Tough Times

During tough times everyone is in sales. As a small business owner you have two choices when in comes to a decline in sales: 1) view your employees as variable expenses that can be cut to help maintain the bottom line, or 2) view your employees as strategic assets that can be redeployed to generate new sales, bolster relationships with customers, and to seek out new opportunities.

To do this, you need to start thinking of your employees as an underutilized sales force. And a non-traditional one. It won't be obvious to treat your production workers as sales people - but most if not all have a great grasp of what customers want - and probably an excellent sense of what people buy and why. Put this knowledge to work - from brainstorming sessions to delivering finished product to the customer's door - to participating in advertising campaigns, booth duty, even a little cold calling.

When times are tough - everyone is responsible and capable of focusing on the top line. Set out the sales targets, discuss progress and lack thereof, and solicit volunteers to take on new duties. Before you fire or layoff that experienced worker - give them the opportunity to earn their salary. You will be surprised, your team will feel a new sense of control (and appreciation), and your customers will benefit from closer contact with the knowledgeable workers on your team.

Give it a shot - what do you have to lose?

For more information and ideas - check out this article.

Payroll Service

The mantra for small business owners is always the same - do what you do well and contributes to the bottom line - and outsource the rest. Your time is your most critical resource - so using your precious time to process payroll is probably not the best use of time.

At a minimum, use the Payroll function embedded in Quickbooks. It's easy to use and automates many of the tedious tasks.

For almost the same price, call your local payroll service. Ask them a few questions: how long have they been in business? how many companies do they serve? are they insured and bonded? can they provide referrals? what is their average number of employees per company? who will you deal with? and most importantly - how do you submit your data? You are looking for a tech savvy company that works over the web or email - that provides input and output reports electronically - and that allows you to access your account 24/7. If they mention "Fax" - move on to the next company.

Better yet - contact a PEO in your area. The Professional Employee Organization takes payroll processing to the next level - and becomes your virtual HR department. They will handle everything from employee manuals to tax filings. Just in terms of time saved and value added - this is a great source of help for most small business owners. Beware - some PEO's use very aggressive selling techniques and hide fees that only seem to appear later. If you get the hard sell - move on to the next company. There are many PEO's serving every market - so you can be very selective. For more information - check out the PEO Association web site.

Bonuses

Employees are your most important asset. I know you've heard that one before - but it bears repeating...  Even better, they are non-depreciating assets. :)   To keep them appreciating, remember to reward them appropriately.

When I first started my own small business, I created a rather complex scheme to set goals and reward achievements. It had multiple line items and algorithms for payouts. We reviewed it weekly with the team - and once a quarter we paid bonuses to the team. It was a great idea, well executed, but it didn't have the right impact.

Goals for rewarding the team should be immediate, visible, and variable.

A handful of $50 bills on hand to reward exceptional performance will guarantee that all efforts will be made to do it again. (Caution - make sure all payroll is accounted for - even cash bonuses - and appropriate taxes are accounted for. Work with your payroll service to ensure you are able to execute your bonus program without violating any rules.) The same is true for movie tickets, dinner coupons, and comp time. Be generous with your rewards - and make them very public to all team members. Jealousy drives motivation.

So, I ended up reworking the bonus system. The goals would change based on business need - but were universally simple, actionable, and direct. The team could see what was asked of them, and what they could do to deliver the desired results. Meeting or exceeding the targets resulted in immediate visible reward. Not meeting the goals meant no reward - and a discussion of what went well and what fell short and required structural improvement to achieve the desired results next time.

The goals changed over time to ensure that bonuses were well linked to our company values - quality, customer service, creativity, customer retention, and growth.

Here are some more thoughts on this subject.

Getting Advice

It can be a lonely experience being the owner of a small business. As such it's important to arrange for structural advice. There are two important ways to do this. This first is discussed below.

First, from day one assemble a small team of trusted smart associates - your "Board of Advisors". I would recommend no fewer than 3 and no more than 5. Ideally you will know them well and they are experienced and have time to help. They don't need to have a huge amount of experience - just the time and desire to seriously commit to helping you grow your business. A family member, a former colleague, a peer in another business, a neighbor, and maybe a CPA or Lawyer. This is going to be useful for you, and fun for them. They won't get paid (except for maybe coffee and donuts) and they will need to be available.

Set a meeting for the Board of Advisors once a quarter or twice a year. Remind them that they are sworn to maintain confidentiality. Share with them the financial performance of the business, what the forecasts are for the coming months, key accomplishments, and key challenges. Then challenge them to engage on 2 or 3 issues that are of concern to you.

You will find that your Board becomes a key resource for you - good advice, positive advocates, and knowledgeable partners. They will also be the ones that can throw cold water on a bad idea - or help you refine and execute a good plan.

