Tag Archives: hiring

Tracking Critical Numbers

How often do you review your critical numbers, those all-important figures that indicate how your business is doing? Do you wait until the end of the month, quarterly, or year to find out where you’ve been and how you’ve been doing? Or do you keep a constant eye on them?

And what numbers are you measuring and tracking? Because what’s truly ‘critical’ varies for every business, and sometimes it isn’t what you think.

Take profit and loss statements. They’re universally recognized as a key measurement tool, but they’re not without limitations. Because they’re historical snapshots in time, they don’t tell the whole story or reflect the here and now. They don’t tell you where you are going, until sometimes it’s too late.

As you know, I’m all about planning ahead. But you can’t do that effectively without knowing where you are and understanding your day-to-day progress.

So don’t wait for your financial statements to become available to assess the state of your business. Use other numbers closer at hand to keep a pulse on how it’s going. Like…

Cash on Hand – Cash is King. Do you know your cash, the cash you expect to collect in the short term, and the bills that you must pay?

Bookings – The orders you receive, and in some cases, the number of quotes you issue, reflect your success rate. If your bookings, quotes, or proposals are down, you can anticipate that you will have less business coming in and therefore less receivables and cash.

Order Backlog – Do you keep track of what’s in your pipeline?  Is your backlog made up of backorders or late shipments or fulfillment? While backlog becomes cash, remember that this is also a measure of service level. I often tell the story of a busy restaurant that only has four waiters, but really needs five. Pretty soon, they will only need three.

Inventory – If you have stock, how well do you know your actual inventory?  Wrong inventory estimates will throw off your profitability expectations. Inventory lower than your expectation means your cost of goods sold is higher than you expect or your selling prices too low, which results in a reduced gross profit percentage.

Open Purchase Order – Some people call this ‘open to buy.’ Are your open purchase orders in line with the business you are getting or expect to get?

Service Level – How do know or measure you are doing a good job? Keeping tabs on service levels is essential to continued success (see ‘Order Backlog’ above!).

Payroll vs. Revenue – Is your workforce becoming more less productive? Or is your business down? This is a quick and dirty test and that will ultimately show up your cash. Tracking payroll and revenue side by side tells you at a glance which way you’re headed.  If your revenue is up and payroll is down, life is good. If the opposite is true, you must find a way to change that!

In addition, some critical numbers may be meaningful only to you.

For example, one of my peer group members is a builder. He keeps a close eye on, of all things, his site managers’ monthly receipts from Home Depot and Lowe’s.

Why? Because if his crews keep running to local stores for supplies, they’re not properly planning ahead. It reflects their efficiency, which in turn impacts everything from customer satisfaction to profitability.

The same applies to forecasting future market conditions. One RV dealer I know keeps an eye on the fur industry. If fall and winter fur sales are high, he predicts a booming spring RV market. To him, it signals that consumers are confidently buying luxury items.

So ask yourself, what measurements are particularly meaningful to your business, both internally and externally? Make appointments with yourself to check these numbers on a regular basis. Don’t wait for P&L statements. The most critical numbers are right at your fingertips.

When it comes to numbers, are you on your game? Ask for my 10-question Financial Tracking Worksheet. Email Ray@propres.com for a copy.

Most Important Hiring Question

Job_interview_0001The Most Important, Most Overlooked Hiring Question

By Ray Silverstein

Good news: it seems like more small business owners are shifting into hiring mode. That’s a good thing for everyone.

Now, the bad news. Many small business owners don’t really know how to hire the best candidate. And making a bad hiring choice is one of the most costly mistakes an entrepreneur can make. Consider the recruitment costs, training costs, and lost opportunity costs incurred when an employee fails.

In my experience, most small business owners dread the hiring process. So they adopt a classic HR-type approach, focusing on background, skills, and experience. They come up with tricky questions to pose to applicants.

Background, skills, and experience are important, to be sure. But they are not the most important thing. So what’s the #1 factor that drives a new hire’s ultimate success or failure?

What are the applicant’s core values…and do they match our company’s?

Think about it. Skills can be sharpened. Knowledge can be acquired. Processes can be learned. But the kind of person you are in your heart isn’t likely to change. If you hire someone who’s competent but doesn’t share your values, you’re almost predestined to part ways down the line.

For example, if your company prides itself on its ethical dealing with customers, you can’t accept an employee who places profits or efficiency over quality service. An employee who takes shortcuts when he can get away with it isn’t the kind of employee you can build your business on.

Or, maybe it’s the other way around. It’s not about right or wrong here. It’s about ensuring a good match. It means recognizing your core values, and asking applicants to share theirs.

Say, you’re hiring an office manager, and work/life balance is one of your priorities. Or, conversely, maybe getting the job done is, at any cost. Either way, wouldn’t it be good to know what a candidate would do if forced to choose between staying to push a key project out the door or attending his/her child’s big recital?

When you’re making your list of interview questions, include some that start with:
• What would you do if…
• Did you ever have to choose between…
• What matters more to you…

…and address the issues that matter most to you.

And consider this. When an employee gives notice, many small business owners view it as a blow, a setback. But it’s also an opportunity to raise the bar. Focusing on the core values that ground your business is one way to ensure that your human assets are in fact…assets.

Interested in raising your HR IQ? Request my Human Assets Worksheet at Ray@propres.com.
Biography: Ray Silverstein is president of PRO, President’s Resource Organization, a network of entrepreneurial peer advisory groups in Phoenix and Chicago. His latest venture is Propelus, a specialized peer group for business advisors and achievers who want to achieve more. He is author of “The Best Secrets of Great Small Businesses,” and “The Small Business Survival Guide.” You can reach Ray at 1-800-818-0150 or ray@propres.com.

