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Leadership Management strategic planning

Thinking about your thinking

Last week, we discussed single points of failure, noting that eliminating them from critical systems is a management responsibility. How managers think about critical systems (and everything else) directly impacts outcomes. It isn’t about being more sophisticated or smarter than others. It’s often as simple as asking a question that no one else has the nerve to ask, like “What (else) can go wrong?“. The TV station issue discussed last week re: the NCAA broadcast might have been avoided if someone had asked “What happens if our primary internet connection goes down during a critical broadcast?

The problem isn’t the problem. The problem is how you’re thinking about the problem.” – Dan Sullivan

Thinking “What can go wrong?”

It’s impossible to eliminate every threat to your infrastructure, systems, processes, supply chain, people, facilities, etc. It’s obvious to think about infrastructure (water, power, internet, health care, food, transportation). Hurricanes, tornadoes, floods, and earthquakes will quickly divert your thoughts to infrastructure.

What if we can’t ship our products for three weeks?” or “What if we can’t get (normally JIT-shipped) raw material for two weeks?” seem like ridiculous questions until mudslides or avalanches wipe out your shipper’s critical rail route, or spring floods destroy critical roads / bridges near you.

Ask “What else can go wrong?” & “What can go wrong with things out of our control?” Prioritize these risks & start toward eliminating or minimizing the most important / likely ones. What workaround processes will you need if mitigation plans missed something? Should you should document these plans? (Yes) Should you rehearse the workarounds?

How has the business changed?

Asking how things have changed can alter your thinking.

20 years ago, a Fortune 500 company might’ve had 20, 200, or 2000 locations. Today, they might have 20-50% fewer locations. Those locations might be larger, smaller, in more/fewer countries. Management at those companies are used to those changes. What’s different from 30 years ago (much less 10) is the potential added complexity of having thousands of remote workers across the globe. For that population, connectivity and power are still critical, and the risk is better distributed. Damage to a single facility shouldn’t sideline thousands of remote workers as it once would have.

Our customers, products, services, facilities, and people change all the time. While the pace and nature of this change varies, it happens to all of us. Our mindset and our history is a big part of it. When it comes to thinking about how our company has changed, our mindset and worldview about our past is a huge influence.

The best advice I’ve ever gotten about this is: “Look at your (and your company’s) past, decide what you want to take into the future, and forget the rest.” That doesn’t mean you forget the lessons or the history. It simply means you don’t let them come along as baggage that weighs down your thinking.

What are we assuming?

When doing a review of a “disaster” (whatever that means for you), it’s pretty easy to see the mistakes that cascaded into disaster. Imagine the value of seeing these mistakes in advance. By default, we make assumptions. Lots of them.

When driving from Billings to Cheyenne in the winter, we know to top off in Sheridan or Casper (or both) because we can’t assume that the drive will be uneventful. Running out of fuel because you had to sit still with the car running for four hours at -10F can be a life-threatening oversight. An assumption like “We have enough fuel” could be your last if things don’t go smoothly.

What conditions, supplies, staffing do we assume will be in place? If your top three salespeople get an ugly case of stomach flu the night before the biggest trade show of the year, what’s tomorrow look like? While unlikely, you need a plan.

If boxes of materials don’t show up at the show, you usually find out the day before the show. Even if the show staff finds them, it might take a couple days. By then, the show will be over. What’s your plan? Do your people have the info / means to find substitutes on a Sunday afternoon in a city they aren’t familiar with?

What did we ignore / forget?

Is maintenance up to date? Is the condition of equipment, people, vehicles, etc what we think? Dashboards and checklists save us from simple oversights / mistakes that can cascade into something you’d rather avoid.

Categories
Entrepreneurs Management Small Business strategic planning

Selling your company

In Silicon Valley, “exiting” means a company you started / invested in went public or was bought by another company. It’s a time of celebration, reward, & anticipation of the next big project. When you are selling your company, it’s often different. For some, it’s an escape. For others, it’s the achievement of a long-anticipated goal. Are you prepared for it?

Is your company ready to sell?

The process of getting a company ready to sell is really about getting it running smoothly. It’s easy to think of it from the “E-Myth” perspective & focus on “systematizing” your business, but there’s more to it. Put yourself in the shoes of a buyer during due diligence.

