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You can hire a manager
...but you can’t hire an owner
After the conclusion of the morning session on the first day of this year’s IGC Show, several people came forward to ask questions about their individual businesses.
One person had owned their business for eight years and was concerned about finding the right key people to hire so they could expand the business. The owner has a desire to add another location but does not see that he has the people to do so.
A second individual asked about understanding components of their financial statements. A close friend of this individual, who also owns a business, had been the victim of embezzlement by a bookkeeper that had been an employee for over ten years. The concern was their not being able to understand how to read the financials. Neither was this owner confident they would be able to detect anything that would indicate a potential problem with their business.
The third business owner spoke of the challenges of repositioning their business because of changes that had occurred in their community. They were asking about their being able to determine which customers, individuals and/or commercial, should be the target customers.
What was once an area of new homes being built, and selling to landscapers was now an area where the focus would have to be different. Instead of commercial sales, should the business concentrate on the DIY customer and those that are lawn maintenance crews and small contractors?
The last owner had been successful and continued to operate a profitable business. However, in looking at the balance sheet of the business it was noted that the profits generated over the past ten years were sitting in a reserve account. This money was of such a sizable amount that the owner could open two more locations and pay cash for the entire inventory needed as well as all of the fixtures, equipment and other needs of the new locations.
The detailed advice given to each of these four business owners was unique to each owner. There was however an underlying theme that was constant to the suggestions given; there were several commonalities to the situations of each of the businesses. None of the ‘problems’ these businesses are facing occurred suddenly. These ‘problems’ exist because the owners were busy doing other things in their business; this as compared to their ‘owner duties’.
Each of the four business owners explained they worked hard and put in more than a forty hour work week. Each owner stated how they were very busy throughout the work week. Each owner was then asked to make a list of the duties they performed each week, month, quarter, and annually.
While these businesses ranged in size from a few employees to nearly one hundred, each of the owners had lists that were very similar. Simply stated, these owners were filling their days and weeks performing tasks they should be having their employees perform.
Continuing the conversation, we discussed what tasks should be reserved for owners. Some of the duties that should be performed by an owner did not seem to command enough attention to be dealt with. Other duties were passed to others, such as an accountant with the expectation that the financials would be given the appropriate attention by that individual, and if necessary, brought to the attention of the owner.
Unfortunately there were tasks that some owners felt could be attended to when they were at home at night or during a day off. This meant the already busy owner was adding more hours to their workweek or were performing owner duties after having already put in a long day; definitely not the best time to be performing the most important tasks in the business.
The conversation with each of the four owners occurred because each experienced a need to make a decision. The decision would be an opportunity to take advantage of a situation or the need to prevent a problem from occurring.
Let’s consider your making a list for yourself; a list of what you should be doing. As the title of the article suggests, you can hire a manager but you cannot hire an owner and you can definitely profit from the experiences of others. Let’s take a look at five key owner situations.
#1. Take a look back to where your business began. You started with a sum of money. You decided with your product, service and business knowledge that you could make more money by your direct efforts than by investing that same money in something like a money market fund. There was likely an initial calculation as to what your return on investment would be. Any exercise that was deemed necessary at the beginning of a business should be repeated throughout the life of the business.
#2. Unfortunately too many people open a business because they like the product or service being offered. The same goes for the location of the business; It is the community that person lives in or wants to live in. Instead, the owner should be looking at what products and/or services, and what community presents the best opportunity to have the highest rate of return on that money we just discussed.
#3. Of course a small business is going to claim that their competitive advantage is that of great customer service. In the session previously mentioned, I asked the attendees how many felt this statement was true for their business. There was an almost unanimous confirmation.
The second question was to ask how many had created a formal education program for their staff. With nearly the same unanimous number of responses, the answer was no. The two responses cause for a follow up question. How can it be that you have a customer service advantage that just naturally occurs? One of the responsibilities of the owner should be to make sure (this does not necessarily mean doing it yourself) that there is a plan for hiring, developing, keeping and educating great employees.
#4. There is no business that can exist by selling the same products and services to the same customers for a long time. Simply stated, the business that focuses on ‘what’ they sell is likely to become extinct. The business that focuses on ‘who’ the customer is will find the customer is constantly changing and that the business must continually change if it is to continue to exist.
Just as a ship has someone that plots the course at sea, so should the owner of the business plot where the business is going in search of the continually moving customer. This search would contain the merchandise sold, services offered, location, hours, and any other component of the business that has experienced change in the past decade.
#5. Thirty years ago the method of getting the message from a business to the customer was quite easy as compared to today. The message was conveyed by television, radio, newspaper, direct mail and that thing called, ‘the yellow pages’. We do not need to list how all of that has lost a lot of its effectiveness, nor do we need to list the methodology for today. It is sufficient to state that what we had then will continue to fade, what we have now will change, and there will be new ways of marketing, yet unknown, that will be utilized in the years to come.
Every owner can profit from performing the exercise these owners have done. Start by making the list of what you are doing; add what needs to be done. Note on the list those items on the list that require the input or the full participation of the owner. Consider the items that the owner can provide some direction for and then delegate to a manager or other individual.
As the workday of the owner is unfolding, it will be important that the owner makes sure which activities are taken care of during the day. And it should be decided at what point during the day the owner is through with work and then relaxes so that the ‘batteries’ can be recharged for the next work day.
Properly used, the list will help eliminate problems and provide opportunities for business growth because only an owner can do the owner’s duties.
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|This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.|
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