Be Different!

A a business advisor, whenever I deal with contractors, I dream of a contractor who has a reputation based on one idea:

We start and finish what we said we would do, when we said we would do it.

That’s it. How hard could it be?

Really hard! – I know this because we try and live by the same rules at our business and we can’t pull it off every time.

If a contractor is on a job that is dependent on other contractors, the first contractor to have a delay, will start the problems for the other contractors.

• Outside contracting work is affected by the weather which is out of their control.
• Suppliers can hold up work with delayed production or shipments.

However, there are some things that could be implemented that move the business world closer to this dream:

Honesty – When a contractor knows up front they are over promising, just say so. What is the benefit of promising a certain date when you know you can’t deliver?

Communication – Better communication of changes in the dynamic world of business will allow others to adjust their schedules accordingly.

And most of all:

A penalty for tardiness and a reward for timeliness.

Why are most contractors missing deadlines? Because they can and it doesn’t cost them anything. Where is the motivation to fulfill a promise?

A 5% penalty for missing a deadline is a good start. How about a 5% bonus for making a deadline!

What if a contractor shows up on time, they get paid on time? For every day they are late, we add a month to the payment of their invoice?

I am aware of a small percentage of contractors who are quite reliable. We need to make sure to recognize, appreciate and reward a contractor who actually delivers on schedule.

I hope this type of positive reinforcement will spread to the majority of the other contractors until soon the dream will become a reality.

As an example, the popular children’s show Blues Clues repeats the same episode from Monday to Friday each week. Children watch the same episode five times in five days.  The developers of the show realized that for the child to really learn the concepts they are teaching that week, that the level of comprehension increases due to the repetition.

As an advisor to business owners, often my clients ask me, “Why do I have to tell my employees the same thing over and over again?” Because sometimes it takes 51 times!  The correct answer to this question is that employees need repetition also to thoroughly develop a new skill or habit.

The sales team is the same way. Although it seems more complicated, sales is simply following a system. The best salespeople have repeated their sales system so many times they have become unconsciously competent in the skill. Unconscious competence is the 4^th stage in the four stages of learning a skill. There is a lot of repetition involved in learning a skill.

I think the secret is to make repetition our friend and accept it as an important part of business growth. If we stop assuming we only have to explain a change for the better once, we won’t be as frustrated when it take 51 times.

We are trying to be better at this at our firm too. We have the made the mistake of sharing knowledge with our clients once and assuming they remembered everything we said. If we shared it verbally, they may not have been listening that one time! We are working to develop different ways of capturing the knowledge so our clients have access to review it again and again. We are exploring video and written formats to provide the knowledge base.

It reminds me of my old piano teacher – practice , practice , practice. That would be the other time I didn’t appreciate the value of repetition!

As an example, the popular children’s show Blues Clues repeats the same episode from Monday to Friday each week. Children watch the same episode five times in five days.  The developers of the show realized that for the child to really learn the concepts they are teaching that week, that the level of comprehension increases due to the repetition.

As an advisor to business owners, often my clients ask me, “Why do I have to tell my employees the same thing over and over again?” Because sometimes it takes 51 times!  The correct answer to this question is that employees need repetition also to thoroughly develop a new skill or habit.

The sales team is the same way. Although it seems more complicated, sales is simply following a system. The best salespeople have repeated their sales system so many times they have become unconsciously competent in the skill. Unconscious competence is the 4^th stage in the four stages of learning a skill. There is a lot of repetition involved in learning a skill.

I think the secret is to make repetition our friend and accept it as an important part of business growth. If we stop assuming we only have to explain a change for the better once, we won’t be as frustrated when it take 51 times.

We are trying to be better at this at our firm too. We have the made the mistake of sharing knowledge with our clients once and assuming they remembered everything we said. If we shared it verbally, they may not have been listening that one time! We are working to develop different ways of capturing the knowledge so our clients have access to review it again and again. We are exploring video and written formats to provide the knowledge base.

It reminds me of my old piano teacher – practice , practice , practice. That would be the other time I didn’t appreciate the value of repetition!

Let’s look at an example:

Cost of investment: The main cost of the new hire will be the monthly wage costs times the number of months it will take the new hire productive.  If you pay someone $4,000 a month and it take them 6 months to become productive, the base investment is $24,000.  There will be employee benefit costs as well as direct training costs. I would add 20% more to the base investment for estimated training, benefits, uniforms, etc. so the total investment in one employee could be $30,000.

