Weekly Business Idea

July 28, 2017 – Is Your Culture Important?

Posted on | July 28, 2017 | No Comments

Main Idea:

When growing up did you play well with others?  Were you able to play with someone else in the 3×3 sandbox?  Do people work together well at your business?  Have you ever walked into your business and people were fighting with each other?  Or worse, what happens when there is a silent sabotage campaign going on?  Did you want to just shut the doors and walk away?

Expansion of the Idea:

This morning, I was reminded of the need for businesses and organizations to create the right culture to grow.  On page 1 of the Wall Street Journal, there is a link to a story about the fight between two senior White House aides.  As I was reading the story, I knew that nothing good is going to come out of Washington, DC until a large number of people figure out how to play in the same sandbox.  It has been that way for a long time and it might be that way for a long time in the future.  It doesn’t matter if you are Democrat or Republican.  It is good to disagree and debate ideas.  But until the culture is restored to one of mutual respect, it is pretty likely that very little will be accomplished.  (At least until they reach rock bottom.)

The same is true of our businesses.  Businesses that struggle frequently don’t have alignment between the owners or leaders and the employees.  There might be distrust.  Or, everyone might have their own agenda.  Employees aren’t sure of what they are supposed to do.  They don’t know where the business is going.  They may not know why the business exists.  They just know their little slice of the business.

On the other hand, some businesses have a clear purpose and goals.  These are communicated and communicated and communicated to the whole team.  They work together.  These businesses might struggle but they do so as a team.  When there is clarity and alignment, the odds for success go up significantly.  Team members are looking to improve their performance as well as that of the team.  They are focused on the big picture and are not as worried about their own future.  Alignment is a result of communication which then further aligns the business because the communication becomes two-way.

Creating the right culture is extremely hard.  It requires a significant investment of time in people.  It might mean that you have the wrong people.  Your systems might have to change.  You might have to be more open and vulnerable.  However, the benefits are worth it.

As Patrick Lencioni says in his book, The Advantage – Why Organizational Health Trumps Everything Else in Business:

“Organizational health will one day surpass all other disciplines in business as the greatest opportunity for improvement and competitive advantage.”

Places to Start:

  1. What is your culture?
  2. Does the team work well together?
  3. Are you achieving your goals?
  4. Does everyone know what your goals are?
  5. Is communication open or do people hold things back?
  6. Discuss this with your team.  Even great teams focus on continual improvement.

July 21, 2017 – What’s Wrong with What You Know?

Posted on | July 21, 2017 | No Comments

Main Idea:

Have you ever been real sure of something and then find out that you were completely wrong?  Has a system changed in your business and you are not aware of it?  Do you read all of the amendments to contracts?  Could something significant change and you not be aware of it?

Expansion of the Idea:

Yesterday I was finishing the trust return for a client who died a year ago.  I called the trustee to discuss the return.  During the course of the call, I realized that he had made distributions to some heirs that he shouldn’t have.  The problem was that the deceased had explained what was supposed to happen when she died but then she amended the trust.  She didn’t explain the full impact of the change in the trust.  As a result, he had the wrong understanding of her wishes.

I completely understand how it happened.  This type of thing happens all the time with estates.  It seems like there are almost always surprises in the administration of a deceased family member’s estate.  The same is true with our businesses.  It is frequently worse because we know them so well.  When we know something, we don’t double check it.  What we think we know can get us in a lot of trouble.

How does this show up in our businesses?

  • A customer calls with a problem.  We tell them that they could not have had that problem because of our procedures.  Then we find out that the system changed because of some event or an employee just didn’t understand why we were doing something.
  • A line of credit that normally renews every year was changed to 6 months and you didn’t realize it.
  • A long-time employee all of a sudden quits because they are bored.
  • A long-term customer decides to go to a competitor because they have stayed in touch with them.
  • You discover that a trusted employee just stole $100,000 from your firm and did not pay the insurance premium for employee dishonesty.
  • You think you have insurance for cyber liability but you dropped that rider because of rates.
  • A large customer has always paid until they get hit with employee embezzlement.
  • Your computer data is backed up daily until there was an update and the backup has been paused for 6 months.

