Small Business Buying, Building and Selling

A friend of mine just emailed me today to let me know he’s just been promoted, is now taking on a much larger leadership role where he works, and sales are doing well BUT he’s having ‘people’ issues.

Well who isn’t, right? All businesses have issues with unproductive, combative, and poor-communicating employees. But before you can address how to fix those problems, you need to know why people are that way. It’s my firm belief that the vast majority of people don’t want to suck at their job. If that’s the case, why do so many businesses have so many personnel issues?

Here’s a quick litmus test to see if your business is creating personnel issues or you just happen to have a few bad eggs.

Personally I’m not a big fan of the term “managers” as “managers manage resources and leaders lead people”. A hundred little things, like your titles, added together form a culture for your team and team members (not employees) that can affect everything about your culture, including financial results. I’m getting a bit ahead of myself, so I’ll get more into what’s required of a leader in number 4.

1. The first step is defining the culture you want… Mine is literally called our “14 Points of Culture” that set the ground work for our team expectations. While you’re laying the ground work for your team and culture, you may already have a Vision and Mission statement, but if not, that’s foundational so create that as well.
2. From there you need to develop a Team Organizational Structure chart with the hierarchy of the leaders in your business. Keep in mind that the 3 points on a successful business triangle are made up of Sales/Marketing, Finance/Administration, and Service/Operations so your Team Structure should make sure someone is excellent at each of those things and has the supporting team to get better. At it’s most basic level, your Organizational Chart would include a Team Leader (CEO) above the Sales/Marketing Leader, Finance/Administration Leader, and Service/Operations Leader who all report to the Team Leader. Underneath each of those leaders will be their supporting teams. Keep in mind that the Team Leader should always dedicate half of his time to sales/marketing and the other half of his time to everything else!
3. Create job descriptions for every position in your Team Organizational Structure. The descriptions should include expectations, benefits, Key Performance Indicators and benchmarks tied to incentives. No one on your team should ever be able to say “I don’t know what’s expected of me or how to do my job well.” More importantly, you must fit each team member’s skill-sets and passions into the position that will best allow her to express those passions.
4. Now you start changing the culture by actively leading your team. You provide opportunities for open communication like regular team meetings (even going to the point of picking fights between people and departments). You provide regular and consistent feedback with quarterly performance reviews based on the 12 Questions Marcus Buckingham outlined in First, Break All the Rules. You rearrange your offices according to the rules of proximity. Make sure each of your leaders knows how to use NLP and then train your people. When you come up with new products, ideas, promotions, etc. you work hard to provide systems, procedures, scripts and all the pieces your people need to be successful at implementing new programs. You develop a culture of innovation by requiring people to come up with new ideas without fear of reprisal for “bad” ideas that don’t materialize… And rewards for the ideas that do yield results. You ensure that your leaders all develop relationships with their team members because the most important factor in employee satisfaction is an employee’s relationship with his direct superior.
5. The fifth piece is probably the hardest, yet most important. You fire, let go, or force out the people who don’t fit into your culture, vision, structure, or job descriptions. You get rid of the people who aren’t contributing to the team and culture immediately. The lost time and energy in trying to “fix” them can almost never be recouped. However, if you haven’t provided for them an environment to succeed (with all of the 5 pieces), you’ll really have no idea if they’re good or not because you haven’t defined the rules of the game, yet. If you’re the leader or manager, this is your responsibility. If your leader or manager isn’t providing this type of atmosphere, maybe you should read my last blog on moving on.

Obviously I just presented a whole lot of ideas and pieces that make up a complex problem in a rather succinct manner. The myriad links throughout this blog will provide additional details on certain topics, however don’t try to make this TOO complex. Problems that are TOO complex get pushed to the back-burner, avoided, and ultimately never solved. Take these 5 pieces at relative face value, work on each of them, and enjoy the results.

For further resources, I recommend the following 3 books to help you change your culture:

1. First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham
2. The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni
3. Instant Team Building by Brad Sugars

To your culture-creating success, Bryan

P.S. Though it should go without saying, before you do anything else you should foster a highly ethical business environment. Without an ethical foundation, everything else will be overshadowed.

Have you ever hit a game-winning shot, scored the game-winning goal, or converted the game-winning touchdown?

How about setting a new Personal Record for swimming, running, biking, car, quad, or motorcycle racing while taking first place?

