Tag Archives: maintenance

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.

The One Thing

The One ThingTHE ONE THING

The Surprisingly Simple Truth Behind Extraordinary Results

Gary Keller with Jay Papasan – reviewed by Ray Silverstein

The author states “The One Thing is the best approach to getting what you want.” “What’s the One Thing you can do this week such that by doing it everything else would be easier?”  The author further states, “Where I’d had huge success, I narrowed my concentration to one thing, and where my success varied, my focus had too.”

If everyone has the same number of hours in a day, why do some people seem to get so much more done than others?  The answer is they make getting to the heart of things the heart of their approach.  They go small.

“Going Small” is ignoring all the things you could do and doing what you should do.  It’s recognizing that not all things matter equally and finding the things that matter most.  It’s realizing that extraordinary results are directly determined by how narrow you can make your focus.  The way to get the most out of your work and your life is to go small as possible.

Technological innovations, cultural shifts, and competitive forces will often dictate that a business’s One Thing evolve or transform.  The most successful companies know this and are always asking:  “What’s our One Thing?”  If your company doesn’t know what its One Thing is, then the company’s One Thing is to find out.

Andrew Carnegie addressed the students of the Curry Commercial College and stated “Don’t put all your eggs in one basket is all wrong.  I tell you to put all your eggs in one basket, and then watch that basket.”  So, how do you know which basket to pick? The Focusing Question will tell you.

Life Is A Question:  You may be asking, “Why focus on a question when what we really crave is an answer?”  It’s simple, Answers come from questions, and the quality of any answer is directly determined by the quality of the question.  Ask the wrong question, get the wrong answer.  Ask the right question, get the right answer.  Ask the most powerful question possible, and the answer can be life altering.

Voltaire once wrote, “Judge a man by his questions rather than his answers.”  Great questions are the quickest path to great answers.  How we phrase the questions we ask ourselves determines the answers that eventually become our life.

Example of a Focusing Question:  What’s the One Thing I can do such that by doing it everything else will be easier or unnecessary?  The Focusing Question can lead you to answer not only “big picture” questions (Where am I going? What target should I am for?) but also “small focus” ones as well (What must I do right now to be on the path to getting the big picture?)

The Focusing Question always aims you at the absolute best of both by forcing you to do what is essential to success—make a decision.  But not just any decision—it drives you to make the best decision.  It ignores what is doable and drills down to what is necessary, to what matters is the foundational habit to use to achieve extraordinary results and lead a big life

To stay on tack for the best possible day, month, year, or career, you must keep asking the Focusing Question.  Ask it again and again, and it forces you to line up tasks in their levered order of importance.  Then, each time you ask it, you see your next priority.

For the author, The Focusing Question is a way of life.  He uses it to find his most leveraged priority, to make the most out of his time, and get the biggest bang for his buck.  Whenever the outcome absolutely matters, he asks it.

The Focusing Question is a foundational habit.  The author uses it for some things and not and not at all for others.  He applies it to the important areas of his life:  spiritual life, physical health, personal life, key relationships, job, business, and financial life.  He addresses them in that order—each one is a foundation for the next.

The Focusing Question can direct you to your One Thing in different areas of your life.  Simply reframe The Focusing Question by inserting your area of focus.  Examples:

Spiritual Life—What’s the One Thing I can do to help others?

Physical Health— What’s the One Thing I can do to achieve my diet goals?

What’s the One Thing I can do to ensure I exercise?

What’s the One Thing I can do to relieve my stress?

Personal Life—— What’s the One Thing I can do to improve my skill at ­__?

What’s the One Thing I can do to find time for myself?

Key Relationships- What’s the One Thing I can do to improve my relationship with my spouse?

What’s the One Thing I can do to make my family  stronger?

Job—————– What’s the One Thing I can do to ensure I hit my goals?

What’s the One Thing I can do to improve my skills?

Business———– What’s the One Thing I can do to make us more competitive?

What’s the One Thing I can do to make our product the best?

What’s the One Thing I can do to make us more profitable?

