Is the economic glass half full?

SunTrust has an interesting video posted on their site.   A panel of SunTrust experts discuss their thoughts on the economy and where we see investment opportunities.  https://www.suntrust.com/microsites/wealth/solidadvice/index.html

What is your most important role?

Business owners wear many hats.  We’re often the visionary, financial wizard, chief marketer, HR manager, IT person and producer of goods and services.  Early in the life of the business, we often have little choice about handling all of these functions.  But at some point in the life of the business, it makes sense to determine our most important role and focus our efforts and attention.

Figuring out how to do that can be a challenge.  Here are a few ways to approach it.

1.  What do you enjoy?  We tend to enjoy things we’re good at, and we tend to be good at things we enjoy.  (Go figure!)  If you enjoy marketing and hate finance, you’re going to choose to do more marketing than budgeting.  That doesn’t make budgeting any less important–it just gets less attention.  Know what you enjoy and think about whether or not it makes sense for you to focus your attention there.

2.  What can someone else do just as well or better than you?  Business owners can be a little controlling.  Sometimes its hard for us to believe that anyone can do things as well or better than we can, but they can, and we should take advantage of that.  Maybe the actual consulting you do is difficult to teach someone else to do, or you have particular expertise and experience that you can’t duplicate easily.  Fine, then think about those things that you can teach:  billing and financial record keeping, standard marketing activities, clerical tasks, and so on.  If someone else can learn how to do it, let them.  That will free you up for the things no one else can do as well as you.

3.  Where do you add the most value?  We each get 24 hours a day — that’s it.  If you want to maximize the value of your business, you have to spend your time on those areas where you add the most value.  If that’s selling, focus there.  If its delivering services, focus there.  Time is a perishable resource.  Every minute you spend doing something that doesn’t add significant value is a minute lost.

If you’re a small company or a one-person company, you may be thinking, “sure, I’d like to hand off some things, but who can I hand them off to?”  There are lots of options today.  Many small companies have sprung up to handle the tasks you shouldn’t.  Companies like Mattson Business Services can handle many of your administrative tasks and keep you organized.  Companies like Web Business Freedom can help manage your social media challenges.  Daniel Ratliff & Company can help with your accounting challenges.  And Altman Initiative Group can help with many of your HR challenges.

Take a little time to think about your most important role.  Your business’s future may depend on it.

Positive Tension is the Key to Success

Tension is usually considered a bad thing.  But as any engineer will tell you, without tension, most mechanical devices won’t operate successfully.  It is, in fact, the tension, that gives devices their power.  One gear turns one way while another turns in the opposite direction.  It’s this design that allows all the moving parts to work.

The same is true in business.  There is a natural tension built in to business processes that keeps things moving appropriately.  Let me give you an example:  the Supply Chain manager wants to keep inventories down and costs down.  That often means ordering far ahead with just in time delivery.  (Rush orders cost money.)  The construction manager wants plenty of inventory on site so that his crews won’t have to worry about slowing down due to inadequate inventory of supplies and materials.  (People standing around costs money.)

These two will have natural tension, because they want different things.  Or do they? 

In a well-run company, the goals of the company ultimately drive the decisions that are made and the behaviors of the team.  Without the over-riding company goal, each department could live in its own world, demanding that the world work the way that is best for that department. 

In our example above, the construction manager would never have a slowdown because of materials, but his inventory costs would be excessive.  If the Supply Chain person had his way, we’d have minimal inventory, which would reduce our carrying costs and add an occasional delay if the just-in-time process broke down.

Only when both parties are focused on the over-riding goal of the company can they come to an optimal solution.  Sometimes, that means a compromise – Supply Chain keeps some buffer inventory stock while the construction department doesn’t get as much on hand as it would like.  At other times, opportunities may arise that require one department to forego completely what it needs for the short term.  For example, a company may need to turn down sales of certain items in the short run (hurting the sales department) if doing so will enhance the overall profitability of the company. 

