Written by Dave Lavinsky on Tuesday, November 27, 2012
With the 2012 presidential election wrapped up, and January's inauguration looming on the horizon, life is getting (somewhat) back to normal in the United States. But the past few months have been filled with stories of great presidents, leadership and change, and tales of how those have impacted America's direction over the course of the past few centuries.
A few good presidential examples can be used to guide a business toward success, as well. Business owners would do well to follow a few of the examples set by Abraham Lincoln, long considered one of the most respected presidents in American history. His reputation is not an accident; instead, he carefully crafted an expert team, sought leadership from multiple subordinates and cabinet members, and turned debate into his best chance for success.
And while it's true that business owners won't be fighting any wars, Lincoln's policies of leadership and discussion are a powerful way for entrepreneurs to get ahead and maintain strong footing in their industry.
You CAN Hire Others Who Disagree with You
One of the most notorious aspects of Lincoln's administration was that it was largely comprised of his rivals. One of the best examples of this is Lincoln's choice for Secretary of the Treasury. The job is typically reserved for those who agree with the president's policies, and have a strong desire to remain above the political fray while ensuring the nation's fiscal sanity.
Lincoln saw it quite differently, instead believing that the Treasury -- and every other department -- should be run by someone who was highly capable of the job, regardless of their ambitions, political viewpoints, or personal relationships with the president.
Lincoln boldly appointed Samuel Chase to the lead the United States Treasury. Lincoln did this despite Chase's well-known political ambitions, and his thinly-veiled efforts to undermine Lincoln for his own political gain.
The same pattern can be seen in Lincoln's appointment to what was then known as the War Department. Secretary of War Edwin Stanton rarely saw eye-to-eye with Lincoln on policy matters. He was the best man for the job, however, and that was good enough for Lincoln.
At every turn, Lincoln followed a basic business philosophy: hiring capability, regardless of ideology. Business owners could learn from this example, as we often expect the ideal worker or partner to look or think a certain pre-conceived way, which blinds us to possibilities.
Rather than leading without any debate or argument, and rather than picking those who merely agree with everything we, the business owners, believe, pick a team full of rivals and strong-minded professionals who will set the business up for success. All ideas will be properly debated, vetted, and implemented -- but only if they're the best ones for the business.
A business that enjoys healthy debate among its employees and leaders is one that makes the best decisions for the entire company, rather than the best decisions for the company's owner. Out of a brief ideological struggle, a commitment to sound leadership and decision-making can emerge.
Shoulder the Blame and Share the Credit
Abraham Lincoln was well-known as the type of leader who preferred to share credit with his expert cabinet members, while also shouldering the blame of the administration's failings. In fact, he often shouldered the blame for issues that weren't entirely of his own creation.
That type of compassion and leadership is often missing in business, and it creates an adversarial environment that can be damaging to the growth of the enterprise.
Small businesses need to work as a team. That team can debate (sometimes for days on end), but they must work to create goodwill at the end of the day (and individual team members cannot be blamed for problems). When everyone feels good about their coworkers, and about how their ideas are being integrated into the growing company's policies, they're more motivated to do the best job they can.
Additionally, happy employees and executives are more loyal in their positions -- preferring to stick with a business through the good and bad times, as opposed to jumping ship to a competitor or starting their own company.
It was Abraham Lincoln who said, "Give me six hours to chop down a tree, and I will spend the first four hours sharpening the axe."
Lincoln knew that before you can achieve success, you must prepare. You must know where you want to go and what you want to achieve, and then create the plan to achieve it.
Have a Commitment to Leadership
Above all else, what Abraham Lincoln showed during his time in office was a commitment to excellent leadership. It takes a very strong individual, and a very capable manager, to hire a team of rivals. After all, a lesser man or woman would find themselves overwhelmed and entirely too stressed by constant debate over company policies.
Lincoln, however, thrived on the discussion. Discussing his views was something he enjoyed; conflicting ideas helped him moderate his own views and policies, allowing him to best enact policies for the majority of a war-torn nation.
In today's business climate, it's all too easy to get wrapped up in a self-centered drive for success, especially for small business owners working mostly alone. But when that motivation is expanded to a larger team, and their conflicting viewpoints are brought in as part of the company's policies, the whole organization stands a better chance of making sound decisions.
With shared credit, proper planning, the right employees (who don't always agree with you), and an understanding leader (You!), your business can grow carefully and strategically, making strong tactical moves that set it up for more sales and profits, and continuous growth.