They’re looking for proof. Signals that provide assurance.

They want to see data that indicates how your company performs. If you have good, verifiable data, you don’t need to make big claims. Let the data talk. For example: You can probably predict gross revenue over the next 90 days with a fair amount of accuracy simply by gut feel, but can you show data that supports your prediction? How you do this will vary, but many use some form of leads-per-month and conversion rate.

Sidebar: One conversion rate calculation is the number of leads who buy during a period divided by the number of leads you gained during that same period. If you get 1000 leads a month & sell to 520 of them that month, your conversion rate for that month is 52%. Sales cycle length & other factors can complicate rate calculations. Keep it simple.

Selling your company requires leading indicators

Measurable business performance can be difficult to extract solely from financials, which produces trailing indicators. Income history over time is good to have, but it’s a trailing indicator. A trailing indicator is one that documents how the company did last week, last month, last quarter, last year, etc. What about the future?

Buyers want to see leading indicators. Data that accurately predicts future performance.

A leading indicator uses verifiable data to reasonably predict how the company will perform next week, next quarter, etc. Restaurant reservations are a leading indicator: You can predict on average that 78 people will show up for dinner if you have 100 dinner reservations for next week.

Lead counts (inbound phone calls, website opt-ins, etc) function both as a trailing & leading indicator. Imagine you got 100 new leads a day on average over the last two years. Let’s say your close rate on sales hasn’t changed during that period. If your average sales cycle is 60 days long, you should be able to predict income quite accurately for the next 60 days. Why? Because the lead count is steady and so is your close (conversion) rate. While this ignores changes in prices & costs, it reasonably predicts future gross income.

Why are you selling your company?

When someone approaches you about selling your company, it’s often done without provocation. You haven’t listed the business for sale. You haven’t indicated that you’re ready to retire. “I’m not ready“, you might think.

They see opportunity. Sometimes they see synergy with their existing business. Maybe they want to buy more customers. Their reasons are theirs. What are yours?

When you ask owners in this situation what they really want, they’re often unsure. There’s nothing wrong with that. You don’t always know what the next step beyond business owner is because you haven’t thought hard about it. You’ve been focused on running the company, growing it, & taking care of customers. It’s OK if you haven’t put serious thought into what a sale really means – even if you always knew you’d sell someday.

A big check” is too simplistic an answer for some, because the business is a big piece of who they are. Some want a role in the company after the sale. Many don’t. Some care what happens to the company, the customers & their team. Some don’t.

Owners often have a number in mind that they would take. The first number I hear is rarely based on hard numbers, desired ROI / payback period, etc. Remember that a buyer is purchasing assets (most likely) as well as an income, whether they’re an individual or a company.

When it comes to selling your company, your “why” is as important as theirs. Think about it and get your business ready.

Categories
Employee Training Leadership Management strategic planning

What makes your customers safe?

We have attorneys, insurance, OSHA, safety regulations, procedures, safety gear, training, etc to help us protect our business, while keeping our staff members & customers safe. We know that in some markets, someone still might get hurt despite all our preparation, training, safety equipment, etc.

If you run a hotel with a pool, offer zip line rides, take people on boat rides / float trips, lead hikes or offer horseback rides into the backcountry, there are obvious risks, but almost every business has some level of risk like this. Have you wondered how you’d respond if something horrific happen to your customers while they were at your place of business? It’s one of a few worst possible nightmares for a business owner. Could you, much less your business, recover from something like that? Could your staff?

There are (and will continue to be) a lot of what ifs related to the recent duck boat disaster in Branson. It’s difficult to comprehend, much less try to relate to what the victims’ families, the employees and the business owner are going through. While it’s the worst possible time for all involved, the rest of us owe it to ourselves, our team, and our customers to learn from it.

If your business involves activities that could put your employees and/or customers in a scenario where they could get hurt, you should watch the process closely as they talk to the media, address safety issues that are discovered, and change processes while customers are in their care.

Review. Look for clues. Ask for help.