What are the risks?

What if they quit after 5 months? What if you have to fire them after 3 months?

This is a big risk. It seems even bigger if it’s happened to you before. The fear of dealing with a bad hire can stop you from hiring even when you should be.

You can mitigate the hiring risks in a number of ways:

1)     Invest sufficient time in the selection process.  Involve other employee in the selection process – they will be involved in training and working with the new person – if they helped pick them, they will naturally be more open to working with them.

2)     Invest sufficient time and effort in the induction and training process. Make sure the first day is a good first impression. Make sure the team is available to train and mentor the new hire. The owner should make time to welcome the new hire and support their training.

3)     Hire for attitude, train for skill. If the new hire is not a good ‘cultural’ fit, I recommend not hiring them.

In summary, hire slow, fire fast.

What is the return on investment?

A good rule of thumb is to make sure an employee can produce 2 to 3 times their base pay. The $4,000 per month employee should produce $10,000 a month in productivity. Your industry may be different, but there needs to be some measurable target of productivity as a goal. If the new employee is an administrative position or indirectly involved in sales or production, you can still look at how much they can increase the sales or production efforts with their support.  If your good producers are bogged down by inefficient administration, the return on investment comes from freeing them up to do what they are good at.

Growing into the new employee

It doesn’t always make sense to wait until you are so jammed with work with your existing team to make an investment in a new employee. Making the investment during a slower period and then ‘growing into’ the new employee is more manageable. You can compare this concept to buying inventory for a retail store – you need to buy inventory and put in on the shelves in order to make any sales. Hiring a new employee is similar. You need to hire them and train them before you can look for growth the make them productive. In summary, the hiring decision usually goes like this:

1)     Mitigate the risks by hiring for attitude and overcome the fears in order to make the necessary investment in good potential.

2)     Make time to train them properly.

3)     Grow the business to keep them productive. Making the investment in the new hire will be your motivation to get the growth!

In summary, you can’t wait for the perfect time. There is an investment and risk for hiring new people. When it works though, it becomes the best idea you ever had!

Related Articles:

Why is it Hard to Find Good Employees?

Improving the Hiring Process – The Induction Plan

How to Hire Employees – 3 Tips

Where to start? Try viewing your website from your customer’s perspective.

Review the spelling and grammar on your website. Poor language can reflect poorly on your business.

There seems to be a trend of more ‘cleaner’ appearing websites. Flashy and busy websites can distract customers from the purpose of their visit and leave users overwhelmed.

Is your website well branded? All your social media sites should reflect the look and feel of your website. If your brand is not well represented across the Internet, it can create brand confusion for the customer.

So, what can your website do for you?

Is it easy for customers to find the relevant information they’re searching for? This can be determined by regularly reviewing the most popular page-views. For example, if you learn that most visitors to your website are viewing the contact page, then perhaps enhance the user’s experience by adding that important information to your home page.

With proper analytics in place, and developing a system for consistent reporting, your website should be telling you how customers (or prospective customers) found your site via the search terms used. Your website statistics should help you better understand the needs of these customers, and your service offerings can be changed to reflect these needs. 

“Businesses don’t blog anymore, right?” - Not true. Many businesses see the value in sharing their culture and values online, and this can be done in just a few short sentences once a week. Regular updates, for example, can prove to the prospective customer that your business is a proactive member of the community.

When implementing changes to your website, be sure to discuss with your webmaster the fees upfront, to avoid invoice shock. Commit to regular updates about your business. Be consistent reviewing website statistics and analytics, and make your website work for you!

I recently found this picture that I took in St. Maarten a few years ago which made me stop and think. I wondered how hard the owner of  the 120’ yacht would have worked to buy it? What sacrifices did he make? Did he feel like the ‘king of the hill’ when he bought it?

So I made up the following commentary for the picture:

Joe Business Owner had a dream. He wanted to one day own a 120’ yacht and sail it to St. Maarten in his retirement. He worked for thirty years, made many sacrifices and compared to most, having an extra 10 million to buy his yacht at age 67 was a great accomplishment. When he bought it, he was truly ‘the winner’ – or he thought he was…

Until the day Joe Business Owner parked his 120’ yacht in paradise and Another Business Man pulled up in his yacht – who, at age 49, acquired his 300 plus foot yacht and had enough money left to buy a 70’  sailboat to park on the back deck!