Written by Dave Lavinsky on Sunday, November 18, 2012
What is the goal of New York Giants or any football team?
The answer should be easy. This team's goal each and every year is to win the Super Bowl.
There's no question about this. Every player shows up for pre-season training with that goal in mind. Every practice drill is performed with that goal in mind. And every game is played to win, because each win will put the team one step closer to the Super Bowl.
So, what is your company's end goal? Can you answer this question without missing a beat? Do you clearly know and understand what your organization has set out to achieve? And, just as important: does every employee in your organization know what this goal is?
And most importantly, do you know precisely what you need to do this month, this week, and today, to make significant progress towards this end goal?
If not, then THAT is the real reason why your business is "stuck."
If you don't know precisely what you need to do beyond today, then you're thinking like a drug addict.
Let me explain. The most successful entrepreneurs in the world focus on the long-term. Sir Richard Branson. Donald Trump. Bill Gates. Steve Jobs. And many more -- they all had BIG long-term visions, even when they were just starting out.
In fact, ALL successful people think long-term. These are individuals who build trees under which their grandchildren will sit.
On the other side of the spectrum are drug addicts. Drug addicts don't think at all about tomorrow. They spend all their time today looking for their next quick fix. Their only plans are to figure out how to immediately get more drugs. As a result, they never achieve success. But rather, they fall deeper and deeper into despair.
So, how do you run your business? Do you act like a drug addict and focus each day on trying to increase today's revenues and profits?
Or, do you operate like a successful entrepreneur, with a methodical plan that will BOTH build revenues and profits today AND create the necessary infrastructure for your long-term growth, several years from now?
The key is to start by creating the long-term vision of where you want to go, and then reverse engineer it.
You see, if I asked where you'd like your business to be in 5 years, or 1825 days, you'd probably be able to answer fairly easily.
But how about if I asked you where you'd like to be in 1824 days? Or 1823 days?
And what about 987 days from now?
Or 481 days from now?
Or 84 days from now?
The fact is that you COULD answer these questions for every single day from now until 5 years from now, all the way back to the present day.
And if you did that, you'd know exactly what you'd have to do tomorrow to be on the right trajectory to meet your 30 day, 365 day and even 5 year (1825-day) goals and vision!
Now, in reality, setting goals for each of the next 1825 days is not practical. Not only would it take too much time to complete, but your business and strategy needs to evolve over time. No business operates in a vacuum, and you must be flexible and willing to change.
But, you can figure out where you need to be in the next year, and figure out what you need to accomplish this month to allow you to get there. And then you could plan your days to ensure that progress is continually made.
In summary, to succeed as an entrepreneur, you need to have a clear goal and vision of what you want to achieve. Then you need to create a step-by-step game plan to get there. Because you can't go from A to Z without achieving B, C, D and so on. The key being that you must plan out and execute on the smaller periodic goals (e.g., weekly, monthly, annual goals) that you must accomplish to achieve your end goal.
For my proven methodology on how to create a step-by-step plan to build your ideal company, pick up a free copy of my book, Start At The End: How Companies Can Grow Bigger And Faster By Reversing Their Business Plan.
Written by Dave Lavinsky on Thursday, November 15, 2012
The REAL Reason Businesses Fail to Achieve Success
Soon after entrepreneurs and business owners start businesses, they tend to become trapped in the day-to-day, week-to-week, and month-to-month struggles...
At some point, virtually all of us become 100% focused on the short-term and lose sight of our long-term visions. As a result, we begin to wander, and never achieve the initial vision we had when we first started or bought our companies.
Specifically, we set short-term goals and create short-term plans (if any plans at all). And as the United States Small Business Administration found after numerous studies, the #1 reason business owners fail to achieve success is lack of formal business planning.
That's right, you must have BOTH 1) a long-term vision and business plan, AND 2) a short-term vision and business plan that puts you on the right trajectory towards achieving the success you want.
So how do you do this?
The Solution is to Forget About Today And 'Start At The End'
"If you don't know where you're going, you probably won't get there."
This quote from Yogi Berra is so simple, yet so true. If you don't know where you want to go, you'll never get there. It's like driving in a foreign country without a map or GPS system.
And it's the same with your business. If you don't know where you want to take your business, how can you possibly get there? You can't.
In business, as in everything else, you need to have a clear vision of where you want to go. Then, and only then, can you create a plan to get you there. The key is to "Start At The End." Figure out where you want to go. And then reverse engineer the path to get there.
