How I bought 10-15 days off, 21 mths from now.

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We had five days straight of overcast, rainy, sloppy weather Friday thru Tuesday in Denver, something we almost never see. It dominated Memorial Day weekend and kept us all inside for the most part.

Finally Wednesday was a gorgeous “Chamber of Commerce” day. Not a cloud in the sky, no wind, no humidity, and no appointments the whole day. Seemed like a great day to “reward” myself, play some golf and ride a bike. Why didn’t I? Am I workaholic? No, to the contrary I worked Wednesday because I want more free time, and sooner.

I manage my business using a Two-Page Strategic Plan. The central pulse of my Strategic Plan is my Business Maturity Date. I know very clearly what my business looks like at maturity, and much more importantly, exactly when I expect to get there. Everything in my Strategic Plan is tied directly to the centering influence of my Business Maturity Date like the kiddy chair ride at a carnival – everything spins from that center – my BMD.

As a result, I know exactly what I have to do this month to build a business that makes money while I’m on vacation.

Wednesday I could have easily rewarded myself for having worked hard the last few weeks. The Monthly section of my Strategic Plan told me I needed to get the first draft of my book completed by May 31. Wednesday was a writing day, and I could have blown it off because I am right on schedule. I wasn’t under any pressure, I simply had a choice to make. Do I want to goof off today or gain a day in pursuit of my Business Maturity Date?

I believe that every day saved on the front of an objective can save us 10-15 days on the backend in not having to “catch up”, similar to investing money on the front end creates more on the back end. I made the decision to get ahead on the book to help ensure I meet or beat my BMD, with the belief that I will get much more time to goof off later if I get to my BMD sooner. I’m not a workaholic. I was still able to take a great bike ride late that afternoon.

My Business Maturity Date and my Strategic Plan run my business, and keep me focused on creating a business I can enjoy, with a lot more time to goof off later if I stay focused now. My BMD and my Strategic Plan have made me “ambitiously lazy” – working hard to create more free time, sooner.

My Business Maturity Date is Friday, February 18, 2011, at 10am (see “Is there a Business Maturity Date ticking in your business?” for more on this). I expect to get there a few days earlier because I wrote Wednesday instead of golfing. I expect I’ll get to golf a lot more, a lot sooner because I’m so focused on beating my Business Maturity Date.

What’s keeping you moving and on track?

Seven Decision-Making Principles Leading us to Profitability

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Guiding Principles of a business are necessary (honesty, integrity, customer service, etc.), but there is another set of principles that help the Business Owner in particular: decision-making principles.

How we make decisions effects everything we do. Problem – we make decisions subjectively, even when we think we’re being objective. All the research shows this – even at the major company level – we even buy subjectively.

As a result, we react badly to shiny objects, short-term victories and defeats, and strategic planning. So the question becomes, do you guide your biz or does it rule you? Who’s really in charge?

Want to make more money and stop recovering from bad decisions? Get some simple decision-making principles on which you run your business.

Like rails that guide a train, your decision-making principles are a core strategy to having a business that knows where it is going and how it is going to get there.

Here’s my seven decision-making principles. What are yours?

The 7 Decision-Making Principles of TeamNimbusWest Crankset Group:

  1. Business Maturity Date – Know Where I’m going & when I want to be there. (Seriously, you plan your vacation destination and time to be there, why in the world don’t you plan the destination and time to be there for your business. Which one is more important? Duh…)
  2. Make more money in less time. – Why do what others can and will do, when there’s so much to be done that others can’t or won’t do? Yield Per Hour. Distributive Management. Your NOT saving money by doing things below your pay grade. If you want to make $200 per hour, every time you do a $20 per hour job, you just lost $180.
  3. Focus on my lifetime goals, not just on growing my business – A BHAG (big, hairy, audacious goal) will keep us going, but “grow the business” is a lifeless idea. So is retirement. Get a reason to have a business, then watch how much more money you make, and in less time.
  4. Get off the treadmill, own the business instead of the business owning me. – The purpose of our business is to create a lifestyle for ourselves and our family. Stop making money, stop making a living, and start building a business that makes money while you’re on vacation.
  5. Work ON my business, not just IN it. Highest and best use of my time. – The key to growth – perfecting as we go by strategic planning, not just production. Know where you’re going, and regularly adjust. I revisit my Strategic Plan every Monday. Keep steering all the time.
  6. Make decisions on where I want to be, not where I am. – Clarity of Purpose leads to Hope which leads to Risk. Know where you’re going (clarity), which will give you something to believe in (Hope), which will allow you to risk moving forward. Take good risks to grow.
  7. Bad plans carried out violently many times yield good results. Do something. Stop planning. Implement now and perfect as you go. Speed of Execution rules. It’s a both/and thing. Move NOW (stop thinking), then as soon as you start moving, start perfecting. If you just move, you’re going to get clobbered. If you just perfect, you’ll never start moving. Implement now, perfect as you go.

