“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.
Monday, July 19, 2010
Monday, June 28, 2010
Fully Utilize Your Technologies
“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.
-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.
Monday, June 21, 2010
What Causes Sales?
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
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
Monday, June 14, 2010
Learn to Delegate
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
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
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