So, oddly enough, the starting point to all success is actually at the end! Now, the reverse engineering process of getting to the end is all about figuring out short-term goals.
Specifically, once you figure out what you want to accomplish by the end, you can estimate what you need to accomplish in the next year to put you on the right trajectory towards meeting your ultimate goals.
And then you can figure out what you need to complete this quarter to get on the path to your annual goals. Further, you can determine what you need to achieve this month to reach your quarterly goals. Likewise, you can figure out what you need to accomplish this week to meet your monthly goals. And lastly, you can figure out what you need to do today to accomplish your weekly goals.
Success really is this easy; it's simply constantly breaking down your ultimate vision into smaller pieces, and then focusing on completing those pieces (rather than getting distracted as most of us do).
For specific tips and strategies to envision the company you'd like to build and to reverse engineer that vision into a step-by-step plan you can follow to achieve it, pick up a free copy of my book, Start At The End: How Companies Can Grow Bigger And Faster By Reversing Their Business Plan.
Written by Dave Lavinsky on Saturday, November 10, 2012
This week, I am really excited to release my new book, Start At The End, published by John Wiley & Sons.
I wrote the book for two core reasons.
1. To help entrepreneurs and business owners succeed
For the past 15 years, I've been helping businesses grow. And, in doing so, I started to get really frustrated and upset by so many entrepreneurs and business owners making the same mistake.
Which is this -- they focus all of their energy solving today's problems. And doing this never gets these businesses to where they want to go. Yes, many of them will survive using this strategy. But these businesses never get where they want to go, and the business owners aren't happy; they work too hard, take too little time off, and don't get the results they want.
The solution I have found that works over and over again is to start at the end (catchy book title, huh). That is, to figure out where you'd like your business to end up. Then you create a plan that allows you to both solve today's problems and make big strides towards reaching your eventual goal.
2. To get the word out about the importance of planning
The release of my book will educate thousands, if not tens of thousands (or hopefully more) of entrepreneurs and business owners as to why they need a business plan and how to create one.
This knowledge will make them more successful. At the same time, the book will help establish myself and Growthink as the go-to firm for developing business and growth plans for businesses.
Certainly writing a book has great PR value in that it gets your name and the name of your company out to the masses. A book also increases your authority and credibility. Specifically, if the average entrepreneur was choosing between two firms to develop their business plan, all other things being equal, they would generally choose the firm who has published a book on the topic.
So, to summarize so far, writing a book is a great marketing tool. It spreads the message about you and your company, while increasing your authority and credibility. And, publishing a book gives you great opportunities for PR. The media likes talking about and interviewing authors, which allows them to further spread the word about themselves and their companies.
The "bad" news is that the heavy lifting starts now
While creating a book is a ton of work, that's pretty much the easy part. The hard part is selling it. As I mentioned in a recent article, a successful writer isn't labeled a best-writing author. Rather, he or she is called a best-selling author.
Because even if my book is great (I think it is, and hope you do too), if people don't buy it, it doesn't matter. In fact, there is a very interesting dynamic that takes place in book marketing. That is this: the more people that buy the book, the more likely it is to get to a best-seller list on Amazon, Barnes & Nobles, the New York Times, and others. And, if and when a book gets on these lists, it gets more and more publicity and more and more people buy it.
So, the key is getting on these lists. Personally, my goal is to get on the New York Times best-seller list. This achievement has been on my list of personal goals for some time, and being able to cross it off and say "I did it" would be a very proud moment for me.
I hope you learned some lessons here about how writing a book could help you and your business. And note that even if your book is self-published, you get many of these benefits.
In the coming days, I will be speaking more about the book: including giving unique opportunities to get a copy, and teaching some of the lessons included in it; mainly proven strategies that have allowed clients of mine to achieve phenomenal growth; which is what I want for you too!
Thanks for reading this; I hope you will soon read my book and grow the business of your dreams.
Written by Dave Lavinsky on Thursday, November 8, 2012
Are you looking to boost your sales and profits?
I hope you are, because any business owner or entrepreneur who isn't looking to grow, will surely start to decline.
So, since you ARE ready to grow, here are seven easy ways to do so:
1. Find or build the right product or service
Without the right product or service, you're going to have a hard time growing your business. The right product or service serves the customer segment(s) you want, and solves a real need of theirs. Also, the size of the customer segment must be large enough to make your business profitable.