We can come up with a lot of different scenarios where we can have problems.  To minimize the damages, we must set up systems to periodically check all significant issues that could threaten our survival.  We need to read contracts.  We need to take time to talk to our employees.  We should visit customers and make sure that we are providing value.  We should make sure that we have systems to maximize our business and minimize risk.  We also should inspect those systems.  We should make sure we are getting the right reports and key metrics to make sure something is not going off course.

All of this starts with us admitting that we don’t always know what we think we know.  A perpetual state of curiosity is a good thing to have.

Places to Start:

  1. Do you do an annual risk evaluation assessment?
  2. Do you have a calendar for management duties that only need to be done 2 or 3 times a year?
  3. Have you taken a hard look at your systems to make sure that they are operating the way they were supposed to?
  4. Have you intentionally spent some time with employees to make sure that you are serving them well?
  5. Have you intentionally spent some time with customers to make sure that you are serving them well?

July 14, 2017 – Is Price Controlling Your Business?

Posted on | July 14, 2017 | No Comments

Main Idea:

Do you get calls asking what your price is for a particular service or product?  Do they ask anything else besides the price?  When you sell, do you lead with a proposal to save your prospective customer money?  Does everything revolve around the price of your product?

Expansion of the Idea:

I received a call yesterday from a broker selling professional liability insurance.  She asked if I would like a quote.   I told her no and she thanked me and hung up.  She did not ask why I wouldn’t like to explore her company.  It might have been better than what I have.  The part she didn’t understand is that my current professional liability insurance company doesn’t just sell insurance.  They help me handle the risk of being a CPA.  They provide proactive resources and help if I have a hard to solve problem.  I am not going to switch to any company that doesn’t provide those services, even if they can save me a few hundred dollars a year.

This brought up the role of pricing in sales.  Pricing is critical for all of our businesses.  However, we first have to decide what our business model is.  Very few of us set up our businesses to be the lowest cost on the market.  The problem with being the lowest cost is that you do need to be profitable at that level and you need to be able to maintain the lowest cost.  Walmart had occupied the lowest cost portion of the local market until Amazon Prime came along.  Even though Amazon doesn’t have a store in Walmart’s local market, Amazon might be cheaper and as a result Walmart has a strong competitor.

If you are not going to be the low cost, then you have to decide how your business will operate and what price is appropriate for the market as well as what you need to be profitable.  Pricing is an important part of positioning your product or service.  Do you want to be a high price/high service business?  Who is your target customer?  Are you selling to businesses?  Do you want to serve families?  What price are they willing to pay?  There are a lot of different aspects of pricing that you need to go through.  Our prices need to be in a range that our customers will accept.  Beyond that, we need to make sure that we provide value for what we do.  Pricing is a critical component of our overall value proposition.

At the same time, we need to make sure that, to the extent possible, our sales offerings are not decided by price.  If your customers are buying from you just for the price, then you are one phone call away from losing that customer.  The problem with this is that most businesses sell by using price.  They open with it and then try to steer the sale away from it.  We need to make sure that sales calls are scripted to get as much information as possible so that we can decide how best to service the prospective customer.  At that point pricing can be used to cement the relationship.

Unless you are intentional, price starts to dictate how your business operates.  When that happens, margins start declining and owners feel like they have no control over the situation.  That isn’t a good place to be.

Places to Start:

  1. Do you focus on price when you are selling to your customers?
  2. Evaluate your pricing position and value compared to your competitors
  3. Do you need to raise prices or value or both?
  4. Does your current pricing model position you where you want to be in the market?
  5. Read Confessions of the Pricing Man by Hermann Simon

June 30, 2017 – Declare Your Independence

Posted on | June 30, 2017 | No Comments

Main Idea:

Do you freely go to work every day with a smile on your face?  Do you love what you do?  Or, do you feel constrained by your situation?  Do you feel like you are a prisoner?

Expansion of the Idea:

I have been recently doing a lot of work on cash flow planning.  I am using a piece of software that is really great and helps me do this efficiently for business planning.  I was planning on using the software for some individual planning.  The problem arose when the software was giving me a false error message for a particular fact pattern.  I have gone back and forth with the software support people and we are still trying to resolve this.  The real issue is that I was trying to finalize a cash flow and tax plan for a client.  I was starting to feel stuck, as if I had no options.  I needed to finish the project but, based on my current systems, I really couldn’t.  This isn’t a good place to be.