What are the decision-making principles of your business?

You’ve got decision-making principles that are running the show. You might as well write them down and see if you agree with who/what is actually in charge. If not, change them and take control of your business future.

Learn objectivity in decision-making processes. Know where you’re going, delegate, make decisions based on your strategic plan, and not based on where you are right now. And stop thinking about it so long. It’s not how good the plan is, but how committed you are to the bad (incomplete) plan you have. And how good you make decisions as you go.

Guidelines vs. Rules – Creating Wildly Successful Employees

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Employees have changed. Rules don’t cut it anymore. The newer generation isn’t sure it even wants to go to work and has in some ways decided to retire BEFORE working. They’re out there “gigging” instead of working. How do you as a Business Owner respond to this new world?

How is the new world different than the old industrial age employee world? The old world had rules the employee needed to live by. The new world has guidelines that create ownership, freedom, teamwork, and creative involvement for the employe:

Employee Guidelines (principles) → → Employee Rules (laws)

  • Provide Framework → → → → → → → → → Box to live in.
  • Gives you a “floor”-minimum → → → → → Gives you a ceiling – “maximum”
  • Encourages innovation → → → → → → → →Encourages conformity/sameness
  • Frees up employees to win → → → → → → →Creates fear of losing
  • Emphasis on effective result → → → → → →Emphasis on process/procedure
  • Emphasis on employee ownership → → → Emphasis on we/they blame games
  • Encourages participation/innovation → → Encourages hiding/work-arounds.
    Examples of each:
    Apple Computers → → → → → → → → → → U.S. Government

A Key Objective in creating happy employees: Create “ownership” of their job, and help them see how it fits into the bigger picture (process mapping is a great way to do this.)

How do you lead in the new world? By becoming a Servant Leader. The best leaders have always led this way, but if you don’t lead this way in the new employer world, you won’t keep your employees.

Leaders do not exist to be served by those “under” them. They do not have the right to have others make them look good. Having a title on a door does not make you a leader. Leaders are focused on how they can make everyone else around them more successful (the servant leader). Employees are very clear that the leader’s job is to champion them and give them the vision, environment, resources, training, and connections to be wildly successful. The smart leader knows that if everyone around them is successful, they won’t have to worry about their own visibility or success.

Be a servant leader – create ownership among your employees for their positions, and focus your energies on making them wildly successful. You’ll have a great business and make more money in less time as a result.

Process Mapping – a Key to Owning a Business

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Last week we talked about why processes are so much more important to small businesses than even big business. This week we’ll cover just how simple it is to put together a good process that will actually have a significant impact on your business. What we don’t need is more stuff sitting on a shelf – Process Mapping is designed to make us more money and free us up to enjoy the business we’ve created. The Key – KEEP IT SIMPLE! The more info you try to capture, the less likely you are to actually use the process. Just the opposite of what you might think.

Get Started – It’s never too early.
Very few companies get a good start on processes until long after they are needed, which really puts us behind the 8-ball.

The best processes will be easy to expand as your company grows and more processes and procedures are required. If you have to throw out the processes you started with instead of just tweaking or expanding on them, they likely were not good processes or weren’t even being used.

The Macro Project, the first process you should map. Map your entire company process (very high level/simple), from marketing & sales, through operations & delivery, through accounting/invoicing, to customer satisfaction. Include everything from the beginning of your company’s marketing process to the very last thing you do to complete the process – cash a check, send a thank you, put someone in a tickle file to be called 6 months from now, etc.

Record the Process – Do this on a piece of paper (or Powerpoint, etc.) using boxes with arrows from one box to the next, indicating what comes next in the process. If you end up with more than 20-30 boxes for your entire Macro Process, you’ve got too much detail – combine boxes until you get it simplified.

Check the Process – see if it is actually what you’re doing – as you go through the process, tweak what you wrote down until it reflects reality (don’t record what you want, but what is.)

Color each box – if you have multiple people in your company, assign a color to everyone and color the boxes with which parts of the process each person owns. If you own them all, seeing one color will motivate you to figure out how to get out of some of the jobs that aren’t at your pay grade. How many boxes do you own? Probably too many.

Assign a Pay Grade – pretend each box is a 40 hr per week job. How much would you pay someone to do that job? Put that in the box. (For your own pay grade – If you want to make $200k per year, that’s $100 per hr (assuming you bill 40 hrs per week, more than likely you’ll need to charge $200 per hr to make $200k).

Redesign the Process – We know what the process looks like. What SHOULD it look like. Get it fixed and re-train your people to the new process.

Circle or re-color the boxes you want to reassign first. The first step in moving from being the producer to being the business owner, is to figure out how to get the low pay grade jobs off my plate and replace them with the activities that are at my pay grade. We think we save money by doing the $20 pr hour job, but if you want to make $200k per year, you are losing as much as $180 per hour every time you do that $20 per hr job. Get someone else doing it (using a Virtual Assistant is always a great first step if you’re a small biz). OBJECTIVE – get your color out of as many boxes as possible.

