How to Prepare for the Next Downturn

Times are good, aren’t they? Will they stay good forever? Of course not.

Back in the last downturn, what do you wish you had done to prepare for future tough years? The time to prepare for hard times is during good times. That’s now.

You don’t want to hunker down and miss out on opportunities now for fear of what may lie ahead. So how can you take advantage of profit and growth opportunities now while taking prudent steps for later safety?

  • Control your costs. This is not sexy, but it’s the single most important step. And it’s the opposite of what many business owners do. When cash is rolling in, they go on a spending spree.
  • Run a lean operation. Don’t get lax with routine expenditures. Weed out people who aren’t doing the job you need done. Stay on top of scheduling, and don’t have more on hand than you need for each part of the day or week.
  • Hire top quality people; train them well. Build a growth team, and nurture their loyalty. A strong, loyal growth team will also be a “get through tough times” team.
  • Build habits of productivity and profitability during good times, so they will carry over into tough times. Make sure your incentives require and reward productive, profitable operation.
  • Raise your prices. Don’t lag behind your competition.
  • Keep your customers happy and loyal by performing impeccably, and handling mistakes completely and openly.
  • Make sure everything you sell is profitable. Make sure your systems can tell you what is most and least profitable. Weed out unprofitable products or services that drag down your margin.
  • Build up business savings, made possible by raising prices, controlling costs and boosting profits.
  • Stay on top of opportunities. Innovate in your products, services, marketing, and operations. Don’t get trapped behind the innovation curve by sticking with lower margin offerings.
  • Seek counter-cyclical business niches. What do you sell that will stay strong through a downturn?
  • Grow into profitable niches, so that you have a stronger basis for profitable operation during a downturn. Don’t be caught trying to sustain an unprofitable operation when a downturn hits.

Surprise!  Your preparation for a down cycle looks very similar to growing during good times.

Want a set of questions to help you discover how to make these things happen in your business? Just ask me and I’ll email it to you.

How to Grow My Business

Many businesses stay small because the owners are afraid to let their employees take over important tasks, for fear they’ll make a costly mistake. Let’s face it: the owner is a control freak!

Here’s a basic rule for growing your business:

The more you can let go, the more you can grow.

• If you’re stuck being a worker or an administrator, you can’t be a good manager.

• If you’re stuck being a day-to-day manager, you can’t be a good strategic executive.

You’ve got to bring in top-quality people to handle every one of these tasks you hold on to and need to hand off, or you’re stuck doing them yourself. That holds you back, and limits your growth and profitability.

Many owners have a very hard time seeing this. They can see getting a bookkeeper or admin assistant, or hiring more producers, but they hold back from hiring a director of operations or a director of marketing. This keeps them small, and consigns them to low profit and low wealth build up. Then they complain about how hard they work and how little they have to show for it.

Hire good people, show them how to do what you need done, give them goals and targets, then let them do the job you hired them for, give review and feedback as needed. If they don’t do it, let them go, but that means you didn’t do a good job of hiring them in the first place.

For you to have good people so that you can let go, that means you have to learn to select good people–or get help from somebody who can help you choose and bring on board good people.

CEOs of rapidly growing companies are leaders of a growth team.

Are You Having Growing Pains?

What barriers keep you from growing your business to the size and profitability you want? How should you tackle them to grow to the next level? Our free webinar shows you how.

What’s keeping you from growing your business to the size and profitability you want? Has your growth been slowed by things that keep dogging you? How can you smash through those barriers and move to the next level?

Here’s what I hear all the time from owners:

— You’re a solopreneur, and you want to grow beyond what you can handle by yourself.entrepreneurial vision

— You have a handful of employees, but everybody’s reporting to you, driving you to a frazzle.

— You’ve got managers, but you’re still running day-to-day operations, and you’d love to hand this off to a trusted top manager, to free you up to focus on growth—and a vacation!

If you’re nodding your head yes to any of these, check out our free webinar, Smash Through the Top 10 Barriers to Growth, on June 4.

I’m doing it jointly with two other small business experts: attorney Nancy Lewellen and productivity consultant Rosie Aiello.

Here are the details.On that page, scroll down to see the 10 barriers we will cover.

