Business Owner’s Blog

I got the blue plastic tub for free and turned it into a garbage can because it used to hold car wash soap so I didn’t want to use it for a compost bin and we turned the old garbage can into a compost bin. Do you know how much money they want for a compost bin?!?!? But I digress.

So the first time I used the blue tub for garbage it they refused to take it. I asked around and someone said it was over the limit. “What was the limit?” I asked and was told “It has to be able to be lifted easily.” A very logical limit. Also a very stupid one. Can you imagine the arguments and even law suits the city would get into if their limit was so vaguely defined? They’d have arguments from customers, from sanitation workers, from people who didn’t get hired as sanitation workers and even from their workers comp insurance company.

So I looked it up. The rules are: Can no larger than 42 gallons weighing less than 60 pounds, the garbage has to be bagged and the lid of the can cannot be hinged. My can violated 3 of those rule. I didn’t do my job. And the sanitation workers just didn’t take it. No fuming or yelling, no covering for my lack of performance. They just did their job and moved on. I’ve seen them be lenient about the hinged lids and also about the no bagging rule many times in the neighborhood which I appreciate, but I don’t begrudge them their decision to enforce the rules in my case.
Why am I telling you this?
This blog is supposed to be about business - your business - not my garbage problems. The point is that I’m familiar with too many business where the performance standards (rules if you will) are vague, even if they are logical. Things like “able to be lifted easily” which begs the question by whom? And how easily? For the record, I’m a middle aged, overweight guy who doesn’t work out and even I can lift that blue can easily, but I don’t want do to their job.

And so there is a lot of confusion and frustration in the work place about whether someone is doing their job properly. My garbage man and I have no such disagreement. My job is to put the trash out by 6AM on Wednesdays, bagged in a can less than 42 gallons weighing less than 60 pounds and his job is to take it away. The end.

Takeaways:

• If good job performance is not as clear to each employee as it is to you there will be problems
• People should not cover for another’s lack of performance under normal circumstances
• Everyone should be able to self-monitor their job performance against unchanging standards
• Some people won’t want to perform under that level of transparency. Set them free to work elsewhere.

Technorati Tags: entrepreneur, small business, CEO, Management

Thanks to an email from Will Hill and Paul Graham’s latest essay I’ve shortened my advice (so you get to do less reading)

1. Make something people want.
As obvious as it sounds this advice is often ignored. Well not exactly ignored, but confused. Inventors especially, are apt to confuse the word “people” with the word “me”. They think if they like something, they can make a business out of it. You need enough people to want it bad enough to pay enough for it. In this context enough means the following. A number of people that you can find, market and sell to so cheaply that they’ll pay more for what you make to cover the cost of making it and also finding them, marketing and selling to them. Start-ups particularly underestimate the cost of finding, marketing and selling to people who want to pay for what they make. If you’re making software or a web application you can tweak and change it cheaply to find out what people really want. Provided you do the next 3 things.

2. Keep your costs low.
I mean really low. Many companies get lazy when they have start-up cash and they end up making stuff that people don’t want, or spending marketing money in ways that don’t get them sales. That’s why so many good companies are started out of a garage or on the side. Sure it takes a bit longer but when your costs are low you have many more chances to learn what people want and how to sell to them. And remember, The goal is not to get investors. The goal is to get customers. Getting investors takes time away from building your business. And if you get the money it could give you confidence to keep charging off in the wrong direction (building something not enough people want badly enough) for a long time. Plus if you keep your costs low and do the next 2 tips, you’ll be more valuable if/when you do get investors.

3. Learn what works.
You can’t assume. Hence the number of tips in my long post about measuring stuff. It’s tedious to measure and you’re never sure if you’re measuring the right stuff. Do it anyway. Force yourself to listen to people who don’t agree with you and challenge your beliefs. Learn what customers (and employees and suppliers) really want and also how your marketing and sales efforts affect their behavior (if at all).

4. Be persistent.
It’s currently in vogue to say be passionate. I disagree. Passion can keep you going, and when it does it’s helpful. But it can also blind you so you don’t learn. But you will need something to keep you going through the emotional roller coaster that is a start-up. Find within your gut, whatever it is that keeps you going and keep on truckin.