It feels good, doesn’t it? As a matter of fact, there are few things in life that will ever rival those feelings of accomplishment and the adrenaline rush that ensues. For the rest of your life, those moments will be remembered and often relived as you just love to tell those stories. Athletics have the power to evoke such an amazing feeling because they bring together a few main things in one place:

1. Competition – No one is letting you win or succeed. Actually there are plenty of people hoping you fail so that they can win instead.
2. Recognition – When you have the ball, or the wheel, or are on the track, it’s up to you. All eyes are on you whether it’s because you’re doing well or failing. When you succeed, they’re all cheering for you!
3. Public Pressure – You are not behind closed doors. As I pointed out in my blog asking Are you putting yourself out there for criticism? public pressure forces us to be good or embarrass ourselves trying.
4. It’s not easy – By definition, if everyone could (or even wanted to do it) there would be no competition. You worked hard to acquire the skills and talents you have, that brought you to that moment of victory. In other words, you’re doing something you are good at.
5. Exclusivity – You’re in front. Everyone else is behind you. Only 1 person can be in that position.

So what does that have to do with employee motivation and business building? Everything. If you can understand and appreciate that feeling and those emotions, you understand what motivates people.

Though I used sports as an analogy there are parallels to this feeling of accomplishment throughout our lives. Here are just a few other ones so you can see the universal appeal of accomplishment:

1. Getting the girl (or guy) – Especially if you had to take a risk to do so by approaching a stranger and your buddies were watching.
2. Closing the sale – Especially if you’re paid on commission and you’re in competition with either yourself to do better or to be the best in your group.
3. Buying a house or car or something of great value – Generally this provides a major sense of accomplishment as not everyone has the ability to do this (except for a few years during the mid 2000′s when anyone could get financed).
4. Winning a competitive bid – You proved that you are the best and it felt good.
5. Making a profitable stock transaction – You bought low, sold high, beat the market odds and beat all the “experts” while doing it.
6. Getting recruited – Instead of being “hired”, someone actively and aggressively sought you out because of your talents.

The list can go on and on… My underlying point is simply this – If you, as a leader and manager, can find a way to bring Competition, Recognition, Publicity, Exclusivity and a Challenge to your business, most people will rise to the occasion and LOVE their jobs because of it.

If you can remember back to those 2 hour practices, or twice a day camps in the summer (3 runs/day at cross-country camp), it was not always easy, fun, or painless. As a matter of fact, the majority of the time it wasn’t fun at all. However, human beings are generally willing to sacrifice and struggle through all of those obstacles because the rewards of success, particularly the feelings that come along with it, are worth it.

Again, though I use sports as my analogy, this lesson certainly isn’t limited to the sports arena so don’t let that prevent you from getting the point.

The other day in my office, I started to ask some of my team about their experiences with sports. Even the ones who “sat the bench” understood what I meant by that great feeling of accomplishment at hitting the game-winning home-run. Ironically, the one who admitted to being the bench-warmer instantly latched on to our current inter-office competition. Every day she gets so excited about it she tells me about every single customer she signs up for this program and then “trash-talks” me for not getting as many as her. She’ll even walk into my office to receive a high-five to commemorate her latest score. Talk about fun and excitement at work! What may be most impressive, is that for all intents and purposes, her job is “secretarial.” Something most of us would never consider to be competitive or exciting.

Let’s take this concept one step further. According to Marcus Buckingham in his book “First, Break All the Rules: What the World’s Greatest Managers Do Differently,” the primary motivator for most people at their job is not how much they make. The primary reason for someone leaving or staying at a job is their relationship with their direct superior (remember that coach you hated or loved?). Take a moment and recall some of your favorite stories about your life. How many of those were directly related to your income at that time? Even your stories of accomplishment at work are rarely simply “I got a raise.” The accomplishments you made to get that raise are what makes for a great story and the true sense of accomplishment. The raise was simply the reward (i.e. winning the game) for showcasing your talents.

So to take this concept full-circle, compensation should be tied to these competitions and other measures of success. This is why I’m not a fan of an hourly wage. An hourly wage does not incorporate a single one of the 5 items that motivate people to make sacrifices for success. Admittedly, several of my team members are at least partially compensated hourly. The biggest problem with this is obviously that it breeds complacency. Once you’re used to getting that $10/hour, you are no longer motivated to keep working hard to get it. It’s a given; it’s guaranteed; all you have to do is show up.  What kind of motivator is that???

Great coaches, great leaders, and great managers find ways to motivate their team members to do their best by rewarding them for their talents.