In addition, the ideal product or service is a consumable item that needs to be replaced on a regular basis, or a product or service that will have recurring sales. If you don't have a product or service with recurring sales, figure out how to create one.
By having a customer base that comes back to you over and over again, you can introduce related products, as satisfied customers will be open to recommendations.
If you don't have the resources to build a new product yourself, consider partnering with another business that already makes the product you want to sell. You can often get them to create a variation of their product and private label it as your own.
2. Learn to sell better
Having the right product or service doesn't help if no one is aware it exists. Someone once observed that a successful writer isn't labeled a best-writing author - he or she is called a best-selling author!
A marvelous product could collect on the shelves if not promoted or distributed. That's where selling comes in. The number one piece of advice for new business owners is, before you learn to build, learn to sell.
3. Improve your unique selling proposition (USP)
Having a strong unique selling proposition (USP) is one of the most important elements of your marketing plan. Your USP separates your product or service from your competitors. It makes your product or service a "unique, must have" item.
In fact, the USP of Domino's Pizza: "Fresh hot pizza delivered to your door in thirty minutes or less, guaranteed," has widely been credited as the reason for the company's success in a highly competitive and fairly commoditized business.
Ideally you can come up with a great USP for your company like Domino's did. But at the very least, you need to be able to clearly articulate reasons why customers should buy from you instead of your competitors.
4. Raise your prices
Entrepreneurs who start a business often think they should charge less, mistakenly assuming that customers will flock to them if they see a low price.
In fact, the opposite is more likely to be true; low price often denotes low quality. When you have a great product or service you'll discover that people will pay more for it and you will earn more. And if your profit margins are too low, that's another sign to increase your prices right away.
5. Do a better job of cross-selling and up-selling
It's said that McDonald's doubled its profits when its cashiers started asking "would you like fries with that?" This simple cross-sell request results in tons of new sales that the company otherwise wouldn't have generated.
Likewise, McDonalds added "would you like to supersize that?" later which is a classic up-sell. This too dramatically increased the company's sales and profits.
Importantly, when you cross-sell and up-sell, you are not only generating more revenues and profits for yourself, but you are better satisfying your customers.
For example, if you owned a hardware store and a customer was purchasing a hammer, you would be doing them a service to offer them the right nails for the job, and a better hammer, or an offer to buy a second hammer at a discount in case they ever lost the first one.
6. Establish yourself as an "authority"
Make sure everyone knows you as an authority and recognizes your expertise. We all know what a "xerox" is, right? In 1959, Xerox introduced its first plain paper photocopier; by 1961, the company had almost $50 million in revenue, by 1965 its revenues were $500 million, and the rest is history - revenues were $22 billion last year!
What was first a company name and then a trademark, in popular vernacular became a noun of common usage, although Xerox fought this use of its name. Do the same with your product. Make sure everyone has a mental picture of a great product or service when they say your company name.
7. Figure out how to gain economies of scale
The key to making a great profit is scale. If you can't produce and sell a product on scale, then you won't generate a lot of profit.
Some ideas may be moderately profitable on a small scale, but can you sell 1,000 units with the same precision and scalability as 10 units? The most important consideration when choosing a product for a business is scalability - the ability to replicate one sale with many sales.
If your current product or service isn't very scalable, figure out how to make it more scalable. Generally, by implementing the right systems, you can accomplish this.
Follow these 7 tips (and see many more here) to maximize your revenues and profits, and keep your business thriving!
Written by Dave Lavinsky on Sunday, November 4, 2012
In many franchise businesses you can see the same hamburger or service turn out the same carefully-designed way, regardless of location or the employees doing the work.
The reason why these often big businesses are able to perform an operation consistently and at a massive scale is because they use and follow systems and work processes. This means that they do the right things, in the right way.
Why Small Companies Can't Handle Growth
Unfortunately, most small businesses and entrepreneurs do the opposite. That is, they fail to create systems and business processes that coordinate routine work in a standardized way. Their style of small business management pretty much boils down to just asking their employees to come on time, and then to watch them and hope their products and services are promoted and fulfilled correctly.
Well, what does "correctly" even mean?
This is a mistake that happens all the time; most entrepreneurs think they don't need to set systems and work processes, or that it has to be done all at once in some monumental undertaking to make an employee handbook as thick as McDonald's.
Because the average small business operates with less than a few dozen employees, their managers generally believe (incorrectly) that since the business only has few people, creating and applying business systems would be a waste of time and money.
