of your stakeholders . . . customers, employees, and vendors. What do you expect of them, and just as importantly, what do they expect of you? Your culture, what you tolerate and what you don’t tolerate, should reflect all of that.

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

Stop Micro-Managing! It's Killing Your People

2009-10-12T08:00:00.004-05:00

“Let people accomplish your objectives their way.”

Where systems or processes are concerned, it really is essential that everybody use them uniformly. Imagine an assembly line. Each station on the line must perform its function in a very precise way, each and every time, or stations further down the line won’t be able to do their work. But for the most part, management challenges don’t lend themselves to an assembly line approach. They tend to be unique situations that require specially crafted solutions. However, that’s not to say that there couldn’t be two or five or a hundred specially crafted solutions that would all work equally well.

For most of us, the joy of work is in figuring stuff out . . . doing or trying things that haven’t been done or tried before. When we’re told, “Here we are at A, and you need to get us to D,” that’s a great assignment. Right away we’re thinking, “I wonder if there’s a way to get directly to D without going through B or C. Or maybe it would work better if we went from A to C, then back to B and finally to D.” On the other hand, if we’re told, “Here we are at A, you need to get us first to B, then to C, and then to D,” all the joy, excitement, and creativity just went out of the assignment.

Micro-managing can tear the heart right out of an organization. Leaders set a broad direction and then get out of the way. Tell your people what to do, but let them figure out how to do it. Are you a leader or a micro-manager?

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

Make Better Hiring Decisions

2009-10-05T08:00:00.005-05:00

“We hire for skills and fire for behaviors.”

That’s true isn’t it? We were excited about our new hire. He had worked at some great places, been trained in the exact systems and processes we need, and impressed us as someone who is diligent and efficient. This was going to be a marriage made in heaven. Unfortunately, we were so impressed with his skills, we neglected to learn that he is rude, self-absorbed, imperious, and nobody can stand to work with him. So the marriage we thought was made in heaven ends in an ugly divorce.

There are no guarantees when it comes to hiring people. Try as we might to hire only the people who are a “good fit” for our company, we sometimes make a mistake and take in someone who is a bad fit. But there are ways to stack the odds in your favor.

First, in an interview, focus on behaviors that will be necessary success factors for the job you’re trying to fill, and ask for actual events in the candidate’s past that demonstrate those behaviors. For instance, you might say, “You will need to work with a team of people to do your job successfully. Give us some examples from your prior work experience to show how you worked with others to accomplish a particular goal.” Or you could say, “Tell us about a really tough customer service issue you’ve had. How did you handle it?” The point is, ask questions that illustrate the behaviors you want and ask for actual situations from the candidate’s past, not hypothetical ones (“What would you do if . . . “).

Second, when you do reference checks, verify the interview answers you got. “I understand John had a tough situation with the XYZ Company but was able to defuse it by doing thus and such. Is that the way you recall it?”

Behaviors are tough to predict, but if you spend some time thinking carefully about the behaviors you need and then thoughtfully constructing questions to highlight those behaviors, you’ll be surprised how much you can learn about a candidate before s/he becomes an employee.

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

Coming to Grips With Change

2009-09-28T08:00:00.004-05:00

“Progress always involves risk, but you can’t steal second base and keep a foot on first.”

“Change with the world – or it will change without you.”

There is always risk with change, and in general, the greater the change, the greater the risk. But you know what? There’s also risk in not changing . . . arguably even greater risk.

Changes in the business world are coming at us faster than ever before, and the rate of change will continue to accelerate. So we need to prepare our organizations to not only accept change, but to embrace it. Yes, change brings risk, but it also brings new opportunities. If you’re unwilling to take the risk, you will be shut out of the opportunity.

People aren’t afraid of change. They’re afraid of the unknown. So the best way to introduce change is through good communication. Tell your people what change is coming, why the change is necessary, and what you need from them to affect the change smoothly. If you communicate the change clearly and completely and you answer all questions about it honestly, the fear is largely gone because the change is no longer unknown.

If your culture is risk averse and resistant to change . . . you’d better change it.

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

Want to Find Waste? Ask Your People

2009-09-21T08:00:00.006-05:00

“The best ideas for improving a job come from those who do it every day.”

Absolutely true. If you want to know where there is waste in your organization, ask your people. They know where it is, but they won’t tell you unless you ask.

