In this organization, the challenge was a lack of efficiency, as The Boss tried to get all managers to work together.  The departments were all siloed working as independent units not worrying about the other departments or how they fit into the overall strategy.  In past newsletters, we identified “IOP’s” (individual operating procedures) versus “SOP’s” (standard operating procedures) done by individual employees.  In this case, the IOP was done by the various departments.  Each department would take care of their own business and not worry about how their output would affect the other departments.  The efficiencies were lagging due to poor input from one department to another.  The department managers could not see how they fit into the big picture; they were not shown the picture on the “Jig Saw Puzzle Box Top”. The initial problem was various department managers had no clue how the pieces they were creating would fit together to create a cohesive business model.  This created several challenges for the organization.  I asked the managers to recite the organization’s Mission Statement.  I heard crickets chirping in the distance!  Not one of the department heads could tell me what their company mission was, and The Boss could […]

The organization was experiencing quality issues. The Boss was young, inexperienced, and frustrated. He was ranting about the poor quality his team was producing on the shop floor. He began by complaining about his staff not completing a time-sensitive job by the time the customer arrived to pick up the product. Obviously, the customer was angry and upset. The Boss was embarrassed that the customer experienced poor service and was looking for someplace to put the blame. I suggested the blame should not fall on anyone on the shop floor. This began a somewhat tenuous discussion with The Boss. I said the quality problem was with him, it was his problem. The Boss immediately became defensive and said, “How could this be my problem? I wasn’t even on the floor to screw it up! It was Joe’s problem, and he should have done a better job!” Unfortunately for Joe, he was the bearer of the bad news and the crew member who had the courage to tell The Boss the customer arrived and was angry. I was in the room when this whole conversation happened. When Joe left the office for the shop floor, I began to ask The Boss […]

The Boss was venting to me regarding his frustration with his top performer, who was his assistant manager. I let him speak and when he calmed down, I asked if we could do a simple exercise with the assistant manager. He agreed, so I asked each of them to list the assistant manager position’s top eight duties, without collaborating and without sharing their lists until we were ready. They both had a hard time listing eight, but we waited until eight were on the page. Then I asked The Boss to put his eight on the whiteboard in the conference room, and then I asked the assistant manager to write her top eight on the board. As you can imagine there was not a consensus. Actually, these two did better than most when I did this exercise in other organizations. They had five duties listed the same, The Boss’s frustration was coming from the three duties that were different between the two lists. This made for an excellent discussion and by the time we were finished, they were both on the same page regarding the top job duties of the assistant manager’s position. The assistant manager was thrilled about the […]

Over the past months, I have had conversations with business owners regarding cash flow issues. Today’s post-pandemic business environment is tough due to several issues, none as relevant as the prime rate increases over the past years. As the cost of money increases, customers are putting off larger purchases, such as remodeling, and major repairs to their homes. These industries are struggling more than most when it comes to cash flow. I see many businesses turning their cash into accounts receivables or inventory as business slows. Not making the needed adjustments in purchases is causing inventory to increase. This is creating “frozen cash,” cash tied up in larger inventories as business decreases and purchasing habits are slow to react. Another major contributor to “frozen cash” is the increase in accounts receivable (A/R). Customers are doing what many businesses do when cash is in short supply, they are pushing out their household account payables A/P, not paying their bills as fast as they normally pay, resulting in more “frozen cash” for their service providers as A/R increases. This puts pressure on the business to increase its efforts to collect the outstanding A/R to maintain proper working levels of cash flow. In […]

I have to say upfront that this newsletter is one of those, “Do as I say and not what I have done most of my career!” newsletters. When business is good The Boss is almost always in a good mood and it’s good to have him around. But when times are tough, The Boss can be a real pain! I had a client who was a specialty machine shop that made custom machine parts on demand. The Boss #1 was the founder of the company and was transitioning the business to his son, The Boss #2. My job was to coach Boss #2 through the transition until Boss #1 was convinced his son could run the place. Now the only thing more frustrating than having one boss is having two bosses, especially for employees who are trying their best to do their jobs in stressful times. So, coaching the employees through the transition was an added responsibility I did for the business’s sake. The transition went as smoothly as you could imagine and afterward, The Boss #1 did retire, sort of – the most a founder can retire, which means he only visited a few hours a week to see […]

Recently, while working with a client, I had the opportunity to lunch with two business owners from Europe. We began with casual conversations, and I was impressed with their understanding of our NFL football teams. Eventually, our conversation turned to business and the similar challenges we all experienced. The most interesting subject was people. It didn’t matter what continent we were on; people offered the greatest challenges. More specifically, we agreed we each had good workers and decent managers but were lacking enough leaders to go around. Some questions we discussed were: Is leadership taught or is it innate in an individual? We discussed personal growth plans and what types of training newer leaders needed. We discussed the benefit of giving candidates for leadership the opportunity to lead before being promoted into a leadership position. Will people like this person as their leader? Will they follow this person? Will employees trust this person as their leader? Great questions that needed to be answered prior to promoting a person. By this time in the meal, I think we were more interested in what we were discussing than the food. Those who know me will find that hard to believe! We discussed the […]

The Boss asked me to help him understand his financials better. I asked what his main issue was, and he stated that he thought the profits were too low. We had developed a budget earlier in the year and he was comparing the actual financial reports to the budget. We knew the budget was not perfect as it was our first budget we wrote together and the first budget The Boss had ever written for his company. After reviewing the profit and loss, The Boss pointed out the net income was running behind budget for the YTD. We began to discuss what could be causing this effect on the P&L. I had The Boss initiate a job costing SOP and The Boss said he had been doing this religiously with good results. So why was the profit not showing up on the financial statements? After calculating some percentages, we could estimate what the dollars should be for the cost of goods sold (COGS) and overhead. We reviewed the balance sheet and calculated purchases versus the COGS on the P&L. Here we found the beginning of the problem Purchases versus COGS according to GAAP. I explained this as simply as I could […]

I recently took on a new client and in our first meeting, The Boss expressed how frustrated he was with his bank. I asked, “How so?” The Boss said their line-of-credit (LOC) was too small and every time he went to the bank asking to increase his LOC, they routinely asked for a profit and loss statement and a balance sheet. Soon afterward, the bank refused his request. I asked The Boss if he ever asked his banker for a reason, and he said “No, he was too frustrated”. I looked over his profit and loss statement (P&L) and asked to sit with The Boss to answer some questions I had. Frankly, the P&L was a mess. The Boss was a great technician but a poor bookkeeper. He tried his best to input the information to keep the P&L up to date but his day-to-day duties often won out over accurately inputting financial data. We spent hours trying to organize the P&L according to General Accepted Accounting Principles (GAAP), a term The Boss did not understand until we started working together. We isolated his profit centers and calculated a gross profit per center. We separated the direct costs and the […]

With the fishing season upon us, I thought of writing this newsletter about fishing guides. Therefore, this newsletter is not for The Boss but for you! When you decide to hire a fishing guide, you pick a guide with years of experience and someone who knows the waters you are going to fish. She knows the various lures that you should use and will share with you some of her best techniques so you can catch that trophy fish of your dreams. As a novice angler, you are eager to learn from your guide and therefore you ask many questions about the proper rod and real, the best way to rig your line, and you are eager to learn how to read the fish locator. You are attentive and heed every word your guide says. At the end of the day, you and your fishing guide have a mutual goal, your success on the water. Now imagine your first week at your new job. You have sought out a company in an industry you think you might like. Your goal is to do a good job and maybe advance in the company to earn a better wage than you earn […]