What’s the One Thing I can do to improve our customer experience?

Leverage Reminders:  Set up ways to remind yourself to use The Focusing Question.  Such as a sign on your desk that says, “Until my One Thing is done—everything else is a distraction.”

The Focusing Question should be “Big” and Specific.  It should not be big and broad, or small and broad, or even small and specific.  Example:

“Big” and Specific—What can I do to double sales in six months?

Big and broad—What can I do to double sales?

Small and broad—What can I do to increase sales?

Small and specific—What can I do to increase sales 5% this year?

The challenge of asking a Great Question is that, once you’ve asked it, you’re now faced with finding a Great Answer.

Extraordinary results require a Great Answer.  If you want the most from your answer, you must realize that it lives outside your comfort zone.  A big answer is never in plain view, nor is the path to finding one laid out for you.  A possibility answer exists beyond what is already known and being done.

A Great Answer is essentially a new answer.  It is a leap across all current answer in search of the next one and is found in two steps.  The first is a stretch.  You uncover the best research and study the highest achievers.  Anytime you don’t know the answer, your answer is to go find your answer.  In other words, by default, your first One Thing is to search for clues and role models to point you in the right direction.  The research and experience of others is the best place to start when looking for your answer.  A new answer usually requires new behavior, so don’t be surprised if along the way to sizable success you change in the process.

Extraordinary Results:

There is a natural rhythm to our lives that becomes a simple formula for implementing the One Thing and achieving extraordinary results:  Purpose,

Priority, and Productivity.  Their link leads to the two areas where you’ll apply the One Thing—one big and one small.

Your big One Thing is your purpose and your small One Thing is the priority you take action to achieve it.  The most productive people start with Purpose and use it like a compass.  They allow Purpose to be the guiding force in determining the Priority that drives their actions.

Think of Purpose, Priority, and Productivity as three parts of an iceberg.  What’s visible to the public—Productivity and Profit—is always buoyed by the substance that serves as the company’s foundation—Purpose and Priority.

The Power of Purpose:

Purpose is the straightest path to power and the ultimate source of personal strength—strength of conviction and strength to persevere.  The prescription for extraordinary results is knowing what matters to you and taking daily doses of actions in alignment with it.  When you have a definite purpose for your life, clarity comes faster, which leads to more conviction in your direction, which usually leads to faster decisions.  With faster decisions, you’ll often be the one who makes the first decisions and winds up with the best choices.  And when you have the best choices, you have the opportunity for the best experiences.  This is how knowing where you’re going helps lead you to the best possible outcomes and experiences life has to offer.

Discover you Big Why.  Discover your purpose by asking yourself what drives you.  What’s the thing that gets you up in the morning and keeps you going when you’re tired and worn down.

Live by Priority:

Live with purpose and you know where you want to go.  Life by priority and you’ll know what to do to get there.  Purpose without priority is powerless.

Goal Setting to the Now will get you there:

By thinking through the format of Goal Setting to the Now you set a future goal and then methodically drill down to what you should be doing right now.

Example of Goal Setting to the Now:

Someday Goal:

What’s the one thing I want to do someday?

Five Year Goal:

Based on my Someday Goal, what’s the One Thing I can do in the next five years?

One-Year Goal:

Based on my Five Year Goal, what’s the One Thing I can do this year?

Monthly Goal:

Based on my One Year Goal, what’s the One Thing I can do this month?

Weekly goal:

Based on my Monthly Goal, what’s the One Thing I can do this week?

Daily Goal:

Based on my Weekly goal, what’s the One Thing I can do today?

Right Now:

Based on my Daily goal, What’s the One Thing I can do right now?

With this method you’re training your mind how to think, how to connect one goal with the next over time until you know the most important thing you must do right NOW.  You’re learning how to think Big—but going

small.