Takeaways:

• Make something people want
• Keep your costs low
• Learn what Works
• Keep on truckin’

Technorati Tags: start-up, entrepreneur, small business, ceo

Image from http://www.flickr.com/photos/drb62/1189903030/sizes/m/#cc_license

Doing any thing takes time - agreed?

We are limited to 24 hours each day - right?
So, the number of things we can do is limited by time - are you with me so far?

Most entrepreneurs respond to this truth by trying to do as much as they can every day. But what happens is they often mistake activity for accomplishment. Yes they are busy, maybe even efficient. But they aren’t as effective as they could be. I think they’re approaching this from the wrong end.

Choice is more important than activity.
If time (and the number of things you can do) is limited then what’s important is not how much you can cram into the day because by definition you can’t cram everything in. What’s important is what you choose to do and what you choose to leave undone. Choice is more important than activity. What if you could only accomplish one thing each day? Or even one thing each week? I bet it would be simple to decide what that one thing should be. But, I hear you saying, if I only did that one thing, then this wouldn’t get don’t and neither would this and this. Guess what? You’re right. But some things are not going to get done in any case (remember the 24 hours limit?). So shouldn’t the things that get done be the most important and the things that don’t get done be those of lesser importance?

Try it for a week. Pick one thing a day and accomplish, finish, complete, actually DO that one thing. At the expense of all else. A week later - revisit and see if it’s better or worse.

Bonus: This article gives some insight about the work routines of some pretty accomplished folks (from Beethoven to Churchill to Mandela to Al Gore). It’s surprising how little they DO to accomplish a lot.

Takeaway:

• Do less

Technorati Tags: time management, productivity, gtd, management

Dan Pink turned me on to this post by a guy named Jason and this one by Mark Cuban (at least I’ve heard of him) with tips for start-ups. I was mildly distressed by the focus on tech and software companies. What about an old school company that makes stuff out of atoms not bits? Not that some of their ideas don’t apply but here’s some that they missed.

1. Technology is a tool - a great one - but only a means to an end. If you don’t know what the end is you’ll waste a lot of time and money on useless technology.
2. Likewise computerizing a process only makes sense if the process is a good one. Otherwise you’ll just be more efficient at your ineffectiveness. Think about processes apart from technology and people. Then adapt them to the people you have and their special mix of strengths and weaknesses. Then adapt technology to fit your processes and your people. Sometimes the best technology is the lowest tech ones, but don’t use that as a cop-out to let technophopes avoid improvement. Sometimes the best technology is high tech.
3. Management’s job is to create an environment where people can do their best work. That means providing them with all the resources, instruction and time they require. It also means good processes. As Daniel T. Jones Chairman of The Lean Enterprise Academy said: “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.”
4. Your employees are not mind readers, nor do they think like entrepreneurs. If they did they wouldn’t be working for you. If they don’t do what you know should be obvious, it probably isn’t. Spell out your expectations in much greater detail than you think should be needed and repeat yourself much more often than you’re comfortable with.
5. Track the right data. If you have any kind of production facility you need to track error rates, productivity and the like. If you spend money you have to track costs. If you make decisions you have to track why you made them and how they turned out or you’ll never get better at making them. The saying is Practice Makes Perfect. not Doing Makes Perfect. The difference between practice and doing is evaluation against a standard. That means tracking data to evaluate so you can improve.
6. Use a sales funnel. This is a sub-set of what to track but sales data is so important I wanted to give it it’s own tip. You have to define your sales funnel - and keep refining it till you get it right. Then relentlessly track every sales activity to learn what works and what doesn’t. The biggest waste of money in most start ups is cost of sales. You’ll never get that under control if you don’t track your sales effort well. Not every sale is a good sale - often the margins are too low or the cost of selling too high. There are patterns you can learn but only if you track and evaluate. From the start. After a month of selling you’ll have enough data to gain some insights. After 6 months you’ll have a lot.
7. You can’t buy buzz. I agree with what Jason and Mark said about not buying swag or PR. Likewise with sponsorships at conferences and lunches at events. Nobody cares who pays for that. And getting your “name out there” is worthless. You want sales in the door, not your name out there. If you get buzz, great but lots of money has been made without buzz.
8. Cross train everyone. Every person should know how to do at least one job besides their own and every job needs to have at least one person trained who doesn’t normally work that job. Even you. In some cases there might not be one person who could do it all, but every aspect of every job needs a backup.
9. Your financials can tell you a lot - but not the way most people use them. You have to figure out what you want to know and have someone who speaks accounting as their first language set things up so transactions are booked properly and reports are relevant.
10. Have a dash board. You should have between 5 and 15 numbers you track in real time. Some on a daily basis, some weekly. But all in real time.
11. Be sure you don’t measure the wrong things and remember some important things are non-quantifiable. People tend to game whatever system you set up to measure so it helps to measure contradictory metrics. For example, if you just measure speed of output, quality can suffer. If you just measure quality, productivity can suffer. So measure both.
12. Learn how to have good meetings. Meetings get a bad rap because they’re done so poorly. Good meetings actually save time, and mistakes, and wasted effort.
13. Focus. That means learn to say no. To yourself and your wonderful ideas. Keep a list of someday projects and do them then. Someday is not on the calendar for a reason. It’s better to do 3 things a quarter and get them done (that’s 12 a year) than be working on 30 all the time and a year later be working on the same 30.
14. Celebrate failures and mistakes. But only the first time. If nobody makes mistakes, then you’re not taking risks or accomplishing much. Mistakes are great when you learn from them. Problems are great when you prevent them (not just solve them). You’ll know you’re doing this right if the company keeps making different mistakes and has different problems. If it’s SSDD (same shit different day) then you’re doing it wrong.
15. Capture everybody’s wisdom. Build a policy and procedure manual on the fly. Keep the master copy on a network where everyone can read it. When they have a question, don’t answer it - have them look it up in the manual. If the answer’s not there, put it there. It should always be a work in progress.
16. Don’t have rules or policies you don’t enforce. Which means don’t have stupid rules and don’t have too many to remember. The ones you have should be dictated by law or the customer’s needs. Nothing else.
17. Under Promise and Over deliver. To your customers (duh!) but also to your suppliers, your employees and your family.

