June 24, 2009 - Are Your Systems Simple?

Main Idea

How complicated is your life?  Why is that?  How complicated is your business?  Does it run smoothly?  Do you have a 5 hour process to determine a customer’s satisfaction when a 5 minute phone call will do it easier and quicker?

Expansion of Idea

My kids introduced me to the TV show “The Big Bang Theory”.  If you have not watched it, the story line is about two genius-nerds and their two friends who live next to a beautiful young waitress.  It is pretty funny.  One episode is about the four intelligent genius-nerds redesigning a bookshelf that needed to be assembled.  They were going to spend 30-40 man-hours each to assemble this bookshelf that the waitress ends up assembling in a couple of hours.  The problem for them is that they were looking to improve something which is good, but that can also be an impediment to getting something done, which is bad. 

The best solutions to problems, customer service, employee relationships and to life in general are the simplest system possible.  Our businesses and the systems are living, breathing ever-changing processes that mutate periodically.  We add little pieces to systems to fix something.  We keep doing that over years and soon, we are pretty far from where we started.  Periodically, we need to reexamine our systems and see how we can simplify them.  This will help simplify our lives.  And the best part is that we will probably improve our customer service and employee retention because we can focus on the truly important issues.

Areas to Start:

1. Ask your team what systems are complicated or are breaking down a lot.

2. Ask your spouse what systems are complicated or are breaking down a lot.

3. Determine what you can eliminate.

4. Brainstorm how to simplify them.

June 10, 2009 - Do You Have an Action Plan?

Main Idea

Does your organization have a business plan?  Is it something your banker required or you put together when you started the company?  Or is it a living, breathing action plan that helps guide you and your decisions?  Has it changed in the recent economy? How prepared were you for the recession?

Expansion of Idea

Most companies draft a business plan when they start or when they are required to by their bank.  They are a laborious chore that only an obsessive- compulsive, anal accountant could love.  As a result, most people miss the big benefit of the plan.  It is an outline of what you are going to do.  It summarizes your reason for being, your goals, your operations and how you will determine if you get there.  Having the plan keeps everyone focused on the big picture and how their job fits in.  By having a plan, everyone can see what is needed to achieve the organizational goals. 

A business plan generally consists of the following plans: strategic, operational, management, employee, marketing, financial, technology and production plan.  Obviously, each business is different and some of these pieces are not as important as others and there are some additional pieces in some organizations.  A solid business plan contains reachable goals and the steps to get there. It should be adjusted once a year to include new goals. Your company’s plan must be based on core values and your mission statement. Use the vision and enthusiasm you had when starting your company to prepare your business and employees to get it there.

The most important thing to do once your plan is in place is to make it happen. Just do something. The government had a plan to turn around the economy. Whether you agree or disagree with the choices, they are following through. Your points of action may or may not always work, but it is important to continue to reach for the goals. Envision what your company will become in 5 or 10 years and set the stage appropriately for that vision to become reality. The business plan helps you get started on the right direction and periodically redirects you back to the right direction. 

Areas to Start:

1. Revisit your old, dusty business plan.

2. Evaluate what part is working.

3. Brainstorm on what isn’t working.

4. Convert the formal business plan into an action plan with specific, reachable goals.

May 6, 2009 - Are You Listening to Your Customer's Feedback?

Main Idea

Why do college basketball teams play so much better at home versus on the road?  When you were in school, why did you get a grade on your tests?  Why do we routinely fight employee performance reviews? 

Expansion of Idea

Obtaining and using feedback is critical to growing your business. The only way we can compete is to continually improve our performance.  Asking probing questions to get into the mind of your customer will give you a better idea of the customer’s experience. Satisfied customers may still leave you for a competitor if the price is right. They may not be so quick to leave, however, if they are approached and asked what could be done differently to better serve them.

Feedback should not be viewed to solve one isolated issue. The purpose of valuable feedback is to improve your systems and improve the customer experience. Objectively review a list of some of your lost clients. Why did they leave? What might have been done differently to save the relationship? With every displeased customer, there are probably several more that haven’t spoken up. Perhaps that one unhappy person is a red flag to a faulty process that is creating many unhappy clients. Once you have received feedback, you should follow up and thank the customer. Let them know their issue is being worked on, and when they may expect resolution.