I finally decided that I could not be in a place where I had no options.  Even though it was going to take time, I created my own planning file for individuals and their personal planning.  As I started doing it, I realized that I could customize it and create a better outcome than what I was previously going to have.  It was a lot of hard work but I feel much better and I can deliver the project.

Small business owners typically go into business to create more freedom in their lives.  They are energized by getting control of the business.  However, it quickly turns into something completely different.  Most small business owners feel stuck at some point in our careers.  In fact, most of us feel stuck quite frequently.  Our success at identifying the problem early normally determines our long-term success in our business.  Areas that we can feel stuck are:

  • Finances
  • Team members
  • Vendors
  • Customers
  • Systems
  • Economy
  • Advisors
  • Personal situation, including personal finances

When we start to feel a prisoner of our situation, our passion for our work goes away.  We tend to retreat and just accept life as it happens.  We don’t ask others for help because we don’t think the situation can be helped.  We can lose the ability to think creatively and plan for the future.  This can spiral into a real problem if you let it.

As we are approaching July 4, give some thought about what you need to obtain independence from.  If a customer is holding you hostage in a bad situation, brainstorm how to fix the problem, including firing the customer.  If your finances are a problem, take more control and develop a plan for improving them.  There normally aren’t any easy answers.  However, getting the right mindset can make all the difference.  If you can make decisions with a mindset that you are in control of your life, your decisions are completely different than if you are a prisoner in your situation.  When you really address issues in your business and life, you will find more alternatives than you thought possible.  The result will be an improved business and a renewed passion.

I hope you have a great and safe 4th of July.

Places to Start:

  1. Make a list of any problem areas in your business.
  2. Rank the list in order of severity.
  3. Have your team make a list and ranking also.
  4. Discuss the list with your team to see if there are common links and causes.
  5. Decide on one thing to work on that will improve your business.
  6. Go do it.

June 23, 2017 – What is Valuable to My Customers?

Posted on | June 23, 2017 | No Comments

Main Idea:

Do your customers love dealing with you?  Do you get a lot of griping about the cost of your product or service?  Do your customers refer other friends to your business?  Do you know why they buy from you versus your competitor down the street?  If you purchased an item that originally lists for $150 and you are able to purchase it for $75, are you buying a $150 item or a $75 item?

Expansion of the Idea:

I just finished reading a business analysis of Ford’s disastrous launch of the Edsel.  Based on the article’s analysis, I think Ford did a tremendous job of marketing the car.  They spent a large amount of money doing some very creative marketing.  The problem was that between when they originally designed the car and when it went to market, people’s taste changed and Ford didn’t know what was valuable to its potential customers.  They could not add any value because there was no way to change the fundamental offering.

Our customer’s perception of value is a critical item to understand.  Our products and services are worth different things to different people.  If you doubt this, think about a $100 bill.  What would you have done when you were a teenager to earn $100?  What would you do now?  Is there a big difference in the number of hours you would work to earn $100?  Compare your answer to what someone like Warren Buffett might do to earn that same amount of money.  Who would work harder to earn that money?  There is a big difference in hours worked for something that is objectively worth the same amount.

The only way to begin to understand what your product or service is worth to your customers is to start thinking like them.  Maybe you can go to their offices or where they spend a lot of time.  You can ask them questions and try to get inside their heads.  Below are some questions that might help if you think about them from the customers point of view:

  • Why are they buying my product?
  • What are they trying to solve?
  • What are their frustrations?
  • What are their desires?
  • How does your product enhance their life?
  • What is important to your customers?
  • How is your customer going to use your product?
  • What is driving their decisions?
  • Are they in a short-term mode of thinking or long-term mode?
  • Who is making the decision or is it a group?
  • Why do customers buy from your competitor?
  • Put another way, why aren’t customers buying from you?

By systematically doing this, you start to build a framework of what is valuable to your customers.  Of course, each customer is different but there are some similarities.  Ideally you sell to one main type of individual or business and it would be easy to go through these questions with that A client in mind.  However, if you have two or three different types of clients, then you need to go through these questions separately for each of your main types of clients.

