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

May 20, 2013

Are You Having Growing Pains?

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.

June 4, 2012

The Inner Game of Business Growth

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.

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.

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 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.

January 27, 2011

Manager Salaries Raise Overhead

Filed under: Growth Management — Tags: , , , , — Mike Van Horn @ 11:09 am

As we add employees, I must hire managers, and much of their time is not billable. Their salaries become overhead added to all the jobs. So our labor rate is creeping up, and our gross margin shrinking. How can I justify this, especially to myself? (Question from MM on “Ask Mike Van Horn.”)

mvh response. I see several ways to justify this to your bottom line and to yourself:

1. A good manager should pay for herself in several ways:
— Improved billing by your staff, i.e., by making sure all client work is billed for
— Improved staff efficiency via training, improving systems and procedures, better scheduling and coordination, and dividing work by specialties
You need to set targets for increases in staff productivity so you (and your managers) can track to what extent their efforts are paying for themselves.

2. She frees you up. Since you no longer have to be overseeing everything, you have more time for:
— Business development, strategic alliances—the keys to growth.
— Free time! This helps recharge your mental and spiritual energies.

3. To prepare for the eventual sale of your business, you must have a strong management team in place.

If your manager is not doing these things for you, then she is not the right person.

Here’s another way of looking at it. You’re not actually adding a manager, you’re adding a CEO. You’ve always had a manager—you! You’ve been so busy managing, you didn’t adequately fulfill your CEO responsibility. Now you can.

You just weren’t looking at your pay as management overhead. Now that you’ve replaced yourself as manager, you must account for her pay.

The new position is CEO–you—and the overhead increase goes to pay the CEO salary. But this is an essential investment for achieving your growth goals.

August 24, 2010

Is Management Obsolete?

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 4:01 pm

In “The End of Management” (wsjonline.com, 8.21.10) Alan Murray says that “managed corporations” are incapable of thriving in today’s accelerating change. He contends, “Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.”

I reacted strongly to this, since I’m always advising small, growing companies that they need more management, not less.

My response: Okay, so this “ad hoc band of peers” comes together, builds and commercializes a whizbang disruptive new gadget like the iPad, puts it on the market, and I buy one. Wow, it’s great!

Then they disband. But wait. Who provides warranty service if they’ve disbanded? I sure hope there’s some big corporation behind them, interested in self-perpetuation and continuity enough to provide good customer service.

No venture capitalist I’ve ever met would back such a venture. A VC’s first question is, “How will you perpetuate this long enough for me to get my money out?” And nobody will cash out the VC unless they in turn are convinced that the endeavor they’re investing in has longevity and strong management.

A corporation’s biggest stakeholders are its customers, and customers want longevity and continuity. I’ve been buying Dial Soap for decades, and I hope some bureaucratic corporation will keep it available for the rest of my life, with as little innovation as possible.

So Mr. Murray, I think it’s way too soon to talk about corporate management becoming obsolete. For every bumbling bureaucratic corporate dinosaur you name, I can name a company like Google or Facebook or Apple where top management strives to find the balance between creative destruction, disruptive innovation, and profit-generating continuity. The only reason Google can afford to give its engineers this 20% time for new exploration is that its “regular business” is profitable enough to support this workstyle–that is all overhead.

If anything, managing a company like Apple or Google is tougher than managing a staid bureaucratic corporation. But both types have strong corporate management styles and systems and cultures. They’re just different.

I contend that your “ad-hoc teams of peers, who come together to tackle individual projects, and then disband” can only be effective within a larger milieu where strong policies and systems for continuity are paramount. And that requires dang good management.

August 2, 2010

The 3 Barriers to Small Business Growth

Your business is growing and profitable, then BOOM, you hit a speed bump. Or you get stuck in a swamp. What happened? The bigger you grow, the tougher it can be to grow yet larger. I call this the “paradox of small business growth.”

As your company grows, you’re likely to run into three barriers at different stages of growth. Seems to me these are dang near universal!

Barrier #1. You’re a solopreneur, yet you want to grow beyond what you can handle working by yourself. But you get stuck in “the business is moi” trap.

Your growth challenge: Learn how to find good employees, then trust and manage them well.

Barrier #2. It’s you and the crew, but further growth is limited because everybody reports to you, and it’s running you ragged.

Your growth challenge: Learn how to be the CEO and entrust day-to-day operations to your skilled managers.

Barrier #3. You’re a successful, strategic CEO of your growing company, and now it’s time to move on to the next thing—sell, retire, start something else. But you’re so tied to the business, you can’t bear to turn it over to others.

Your growth challenge: Learn to let go.

I’ve been working with owners at all three levels for a lot of years. Here’s what they have in common: They have a management style that has worked very well to get them where they are. But to get to the next level—and they definitely want to get there—they must change what works. “It works, but break it anyway!” And this is very painful.

Many can’t make the leap. They decide to stay the same, and come up with very convincing explanations why further growth is not desirable for them. Alas.

There are straightforward ways to tackle these barriers. Once you see them laid out, you say, “Oh yeah, I could do that. I just need some guidance.”

This fall I’m going to offer a program that addresses each barrier. (You can only be at one barrier at a time.)  I’ll elaborate on each of these barriers in later posts.

In the meantime, I’d love some examples from the Peanut Gallery. If you read one of these and moan, “Ohh, that’s me right there you’re talking about!” let me know your story. Where do you want to go; what’s in your way?

We learn best from each other. You learn to transcend your barriers by seeing how others have done so (or even by watching them be stuck).

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