Saturday, September 29, 2012

Business Growth Requires Extraordinary Executives - Trust and Respect

In most companies, employees have some degree of mistrust for executives. After all, executive meetings are confidential. Although many executives do their best to treat people fairly, their job is to make the tough decisions that can unfortunately include layoffs and other unpleasant surprises. Full trust of executives may be lacking, but as long as employees show them respect, the relationship usually works. Over the decades, such an environment has become rather "ordinary".

Executives who want their company to be more than ordinary, however, should consider the following truth:

Maximum Employee Performance Can Only Be Achieved When There Is Mutual Trust and Respect.

The Rationale:

1. When employees feel trusted and respected, they return it. Trust and respect are not earned with a title, nor do they just exist. Instead, they are verbs. If executives want trust and respect, they must "give before they receive".

2. Trust brings inner security, which allows people to reach for lofty goals without fear. In ordinary companies, people who don't feel trusted are insecure, and so they do the minimum to stay out of trouble. Unfortunately, the cumulative effect of a workforce doing the minimum will cause a company's performance to be mediocre, at best.

3. When trust is given, people are much more likely to live up to it. It is human nature for people to show those who trust them that they have made the right decision. As a result, trusted people have the best chance at becoming star performers.

4. Mutual respect helps attach people to the company with their hearts. When employees do not respect the company's management team, their concern for organizational success leaves something to be desired. Indications of a lack of respect are "fudged" expense reports, long break times, absenteeism, high turnover and a slow work pace.

But when employees truly feel respected and respect management in return, they form a bond with the company. Instead of working hard because they are being paid, they care about the company's results and do the maximum possible. With a company full of people doing the maximum, customers and competitors will wonder how such performance is possible!

Convincing people that you trust and respect them is not an overnight process. But the rewards are much more than worth it! The following are some important steps toward progress:

- Trust and respect employees first, even if you don't feel it is mutual.

- Don't mistake the show of respect with the presence of it.

- While titles gain "displayed" respect, actions earn actual respect.

- Ask for the opinions of others and value them.

- Believe in people, and show them that you do.

- Treat the lowest level people like royalty.

Friday, September 28, 2012

Small Business Management

Running a small, start-up business has it share of ups and downs. When I launched my company nearly nine years ago, running my own small business has been both rewarding and challenging. It has enabled me to establish greater balance in my life as I have reduced the administrative burden that corporate America places on each of its employees and replaced it with more time spent on developing content for my clients.

Given the choice, running my own small business is the best option for me at this stage of my life. I can work out of my house, see my kid on a regular basis, focus my work effort on content, rather than administration, and yes golf a tad. That being said, I am asked continually by others "what is it like to be in business for yourself?" as they contemplate the leap from corporate to sole proprietorship.

While it is not for everyone, here are some of the points of consideration that one should mull over before making the jump to starting your own small business:

One Stop Shop: One of the benefits of being a small business owner is the autonomy of "calling the shots". You are the boss and clearly can steer your company as you see fit. Many think they relish this set-up but in reality, when it comes to being the self-motivator that is required to be successful - the "guy" to go to - lots fall short. Before you read any further, ask yourself if you are cut out to be the "go to guy". If not, you can save yourself a lot of time and frustration. Simply stay in the corporate world.

Develop A Business Plan: So, why is business planning so crucial? In a word, it provides "clarity". Investing time to develop a plan provides precise clarification of the company vision. In addition, it provides a mechanism to gauge the results of the business and provides the foundation for future growth plans. In the long haul, it enhances the company valuation through fiscal responsibility, which provides the story of opportunity to any future investor or employee. Business planning is one-part strategy and one-part tactics - but where the sausage actually gets made is in the execution. Execution comes in the hard work necessary to carry out a plan and the accountability for your activities by tracking them.