The moral of the story is that big boats are very nice – but if  your ego is involved in owning it – it usually doesn’t take very long for a bigger one to show up.

I guess that’s why we should enjoy the journey as well as the destination.

Is a business plan a good management tool?  I don’t think so.

I will agree that preparing a business plan can help a business owner think strategically about their business. A business plan will also provide some structure as it requires a business owner to document their current assumptions and guesses about the future of their business.

Compared to ‘doing nothing’, the business plan process is valuable.  But I think the Business Model Canvas developed by Alexander Osterwalder is an option worthy of consideration for existing small business owners. The Business Model Canvas was developed to be used in conjunction with the Lean Startup methods that are described very well in Steve Blank’s Harvard Business Review article I mentioned last week.

Here are the reasons why I think the Business Model Canvas is a better fit for existing small business owners rather than a business plan:

1)     It’s more visual – Most business owners I know think visually. Planning their strategy seems to work better moving sticky notes around a wall than writing out a ten page document.

2)     It’s more dynamic – The business plan is a static document, but the business model canvas evolves as the business owner experiences the world around them.

3)     It’s about actions as well as thinking – The activity of ‘validating’ the static guesses is more about actions and experiences than just thinking. While thinking is important, I find the following statement to be more applicable: “You can’t think your way into a new way of acting, but you can act your way into a new way of thinking.” The experiential learning obtained from ‘getting out of the building’ and validating assumptions is key.

4)     It’s about key activities more than results – A business plan usually includes a projected income statement.  Income Statements report the results after the activity of business takes place.  Business owners need to focus on activities in order to get better results.

Since the Business Model Canvas is not a common tool in the business owners’ toolbox, you probably haven’t seen one in action.  It’s a pretty good guess that your business plan hasn’t seen much action lately either!  My guess is that a more visual, more dynamic, more action focused and more activity driven tool would be valuable to business owners.

In true Lean Startup fashion, as of today, I am accepting that my above statement is just a guess or hypothesis only in my mind. Now should I write that statement down into my business plan and file it away or should I go out and validate my hypothesis with some real small business owner customers?

It means the Lean Startup movement is becoming less of a fad for its cult members and more of a ‘mainstream’ methodology that is being shared among leading business thinkers for consideration.

It’s a great article and you can read it yourself here.

We have another important Lean Startup development at our firm. I will be travelling to Stanford University in June to participate in the Lean Launchpad Educators course with business and engineering professors from the University of Windsor. I participate in my role as Entrepreneur in Residence at the Odette Business School and will be supporting the effort to bring the Lean Startup methodologies into the curriculum at the University.

The University of Windsor is really developing a strong entrepreneurial culture in the region and I am happy to have a small role in moving things along.

At first glance, you might think the Lean Startup is just for startups, but it is useful for any existing business looking to innovate or to tweak their business model.

For those of you interested in finding out what this methodology is really about, the Harvard Business Review article is a great place to start.

A young woman was strolling along the street in Paris when she recognized Pablo Picasso sitting having a coffee at a café. She stopped and asked if he was really Picasso and he confirmed he was.

She boldly asked him if he wouldn’t mind doing a quick pencil sketch of her. He obliged and in a couple minutes completed the sketch.

She was delighted and kindly offered to pay him for the item.

“Thank you, that will be $10,000 francs.” said Picasso.

The woman was dumbfounded. “But that only took you a couple minutes?” she exclaimed.

Picasso correctly replied, “Actually, that took me my whole life! ”

How could this example apply to your business?

• A real estate appraiser with 30 years of experience is asked to give a value estimate over a coffee
• An experienced tent rental professional is asked how to lay out an event site before being awarded the job

There are many times when it only takes a few minutes to provide huge value to a potential customer and we often forget how long it actually took us to obtain that knowledge.

How do we unlock the value? First we need to understand how much value we can provide to a potential customer in only a couple minutes. Secondly, we need to share the story of Picasso with them.

While we may not always be offered to be paid for our talents, our potential customers who now understand and appreciate the value, are far more likely to do business with us.