I will focus on three areas:

1. Management style for growth. Make sure you’re not the bottleneck to your company’s growth.

2. Profitability. See how you stack up against the 12 Principles of Profitability.

3. Marketing & Sales. Make sure your Magic Chain of Marketing has no missing links.

This free webinar will be an exciting tune-up for you, to help you quickly discover ways you can overcome your own growth barriers.

Check it out and sign up now while you’re thinking about it.

Call me at 415-491-1896 if you want to find out if it would be right for you.

12 Steps to Introduce Change to Your Employees

To make change happen in your workplace, you have to deal with resistance to change.

“How NOT to introduce change” was the topic of a previous post. So how should you do it? Follow these steps. I’ll elaborate on these in upcoming posts.

  1. Treat change as a shift in your business culture.
  2. Take leadership. Don’t leave it to others.
  3. Do your homework before you start.
  4. Involve all those affected.
  5. Apply the Problem Solvent.
  6. Build acceptance, starting with allies.
  7. Address questions, concerns, and objections.
  8. Tackle resistance.
  9. Watch for the hidden barriers.
  10. Stick to it. Don’t get sidetracked.
  11. Know when to change course.
  12. Declare completion.

I’ll talk about these in upcoming posts, but I’ll start here with #8, “How to tackle resistance to change,” because that’s what the most people ask me about.

How to Tackle Resistance to Change

When you introduce change to the people in your organization, you can count on questions and resistance. Even making minor changes: “All I wanted to do was change the type of fluorescent bulbs we use; I had no idea this would rouse such heated discussion!”

How do you tackle this resistance? Here are a few guidelines from my “Twelve Steps to Successful Change” from my new ebook.

Resistance comes from supportive and well-meaning people—it isn’t necessarily antagonistic. It can come from long-time employees, your partner, spouse, co-owner, or even from you. Yes, you! You, as owner, are an enthusiastic backer of the new system. You want the benefits, yet you resist the change and become part of the problem yourself. If your people sense this, then you give them tacit permission to vacillate and backslide.

Can you spot these negative reactions to change? How will you address them?

• Inertia. Any change is resisted. Its value must be proved.

• Not invented here reaction. “If we didn’t come up with the idea, it can’t have much value.”

• Busy-ness. “It sounds great, but we have way too much to do already.”

• Bad timing. “We can’t do this just now. We need to wait until after the summer season.”

• “It’s just another whim of the boss. If we drag our feet, she’ll get tired and forget about it.” This is an important comment on your management style.

• Fear. “I’m afraid I’ll be held accountable for all of these tough things in the future.”

• Resistance to your mandate. You think you are asking, “Will you do this, pretty please?” while others hear you demand, “You will do this!” Perception is reality!

How can you create allies from people who are initially indifferent or against you? By heeding their concerns, and producing positive results.

Resistance with a smile. Some people will smile and say, “This is a great thing.” But then they will pick it apart and criticize you behind your back. For example, a long-time loyal employee may subtly resist things you want her to do that push beyond her comfort level. These might include mastering a new technology, adopting new systems, logging time or activities, supervising others, or even participating in the coordination meetings for the big transition.

This puts you on the spot. You are loyal to her but you can’t let her dictate the pace of change. She has done her job well up to now but now the job requirements are changing. Can she adapt? Is she willing to learn? How can you make it easier for her?

Her initial resistance may melt away once the change is made and positive results are apparent, but it may not. She may not be happy with the new responsibilities, and on top of that feel guilty for letting you down. She may well be happier elsewhere.

The Foot Draggers Club. Some who resist turn out to be saboteurs. Unfortunately these might be long-time employees. They may pay lip service to the change yet drag their feet to the extent that the process is endangered. They may seek out others who don’t want to change and reinforce each other in their resistance. Their hidden agenda may be to prove that the new process won’t work so you will go back to the old way of doing things. It is dangerous and debilitating for you to allow this to spread. In most cases you will have no choice but to get rid of such people.

You can find the whole program laid out in my new ebook “How to Introduce Change to Your Employees” on Amazon for Kindle or iPad. A very affordable $2.99.

 

Are You Cut Out to Be an Entrepreneur?

Do you have what it takes to succeed in business? Many do who seem to lack strong entrepreneurial skills. Here’s what they do have in common.

