The Ebb and Flow of Managing Your Resources
Monday 6/21/10In a perfect world, businesses grow in a smooth, upward trajectory that is both predictable and deliberate. There are no slow times...no staff upheavals...no sleepless nights...
Clearly, I'm living in the wrong place.
In my world, business grows the same way that Elaine Benes (from Seinfeld) dances: everything looks perfectly normal, but then the music starts and suddenly we're witnessing a herky-jerky motion with very little rhyme and sometimes no reason. Sooner or later, someone's going to lose an eye.
Over my career, there have been some hard-won lessons, though thankfully very little bloodshed. Like all business owners, we've had challenges in determining what staff we need, when we need them, and when we need to let them go. And, yes, there have been a few all-nighters that have made me appreciate vacation time much more than I used to.
So, what is the trick to managing business resources for the best possible return to make sure that I'm saving where I can, spending when I need to, and growing my business in the most un-Elaine way possible?
When it comes to managing your human and financial resources, there are four things to keep in mind:
1) Know when to hold 'em and know when to fold 'em.
This lesson has been probably the hardest one to learn because the target is always moving. And unfortunately, it's not something that people outside your company can really help with.
- To know when to add staff, stay in touch with your team of supervisors to know what their workload is now and (here's the tricky part) what their workload will be in 90-120 days. No matter how deep the labor pool is, you can assume it'll take you at least three months to find, hire, and train a new person before they can contribute meaningfully to your bottom line. (In some industries, the gear-up time can be as long as 6-12 months, so you may have to project even further out.)
- To determine when to add financial resources, look farther toward the horizon. Think about your payables and receivables, and anticipate worst-case scenarios for at least six to nine months. Assuming everything goes wrong, do you have enough to stay afloat and keep everyone on payroll? If not, start thinking about your options... does it make sense to get a loan?... should you look for a partner?... can you venture into a new market or deepen your draw from existing clients?... can you reduce your overhead? The key is to plan ahead so you don't get left behind.
2) Not all that glitters is gold.
Maybe I'm the only one who's ever been taken in by a winning personality or a deal too good to be believed, but every time it happens, it's still disappointing.
- Separating the wheat from the chaff during an interview process can mean leaving your personal preferences outside the room. Forget about how polite they are or how firm their handshake is. That stuff's important, but also listen to how they talk about former employers, clients and colleagues. Do they blame others for making their last job horrific? Do they engage in gossip? Do they tell you more than they should? What you see is what you get, so rely on your intuition and think about what you need to grow your business.
- Because you've invested so much to get this far, no doubt you'll do anything you can to support the vision. Your business is a risk (as is everything worthwhile), but remember that any financial risks you take should be calculated risks. Don't get in debt over your head. And don't be afraid to make the hard choices for the health of your business. Above all, remember that there's no such thing as something for nothing. Really. Not ever.
3) Don't let your eyes be bigger than your stomach.
Rome wasn't built in a day, so don't expect to build your business in a day. Stay focused on your end goal, and be willing to bob and weave a bit to suit the realities of your world.
- Taking on too many employees is as bad as taking on too few. When you anticipate needing more bodies, think of alternatives that can help at least temporarily. Freelancers may be an option. Or maybe job-sharing with part-timers who work some overlapping time. Interns can also help out with certain needs, but keep in mind that they may require more supervision than you're expecting. And if it's feasible for your industry, paying overtime to a few folks on a short-term basis may be the most cost-effective way to manage a production need.
- Being too far in debt is often the death knell for any company. Owing more money than you can reasonably pay back makes you top-heavy and wobbly. With so much gambled on uncertainty, your business may be unable to respond quickly and fluidly. Imagine turning an RV around a corner versus turning a Lamborghini around the same corner. High centers of gravity always make the biggest crashes. Don't be one of them.
4) Trust is the most important part of any relationship.