In my work with executives, I frequently run into this tension issue.  Unfortunately, some start to take these issues personally.  “He just doesn’t understand what I’m up against,” is the battle cry of many.  And, that’s probably true—for both parties. 

In most companies, we have too many silos where people don’t understand what the other guy is up against.  We need more communication, a clearer understanding of the company’s over-riding goal, and a better understanding of what it takes to do each job effectively.  Then, we can move past petty disagreements, and make business decisions.

I see this frequently with accounting and sales.  Sales people often feel like accountants are nagging them to death about “petty details” like receipts and expense reports.  Accounting feels as though the sales people think they are “too good to fill out an expense report,” or that they are trying to hide something.  Truth is, accounting needs the documentation, and sales needs to be in front of customers, not filling out paperwork.  Contrary goals, right?  Maybe, but positive tension makes the systems operate better for the overall good of the company.

If sales spent too much time on arduous paperwork, revenues would suffer.  If they didn’t spend enough time, profits might be suffering without our knowing it.  Accounting for expenses is important, too.

If your company is feeling tension and not seeing it as positive tension, here are a few things to think about:

1.         Are you as the company leader making clear which goals take priority?  For instance, is it more important to meet a production deadline than to maintain lowest cost?

2.         Is your team hearing a consistent message from you?  If they all hear you saying you support their position, silos and territorial behaviors will result.  Focus their behaviors on the over-riding goal.

3.         Does your team share enough information about how their area operates to give others a basic understanding of the challenges in each position?  A job rotation program can help here, but so can open communication and education within the company about the value and challenges of each position.

4.         Are you measuring progress toward the right goals and holding people accountable for behaviors that reinforce the common goal?  If you judge supply chain only on low levels of inventory or pricing, and you judge production on throughput, you may be sending the wrong message.  Find ways to measure contribution to the primary goal.  Incentivize people to act in a way that achieves the goal of the company, not just a departmental goal.

Turning tension into a positive takes good leadership, good communication and lots of hard work.  It may be the most important thing for you to focus on.

Tick, tick, tick…that’s your day slipping away!

Time is perhaps the most predictable thing in our lives.  It comes and goes at the same rate every single day.  Time is also probably the most fair thing in our lives.  Each living person on the planet gets the same amount of time each day – 24 hours, no more, no less.

Why, then, is time management such an issue for most people.  Alas, it isn’t the time that needs managing, it’s the people.  If we can’t control the supply of time or the rate at which it burns, we must control our choices about how we use time. 

The biggest complaint regarding time management concerns interruptions.  You plan your day, and then the interruptions start.  Your family needs you, your staff needs you, your customers need you.  We fret over the interruptions, but we may actually be encouraging them.  It is nice to be needed, after all.  If no one needed us, they wouldn’t have to interrupt us, would they? 

Here are some behaviors that will minimize interruptions.  How many of them do you exhibit?

1. Give clear instructions when assigning work.  Think about it from the recipient’s point of view.  Don’t assume they know things that you know.  You can gauge your effectiveness by how often they have to interrupt you for more information.
2. Empower others to handle tasks.  Set clear guidelines about when you need to get involved.  In some cases, this may be a dollar amount.  In others, you may empower based on time.  Train employees, family members, and even customers about what they can handle without you. 
3. Teach others to solve problems.  When someone comes to you with a problem, don’t solve it for him.  Lead him through a thought process to determine possible courses of action.  Teach him ways to judge those options and predict consequences of each one.  He will become more confident, and you’ll be interrupted less often.
4. Close your door.  “Hide” for an hour a day.  Gather anything you’ll need to complete the tasks at hand.  Then inform everyone that you’re going in and you will be out in one hour.  Statistics show that you will accomplish three hours of work in that one hour.  Do not allow interruptions.  Reinforce your policy and your team will get used to it.  You’ll be glad you did.