It's like saying that you don't need a system to organize your CD collection because you only have a few CDs at present. This might work in the beginning, but the problem comes when it's time for the business to grow. Then you may have 10 times the work going on, and things get chaotic. Quality goes down, morale goes down...it's a confusing mess!
Same goes for when your business has to change employees (even satisfied employees change jobs, move, or otherwise stop working for you). With no systems in place, the new employee will have a tough time doing the task correctly because "correctly" has not been defined for them or demonstrated.
The Process Determines the Results
Another reason why small businesses often lack proper processes is because their management only cares about results, rather than the processes that created them. They don't care how their employees get the job done, as long as the finished burger meets the standards.
Of course we should all be results-oriented. But sometimes having your team do something a specific way will lead to better results, higher quality, faster work, less waste, etc. In these cases, you definitely want to spell out the process for them.
When buying hamburgers from a franchise, for example, people expect it to be perfect or to at least be identical to the previous ones that the burger joint sold. If you didn't have a system or a process for making burgers (how long to freeze, how long to cook, what the toppings are and in what order to stack them, etc.) then keeping the quality up to your standards would be tough. One employee would do it one way; another employee would do it another. You would not get consistent results.
How a Systems-Run Business Looks
We've covered the disadvantages of not having small business management systems and processes, but now let's delve into what may actually happen when you do have them.
When talking about the advantages, we just have to reverse the scenarios we talked about earlier.
Imagine a business with only a handful of employees. But also imagine them following a system and doing what they were supposed to do, and doing it the right way. Costs would go down. Product and service quality would go up. Profits would soar. And your business would be simple to run. As a result, you would spend your time growing vs. simply operating your business. And tons of other businesses would want to purchase yours for a big premium.
Now imagine one employee quitting for whatever reason. The new employee wouldn't have a problem taking the old employee's place; because there would be a process to follow that everyone knows. It would have become the way you do it here.
Now that you know that systems and business processes are important, how do actually create them?
Make A Few Simple Systems Of Your Own
To create systems, it is best that you start looking at the business processes that take place in your business. Make a quick list of everything your business does, from accounting to sales.
Once you have a list, take one at a time (in order of impact to your business; the most potential impact first) and start writing down a simple checklist of actions that make it happen. Start with the beginning of the process (e.g., customer places order), then imagine the ideal outcome (customer receives perfect result), and then write down each step that should occur in between. Then write in who is responsible to do what, and estimate the costs of each step in hours and dollars. You should then have in one hand a brief write-up of how to perform the system and what it will take to do so.
Once you've designed your system, test it out once or twice before officially implementing it. Make sure your systems and processes do what they are supposed to do and nothing short of that. Perform the work yourself or watch someone closely, and pay attention to every step.
Whether it's from not knowing about systems or not making the time for it, most small business managers do not make and improve their business processes over time. But that's manager's main job -- to keep the right people running the right systems, so the company's desired results can be achieved.
If the system doesn't work...change it. If an employee will not or cannot work the system...change employees. Because once you systematize your business, it will run smoothly and it will run itself. You can then focus your efforts on growing the business, and reap the rewards of a fully systematized company.
If you want to learn more about systematizing your business, I will present a full session on this topic at the upcoming Business Blueprint Live event.
Written by Dave Lavinsky on Saturday, October 27, 2012
For over 15 years, I've been a serial entrepreneur. While not all of my ventures have been successful, the majority of them have been. Someone recently asked me what the keys to my success have been. Upon thinking about it, I identified the 7 strategies I religiously use, and which I attribute to my success.
Read them and use them yourself, and I'm confident the level of your success will increase dramatically.
1) Have a Clear Vision Of Where You Want To Go
If you don't have a clear picture of the company you want to build, there's no way you can build it.
Spend time figuring out the precise attributes of the business you would like to build. How much will your revenues be? What products and services will you be offering customers? How many employees will you have? And, by what date will you achieve all this?
2) Have a Written Strategic Plan
Your vision is your dream. And to attain the dream, you need a strategic plan that details how you will achieve it.
Among other things, it must document your product strategy, your marketing strategy and your human resource strategy. Your plan should detail your long-term vision, but focus more specifically on what you must accomplish in the next year.
3) Have Quarterly, Monthly, Weekly, And Daily Goals
If you were able to draw a line from where you are now to where you want your company to be, that line would be known as a trajectory. Success is about getting on the right trajectory. That is, as long as what you accomplish today, this week, this month and this year progresses you farther and farther along the line (versus going below the line or stagnating) then you will eventually reach your long term goal.