To your “motivational” success, Bryan

P.S. Since you’re the coach of your team, make sure your competitions and motivators encourage both individual and team performance. ER9Y2V4W6YK5

As I mentioned in my last blog (yes, I know it’s been a long time but with restructuring our team I’ve been busy), after reviewing how I doubled profits in a year, I was going to review all that I did wrong. Actually, that would require a book not a blog so let’s start with the biggest problem.

My biggest mistake in my first year of business ownership was my avoidance with letting people go.  There were 2 reasons for that:

1. The worst thing you have to do as a business owner is to let someone go. It’s not fun and if you have any heart it’s actually very emotional. Beyond that, while you’re training his or her replacement guess who gets to pick up the slack? That’s right, the owner or leader in charge of that position.
2. I prefer to believe people are better than they actually are. I tend to believe I can educate, train, and help someone learn “anything”. After all, if it’s easy for me then how hard could it possibly be to teach someone else???  Well that’s just not how the real world works. People with the greatest intentions just may not have the talent or intellectual capacity to do what’s needed. For a great reference on that topic read First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham

Ironically, in the six stage of business that Brad Sugars teaches, building your team is the fourth step. In the next year, as I build my team so to replace me, I’ll let you know how that works. At this point it seems it would have been a lot easier to get the right people in the right places first… We’ll just have to see.

So I’m much more cognizant of my weakness at letting people go who need to be let go and in the process have learned the “proper” method to do so.

If you fire someone correctly, a few things will occur:

1. You’ll maintain a positive relationship. In my experience several people asked for their jobs back a few months after I let them go so obviously they didn’t completely hate me.
2. He won’t file for unemployment. It affects your unemployment insurance rates for years to come so it’s worth fighting and preventing.

Firing someone is actually MUCH easier if you plan and prepare properly. Here’s what I suggest:

1. Make up your mind! If you’re not 100% sure that it’s the proper thing to do, then you probably shouldn’t do it. You don’t want to get in an emotional situation where they talk you out of it. Make up your mind and stick to it.
2. Gather performance information. Particularly related to poor performance. The reason for this is because if you “fire” someone with reason, they aren’t eligible for unemployment. Otherwise they consider it laying them off in which case they can claim unemployment. The second reason for this is that when you sit down with them, if they feel the need to feel indignant and question everything, you have all of your notes and information in front of you to stick to your guns.
3. Don’t use the negative performance information more than you need to. In other words, you’re already ruining their day, no need to rub it in. Most people know they’re underperforming. At least 3 people I let go didn’t offer any resistance whatsoever and acted as if they knew it was coming (they all did).
4. Don’t ever use the words “fire” or “quit”. Those are harsh words. Instead use the terms “let you go” or “resign.” Review my blog on NLP if you don’t feel proper word choice is important.
5. Offer them a choice. If they just aren’t capable of doing the job you need them to, but they otherwise work hard, show up on time, etc. and you feel comfortable doing so, offer to let them choose to resign or you’ll have to let them go. Emphasize that in this job market it’s tough to get a job if they can’t use you as a reference. Moreover you can’t lie, so if someone calls to ask why they no longer work for you, you’ll be obligated to tell them they were let go and why. All 4 people I offered this option to decided to resign.
6. Get any business items immediately. Whether its keys, tools, company credit cards, cell phones etc. Get them all immediately. It’s against the law to hold someone’s paycheck, but if your handbook says so, you can charge them back for any equipment they don’t turn in before their paycheck is ready.
7. Offer to let them put in their 2 weeks notice. If you don’t have a gross negligence issue and you can completely trust that the individual won’t sabotage you and your business for their final 2 weeks, offer to let them work their last 2 weeks while they search for a new job. Make it clear that you don’t want to regret that decision and that you’d be willing to be flexible on their schedule if they have interviews. As an Ethical Business Builder, in instances where the person just can’t keep up with their work I prefer making this option available. In my business I only made it available to my office personnel and never to service personnel who have my trucks fully stocked with tools and parts to slowly sell off or steal with little oversight in their last 2 weeks.

That’s it. So far I’ve had to let 4 people go and haven’t had a single one even apply for unemployment. Two have asked for their jobs back and I hired a thirds father to work with me with no hard feelings (and he’s a GREAT addition to our team).

Properly preparing for this horrible part of being a business owner actually does make it easier and a lot more palatable. It’s eventually going to happen, so don’t put off letting someone go when you know it’ll will be better for your business, customers, other team members, and ultimately the individual.