At a medical practice that has a number of offices, we asked the staff for “time wasters” . . . activities that take up a lot of time without an obvious benefit. In this practice, patient records are kept centrally, so when a doctor is seeing a patient at one of the outlying offices, the patient’s record (which can be voluminous) must be faxed there. The staff reported that they spent a lot of time standing at the fax machine. We checked with the doctors who told us they don’t need the entire record, only two or three pages of it. So it was an easy fix that saved a lot of staff time with no adverse impact on doctor or patient. But we wouldn’t have found this “time waster” if we hadn’t asked.

Go through your entire organization from the executive offices to the loading dock and ask everyone where they see waste . . . wasted time, materials, or space. You’ll be surprised by what you learn. In some cases, an employee will believe something is wasteful because s/he doesn’t understand its value. This becomes an opportunity to help that employee learn more about how your business actually works. But in many cases, the employee will point out something that really is wasteful and can be corrected. You just have to ask.

A retiring GM worker once said, “For 25 years you’ve paid only for my hands when you could have had my brain for free.” Don’t make that mistake.

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

Put Down Your Fire-Fighting Gear

2009-09-14T08:00:00.002-05:00

“Never let the urgent crowd out the important.”

As small business people, we spend a lot of our time putting out brush fires. When we arrive at work in the morning, we probably have in mind the things we hope to get done during the day. But five minutes later, our best customer calls with a problem or a key piece of machinery breaks down, and in a flash, whatever plan we had for the day is gone.

Most business consultants are familiar with a two-by-two grid where one axis says “Important” and “Not Important” while the other says “Urgent” and “Not Urgent.” Unfortunately, many of us spend far too much time in the part of the grid where “Urgent” and “Not Important” intersect. Is it urgent to get a key piece of equipment back in operation quickly? Of course. But will that be important to the long-term health and growth of the business? Probably not.

Each of us needs to carve out some protected time to work on the business, not in the business. We need to commit to some time each week . . . maybe a day, maybe half a day, maybe just a few hours . . . for activities that will move the business forward in a measurable, strategic way. If you can accomplish that by closing your office door and unplugging the phone, fine. If not, go to the library or to a coffee shop, or maybe work from home. However you do it, find a way each week to put aside your fire-fighting gear for awhile and focus on the longer term problems and opportunites for your business. Can’t do that? You can’t be out-of-touch with the business for even a little while? Then your first “important” task is figuring out how to change your organization so that it runs just fine whether you happen to be on the premises or not.

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

Decisions, Decisions, Decisions

2009-09-07T08:00:00.002-05:00

“Permitting colleagues to participate in decision-making is not so much a favor to the participants as it is to the executive.”

The days of the boss hurling down lightning bolts while his employees scurry to do his bidding are long gone. Employees today are better educated, better trained, and have access to more information than ever before. They have insights as to what’s working well and what’s not. In short, they are smart people who expect a seat at the decision-making table. If they are denied that seat, a number of things are likely to happen, all of them bad.

First, the best employees will leave in favor of businesses that value their input. Then the remaining employees will not enthusiastically support decisions in which they had no part. Or worse, they may actively subvert such decisions. On the other hand, an inclusive decision-making process carries a number of positive outcomes.

The most important outcome is that the executive gets the brain power of some really smart people who will express views, opinions, and ideas that may s/he may not have considered. Job satisfaction goes up because people want to know that their views have been heard and valued. And implementation is more robust when employees are part of the process and take ownership of the decisions.

The one drawback is that decisions made with input from lots of people may not be as elegant and precise as a decision formulated by one person. Still, it’s far better to have an imperfect decision perfectly implemented than it is to have a perfect decision poorly implemented.

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

The Beginner's Mind

2009-08-31T08:00:00.002-05:00

“A new idea is delicate. It can be killed by a sneer or a yawn; it can be stabbed to death by a joke or worried to death by a frown on the right person’s brow.”

Bruce Lund is the owner/founder of Lund and Company Innovation, a toy design and product invention company (inventors of Tickle Me Elmo). His company is dedicated to the proposition that toys are profoundly important. Great toys teach, entertain, surprise, inspire and invite inquiry.

Mr. Lund wrote this blog and I thought it was so good, I wanted to share it with you. Normally, I post a brief quote and then comment on it, but in this case, I’m passing on his blog in its entirety without comment . . . there’s nothing I could say that would improve or clarify what he has written. I hope you enjoy it as much as I did.

Bruce Lund on The Beginner’s Mind

In our work, we have to have the ‘Beginner's Mind’, that innocent state of mind - a way of thinking and believing that all things are possible. I had forgotten that term. The Beginner's Mind does not know what cannot be done, and thus all things become possible.

