1. Have cash available – Check out my blog about cashflow first. In essence, if your receivables are high or you have an issue with billing or you just have a slow month, make sure you have access to cash so you don’t have to miss payroll. That doesn’t help team member morale much. Discipline yourself to build up a company savings account with at least enough money to cover 1 payroll. Another way to help cashflow is to pay for performance instead of just hourly or flat salary.
2. Improve Marketing – Don’t cut back on your marketing unless that marketing isn’t producing results. More and more people are skipping the Yellow Pages and going to the internet. Or they’re going to the yellow pages simply to get your phone number once they already know who they’re going to call. How much are you spending on yellow pages? Is it paying off? Invest time into making your website better if that’s an area that drives leads. Try some direct mail campaigns. Place an offer along with your radio and print ads to measure the response. If it’s working invest more money into it. If it’s not, cut or eliminate it completely. Focus on referrals!
3. Cut Expenses – Use better technology (VOIP, Quickbooks Payroll, Online bill-pay, online backups). Improve employee efficiency with detailed procedures and performance based incentives. Search for better deals before purchasing anything. Shop from multiple vendors and keep a database of vendors available for each part so you know where to get the best deals.  Find out from ALL of your vendors if they have quantity and pay-quickly discounts (i.e. pay in 10 days to receive 2% discount instead of in 30). Cut out some of the owner perks if necessary.
4. Ask your team for help – It’s a team and they’re all working with your customers every day. What can they bring to the table as potential cross-marketing, upgrade, and add-on opportunities that you’re not taking advantage of right now? Get everyone involved so they “buy into” new programs. At the same time, work to improve the productivity of your team.
5. Sell to your existing customers – They know and trust you so how else can you help them?
6. Know your numbers -Taking a page from Michael Masterson, each leader should only have 3 numbers to focus on.
   1. Your office leader needs to know total receivables, outstanding payables, and bank balances.
   2. Your sales leader needs to know # of outstanding leads, # of new sales, and average dollar sale.
   3. Your marketing leader needs to know # of leads coming in from each marketing project, # of sales from each project, and average dollar sale.
   4. Your service leader needs to know # of work orders completed, # of work orders outstanding, and # of customer complaints.
7. Acquire competitors and/or complimentary businesses – If you have the top 6 under control, it’s time to really take advantage of the economic climate by acquiring more businesses. Competitors are perfect since you can cut out nearly all of their overhead expenses by absorbing them into your business. Generally if they’re for sale they haven’t done as good of a job as you so they should be ripe for new marketing, cross-marketing, add-ons, up-sales, etc. A complimentary business can help you do the same thing. You may not get as many synergies as quickly, but with a complimentary business you can now sell the service your new business provides to your existing customer base and vice versa.
8. Avoid starting a business – When you start a new business, you have a lot of expenses up-front and NO customers. You have no immediate cashflow, no systems, no marketing, no referrals coming in, no name recognition. Nothing. By relying on an established business as your primary source of cash you don’t have nearly the time invested as starting from scratch. And on day 1 you have sales and money coming in.

There are lots of “little things” you can work on to improve your business to make sure it’s resilient in times of economic slow-downs. However, don’t get bogged down in the details! This was a quick overview of just the most basic things every business should be doing. Obviously all of this is true in good times and bad so when your business starts picking up, don’t forget to stick with it!

To your success, Bryan

For me if I can pull a single good idea out of a book then I consider it worth the $20 and time invested. It wasn’t until the last few chapters that I found that great idea from “Work the System”. It’s a concept Carpenter calls “PTO” or Paid Time Off. The way it works is that with every paycheck your team members accumulate vacation or sick days or both. Well Carpenter found out that caused a problem with people just taking one of those sick or vacation days because “i don’t feel like working today.” So instead of that, he wrapped both into Paid Time Off and paid the employee for that time immediately as an additional line item on each paycheck. That way when the employee takes off a day or week, they don’t get paid for that day or week since they’ve already been paid ahead of time. He claims it reduced absences by 80% and I believe it. I read that last night and this morning I was working with my accountant to get it into our Quickbooks program! Brilliant idea!

Beyond that, let’s call it what it is – Sam Carpenter’s “System” was an effective way for 1 man to take 1 small business (currently $2 million in annual revenue) in 1 area of the world in 1 specific industry to his own personal definition of success. God bless him because he’s living his American dream and I absolutely LOVE to hear how people are able to do that. The thing is, Carpenter tries to convince the world that what has worked in his very limited world and experience is the answer to all business owners’ prayers.