Customers will continue to provide invaluable feedback when they feel that it is going to improve their experience. Don’t wait for your competitor to ask what your client needs are!

Areas to Start:

1. Send F&F a note on the weekly business ideas.

2. Identify your feedback systems

3. Evaluate whether they could be improved.

4. Learn from your lost customers

5. Give employees feedback to keep them on the right track

April 15, 2009 - Do You Finish Strong?

Main Idea

What is one of the secrets of top golfers, basketball players, tennis players and also business people? 

Expansion of Idea

A key to a lot of activities is finishing strong.  Golfers have to follow through in their swing.  The same is true for basketball and tennis players.  They have to stay with their shot until it is finished.  It sounds easy until we try to do it.  The same is true in business.  We have to make sure that we stay with the project or customer until it is completely finished.  We just completed a successful tax season that I have to give all the credit to my team.  They stayed focused until the end.  (They are pretty quiet today.) 

But it is critical to stay focused until you finish your work.  This is really critical in customer service issues.  How many times do you know that you should send a thank you to a customer and you fail to follow through?  Or, a customer may have a problem and you sent in the fix to the problem but you did not check and make sure it was fixed.  These little things at the end of a sale or a customer interaction can make the difference between a delighted customer and a marginally satisfied customer.  And that difference separates the surviving companies from the dropouts. 

Suggested Areas to Start

1. Identify one thing that you can add to an internal or external customer interaction.

2. GO DO IT!!!!!

April 8, 2009 - Do You Have Special Growth Systems?

Main Idea

Do you think you can grow your business by focusing on systems?  Are there key points where your systems, or lack thereof, determine what happens next?  Have you thought about the power of questions in your customer service delivery?

Expansion of Idea

Growth systems can take many different forms.  They may be a carefully displayed sign, an unusual question, a prompt follow-up, or a valuable piece of advice.   These systems can be critical in helping potential customers deal with you as opposed to your competition.  There are small windows of opportunity for you to help a potential customer buy from you.  Your job is to figure out how to help these potential customers make the right decision. 

Too often we compete on price because that is the only thing that the customer can evaluate.  Your job is to separate your products and services from the competition in a creative way that is not focused just on price.  You must add value as defined by the customer.  When you can consistently do that, you will create a customer for life.  If you think this is theoretical, I want to leave you with two words, “HAPPY MEAL”.

Suggested Areas to Start

1. Make a list of key contact points with potential customers.

2. Evaluate your processes in handling the interactions.

3. Measure how effective the systems are in converting potential sales into actual sales.

4. Brainstorm ways to improve those processes.

April 2, 2009 - Are Your Systems Breaking Down?

Main Idea

Do you constantly find yourself handling the same problems over and over? Are your mornings spent putting out the same fires you took care of last week? Are you always shuffling through the same stack of papers to find what you need?

Expansion of Idea

Many business owners have a hard time taking the time out to review their systems. What they may not realize is evaluating and improving their current flawed processes will end up saving them many hours. More importantly, it may save a customer.  Personal commitment to improvement is crucial. You must commit to taking the time to brainstorm areas where you may have gaps in your processes. 

This is the area that problems arise. Work on one system at a time. Small improvements over time create better systems, which in turn, will improve productivity. Each week brainstorm a way to make that specific system just a little bit better and implement immediately. If you choose your system for marketing to begin with, involve your marketing team. Ask them where their recurring issues lie. There may be a very simple tweak to your process that will close the gaps.

William Edwards Deming, the late author, statistician, and consultant best known for improving production in the US during WWII, said "97% percent of all business failure is due to the system – not the person."

Suggested Areas to Start

1. Evaluate where you have recurring problems

2. Commit to spending time each week to devote to improvement.

3. Brainstorm and collaborate with employees involved.

4. Document all process changes and update all staff with new systems and policies.

March 25, 2009 - What is a System?

Main Idea

What do you think about the word “Systems”?  Does it put you to sleep immediately or does it take at least 3 minutes?  Is there anything in the world more boring than looking at systems?  (Try reading the tax code.)

Expansion of Idea

Right now, everyone is looking to find new business.  We are trying to replace customers that are not buying or have gone out of business.  We are always looking outside of our business instead of sometimes looking inward.  The answer for a lot of us is to improve our systems.  This is one of the four main ways to grow your business and is actually the key to everything. 