Only by identifying what is valuable can you then identify ways to increase or market that value.  When you increase what is valuable to your customers, you increase your loyalty from those customers.  And that translates to improved profitability.

Places to Start:

  1. Make a list of 10 things that are valuable to your customers.
  2. Have your team do the same.
  3. Ask your customers what is valuable to them.
  4. Compare the answers.
  5. Put together a composite of what is valuable to your customers.

June 16, 2017 – What Story Am I Telling?

Posted on | June 16, 2017 | No Comments

Main Idea:

What are your priorities?  Can you clearly articulate them?  Does your team know what they are?  Does your spouse?  Do you live them?

Expansion of the Idea:

This past week I ran a financial planning workshop that was designed to help clients understand the basics of financial planning.  I felt that I needed to run this because I see a lot of situations where people are woefully unprepared for retirement.  I was discussing this with a friend who is also a CPA.  He asked me if I was moving my firm more into financial planning because he knew that my focus was on helping the small business owner improve their businesses.  I told him that my focus is still on the small business owner and this is a part of what I can do to help the small business owner.  There are benefits to non-owners as well, but the focus is on the small business owner.

However, this led me to think about what my true priorities are.  I am pretty clear on what they are.  I think my team knows them.  The question is whether I am living them.  I think I am because my time and money are focused on helping small business owners with their businesses.  I am investing time and money on improving my skills and those of my team.  I hope that my clients would see the same thing.

Yet I do know that I drift.  We all do.  Life gets in the way.  Emergencies pop up and you aren’t in control for a day, a week or a month.  You get away from the habits and practices that made you successful.  You are focused on playing whack a mole as opposed to fixing the bigger problems.  Your financial statements tell a story about your business and your strategy.  How you spend your time fills in the rest of the gaps.  It tells a complete story.

The question to ask is:

Is my time usage telling the story that I want it to?

If not, then you need to figure out how to get back on track.  There are three questions to ask:

  1. How are you spending your time?
  2. What are my priorities?
  3. What do I need to do differently?

This exercise should be done a couple of times a year to insure you will achieve all of your goals.  You are in a unique position to help your business.  Your business can grow only by doing the things that you are uniquely prepared to do.

Places to Start:

  1. Brainstorm with your team on the goals for the business.
  2. Then do the same for your goals, both personally and professionally.
  3. Keep a log of your time for a few weeks.
  4. Evaluate what you can get rid of completely, or delegate to someone else.
  5. Discuss with your team if there is something you should add to your schedule.

June 9, 2017 – What Can I Control?

Posted on | June 9, 2017 | No Comments

Main Idea:

How likely is it that you will hit your long-term goals for the business?  What are the levers that you can adjust?  How often do you adjust them?  What is the impact when you do adjust a critical piece?

Expansion of the Idea:

Over the last few months I have had a number of clients talk to me about their financial situation.  They were concerned they weren’t going to be able to retire well.  I decided to do a couple of workshops on simplifying the financial planning process because non-financial planners do not understand the words or the process.  The problem with not understanding is that people tend to put things off if they don’t understand them.   As I was doing this I decided to develop a simple spreadsheet that demonstrated the essence of what people need to do to retire well.  I ended up with three controllables that people can use.  These will have the most impact on whether they can retire in the manner they would like.  They are:

  • the age you are going to retire,
  • your annual spending, and
  • how much you are saving between now and retirement.

Everything else is fixed or is pretty much outside of your control.  The key takeaway is that the earlier someone addresses this planning the more they can impact it.

The same is true in our businesses.  We have certain things that we can control that will impact our businesses.  Here are my top five things that I think will impact small businesses:

  1. Our time
  2. Our mindsets
  3. Our investment in our people
  4. Our marketing and our messaging
  5. Our planning

Most small business owners focus on one thing, sales.  Most of us can’t go out and just sell one more item without extraordinary effort.  It is hard to find potential customers that are ready to buy our products or services, convert them to actual customers, deliver the product or service and make sure that they are ecstatic with our customer service.  It doesn’t matter what we are selling.  All of our people, systems, branding, marketing need to be working in sync to generate new business and then to keep those customers coming back and referring new customers.  And we need to be doing it in a way that is profitable for us and for our team.   When we have good sales months, it can mask whether our business is operating well.  When that happens, we don’t do the hard things to make sure we are successful in the long term.