To stay on the right trajectory, you must set quarterly, monthly, weekly, and daily goals. Each goal should be set with an understanding of the larger goal. For example, figure out what you need to accomplish this quarter in order to properly progress towards your annual goal. And then figure out what you need to accomplish this month to properly progress towards your quarterly goal. And so on.
By creating and achieving these smaller, periodic goals, you start to ride the trajectory to your ultimate vision.
4) Educate Yourself Continually
To succeed you need to continually invest in educating yourself.
You should be reading the right books. You should be attending the right seminars, conferences and trade shows. And you must read the right newspapers, magazines, newsletters and blogs.
Do not skimp on spending money on educating yourself. Investing in your education (and that of your key employees) will generally give you a larger return on investment than anything else in your business.
5) Satisfy Your Customers
Satisfied customers are the key to your success. If you can't satisfy customers, you will fail.
They say it takes one dissatisfied customer to undo the good that nine happy ones provide by spreading the word about their experience with you friend-to-friend or in online reviews.
You can satisfy your customers on the front end (at or immediately after the time of the first sale) by making the sales and delivery process smooth and seamless, by reducing the customer's participation or steps required to use the product, by managing their expectations so that what they get is exactly what they were promised, and of course with spectacular customer service and support.
In addition to providing a great experience as just specified, the product or service you deliver them should be high quality and fully satisfy them.
6) Market to Your Customers
This is a big one, particularly since most business owners don't do it enough. Most entrepreneurs and business owners are so focused on getting new customers that they neglect their current customers.
And, unlike prospective customers, current customers have a track record of buying from you...and are much more likely to buy from you again than prospective customers.
So spend time listening to and communicating with your current customers. Find out what that truly want and need, and stay top-of-mind so they buy from you again and again.
7) Be Laser-Focused in Your Work
This ties in with #3 (Have Quarterly, Monthly, Weekly, And Daily Goals), but deserves its own mention. Which is this: be sure to focus on one aspect of your business at a time. Conversely, trying to do too many things at one will diffuse your focus and inevitably result in failure.
Limit the number of projects you're working on until they are finished. Remember, twenty projects that are 99% complete but not live yield less revenue that just one project that is 100% complete and live.
As we keep hearing in the presidential debates, you, the entrepreneurs and small business owners, are the backbone of our economy. Follow these strategies and you'll be more successful, and so will the economy!
Written by Dave Lavinsky on Thursday, October 25, 2012
Accountability has been a buzzword in the business world for some time. Unfortunately, most of us have a negative association with the word. We often use it as if it means blame and punishment, as in "Who is accountable for this mistake?" So we unconsciously try to avoid it.
The truth is that accountability is unavoidable. In the workplace, everyone is accountable to someone. As an entrepreneur or business owner, you are accountable to your business' success, and to your customers, investors, and employees.
Now, what if being accountable was empowering for you and your employees? Research indicates that rather than a negative force, holding people accountable for their actions and results has very positive effects on morale and performance.
For your employees, an environment of accountability produces vigilant problem-solving, better decision-making, and greater job satisfaction. With an environment of accountability, employees can develop their skills and be their best. It means a higher likelihood of reaching goals, which we all want.
For yourself, accountability is also key. Most of us worked for someone else in the past to whom we were accountable. But when we struck out on our own, and became the boss, we lost that. While many entrepreneurs and business owners are able to be accountable to themselves, it's often challenging. And for tasks that take a lot of discipline (e.g., calling 25 prospective investors every day), sometimes more accountability is needed to make sure they get done.
Here are some ways to boost accountability in your company:
- Create accountability standards for yourself. What happens if you don't complete a task? Do you force yourself to stay late to do it? Or are there no immediate consequences? Figure out how to reward yourself for being fully accountable, and likewise give yourself some sort of penalty when you are not.
- Ambiguity is the enemy of accountability; so your first step as the manager of your employees is to make sure they have very clearly defined roles, job descriptions, and duties.
- Accountability is an attitude, so look at yourself as the role model. Are you being accountable to your employees, clients, and yourself? You as the leader will want to model this attitude, so focus on being accountable in addition to holding others accountable.
- Do you have written expectations of your employees? Starting at the time of hire, if possible, create written expectations and standards of performance for each employee. You cannot expect something from someone who has not had the opportunity to buy into the expectation.
- Do your employees have a working plan - a project timeline, an economic model etc? This will help keep them accountable.