Right-sizing your organization for Recovery

Many companies faced layoffs during the past year as the economic downturn continued.  If your company was one of those, you may soon find yourself facing the other issue of deciding who or how many people to bring back.  The question “what is the right size for my organization to be?” is an important one – and sometimes a difficult one to answer.  The value of your company is directly affected by how productive your employees are – more productivity generally means more profitability.  If you want to maximize value, you must right-size the organization.

Right-sizing means having the right number of the right people in the right jobs to accomplish your company’s goals and objectives.  With that concept in mind, you should “begin with the end in mind,” as business writer and consultant, Stephen Covey, would say.

Your company’s goals and objectives:  The downturn may have drastically altered your company.  You may have repositioned yourself or changed product lines or markets to make it through the tough times.  Now may be the time to think about who you want the company to be in the recovery.  Do you want to continue with the strategies you adopted previously and make them stronger, or do you believe the recovery offers you the chance to accomplish something totally different.  Define your goals in terms of customers, product/service lines, brand positioning, employee satisfaction, and profitability.  You’ll need to be clear on each of those to go to the next step.

The right jobs:  What infrastructure does your company need to accomplish the goals you developed from the last step?  If you’ve decided new products are the wave of the future, you may need to beef up your Research and Development department.  If you think customer service will be the brand differentiator for your company, your service and sales department may need to change.  If speed to market is critical, your order, manufacturing and shipping processes may need to be expanded.  Flow chart what needs to happen to achieve your goals, and then break those processes into functional jobs that make sense, utilize reasonable skills sets, and maintain adequate controls.  Research best practices in your industry to see how each job can be done most efficiently, and plan jobs to take advantage of those ideas.  (Visit www.kboptions.com if you need help with this step.)

The right people:  Once you’ve defined the jobs that need to be done, you need to give some thought to the kind of people who could best accomplish those jobs.  What skills, education and experience would they have?  What temperament or behavior style would make them best suited to that type of work?  How will you screen potential employees to see if they fit what you need?  In other words, will you know a good fit when you see it?  Get your selection process in place so that you can put the right people into the right jobs.  This applies to your current employees and any new ones you’ll bring on.  We want to plug people in where they can best succeed, not set them up to fail.  (Visit www.altmaninitiative.com if you need help with this step.)

The right number of people:  This may be the toughest question of all.  How many customer service reps do you need to handle 500 customers?  How many billing clerks do you need?  How many sales people will it take to reach your goals?  Determining the answer isn’t purely scientific, but some data can be used to help you with these decisions.  You can find that data in a number of places including your own historical records.  For instance, by using your accounting and payroll records, you can determine how many man-hours you spent to produce a certain outcome (invoices produced per clerk, clients brought in per sales person, etc.)  You can also pull information from your trade association on many of these data points.  Check the association’s website or call to ask if they compile such information and if you can gain access to it.

As always, you must use a little common sense.  Your company isn’t just like anyone else’s, and your way of doing things may require fewer or more people as a result.  But using this information can help you get a “ballpark” read on your staffing plan.

Now is a great time to start readying your company for recovery.  Position yourself and your company for success!

It’s lonely at the top…

Hey, Mr. or Mrs. Business Owner, have you ever felt isolated in your position?  Have you found yourself considering decisions, wishing you had someone to talk to who would understand what you’re dealing with and address it from your perspective? 

Many of you may have found resources to help you through those times, and that’s good.  For those of you who haven’t, let me talk to you.

They say “two heads are better than one,” and I think that’s usually true.  Having someone you can bounce ideas around with, talk over options and get real, honest feedback is invaluable.  As business owners, you need other business owners you can talk with.  Nobody feels your pain like someone else who has to meet payroll every Friday, or someone whose house is on the line as collateral for the business’s line of credit.  Another business owner can speak from real experience, not just about theory.

There are a number of ways for you to connect with other business owners.  Industry groups are an excellent resource.  Many industries have regular conferences or owner panels that meet by phone.  If the others in the group aren’t competing in your market, you can be very open and frank and get excellent feedback.

