Where Do We Go From Here?

In the US, we have reached the point in the Covid-19 pandemic that more cities and states are issuing shelter-in-place orders every day. This is creating a substantial hardship on our nation’s small businesses. While there are government programs available now to provide aid (you can easily find these via Google), it still is going to be a while before we get back to normal. For now, we need to survive.

While we are busy surviving, we need to be thinking about not only recovering, but about what fundamental strategic and tactical changes we can make to our businesses to be stronger for this pain. We cannot simply go back to what we were. The economy will NOT be what it was prior to the pandemic. A recession will still be taking place for several months even as we climb out of it. What do we need to do?

Right now, conserve your cash. Take government programs, offer discounts, cut back hours and reduce expenses as needed. I will suggest that, if you cut hours or enact layoffs that you, as the owner, participate in a bigger way than your team. Lead by example.

Concurrently, research what your industry has looked like as recessions of the past have come and gone. Make needed adjustments. If you aren’t sure how to make the needed changes, get a mentor/coach. Use every resource you can get your hands on to restructure and re-tool. Be ready for whatever is next.

The changes won’t be the same for every industry. Some industries are counter-cyclical; they do better when the economy is down and consumers pull back spending (think fixing your car vs. buying new). Others will have an extended recovery timeframe. They will need to market hard, and get creative about products, services and delivery channels to stay “in the game” until the economy improves.

We cannot assume that what worked before will work now. Access every resource you can in order to lead your business back. Don’t be shy. Be bold. Your team and customers are counting on you.

Leadership is Not About Power

A number of years ago, when I was leading a group of about 150 employees, I used to have “Lunch With Jeff” for all the employees that had a birthday in the current month. I would have one gathering for 1st shift and a second gathering at the switchover between 2nd and 3rd shift.

A typical get-together would include some pizza or subs served in a conference room. Generally speaking, these were pretty well attended affairs. Who doesn’t like free food? My primary purposes were to: 1. Wish them happy birthday (always good to survive another year, right?), 2. Thank them for the effort they were putting forth, 3. Give them a chance to get to know me better and me them, 4. Let them ask me pretty much anything, with the caveat that there were some things I either did not know or could not answer.

I recall, in particular, one of these lunches that occurred during the run-up to a presidential election. Living in Iowa at the time, the Iowa Caucuses were on nearly everyone’s radar. During the course of conversation, one of the youngest in the group (guessing early 20’s) indicated that he wanted to go into politics and get elected (we nicknamed him The Senator from that day forward). Being extremely skeptical of nearly all politicians I asked him why he wanted to do that. He replied, “For the power; just like you are in management for the power.”

I looked at him and smiled what I hope was a gentle smile and informed him that I really had no power at all. Sure, I could hire and fire. However, I did the latter only out of necessity. Beyond that, I explained that the power belonged to each of them. If they weren’t buying what I was selling, it would show in the business’ results and I would be out on my ear in short order. If they were buying into my vision, then they could make the company as good as they possibly could. There was a short period of silence followed by a new topic of conversation.

John Maxwell tells us in his book “The 21 Irrefutable Laws of Leadership” that the true measure of leadership is influence – nothing more, nothing less. The ability to influence is preceded necessarily by a relationship. No influence occurs until there is a relationship created first. That is true for a business, a family unit, the acceptance of a faith….any influence.

Since this is a business blog: If you own or manage a business/business segment, invest the time in your team to get to know them and allow them to know you. In doing so, the relationships you develop will allow you to influence your team so you can lead them to new heights.

7 Ways to Create Value

I ran across this article in Pro Painter Magazine and, while it’s about running a painting business, it applies to any small service business…..
You’ll never earn a profit as a painting business owner unless you bring real value to the table. Here are seven essential ways to make that happen:

SELL WELL: Selling jobs at profitable prices is a completely different skill than painting, and most painters don’t like to find new jobs and clinch deals. Selling well is key to any business, and if you don’t like selling you shouldn’t try starting a painting company. And selling effectively these days always involves some kind of online presence. It’s certainly not the only part of selling, but it is the new normal for any painting business owner who expects to thrive. If the internet scares you, don’t try starting a painting business.

ORGANIZE BIG JOBS: The larger the painting job, the greater the role for you to coordinate painters, supplies, timelines and financials. Solo painters simply can’t do this on their own, so it’s a natural role for you as leader. Many successful painting companies find a profitable niche doing jobs that are too big for anything other than an organization to handle.

