Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

November 29, 2011

Business growth dilemma #3: Grow profit while you keep personal touch

Many businesses lose their personal touch as they grow. This is the classic struggle between “corporate bean counters”—profitable and impersonal, and “mom and pop”–small and happy but poor and hard working.

We know that growth and profitability spring from good systems and procedures. The things you used to make up as you go along, you must now do by the book. Everything you do must make the numbers. Alas, the personal touch that customers love seems threatened.

So how can you retain your personal touch while improving efficiency, productivity—and profitability?

It requires a shift in attitude.

The owner of a retail store said to me, “My employees—and me also—used to resist all these systems and procedures. We wanted to serve each customer in our individual way. But we found that systematizing the routine things allowed us to be more creative and personal with customers. And customers loved the consistency and predictability in our operations.”

Another owner said, “My business is an expression of my soul. So if I wasn’t there all the time, the business suffered. So I was chained to the business. To launch a second location, I had to find a way to ‘bottle my soul’ and train others to run things by my values and standards. And they still have to make their numbers!”

You must turn your viewpoint around, and view systems and procedures as a way to maintain your personal touch rather than overwhelming it.

This is a major theme in my “Top 3 Barriers to Small Business Growth—and how to overcome them” program.

November 26, 2011

Business Growth Myth #3. “I can’t find and keep good people”

I hear this from both solopreneurs and owners with a handful of employees:
“I can’t find good people to hire.”
“I’ll train a good person; then they quit and become my competitor.”
“I had an employee. It didn’t work out. I’m not hiring anybody else.”
“My work is so unique, only I can do it. Too much trouble trying to train someone else to do it.”
“I can’t rely on my managers to make good decisions.”

What I see. If you fail to get needed help, if you opt to go it alone, if you have people who only follow orders and take no initiative, this guarantees you remain a small operation. This may be what you want, but if you want to grow, you’ve got to overcome this attitude. You must learn to ask:

“What is the highest skilled person I could bring in to free me up to focus on growing the company?”

My recommendations. (From our “Finding and Keeping Good People” and “Employer Assertiveness” ebooks)

— Make sure you hire the right people. If you have trouble interviewing and selecting quality people, get help from someone skilled at this.

— Start with a job description that answers the question just above. Look for, not just work skills and experience, but personal qualities and attitudes as well. For many jobs, the latter are more important.

— Help your people do the job you hired them for: training, clear direction, trust, feedback, systems and tools, acknowledgment.

— Be firm, fair, and consistent with your people. Employees leave because they don’t like their boss!

— It someone is not working out, let them go. Hire slow, fire fast!

— For every job that you think only you can do, look for the pieces that you could hand off to others.

This is a major theme in my “Top 3 Barriers to Small Business Growth—and how to overcome them” program.


November 15, 2011

Cost of training when cash is tight

Are training costs an essential part of your budget? Do you allocate funds to training programs even if your revenues are lower than expected? Linked In question by Eric Saint-Guillain

I advise owners of small growing businesses. When their business is small, money is tight, there’s no budget for training. So one of three things happens:
— Training doesn’t happen, productivity suffers, mistakes get more expensive, good people are fired for not doing a job they haven’t had proper training for.
— Training happens ad hoc, but since it’s not budgeted for, the money is drawn from other sources, such as marketing–or profit.
— Training duty is assigned to people who are already working full tilt, so it’s not accorded the importance it deserves, and gets done haphazardly or grudgingly by people whose hearts are not in it.

It’s a “coming of age” marker for a young, growing business when the owner decides to allocate money and time to training, for all levels–workers, managers, and him/herself.

 My comments were aimed at companies with employees, but they are equally true for solopreneurs. As a consultant, I find that I get most of my training via:
— My industry association, Institute for Management Consultants (IMC USA)
— Webinars and other such events
— My clients! I learn a tremendous amount from them.

Here’s my sermon!

Training needs to be viewed as an investment in the increased profitability of the operation. Otherwise, why are you doing it? An owner who is a strategic planner sees training of valuable people in the same light as upgrading and maintaining valuable equipment.

It’s insane not to do it–even if money is tight. If you as executive let operations slide so that you cannot afford to take care of your most productive resources, then you should be fired. If you’re the owner, you’d better learn the lesson well, or you’ll soon be left behind by competitors, and lose everything you’ve put into the business.

October 8, 2011

Business Growth Dilemma #1–Doing Paid Work and Developing New Work

Filed under: Growth Management,Overcome growth barriers — Tags: , , — Mike Van Horn @ 4:32 pm

When we’ve got lots of work, we don’t have time to market. Then the work ends, and we have to start marketing to find another big project.

