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I spent a day recently with a couple of business partners whose grasp of their business was really impressive. They were absolutely on top of every key success factor in the company, a mid-sized professional services firm. Here's their 8-point formula for success:
1. They Plan -- These guys actually have a written strategic plan (and have had for 6 years). Objectives define where the company is going, Strategies define the big-picture initiatives and Action Plans establish the what, when and by whom of getting the plan accomplished. The plan is revisited and formally updated at least every 2 years. It's a collaborative effort, including minor partners and employees, as well.
2. They keep excellent financials -- They've worked diligently to get their costs and revenues aligned month-by month, so they can tell exactly where they are in growth and profitability at all times. Committed costs for work done by subcontractors are accrued each month, so they don't kill the income statement the month the bill comes in. Bonuses are accrued each month, despite being paid quarterly or annually. They manage their business on accrual-basis numbers, so the timing whipsaw of receivables and payables don't obscure their operating results. They watch their Balance Sheet, forecasting cash needs well in advance and they use a Line of Credit to absorb the variability in timing of receivables and payables (rather than leaving a lot of cash in the business for working capital).
3. They forecast backlog -- On a monthly basis, the partner managing operations forecasts each project's revenue and manpower needs month-by-month, going out almost two years. They see months where they'll be covered up and months that will be slack well in advance so they can push and pull project schedules or outsourcing to level out workloads.
4. They forecast bookings -- A recently-added forecast now tracks their prospecting pipeline, anticipating project size and month secured. As confidence levels rise on a given prospect, some of those make their way into the backlog forecast (identified, of course as "anticipated).
5. They forecast staff requirements -- They have a keen sense of revenue to headcount, so the above forecasts allow them to plan recruiting of both entry-level and senior people. They've matured to a mostly "grow your own" strategy as far as internal leadership is concerned, and they have developmental plans in place to meet the leadership needs of their future growth plans.
6. They work on the business, as well as both working in the business as billable resources. They set aside time to plan and they also execute. With good financial instrumentation and good forecasts, they can focus on crisp execution, rather than fighting surprise wildfires. They get things done, both short and long-term.
7. They're accountable -- The partners are accountable to each other for doing their parts in the day-to-day operation and the long-term strategies of the company. In large part, this is due to having a collaboratively-developed plan that they've all had a hand in and bought into.
8. They use outside help -- They realize they need expertise beyond their own trade and experience, and they engage external resources, regarding those costs as an investment in their success.
If you're looking for a model by which to steer a mid-sized company, I'd encourage you to consider these guys' "8-step program". It's working for them, building a valuable company, and throwing off some enviable cash flow, as well.
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Terry Weaver
CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
The season has arrived for a spike in employee turnover. Do your employees still feel they've sacrificed for your business, and that you've never made it up to them? If you put your employee hat on, would you still feel like you're in the hole income-wise? It may be time for you to shell out -- either some raises or some "we made it" bonuses.
There's a pervasive continuing attitude among business owners that "they're lucky to have jobs." Employees don't see it that way -- the music playing in their heads goes more like "I took a pay cut (reduced hours, no bonus, etc. -- you fill in the blank), and I haven't seen anything in return."
What they do see is increased orders, increased backlog, increased expectations, increased workload (productivity is up -- you're doing more with less, right?), and in many cases no increase in compensation. And they're starting to vote with their feet, according to a recent Wall Street Journal online (wsj.com) article.
This article is a "wake up call" for business owners. If you haven't done anything meaningful (in the pay envelope) to recognize those who believe they helped pull your company through the recession, it's time to think about it. And it's surely time to look at the "soft" side of turnover, as well -- specifically:
- Engagement -- Employees, particularly GenY'ers, want to feel their jobs mean something in the big picture. Have you reminded them lately of the good things your company's products or services do for the world at large?
- Trust -- Do they feel they have been, and are being treated fairly? Perception is reality.
- Appreciation -- The more personal, the better -- have you let them know (lately) that you appreciate them, their work, their contribution, etc.? A personal note or conversation means a lot. Likewise, a company event (picnic, pizza lunch, etc.) could be a good platform for an appreciation talk by yourself.
- Opportunity -- What can employees who have stuck with you expect in the future? (Take off your "lucky to have a job" hat -- that one's not selling any more)
We'll be discussing this topic at upcoming Local Board meetings of Chief Executive Boards International. True to our "we share ideas" tagline, we also try to provide forward radar for business owners -- to alert them to emerging trends and potential potholes before they fall into them personally. Experience is the worst teacher -- it gives the test before it presents the lesson. Better to learn from someone else's experience.
If you've done things to avert potential post-recession turnover among your employees, please click "Comment" below and share them with others.
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Terry Weaver
CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
I received an interesting E-Marketing message today, and it underscores an important "get ready" strategy. Whether you have current plans for E-Marketing, let alone an active E-Marketing strategy, you can still get started collecting customer and prospect email addresses.