Informal alliances can also be beneficial.  If you have other friends who are business owners, and there are some that you respect and trust, meet for coffee or lunch on a regular basis to talk over business issues.  Keep each other’s phone numbers handy so you can brainstorm as needed.

There are also groups like our Business Success Institute who organize business owners and hold regular meetings to discuss specific topics and brainstorm solutions.  The relationships you develop in groups like these reach beyond the meeting times and can be a real benefit.

 Whatever your business, remember that you don’t have to go it alone.  There are others who are willing to share their experiences, insights and ideas.  Find a resource.  Connect with others.  It doesn’t have to be lonely at the top.

Will you lose employees when the economy recovers?

About two years ago, the topic of a pending labor shortage was making the news.  There were articles everywhere about the retiring of the baby boomers and the inadequate number of people ready to fill the void.

And then, the recession hit with full force.  Suddenly, the pending labor shortage wasn’t all that important anymore.  In fact, unemployment numbers began to rise.  Not only were there ENOUGH people to fill the jobs, there were TOO MANY people for the jobs available.

Thus goes the cyclical nature of most economic phenomena.  But, as they say, “what goes up must come down,” and with that comes yet another challenge.  Once the economy rebounds, will you be able to keep the employees you have?

This is particularly important because many companies who needed to trim staff started with the least productive workers, as one would expect.  That means that the employees who remained were the most productive.  They were likely also the best trained, had the best attitudes, and had the highest potential to impact the company in a positive way.  These are the people you most want to keep as the economy rebounds.

Shifting attitudes

Many employees, even the ones who kept their jobs during the downturn, have become jaded.  They witnessed their friends and family dealing with layoffs, company closings and hard times.  They often feared for their own jobs, not knowing which companies would be able to survive the continuing economic decline.  That sort of stress has long-term impacts.

Add to that the inability of companies to give raises and bonuses or to pay for training and development, and you see a further deterioration in morale.  Loyalty of employees to a company was already waning before this downturn, and now, it is likely to deteriorate further.

What do employees want?

This is the 10 million dollar question, and it has been for years.  The general wisdom has pointed to “meaningful work,” “being in on things,” “feeling appreciated,” and “opportunities to grow and develop.”  All of these are likely true at one point in time or another, and from one person to another.  Economic factors, while often deemed not a motivator, also come into play. 

Maslow’s Hierarchy may have a place here.  When employees are worried about paying the mortgage and putting their kids through school, self-esteem and self-actualization may take a back seat.  The immediate need for economic resources takes precedence. 

As recovering companies compete for employees, they all want the best and brightest.  Competition for those folks means that the stakes rise.  Salaries, signing bonuses, relocation packages, incentive compensation—all of these will be tools companies use to entice the best to leave the fold and come over to the other side.

Even when the economy is good, many employees have learned through observation and experience that moving up often means moving over—to another company.  If they want to advance in position or compensation, they often find it easier to negotiate with a new company than with their existing one.

How do you view your employees?

There’s an old joke about a man who has an opportunity to choose between Heaven and Hell.  When he takes a tour of each, Hell looks much more inviting than Heaven – all the good things of life are at your fingertips!  So, the guy chooses Hell.  Once he makes his choice and arrives, he finds the lake of fire and torment.  He questions the Devil about this, and the Devil replies “then you were a prospect, now you’re an employee.”

Too often, employees feel that this is the way they are being treated.  Their value seems to diminish once they come on board.  They aren’t “special” anymore.  That’s why they are more easily lured to other companies – the people who are courting them make them feel special.

The flip side, of course, is that we know more about our employees than we did about them as candidates.  We’ve learned about their rough spots and foibles.  We know them as the flawed human beings that we all are – not just the story they sold us during their interview.  Potential employees, of course, have similar rough spots and foibles—we just don’t know what theirs are yet.