We are going to discuss systems and various examples over the next few weeks.  The starting point is to define what a system is.  A system is how work is performed.  Systems are either soft systems or hard systems.  A hard system may be how the financial statements are generated or how goods are shipped out of your warehouse.  A soft system would be how you answer the phone or how you manage your people.  Systems only work when there is consistency of application.  (There is a place for appropriate use of exceptions also.)  Your team must understand and embrace the systems.  

A great example of using systems to bring a group together is the University of Missouri basketball program.  The new coach, Mike Anderson, put systems and policies in place which insured that the team would play hard and at a high level.  In just three years, he has taken a program that was miserable and will play this weekend in the NCAA Sweet Sixteen.  Frankly this is unbelievable considering the shape that the program was in when he took over.  The key is the relentless focus on systems and the discipline to accomplish them. 

Suggested Areas to Start

1. Define your systems

2. Review your systems with your team and determine if they are being followed.

3. Commit to spending some time every week to work on systems.

March 18, 2009 - Do You Know the Average Value of Your Sales?

Main Idea

Do you know how many customers you have, how often they deal with you and how much they spend?  When was the last time you met with your sales or customer service representatives and focused on increasing how much your customers spend with you?  Do you know what percent of your customer’s wallet you have?

Expansion of Idea

A key part of growing your business is to increase the average value of each sale.  A good starting point is to look at your prices.  Are you charging the right prices?  Everyone looks to cut prices to increase sales but you are just giving away margins.  (Yes, there are times to cut prices.  However, they are not as often as most people think.)  Maybe there are specific items or services that you are selling below your competitors.  Raising prices on those items will fall through to your bottom line.  A good example is a convenience store.  They may have to be competitive with the price of gas and maybe cigarettes.   Everything else is priced significantly above a grocery store. 

The other part of increasing the average value is to make sure that you are capturing more of your customer’s wallet for the items that you sell.  Almost all of us have competitors that deal with our customers.  Rarely does any firm capture 100% of its customers business.  I could argue that, even if I do a client’s tax return but do not do the tax returns for their kids, then I have not captured 100% of the family business.   A car dealer may sell a car to a family, but then it does not do all of the maintenance.  A wholesaler may have a good customer which purchases one product line direct from the manufacturer or from a competitor.  All of us have situations where we can increase the amount of sales by expanding our definition of our customer, by inquiring how we can provide additional services, or by just providing great service.

Suggested Areas to Start

1. Get baseline measurements of the average value of your sales.

2. Pick one customer and brainstorm how to increase the value of the sale.

3. Question your Questions.

December 17, 2008 - What Are Your Default Systems?

Main Idea

Why does your new computer come with software preloaded?  And why do they have a duplicate of the software on the hard drive?  Why does Southwest Airlines fly only one kind of airplane?  Why does the food selection decrease when you go into a higher priced restaurant?

Expansion of Idea

Last week I heard about a loan officer in Pennsylvania, who, when standing on a hill, can honestly say that he finances every farm within sight.  He also has zero loan delinquencies.  Not only that, he has only had one late payment in 20 years.  Is this unbelievable?  Not really if you consider that he finances farms in an Amish community and it is against their culture to borrow very much and on top of that it is extremely humiliating if you do not pay your bills.  This loan officer picked his customers very well.  The only thing different about his servicing of the customers is that he had to create a default system.  He had to go to his customers every month to collect their monthly payments.  This is very unusual for a loan officer but it did two things.  First, it kept him close to his customers and second, it collected the monthly payments.  I am sure he serviced these customers very well.  I would also bet that these loans are not as sensitive to rate changes as normal loans.  (These loans are a little different because they could not be sold on the secondary markets because the houses do not have electricity.) 

In hindsight this default system is obvious.  So are many other genius ideas. Do you have default systems in place?  Are they working for you?  One of the main changes I have made in the last 4 to 5 years is that I will not take a new client that will not allow us to look at his interim financial data for his business.  If clients are not that proactive, then I do not want them.  Some of these potential clients keep good books and it would normally not be a problem.  But if, in a given year, they do not have good records, then my office has to make up the difference during tax season and that creates problems for me and for other clients.  This is a default system that is good for clients and for me. 