Do you have what it takes to succeed in business? Some people think it takes special skills to be a successful entrepreneur. I think it’s a myth. If you question your own entrepreneurial credentials, take a look at some of the people I’ve worked with—from solopreneurs to 50 or more employees:

  • Two art majors started making hand-printed greeting cards for friends. Now they own a print shop with a bunch of employees. They’ve printed my books.
  • A woman was making pear condiments in her kitchen. Soon she was selling pallets of her specialty foods to Costco from her warehouse. I have a photo of her driving her forklift.
  • A woman in IT had gluten intolerance, started baking things for herself. She now has a bakery, several retail outlets including a new one in the San Francisco Ferry Building, sells online, and has 30+ employees. She still doesn’t understand her P&L.
  • A Japanese immigrant worked as a busser in a restaurant, and saved his money. The restaurant went bust, he bought it for a pittance. Twenty years later, he has one of the best restaurants in the Bay Area, and has had a Michelin star.
  • A woman took over her husband’s bookstore when he died of a heart attack. She didn’t really enjoy the business, but she trained somebody else to run it for her, and she actually hired two more people.
  • A Hispanic guy got hurt on his construction job, and went on disability. While he was waiting for some job retraining, he started doing gardening for neighbors. He was chastised by the state for accepting money while on state aid. He now has three trucks and two gardening crews working for him.
  • A woman got fired from her sewing job, took a couple of favorite customers and did sewing for them. She now has a sewing workroom with ten employees. She recently bought out her former boss.
  • A banker took his early-retirement buyout and started a yoga studio, and he just loves doing that.
  • My wife BJ, the least entrepreneurial person I know, left her job when she got passed over for a promotion. She scanned the want ads for a new job for about six months, until she had so many HR consulting clients she had no time for that. Ten years later she keeps her schedule full without any marketing, just by referrals.

None of these people would have scored high on anybody’s entrepreneur test beforehand. But they’ve all done well. It may be true that not everyone is cut out to be an entrepreneur, but I challenge you to point ’em out ahead of time.

Are you one of these “accidental entrepreneurs?” Your issue is, once you are up and going, how can you make the best of it? Not just to survive in business, but to thrive, and get where you want to go.

What It Takes to Succeed

For these folks to succeed as entrepreneurs and take their business where they wanted it to go, they had to master a handful of basic lessons. Here’s what they have told me. My guess is, these apply to you as well:

Find your natural gift and build your business around it. Not only what business you are in, but what you do in the business. These folks learned to succeed by doing what they were best at—design, product selection and merchandising, working with customers, spotting and negotiating deals, whatever—and handing off all the rest.

Insist on making a profit. Know what things cost, and how profitable each sale is. Don’t spend money unconsciously. If you’re not good at the numbers, hire a strong numbers person and have them give you the financial data you need in a way you can understand and take needed action. If they don’t do this, replace ‘em!

Pay yourself first, and well. If the cash is just not there, tune your business model until it is. Or is this just a hobby for you?

Listen to the market. Let it tell you what to sell, and what to ruthlessly pare back. Let your customers tell you what they want to buy from you, then give it to them.

Learn to sell by being who you are. Let your passion show through. Be there with your prospects and customers. Looked at this way, selling is not a fearful activity.

Don’t be the Lone Ranger. Get past your “only I can do this job” mindset. Bring in top quality people. The better people these owners had on their team, the bigger and more profitable they became, and the easier their job was. And the longer their vacations!

Let go those who don’t measure up. Don’t be held back by the limitations of your people—whether employees, subcontractors, or professional advisors such as accountants.

Stop being a control freak.  When you have good people, trust them to do the job you’ve hired them for. Trust but verify. Watch over things, but don’t jump in and do them yourself.

Get the secret knowledge out of your head. Learn to turn everything into systems, checklists, procedures manuals—even the things that you’re sure only you can do correctly—so that others can do them.

Set a plan, even when the uncertainties are daunting. Stick with it, review it regularly, and revise it as needed. A plan should be just a page or two, and should be dog-eared, coffee stained, and covered with notes.

Save money as you go along. Build up a cushion for tough times and a fund for expansion. Those that did this all along stayed in business throughout this tough downturn.

Take care of yourself. If you burn yourself out, you can’t provide the services you are passionate about. The notion of the 24-7 always-on entrepreneur is a dangerous myth.