I will go into more detail on these in the next few weeks.  I would encourage you to think about these items that might impact your future.  Just like our personal retirement planning, these controllables won’t automatically guarantee the desired results.  However, inattention to these controllables will almost always guarantee unwanted results.

Points to consider:

  1. What are the top 3-5 controllables in your business?
  2. Of those, what will have the most immediate impact if you focused on it?
  3. Which would have the greatest impact?
  4. Discuss this with your team.

June 2, 2017 – Who is Your Core Customer?

Posted on | June 2, 2017 | No Comments

Main Idea:

Do you have a good handle on what types of customers buy from you?  Do you provide a range of services to those customers?  Do you know what your profitability is by product line and by customer?  Do you like your customers?  Or, do you groan when a customer calls your office?

Expansion of the Idea:

When I was in high school and college, I worked in an Italian restaurant.  It was a small local chain with good food but great pizza.  Celebrities used to come to the restaurant when they were in town.  On certain days like New Year’s Eve, the kitchen would be completely overloaded.  That was the only time that the owner would come down from his offices to help out in the kitchen.  However, it didn’t matter where the biggest backlog was, he would only help on the pizza line.  That was what he cared about.  He knew that his business was tied to keeping the customers that loved his pizza happy.  The rest of the kitchen was important but the pizza line was critical. The owner knew what his core customer cared about and why they bought from his business.

Most small businesses, and CPA firms are small businesses, need to know who is their core customer.  Before I really understood this, my client selection criteria consisted of whether a potential client could afford our services or if we need the business to keep the staff busy or something like that.   And I tried not to take on any jerks.  Every time I took a client that I knew wasn’t a perfect fit, I regretted it later.  I finally started to identify what I wanted in a client.  I also started to eliminate services that I was perfectly qualified to perform but didn’t fit my vision for the business.  After doing this for a while, I zeroed in on who my core customer is and what they want.  I understand this customer much better because I am focused.  This allowed me to do the following:

  • It simplifies my marketing and branding decisions.
  • It allows focus on my services.
  • It provides boundaries for other services.
  • It allows us to become experts, whether we call ourselves that or not.
  • It provides a decision path for accepting new clients or terminating existing clients.
  • It improves profitability because I am focused.
  • It allows for better training of my team.

The best part of this whole process is that it shifts us from identifying ourselves by what we do to who we serve.  When you start having an outward focus, it changes your business in ways that are hard to imagine and harder to imagine ever losing.  I think my clients have benefited from this increased focus.  I know that my firm has benefited.

Whenever I have discussed this with various small business owners, almost universally they say that it is impossible to have just one type of customer.  They sell to a variety of types of customers or they might have multiple business lines.  They cannot narrow their core customer to one type.  There are valid business reasons to have different lines and types of customers.  However, everything needs to revolve around your main customer.   My core customer is a small business owner.  However, I do serve individuals by doing tax returns.   My team understands that our primary focus is the small business owner.  We cannot let the individual tax returns impact our service to the small business owner.  This provides clarity to everyone in my firm.

Points to consider:

  1. Do you have a clear understanding of who your core customer is?
  2. Do you have an intimate understanding of their operations or what they use your product or service for?
  3. Have you discussed this with your team?
  4. Have you evaluated the profitability of your customers and product lines?

April 26, 2017 – Do You Have an Expectations Gap?

Posted on | April 26, 2017 | No Comments

Main Idea:

When you buy something, what are your expectations of that product?  Who controls what you think about the product?  Does the seller explain the product and its benefits and limitations or do you know what you want it to do?

Expansion of the Idea:

A few weeks ago, I was in the office where our water cooler was located.  I heard a sound and looked down.  I could see that the carpet around the cooler was wet.  This was the second time in the last three years that our water cooler leaked.  I wasn’t very happy about this, especially since this was a week before the tax deadline and I had other things to do.  I called the company and told them about it.  They said that this is normal and happens because of a tiny pinprick in the seal of the bottle that lets air in and eventually will force a leak in the cooler.  They said that this frequently happens overnight when the cooler isn’t being used.