What you’re able to see from the public perspective of this accident will help, but the opportunity to learn won’t stop there. There will likely be additional considerations discussed by your advisors that they will want to share with you. As an example, you’ll want to talk to your attorney, insurance agents, licensing and related safety enforcement agencies, as well as industry groups.

As details come out about what went wrong in Branson, you may find subtle gaps in your tools, gear, processes, inspections, or training. Even if you have 40 years of experience in your business, as the boat tour business does, you can still learn from the lessons and discoveries that come out of this.

Your customers know they’re putting themselves at risk to take part in adventures. They expect your team to be experts. Reviewing your current procedures, training and equipment use is at least as important as making sure that you’ve developed enough of a sales pipeline to have the necessary cash flow to make payroll three months from now.

One more critical tool

There’s more to this than safety equipment and training.

When bad things happen, time has a way of changing. For some people, time stands still, or more commonly, slows down a good bit. For others, it accelerates.

It’s easy to find stories about highly accomplished people (athletes and others) who describe what happens when they get really good. They’ll say the game or activity “slows down”. It means that they are so ready, so fit, so well-trained, and so mentally prepared that the activity feels as if they have plenty of time to do whatever they’re good at. It looks easy when they do it because to them, it is. For the rest of us, the game or activity feels like it keeps getting faster and faster. When we try to keep up at a pace we aren’t used to, we start making mistakes.

Leadership works this way too.

When bad things happen, preparation slows things down. When you’re the owner and 20 people are asking questions at once, preparation, experience, and practice help you keep your bearings, calm everyone, and handle the questions.

You aren’t the only one who needs this preparation. Your ENTIRE team needs leadership training. When everyone else panics (and perhaps rightfully so), they will need leaders to help them find a safe way out. Leave no one out. That kid in produce might be the one who takes charge and guides your customers to safety when the worst happens.

Train your entire team. All of them will need one another to get through it, both during the event, and afterward. You’ll need their leadership most of all. If the worst never happens, you still have a team of leaders. Your customers will notice.

Photo by Symic

Categories
Management Small Business strategic planning

Brainstorming your 2017 Business Roadmap

It’s a hair after five am on January 2nd. 2017 is barely underway. Have you started working through the first task on the detailed 2017 business roadmap that you painstakingly carved out last month? I’m referring to your checklist of all the things you want to get done to grow and improve your business this year. I suspect that list includes a number of tasks that execute on the strategies you worked out to improve your finances, marketing, sales process, and customer service – all while edging your way into adjacent markets, right? If that’s you, I hope you stay the course, crank through your roadmap and make some great things happen.

If that isn’t you and you’re beginning to consider what aspects of your business need your focus for 2017, maybe this 2017 business roadmap brainstorming discussion will help.

What’s your business roadmap expected to accomplish?

Without knowing your specific business, it’s tough to focus on the exact challenges you’re facing. So what do we do?

Experience tells me that you likely have one or more of these four things on your todo list for 2017:

  • Increase sales.
  • Reduce expenses.
  • Improve profitability.
  • Improve quality

While those are all good things to accomplish, let me first suggest that you nail down exactly what you want to accomplish with this list.

What does “Increase sales” mean to you? Does it mean double or 10x your sales? Does it mean sell one more car a day? Does it mean that each salesperson will sell $1000 more a week?

Until you decide what “increase sales” means, it’s going to be pretty hard to hit that goal. The same goes for each of these targets. Once you’ve decided, then there’s more drill down to plan each project that moves you to these goals.

You may tire of this process, but it’s exactly what you need if you’re looking at a 2017 goals list that looks like the four item list above. You need to know how far (and where) you want to go and what is involved in producing with the increase you’re striving for. Not advisable: Wandering off in a goal’s general direction and hoping you’ll get there.

What’s hiding inside “Increase sales”?

As an example, the first item can and should be broken out into multiple goals even if each one of them isn’t applicable to your intent to triple sales:

  • Get new customers. (What kind of customers? From what lead sources?)
  • Keep more existing customers.
  • Sell more to existing customers (selling more frequently, selling more expensive things, or both.)
  • Find new products to sell to your customers. (things that make sense in the context of your relationship)
  • Find new services to sell to your customers. (ditto above)

These can be broken down as well. Drill down until each goal’s first step is obvious. You’ll have to delegate. Delegation won’t go well without specifics.