Treat them well, involve them, and you will be amply rewarded.

Further reading on this subject can be found here.

What to Pay Your Team?

One of the toughest decisions you will make as a small business owner is how much to pay your team members. Even if you purchased the business with a team intact, you will need to review the payroll and benefits and potentially make life changing decisions.

The best place to start is by reviewing your total payroll budget - how much can you afford and how many people do you need? Establish this as a percentage of sales or gross margins - at a level where you want the business to be in 9-12 months. This will allow you to hire ahead for growth.

Collect industry data and association data for your specific business. It's worth paying for the data if it is available. Here is one place to look - and there are many more that you can Google by typing "industry pay rates". If you are using a payroll service of any kind (and you should be) - ask their help in supplying competitive data. Identify your staffing positions taking into account the degree of experience required, degrees, seniority, etc. Establish a range of pay for each position. Do this even for existing team members. Remember that compensation includes regular pay, bonuses, health care, retirement 401(k) contributions, and even eventual ownership sharing. Calculate the Total Compensation - and the split between regular pay and other benefits.

When you have established the positions and the payroll ranges, i.e.  Manager, $35-40K, 10% bonus target, $1000 401(k) matching, and up to $200 / month for health insurance - you can now take the next steps.

Shared Calendars

It is now possible to create and share calendars for your entire team - at NO COST.

Each employee can set up a personal calendar through GOOGLE. These calendars can be created under a master account - with each person given their own page - as well as access to the rest of the team. You can even set up a calendar for "Staff Meetings" or "Installations" or to reserve conference rooms, vehicles, tools, etc. It takes just a few minutes.

One valuable use of these calendars is for each employee to note their Out of Office time (doctor's appointments, teacher conferences, etc.) and vacations. You can easily see a 'roll-up' of the calendars to know when vacations are scheduled and if you need to reschedule something to avoid conflicts.

This powerful tool is available now - and for small business owners worried about cost - and employee productivity - it's a wonderful tool.

Staff Meetings

Keeping everyone informed seems easy - but it isn't. It requires constant focus to make sure everyone knows what's important, how the company is doing, and how their efforts are linked to the overall success of the team.

As part of your communication process - schedule regular staff meetings. This is an all hands meeting (with one rotating person to answer phones). Schedule the meeting every two weeks - and make sure that everyone can attend in person. If you are missing more than 2 key people, reschedule the meeting.

Keep the agenda simple and consistent.

1) Business overview - what are the key indicators and what is the progress against those indicators.

2) What went well since the last meeting? Recognize outstanding efforts, happy customers, good survey results, positive press, etc.  Spread the positive feedback around - be specific - mention names!

3) What didn't go well since the last meeting? Make this data driven - not impressions. Quality issues, missed deadlines, lost orders, late orders, etc. Don't mention names - everyone is responsible for problems.

4) What are the priorities for the next 2 weeks? Which customers are must wins, which orders need attention, where are areas for improvement? How do you achieve more of #2 and less of #3.

5) Opens. Give everyone a chance to chime in and raise issues and concerns. Give everyone a chance to recognize other people for their contributions. Call on each person by name.

Keep the meeting to 30min to 1 hour. Buy donuts, bagels, or pizza.

1:1's

Nothing replaces a 1:1 meeting with your direct employees.

As a small business owner, time is your most precious resource. Invest some of this time each week to meet with your employees 1:1. That means scheduling time that works for your and your team members - same time very week is best. Make it a time that is convenient and won't be rescheduled. Make it a priority for you - and for  your employees. Book 30min for most of the team, and an hour for most senior members - you don't have to use the whole time, but it is reserved!

For the meetings - each of you should bring a pad of paper, pen, and a file with notes from prior meetings. The meeting is for your employee - and they own the agenda for the first 3/4's of the meeting. They should bring topics they want to discuss with you - anything is fair game. Training, jobs, priorities, work place issues, longer term projects, work place organization, hiring, etc. Anything that is on their minds. Your should focus on their issues, not your own. Listen and discuss. You get the last few minutes to discuss your issues and priorities.

1:1's are empowering for your team. They will appreciate your attention and focus. At first they will be nervous - but they will get used to the process and value it. Write down what you have agreed to - and what they have agreed to. Follow-up on your commitments. 

Regular 1:1's will also have the benefit of reducing interruptions. Remind your employees to use their 1:1 time for less than urgent issues - and you will also see that 'urgent' issues become less urgent, and that your employees will solve many problems on their own.

1:1's are an important part of managing and leading your team. Prioritize them and take them seriously.

A great resource is a book by Andy Grove of Intel.

