Throw Away Your To-Do List

In his book “Getting Things Done”, David Allen describes the four ways you can respond when presented with a potential “to-do”.

1)     Do it now

2)     Delete it

3)     Delegate it

4)     Defer (do it later)

Chaos reigns when you always try to “do it now”. Many, many small business owners suffer from a daily crisis of constant urgency. It is impossible to get anything done when you’re always busy doing things!

Important things – those actions that will have a lasting and meaningful impact on the future of your business – typically take more time to complete than the time you have available right now. Most people “defer” these items by putting them on a to-do list.

The problem, though, is that written to-do lists don’t have a deadline. And while electronic task lists provide this very critical element (no deadline means it will NEVER get done), they still don’t provide the most critical element of all: a block of time to work on tasks before their deadline.

I have found that productivity can be significantly improved by scheduling your “defer” items. In other words, allocating a block of time specific to each deferred task. This discipline might work for you, too…

Schedule your tasks, just like you would a meeting. If you need to reschedule a task because something urgent (and important) comes up, then reschedule it. If you don’t complete a task in the allotted time, schedule the next time you will continue working on it.

Keep doing this, and that former to-do list item will become a done item. You’ll need to use some form of electronic calendar (eg, Outlook) to make this system work, of course. If you aren’t yet using such a calendar to plan your time, it’s to start.

A Profit Management Resource for Business Owners

I'm pretty excited for the 15 or so companies I'll be recruiting for this year's Profit Management Program. Over the next 10 months or so, they'll have the opportunity to learn and practice the key disciplines for managing to greater profitability: planning, strategic management action, and regular review.

Most small businesses do none of the above.

The program starts out with three 90-minute planning and strategy sessions. Then, in late March, we'll begin meeting monthly to review results, share challenges, and adjust strategies. We'll continue meeting thru November.

Each participating company will be working from its own comprehensive TLM productivity plan. Every month, I'll personally analyze the P&L results for each company and share with them the key actions they can take to achieve the plan goals. Great feedback, just like I talked about in an earlier blog (see below).

Last year, participating companies achieved amazing results. A couple of their comments can be found on the Profit Management Program page of this website (navigation link at left).

I know the same thing is gonna happen this year. The TLM System works. We're not gonna count on luck and hope. We're gonna make profit happen.

Want to join us? E-mail me, I'll send you the info. steve@ffbizcoach.com

Let's make some money in 2012!

9 Strategies for Growth & Profit

There are no "magic bullets" out there. Companies grow and profit for very fundamental reasons. Mainly, because plenty of customers like the experience of doing business with them.

But it is helpful to have an annual plan that specifies sales & profit targets. And then, to identify strategies for achieving those targets, each and every month.

Here are 9 of the "big" strategies you might consider for your 2012 plan. These are pretty self-evident, but it is always useful to be reminded of the fundamentals. And remember, your key initiatives for 2012 will likely address several of these…

Sales strategies

§         Sell to more customers (implement marketing activities to attract new customers)

§         Sell more to existing customers (implement marketing activities to increase repeat business)

§         Sell more to each customer, by selling more expensive products and/or adding on to each sale (sometimes called upsell/cross-sell)

Profit strategies

§         Pricing – strategically raise prices (cannot typically be done across the board)

§         Sales mix – sell more high-margin products/fewer low-margin products (a merchandising strategy)

§         Lower purchase costs – find lower-cost suppliers for products and materials and/or negotiate better pricing from current suppliers (a vendor strategy)

People strategies

§         Staffing – “right-size” your company to maximize overall revenues-per-employee.

§         Efficiency – train salespeople so they each sell more, installers & technicians so they each bill more. Streamline admin processes.

§         Compensation – manage costs to be in line with company Gross Profit. Maximize company GPP (GP-to-compensation ratio).

Whatever the improvement activities your company employs, you must regularly measure to determine whether or not they are working (there are metrics for almost every strategy in the list above). Keep track of the results. Via weekly and monthly review with key employees, you can keep your company on target to achieve its goals.

Why You Should Be Keeping Score

I am a big proponent of measuring outcomes. “Keeping score” helps me quantify the success of my coaching clients.