Action Items

1. Where are you having problems in your customer service delivery?

2. Are there adjustments in how you approach the sale and service delivery that would benefit you?  (Remember these are probably small adjustments.)

3. Are you trying to be all things to all people just to make the sale?

4. Have you set up systems to protect against the 1% of customers who create problems?

November 20, 2008 - Activity Brings Results

Main Idea

How often does business just appear on your doorstep? Do people come looking for your services? Do your clients pay you before you bill them? When is the last time you contacted your clients, just to check in? Do you think touching base might create the result of more business?

Expansion of Idea

Activity brings results. Depending on the activity, the results may or may not be what you had intended. In 1982, a man named Larry strapped himself to a lawn chair with 45 weather balloons attached with the intent of floating 30 feet above ground, whereupon, his plan was to use his pellet gun to deflate the balloons to slowly descent back to Earth. After his buddies untied the lawn chair, Larry shot up to 16,000 feet, beer and sandwiches in hand, right in the line of planes landing at Los Angeles airport. Larry was stuck for 14 hours before he gained the courage to shoot the balloons. On his way down he was tangled in power lines. He eventually made it back down safely, at which point, he was arrested. Probably not the result he was aiming for, but his activity sure brought forth a consequence. In all of his stupidity, Larry was correct about one thing, “A man can’t just sit around.”

Could your business be accused of being stagnant? Put forth the effort of a positive business activity and you will reap the benefits of positive consumer results. We recently hosted a seminar at our office for our personal tax clients on Estate Planning. The day after the seminar, our phones (which are usually quiet once tax season is over), were ringing off the hook. What sort of things could your business do to create a wave of interest from customers?

Action Items

1. Call a customer

2. Call a supplier

3. Brainstorm with your team

4. Try something

June 20, 2008 - Are You Measuring What You Need to Manage?

Main Idea

What do you measure in your business?  Do you measure things that you have to manage?  How often do you measure and manage parts of your business?  You probably know sales numbers and cash balances.  Do you know what your customer retention is?  What about employee engagement?  What is the average ticket price? 

Expansion of Idea

This is a critical area for all businesses.  The business needs to know the score. Each department and team member need to know their respective scores.  Are we moving forward or backwards?  It is hard to manage something without any measurements.  Why do people hate performance appraisals and evaluations?  They have not set clear goals and then do not measure performance through out the year.  At year end, it becomes a huge problem and nobody enjoys the process.  It is critical that you decide what is important and then set up a system to measure that.  The main thing that you need to consider is that what you measure is what you will get.  The act of measuring will change behaviors and could change the focus of the organization.  So, these measurements need to be closely aligned with the overall goals of the organization. 

Areas to Look At

1. Priorities and goals of the business

2. Customer profitability analysis

3. Customer acquisition and retention

4. Product and vendor profitability

5. Average sales per ticket or customer

6. Employee turnover and engagement

7. Key overall ratios and breakeven analysis

8. Feedback and accountability

June 13, 2008 - What Do You Need to Abandon?

Main Idea

Do you or your spouse do a spring cleaning at home?  Why?  As part of the spring cleaning, do you pitch stuff that has accumulated?  How did it accumulate?  Sometimes it just seems to show up, especially with kids.  When was the last time that you went through your business and pitched the stuff that was not working?  This could be customers, product lines, systems, and maybe employees.

Expansion of Idea

The idea of abandoning something such as customers seems like a stupid idea on the surface.  We are trying to grow our business and yet I am suggesting that maybe you should abandon something that is important to you.  What I am really saying is that we should see what is no longer productive.  If it can be fixed, that is fine.  But sometimes, it just needs to be let go.  I know I have clients that have actually cost me money in the past, not to mention a lot of wasted time.  And those customers were typically ones that were slow in paying bills and eventually will lead to bad debts.  I could have used that time to better serve my other clients, train employees, develop systems, take a vacation, etc.  I know that when I have severed relationships with customers in the past, it has not cost me money.  On the contrary, my business runs smoother and is more profitable. 

Areas to Look At

1. Customer profitability analysis

2. Priorities & Goals

3. Product and vendor profitability

4. Systems

5. Business plans

6. Changing business dynamics

7. Feedback and accountability