Build your business around your life, not your life around your business. You’re in business to get to do what you want. Otherwise you might as well have a j-o-b.

Know when to let go and get out–whether you sell, pass it on, or just lock the door–and head on to the next thing.

You don’t have to be a rocket scientist to master these lessons. But having some help makes it easier.

This is where I come in. I’ve helped these folks grow to the size they want, put a lot more money in their pocket, take long vacations, then come back and find things ran well in their absence.  So give me a call.

 

How NOT to introduce change to your employees

The 12 worst ways to introduce change to your organization

What are the WORST ways to introduce change to your employees? Yeah, I’l be glad to tell you the BEST ways, but first see if you’ve used any of these approaches:

  • Surprise your people by springing it on them.

    How well are changes accepted?
  • Issue a fiat: “Starting Monday, everyone must . . .”
  • Introduce change on a whim: “Hey, I had a good idea; why don’t we…”
  • Assume you know best and ignore people’s questions and concerns.
  • Seek the input of your people and then ignore it.
  • Say one thing, do another.
  • Keep everyone guessing.
  • Let negative rumors spread because you haven’t said enough–or anything.
  • Play down the burdens and hassles involved.
  • Start the project and then abandon it.
  • Make the change seem like punishment or extra work.
  • Wait until the change is forced upon you, then do it in crisis mode.

So this is what you want to avoid. What’s the best way to introduce change? That’s the next post.

 

The Inner Game of Business Growth

Why do some businesses grow rapidly while others struggle for growth and profitability? Here are examples of what holds people back.

Why do some businesses grow rapidly while others struggle for growth and profitability? The difference often lies within the noggin of the owner. You are the biggest asset of your business, and more than likely the biggest bottleneck as well.

How about you? Is the way you run your business a barrier to your growth, profitability, and ease of operation?

Self-defeating management habits, attitudes and beliefs pervade the “crazy makers” I hear from business owners all the time. If you look at yourself, you may notice contradictory attitudes like these:

On the one hand . . . On the other hand . . .

• I can’t get all my work done. . . . I’m not hiring another employee.

• I must learn how to manage my time better. . . . I can’t find the time to make the needed changes in how I use my time.

• We’ve got to stay on budget. . . . I can’t resist making last minute design changes.

Pulled by conflicting attitudes

• We’ve got to watch costs. . . . I can’t be bothered to review the financials.

• Low margins are killing us. . . . I can’t bring myself to raise prices.

• I’ve got to take more time away from the business. . . . I can’t leave my managers alone. I can’t totally trust them.

• I need more skilled employees. . . . I’m afraid I’ll just train my own competition. I’m afraid I won’t have enough work to keep them busy.

• I need more sales. . . . Marketing scares me. I wish customers would just come.

• I get so tangled up in day-to-day operations that I lose sight of my vision. . . . I doubt the value of having a plan.

• I want to ease up and work fewer hours. . . . I can’t change my belief that hard work is necessary.

If you are nodding your head, “Yep, that’s me!” for any of these, you’re not alone. Crazy makers like these bog down many entrepreneurs.

This is the theme of my new ebook, “The Inner Game of Growth,” which shows you how to resolve these crazy makers.

I also offer you a freebie phone session on how to tackle contradictory attitudes like this using two simple tools. Just call me, 415-491-1896.

Do Small Businesses Fail for Lack of Money?

Running out of money is often the endpoint of years of bad business decisions. Here’s how to avoid this fate.

I say it’s a myth.

cash management, cash flowBelieving this shifts attention away from the real problems. It’s like saying the leading cause of death is your heart stopping. Well, duh. But why did your heart stop? Most heart attacks hit people who haven’t been taking care of themselves for years.

Same with business. Running out of money is often the endpoint of years of bad decisions. For example:

Not watching the numbers closely. Not having financial statements you can understand, and not getting or reviewing statements in time. You should tell your bookkeeper/accountant exactly what numbers you need to track, when, and how you want them displayed. If they don’t give you what you want, replace them.

Not controlling costs. Keeping unnecessary payroll and other expenses. Some owners borrow money to avoid laying people off. During tough times, if you’re not ruthless with expenditures, you won’t have the reserves to take advantage of later opportunities.