For 2011, the Fast-Forward client scoreboard is pretty outstanding. Out of the 18 companies for which I have comparative financial info…

• 17 of the 18 will show sales gains in 2011, over 2010.
• 14 will have increased net operating profits in 2011.

The profit change was significant, too. 10 of the 14 companies improved their annual profits by over $100,000, compared with the prior year.

The common denominator here was how we kept score:

• Each company started the year with monthly targets for sales, GP, expenses, and profits. A Productivity Plan, if you will.
• These companies submitted their P&L statements every month. Fast-Forward provided summary TLM reports of actual productivity, vs the plan targets.
• We would talk monthly about corrective actions required to stay “on plan”.

In other words, these companies were getting monthly feedback about their productivity. And that’s where keeping score pays off.

Feedback changes behavior.

Contrast this to companies that have no plan. They can still generate monthly financial reports, but there’s not really a scoreboard because monthly productivity targets haven’t been specified.

Even worse are the many companies that never look at their monthly financial reports. Their only feedback is the gut-feel of the owner, and the balance in the checking account. That most of these companies struggle to sustain – let alone grow – should be no surprise.

Improved productivity and profit can happen by luck. But if you keep score, and pause each month to review results and determine future actions, you are far more likely to grow and prosper.

See Your Future

If you could, it would change the way you act, wouldn’t it?

It would affect what you’d do, and how and when you’d do it. You would no longer be waiting for things to happen, you’d be making things happen. This would be true whether the future you saw was good or bad.

Same thing in business. Seeing a future improvement in sales, for example, would help you anticipate hiring employees, purchasing inventory, and investing in infrastructure.

If you could see your company’s future you’d know how much to pay people, and how much cash you, the owner, could safely take out of the business.

With a heads-up to what was coming, you’d be better able to maximize opportunity, and minimize risk. Your company would be more likely to grow, and become financially strong. Prosperity would become a distinct possibility; perhaps even probable.

Business, or Busy-ness?

Instead, most small business owners are consumed by today’s urgencies. They are looking down and sideways and back, but not forward. They can’t see tomorrow’s opportunity.

They own busy-ness, instead of a business.

It doesn’t have to be that way. If you’re at all interested in looking forward, and “seeing” your company’s future, I have some thoughts and recommendations that you can find by clicking the Current Newsletter tab at left.

The Dreaded “P” Word

There are a lot of good words that begin with the letter P. I use two of them frequently – Productivity, and Profit.

(Plus, I love Pizza.)

Productivity and Profit are often “accidents” in many small businesses. By feel or luck or Providence, owners make it through yet another year, eking out just enough cash flow to get into next year – and hoping for a better result.

That’s where our “P” word comes in. Without it, Profit is a wish.

Why is it, then, that so many small business owners… Don’t…

(reader alert. I am about to use the P-word. It is known to make business owners look the other way and try to think of something, anything to do besides confront the truth that they are one of those who don’t…)

PLAN for Profit?

It’s not that difficult, and the results can be rather amazing.

A good Plan quantifies the key goals a company has for revenues, costs, and spending. A good Plan is built on a historical foundation (how the company has performed in the recent past), and shaped to what can be realistically achieved in the year(s) ahead.

These assumptions and goals, compared with past performance, help identify what a company’s strategic priorities need to be to get the Plan to work. This is where a Plan becomes immensely valuable.

The Plan helps define Actions.

The Plan is a map for company-wide productivity. It quantifies how much salespeople should sell, and at what margins, and how much labor should be performed, at what cost. It tells owners how much they should be purchasing and spending. And it predicts how much Profit – if everything goes as planned – will be left over.

He who predicts best, wins.

I’d like to invite any motivated business owner to take part in a valuable planning exercise with me. It is a very systematic process that will yield a comprehensive 12-month Productivity & Profit Plan – a Plan that you can use to guide your management actions throughout 2012.

The 2012 Profit Management Program starts Thursday, February 16. It will change the way you approach your business in 2012.

If you’d like to do more than just hope for a better outcome, click here to learn more.

Managing Your Company’s Most Important Number

While Sales is the biggest number on your company’s P&L, Gross Profit is the most important.

In the TLM system, we describe Gross Profit in its “ purest” form: Sales less Cost of Goods, where COGS includes only the net costs of goods purchased for resale – no labor, freight, indirect selling expenses, or other forms of “burden”.