This is a classic entrepreneur’s dilemma, and it can lead to the dreaded boom and bust cycle. However, a mistaken assumption lies beneath this—that we don’t have time to do both customer work and business development.

When I question owners about where they spend their time, I usually discover a third category of activity—“minutiae” —that takes an inordinate amount of their time. Yet these routine admin tasks are the easiest to hand off to someone else. Once we do this, then we often have time for doing the work and the business development.

Some people enjoy one and resist the other. Love doing the work, hate doing the marketing. Or vice versa. So, you bury yourself in the work so that you can plausibly claim that you have no time for marketing.

What is your strength? Where do you make the biggest contribution to your company’s success? Could you arrange your business so that you could focus on your strength, and hand other things off to someone else? If you are best at bringing in the business, then hire someone to do a substantial part of the paid work for you. If you are best at working with customers, then hire someone to do business development for you. This should make your business grow and prosper, because you focus on the activity you are best at. And in either case, hire someone to handle admin and routine for you.

How can you afford to hire this extra person if you have a small business? Let’s assume you have a viable business with growth potential. So if you find a way to hire this needed help, it can pay off for you.

To figure this out, answer a few questions like these:
— What is the highest-skilled person you could bring in to give you the support you need to boost your company’s growth? What’s their job description? What personal qualities must they have?
— What’s their learning curve? How long would it take for this new hire to pull their own weight? The more experienced the person, the shorter their learning curve.
— What’s the upfront cost and payback period of hiring the expertise you need for growth? I.e., how much will you have to invest before profit from the new business generated covers the cost of this person?
— Are you willing to risk this investment in your business growth?
— How would you need to change the way you run your business to best take advantage of their skills? What habitual ways of running things would you have to change?

These are the questions we tackle in our program, “Top 3 Barriers to Business Growth—and How to Overcome Them.” Ask me about it.

October 5, 2011

Business Growth Myth #2. “I must oversee everything.”

Everybody comes to you, so you can’t get other things done. This is another management habit that can keep you from focusing on the things necessary for growth.

I often hear two related complaints that pull in opposite directions. Here are two examples:

1. “My customers—and my employees—always ask to talk to me, because I have the answers.”
But you also complain, “My managers do not handle as much responsibility as they should.”

2. “I need to watch the numbers. I just have to shut myself away in my office more.”
But you also say, “I need to keep in touch on the floor, both to know what is happening and to motivate my people.”

What I see about this. You are operating at two levels—manager and floor supervisor. While it is important for you to keep in touch with what is happening, the question is, how much? You are clearly invading the turf of your floor managers who should have the primary responsibility for keeping in touch and motivating the troops. Since you are doing part of their job, your managers feel frustrated and take less initiative.

My recommendation. Examine your own motivation. Is it possible you are holding on to the floor work—at which you feel more comfortable—to avoid facing bigger challenges, such as tracking the profitability of each thing you sell? Or developing new strategic alliances?

As your business grows, you must promote yourself from worker to supervisor to manager to CEO. Many owners get stuck at supervisor or manager, so their company in effect has no top executive. This is guaranteed to keep you small.

Do the work you enjoy, but find a way to do it that doesn’t conflict with the responsibilities you have given your managers. Maybe you should take one shift on the floor a week, just to keep in touch.

This is a major theme in my “Top 3 Barriers to Small Business Growth—and how to overcome them” program.

August 25, 2011

Can Apple Thrive Without Steve Jobs?

Filed under: Growth Management — Tags: , , , — Mike Van Horn @ 11:56 am

Could your business thrive without you? Can you “bottle your soul”? Can you instill in your top team your seemingly unique qualities and values?

“The better people you have in place, the longer you can afford to be away,” I tell my small business clients.

— If you have a good part-time admin assistant, plus good instructions and checklists, you can take a long weekend, knowing that no customer is left hanging.

— If you have a good manager who can oversee the work, plus good systems, you can take a nice vacation without constantly checking in via cell phone.

— If you have a strong #2, who has been carefully groomed, and who has a reliable management team, you can safely be away for an extended period, like a sabbatical or world cruise, or to focus on a major expansion.

But what if you’re going to be gone forever, like Steve Jobs? How can you assure that your company, into which you’ve poured your heart and soul and sweat and tears, will continue to thrive? Very few strong CEOs and visionary leaders do a good job of this.