Live For Productivity:

“Productivity isn’t about being a workhorse, keeping busy or burning the midnight oil….It’s more about priorities, planning, and fiercely protecting your time.    Margarita Tartakovsky

Productive action transforms lives.  Putting together a life of extraordinary results simply comes down to getting the most out of what you do, when what you do matters.  Most people think there’s never enough time to be successful, but there is when you block it.  Time blocking is a very results-oriented way of viewing and using time.  It’s a way of making sure that what has to be done gets done.   Time blocking harnesses your energy and centers it on your most important work.  It’s productivity’s greatest power tool.

If disproportionate results come from one activity, then you must give that one activity disproportionate time.  Each and every day, ask the Focusing Question for your blocked time:  “Today, what’s the One Thing I can do for my One Thing such that by doing it everything else will be easier or unnecessary.”  When you find the answer, you’ll be doing the most leveraged activity for your most leveraged work.

Once you’ve done your One Thing for the day, you can devote the rest of it to everything else.  Just use the Focusing Question to identify your next priority and give that task the time it deserves.  So, when you know your One Thing, make an appointment with yourself to tackle it.

Time Block these three things in the following order:

  1. Time block your time off.
  2. Time block your One Thing.
  3. Time block your planning time.

By planning your time off in advance, you are, in effect, managing your work time around your downtime instead of the other way around.  Resting is as important as working.

The most productive people design their days around doing their One Thing.  Their most important appointment each day is with themselves, and they never miss it.  In addition, the most productive people work on “event” time.  They don’t quit until their One Thing is done.

The last priority you time block is planning time.  This is where you reflect on where you are and where you want to go.  Block an hour each week to review your annual and monthly goals.  First, ask what needs to happen that month for you to be on target for your annual goals.  Then ask what must happen that week to be on course for your monthly goals.  You’re essentially asking, “Based on where I am right now, what’s the One Thing I need to do this week to stay on track for my monthly goal and for my monthly goal to be on track for my annual goal?

Protect Your Time Block:

For time blocks to actually block time, they must be protected.  Although time blocking isn’t hard, protecting the time you’ve blocked is.  The world doesn’t know your purpose or priorities and isn’t responsible for them—you are.  So it’s your job to protect your time blocks from all those who don’t know what matters most to you, and from yourself when you forget.

The best way to protect your time blocks is to adopt the mindset that they can’t be moved.  You own need to do other things instead of your One Thing may be your biggest challenge to overcome.

Are Your Habits Helping or Hurting Your Business?

a3feAre Your Habits Helping or Hurting Your Business?

By Ray Silverstein

Right now, many of us are wrestling with the personal habits we resolved to break or build back on January 1, like losing weight and giving up smoking. But what about your business habits? Have you given them any thought?

Like it or not, we are slave to our habits. According to research, a whopping 40% of our daily activities are habitual, not things we consciously choose to do. So chances are, if you put in an eight-hour workday, you’re spending three hours and twelve minutes of it on auto-pilot.

That’s 16 hours—two who eight-hour days—every single work week!

That can be good or bad, depending on your habits. If you have built good, productive habits (following up with prospects, monitoring sales activity), they’ll serve you well.

But if you’ve developed unproductive habits (checking emails continuously, tending to mundane tasks), your habits may be wasting prime work time.

Habits are extremely…well, habit-forming. Our brains are hardwired to create habits, according to Charles Duhigg, author of the fascinating book, The Power of Habit: Why We Do What We Do in Life and Business.

If you’re trying to grow your business, it’s important to understand what habits drive you, so you can either put them to work for you or change them. The first step? Identify them. Learn what they are.

According to Duhigg, a habit consists of a three-step loop:

  • The cue – the trigger that prompts your brain to begin a specific routine.
  • The routine – the activity itself, which may be physical, mental, or emotional.
  • The reward – the payoff for performing the routine, which gives your brain a reason to remember the habit.

Habits are powered by cravings. For example, I’ve developed a habit of craving a chocolate chip cookie at 2 a.m. My habit breaks down like this:

  • The cue – I wake up at 2 a.m.
  • The routine – I eat a chocolate chip cookie.
  • The reward – It tastes good. I feel good.