Turn Problems into Opportunities

PRO-Success-225x220“Don’t bring me problems, bring me solutions.”

This is one of those standby expressions that small business owners frequently say to their employees. It recently came up in one of my PRO peer groups. The question was: is it a smart thing, or is it a dumb thing?

At first glance, the phrase implies that the employer has mastered the art of delegation and empowered his or her employees to take independent action. So, it’s a smart thing, right?

Actually, the conclusion we came to is: no, not when you really think about it.

  • Do you really not want to know what’s going on in your business, especially problems?
  • Do you really want to encourage your employees not to communicate with you? To not use you as a resource?

The Art of Delegation

Delegating to employees is a healthy strategy, yes. But completely removing yourself from your business and your staff is not going to help either one grow.

But delegating to the correct degree is a tricky skill for many small business owners to develop, because it goes against their entrepreneurial roots.

Many young entrepreneurs are control freaks in the early days of their business, and it serves them well.  They want to manage every aspect of their operation and jump on every little problem. It’s a good thing when you’re getting started.

But then, as the business grows beyond their capabilities, they recognize the need to hire a staff and delegate. But some can’t let anything go and become overbearing workaholics; while others let everything go and get out of touch with their own business.

The trick is to find the right balance. The right approach is to encourage employees to bring you their problems, whether they have solutions or not. Problem solving should be encouraged, but good communication should be encouraged more. That’s how you create a foundation of trust.

Seizing Teachable Moments

Every time an employee brings a problem to your attention, it’s an opportunity for a mini training session.

No, you don’t want your staff bringing you every trivial little issue. But it’s up to you to define what’s important and communicate those limits to your employee.

For example, one of my peer group members had a new service rep. The rep was having trouble resolving customer complaints, and ended up bringing everything to the boss. It was time-consuming.

His solution was to define the limits of her decision-making authority. If it was less than a $100 problem, she could make the call. If it was more than a $100 problem, they’d resolve it together.

At the end of every week, he had her provide a spreadsheet of the problems and her resolutions, so he could confirm she was on the right track. As she grew more knowledgeable and confident, he increased her decision-making dollar max.

In other words, the problems became a springboard for employee training and development. For more ways to turn business “lemons” into lemonade, check out my website, www.bestsmallbizsecrets.com.

Ray Silverstein is president of PRO, President’s Resource Organization, a network of entrepreneurial peer advisory groups in Phoenix and Chicago. His latest venture is Propelus University of Practical Business, a specialized resource for emerging businesses, solopreneurs and those who want to achieve more. He is author of “The Best Secrets of Great Small Businesses,” and “The Small Business Survival Guide.” You can reach Ray at 1-800-818-0150 or ray@propres.com.

The Smart, Easy Way to Recruit Top Talent

recruiting_leaders

by Ray Silverstein

Last month, we discussed how the key to making successful hires is to target applicants who share your core values.

This month, we ask: why wait for those hires to come to you?

The smartest, easiest wayto identify great potential employees is ‘24/7/365 recruiting.’ It’s simple: even when you’re not actively hiring, keep your eyes open for people who impress you, and get their contact information as you go.

It’s like you’re building your own major league baseball team. You’re always scouting at some level, and you keep a running roster of possibilities. So when it’s time to trade-up, you have a leg up.

24/7/365 recruiting comes down to being observant and building a few good habits, which include:

  • Always carry business cards. When you meet an exceptional worker, give him a card and request his. Tell him upfront that he impressed you, and while you don’t have openings now, you’d like to explore future possibilities. At the very least, you’ll make someone’s day.
  • Keep your eyes open at trade shows, chamber of commerce meetings, not-for-profit gatherings, etc. At these events, you have a golden opportunity to observe a potential candidate’s skills, work ethic, and communication style, without a formal interview or aptitude test.
  • When calling on customers, take a peek at the sign-in book. It’s a goldmine. You just may find an experienced sales pro or two who already know your client or target market.
  • Review your company website. Does it do a good job of reflecting your goals, culture, and core values? Make sure it does, because it will draw the kinds of candidates you seek to you.
  • Research your market. Visit the websites of competitors or firms that resemble yours in terms of distribution or skill sets. Some companies list key employees on their sites. Use the wonders of LinkedIn to learn more about them.
  • When you come across finished work that impresses you-say, a highly-effective website or print marketing piece-find out who did the work and take note. When you’re ready to start a project like that, you already have someone in mind for it.

I have a great example of the benefits of 24/7/365 recruiting. One of my peer group members, Joe, often grabs lunch at a sandwich shop near his company.

Over time, Joe became impressed by one of the shop clerks, Adam. Adam was very careful, and cordial, and took his job very seriously.

At the time, Joe was dissatisfied with the performance and attitude of one of his employees. He found himself wishing he could find more employees like Adam.

Then Joe realized that, instead of finding someone like Adam, he could hire the young man himself.

Out of courtesy, Joe asked the sandwich shop owner if he would mind if he approached Adam about a potential job. As it happened, the owner was all for it. The young man’s wife was pregnant and he knew Adam was ready and eager for a bigger job and paycheck.

So Joe was able to let his non-performer go and hire Adam without missing a beat. Thanks to his proactive recruiting, what could have been a setback turned into an opportunity.

And that’s how 24/7/365 recruiting puts you ahead of the curve.