For this to happen, you’ve got to make sure that someone there (perhaps more than one) can excel at the things that seemingly only you can do. Seems paradoxical, but this is your challenge.

Look at what Steve Jobs has brought to Apple:

— Product visionary—from conception and design to execution.

— Strong attention to detail

— Able to attract a top-quality team, and hold them together despite their strong personalities

— He’s the soul—the creative force—of the company.

For Apple to continue to thrive beyond the products currently in the pipeline, Tim Cook or someone else must manifest all these qualities.

If your company is based upon your vision, your sure perception of opportunities, your attention to quality and detail, and if you wish for it to thrive after you depart, then you must find a way to “bottle your soul” and convey it to your top people so that they internalize it. This is difficult if, like Steve Jobs, you are a strong-willed leader. It may be hard for you to allow others to grow into these qualities, which have been your special domain. It may be tough for you even to hire people capable of replacing you.

At our recent retreat, for my senior business owners, this was a major topic of discussion. I’m going to do a series of posts here on “how to bottle your soul” and instill it in your top team. If this is a live topic for you, please subscribe so you’ll receive them all.

I would also love to hear from you. Your experience with this (positive or negative), or your questions about how to make it happen.

August 8, 2011

The Power of a Strong #2

“I’m now getting a glimpse of what I can do in my business if I’m not in charge of day to day operations.”

So says a woman who owns an eight-person professional service company and who just hired a top-notch marketing associate. “Execution–doing the work–isn’t our problem; it’s keeping the pipeline filled. That’s what I can focus on now that she’s handing the operational side.”

“Now that she is coordinating my staff, making sure they are working efficiently, using their time well, and keeping the clients happy, I have the bandwidth to turn my attention to building the strategic relationships in order to expand our service area.”

“She’s expensive. But what choice do I have if I want to grow? I’ve got to be willing to invest in my business—especially right now as the economy is beginning to turn around. I’ve got to be there to take advantage of the opportunities that are happening right now. If I don’t, the others will be passing me by. The key is selecting that person who can do the job—even better than I could—so that she pays for herself many times over.”

I couldn’t say it better myself!

So who is the strong support person you should bring in (or groom) to free you to leap into the emerging opportunities?

April 4, 2011

Can Your Business Run Itself?

Filed under: Entrepreneurship,Growth Management — Tags: , , — Mike Van Horn @ 10:34 am

I.e., can you ever take a vacation?

“If I leave, my business will fall apart!” Does this sound like you? Want to change that? Then ask yourself: What must happen so that you feel comfortable taking a three-week vacation—without your cell phone? “Three week vacation?” asks the owner of a busy store incredulously. “When I look at my floor managers, I fear taking a three-day weekend!”

What’s the #1 requirement for a stress-free vacation? You must have good people in place. The better your people, the longer you can safely be away. Some of us have “long weekend assistants”—that is, we can rely on them if we take off a Friday or Monday—and some of us have “world cruise assistants.” It’s a great feeling to return after a sojourn to Italy and find everything running smoothly. 

Do you say, “The business is me”? If so, then you can never leave. What do you handle in your business that no one else can? This is what limits the length of your absences. Start by listing the tasks and responsibilities that someone would have to handle in your absence. How frequently must these tasks be done? 

More prep = longer trips. How many high-level tasks can your people handle? The more lead-time you have, the more you can do to prepare them. Here are four levels: 

Level 1. Delegate tasks to those already capable of handling them. Takes a few days to do this, and allows you to be gone a few days. 

Level 2. Simplify tasks so that others can more easily do them. This process can take a few weeks. 

Level 3. Train your people to take on more. This may take a month or two. 

Level 4. Hire and groom the person who can run your business in your absence. May take six months to hire and train this person, but then you can be gone for an extended time. 

Perhaps you should start with a short trip. See how your people do when you are gone for a week, and work up to longer trips. Your people gain confidence, and you gain confidence in them. 

No cell phone on the beach. While you are gone, how often should you check in? Again, the more you trust your people to handle whatever comes up, the less you worry about this. DO NOT keep your cell phone with you 24/7. Instead, set specific times when you will check in with them. Be reachable in an emergency, but make sure they understand what constitutes an emergency. 

How did it go? 
When you finally go and then return, de-brief your people: How did they do? What went well? Where did problems arise? What should you do differently next time? Time after time owners report to me, “There were a few glitches, but things went amazingly well.”

“How to Have a Life” lessons for the busy business owner. 

1. Schedule your vacations far in advance. Put them on your calendar, buy the airline tickets, tell people you are going, and start making the work preparations.