This post is not about what you think. It really is about business. First a little background. I started a company in 1991 when I lived in Texas. Two years later I moved to Connecticut but the company stayed Texas. I’ve run it long-distance as a “remote control CEO”. I had to systemize the business to work like this and that’s what laid the ground work for my coaching other entrepreneurs to systemize their companies. About four years ago my wife took over and has done a wonderful job. She is much more of a people person than I. Here’s an illustration of that.

We have a system for tracking our sales efforts (number of calls, follow ups, contracts sent out etc) and our results. One of the guys in our fulfillment department quit and they decided not to replace him, figuring the people in the front office could fill in. This month, sales are down 33% from last month. That sounds worse than it is: we keep client for years and only get about 10 new ones a month (and we generally loose about 10 as well) so sales went from 9 to 6 and it so happens we only lost 6 so we’re even. But still 33% down is not the way you want to go.

My wife could tell from the sales tracking system that the number of contracts sent out was about the same as last month but the number of follow up calls was way down. And she could tell from the timing of when the calls were made (or not) that it’s because the people in the front who are now filling in in the back are letting the follow up calls fall through the cracks.

So what does she do? She goes over these numbers with our general manager and says basically “You see the problem? I’ll give you the month of April to fix it and if sales don’t come up we’ll have to do something different”

What would I have done? As a typical entrepreneur, I would have said that it’s OBVIOUS that the guy who left needs to be replaced and I would have been frustrated as hell that somebody didn’t see this coming half way through the month and waited till I saw it at the end of the month and I would have wanted changes made right now.

Which way is right?
What? You think I’m going to say my wife is wrong - all over the internet? I may be dumb but I’m not crazy. And I like to think that I’m not a typical entrepreneur anymore. There are three things to think about.

1. A typical entrepreneur’s approach only works if you’ve instructed people how to analyze the numbers and told them that it’s their job to do so and how frequently you want them to do this and how to come up with solutions to the problems they uncover when they analyze the numbers. If you’ve done that and put people who have that skill in the right positions then you have the “right” to be frustrated when they don’t do their job. In my experience most entrepreneurs don’t do any of this, but they still want the results of having done it.

2. My wife has never done this, and given the way responsibility is assigned in our company she has no intention of doing it. She’s keeping the job of analysis and problem solving on her desk. So her way is perfectly suited for our company - even though it’s slower than what a more typical entrepreneur might want.