- Do your employees have training? You cannot hold someone accountable to something they are not been trained to do!
- Have you created a learning based environment? Is it okay to make a mistake or say, "I don't know?" Creating a safe environment for mistakes encourages accountability. Employees will be less afraid to share mistakes and other negative feedback with you that can be used to correct the root of the problem. The opposite of this would be a culture of "yes men" (which you clearly don't want).
- Are there real consequences for lack of accountability in your organization? Consequences work best when spelled out before actually needed, in expectations for example.
- Do your employees have the talent and ability needed for the task? Some people will not have the ability to do the job you are asking them to do regardless of having a well-defined role, a great manager and excellent training. Try to find this out when hiring, but keep an eye on employees throughout their working time with you to confirm it.
Without accountability, no one knows the goal or who is supposed to do what. There's no way of knowing what's going on, so things don't get done (surprise, surprise). Without the right accountability, you will create an environment of low productivity and high turnover.
Conversely, setting up the right accountability structures, as discussed above, will create a culture in which goals are constantly attained. So make a plan today to implement the tips above. After all, if you don't emphasize and demonstrate the important of reaching the goals you set, who will?
Written by Dave Lavinsky on Sunday, October 21, 2012
Luke Fishback is a bright guy. Upon graduating college with a degree in engineering, he got a job at Lockheed Martin. However, within a few years, he had had enough.
Well, Luke realized he was an entrepreneur at heart. And that he needed to start his own company. In fact, earlier in his life, Luke had been an entrepreneur. When he was 14 years old, he started Luke's Garbage Service, a waste disposal and recycling service for a rural community in Georgia.
So Luke started a company called PlotWatt.
PlotWatt creates technology (cloud-based algorithms that analyze smart meter data) that helps people reduce their energy bills by providing customized money-saving recommendations.
But there was one thing Luke didn't have, but desperately needed: money. Luke needed money to build his team, develop his technology, and start marketing his company, and so on.
The good news is this: Luke didn't follow the failed path that most entrepreneurs take; which is to try to secure millions of dollars in venture capital right away.
Rather, Luke understood Growthink's Funding Pyramid -- the fact that:
1) Some sources of funding are much easier to get than others, and
2) Once you get the easier sources of money and progress your business, it's MUCH easier to raise the harder (and bigger) sources.
So, Luke entered PlotWatt in GE's Ecomagination Challenge competition last year. And he won!
Now while the Ecomagination prize was only $100,000 (that's still a sizable sum, but not as much as Luke needed), it was just what he needed.
Luke used the $100,000 to make progress in building his technology and team, and the press from the award elevated his company's profile.
As a result of this, Luke and PlotWatt were quickly able to assemble a $1 million additional round of funding. And now Luke and PlotWatt are starting to really grow.
Importantly, Luke's story illustrates 5 keys to raising money for your company today:
1. Understand that funding is a progression. No matter how unique your company or idea, you're generally not going to receive a $10 million check from the start. Rather, you will more likely raise several "rounds" of funding. You start with smaller amounts, and then as your business makes progress (and your valuation increases), you are eligible for larger rounds of capital.
2. Find the right sources of funding for now. As I stated above, some forms of funding are much easier to raise than others. And based on your company's current stage of development (e.g., startup vs. established business ready to scale), different forms of funding are more relevant. The key is to go after the right sources. No matter how amazing your company is or could be, if you go after the wrong funding sources, you'll fail. Like when Google initially failed when it targeted venture capitalists (Google then successfully raised funding from angel investors, and went back to venture capitalists thereafter).
3. Cultivate relationships early. Even though you won't get the $10 million venture capital check today (if you haven't raised money before), you CAN start forming relationships with venture capitalists now who can write you a $10 million check tomorrow. According to Fred Wilson of Union Square Ventures, "The perfect entrepreneur/VC relationship is one where each has established respect and trust with the other well before an investment transaction is broached."
4. Create your business plan today and keep it up-to-date. Your business is always changing. And as your business changes, different forms of funding become available, and you'll come across different types of lenders and investors. Importantly, when you meet a lender or investor, you must be able to give them your business plan. So finish your plan now, and keep it up-to-date, so you can send it off at a moment's notice.
5. Always be a marketer. In raising money, the best company doesn't always win (in fact, while seemingly unfair, it often doesn't win). Rather, the best marketers win. That is, the entrepreneurs that are best able to market their companies to lenders and investors are the ones who raise the money. In Luke and PlotWatt's case, their marketing efforts were aided by the PR they received from winning GE's Ecomagination Challenge. In many other cases, it's the entrepreneur marketing themselves via networking at events, sending emails, making telephone calls, getting and leveraging Advisors, etc.