Your parents were right about this one. And while others may not treat your business with the 24/7 attention you do, that doesn't mean their ideas and suggestions should be ignored. Because they don't focus on the trees, they can help you see more of the forest.
- Everyone's been burned by a bad hire, and that can have serious repercussions for future hires. But just because you made one hiring mistake doesn't mean that you're not good at it. It just means you made a mistake. When it happens (and if it hasn't yet, it will), find the lesson, learn from it, and move on.
- If there's one thing in your business you don't want to skimp on, it's finding a financial team that has your back. Trust your gut on this one...you want a top-notch team of accountants, bankers and attorneys who will be around for the long haul to watch out for you as you grow your business. Interview several professional teams, seek out recommendations from trusted business colleagues and make a decision. Hiring outside professionals will be more expensive than having your Aunt Mildred do your bookkeeping and your cousin Susan at ABC Bank managing your line of credit, but in the end, it'll be worth it. (Trust me.)
What are some of your experiences as you manage business resources while trying to remain un-Elaine-like? Email me at adam@gladworks.com to share your stories.
It's Time to Jump!
Sunday 4/25/10Now that we've identified the strengths of your small business (February) and discussed how to create a game plan that makes the most of those strengths (March), it's time to put that game plan into action.
Step 3. Execute and evolve that plan, and continue to build momentum.
Your game plan will be unique to your business, industry and personality type. Whether you're playing Monopoly, chess or LIFE (see March column), your plan can succeed only if it's actually carried out.
Who hasn't heard the riddle about the toads on a log? Three toads are sitting on a log and decide to jump off. So, how many toads are still left on the log? Three; they all decided to jump, but none of them took an action.
First, we have to presuppose that in your plan (strategic plan, marketing plan, communications plan, growth plan…), you've broken down your large objectives into smaller goals, and then gone one level (or more) deeper to turn those smaller goals into detailed tasks.
If you hadn't gone to that level of detail, now's the time to do it. Go ahead; I'll wait.
[Imagine easy listening elevator music here.]
Stumped? Okay, let's see if this helps.
Let's say that your main objective is to grow your widget sales by 10% within the next 5 years. In order to reach that target, your goal is to grow your current client base by 15% (to account for attrition and economic fluctuations). And in order to reach that goal, you've identified three tasks:
- Ask five of your current clients for one referral each.
- Attend one additional trade show in the next 18 months to promote your new widget design.
- Publish a bylined article in the trade journal for the American Widget Association.
This example is overly simplified, but do you see how it works? Start with a big-picture objective, then create real, achievable tasks to help get you there.
Since we have our handy widget example, let's use that to illustrate our final step of this process:
- Execute: Now is the time that you'll need your task lists. There's no hard-and-fast rule for where to start on your list…sometimes it makes sense to start with the easiest ones that you can quickly take care of…other times a task may require some advance planning and you need to work on that one first.
For instance, in our list above, I might suggest working on the trade show first. To secure a booth space for an upcoming event, you'll probably need to research industry shows, find out which ones are most popular with potential widget clients, decide how much space you'll need (if any), estimate the cash outlay so you can apportion resources, and more.
And I typically ask a client for referrals in person (that kind of favor is something you can usually bring up at the end of a meeting or over lunch), so this task will probably take several weeks to complete.
Writing an article can be a time commitment for you and for your editor/proofreader, so it's helpful to have those resources set aside before you begin.
- Evolve: Keep in mind that your plan will never be enshrined in the National Archives in Washington, D.C. Schoolchildren and tourists will never parade past a glass-enclosed case, point at your masterpiece and whisper in awed tones, "I can't believe I'm so close to this piece of history."
Your plan is a working document; it should have scribbles, scratches and a revision date. You should discuss it with a trusted team of advisors to get their thoughts and opinions. You should be willing to
hear objections to your ideas (even if you don't act on them.)