Now you have a bit of a template for breaking down annual goals so that you can start executing.

What’s involved in tripling sales?

Let’s say you sold $340,000 last year and you want to triple sales this year. A 300% increase is a tall order, but it isn’t impossible. The big question is “What makes this possible?”, because the effort is in the details.

If I ask for explicit details on what you need to do, you need to know what it’s going to take because there are resources that must be invested to make that kind of growth happen.

Let’s say you have two sales people and each of them sold $170,000. To hit $1.2 million, you’re either going to have to hire four additional sales people capable of selling $170k a year, or have your existing sales people work *at least* four times as hard, or some combination thereof.

But that’s not all.

Four more sales people will need four times the leads. Customer support will be affected by a 300% increase in sales, as will delivery, storage, accounting, supplies (and suppliers) and finances.

You need to think about exactly what it’s going to take, map it out and then start implementing your plans. Then you get to repeat the process for each goal.

Running off the roadmap

What if you miss a month? Or a quarter? How does that affect your execution of the impacted areas (service, delivery, etc)? Have a plan B figured out in advance so that you don’t have to figure out plan B while plan B is being executed. Last minute, panic or fear-driven planning seldom works out well. Think about contingencies for each aspect of your plan that has risk of failure. Communicate early and often if it happens.

Categories
Leadership Small Business strategic planning The Slight Edge

Who on your team is wired for tough situations?

In every sport, a team’s best players want the ball when the game is on the line and nothing but an amazing performance will help their team win the game. Regardless of the potential cost to them personally, the risk of failure and the pressure of the moment, they take charge during tough situations.

In your business, you likely have staff members built the same way. These are typically the folks on your team who step up in tough situations, probably for the same reason. It’s how they’re wired.

How’d they get wired that way?

I haven’t ever explicitly asked someone what makes them “want the ball late in the 4th quarter” but I suspect they would answer one of two ways:

1) In the early / formative years of their career, they had responsibility thrust upon them by virtue of the work laid in front of them. As a result, they’re become accustomed to tough situations.

In this case, it’s a matter of training and familiarity. Once these situations become normal, their confidence in handling them grows over time to the point where stepping up is simply part of what they do. They don’t see it as a big deal because being the one who deals with these situations is just part of who they are. One of the things that gives them this confidence is time spent in tough situations in the past. Be sure to include your up-and-comers to participate and observe so that they also gain this experience.

2) Leaders and peers have always shown confidence in their ability to perform under pressure, under deadline and in other tough situations.

This demonstration of confidence comes in several forms. It shows in team members asking not simply how they can help, but by taking on specific tasks that they’re confident your “crisis players” can trust them to handle. It shows in leadership asking if they can help (and if so, how) rather than yielding to the temptation to check for progress so frequently that it becomes an interruption. It shows in everyone asking questions that provoke the team to think a little differently about the problem, and to question and discuss every assumption.

How do you find more people like that?

Ask.

Prepare interview questions that provide your candidates with the opportunity to explain their experiences during crisis situations. When your team nominates someone for an opening at your company, discuss your “interview crisis” questions with the nominating employee. Your goal: to gather their viewpoint of candidate’s ability to handle crisis situations, and their observations of the candidate’s behavior under pressure.

Here are a few generic examples that will help you create better, more specific questions that are more appropriate for your business: Would you want to work with this person when trying to solve a problem that threatens the life of the company? Why? What about this person’s behavior under pressure impresses or concerns you? How do the peers of this person react to this person’s crisis behavior?

How do you help in tough situations?

Ask any crisis player you know what kind of help they need most when dealing with these situations. It may take them a while to mentally step back through the process. This should encourage you to plan on a discussion after the crisis abates. It’s not unusual to have these meetings so that we can, as we are famous for, make sure this never happens again.

Reacting to what happened so that it doesn’t reoccur is important, but what’s desperately needed is getting a lot better at prevention. Ask your crisis players what would have averted this situation. Ask them if they saw this coming. Ask them who else saw the oncoming problem. Ask them who listened to those who raised the alarm and who didn’t. For that matter, did ANYONE listen?

