Being Too Relaxed? 6 Tips for Business Owners to Insure Profits
Taking too much for granted? It May be Time to Inspect Some of your Expectations
by Patty DeDominic, Coach to Million Dollar Business Owners
We are all for owners' Freedom, but I don't want you, as the founder or CEO, to be too relaxed or chilled! We can let down our guard sometimes, but we can't send a message that we are an absentee or too-trusting business owner. Don't let your previous success give you too much "trust" that things are going to continue as successfully tomorrow as they have run the past few years. S..... Happens
Do not wait until there is a crisis!
Here are 6 things you can do right now.
Now is the time to check back in and to install a few controls to make sure your organization is running at its optimum productivity. These tips will help you increase shareholder value and profits. I know they work since I used them as a business owner and I now help others execute life-changing business plans. As a business coach, I help my CEO clients escape the hamster wheels that can exhaust them. Sometimes we bosses get too tired. We can forget to communicate, or we forget to work ON, not just IN-the-business.
How Are You Leading? Some small business owners keep their team in the dark by overmanaging or making all the decisions themselves. If you hold the reins too closely, how will your team learn? Keep that up and you will eventually lose your good, ambitious people. You could one day be left with those who need to be led. Some business owners complain that their team does not take initiative and it is often the culture “earned” by the boss’s style. I felt the burden of “dependents” and when, after 27 years of running my company, I sold my 600-employee business, I vowed never to be responsible for other people’s families again. Yes, I was burnt out, but that’s another story.
Get off that treadmill. Let the team take turns leading. You do that by setting up self-improving systems and fostering a culture of accountability. Get your team fired up with your mission and a clear set of values. You can start with small projects or by getting them more involved in your quarterly planning. Don’t’ abdicate control or details of the business. You will get far more accomplished by delegating the bigger projects out in ever-increasing opportunities. Let your leaders learn on the job, as you did. Remember to check back in with the team to ensure they are clear on what the goals and deadlines are. If you never inspect what you expect - or if you only do it annually, and not randomly at unpredictable intervals, you could be in for some big surprises. Hold those reins, but not too tightly.
Anyone who has led a successful organization understands that we can trap ourselves with treadmills that seem never-ending. You toiled in the company you founded till it grew. You may have even begun netting a million a year and then one day got burned out. Businesses and goal achievement just don't run on autopilot. Don’t wait until you are exhausted or disgusted. That price is far too high. I want you to be able to run your company with systems and embedded controls. Done well, they reinforce great people and outsmart the profit stealers. You will be able to outlast the marathon when you learn how to vary your vigilance and create a culture of continuous improvement.
Review your Customer Accounts Receivable Regularly: One business owner had decades of success and had allowed long and loving customer relationships to get lax. In the matter of collections, credit policies and contracts, they had stopped enforcing clauses, late fees and items which could have been billed for. This one business owner found that they let a "favored large client" take advantage of them to the business coaches’ nightmare, a figure of over a million dollars which is now going to be very hard to collect. Their client may file for bankruptcy soon. Pay attention to industry trends too. If Sears just filed bankruptcy does that mean their close competitors will soon be in a similar boat? Your banker has some insights into this as they tract credit standings for entire industries. You can leverage our banker’s knowledge as a “free consultant” of sorts. Better they tell you that they are going to disallow a particular customer of yours as collateral before you extend great credit to that long-time customer.
Shop your vendors, your insurance brokers, policies and bankers regularly. One client grew significantly over the past 3 years, but her credit line did not. Her banker remembers the naive too hard-working entrepreneur she used to be before she added key staffers and hired a top business coach. She told me she was going to stay loyal to her old bank and get a second mortgage on a rental property she owned. I encouraged her to let the old bank know she is going out for bid. She needs to let the next potential banker know that she wants them to beat the long-time bankers’ "tired" service. Loyalty is important, however, be smart about it. Always review relationships annually and shop vendors and advisors assertively!
Review your Bank Statements Regularly: Another client and even our local government, got lax about reviewing bank and credit card statements. Luckily the bank had a new transaction clerk who was following protocol and noticed some irregular signatures. A quick phone call surprised the CEO who had stopped reviewing payables and canceled checks years earlier. This little oversight cost the company at least $70,000 that they know of. These lapses happen all the time and fraudsters and opportunists just can’t keep their fingers out of your accounts.
Inspect what you Expect. Deputize a few other Inspectors: Coworkers turned in the Santa Barbara County Accounting Manager who recently pled guilty to embezzling $2 million, over the previous four years. According to the Santa Barbara Grand Jury, this could have been spotted much earlier had better controls and spot inspections been followed. Be unpredictable in your oversight, not your neglect as many founders are. Another board I now chair had some wild expense reports questioned by the outside auditor - a tough call for her because she was reporting her contracting “boss" but it saved the board much greater losses and cost the GM his job. Trust AND Verify yourself and with outsiders too.
Do not wait until there is a crisis! Here are 6 things you can do right now to evolve past complacency. Stop trusting that everything is just fine. If you install these safeguards, then you can do a much better job of leadership! Whether you want to buy another company, merge or eventually sell for millions, there are some regular, relatively simple, steps to take now.
These steps go a long way to ensure that your profits live on:
1. Train the Team and Reinforce the Values of your Organization. Nurture a culture of productivity and continuous improvement in all new hires and the seasoned team. Train, train, train. Communicate values and let folks hold each other accountable too.
2. Audit Everything Occasionally. Appoint formal and informal "inspectors." Do the unexpected at times, to make sure the team, your vendors and employees know you are noticing and appreciating them. not asleep at the wheel. Inspect what you Expect.
3. Trust AND VERIFY. Regular audits, cross-training, making sure your people take vacations and changing auditors every few years are among the best business practices. Be a little less predictable in your routines and keep your E&O and cybersecurity insurance up to date.
4. Cross Train. When you have a new hire, hand them their weekly and monthly checklists and ask them to update them for the cloud-based master system you keep in Google Docs or another online "folder". Ask each person to fully and clearly document their processes and procedures, so that others can help or substitute when needed.
5. Review Your Progress and harvest lessons learned each quarter. Do not assume that your profits will continue every year. Economic conditions, international sanctions, tariffs, judgments and fraud can turn your world upside down. You can bring in a profit hunter like me if you need to. We profit hunters love to comb your balance sheet, review your ratios and find ways to add margin, reduce costs and increase net sales.
6. Create a new Action Plan Quarterly. Ask your team for their best ideas for value-adding solutions to the company and your clients. Brainstorm ways to provide faster, better service to each other too. Appoint Champions or a scrum master to game breaking projects. Assign Action items on your wildly important goals to keep people in various departments engaged. Do the follow up on a regular basis to help people stay Accountable.
If you, the business owner, employ these 6 tips now, you will lessen the likelihood of being the target. You will be going a long way toward continually improving systems. Remember, if work-life seems too good to be true, it just may be! We can provide those proverbial ounces of prevention to avoid tons of pain and legal fees later!
Patty DeDominic is a business coach to businesses exceeding $10 million in annual sales. Named CEO of the Year by the Los Angeles Business Journal, she also received a Lifetime Achievement Award from two United States Presidents and built, grew, then sold a 600-employee firm that is now part of a billion-dollar staffing leader.
dedominic.com or text me at 805 453 7490 to see if we can help you find more than a few hundred thousand hidden in your business. We did with 4 new clients this quarter. My goal is to help clients net one million more before year-end!