3. I’ve given you a bit of a red herring by talking about the typical entrepreneur the way I have. If my experience of coaching entrepreneurs since 1994 has given me insight to what’s typical, the typical ones don’t even start to measure things to the degree that we do. So they would have no idea why sales were down. They’d just be upset when they saw the decline. So what appears to be slow as I tell this story (taking a month to see the problem and another month to fix it) is actually fast compared to what usually happens. (A month to see the problem and several months fuming about it while casting about for a fix - and maybe never uncovering the real cause). Because we’ve always measured a lot of stuff in our company, and always looked to find the root cause of any problems, not just the immediate solution, I don’t think I’m the typical entrepreneur.

Takeaways:

• You need to measure the right stuff. At first you don’t know what’s the right stuff so measure more than you think you need.
• Make sure your expectations for people are in line with their skill set, and what you’ve trained them to do. They can’t read minds.

Technorati Tags: management, entrepreneur, small business

I mentioned this before but I don’t think I gave it the focus it deserves. The focus it deserves is actually in this New Yorker article and a shorter one in Fast Company.

But consider this key quote

If someone found a new drug that could wipe out infections with anything remotely like the effectiveness of Pronovost’s [check lists], there would be television ads with Robert Jarvik extolling its virtues, detail men offering free lunches to get doctors to make it part of their practice, government programs to research it, and competitors jumping in to make a newer, better version.

The article focuses on checklists to improve outcomes in hospital intensive care units. But has examples of their use in other fields, with results just as impressive.

Why They are Unappealing

But just like the timer, a checklist is so mundane we feel funny using it. We think it will dehumanize our workers or our work. In my opinion it does the opposite. For two reasons.

1. When the checklist is created (and improved) it encapsulates the best of our creativity and judgement to determine how to best perform a job. In other words it takes the best practices out of the heads of a few individuals and spreads them around the entire organization.
2. When the checklist is used, it provides consistentcy and recall of best practices. Consistency and recall are two things people are not terribly good at. By relying on the checklist for those parts of their job, they can free their brains for other aspects that people are good at. Courage, wits, and improvisation are three of these that are mentioned in the New Yorker article.

Would your business benefit from consistency? Best Practices? Courage? Wits? Improvisation - what I’ll call creativity? If so then I’d propose that management’s primary job is to create check lists and make sure they are used properly.

Takeaways:

• Checklists encapsulate the best thinking in your organization and make it available to everyone
• Checklists replace the parts of our brain we aren’t good at, and free us up to use the parts we are.
• The primary job of Management is to come up with the right checklists and make sure they are used properly.

Technorati Tags: best practices, entreprneur, check list, productivity, small business, management. CEO

I usually keep politics out of this blog, but I’m writing this piece not to change your political views as much as challenge how you think about the relationship between business and politics. Many years ago I was a member of a small business lobby group called NFIB. They poll their members on every position they should take. I couldn’t believe how short sighted the majority was and how ultimately harmful to business their positions were. I guess I shouldn’t be surprised, If there weren’t a lot of short-sighted business owners there wouldn’t be much need for my coaching services. I didn’t renew my membership in NFIB.

So here are some typically pro-business political positions and my questions about how they miss the point.

Taxes are Bad for Business
Would zero taxes be better? Can you imagine doing business in a country where there were not enough taxes to pay for a working court system? To keep roads and bridges safe? Where most of the population were not educated? Is inflation good for business? Is it possible that a slight tax increase on certain people might eliminate inflation and improve your business prospects? Didn’t the economy do better 10 years ago when taxes were just a tad higher? Maybe it’s about who gets taxed and what the taxes get spent on rather than whether taxes go up or down. Where do you draw the line?

Government Regulation is bad for business
What about regulations that keep your competitors from cheating? What if stronger regulations were placed on cheap imports so that goods sold in your country could compete on a level playing field - one where safety costs and such were the same no matter where something was made? What if you could compete only on quality and execution not on which country lets people pollute more?

Minimum Wage Raises are Bad for Business
If people can’t afford what you sell, isn’t that bad for business? Henry Ford once famously doubled the wages at his factories. As a result, more people could afford his cars. Is the market for what you sell better in third world countries with no minimum wage?