To your team re-building success, Bryan

We’ve had a couple of adjustments to make between my 2 businesses lately. Namely, our top sales person based on revenue generated quit with 2 days notice…  The day he provided his notice I launched 2 new radio ads that on the first day he wasn’t in the office “indirectly” generated 6 leads in one day. I say indirectly because none of the appointments have been run yet so I don’t have any feedback from our sales professionals as to the prospect’s reason reason for calling. Obviously asking them how they heard about us is a waste of time, which is why both ads have a specific offer only available by mentioning the ad.

Writing a job description shouldn't be this hard...

At any rate, there are a few important aspects to recruiting:

1. ALWAYS be recruiting.
2. Have a plan so when you find the perfect person you can impress them.
3. Have a basic job description that you then tailor to that “perfect” person.

When people ask me if we’re hiring my standard response is “we’re always looking for great team members.” Finding loyal, hard-working, reliable team members is one of the hardest parts of business so if you meet the “perfect” person for your team while visiting another business are you really going to sit by and do nothing? Great people pay for themselves. Granted, you may not have a spot in your current business right that moment however you may have one over the next few months or years as your business matures. Heck, you may even buy a business for that perfect person to run. I personally had someone recruit me for over 5 years before I called them up one day and said “so do you still have an opportunity for me?” (of course he did).

So now that your eyes are open, how do you know they’re “perfect” for the team? Moreover, how can you make sure they’re “perfect”?

This is where my opinions differ a bit from Brad Sugars, Michael Gerber, Michael Masterson and even Marcus Buckingham (their books are all in my Recommended Reading section). Actually I agree with all of them as well – I just decided to blend their philosophies…

Before we get into the job description, you absolutely MUST have your Vision, Mission, and Points of Culture. Not only is it crucial for you to make sure you find someone who can fit into that culture, it has been the absolute best recruiting tool I possess. When you bring out your Points of Culture during the interview process, people are impressed. They immediately respect your attention to detail, focus on ethics, and business savvy. If for no other reason than it seems to be common sense, yet they’ve never seen anyone else do anything like that.

Back to the job description… Make sure you have one for every open position in your company. That description does not have to be extremely detailed, but it should include at least the top 3 responsibilities for that position (that’s a Brad Sugar’s concept though I can’t remember from which book). Compensation, Team members for whom they will be responsible, and a general description of their overall goal are necessary prior to an interview. My descriptions also include a section for “Test and Measure” where I list specific numbers they’ll be responsible for improving through testing and measuring. For instance, Average Dollar Sale, Closing Ratio, Daily Break-even, etc. may all be important “Test and Measure” concepts for a particular position. It’s my responsibility as the Team Leader to provide them with those numbers and provide the education and resources necessary to improve them.

So your pre-interview job description may look something like this:

Compensation: Fifteen percent commission of all gross sales with a target of $50,000 in sales per month.

General Responsibility: Generate new revenue for the business by presenting the best solutions to our target market.

Specific Responsibilities:

1. Present products to clients and prospects
   
2. Generate leads on your own in addition to those generated through our marketing
3. Ensure that every client is so happy they’re excited to provide referrals

Test and Measure:

1. Average Dollar Sale for your sales
2. Average # of transactions per year per customer
3. Closing ratio

The need for those basic points is simply to make sure you are being realistic in your search for the perfect person. It’s basically common sense things like you wouldn’t try to recruit someone making $50,000 per year for a $10/hour position even if they are perfect. The job description ensures that you’re focused on the person with the proper traits.

Now here’s the important part, after you find that person, interview them, and learn a bit about their passions, talents, and skills, you need to expand on your job description to ensure that new recruit will be doing what they do best as often as possible (Marcus Buckingham harps on that in all of his books).

For instance, my current openings are in sales. Your stereotypical sales professional can’t stand paperwork, is rather disorganized, but is extremely outgoing, excellent at building rapport quickly, reading people, and isn’t afraid to ask for an order.  That type of personality would lend to having all appointments, follow-ups, paperwork etc. handled by someone other than the sales professional so they can just focus on getting in front of prospects. His job description might include generating new business by cold-calling or canvassing because he enjoys the challenge. However, what happens if you find a talented sales professional who is organized, loves to know how a business works, enjoys building longer-term relationships, and even feels comfortable documenting what they do. Well you write up her job description to focus on setting up relationships with complementary businesses who can be constant lead sources, you have her document the steps she took to build those relationships, and for the most part you don’t require her to do any cold-calling or canvassing because if she’s not passionate about it she won’t be good at it anyway. If possible, you probably still want someone else in your office managing the paperwork, appointments, etc. however a person with that type of personality may be more effective juggling her own schedule because of her highly-organized nature.