Employee Manuals

Most small businesses do not have a written employee manual. Don't fall into this trap.

With an investment of a few hours, you can both protect yourself and your business - and - increase employee satisfaction and morale. At a minimum, your employee manual should list your expectations (start time, end time, appropriate dress, appropriate behavior, things you don't allow, etc.), vacation policies and sick time, and your rules on performance and hiring/firing. There is room for more and you can add as you go.

When an employee joins the company - give them a copy of the manual (it can be only a few pages, or a complete bound document). Include three tear out pages - one saying that they received and read the manual, one saying they will keep the company's proprietary information proprietary, and one covering a non-compete if they leave or are terminated. All three pages should be signed by the employee, returned to you,  and kept in their personnel file (locked in a file cabinet - with access only by the owner). This should precede their first paycheck.

There are many web sites that will help you write a manual or even write one for you. There are also a few books on books.google.com - that you can view and read.

Take the time to create and maintain an employee manual. When your employee comes to you and says "what about ..." you can pull out your copy and give a consistent, well thought out, policy. 

Firing

All employees will disappoint you at some point in time. That's the reality of hiring people that aren't your clones. Get over it.

When an employee falls short - ask yourself the following:

1) Did I set clear expectations? Simply put - does the employee know what is expected of him or her. Is it crystal clear - in writing. Have you discussed the expectations and has the employee agreed and understood. Expectations can be as basic as "come in on time" and as complicated as "improve customer satisfaction as measured by repeat orders". 

2) Are there barriers to meeting and exceeding expectations? For instance, if the expectation is that the employee arrive at 8am - but the employee is responsible for getting their child to pre-school at 8am - they will not be on time - no matter how many times to demand it. In a more serious situation - the employee is expected to keep orders updated in the 'system' but the 'system' isn't reliable or the employee isn't appropriately trained. These sound straight forward - but in the real world - the vast majority of employees want to excel - but a large variety of barriers may prevent them from doing so. The best way to identify barriers is to ask the employee. You are not looking for excuses - just systematic items to prevent success.

3) Is this a repeat offense or a one time event? Don't sweat the small stuff - keep your eye on the big picture. If you have a bad day or you don't make the sales goals - go have a drink - don't go looking for an employee to blame. Most likely they are as frustrated as you are - and are looking for ways to improve as well. Work together on solutions. If the offense is a regular occurrence - stop and talk to the employee. Buy them a cup of coffee and outline the issue, why you feel it is important, what the employee needs to do to address the concern, and what the consequences are of failing to address the concern.

4) Think twice. It is always better to address poor performance through training, reassignment, barrier removal, and clarification of expectations. Remind yourself of how painful it is to identify and hire new employees. Talk to your spouse or trusted associate - review the issue and your feelings - and your positive attempts to resolve the situation.

5) If all of the above is not successful - alert the employee that the problem is not resolved. Schedule a short meeting at the end of the workday - Wednesdays and Thursdays are best. Be clear and unapologetic. Explain any severance benefits if any. Make it quick and as painless as possible. Don't assign blame or make excuses - it's too late for that. 

Hiring

Building your team is the most critical activity you can focus on. You are looking for people to do the work - but also that meet your requirements for reliability, dependability, honesty, knowledge, drive - and about 50 more! Where do you start?

The first step is to determine what you need. How do you know you need to hire someone? Did someone quite or get fired? Are you growing? Is the mix of work you are doing changing requiring new skills? Did you decide to eliminate a subcontractor and bring the work in-house? Are you getting too busy running the business to keep up with some aspect of your responsibilities?

Take a hard look at your current team. Is everyone working hard and full time? Is there some one that is ready to take on new tasks or more hours? It's ALWAYS better to promote an existing member of the team if possible - and then fill an entry level position. It's ALWAYS better to assign new tasks to the people that have already mastered their current jobs. Most of your team members will be eager for new things to do - especially if it holds the promise of increased status, learning, variety, interaction, and of course - compensation.

Grow My Biz

This blog is now an adjunct to an exciting new website site and consulting company - Grow My Biz - found at www.growmybiz.us.

Grow My Biz is focused on helping small business owners with employee issues - from identifying qualified candidates, to hiring and firing, establishing compensation plans, and most important - motivating the team for maximum performance - and profits.

As a small business owner, I learned that the key enabler of my success - was my team of employees. I also learned that the key factor standing between making money and growing - could also be my employees.

I'll be discussing practical means to improve your team. I also welcome your comments and phone calls - 480 229 5767.

Welcome

This blog covers topics of interest to small business owners with 1 to 25 employees. We'll go from the basic to the philosophical. The content is based on experience I have gained over 25 years as an employee, manager, and business owner. Your comments, thoughts, and feedback are always welcome.