STREAMLINE THE FINANCIALS: Invoicing and collecting payments will always take too much time and too much effort if you don’t design a streamlined financial system intentionally from the start. The slickest I’ve seen painting business owners use is on-the-job digital payment systems at the end of each project. Swipe the clients credit card through a reader on a cell phone and you’re done. You get instant payment and there’s no need to follow up with paperwork. Painting business owners I know who use on-the-job payment also find that clients are less likely to call back for touchups and repainting when they’ve paid immediately, too.

PROTECT YOUR PAINTERS: Part of running a successful painting business involves finding and keeping skilled and loyal employees or contractors. And a big part of loyalty comes down to creating a hassle-free zone for your painters to work within. You need to protect them from the conflict caused by angry customers and the hassles involved in gathering paints and painting tools. Eliminating everything beyond the work of painting is one way you can bring value to your work as a painting business owner. Painters will want to work for you because it’s a simple, hassle-free experience for them.

PAY LIKE CLOCKWORK: This is huge. One of your main roles as a business owner is to cushion your employees against all financial shocks. Making payroll late is a recipe for disaster because your painters will jump ship. It doesn’t matter if a client pays late or stiffs you for an invoice. Your job is to take the hit and make it up another day. If you don’t have enough cash on hand to make at least three months of payroll with no revenues, don’t start a painting business. You’ll fail.

RESEARCH & DEVELOPMENT: As the painting world advances, it’s your job to stay on top of technical advances, try them out, then introduce the good ones to your crew and clients. Don’t neglect this role or your business will slowly lose vitality and profitability as the painting world advances.

GATHER AND ANALYZE NUMBERS: Bidding profitably on jobs is the single most important skill you need as a business owner, but it’s a skill that requires informed practice. And the only way to get that practice is by monitoring the numbers to see if they lead to profit or loss. Keep close tabs on what your crew actually costs you in time, wages and benefits, then compare these costs to the offsetting revenues from your bids. While you’re at it, monitor the productivity of individual employees and contractors. You need to know who’s actually delivering more value than you’re paying them for. Some employees will contribute much more to your bottom line than others.

Being “Solo” Only Works For a While

Are you a solo business practice owner (physician, dentist, chiropractor, attorney, accountant, auto technician, etc.)?

If so, you may have Solo Professional Syndrome. No, of course that’s not a real name for an illness. It’s just how I refer to the situation where you are doing all the work yourself and can’t grow the business or find time to work On the business instead of In the business.

You’ve done everything possible to streamline operations, maximize revenue and increase margins. You may have even outsourced marketing, accounting and payroll to give yourself a few precious extra hours every month. You have proven that you can be successful going it alone. However, you find yourself wondering, “Isn’t there a better way?”

Think about it. You are responsible for every dollar of revenue generated by your business. If you are absent, no revenue comes in. If you are disabled or worse, your practice likely will shut down and you will lose all the value that you have created over your years in the business. Why? Because you have no successor in place.

What if I told you that there is a way to increase your current income without doing all the work yourself? And, at the same time, you would then have time to step back and work On the business instead of In it, reduce your financial risk when you are absent, protect the value that you have created in your practice and provide yourself with a succession plan. Would that interest you?

You may be thinking right now, “Why don’t I just add an associate? That’s what Suzy did on the other side of the city.” That can work….but there are pitfalls that need to be headed off before doing that.

Where will he/she work? Where will I find clients/patients for him/her? I don’t want to eat their salary until their book fills up. How can I be sure he/she won’ t leave after getting all trained up and end up being my competitor? Ugh…I think I will just stick to the problems I already have.

That is an understandable conclusion. But it would be wrong. Let’s get a little creative and figure out how to do it right and provide those benefits mentioned above.

You are right to be concerned about having enough patients/clients to keep the changes from costing you a lot of money. It’s really not reasonable to expect the associate to fill their own book of business. You are hiring them to produce revenue, not make sales calls.

So, to combat those issues, the method I am suggesting is to acquire another solo practice. Preferably, it would be one that is geographically nearby so you can fold it into your existing practice. This will give you a very good chance of keeping that new associate busy.

If this has your interest piqued, let’s discuss where to start.

First and most importantly, you need to make sure that you, personally, are ready to lead another professional. How are your supervisory skills? Do you explain things in a manner that someone else can easily pick them up? Perhaps you need some training. Go and get it!

Second, assess your financial situation. How much cash do you have on-hand? How much can you afford to spend on another business? Talk to your banker about loans, if necessary. Check with your accountant with respect to tax issues. Talk to your attorney about the employment document that codifies a compensation plan that we will cover in just a moment.