We also get into a mode of justifying why we can’t give an employee a raise or bonus during tough times.  We feel badly about that, and it makes us feel better if we can point to something that at least partly justifies the decision.  “Well, remember last month when he missed that deadline…”  We end up focusing on what employees don’t do instead of what they can do. 

We feel a bit of a disconnect when we’re saying to our employees, “You’re so great,” and giving them 0 – 2% raises.  We’re afraid, at times, that they are going to push back.  “If I’m so great, why can’t you find a way to help me out?”  Avoiding this disconnect may result in employees feeling unvalued.  And that will hurt us when the economy recovers.

So, what’s the answer?

Employees, similarly, become disenchanted with the current employer and see the prospective employer as more worthy of their time and effort.  They know our rough spots and foibles, but not those that exist at the prospective employer’s house.

It seems no surprise, then, that communication is the key.  If the grass is always greener, perhaps we need to talk about our own lawns.  What do your employees want the company to be?  What does the company need employees to focus on?  How can the two work hand in hand to better serve customers and make the company stronger?  Employees and employers aren’t adversaries, they’re partners.  Or at least they should be.

Some of the companies who have forged this kind of relationship with employees cite openness and honesty as foundations.  If employees know what you’re trying to accomplish and how you’re going about it, they can better understand how they fit into the picture.  Employees need to understand how they personally impact the company’s success AND see that employees benefit as the company succeeds.  When this direct connection is clear, employees feel empowered.

I held a training session at a large, well-known company a couple of years ago.  During the session I asked the group how their jobs impacted the bottom line of the company.  I received blank stares.  Only after spending some time on how their function impacted other departments were they able to draw a clear line between their function and company success.

How does your company ensure that employees understand their contribution to the company’s success?  Do you talk about it?  Do you let employees know when their work or ideas prompted a good result?  Do you explain how their actions took a toll on company profits and long-term success?

From on-boarding all the way through their career, employees should know clearly how they impact the company, and they should be treated as an integral part of the company’s success or failure.

The real question is “why?”

I’ve learned a lot from my business associates over the years.  One business associate, Mary Bruce with Kaleidoscope Business Options , has helped me remember one very important word–why.  Mary is a very focused business person, and she keeps her clients focused as well.  One of the most important questions I hear her ask is “why?”

As I’ve heard Mary explain, business owners are “action” people.  They tend to like to move forward, do things, make things happen.  Sometimes, they move forward before they should.  First, they should ask “why?”  “Why do we want to go in that direction?”  “Why does that make sense — or not?”  “Why is this a good idea?”  Too often we aim for the “what” before we answer the “why.” 

Focusing on the “what” gets the ball rolling, but sometimes in the wrong direction.  It can make for scattered resources, confusion and wasted effort.  Asking “why” helps us focus on doing the right things for the right reasons.  It makes us be more strategic.

Are you asking “why” enough?  Or are you too focused on “what”?

“Keywords” may be key to problems…

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I recently looked up “keywords” that business people searched most often in Google.  I was surprised at the words that didn’t land near the top.  Here are two that left me scratching my head:

Strategy – apparently not a lot of focus on strategy these days.  Maybe we’re all just hanging on, waiting for the recession to end — for real.  “How can you set a strategy when things are so uncertain,” I’ve heard people ask.  I guess my question would be “how can you NOT?”

Profit – now, I thought this was what kept businesses going, but maybe that’s just the CPA in me talking.  Maximizing profit is a key to long-term business success.  Whether it’s driven by increasing sales or decreasing expenses, the equation is one that requires attention–in every economic cycle. 

Two that DID hit the top of the list were “business loans”  and “cash flow.”  I understand that “cash is king,” but perhaps we need to spend more time and attention on the generators of cash (strategy and profit) so that we have more cash to manage.

One keyword that wasn’t a surprise at the top of the list was “business success.”  That’s what we all want, right?  At the Business Success Institute, we provide practical information to help you achieve that.  We also know the value of sharing with one another, and we hope that’s what will happen with this blog site.  Share your comments–we want to know what you’re thinking.

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