Just as your business has (most likely) changed from what you originally envisioned, your plan will grow, morph and adapt to fit your needs, aspirations and ideas. And that's a good thing. If people didn't change and evolve to suit changing conditions, we'd never have invented air conditioning or developed the technology to cram pre-formed biscuits into a pop-open can.
- Build Momentum: Remember that motivation you had when you started your business? That nagging thought that wouldn't go away…the idea that stuck in your head saying you just might be able to make a go of this crazy idea…?
That's what working this plan can do for you. It can motivate you to take charge of your destiny just as you did when you stopped working for someone else and took a chance by working for yourself. Creating a plan that takes your biggest aspirations and carves them into manageable tasks puts you in the driver's seat, ensuring that you're doing what you can to build this business.
So, have you jumped off the log yet? Email me at adam@gladworks.com and let me know where you land.
Next month, we'll talk about some tactics for motivating and managing your employees.
What Game Are You Playing?
Thursday 3/4/10Last month, we talked about the first step in growing your business: identifying both your strengths and your opportunities. This month, we'll move on to the next step:
Step 2. Create a game plan that builds on those strengths and takes advantage of those opportunities.
Now that you know what elements of your business work for you and what objections your prospects may have about working with a small company, it's time to develop a profile of your company. Here's where we figure out if you're playing Monopoly, chess, or LIFE.
Monopoly
If you're bent on acquiring more, charging more and growing to be the biggest, baddest kid in the neighborhood, you're probably a Monopoly maven. You move nimbly to find opportunities to expand in your industry (either vertically or horizontally) and seek to dominate your competition. You don't mind adding management when it's needed, but tend to work best with management who can handle an ever-changing landscape and rapid growth. You focus on building a strong team that is along for the ride, and tend to reward them handsomely for loyal service.
Starting with a relatively small staff may seem like a disadvantage, but you quickly recognize that the team you've cherry-picked works hard enough to compensate for that shortage. And because your game plan is to acquire services to broaden your offerings, you tend to have an eye out for vendor partners who may be eligible for a takeover when the time is right. Your goal is to become broad enough and/or deep enough to be recession-proof so that your clients can rely on you for years to come.
Chess
If you move deliberately and methodically in executing your strategies, you're probably a chess connoisseur. Your goal is not necessarily to be the biggest in your field, but rather to be the smartest. You think carefully before making any move, and when you do execute, it's sure and fast. You seek like-minded partners who add strategic value to your business and can help you build a reputation for having brainpower in your industry. You want to be regarded as experts in your world, and you know that clients will be willing to pay more to work with your stellar team.
When it comes to making your next move, you carefully judge what players to add to your team. Rather than hiring on a whim, you assess not just what work needs to be done for the present, but also how a particular hire could help you move forward to achieve your longer-term goals. You are also careful to evaluate potential vendor partners; because you value your reputation in the market, you want to ensure that your recommendations reflect well on you. In terms of longevity, you believe that your experience, intelligence and consultative input guarantee that you'll be around for a long time.
LIFE
If your business goal focuses more on the journey than on the destination, you're probably a LIFEr. You pay careful attention to the warning signs that go up in your industry, and work hard to adapt to changing conditions as needed. You tend to grow your staff organically, adding services as needed to meet your clients' demands so you don't generally have an abundance of fluff in your company. You feel a personal connection with those you work with, which keeps you motivated to continue moving forward on your business journey.
To stay ahead of the curve, you are likely to have a staff that
can wear a lot of hats so you can own many services in-house without relying on outside vendors. To supplement services you don't provide, you carefully assemble a key group of third-party vendors that you trust to deliver for your clients the way you
would. And you're in this for the long haul: you believe it's more important to stay in the game for a lifetime and keep your team happy and employed than to become the Walmart of your field.
Do you recognize yourself in any of these descriptions? Or are
you a hybrid of them? I'd love to hear your thoughts...email me at adam@gladworks.com.
Next month, we'll address the final step in growing your business and look at how you can execute and evolve your game plan.