Focusing on revenue instead of profitability, therefore not paying attention to the margin of jobs or sales. Taking any work. “I’ll make it up on volume.” “Maybe they’ll grow to be a big customer.” Don’t bet your business on these beliefs. Insist that every job must make a profit. Make sure you have systems that allow you to allocate costs to profit centers, so you can know the profitability of each thing you sell.

Under-pricing. Many small businesses try to meet the prices of large, well-capitalized competitors, rather than competing on unique services and features that set them apart and command higher prices. Set your prices to include your desired profit margin.

Not anticipating needed growth capital, so that a growth spurt causes a cash flow squeeze. It’s very difficult to grow relying on current cash flow. People criticize companies like Apple for amassing a huge cash hoard, without realizing that this is necessary to fund growth, innovation, and keeping options open.

Having the wrong kind of financing. Financing growth with a short-term line of credit that must be paid off each year, rather than with a 5- to 7-year term loan. And how many of us have financed growth on our credit card, thus saddling ourselves with interest payments that eat up the profit needed to repay the loan?

Not saving during good times, so that you have a fund for tough times. Too many owners would rather spend than save because they don’t want to pay taxes on the profits.

Not being “bankable.” For example, if you run your business to minimize taxable income, you’ll never get a bank loan. Try telling your banker that you really do have a profitable business, despite what your tax returns show. Take your banker to lunch, and ask what the bank will need from you in order to approve the loan you will need.

Not refining your business model to stay competitive and to meet the emerging needs of your customers. Just staying the same because it’s the easy thing to do. The old cliché, “Work on your business, not just in your business,” means that you as owner need to keep looking at opportunities, challenges, alliances, and strategies.

Ineffective marketing. If you don’t keep looking at what works, refining your offering and outreach, and dumping the rest, your business will slowly decline. Where can you get the most bang for your marketing buck? What ineffective things should you drop? How can you leverage your effort?

I’m sure you can think of others. If you address these problems in your business, you’ll never have to use “I ran out of money” as an excuse.

This is one of the lessons in How to Thrive in Tough Times—Lessons From Small Business Owners–my newest ebook, just posted on Amazon for Kindle, iPad, etc. for $2.99.

 

Can you stop a former staffer from poaching your clients?

How do you get your clients to identify with your company rather than with a particular employee?

From question on Quora. Several attorneys addressed the legal side of this question, then I added my 2¢.

MVH. The bigger question is, from now on, how do you get your clients to identify with your company rather than with a particular employee. Do clients work only with one of your staffers, or do they draw on the team?

Some can be drawn away by the promise of lower fees, but a client who leaves solely on price may not be a very good client anyway.

This is a good time to ask your clients how you could serve them better. Give them a call; put in some face time. If they’re already grumbling about you, then they’re ripe to be picked off by a competitor, including your ex. In that sense, this event could be an important wake up call for you.

Sometimes clients come back after a time, because the newly independent guy cannot provide the level of service they are used to. Keep in touch.

And finally, sometimes you’ve just got to let it be. After all, how many of us started our businesses with a few customers from our former employer? It’s the chain of business continuity. Look at it as a form of giving back.

Then go out and beat this guy in the market place with your superior service!

How to Get it All Done This Holiday Season

Hire a personal assistant–a concierge–to handle all the little things, allowing you to focus on big stuff, and to have a life.

“We’re trying hard to balance our busiest work time with the never-ending to-do list. How to stay balanced and sane.” Amy Graver, question on LinkedIn.

My answer. Two levels, Amy.

1. Right now. Hire a personal assistant, someone like a concierge, who will handle all small issues for you with competence and aplomb–both business and personal. If you’re busy doing year-end billable work for your best clients, and you have someone else running around for you, picking up your cleaning, writing addresses for all your holiday cards, replacing the color toner cartridges, dealing with the caterer, getting your invoices out, you will be so-o-o happy. Plus rested and better off financially.

2. Planning ahead. All my clients do an action plan for the coming year. Goals, strategies, and action items. The action items are spread out over a year calendar. But first I have them write in their busy times, vacation times, etc. If holiday season is a crunch time, then they make sure they don’t pile extra things into that period.

The first things to enter are your personal “have a life” things. Why? Because the reason you are in business is to get to do the things you most want in life, including “have a life.” If you don’t do this, you might as well have a J-O-B!

Happy holidays! And may the new year bring you health, prosperity, and relaxation!