You’re not asking for names so you can have a witch hunt, but so that you can identify those who see things before others do. Some people have a sense about these things and ask questions or notice issues long before others. These folks need to know that management has their back when they think they see something.

One way you help your existing crisis players is by identifying players in the making and by giving all of them the resources and ear they need.

Categories
Management Small Business strategic planning

Preparing your business for sale, or not.

As you get a little older, one of the natural things you start to think about is “What am I going to do with this business?” While you might find a buyer (as many do), or you plan to involve your family in some way. Anyone else might have to search for a while. While you’re considering that (family or not) and dealing with the day to day, it’s worthwhile to spend some time preparing your business for sale.

One of the ways to do that is to start thinking about what happens the day after closing. In many cases, your buyer is likely to request some sort of financing, which often comes as a revenue split payable to you. If you have to (or want to) do this, you’ll be a lot more interested in the buyer’s success.

Leaving a road map

Leaving the new owner a road map can’t hurt, no matter how experienced they are.

What roles will have to be filled to take over your business?

  • Daily operations
  • Product management and development
  • Finance
  • Infrastructure management
  • Marketing
  • Sales

You may have others, depending on your business.

What do these things involve?

Daily operations

In brief, run the business day to day, relieving the owner of all tasks. Making sure everyone on the team is communicating and is being communicated with. No mysteries, no surprises. If you had to be replaced tomorrow, what would it REALLY take?

Product management and development

Managing employees, consultants, their projects and the quality of those projects. Planning and executing testing so that quality meets or exceeds both your own and your customers’ expectations. Working out ongoing product plans, deployments and deadlines so these projects can be coordinated with other parts of the business.

Finance

Monitoring AR / renewal rate / renewal speed, keeping the bills paid, updating metrics, etc. Making sure your financial records resemble something a buyer and their people (banker, investors, etc) expect to see.

Infrastructure management

What infrastructure do you currently have to manage and care for?

Marketing

Planning, design, development, and execution of marketing efforts per your marketing calendar. What prospects are you not reaching? Are there prospects who need what you do, but simply aren’t exposed to your company because of (what, exactly)? When you have churn, what is the cause? When someone declines to purchase, what are the reasons? The answers to these questions change over time, so they must be asked on a recurring basis. This includes lost customer re-acquisition.

Sales

Improve, manage and document the sales process. If there isn’t one now, develop one. It’s “easy” to take a company to two times current revenue by doing more of what you’re doing now, the same way you’re doing it now – throw “bodies” at it. However, it’s all but impossible to 10X a company that way.

Investigate expansion into adjacent markets

Are there closely adjacent spaces you aren’t yet addressing? Do the people that work with the people who work with your products and services all day need your help in a way that relates to your existing business?

Identification of partner and cross-marketing opportunities

Investigate partnering and cross-marketing opportunities where you can leverage your reach to help your partner and where your partner can do the same for you.

Standardize and organize company finances

Investors, angels and prospective buyers expect (hope) to find well-organized finances in forms they’re used to seeing. I don’t mean to say that your finances aren’t organized now (are they?), but they may need to be more formalized. What you want is something that wouldn’t raise concerns when an investor and their professional finance team sees them. Being able to provide such numbers to them on relatively short notice sends a message.

Other benefits of preparing your business for sale

Everything here is about ultimately about preparing for exit. That doesn’t mean that you aren’t focused on customers, in fact, it means just the opposite.

Everything you do to prepare a company for sale prepares it to withstand market challenges, slow months or quarters, while also making it more attractive for purchase. In particular, the road map makes it easier for you to “replace yourself” in the event you decide not to sell and instead, decide to become a passive owner.

No matter what direction you go, making the business stronger benefits you and the new owner.

Categories
Management Small Business strategic planning systems

Pennies add up for the strategically efficient

Part of my unique ability is to help clients think and act in the most strategically efficient way possible. It isn’t necessarily to save pennies everywhere we can, but to save the “best” pennies. In other words, the ones that have the most impact.

I visited a client this past week who makes a good example of strategic efficiency. They are in a highly regulated business, so they take steps to squeeze the most impact out of the pennies they save. Even in innocuous areas like invoicing, there is substantial impact.