There are a few reasons his systems approach was so effective for him:

1. He had absolutely none to begin with. I felt really bad for him reading the first few chapters about how his life and business were in such shambles. It was rather depressing.
2. His business has a recurring revenue business model. In other words if he doesn’t sell another X this month he’ll still make payroll and there are a LOT of businesses that don’t have that luxury.
3. His business is relatively simple. He mentioned they can take someone off the street with decent typing skills and have them handling calls for his 24/7/365 call answering business within 3 days. There are plenty of small businesses that require much longer then that just to get someone acclimated.
4. His business is a necessity for its clients. Its not a luxury.

So let’s face it, he misses some VERY important points in growing a business that no business owner should be without. Here’s a quick list of just a few things he doesn’t address that are important to a business:

1. Unique Selling Proposition and guarantee.
2. Testing and Measuring particularly with lead tracking.
3. He grows his customer base mostly through buying other businesses but gives no weight to the value of doing that. I’m curious as to how many new accounts he signs up every year through his marketing and sales system since they’re never mentioned.
4. His first systems to fix were his operation’s systems not his sales/marketing systems (he had that luxury because he had a recurring revenue business).
5. He never really reviews team-building other than to find people who buy into his systems mantra
6. NLP, Proximity, marketing, scripting are all missed.
7. He doesn’t review any method for maintaining the systems or the business with important financial numbers such as a daily break-even, the cost of “buying” your customers, the 4 ways to grow revenue, lead conversion ratios, lifetime value of each customer, etc. etc. etc. How can you manage what you don’t know?
8. Back-end Sales, cross-marketing, additional income streams
9. Commission and employee incentives for productivity. For as much time as he harps on the necessary mechanics of life in that everything is controlled by systems, it seems ironic that he doesn’t have an incentive based pay-structure for his managers. Instead he seems to rely on the “pay my people a good salary and make them feel good and they’ll perform to their full potential” model. Wasn’t his whole hippy-to-reality conversion based on feeling good doesn’t produce results?

You get the point. The list can go on and on. Let’s face it, Sam Carpenter may be the McDonald’s brothers, but he’s no Ray Kroc. The McDonald’s brothers created a fantastic systematized business that made them both millionaires in a relatively short amount of time. However the McDonald’s business didn’t make it big until Ray Kroc bought them out and applied all of these other principles to their beautifully systematized business to become a billionaire.

If his systems are that good, and he’s looking to develop a lot of credibility so he can write books and charge people $3k to attend his workshop in Oregon, I’d recommend spending the next 2 years buying a competitor a month and applying the systems. Or just franchise his systems out to other call center businesses since his systems approach is the way you develop and sell a franchise. Within a few short years his business could grow ten fold into a $20 million operation. I have no doubts he could do that very successfully with the well developed systems he has in place. Then again he is more than twice my age so maybe at that point in my life I’ll be more interested in living comfortably than creating an empire.

Again, his systems approach has its place and is certainly a crucial point for every business – but its not the guiding factor for success and certainly can’t be taken on its own. Maybe it’s because I personally know and have consulted with at least half a dozen people who make a lot more money than him, work when they want, and take vacations wherever they like without his obsession for systems. Especially since many of those business owners I’ve worked with understood that their first priority and most important systems were the ones that generated leads and closed sales (something he never addresses).

Michael Masterson in Ready, Fire, Aim: Zero to $100 Million in No Time Flat probably points out the biggest flaw in Mr. Carpenter’s approach and that is that a Stage 1 business’ main priority is to sell. In Stage 2, once you’ve proven that you have a viable product and a willing market, you focus on systems’ development.

The freedom, comfort, and happiness that Mr. Carpenter has found through HIS approach to HIS business is awesome – this blog is just a fair warning to people who think that by reading his book you know all there is to becoming a successful entrepreneur. His book is excellent for what it is – a book on the importance of systems to small businesses – but that’s about it.

It’s worth the read and a decent book so check it out but only after you read the other 5 books on my list of books that make you wealthy so that you have a picture of the WHOLE system that a business owner needs.

To your success, Bryan

P.S. I can’t stop thinking that Brad Sugar’s is by far the greatest entrepreneur of the last 100 years (maybe longer). Eight years ago when Mr. Carpenter had his epiphany about systems, Brad Sugars was retiring at the ripe age of 26 with $10 million cash in the bank. He has since owned 54 businesses all over the world and is only 34 or 35.