This caught me off guard.  I had an expectation that the cooler would not leak.  I thought that would be obvious.  Obviously, I was wrong.  The company sold the product with the expectation that there would be an occasional leak.  That was never communicated to me.  I thought the first leak was an isolated incident.  Now I could see it wasn’t.  The funny part is that the customer service representative that I talked to really didn’t understand that leaking every other year was not a good thing.  It could ruin carpets or ceilings if you are on the second floor.

What are the implications for our businesses?

All of us sell a service or product.  Our customers and clients have expectations.  If they are like me and the water cooler, they set their own expectations and we either meet and exceed them or we fail.  This expectation gap really determines if we are successful or if our businesses fail.  And it is not just small businesses that have this problem.  United Airlines is the latest big business example of a company that doesn’t get it.

The key for our businesses is for us to do what we can to control expectations.

  1. We have to understand what the customer expects.
  2. We have to make sure our product or service will meet those expectations.
  3. We have to communicate any deficiencies so that the customer understands if there are problems.
  4. We may offer upgrades from our basic services to cover the deficiencies.
  5. We have to test our product and service offerings to make sure we are delivering.
  6. We have to go back through steps 1-5 periodically to make sure something hasn’t changed.  If it has changed we need to modify our services.

By focusing on customer expectations, we can significantly improve our businesses.  If you have customers where there is still a gap, and it isn’t positive, then that might be a time for you to invite them to experience the wonderful service at one of your competitors.

Points to consider:

  1. Do you know what your customers expect from you?
  2. Are you clear in what your offerings are to your customers?
  3. Does your whole team focus on understanding your customers?
  4. Go through the 6 step process above and see if there are any changes in your business.

April 7, 2017 – Can You Grow by Focusing Inward?

Posted on | April 7, 2017 | No Comments

Main Idea:

How would you describe your plans to grow your business?  Is it a wing and a prayer?  Do you have a specific strategy that you know is critical and you must stay focused on?  Is it working?

Expansion of the Idea:

A few years ago, my son Kevin suggested that I would like a show that is currently on Netflix called Leverage.  There are about 5 seasons that originally aired beginning in 2008.  It is a cross between Mission Impossible and Robin Hood.  (If you want to understand that, just watch the shows.)  I got hooked.  I did not quite binge watch it but I probably spent more time watching it at night than I should have.  The big point of the show was that they achieved great things utilizing each person’s unique criminal abilities.  It is a great example of growing an organization while helping each member grow personally.

Most of us want to grow our businesses but we do things in isolation.  Small business owners typically make decisions individually and don’t involve their teams and outside advisors enough.  Great business owners do things differently.  First, they focus on their own growth.  Then they try to help their key team members grow.  After that, the power of the group takes over and helps push the business forward.  Jim Collins writes about this in Good to Great.  He states that great leaders get the right people on the bus in the right seats before they determine where to go.  Liz Wiseman wrote a book called Multipliers.  She writes that leaders are either multipliers where they get multiples out of their team members or they are diminishers where they get less out of the team.

Focusing on your own growth and then that of the team is not our normal tendency.  As owners, we want new customers.  We want more sales.  We can normally get them.  The key is to invest our time and energy in the right spot.  Most small businesses have untapped sales potential in our existing customer base.  We need to be able to serve that potential.  To do that our team has to be operating at a high level.

In all of my years serving small businesses, I have never seen a growing, healthy business that had a completely dysfunctional team.  And I have never seen a business that closed its doors that had a great team.  Great teams require a lot of work by the leader.  They need to be nurtured and mentored.  They require energy and guidance.  When you do that, you are rewarded by a business that is healthy and fun and growing.  That is what all of us are trying to do.

Points to consider:

  1. Are you growing personally?
  2. After you thought about question 1, ask your team if they agree with you?
  3. Is your team growing, personally and professionally?
  4. Are you intentional about helping them grow?
  5. Read Multipliers or Good to Great.
  6. Consider taking your team to the Leadership Summit.
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  • About

    These weekly ideas are brought to you by FitzGerald & FitzGerald P.C. For more information about how to use these ideas with your small business contact Tim FitzGerald at trfitz@fitz-net.com.