Are Mistakes Good?
"Experience is a dear teacher, but only a fool will learn from no other." Benjamin Franklin Business owners learn a lot from their experiences. As a friend says, "Experience is what you get when you don't get what you want." In many companies, you can trace the history of their employee issues through their handbooks. The dress code says that Fridays are casual days. Then it goes on to say that casual dress does not include ripped jeans, low-cut blouses, flip-flops, shorts, sleeveless t-shirts...more
Can You Build Your Business in Half the Time?
I had an unusual coincidence happen last week. Speaking to prospective new members of The Alternative Board (TAB), I wound up with three CPAs in the same meeting. They were from three different smaller firms, and all three identified their current concern as a struggle to develop new business. The idea of participating in TAB is to set aside time each month to work on, not in the business. When I asked if they might find benefit in doing so starting today, they looked at each other and then at...more
Employees aren't Partners
Many of my clients are recovering from the recession. They are running lean, and have restored their profitability, even if at lower revenues than prior to 2008. Those that had to reduce or freeze employee compensation are seeking ways to share their recovering success. When cuts were made, whether layoffs, wage reductions, curtailed working hours or just freezing costs, profitability was the universally quoted reason. "We are losing money" or "We have to maintain a safe operating margin" were...more
Do Goals Make a Difference?
To start the New Year right, let me tell you a true story about a goal. It was a little goal; or at least it started out that way. It certainly wasn't a goal that was intended to be life changing, although it looks like that will be the result. For the next few weeks my morning workout at the gym will be tougher, as I'll have to get to machines around all those folks who will dissapear by mid-February. It's a new year, and millions of people will make tens of millions of "resolutions" that have...more
Turning Plans into Realities
We've discussed some simple steps to getting started on your annual business plan. (see previous post: The Seven Questions of Simple Planning). Once you have the questions answered, you can begin moving towards the actions that transform your plans into realities. The first two of the Seven Questions ask what your revenue goal is, and what needs to happen for it to be reached.Let's say the target is a 10% increase, and the "need to happen" is expanding to a new geographic territory. For most business...more
The Seven Questions of Simple Planning
The Creation In the beginning was the plan And it sprang from the assumptions And the assumptions were without form So the plan was void of substance And darkness fell upon the face of the workers And the workers spake unto their supervisors, saying “This is a crock of shit, and it stinks!” So the supervisors went to their managers, and told them “This is a pail of dung, and none can abide the odor.” So the managers went to the division heads, and said “This...more
Getting Smart about SMART
It is approaching 2012, and (hopefully) most of us are finalizing our plans for the upcoming year. In our groups of The Alternative Board, we are asking each member to state their sales and revenue objectives. We all know that goals are supposed to be SMART, the acronym for setting a goal that is well...smart. When I ask an owner whether he or she sets SMART goals, they usually reply "Oh sure. That's Specific, Measurable, and uh...uh..." Not knowing the acronym past the first two words isn't...more
Trimming the Customer Tree
Anyone who has shopped for a live Christmas tree knows the drill. They have some on display, but none look exactly like what you want. You start looking through the trees that are still bundled up. If one looks promising, you have the lot guy cut the twine and spread it out for your examination. The bottom branches are never as nice as the top branches. They get less sunlight, and the branches closer to the trunk are brown and thin. The vendor doesn't like to trim the bottom, since he is usually...more
When is the Right Time to Sell?