Understand Tax Burdens: Regardless of the political rhetoric surrounding the tax code and its impact on small business, the fact of the matter is that these entities are levied with a myriad of taxes. I am shocked by how many budding entrepreneurs fail to understand the taxes that small businesses pay. My company has essentially one of the easiest business operating models that a small business can have. I invoice a few clients per month; receive a few checks a month; pay a few bills a month; and have very little inventory and/or depreciation of capital assets. Despite that, my tax return was 84 pages last year. Filing as an S-Corp, my outlay on taxes is between 25% and 39% of federal taxes; North Carolina state income taxes ranging from 6.0% to 7.5%, social security and medicare (twice as a matter of fact for employer and employee) of 15.3%, so nearly 50% of all income goes to taxes and fees.

Replicate Yourself: Given the fact that you are a one stop shop, a small business owner needs to replicate themselves wherever possible. Tools such as social media and the acceptance of telecommuting through online collaboration have enabled small business owners to be in many places at one time. In order to be successful, small business owners need to tap these tools to maximize their exposure to potential clients as well as reaching customers outside of their immediate trade area. Prior to these tools being readily available, my business was limited to the state of Illinois (where my company was originally based). Since I have utilized these tools to replicate myself, I have had clients in thirteen different states.

Navigate Third-Party Challenges: A small business owner wears many hats and relies on third-party entities for key alliances. When Go Daddy had their website and email server outage in September, roughly 5.3 million small business websites and emails were knocked out. Small business owners rely on these support companies and at times, are held captive when issues arise. While my company does not conduct a lot of commerce via my website, many small operators lost online revenue due to the outage.

Be Wary Of Scams: Lastly, where there is a small business owner, there is a criminal waiting to prey on the unsuspecting operator. In fact, this past week, I received a letter from a group claiming to represent the State of Illinois. Having been in business nearly nine years, I am keenly aware of all of the annual expenditures that my company pays. As an Illinois corporation (operating in North Carolina), I received a letter stating that I needed to send in a $125 fee for my "Annual Minutes Records Form". I didn't recall ever doing this, and when I contacted my CPA, he shared the following press release with me:

The Top Components of Strategic Planning

If you already know what is strategic planning, then the next thing you'd have to be familiar with before learning the process of strategic planning is its key components.

Number one on the list is vision. This summarizes what the organization desires to be, or how it wants the world in which it operates to be. It is a long-term view and focuses on the future. It should be one that should inspire and motivate the members of the organization.

Second is the mission statement. The mission statement is an predominant, endless statement of your purpose and goal. It also tells what your organization wants to accomplish and in what ways you plan to accomplish them. It's a pronouncement of the reason for your company's existence.

Next values are then specified. Values are the organization's basic beliefs about the way you would run the company or organization. It provides an idea to the management and staff on what behaviours is acceptable and what are not. Most of the time values is connected with the culture of the organization.

What follows is the setting of the goals, objectives and tasks. Goals are defined as a list of wide-range strategies and tactics that have to be done so that the company can reach its mission. Objectives on the other hand, are SMART (specific, measurable, action oriented, realistic and time bound) strategies or activities that are need to reach the company's goals and vision. Then, tasks are precise activities and actions members, employees have to carry out day by day. They, too, should be specific, measurable and time bound.

Then, there's the strategy. It is a blend of the results the company or organization want to achieve and the ways by which it is seeking to get there. Another name for strategy is roadmap because it tells the company what path to take so that the goal or vision can be achieved.

It is at this point that strengths, weaknesses, opportunities and threats are pointed out. These four are simply represented by four letters - SWOT.

Also, there are the action items or plans. These are definite statements that point out the ways in which a goal will be accomplished. An example of which is stating that the company would have to use quality management software to evaluate quality of products or performance.

Wednesday, September 26, 2012

Company Profile: Bringing Jobs Back to the US

As a consumer, I personally enjoy purchasing products that are made in the USA. It's a great feeling knowing that I'm buying a product which is part of providing work for Americans. In a perfect world, I'd love it if more people would try to "buy American"-of course, that's kind of difficult these days since so many products are made in other countries. However, if we would be more patient and take the time to look for and shop around, we'd be able to purchase more products that were made in the USA.