Typically, as we age and learn, we develop this acute sense of what can’t be done, what is impossible. We become clever, logical, and incisive in our thinking and we begin to start demonstrating to others how smart we are at perceiving what won’t work. Most all of the designers I have worked with over these last 25 years have been keen to explain to me why ideas I suggest will not or cannot work. I am always entertained by their explanations and often frustrated, I will admit. But of course, they are on the threshold of discovering the processes of invention. These processes make the unlikely possible, and on occasion, the impossible possible. But only if you can approach the work with the Beginner’s Mind.

When we take on a project that we do not believe can work, we will always be right - and it won’t work. It is a tribute to the designers, inventors, and tinkerers who have been successful contributors to our team that they have been able set aside their inborn, natural critic to undertake projects without pre-judgment of the likely outcome. In doing so, they are often surprised at what they accomplish.

There is a special joy in making something that one didn’t think could be made, in doing something one didn’t believe could be done. We do that time and again because we are willing to believe all things are possible with the innocence of thought, the absence of doubt, the suspension of disbelief . . . the Beginner's Mind.

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

Don't Waste Time Trying to Change Behavior

2009-08-24T08:00:00.003-05:00

“As managers, we have to get out of the behavior modification business.”

We can help people with skills . . . to improve old ones or learn new ones. But it’s just about impossible to change their behaviors in any meaningful way. Yet we continue to waste time trying.

Take the example of Bill, ace IT guy. He’s an electronics genius. There isn’t anything with a circuit board that he doesn’t know or can’t figure out. Unfortunately, he’s perpetually crabby, ill-tempered, and believes everybody in the building is an idiot except for him. He’s been counseled, numerous times, about his hostile behavior. He always acknowledges the criticism and pledges to do better, but within about an hour and a half, he’s back to his old crabby, ill-tempered self. He’s 35 years old. It’s very unlikely that a few counseling sessions are going to undo the behaviors it took Bill 35 years to learn.

The best solution, of course, is to hire people whose behaviors are a good fit with your company’s culture. But nobody bats 1000 when it comes to hiring the right people. Sometimes we get it wrong and end up with Bill. When we do, we have to recognize that he is what he is and wasting time trying to modify his behavior would be a fool’s errand. Our only real options are to show him the door or find ways to put up with him.

“Consider how hard it is to change yourself and you’ll understand what little chance you have of trying to change others.”

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

Delegating Effectively

2009-08-17T08:00:00.002-05:00

“One of the greatest challenges as a manager is how to delegate so effectively that once you have gotten the monkey off your back, your employees don’t return it to you . . . with instructions for its care and feeding.”

An important part of leadership, delegation, is growing the people who are under the leader’s care. It takes time and it takes effort, but it’s the only way to develop a strong, effective team.

Picture this. You’ve just given one of your direct reports an important assignment. Soon the direct report returns with questions, lots of questions. In the back of your mind you’re thinking, “I could do this myself in just a fraction of the time it’s going to take me to explain everything.” If you give in to that thought, two bad things happen: the monkey climbs on your back again, and you miss a growth opportunity for your direct report.

So how do you move the assignment forward and still keep the monkey where it belongs?

First, you need to invest the time in your direct report. And that’s what it is. It’s not a waste of your time, it’s an investment in growing one of your people. Second, to make this a learning and growing opportunity, don’t spoon feed your direct report with all the answers. Make him/her come up with his/her own answers. For instance, when your charge says, “I’m not sure if we should do X or Y.” Don’t say, “Let’s go with X.” Instead say,

“What do you think?”
“Why do you think that would be a better choice than the other?”
“Have you asked any of your colleagues for their opinions?”
“Have you talked with others in the organization who will be affected by your decision?”
“Have you talked with stakeholders outside the organization who may be impacted.?”

The point is, don’t be the answer person. Be the question person who helps draw out of your direct report the excitement of creativity and discovery. Yes it will take some time, but you’ll end up with a more effective, self-confident employee. And the monkeys will stay where they belong.

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

Let Your Customers Explain It to You

2009-08-10T08:00:00.002-05:00

“If you listen closely enough, your customers will explain your business to you.”

Your customers don’t have to do business with you. They have many suppliers from which to choose, but they have chosen you. Why? What is it about the product or service you offer that brings you customers and keeps them? You think you know why your customers have chosen to do business with you, but do you really know?