For example, when bills are processed and delivered properly, well over 100,000 go out each day. If they are not prepared properly, the cost of delivering them can increase by $1000 per day, possibly more. When you send this many bills a month, there are a number of tactics you can use to save as little as $0.001 to $0.003 per bill.

While that seems like a tiny savings, at scale it adds up to real money.

Saving $30,000 a month, a penny at a time

When they put systems in place to do things in the most strategically efficient manner, they could identify *daily* savings of $1000 per day, every work day. That’s hard money, not touchy feely savings that don’t show up on a bank statement. $1000 per day adds up in a hurry, regardless of the size of the business.

It isn’t just about handling these bills properly. It’s also about handling them on time.

Should these bills go out late, you can imagine that cash flow is negatively affected in a substantial way because clients who don’t get bills on time wont pay them on time. If everything goes well, on certain days of the month, they might be able to “loan” money using short term finance mechanisms.

Process affects transit time

If the bills are late going out by only an hour, they can miss their transit window. If they make their window, it all but guarantees invoice delivery on the next business day. If they miss the window, it will mean bills arrive late and believe it or not, it will mean some customers pay later than normal.

The cascading effect of these tiny shifts can hamper cash flow from that set of customers for the next month. Some days of the month, that may mean they have to manage overall cash flow far more carefully, simply by how things come together that month. Timing matters.

If the processing that gets these bills out the door has problems frequently, it can put pressure on cash flow that affects the entire business.

Yes, but we don’t mail bills

You might be thinking that this “old school” business could gain from efficiencies like emailed bills and other electronic transaction processing. They do, however they are not in a position for force their entire customer base away there. As with some of your clientele (I suspect), there are some who want a paper bill, and others who require a paper trail, even today.

For those invoices, on-time delivery still affects payment patterns and thus, cash flow. Electronic delivery also has requirements to keep it strategically efficient, such as delivery management and bounce processing. If there are no systems in place to monitor delivery and assure that every single bill arrived, those bills will not likely get paid. If they arrived late, they’ll likely be paid late.

“Oh, it’s just email delivery” isn’t simply a minor annoyance when it becomes a cash flow impact factor.

The boring, innocuous back office

Those “boring”, innocuous back office processes may not be as exciting as the innovative, front-line business things you’re doing to close sales and retain clients. Their level of efficiency, quality, and timeliness has a broad impact on the day to day operation of your business.

Whether these processes are based on paper, email, electronic transactions or a combination of all of those things, they (and the company) will benefit from constant improvement and fall back protections. You (and everyone else) will sleep better at night because you know these things are more consistent and more resilient.

Your back room processes fuel what’s going on in research and development, sales and elsewhere. Be sure to make them as strategically efficient as possible.

Categories
Leadership Management Small Business Strategic Notepad strategic planning

Would a succession plan save your business?

What happens the day after you’re gone or incapacitated? Do you have a succession plan in place for your business?

While I suspect that most business owners have taken care of the family side of things – i.e., they have a will and/or a trust, etc. Has the business been taken care of?

We’ve talked in the past about how few businesses survive a fire, mostly because they haven’t taken care of the contingency planning necessary to continue operations when the business’ physical facilities have been destroyed.

A succession plan is different from a contingency plan. It provides a plan so that the business survives the death or incapacitation of the hands-on owner-manager, or even hands off owner in a family-owned business.

What happens tomorrow?

Going back to the contingency plan for physical business damage, look back at the bombing of the Oklahoma City Federal Building. Despite the destruction of their facility and the loss of all but one employee on site that day, the credit union was open for business the very next day by virtue of off-site employees and redundant systems.

This required the foresight to discuss and put together a plan, which included off-site backups, training for all involved and an execution plan.

Whether or not you are ready for a physical disaster at your business, the likelihood of tragedy striking the owner is just as important – perhaps more important.

An important question starts the conversation: Do you care if the business outlives you if the worst happens? If you don’t, this seems like something your family, clients and employees should know – though I’m not sure you’d tell them if you feel that way.