In the last few weeks I've had several conversations with owners about selling their companies. In one case a professional firm with whom I've worked for the last 4 years completed a merger with a large national company. That was a "Boomer Bust" transaction, driven by an ageing partner group and a lack of willing successors in the next generation. In another, a relatively young client received an unsolicited offer for the company. He wasn't planning to sell for at least another ten years or so...more
Three Circles of Family Business
What is a "Family Business?" A large percentage of small companies have some family involved. For most, it is simple a case of providing employment to family members. If the founder of the company is also the principle revenue generator, it may be a spouse (most often the wife) who keeps the books and runs the office. Employment of children who can't (or won't) find another job is common, and more so in the current economy. In most instances it is just a matter of income transfer with some value...more
Fighting on Level Ground
Poland has been conquered numerous times in history. Since the 11th century, it has been partially occupied, partitioned, or fully subjugated by the Germans, Russians, Austrians, Mongols, Tartar Muslims, French (under Napoleon), Prussians and Hungarians. The Poles aren't a timid people, and they have given good account of themselves in numerous battles. Their role as repeated door mat is largely due to a single factor. Bad luck. First, Poland straddles a historical divide between western Europe...more
Changes in the new landscape
Last week we talked about an economy where we can expect things to stay flat, or at least feel like they are flat, for a long time. The ageing Boomers, a long recovery in real estate and construction, shrinking government spending, weakness in the financial markets and increasing global competition will prevent anything like former fast recoveries for the forseeable future. What does that mean for the business climate? It's one thing to say that things will be flat, but another to translate "flat...more
"When everything is flat, you can see a long way."
That statement was made by Van Palmer of Palmer Technology Systems after a lengthy discussion about economic trends. It perfectly describes why we should be positioning our businesses differently from how we did it at the end of previous recessions. Since World War II, the United States has enjoyed a growing number of working adults as a percentage of the population. This was an effect of both the baby boom, which added 58% to the US population in only 20 years, and the baby bust, the trough in...more
Dealing with "Malaise"
This starts out sounding like doom and gloom. It isn't. I have come to the realization that the world of small business ownership is changing, and we have to change with it. For the next few weeks this column will discuss how we have to be different. Please read through the depressing part- it gets better. I promise. On July 15, 1979 President Jimmy Carter delivered a nationally televised speech on the "crisis of confidence" facing the American people. It has become widely known as his "malaise...more
The Catch 22 of IT management
Are you big enough for an "in-house" IT professional? With the rising cost of service by outside firms, many smaller businesses are trying to hire someone to take care of their technology needs. Of course, many small businesses are still trying to ignore their technology needs. I am surprised at how many times I get a belated answer from someone that starts "Sorry, but our email has been down for a week." Those companies are simply playing roulette with their business. I'm talking about the ones...more
Performance Reviews- Best Practices
Performance reviews are a pain. In my nearly 40 years in business they have always generated the same complaints. Managers hate to do them. As a consequence, they are frequently over due. They provide the employee with little information on how to improve. They are written to match decisions that were already made, like a promotion, a big raise, or a small one. I was auditing one of our business owner peer groups (The Alternative Board®) when one of the members presented his issue. His family...more
Profits and Savings aren't the Same Thing
How much profit will you make this year? If you are like many business owners, the answer is "We'll see." They consider profit to be the amount left over after all of the business expenses are paid. That's an accounting definition, not a business definition. The accounting equation is R-E=P. While valid from an arithmetic perspective, that approach causes may businesses to look at profit as an incidental effect of cost control. Intuitively, calculating profits as a remainder seems to make sense...more
Black Swans and Small Business Plans
The term "Black Swan" has become immensely popular on Wall Street and in the media to designate a rare occurrence. Google "Black Swan Japan earthquake" (which is popular enough that Google will fill in the last 11 or 12 letters for you) and you'll find hundreds of articles comparing that seismic event and the rare bird. The term "Black Swan" comes from Nassim N. Taleb's bestseller of the same name. Like most ideas popularized in the media, they got it wrong. Taleb's point is that Black Swan events...more
Why is San Antonio Bucking the Trend?
The national economy is recovering, but it has a long way to go. Residential and commercial foreclosures, consumer debt levels, and bloated public pensions will take some time to correct. Yet San Antonio has been named as one of the least affected cities in America, as well as one of the best positioned in the world to prosper in a recovery.How does this "tale of two economies" (see my previous blog) come about? How does a city with limited resources, long a national backwater, charge...more
Entering 2011: a tale of two economies
In January of 2009 I blogged here titled “The Strategic Triple Threat” At that time, Congress had just passed the TARP act, saving the world from financial meltdown. The Federal Reserve was predicting a short recession followed by a resumption of historical growth rates by the end of 2009.I quoted Peter Drucker then, and do so again now, “I don’t predict the future. I merely look at what has happened already and calculate the inevitable results.” In 2009, I looked at the sub-...more
