Friendly Competition Makes for Greater Profits!

Like many business owners, I served on the state board of the industry my company served.  I got to know most of my competitors, some of the suppliers, and a few of our legislators as well.  We would discuss the industry and our own concerns regarding government changes, the economy, and pressures on the labor force.  One of the most valuable parts of this experience was the cooperative relationships we developed between each other. For example, one day I received a phone call from Bill, the owner of my largest wholesale distributor.  Bill asked if I had a certain item in inventory.  I answered that I did.  He then asked if I would drop it off at my competition an hour north of my location.  Bill’s warehouse was two hours south of my building so this trip would have been a three-hour one-way drive for his trucks.  He said he would replace the inventory item on my next delivery from him.  I said I would and promised we would deliver the item by the end of that day.  When I told my foreman what I wanted his driver to do, he looked at me as if I was “collaborating with […]

Do you know when to yell “Uncle!” It’s good business.

A frustration of mine and many of the business owners I work with is understanding when to yell “Uncle”.  In other words, when to ask for help. I often get calls from The Boss explaining a situation they have gotten themselves into and asking what I can do to help them cope.  Most often these calls come when The Boss is experiencing cash flow problems and their stress level is high. With hindsight being 20/20, The Boss realizes their error and wants help strategizing to minimize the fallout. One such call was cash is tight, but The Boss gets wind of “a deal” on a piece of equipment and goes ahead and purchases it without talking to the finance department.  Now to make things worse, the equipment cannot be used for several months as it is a seasonal business. The finance staff must find the funds to purchase the equipment and keep the day-to-day cash flow flowing!  As you would expect, this causes strife between The Boss and the frustrated finance staff. This is when I get the call to help relieve the tension. The root cause is communication issues especially when the finance department learned of the new equipment […]

Where is the best place to recruit good employees?

My son was playing basketball in our driveway one summer day and my wife made the comment that his friends were so nice and courteous. I assured her that our son was just as nice and courteous as those other boys. How did I know this? Watch your kid’s friends when they come to your house to spend time with your son or daughter. I would notice how our kid’s friends would act, the words they would use, or if they played fair and were courteous. I believe this is how our son or daughter behaved when they visited their friend’s houses. I told my wife I believe that when our kids host friends at our house, our kids are on their best behavior because we are there, and they know we are watching what is happening. Their friends aren’t as worried about what we think because we were not their parents. When our kids went to their friend’s house, I am sure they would act as their friends do at our house. Why do I think this? Because we hang out with people we like. We choose our friends because we have things in common and share many of […]

Employee retention doesn’t have to be a big problem!

Did you know that in today’s workforce we have four to five generations of workers?  This made me think of the businesses I know that truly understand how to manage the various challenges that come with a diverse workforce.  I get into many organizations and have the privilege to talk with many business owners on a daily and weekly basis. In recent discussions with some organizations, I hear their main concern is retaining the employees they have and stopping the employee turnover they are experiencing.  From other organizations, this topic does not come up unless I bring it up. I was curious why some businesses have huge retention issues and others do not.   In my opinion, there are many reasons for this, one overarching reason for poor retention is The Boss’s lack of understanding of the several generations in their present-day workforce.  Here are a few points to think about; First, I have been carrying an AARP card in my wallet for more than a decade now.  In my generation, I was trained in an autocratic management style. If you didn’t like what The Boss said and didn’t comply with The Boss’s demands, you would often hear, “My way or […]

“We’ve got to get shit done and we can’t afford to lose anyone!”

I recently began to work with a company that had a problem with employees not showing up for shifts and/or often leaving shifts early.  We called a meeting of the management team and began to discuss the problem and how to correct this type of damaging behavior.  I asked The Boss if the company had a disciplinary policy and the proper forms for the managers to use to correct these types of activities.  The Boss said no, the company never had anything like that.  The Boss said in the “old days” he would just threaten to fire any employee the next time “stuff like this” happened and that would be enough to correct the problem.  Today with the unemployment rate so low, The Boss says he is afraid to discipline anybody because of the worker shortage and as The Boss says; “We got to get shit done and we can’t afford to lose anyone!” As we continued our discussion, The Boss was not comfortable saying anything to the employee because he was afraid to lose another worker.  I stressed the fact that at least disciplining the employee or even letting the employee go would be the best action The Boss […]

What is your company’s competitive advantage?

In my work I have often been approached with these questions; “Do you think this is a good idea” and “should I go into business?”  I usually asked them to further describe their business idea for me.  They begin by speaking calmly and at an average pace, then, as they begin to get excited, their voice tone starts to rise, the pace of their speech increases and they often become animated.  This is a great sign since it shows they have a true passion for what they are describing.  Passion for what you’re doing is one of the critical ingredients for success as a small business owner. Next, I ask them to describe their competitive advantage.  If they respond with, “What’s that?”  I tell them not to quit their day job; end of discussion. Having and identifying a competitive advantage is so important that if a business owner cannot describe their competitive advantage then I believe they are destined for failure. As the owner of your business, you must identify or develop your company’s competitive advantage.  Once you’ve done that, you have to teach your key management and employees how you plan to use your competitive advantage to outsell the […]

Don’t underestimate what your employees don’t know

While evaluating a new client, I participated in their management meeting where The Boss and the department managers were reviewing their financial performance from the past month. They were evaluating the financials by department, going over the expenditures line-by-line. I began to ask questions about the sources of the expenses. I received some very vague answers in some cases and in others, I was told, “I have no idea”. I observed that the department managers didn’t know what “success” looked like. They didn’t have a year-over-year comparison to benchmark their performance, nor did they have an annual operating budget to use as a goal for the month, quarter, and year. I asked The Boss if he set goals for his managers. He said he shouldn’t have to, they are the managers and they should know what they must do to be profitable. “That’s what I pay them for” was one of his responses. I said I understood his position and I often run across owners who have this same viewpoint. But this approach by The Boss will not create the results in the owner’s equity that The Boss desires. After interviewing each of the department managers, I gained some more […]

“What “The Boss” stresses the employees accomplish, make it the right message!

When I first begin working with a company I sit in on the manager’s meeting and just listen.  What I often find is that the staff is focused on what The Boss stresses as important. They instruct their direct reports to accomplish the goals set forth by The Boss in these department meetings.  The problem I sometimes see is that The Boss is sending the wrong message or a partial message. For example, in one meeting during a review of the prior months’ financials, each department head reported out to The Boss what their actual revenues were compared to the annual budgeted numbers.  Then The Boss asked what the budgeted revenue goals were for the next month and how each department manager was going to achieve those revenue goals. Afterward, The Boss was expressing frustration to me in the lack of gross profit from each department as it pertains to the annual budget goal.  During our discussion, I asked if the departments were hitting their revenue goals and The Boss said “Yes, as a matter of fact, the total revenue for the company was ahead of last year and ahead of budget”. I said I was not surprised as that […]