Most habits don’t go away by themselves. If I want to break my cookie habit, I can start by recognizing the cue for what it is when I wake up. I can change my routine, switching out a cookie for a piece of fruit. It still tastes good, though not as good, but now part of my reward is knowing that I’m eating something healthy instead of something less healthy.

It’s the same thing in business. For example, when we discussed habits in one of my PRO peer groups, one business owner—who had previously expressed concern that his close rates were dropping—had a moment of enlightenment.

He realized that he had fallen into a bad habit at sales presentations. Instead of engaging prospects in conversation, he would immediately launch into a features-and-benefits recitation.

It was driving people away.

His cue was getting in front of a prospect; his reward was sailing through the presentation. But a better reward would be closing more deals. Now, he is consciously changing his routine, engaging prospects in real conversation and making his presentations more organic.

So here’s my challenge to you: identify your good and bad business habits. Figure out what triggers them and how you can modify them to better serve your business.

In other words, make it a habit to pay attention to your habits.

 

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 PRO-preneur, a peer group with unique features 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.

How’s Your Crystal Ball?

How’s Your Crystal Ball

by Ray Silverstein

When you own a business, you need to be able to tell the future. To know where revenues are headed and what resources you’ll need. The good news is, you don’t need to be clairvoyant to see what lies ahead. 

Because you have something better than a crystal ball: your business indicators. Some indicators are nearly universal (i.e., the economy), and some are unique to every business. Either way, when you track your indicators, including those listed below, you can get a handle on the future.

Indicator #1: Present and Future Sales 

Reviewing current orders is the first step to projecting revenues. But you can estimate even more accurately if you factor in outstanding bids/proposals.

For example, review past proposals for the last 12 months. What percentage did you close?  

Apply that percentage to today’s proposals, and you’ll get a sense of where you’ll be in X number of days, depending on the length of your sales cycle. In essence, you’re diagramming your sales funnel. (Then you can also work backwards to determine how many proposals you must generate to hit your sales goals.)

Indicator #2: Service/Maintenance

If your sales have a ‘tail’—i.e., the initial sale will result in service activity down the road—that’s another indicator.

Say you sell and service equipment. By analyzing past maintenance activity, you can predict what service/parts will be needed when. Apply that information to your equipment in the field, and you cannot only proactively line up parts and staff, but anticipate maintenance-related revenues.

Indicator #3: The Domino Effect 

Certain activities in one industry  impact related industries. If you can pinpoint those relationships, you can use them to make projections.

For example, one of my PRO peer group members is in the furniture business. By talking to her customers, she found they shared one common denominator: many had purchased homes within the prior 6-12 months. By tracking the local housing market, she can project which way sales are trending.

Indicator #4: Fill-in-the-Blank!

There may also be some indicators unique to your business. Keep a look out for them.

For example, years ago when I owned a manufacturing company, I used to sell to a well-known mail order house. This was before the Internet. Every day when the mail arrived, the mail order staff would immediately weigh it. Yes, weigh it. The company’s savvy owner knew the value of his average order and had calculated the number of orders that made up a lb. of mail. So hours before the orders were processed, he knew what the day’s sales would be.

Indicator #5: The Local Landscape

Your business is part of a local community. Depending on what you sell or do, all kinds of local activity may affect you: big construction projects, hiring moves by major employers, even the school calendar. By staying abreast of your community and keeping tabs on local business news, you can get a sense of what will impact your business.

So, put away your tea leaves and cancel your appointment with Madame Marie. Learn to track and read your key business indicators, and you’ll be able to predict what the future holds.


Ray Silverstein is president of PRO, President’s Resource Organization, a network of entrepreneurial peer advisory groups in Phoenix and Chicago. He is author of “The Best Secrets of Great Small Businesses,” and “The Small Business Survival Guide.” He has partnered with the Phoenix Business Journal to bring you access to the Journal’s Digital Portal, a goldmine of potential business indicators. For more information, contact Ray at 1-800-818-0150 or ray@propres.com.

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