2. Hire, train, and retain the best people—those who can free you up. Don’t let mediocre people keep you chained to the office. 
Do this even if you have only one part-timer.

3. This is about more than vacations. Running your business this way is the route to growth, profitability, and ease. 

The booby trap. You return, everything has gone well; your people have stepped up to the challenge and handled things better than you anticipated. But within a week or so, they fall back into the habit of relying on you more than they have to. 

Ah, yes! That’s the topic for another post.

Have a question about how your business can run well in your absence? Post it on my blog.

Can You Afford a $100,000 Manager?

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 10:29 am

“Promote yourself to CEO!” I’m always exhorting the business owners I work with. Too many of us run our companies from a manager’s or supervisor’s perspective. We’re there in the trenches, directing our people, doing lots of little jobs ourselves. We work long hours—sometimes evenings and weekends. We work this hard because we’re growing our businesses, and we know we have to put in the sweat equity.

But this gets old! “I have to wear a nametag so my kids will recognize me!” complained one business owner. We see ourselves heading toward burnout; we can’t possibly work this way indefinitely.

You miss opportunities. With your head down, running the day-to-day operation, you’re not paying attention to the big picture. You miss windows of opportunity that are opening, strategic alliances beckoning, and threats peeking over the horizon. Your company has no chief executive. Your company’s growth and profitability are held back because you neglect being presidential.

But you can’t promote yourself to president unless you have a strong manager in place. Managing the day-to-day operation cannot be ignored. If you don’t have someone in place, you must do it yourself.

Good managers are expensive—and they are overhead! Whether you call it general manager, operations manager or whatever, this person can cost you $80 to $150,000 per year. And as everyone in a professional service firm knows, top managers aren’t usually billable to clients. Their pay is mostly overhead. This fact alone keeps many small business owners from hiring a general manager. You just can’t stand to hire this “non-productive” person. You forget, of course, that this pulls you—whose time is even more valuable—into the top manager’s position and away from being president.
How can you justify spending $100k? Where does this $100,000 come from?

Here’s a story: A growing professional service firm will soon have ten highly paid technicians in the field working with customers. With every new technician hired, the owner’s scheduling and oversight responsibility increases. He’s tearing his hair out, working evenings and weekends, and the job isn’t getting done well.

I asked him, would a good operations manager be able to improve productivity by, say, $10,000 per technician per year? “Heck yes!” was his answer. “By better scheduling, better job selection, billing for all the work done, handling change orders properly, upselling the customers, training to improve skills, etc.” All of a sudden, the $100k salary didn’t sound so daunting.

He got excited. “A good ops manager would enable us to hire another 8 to 10 technicians—almost doubling our revenue. The addition to our bottom line would be much more than double what he costs.

You get to become president. Most important, hiring this manager frees the owner up to focus on business development, handling the most challenging projects, watching overall performance. “If I’m freed up, I can easily bring in that business.”

“I’d be crazy not to hire him.”

You deserve not to work so hard. Your new manager also allows you to take more time off. More time for family, more vacations, more time for your avocation, hobbies, or community service. More time for watching the waves and clouds!

More time or more money? As your business grows and profits, you can choose to pay yourself more. Or you can buy time off by hiring really good help who can run the business in your absence.

Bigger vision. “As soon as my new GM had a firm grasp of the day-to-day, I started seeing ways we could grow, and opportunities appeared that I had been blind to,” said the owner of a small financial services office I work with.

This is the joy of running a successful small business.

February 16, 2011

How to Set Up a Collective Organization

Filed under: Growth Management — Mike Van Horn @ 5:41 pm

Asked by Dasha Bushmakin in LinkedIn

mvh answer. I belonged to an artists’ collective once, years ago. I was the potter. (I have a photo of myself inside a kiln with shoulder length hair.) When times were good, things worked fine. But when a crisis hit, it essentially fell apart; we had no way to make the quick decisions needed. Collective decision making didn’t work well. People argued while we went off the cliff.

The collective of artists needs to be the board of directors: create the vision and basic strategy, spell out the policies. Then turn it over to a real manager–whether one of the members or someone hired from outside–and keep hands off day-to-day decisions. The board sets goals and policy, the manager executes. This way, one competent person responds quickly to whatever arises.

The board gives guidance and feedback in pre-arranged ways, and if the manager doesn’t do the job you want, then replace ’em. This works out best for everybody. The artists get to be artists and not managers (which they probably detest having to do). And the business is run according to their broad wishes.”

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