If you want the business to outlive you, you have to confront that situation and discuss it with your team and your family. Who takes charge? If you don’t lay this out in advance and have agreement with your family, your death could set in motion a struggle that could destroy the company despite your wishes.

Who takes on your day to day responsibilities? It’s likely that more than one person will have to do so, depending on your role. It needs to be discussed with your executive team and documented for your family, whether they will be hands on or not. Think of it as a living will for your business.

How will things work in the first day, week, month, quarter?

Is there a documented, step-by-step checklist to get critical, keep-things-running work done? Who knows what to do? How do they know? How does everyone know that they (one person or several) have the authority to act?

Oh, they just know” isn’t the answer you want. If you don’t believe me, call your senior people into your office and tell them you are leaving for a 90 day sabbatical in the morning and you will be unavailable by phone or email. Ask them who will run things while you’re gone. Who will be responsible for x, y and z? What duties are they unaware of or untrained for?

Are you comfortable with their answers? Are they?

Can you…

  • Make payroll?
  • File payroll taxes?
  • Deal with property taxes and the state?
  • Pay bills?
  • Get the mail?
  • Write a check?
  • Deposit receipts?
  • Access online payments and transfer them to a bank account?
  • Access your bank accounts and line(s) of credit, if any?

Who pays the power bill that’s due three days after your death or permanent incapacitation? If you’re the only one who can sign a check, how does that work when your picture is in the paper the next day and your vendors (and your bank) keep seeing checks with your name signed on them? Sure, much of this is electronic, but there will be scrutiny on the accounts. What happens if the bank freezes your accounts?

Who takes care of things like that in the short term if you are temporarily incapacitated? Even if unhurt, but simply lost in the woods on a hunting trip for a week, the inability to sign a check or access your business accounts could create a problem.

Smaller things have derailed companies, or killed them, given the wrong timing.

But I don’t trust anyone with that stuff!

If so, you have work to do. Your attorney, accountant and banker can help, but if you still don’t trust anyone, that’s a fundamental problem to tackle. A business with no trusted senior employees is in a really bad spot. I understand that “trusted” doesn’t necessarily mean “trusted with the checkbook”, but you still need a solution if you care about the post-you business.

Categories
Entrepreneurs Leadership Small Business strategic planning

Key person: Scalia and you

The loss of a key person, such as the death of Supreme Court Justice Antonin Scalia, is a critical moment in any organization. His passing sharply increased the temperature of an already highly-charged Presidential election season. It was already forecast that the next President will likely have to opportunity to make at least two and probably three appointments to the bench. What it make me think about was the impact of a Justice’s death on the day to day business of the court.

And that reminded me of you and your business.

Why? Events like this can have a critical, if not fatal impact on your business. Could your business survive your death or permanent disability, or that of key employees?

Regardless of your answer to that question, consider what’s in place to assure that the business will survive you. Is there insurance? A plan? Anything?

Key person insurance isn’t enough

While there is key person insurance available to help subsidize the cost of dealing with these kinds of situations, it often does little more than take care of expenses related to an orderly dismantling and/or sale of the business. Why? Because there was no plan to do anything else.

The real work, if possible, is the work necessary to survive the situation and keep the business running. That’s often the root cause of business failures that occur after an event that prevents the owner from being involved in the daily operations of the business.

Do you have a plan to survive a key person event? Without any instructions from you, could your family and/or your team know exactly what to do to get payroll out this week? A bank will work with you to get payroll out the door, but who can fund the payroll account in the first place?

What about the business that will transpire this week? What about the leadership void you would leave? Does your spouse take over? If so, do they have the necessary written instructions (or a video, or something) to help them get their feet under them in the short term? Have you organized the guiding information they need to take this on for the long term?

Keep in mind that in the early days, they will be trying to do this while suffering through the unexpected and sudden loss of you. This will certainly affect their decision-making abilities and focus, even if only temporarily.

Will there be a battle at the office to see who takes charge? If you don’t have a leadership assumption plan in place, what would happen? If your spouse isn’t ready to lead the company in the short term – regardless of the reason – who should their confidant be? Have you briefed the person charged with getting them up to speed on what’s important and how you make decisions? Is this information in writing?

