I was reviewing the monthly financials with The Boss in advance of sending them to his banker, one of the services I offer is coaching The Boss how to manage a banking relationship.  I was challenging The Boss with a few questions regarding the change in his backlog.  The backlog for the previous month was close to a million dollars and now for this month it is next to nothing, and the revenues did not reflect the million dollars in sales.  We took a step back to analyze why and search out the root cause of the miss-information.  Come to find out the production manager, who was only a few months out of the field and now in a management position, had made an error when estimating the backlog. It didn’t take long to determine that the production manager was never taught how to calculate the backlog.  Fortunately, in this case, we caught the error and adjusted the information prior to sending the financials to The Boss’s bank. After we found the problem, The Boss and I had a few conversations about how to fix the situation so it did not reoccur. What I explained to The Boss, who was […]

One of my clients wanted to know how to increase profits without raising prices. I asked if they had established SOPs in the various departments. The Boss said that would be impossible and way too costly and time-consuming. The Boss said if one of his managers wanted to set up SOPs with me that would be fine as long as it didn’t take away from his productivity. I found this statement to be curious as SOPs more often than not will enhance productivity and efficiencies. The service manager volunteered to work with me as his department was always lagging behind the other departments which were granted more resources. Our job was to observe the current procedures and then talk with the crew members about how we could improve their processes. During one morning break, I showed up with a Starbucks cardboard coffee carafe and a dozen donuts and we began to talk. In the fifteen minutes we had during their break period we came up with many procedures that, when implemented, had the potential to improve efficiencies. The manager and I took notes and the next day we came back with the first draft of our SOP’s. The crew members […]

It’s true that as business owners, we are gamblers.  We are willing to take those mitigated risks that our employees are not willing to take.  We are willing to bet our savings and, oftentimes, our homes on a new second location, an expanded master franchise agreement, or new capital that allows us to enter a new market.  Whatever the reason for the risk, we are the ones who say; “Yes, I got this!” Not always will those risks pay off, and sometimes it can cripple you and your company. That is when we need help.  But when do we, as risk-takers, feel we can no longer beat the odds and ask for help?  Often, it is when the pain we feel is extremely high and the initial risk has developed into a full-grown problem.   As The Boss, you have grown to become pain tolerant.  The normal day-to-day issues cause you slight pain as you struggle to make payroll or look for funds to fix that old piece of equipment again.  The bigger pain points are the larger capital investments you chose to make.  It is as if you look over the cliff and say to yourself; “That doesn’t look that bad and I believe […]

If you do not possess an “Entrepreneurial Mindset”, The Boss’s decision-making process may look very risky to you.  To The Boss, it makes perfect sense.  Let me try to explain. The Boss receives a small piece of information.  Most folks in the company see it as non-essential data with little meaning.   The Boss gets excited about the opportunity she sees and begins discussions to react to and move forward with a plan using the newly discovered information.  The managers declare the data they have is at best only 25% of what they would need to even think about diverting resources and investing company funds.  Well, The Boss is “the boss” and a plan is developed, and the company begins to implement the plan. In short order another 25% of the data is received, making the entire data collected 50% of what others would say is needed to begin to think about developing a plan.  The Boss reviews the new information and now with 50% of the data, she pivots and changes course.  Still moving forward and begins working the newly revised plan. A short time passes and an additional 25% of the data is collected, now The Boss has […]

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 […]

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Back in the day, as I am told I say way too often, a full-blown business plan would be necessary to get funding, and some may say to have a successful business.  Today, times have changed and that 20-plus page business plan has become somewhat obsolete. What has replaced it? A three-year financial projection with eight to ten pages describing how The Boss is going to execute to achieve the Pro-forma numbers.  One of my past careers, I worked in an entrepreneurship center where we helped entrepreneurs launched approximately 170 new businesses over four years. What I saw were many of these new businesses going out of business in about eighteen to twenty-four months after launching.  After closer investigation we noted that the new business could not cash flow after the start-up funding was used up, causing the businesses to fail. That old adage is true, “You can have profits without cash flow and go out of business, but you can have cash flow without profits and fight another day!” If you want to know your business intimately, create a three-year operating budget with a very detailed first-year and two following years of projections.  At the end of the first […]

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 […]

I was working in a business that was having efficiency challenges, I requested the managers of the various departments meet to discuss potential solutions. We had people from finance, production, sales, customer service, human resources, and the service department in a room and The Boss began the meeting by defining our goals and asking for their full participation. I come into a business without emotional connections and without a silver bullet or magic wand. The solutions are most often found within the business, offered up by the organization’s employees. It did not take long before The Boss and I noticed many of the managers did not understand their peers. I studied the situation briefly and realized that each department was speaking a different language. The finance manager using “accounting speak”, production was using words that the human resource manager did not understand. The customer service manager and the sales manager thought they knew what each other were trying to explain, but after the exchange of several questions, they soon realized they were not on the same page. The service manager was not talking at all, when asked why not, he said he didn’t understand what was being said so he […]