This approach in no way obscures our ability to manage Gross Margins in TLM. In fact, it makes it easier to isolate what is happening in the three major revenue areas relevant to most integration companies: Equipment, Install Parts, and Labor.

By managing across three categories, we are able to manage the gross margins of each, while also managing the percentage of total sales produced by each category. This matrix of Margin and Mix forms the basis for the TLM top-line profit strategy.

I am really big on having a plan for your business. It can be simple, or it can be comprehensive. But it should provide at least some idea of how much business you're planning to do each month, and how much money you're planning to make.

Without such a plan, you are not likely to respond to monthly results as you should.

Accept? Adjust? Or, Modify?

With a plan in place, there are three ways to react to monthly sales & profit outcomes:

1)      Accept results

2)      Adjust expectations

3)      Modify behavior

You accept results only when they are in-line with expectations. If they're not, you must adjust your expectations to the reality of the results you're achieving, or modify your behavior to achieve different results.

One of the things we plan in the Top-Line Management System (TLM) is the percentage of sales that will come from labor billings. This provides a monthly "prediction" of labor productivity, which helps us gauge how many installers we'll need, and how much we'll be able to pay them.

If monthly labor productivity comes in below plan, we have several things to consider before deciding what to do in the coming months:

• Are we under-allocating labor in our bids (a sales/pricing issue)? Or...
• Are we billing all the hours we could/should be billing (an admin issue)? Or...
• Is our productivity per installer too low (an efficiency issue)?

Any one of these could be the reason labor revenues are below plan, and each invites its own "modified behaviors" to resolve the problem

Of course, the plan itself could be unrealistic. In which case, you adjust the plan and trim your installer staffing and/or compensation.

But with no plan in the first place, you leave yourself only one option.

Accept results, and keep getting more of the same.

That's great if you're swimming in profits.

Not-so-great if you're not.

And here's the funny coincidence. The companies most likely to be swimming, are the same companies whose planning helps them determine whether to accept, adjust, or modify.

Next time...

I'll show you some of the TLM planning and measures that help companies make profit-improving decisions.

Last Friday's "Tips & Tricks" webinar again drew accolades for its illustration of a systematic process for using QuickBooks (same thing happened last fall). Its demonstration of integrator-friendly capabilities prompted most who attended to comment, "Wow, I didn't know QuickBooks could do that!"

Which is what should happen when you bring other minds into your business. There are people out there who know stuff you don't!

Yet integrators persist in being a rigidly DIY group. They are interested in learning how, of course. But only if the cost is low, and only if they can then go back and work on it later when they "have the time".

Of course, the time never comes. The newfound knowledge withers. Nothing gets done.

That's what promises to be so cool about the Management Practices Monthly coaching group that starts later this week. You'll have a group of peers to learn from and with. And, thru on-line monthly group meetings, you will inspire and motivate one another to stay focused, to keep working, to hold each other accountable for actually making key & needed changes in your organization.

Please consider joining this dynamic group of companies. Because you'll figure stuff out faster and better with help, than you will on your own.

Click the Management Practices link on the navigation panel to sign up. Just $198 for three months.

How do you track daily work?

Every day, you and/or others in your company are out in the field, delivering goods and performing services for your clients. How do you keep track of what goes on each day, on each job?

I contend that some kind of daily work order (WO) is a necessity. A piece of paper will suffice, but it’s low tech (read, “not fun”) and subject to getting lost.

I have clients who ask their techs to e-mail after each job. Others who use Google docs and Google calendar. Others who use Outlook, Sharepoint, or even custom-written “in the cloud” software.

I’d love to hear what you do. Simply click the comment link below.

Thanks for sharing!

We know we should, but we don’t

Most of us are pretty selective at following advice, whether it comes from a book, a magazine, a professional, or even a peer.

Exercising daily. Eating and drinking in moderation. Sending ‘thank you’ cards. Documenting company procedures. These are a (very) few of a long list of good habits and practices we know we should be doing, but in many cases are not.