Universal Health Care is bad for Business
What does your business pay in health care costs? Do you compete with companies that pay zero because they are in countries that provide universal health care? How many good employees might work for you but can’t leave their jobs because they have a pre-existing condition? How many customers can’t afford your products because they spend too much on medicine?

Smaller Government is Better
Do you get any government contracts? Do any of your customers work for the government? Did the US government spending to put people on the moon have any spinoffs that benefited American business?

Democrats = Tax and Spend. Republicans = fiscal conservatives
Then why does inflation and unemployment do better under Democrats? Why has something like 2/3 of the entire US national debt been rung up under the last 3 Republican presidents?

Environmental Protection is Bad for Business
Did the Prius hurt Toyota’s prospects of becoming bigger than GM? Haven’t a lot of companies found unexpected profits or cost savings when they cleaned up their acts? If you could get your power from the sun would that be bad for business? If the taxes spent on supsidising the oil companies had gone toward making solar and wind power affordable and plentiful would that be bad for business?

Takeaways:

• I’m not saying these positions are always wrong or that the opposite is always right. I’m saying the devil is in the details.
• Maybe you should look at the specifics and the longer term ramifications before you vote.

Technorati Tags: politics and business, tax increases, environmental protection, small business, health care

I got this idea from a client - Thanks, Kendra.
In meetings when they have an topic on the agenda they allot a certain amount of time to it. Then they set a timer at the start. It keeps the meeting on schedule.

We also talked about the benefits of spending 15 minutes at the start of the day planning the calendar and developing a plan for the day. Many people have a hard time sticking to a routine like that because when they walk in, there are people wanting to talk to them, voice mails wanting to be listened to (it could be that big deal that you were waiting for and if you don’t get to it in 15 minutes it’s sure to disappear - really it could.) and emails screaming READ ME! READ ME! But usually those same people will keep appointments with another human, they just can’t keep the appointments with themselves to schedule their day. DAMHIKT - (that stands for Don’t Ask Me How I Know This meaing I learned it by personal experience).

Enter the assistant and the timer.
Make an appointment with your assistant every morning first thing when you arrive (or you could do it last thing before you leave to plan for the following day). By “your assistant“, I mean any other person in the office. If you don’t have an assistant, just pick someone and make this part of their job. When you first arrive, they are to drop what they’re doing, and come have a 10 second meeting with you. At the meeting they say: “I’m going to set the timer for 15 minutes. You’re going to do nothing but plan your day. I’ll call you when the timer goes off.” Then they go back to their regularly scheduled job and set a timer. In 15 minutes they call you. You spend that time planning your day. The end.

What’s weird about the timer.
What’s so funny is that all this use of the timer sounds so contrived and artificial. It’s true. It is. Don’t be afraid to say so and to laugh about it. But use one anyway. Do you work out? Don’t you measure your time on the tread mill? Your reps on the weights? Your miles on the bike? Would you eat in a restaurant where the cooks didn’t measure the ingredients? And of course you track the money in your company. Why are we so squeamish about measuring our most precious resource - time? I don’t know but we are. Acknowledge it and get over it.

Takeaways:

• Use a timer.
• It will feel strange. Don’t ignore this. Talk about how you’re using the timer and how strange it feels. That will make the power of the strangeness disappear.

[Update - I didn’t fall off the face of the earth since the last post, we had a death in the family. But I’m back now]

Technorati Tags: entrepreneur, small business, business owner, time management, productivity

It’s a stupid tradition. Most of them get forgotten or broken in a week anyway. So why not just be honest. If something’s worth doing it’s worth doing whether it’s Jan 1, or any other date. So get real.

Takeaways:

• Have fun, and don’t drink and drive.

Let’s say you run a grocery store and your computers go down in the middle of the day so you can’t process any payments. What do you do?

Let’s say your employees decide that since the problem was the company’s fault, they shouldn’t make the customers wait, so they let them take their food for free. What do you do about employees like that?

To see what happened when that situation occurred in West Hartford CT click here.

Takeaways:

• Do you trust your employees? How much?
• How do you train & motivate them to do what’s best for the company?
• Check out how Whole Foods does it .

Technorati Tags: management, small business, entrepreneur, team work