Sadly, too many business people aren’t in touch with what their customers are buying. We think we’re selling price but our customers are buying on-time delivery. We think we’re selling world class service but our customers are buying long-term durability.

The answer is to stop telling your customers what you want to sell them and start listening to what they want to buy. Take a customer to lunch, leave your pre-conceived notions at home, and he or she really will explain your business to you. You might just learn that you’re not in the business you thought you were in.

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

Don't Put Off Decisions

2009-08-03T08:00:00.002-05:00

“A decision is an action an executive must take when he has information so incomplete that the answer does not suggest itself.”

The message here is clear. Don’t wait until you have all the information you need to make a perfect decision, because you’ll never have it. So leaders need to discipline themselves to recognize when they have assembled as much information and as many opinions as they reasonably can, and that further delay will not produce a better decision.

Decision-making is more art form than science. It mixes data with experience, good thinking with instinct. So don’t allow its imperfect nature cause a thoughtful and deliberate decision-making process slip into procrastination and unnecessary delay. As the folks at Nike would say, “Just do it!”

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

Cut Your Losses and Move On

2009-07-27T08:00:00.002-05:00

“If your horse dies, get off.”

Inertia can be a terrible thing. It can keep us rooted in decisions and activities that may no longer be productive. It can keep us astride ol’ Trigger long after it has become obvious that Trig isn’t going anywhere.

For example, let’s say we launch a new product or service, but the new offering isn’t getting the acceptance in the marketplace that we had planned. We try different pricing models and different promotional efforts, but nothing seems to help. What should we do? After all, “We’ve invested a lot of time, effort, and resources in this thing. How can we quit now?” A more practical course might be to concede that the horse is deceased, give the animal a decent burial, cut our losses, and move on.

We often see the same behavior in personnel decisions. We don’t want to face a hiring mistake because it took a lot of time, effort and money to find this person and to get him or her trained. We tell ourselves, “We can work with this person. We can get this person turned around,” because we don’t want to lose our investment and have to start the whole hiring process over again. In many cases, this causes us to waste even more time, money and effort before we finally have to face the inevitable. Again, a better solution is to concede the problem, deal with it, and move on.

Can we avoid these situations? No, we can’t. As business people, we all make decisions that do not create the results we expect. But we can defeat inertia. Before we make an investment decision . . . whether it’s an investment in people, equipment, or new products . . . we should lay out clear, measurable results we expect from this investment, and a deadline for achieving those results. And we need to determine, in advance, what action we’ll take if the expected results are not achieved by the deadline we have set. This approach takes a lot of the emotion and trauma out of the situation because we’ve mapped it all out in advance. At this point, we’re simply executing a plan designed to prevent inertia and to avoid investing more than we intended. We’re saying, “We’re prepared to invest this much in resources over this period of time. If at the end of that time, we’re not achieving the results we expected, then we will intervene and take this corrective action.”

Let’s be honest. We’ve all been there, probably multiple times . . . the magnificent stallion we thought we were riding turns out to be a broken down old nag. That’s not the issue. The issue is how we dismount in a timely, disciplined, and orderly way. The better we are at doing that, the quicker we can climb aboard our next steed, and this one may actually be the stallion we want.

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

Planning Isn't Optional

2009-07-20T08:00:00.002-05:00

“The nicest thing about not planning is that failure always comes as a complete surprise and is not preceded by a period of worry and desperation.”

Many small business owners do not engage in any real, substantive planning activities, even though planning will do more to move the business forward than anything else they can do. This is often because:

a) they are so busy putting out the fires of today that they don’t have time to worry about tomorrow, or
b) they believe it is a waste of time to produce a plan document that will sit on a shelf collecting dust and never play a meaningful role in the management of the business.

The most successful business people find time for planning despite the daily fires that need to be put out, and these leaders insist that the results of the planning regimen become an essential tool for making decisions and managing the business. It’s not an either/or proposition. It’s both. We’re going to put out today’s fires and execute a plan for tomorrow.

The planning process need not, should not, be a complex, onerous task. It’s a simple activity that defines where we want to go as a company, where we are now, the steps needed to get us where we want to go, and a timeline for accomplishing those steps. That’s it.

If your company does not do any serious planning, start now. If you need help with your planning process, go get it. Your business will travel down a path of some kind. The only question is, will your business travel down a path toward the destination you have chosen for it? Or will it go down a path random circumstances have imposed upon it and lead to . . . where? The answer should be obvious.

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