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Posts Tagged ‘small business’
Phil’s Profit Point 25 Podcast – A Good Accounting Department, Part Three – The Fortune Tellers
Wednesday, October 12th, 2011
The worst job in the world: owner/manager
Monday, October 10th, 2011I recently spoke to a business owner who wanted to maximize short-term profits and increase long-term capacity in the business. It’s very difficult, if not impossible, to do both at the same time because they are in conflict. However, I hear the question often, and here’s why: The person isn’t thinking clearly, they are thinking like the owner/manager.
The worst job in the world, in fact, is ‘Owner/Manager’ because the two roles are always in conflict with each other.
Are you the owner, trying to achieve a return on investment from what should be a passive investment?
Or, are you the manager, trying to maximize revenues, profits and growth while consuming resources and spending money on training, advertising and other things that may not have an immediate payback-things that reduce short-term returns desired by owners?
Are you in conflict with yourself?
Just imagine what your role looks like to your employees? Are we maximizing profits today by cutting expenses because the owner is worried about a dividend or are we building for the long-term by increasing expenses and investments?
To help you sort out your roles, here are questions to think about.
Questions for owners:
- What is my return on investment?
- What is my return on equity?
- How can I build equity in the company?
- How can I protect my equity?
- How can I position my investment for eventual sale?
Questions for managers:
- How do we make our customers happier, improve our competitive position and grow revenues?
- How do we beat our budget and forecast (you have one, right?)?
- How do we allocate resources to increase our capacity and speed?
- How do I attract and retain key talent, regardless of what the economy is doing?
- How do I develop my people to replace me so that I can move up in the organization?
If you’re thinking about your wealth, you’re thinking like an owner. If you’re thinking about growing the company, you’re probably thinking like a manager.
Which hat are you wearing? Which hat should you be wearing?
If you’re not sure, here’s my recommendation: “You’re fired!”
Fire yourself as manager, build a management team, and give the team your performance targets that will meet your ownership returns of investment and equity. Then, get out of the managers’ way.
Copyright Phil Symchych 2011. All rights reserved.
Phil’s Profit Point 24 Podcast – A Good Accounting Department, Part Two – The Scorekeepers
Wednesday, October 5th, 2011That was rude.
Thursday, September 29th, 2011The phone rang and it was a former client that I hadn’t heard from in a few years. Instead of letting the call go to voice mail, I eagerly picked up the phone. That was my first mistake.
The person on the other end was not my former client but a new employee who had only been with the company for a couple of months and was in charge of a special project. He introduced himself and proceeded to tell me (he did not ask-strike one) to do something immediately because they had a deadline. The request just didn’t make sense which indicated the person didn’t know what they were talking about (strike two). He persevered to try to get me to do what he needed done immediately, aggressively and without regard for my schedule (strike three).
This was one of the fastest strike-outs that I had ever witnessed.
I informed the person that our conversation was over. If they had any further questions, the owner was to call me personally and I would be happy to help.
I sent an email to the owners advising them of the unprofessional behavior that their employee was displaying. If the employee was acting badly with me, they were doing it others, possibly their customers and probably their other business partners. The worst part is that this behavior reflected very negatively on my former clients, who probably cringed when they received my email.
Lessons:
- Your employees actions reflect on you, your business and your reputation.
- If an employee is acting badly or aggressively, it could be assumed that you – the owner – condone or even request this type of behavior.
- If an employee is ticking off your customers and suppliers, they’re probably ticking off your other employees, too.
- The first employees to leave will be your best ones…because they’re highly employable and usually won’t tolerate anyone else’s poor behavior.
- The last employees to leave will be the misbehaving one. You will probably have lost a few customers before this actually happens.
- Coaching can help improve behavior but the person needs to know the proper standards and be willing to change (that’s the hard part).
- You can train skills. You can’t train attitudes.
- As entrepreneurs, we all hire to0 fast and fire to0 slow.
- Never tolerate unprofessional, disrespectful or rude behavior.
As the baseball umpire yells, “STRIKE THREE, YOU’RE OUT!”
Copyright 2011 Phil Symchych. All rights reserved.
Phil’s Profit Point 23 Podcast – A Good Accounting Department
Wednesday, September 28th, 2011Phil’s Profit Point 22 Podcast – What’s Your Dashboard? Part Two
Wednesday, September 21st, 2011Phil’s Profit Point 21 Podcast – What’s Your Dashboard? Part One
Wednesday, September 14th, 2011Million Mile Warranty
Monday, September 12th, 2011Have you ever heard of a “Million Mile Warranty” and would you believe it if you saw it?
Well, here it is:
K&N Air Filters
K&N makes “the world’s best air filters(TM)” and has trademarked this phrase. That’s an impressive claim and they’ve backed it up with a million mile warranty. They manufacture air filters for engines; pretty sexy stuff, right!?
Their air filters, because of brilliant design and high quality materials, can increase air flow by 38% to 62%. Just think, if you had a third lung, how much more capacity you would have for exercise, speed and energy. This has a dramatic impact on increasing power and fuel efficiency.
It’s a pleasure to buy an extremely high quality product that says “Made in USA” and that is the best in the world. Too often, we focus on what is cheapest instead of what is the best. The best air filter, by the way, is more cost effective than cheap, disposable products. Did I mention the K&N filter improves fuel economy and increases power immediately?
Whether we’re pulling the camper trailer or driving the girls to dance class, the K&N filter is improving our vehicle’s performance and is easier on my wallet.
What can you do in your business that you could back up with a ‘million dollar warranty?’ Do you think your customers would be willing to spend more for such a high quality product and extensive guarantee?
Copyright 2011 Phil Symchych. All Rights Reserved.
Phil’s Profit Point 19 Podcast – What’s Your Sales Process
Thursday, September 1st, 2011Raising Funding for your Business
Thursday, August 18th, 2011A business colleague from the U.S. recently asked me how to raise funding so that his client would have more cash to invest in business growth. You can generate funding internally from your profits and externally from your banker. Here was my response:
1. There are two kinds of bankers: lenders and collectors. Make sure you’re dealing with a lender. I have a couple of blog articles on bankers if you want more info.
2. Verify that they’re not using their working capital to purchase long-term assets. These assets should be financed with matching long-term debt or leases.
3. Strengthen equity retained in the business (retained earnings) to increase borrowing power-by reducing dividends paid out, or reducing unnecessary expenses.
4. Maximize internally generated financing by accelerating inflows from deposits and customer payments, and reducing outflows by stretching suppliers and reducing unnecessary expenses (using subcontractors instead of employees, renting equipment vs. owning).
5. Making sure they track cash flow regularly (daily, weekly, budgets) so they know how much fuel they have in the tank and how fast they’re burning it up or putting it back in.
There are more financing, cash flow and profit improvement tips in my weekly Profit Points newsletter that may be of help and applicable to your opportunity.
Copyright 2011 Phil Symchych. All rights reserved.