In the "good old days," you could rely on reliable, quality products and know that what you bought, would last. These days, when you buy something, you cannot rely on the quality of the product. It is true that things are not made the way they used to be. Clothes don't last as long. Shoes wear out more quickly. As a business owner, the hope is that the business climate here in the US will become more business-friendly.

In the meantime, that means business owners will try to be more frugal and trim the fat and do what's necessary to keep their businesses going. With the advent of the Presidential election coming up next month, the tide will turn one way or the other. Time will tell, but we all hope that more businesses will be able to expand and hire more employees and that the job market will turn around.

In these current hard economic times, what one thing does this Country need right now? We need jobs, here for the American people... not jobs sent overseas to other countries so businesses can save money on paying low wages. One American company that has been profitable is able to make the claim that they started to bring jobs back from China.

What have they been doing? They've tried to cut costs and manage their production in a more productive way-they recently bought an abandoned factory in Ohio and have simplified the design of their Eden Pure heaters. [Disclaimer: I have one of these heaters and absolutely love the product... it works great.] By making a simpler design, which works just as well and even better than the older models, the product requires less parts (rivets and screws). They have now been able to compete better with their competitors who have taken their plants overseas to benefit from paying lower wages. For more details on Eden Pure's story, visit: "Purely Profitable" from the Costco Online magazine.

Monday, September 24, 2012

Build a Strategic Plan For Business Growth - Connecting the Plan

Once your company's strategic plan has been completed and a "growth map" is in place, it is time to execute it. But unfortunately, the reality of business, with all its pressing concerns, can quickly cause plan execution to falter. The answer is not to try harder or make the plan an urgent priority. Instead, the solution is to integrate the plan into the company's ongoing activities so that execution takes place as part of the normal course of business.

The most common and deadliest enemy to strategic plan execution begins the moment that a company's long and involved planning process comes to an end. When executives finally turn their full attention back to running the company, there is often a pent-up demand for their time. Customers have issues, suppliers bring challenges and shareholders want immediate results. And that doesn't include regulatory demands, legal considerations, human resource needs, etc. The list goes on, and unfortunately the "dust gathering" process for the strategic plan often begins before the ink is dry.

Even when executives make time to execute their plan, initiatives can falter as part of the company's "project list". The problem is that when projects are prioritized, strategic plan initiatives are nearly always labeled "important" rather than "urgent". And urgent projects, like the ones that customers are waiting for and those that will increase cash flow, tend to be implemented first. So as the year progresses, strategic initiatives often fall behind and executives must be content to report the reasons. At year-end, it can become embarrassing for a company's executive team to realize how little of their strategic plan has actually been implemented.

Instead of attempting to keep the plan in better focus or placing its execution ahead of urgent matters facing the company, the permanent solution is to integrate the plan into the company's normal operations. This way, plan initiatives will not be seen merely as additional projects.

The first step to effective plan integration is to separate each plan initiative into "action plans". For example, let's assume that there is an initiative called "Build A Marketing Program That Targets Small Businesses". This initiative can be split into 5 separate action plans, as follows:

1. Identify the products and solutions that will be required.

2. Develop tailored presentation materials

3. Prepare advertising and promotion plans

4. Initiate relationships with appropriate trade organizations

5. Create a sales target list, with contact information

Once action plans have been established, the next step is to assign responsibility for each of them. Although the company's marketing executive would likely be responsible for the overall initiative in the above example, each of the 5 action plans should be assigned to an appropriate employee team. For instance, the Customer Service team can be responsible for action plan 1, the Promotion team can handle action plans 2 and 3, the Sales team can initiate the relationships with trade organizations in action plan 4 and the Sales Support team can create the target list in action plan 5.

At this point, the initiative has been pushed deep within the company. But an even further step towards integration is to make timely action plan completion a part of employee compensation. For example, when teams meet their goals for the quarter, which should include completion of assigned action plans, the members of those teams would receive performance pay in addition to their regular pay. Similarly, completion of the overall initiative can be one of the components of the executive team's compensation.