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Archive for May, 2011

The empty spot on your bench

Wednesday, May 25th, 2011

Ask any business owner if they ever have enough money or enough people to get the job done and their answer is probably a guffaw and a resounding “NO!”

When you ask them who they need (in a perfect world) you’ll hear they need sales people, operations people and line workers.  Rarely do they say they need a Chief Financial Officer (CFO.)

Ask any business owner that has left their accountants’ office during tax time still puzzled on why they owe so much to Uncle Sam or how they could have made so much on paper but don’t see it in the bank.  Many accountants can’t answer these questions.  A CFO can.

If you are worried about looking foolish in front of a CFO, or are embarrassed that you don’t have a grasp on your numbers, don’t be. You aren’t alone.

If you have a handle on your financials but still find yourself with questions about product line or customer profitability, whether you should pay back your loan or take the money and use it to grow, or why you never seem to have enough cash, you should consult your CFO.

If you believe your CFO is strictly a glorified bean counter, you have found the wrong person for the job. If you think that a CFO is really short for CF-”no”, that is, someone who will shoot down all your plans or ideas, you’ve found the wrong person.

If you are looking for someone to help you map out your growth, “run the numbers” and provide you options backed by analysis, and you naturally turn to your CFO, you know you have the right member on the team.

But most businesses don’t have that team member in place. There is an empty, yet critical, spot on their bench. It comes down to one change in mindset on the part of the business owner:

Hiring a CFO isn’t an expense, it’s a growth strategy.

A CFO can provide you with the best springboard for growth: information.

Information can be in the form of financial analysis and trends or forward-looking projections. It can be a scenario analysis (“if I do X, then my profit could be Y”) or a post-mortem (“why did this job run over budget?”) A CFO with good business sense can take your operational and financial data to give you a picture of the effectiveness of your daily operations. That’s pretty powerful stuff.

So, you can muddle along and find out what works through gut instincts or trial and error. You can hire another sales person or line worker and you can grow in increments. Or you can fill that empty spot on your bench with a CFO, even on a part-time or consulting basis, and grow exponentially. You just need to change your mindset.

An alternative to “Off with their heads!”

Tuesday, May 17th, 2011

When businesses downsize or look for cost savings the first place they look is their staff. Employees are expensive—you have to pay them a salary, benefits, “house” them for the work day, and give them whatever equipment they need to complete their work. Naturally when it comes to cutting costs, business owners see reducing these “people” costs as a quick way to save money.

Here’s a twist. Before you start thinking about headcount reductions, look to your employees for costs savings by ASKING them for their opinion. I know—it probably isn’t comfortable to admit that you need to save money if the business isn’t doing well. You also have to deal with the mind-racing and jumping to conclusions of inevitable layoffs. There is a lot to manage when you go this route.

As the business owner, you may need to shift from thinking you’re the only one who knows how to run the business, to being open to input from the lowest levels within your organization. When GE went through this process of seeking out cost saving ideas from deep within the organization, a line worker in one of its plants commented that for 25 years GE had his hands, all the while they could have had his brain as well—for nothing. Pretty powerful.

So do yourself (and your company) a favor—ask. Ask your employees how you can save money, how you can improve operations, how to grow the business. Remember those closest to the work know it best. They know a lot more than you give them credit for.

A critical thing with opening yourself up for ideas is also being open to act on them. Here are a couple of ways to encourage ideas:

Share the savings: If employees think that cost savings are going to wind up in your pocket, and yours alone, they’d be less likely to volunteer ideas. Give them a portion of the savings and recognize them in front of your peers or reward the best ideas with dinner for two paid by you.

Have Belly-Flop awards. Every idea you get may not be a good one, so have some fun with it without embarrassing the person who made the suggestion. If you pursue an idea and it doesn’t work out, award it the “Belly-Flop” award and analyze what went wrong, and learn from it. The main point here is you want to reward the risk that person took by suggesting something.

Watch the eye-rolling: You know what I mean, whether literally or figuratively, there is always one or more employees that roll their eyes as you announce your next big initiative or idea. Before you dismiss them as small-minded, take a moment to find out what their qualms are. In their response may be some warning signs of a project about to fail—or cost too much.

So take time in your day, week or month to ask, listen and do. If you show you are open to ideas from the ranks– and take them seriously–more will come, and so will your solution for turning around your business.

Brain drain- when a critical employee leaves

Thursday, May 12th, 2011

There is a lot to be said about a star employee—one that holds the company together—the go-to guy or gal that helps run your company smoothly. They may have a big role in your company or they may just be the billing clerk who gets the invoices out on time and accurately. You take them for granted—until they are gone.

By “gone” I mean any number of ways: They leave your company completely, they get sick and are unable to work or they just “check out.”

Most businesses have some backup plans for data—redundant systems, servers, backups to the cloud. But I am surprised that most companies don’t have a backup for their most critical information—the information that resides in the heads of its employees.

Think about how much knowledge walks out your door every day. How would your business be affected if a few key people didn’t come back?

What if that employee is you?

In small businesses there is little room in the budget for redundant employees but there is NO room for the disruption that ensues when a critical employee is absent.

You as the owner need to come up with a backup plan—otherwise you will find yourself constantly distracted and firefighting while at the same time finding someone to replace him or her. It doesn’t have to be a massive undertaking—you probably already do it for when employees go on vacation.

Think of it as extended vacation planning. Here’s how:

Make upkeep of standard operating procedures part of everyone’s job. These don’t have to be long, formal documents but they should entail critical pieces of information about standard policies and procedures– from how much material you order to where all the passwords are for the bank accounts, to the way that certain customers like their invoices processed.

Develop a pipeline of talent. I’ve worked in organizations that get this right—so when there is a vacancy it’s no sweat, they just move up the next person they were grooming for the position. By grooming, that means ensuring the understudy has had the experiences and some of the training the critical employee has while allowing him or her to pinch-hit during vacations or business trips. This will ensure a smoother transition when the time comes.

Cross-train. This may be the easiest to do but the hardest to find the time to do too. The best way to do this is by allowing people to work on projects together, paired with people with different skills or responsibilities to allow each other to see what the other is doing .

Shuffle the deck. Have one person who is doing all of your critical activities? Maybe you need to shuffle the deck and allocate different critical responsibilities to a few different people. This way if one person leaves business doesn’t come to a halt. Spend some time and develop your A-list of critical tasks and make sure you don’t have all your eggs in one basket—with only one person doing them.

It’s time you had a backup plan for the rest of your data—the data that walks out your door every evening. Develop your backup plans now and avoid the brain drain when a critical employee leaves.

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