This is where I differ a bit from Michael Gerber who focuses on creating your organizational chart right from the beginning with full job descriptions. The chances of you finding the person who fits your detailed job description perfectly on every point is nearly impossible. If Michael Gerber had actually ever owned a business before writing his book he would know that.

Michael Masterson, on the other hand, teaches that all of your top-level people should have the same job description – “Whatever is best for the customer”. Sorry, that’s just a prescription for chaos… Reference my blog on the lessons 5-6 year olds taught me for a better analysis of why.

In summary, ALWAYS be looking for new recruits, be prepared to set yourself apart from any other business the recruit has ever dealt with, and then tailor your job description to focus on her doing whatever she does best as often as possible.

To your success, Bryan

When I started business “consulting” at the ripe old age of 20 with no actual business ownership and management experience, I ran into a few problems. My job was to implement a new software system that would significantly change the work flow of a business. In that process I would have to recommend ways to handle leads, in-bound and out-bound calls, inventory, receivables, and offer suggestions on what management reports to run. I learned that to get buy-in it was necessary to explain WHY they needed to do all of this. No matter how much I knew or how many businesses I helped, a 21 year old wasn’t ever going to get much respect right away. So I learned a quick way to build rapport is to use “experts” to make some suggestions instead of me just making them. In other words I learned to use books to backup my expertise and build instant credibility. I furthered that credibility by publishing articles in trade magazines when I was 22… But that’s a different story.

So after years of reading books on real estate, investing, business building, sales, marketing, and psychology here are the ones that offer the BEST advice for wealth building in the order of importance.

1. Billionaire In Trainingby Brad Sugars: If you don’t know this guy then you need to. He retired with $10 million in the bank at age 26 for a few years. Then got bored and launched what is now the largest business coaching business in the world, Action Coach International. Now at age 34 he’s been involved in over 50 businesses and is using the formula in this book to become a very young billionaire. The best book of its kind.
2. Ready, Fire, Aim: Zero to $100 Million in No Time Flatby Michael Masterson: Masterson’s approach is a bit different than Sugar’s which is why I liked it. Masterson talks in detail about starting and growing a business step-by-step, whereas Brad says don’t waste your time starting one, just buy one. Regardless, Masterson has turned himself into a hundred millionaire and retired for the first time at age 39. He provides some excellent tools particularly his insights into marketing and back-end sales.
3. The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About Itby Michael Gerber: One of the best business books ever according to Inc. magazine. Gerber breaks down the reason most businesses fail to the owners misunderstandings about business. The greatest misunderstanding – that because I’m a good plumber, electrician, accountant, lawyer, etc. I’m gonna be great at running a business that will allow me to use my sweet skills.
4. First, Break All the Rules: What the World’s Greatest Managers Do Differentlyby Marcus Buckingham: After interviewing 80,000 managers in 20,000 different organizations over 20 years Buckingham has broken down the best way to measure employee productivity and happiness to 12 simple questions. If 12 is too many he even gives you ways to shorten that list depending on your goals. If you EVER plan on doing a performance review or have employees, read this book.
5. Built to Last: Successful Habits of Visionary Companiesby Jim Collins and Jerry Porras: The greatest lesson I took away from this book was that Gerber and Sugars are right. Even the greatest businesses over the last 100 years were founded to be great businesses from the start NOT to provide a great product. That’s a VERY important distinction. Sorry to dissapoint all those high-ranked business schools that say you need the product first.
6. The Millionaire Mindby Thomas Stanley: This book is a compilation of data from survey’s answered by over 1300 millionaire’s. Some of his findings are quite interesting. The most important 2 were that the number 1 thing millionaire’s attribute to their success is “Being honest with all people.” The second is that most millionaires were at or below average according to our fine education system. They were mostly college dropouts , C students, and averaged less than 1000 on their SAT’s.

Though I’ve read Robert Allen’s Nothing Down for the 90sand Hagstrom’s The Warren Buffett Way and Peter Lynch’s Beating the Street along with dozens of other books and online services related to real estate and investing, I have very purposely left those out. I’m not saying they’re poor books, because they are all VERY good (Robert Allen inspired me to buy my first rental property at 21) – however, as Brad Sugars points out in “Billionaire in Training” you don’t climb the capital ladder (i.e. real estate and stocks/securities) until you’ve climbed the cash flow ladder. In other words, until you have cashflow to backup your real estate investments and securities in case of trouble, you’re wasting your time with those. I know in the instance of both my real estate investments and stocks/mutual funds I NEEDED cashflow (from my job) to cover them.

To your success, Bryan