Regular Review – 15 minutes once a month to make sure you’re actually doing what you say you’re doing, and that the appropriate people are well trained on the process boxes they own. Keep changing it to keep it relevant.

Try not to do this with a lot of your processes. Once you have the Macro Process figured out, you’ll probably want to break it down into a few sub-processes: Sales/Marketing, Operations/Delivery, Finance/Accounting, and Customer Satisfaction. Unless you have a very complex delivery, anything beyond this is potentially a waste of time.

One last thing – for boxes that aren’t self-explanatory, go ahead and write a full process description for that box – this will help people actually go on vacation and know the job will still get done. And it will be a critical first step for you to get out of the Producer role and get into the Business Owner role. After all, wouldn’t you rather own your business than have it own you?

Edward Deming said 85% of a worker’s effectiveness is determined by the process he works within, only 15% by his own skill. How well defined are your processes? Get good processes and get off the treadmll.

Small businesses that use processes create a winning environment that puts them in a different class then their competition. And they are more likely to survive and be profitable.

Simple Processes Create More Revenue

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Once in awhile Mom would tell me on the way out the door to school that we were having hamburgers that night. But when I came in from playing to eat dinner, I found chicken on the table. I was disappointed by the switch, which was completely irrational because I like chicken just as much as hamburgers. But she had set one expectation and fulfilled it with another. I was an irrationally unhappy customer, but unhappy just the same.

A realtor sold a house and sent a weekend voucher to a high-end hotel/spa to the new owners as a thanks. They recommended the realtor to friends, and after the friends sold their house, the realtor sent them a very nice, expensive house-warming gift. They were disappointed and never recommended her to others.

What happened? It’s simple. The realtor didn’t have a process in place for relating to clients and ensuring she got referrals. She was winging it. The first customer told the second about the weekend and when they got an equally expensive house-warming gift, they felt short-changed because the realtor had set an expectation for how they would be treated, then changed the rules of the game on them. The second seller thought they were getting hamburgers and they got chicken instead.

Simple, effective processes are a necessity for every small business. If businesses spent a few hours putting a few processes together instead of spending weeks on fancy business plans that never see the light of day again, they would be much more successful, much more quickly.

Creating processes to help us run our business is one of the keys to getting off the treadmill.

From Brian Phillips’ Third Secret of Small Business Success (of Four Secrets):
“Consistent results come from consistent actions. Too often we fall into crisis management mode and the wheels fall off the cart.”

Enter Edward Deming – 1950 – Japan.
What is a process? – “A system [process] is a network of interdependent components that work together to try to accomplish the aim of the system. A system must have an aim. Without an aim, there is no system.” Deming

Edward Deming, the father of modern quality and customer satisfaction had an 85/15 rule “85% of a worker’s effectiveness is determined by the process he works within, only 15% by his own skill.” One-person companies need processes as much as 500 person companies (more actually). If I’m operating without processes, I’m being as ineffective as possible, and my great chicken will not be well received.

Why we don’t create processes for ourselves.

  1. Only big businesses need processes – my company is small enough to not need all that “organization”. We couldn’t be more wrong. Operating without processes makes us reactive, but most importantly, when we’re “winging it”, we create inconsistent experiences for our customers, ourselves, our employees. Inconsistency is one of the keys to failure.
  2. Creating processes sounds too complicated. Keep it simple – a few bullet points for each process, not a 30 page detailed procedure manual. Just write down what you are already doing, and decide whether what you wrote is really what you want to see happen every time. If so, you have a process. If not, you have a piece of paper that will go in a drawer.
  3. I don’t have time – You don’t have time NOT to do this. A couple hours a week over a few weeks should get you most processes written down. If you have 3-6 processes in your business, and you dedicated four hours a week to this, you would be done in 1-4 weeks. You likely waste more time each month and lose more customers “winging it” than you would spend in one month completing your Processes.

Why we should create processes for ourselves.

  1. Effectiveness/Profitability – Natural talent is not a good way to run a business. All of us would make more money if we systemize what we’re doing.
  2. Consistency – If each customer (or vendor or employee) has a different experience, I’m creating issues. Why not ensure everyone has the same good quality experience every time? McDonald’s is successful not because they have the best food, but because you know exactly what you’re going to get at every location, everywhere in the U.S. Consistency builds loyalty. Inconsistency builds confusion and disappointment.
  3. Transferability – which is a key to consistency. When Tom goes on vacation or takes a day off, or worse yet, leaves the company, the “procedures” in his head no longer exist. A good, simple, WRITTEN process can be carried out by the next person without dropping a beat, especially if you have done cross-training on each process to ensure more than one person already knows how to do it.
  4. Profitability/YPH – all this leads to making more money in less time!

Next week we’ll talk over specifically about how to write a good process – I’m betting that what we describe won’t be what you imagine as “processes”, but something more practical and easier to implement.