Is the plan you left in place legally binding?

Key people need access

If you don’t pass on, but something happens to prevent you from having your normal access to business data, paperwork, assets etc or prevents the business from having normal access to you – what impact would that have?

Some events could impact almost any business, like these:

  • The owner, operations manager or a key employee has a stroke.
  • The owner, operations manager or a key employee leaves without notice.
  • The CEO’s spouse is taken to intensive care without warning, and the forecast is that he will be there for months.

For a larger business, international travel is likely – and that opens the door to many more possibilities:

  • Any of the items above could happen while an executive is out of the country, adding complexity to an already-trying situation.
  • The CEO could be stuck in a situation out of their control that keeps them out of the country for months.

How could this happen? Easy. If the boss is in South America, how will it affect your business if she can’t return for three months? It isn’t much of a stretch for the Zika virus (or something similar) to cause a country to close their borders, or for it to provoke the U.S. to disallow flights from the Zika-borne country.

How would the inability to perform simple tasks like signing checks impact your business? Little things can sometimes become big things when you lose control of them.

Is your business ready?

Categories
Employees Improvement Leadership Small Business Strategic Notepad strategic planning

Are you communicating company goals?

The natural thought process for small business owners at this time of year is often about goals, i.e.: “How can we do better next year?”

Before you can answer that, you need to decide what “do better” means. What’s your process for thinking that through? If you decide it’s about increasing a high level focus item like profit (rather important), you’re going to have to break it down so you can focus on the actions that produce the increase you’re looking for.

Departmental goals matter too

Once you’ve settled on an area to improve, don’t limit improvement ideas solely to your focus. If you have a staff, you have to get them involved. If you’re big enough to have multiple departments, you have to get them involved. Get them together and take them through the process you went through. For each department or area of the company, what data should they review? For each department or area of the company, what else needs review and discussion? What do they think they can improve upon this year that will have the most significant impact on their area’s quality and speed? Each department needs to understand how achieving their goals will contribute to other departmental goals, and vice-versa. Finally, all departments or areas of the company need to understand how their area’s goals contribute directly to company-wide goals.

Communicate company-wide goals

Most business owners are pretty good at breaking down the achievements required to reach their goals, but a common misstep is to overlook the communication required to make sure that the owner’s company-wide goals have “Why does this matter to me?” context at all levels of the company, for every employee.

This is a critical step for several reasons, most of which are connected to the need to provide employees with context to the company’s goal(s). When discussing the context of the goals with your team, answer these questions from the employee’s perspective: Why should I care? How can a brand-new employee contribute to such a high-level goal? How can an employee who feels their work is “menial” possibly believe their effort is critical enough that it rolls up into the company’s goals? What do I need to hear about my work to make this company goal important? (If they don’t know these things, they won’t likely be bought in to company goals.) My low-level work seems unimportant, so why does this matter to anyone? I watch the clock all day, how could my work be of importance to the company?

Each person, regardless of what they do, needs to understand how their work contributes to the company’s goal(s). They also need to understand what their department’s goals are. They need to be reminded that the most “menial”, seemingly “low level” task is important because that work is often where the company has significant contact with the customer. If they don’t truly understand the importance of what they do – their leader needs to step in and help.

Obvious, but often overlooked

You might be thinking this is all so obvious, but in small, closely-held companies, these things are not commonly communicated, or are not explained to a level that makes them resonant with the staff. If your company goals don’t resonate with the staff, they really aren’t company goals at all. The same goes for departmental goals, which can produce silo’d behavior that leaves people with the impression that the performance of one group or even one person is not all that meaningful to the rest of the company, when the truth is that all of these pieces working in sync are critical to making the entire company’s goals.

Things to consider

What are the three most valuable pieces of information you learned about your clients this year? Of those three, which demand that you leverage them with into the new year? Is any one of them such a competitive advantage?

What is an area of strength in each department that can be leveraged for the entire company? Is this a strength limited to that department, or can that department teach the rest of the company how to gain from it?

When you sit down to look at these things and discuss them, be sure that you’re thinking about and discussing the data, rather than going on gut feel. It’s way too tempting to do this by the seat of the pants, but don’t do it.