Perhaps you are different. But in my six years working with consumer electronics business owners, my experience is that most go into every New Year like this…

• No monthly sales goals
• No gross profit strategy
• No compensation plan
• No labor efficiency benchmarks
• No effective measures of monthly productivity

These are the most fundamental of management practices. They are written about and recommended in all the management literature. They are spoken about at every business conference you will ever attend. Because having goals and a plan and working the plan, works.

That doesn’t mean you can’t stay in business without goals and a plan. Indeed, most small businesses in America don’t have goals and a plan, and many seem to remain in business for quite a few years.

Staying in business is a form of success, I suppose. But not having a plan and working the plan is a key reason most small businesses in America remain, well, small.

I was thinking about all this as I recalled my company first achieving a million dollars in annual sales, and then growing to over 10 million in annual sales.

10 million! I didn’t recognize it at the time, but now I understand that is a HUGE deal.

I googled ‘small business statistics us’. According to the US Census Bureau, 79% of US businesses report annual revenues of less than $1 million. Only 3% are at $10M/year or more.

And I recalled that before my company achieved $1M in sales, we didn’t even have a cash register. And that after we’d gotten to $3M, and then fallen back to under $2.5M, we started using PCs and Lotus 1-2-3 to help manage and plan our business. And that by the time we got to $10 million we were fully computerized point-of-sale and had comprehensive sales and profit plans across seven business categories, with daily monitoring of company productivity.

So, if it works – if, as my own experience shows, goals and plans enable companies to grow and prosper – why don’t more companies have goals and plans and profit strategies?

I invite your opinion on this. Here is mine. It is simple.

Most small business owners….

Don’t. Know. How.

I’d like to change that. Using tools and techniques developed in my years as a business owner, I’ve been helping individual companies learn and do all the above since 2004. I can do this at a surprisingly affordable cost when I work with multiple companies at once.

That’s why I’m starting the Management Practices and Strategies Coaching Group. You  can read more about it elsewhere on this website. But here’s a summation of how it will work…

Beginning Thursday, January 20, I’ll be helping a select group of business owners develop their company’s plan for making money in 2011. Over a 4-week period there will be three 90-minute web conferences to help members assess their opportunities, develop a comprehensive plan for improving profitability, and learn the work-the-plan practices for managing goals into actual outcomes.

We won’t stop there. The group will continue to meet, every month, March thru November. Almost a full year of training and practicing to be a more professional, productive business manager.

Member companies will see their business in a new and exciting light. They will learn daily and weekly practices that will make them more efficient than they are now.

Most importantly, they will add precious points of profit to their company’s 2011 income.

A single point of profit would be a modest gain, but even in a small company that could be $5000. And 3 to 5 points is more likely.

The MPS Group return on investment could be huge. 2011 memberships are offered from $597 (first session only) to $997 for the full year. Or, companies can pay as they go for a total cost of $1191.

Thanks for reading my blog.

Steve Firszt - January 7, 2011

Here are three tips for creating and maintaining the kinds of relationships that foster customer loyalty.

1) Maintain a comprehensive customer list. Relationships require that you know something about your customers. Your customer list should be much more than names & contact info. What kind of systems they own, when they bought them, how often you’ve been to their home – this is key info for helping you and staff communicate appropriately. Beyond that, the names of significant others, birthdays & anniversaries, and a few notes about key likes (& dislikes) will help you garner greater loyalty.

Now, this might sound like you need dedicated CRM software. You don’t. For example, I’ve set up pretty effective customer coding in Outlook, which also lets me do e-mail and postal mail merges. You need to do this, too. Your customer list is – are you ready? – the single most valuable asset your company will ever have.

2) Communicate often. It’s a simple truth – relationships weaken absent communication. When was the last time you wrote to, e-mailed, or spoke with your best customers? I think customers should hear from you at least once/month. That doesn’t mean you should be trying to sell them something every month. But a quarterly newsletter, a couple personal phone calls, and monthly e-mails with valuable news or tips will help your customers remember why they should stay loyal to you. Birthday and holiday cards make the relationship even stronger.

3) Visit their home. Once every year, you should find an excuse to visit your customers’ homes. This is simple, really – include an annual maintenance visit in your (renewable) warranty. And if you haven’t been doing annual visits up til now, and your crews are less busy than usual, and you want a sure-fire way to drum up some activity – start calling and scheduling some courtesy maintenance visits, right now.