Third, start looking for acquisition targets. This may take some time. There aren’t always businesses for sale. Take your time and get it right. This is the beginning of your exit strategy and intended to give you more near-term freedom and strategic thinking time (working On the business).

OK, so getting the acquisition done will take care of the near-term revenue growth and work/life/time balance issues. It does not, however, address how to extract the value you have created in your practice when you decide to retire.

If you hire the right associate, he/she will also be a part of that solution. A really good associate will, most likely, want to own their own business one day. You should make sure it is your business that they acquire to make that dream a reality. Build a compensation plan for them that rewards performance with equity in the business.

As part of that compensation program, you make it clear that there is a specific process for him/her to succeed you when you decide to retire. In fact, it should be documented that they must succeed you and buy the practice. Failure to actually purchase the business from you at the agreed upon time will cause them to forfeit the performance rewards. That is how you will extract the value you have created. It is virtually guaranteed.

It will take some extra work up front and test your coping skills during the early months after the transition. But if you hire the right person and set your business and compensation plan up the right way, you will reap the benefits.

Realizations of New Business Owners

The US and, probably, the world are filled with millions of people who dream of owning their own business.  However, when it comes to finally taking the plunge and doing it, a much smaller group of people actually make the move.  This is not a judgement on those who don’t.  It’s not for everyone.  Personally, it took me a long time (over 25 years) and the loss of a job to get me off the sidelines.  Inertia was my roadblock; that and the fact that I didn’t really know what I wanted to do.  For many, they have the same issue.  For others it is the lack of financing or the realization that their dream or idea is not capable of being scaled to the point of providing a living for them.  Still others just decide it is not worth the risk.  All of those are OK.  For those of you that are about ready to take that leap, here are some thoughts that may push you one way or the other.  These come from the experiences of first year business owners.

Talent and Determination Only Take You So Far

In many cases, having a particular talent like repairing cars, building houses, making cupcakes or fitness training drive us into our own business.  Then, we put our heart and soul (i.e., time) into making it grow and become profitable.  However, none of us can do everything in the business.  Where to turn?  The answers are closer than you think.  We all know people.  They all know other people.  Somewhere in that network are resources that you can tap into for help with areas that are not your strength.  First, identify those weaknesses (yes, I said it) and then ask for help.  The second was my toughest step.  As it turned out, a lot of people were mentors to me, but they didn’t really know it.  I got little tips from a lot of places instead of leaning on one person.

You Will Need to Adapt to The Market

If you were wise, you wrote a business plan before you started your business.  It’s been written that nobody plans to fail; they just fail to plan.  That said, business plans cannot be something you write once and toss in a drawer never to be seen again.  They must be reviewed and adjusted based on the market place; primarily feedback you receive from your customers.  Should you do everything they recommend/request?  Heck no.  The customer is always right…..except when they are not.  You should, however, take ever suggestion into consideration.  Examine the cost and ROI of each idea.  In the end some will make good business sense.  Some will not.  That is up to you to decide.  No business stays the same over time.  The longer you are in business, the more you will need to adjust.  Change products.  Change marketing methods.  Change personnel.   Improvise, adapt and overcome.  That is the secret to longevity for your business.

Do NOT Sell Yourself Short

This might be the biggest single mistake that entrepreneurs make.  They don’t charge enough for their products and services.  When I bought my business, part of my business plan was to compete on service and quality.  That, necessarily, precluded me from competing on price.  We let hundreds of jobs go due to pricing over the years.  That was a strategic choice and we stood by it day in and day out.  Charge a fair price for what you do; fair to you and fair to your clients.  We weren’t the most expensive and we weren’t the cheapest.  Find your price point where you aren’t working at full tilt just to break even.  Know your market value.  Know your costs.  Price accordingly.  It’s equal parts science and art.  You will need to adapt from time to time based on the market (do your best not to go downward).

You Will Never Work So Hard in Your Life and Love It

I’ve had a few people tell me, “It must be great to own your own business.  You can take time off whenever you want!”  All I can do is laugh and tell them the truth:  I’ve never worked so many hours in my life.  To which they just stare at me with their jaws wide open.  The other part of that statement is that I never had any trouble getting up and going to work.  It was a labor of love.  Every entrepreneur that I have known or worked for felt the same way.  In many ways the business defined them.  Vacations will be few and far between for a while.  If you and your significant other can handle that, dive in.  If not, it may be best to continue being an employee for someone else.  Either way is OK.  Just know what you are signing up for.