This E-Marketing message was from a service department at a local Ford dealer, reminding me that my car may be due for service. Their mileage calculation algorithm is off a bit -- the car has 75k miles and this message said "Your xxxx (car model) is due for a 36k mile service". Nevertheless, this kind of reminder no doubt brings in some service business (and the mileage guesstimate could be easily fixed).
How do I like my Ford, you might ask? Deal is, I don't drive a Ford. In fact, I've never been in the Ford dealership or the Ford service department. So, how did they get my email address and my car model? Turns out, these guys have the best body shop in the area, and I've had some minor body repair done there -- at least 4 years ago. Apparently they had a "collect customers' email addresses" strategy in place going back that far, and they're now capitalizing on that knowledge base with an E-Marketing campaign.
If your organization is not actively collecting email addresses of customers and prospects, today is a good day to start. Make sure you have a skeleton plan for doing this, such as a database or spreadsheet accessible to all users. As a kickoff strategy, you could get an export of all your employees' Outlook (or whatever client they use) address books, and then combine those into a starting point.
E-Marketing will someday be important to your business, no matter what it is. Start now collecting the raw material (contact information, including Emails) so you'll be ready for that party whenever you decide to throw it.
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Terry Weaver
CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
The resilience of American entrepreneurs is not to be underestimated. In just this past week, I've heard from two business owners whose businesses were not able to withstand the recession. Both had partners who saw the world differently. Both realized they could not survive and decided to pull the ripcord, separating from both their businesses and their partners. In both cases, just in time, before putting a lot of personal assets at further risk.
Not surprisingly, this week's news is that both have landed on their feet and started new ventures from scratch. Owing partially to their own experience and partially to ideas, support and relationships they've had in place through Chief Executive Boards International, both have brought new ventures to revenue generation and cash flow in record time -- less than a year.
One of these cases provides a number of lessons others wish they'd learned.
First, that you need to protect your personal assets from getting dragged into the demise of a business. Unfortunately, I have multiple friends and acquaintances who violated that rule and let assets from qualified plans, such as 401(k)s, otherwise bulletproof even from judgments and bankruptcy, get drained down in efforts to keep banks happy.
Second, that it's hard to start a business with no money. In one of these cases, the new business started with a $300,000 line of credit to cover working capital needs on the strength of the founders' balance sheets. Not without risk, of course, but a lot different than liquidating personal assets and putting $300,000 cash at risk.
Third, that bad times create opportunity if you have some dry powder. That same business found Class A space downtown in an NFL city at bargain rates. It is subleasing from a larger company at 1/2 their primary lease rate, including all furnishings right down to the fax machine and water cooler! Even better, at the end of the remaining lease period they own all those furnishings. Wow, talk about a fire sale!
Despite being casualties of the 2008-2009 recession, these business owners have risen from the ashes to fight another day -- to put yet another business on the map, and do so quickly. Statistics are on their side. Many highly successful businesses are founded by people who failed at least once in earlier efforts.
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Terry Weaver
CEO
Chief Executive Boards Internationalhttp://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
Are you strapped in? Oxygen mask at the ready?
Nicknamed by several writers as "The Mandate from Hell", there's a provision buried in the Patient Protection and Affordable Care Act (PPACA) that staggers the imagination. As Nancy Pelosi promised, "We'll have to pass this so you can find out what's in it."
Well, we're finding out. This requirement, simply stated, is that as of January 1, 2012, all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. Anything. Anywhere. Link to full CNN article....
Think of it. You'll need to collect (require) EIN's & mailing addresses from every vendor on your vendor list, including retailers, restaurants, hotels, etc. and send them a 1099. You'll need to know the difference between a franchise location (like many hotels) and a company-owned location. You'll need an EIN and a mailing address from every airline, as well as Orbitz, Travelocity, Hotwire and Priceline. Don't forget the phone company, UPS, FedX and the mechanic who works on the company vehicles.
And, worse yet, everyone you sell to will be sending you W-9 forms asking for your EIN (you might as well post a W-9 with your EIN on your website), and then they'll each be sending you a little envelope about February 1st with your 1099. The post office will be out of the red. And what in the world will you do with a wire basket full of 1099s?
I don't even know what to suggest on this one, except perhaps to write your Senator or Representative who voted for this, thanking them for their brilliant plan for flushing out tax cheats (the argument for this abomination). My concern is that it won't get the treatment it deserves -- full repeal -- but rather a morass of regulation writing exempting this and that from the requirement (which you'll need to sort out after it happens).
Good news: Rep. Daniel Lungren (R-CA) has introduced legislation to repeal this requirement, H.R. 5141, the Small Business Paperwork Mandate Elimination Act. Perhaps in your letter to your Senator or Representative, you could urge passage of that act as proposed -- a 100% repeal.
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Terry Weaver
CEO
Chief Executive Boards Internationalhttp://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
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