Work Life Balance Can Be Hard to Find

As I mentioned above, your business can be a labor of love.  The risk in that is that other parts of your life may suffer.  Are you married?  Do you have kids that are busy with activities year around?  Can they handle your not being present (physically or mentally)? Often times, this is the tipping point between hanging up your own shingle or holding off.  When is your family ready?  Even when you all collectively decide you are ready, there has to be balance.  Just like you wrote a business plan, I suggest writing a “Work/Life Balance Plan.”  Commit to certain vacations and other events that are inviolable.  Maybe you like to volunteer at your church or other organization.  Find a way to NOT give that up.  These things complete you and refresh your mind.  For me, the time was not right until our children were grown and out of the house.  My wife was busy with here career, too.  We agreed that vacation was not an option, it was a requirement.  Our church and our relationship had to be on equal footing with the business (in fact, they came slightly ahead of the business in reality).  Find your balance.  Find your success.

Be Persistent

To be direct, there will be struggles.  How you handle them will determine your level of success and longevity.  Stick-to-it-iv-ness has helped many a business owner when talent wasn’t enough.  Let me repeat:  there will be struggles.  You may even fail and have to start over.  If you want it it badly enough and believe in what you are doing, keep pressing forward.  When you hit the bumps, be willing to work/suffer through them.  Lead your people, if you have any, and show them you are confident that the business will get through the issues.  Make the changes that are needed.  Persistence can overcome a lot.

Marketing Today

I have been in business for a long time.  Over the years, marketing has changed quite a bit.  From TV and radio ads to Yellow Page ads, direct mail, variable data direct mail and now the various forms of internet and social media marketing, it has been difficult to stay on top of what works best.

Having spent over 20 years in the printing industry (and not being in the industry any more), I can tell you that print ads just don’t produce like they used to.  Personalized variable data mailings provided a huge leap in response %.  However, they are so common now that most of us just throw them away too, don’t we?  To be honest, I would not recommend spending much, if any, on print marketing other than business cards (apologies to my friends still in the industry).

Where to spend your ad budgets?  It’s all about the web, my friends.  SEO (search engine optimization) is important but don’t blow your entire budget on that.  There are a lot of simple free, or nearly-free, things that you can do for that.  The key is to make sure, if you own a small business, that you are on the 1st search page when a smart phone searches you nearby.  Don’t worry if you aren’t on the 1st page of a search in LA for your Wisconsin business.  They won’t be a customer anytime soon.

Where you really want to focus is on Facebook.  70% of Facebook users log in every day.  Couple that with all the demographic data that Facebook collects (themselves or via business partners) and you can target your marketing very specifically at reasonable prices.  I have just begun to learn about this and the potential is amazing (if a not a bit scary with respect to the data Facebook has on each of us).  I paid for a service to help me do it the right way.  It was under $500 to learn how to do it.  There are email marketing subscriptions that I will need to purchase, but they are not terribly expensive, either.  Time will tell just how effective this will be, but it seems to make good sense to me to skip paying for ink-on-paper and target my “ideal customers” using all that demographic data.  I expect it to minimize my cost per new client.   Once I work out the kinks on my more established business, I will set out to work on my newer business.  It’s going to be interesting.

What Does Your Business Stand For

Most business owners/executives are rightly concerned about the customers’ perception of their business.  They work very hard at trying to manage that perception through their marketing program.  The really successful ones have a very clear vision of what their business is about and what it stands for.  From there, they make sure that all communication and customer interaction reflects that vision.  Now, being human, mistakes are made in this endeavor.  The key is to get back on track immediately.

In order to do this in your business, answer this one question:  “What do you stand for?”  Sounds simple, doesn’t it?  It really takes a lot of self examination, especially for a leader of a small business like me.  This is because every step you take has a direct reflection on you.  Plus, if you actually stand for something, there may be potential customers that aren’t comfortable with that and decide not to patronize your business.  It’s tough self-love and can be risky, but critical to identifying what your business stands for.

When I purchased my auto repair business two years ago, I thought long and hard about the experience I wanted to provide for our clients with respect to what I wanted our image to be; what I personally stood for.  Believing firmly that God put me in this place at this time, I believed that the business was my opportunity to do His work through this business.  I made that clear by putting the Christian Fish symbol on our company’s sign and a reference to my faith on our business cards.

Clearly, there will be people that don’t come to our shop because they don’t believe what I believe.  So be it.  That’s their right.  I can look in the mirror and know that we stand for something good and right AND our clients know that.  That gives us a baseline from which to operate and makes it clear What We Stand For.