Last year, Luke Fishback was bootstrapping PlotWatt. The company was making progress, but funding was holding back its potential. Today, the company has a million dollars in the bank and is poised for phenomenal growth. Funding can do that for you; so go out and get it.
Written by Dave Lavinsky on Tuesday, October 16, 2012
Every business has a break-even point, which represents the minimum amount of cash to bring into the business on a given month in order to at least be able to cover your cash expenses for the month, or larger profit goals. The reason the media call the Friday after Thanksgiving Black Friday is that many businesses do not reach their break-even point for the whole year until that day, due to the tremendous volume of sales.
Determining your break-even point involves a similar process to thinking through your business plan, wherein you not only gain better understanding of your business but also learn which areas offer ways to cut expenses and boost profits.
In this article, I will share with you how to calculate your own break-even point, and share 3 tips for lowering it.
Calculating Your Personal Black Friday
The first step I recommend is to establish your own break-even point. You reach your personal Black Friday when your fixed costs plus variable costs equal your income.
After hitting this point, all further sales become profit, less any additional variable costs for manufacturing and sales expenses.
- Fixed costs include rent, salaries, maintenance, licenses, equipment, and other overhead expenses.
- Variable expenses include the cost of wholesale goods, manufacturing, sales commissions, advertising, utilities, and other expenses needed to produce the number of goods or services you sell.
- These expenses also apply to intangible products that require software developers, consultants, website managers, pay-per-click advertising, and other expenses associated with creating intangible products or services.
- Income includes the gross sales prices of the number of goods or services sold, whether wholesale or retail. The higher the number of goods, the higher the variable expenses will grow.
Consider all the expenses you might overlook in your specific line of business. Having more salaried employees or too expensive an office space are two examples that might lead to this. You might be paying too much in advertising to produce the same number of leads. There could be a number of expenses you could lower.
You can change your break-even point by cutting overhead expenses and other fixed costs, reducing variable expenses, increasing sales transactions, or charging higher prices.
Below are three proven ways to change your break-even point:
Cut Manufacturing Costs or Raise Prices
The price of your goods must be high enough to cover manufacturing (or service delivery) costs, fixed expenses, and returns on investment. If your analysis shows a high break-even point, you should consider raising prices. You can also try to find ways of cutting expenses by finding cheaper suppliers, buying in bulk to get discounts, lowering advertising costs by targeting customers more efficiently, or lowering the raw materials' quality that you use to make products.
- Niche-type companies can usually raise their prices 3 to 5 percent without causing too much backlash from customers.
- Increasing productivity will lower your costs of goods.
- Inventory control can often find sources of waste, theft, or inefficient production techniques.
- Telephones, energy costs, worker wages, and commissions also add to variable costs. You might convince salespeople to take greater risks for higher future commissions, reducing expenses until you reach your break-even point.
Lowering Fixed Costs
Fixed expenses prove difficult to change. You might have to move to a smaller office space, cut services, lower administrative salaries, or cut staff and outsource some services to more efficient organizations that can get the same results for less money.
Don't cut these expenses so much that your ability to function gets hampered, but do watch fixed costs like a hawk to keep them low and lean.
Make Sales More Efficient
You make your sales more efficient by cross-selling, upselling, and getting referrals and sales leads from customers.
- Offer service or product bundles to convince customers to spend more money.
- Create attractive accessory options to increase sales volume.
- Ask customers to recommend you to friends and associates. You might offer product discounts for referrals.
- Try to motivate your sales force by giving bonuses for meeting certain sales targets.
Your Break-Even Point Will Change with Evolving Market Conditions
I recommend that you periodically review your figures and adjust your break-even point to reflect changes in prices, the economy, competitors' responses, and other factors. Update your figures to stay on top of market changes and make adjustments as needed.
Knowing and managing your break-even point is an ongoing job you perform in your role as manager of your business. It goes hand-in-hand with budgeting and cash flow management. Handle it well and stay on top. Neglect it and you could end up underwater. Hopefully these tips and insights will help you grow your business through ever-changing times and markets.
Suggested Resource: Would you like to know more ways to maximize profits and the value of your business. And specifically to turn it into one that exceeds $10 million in revenues? Then check out Growthink's 8 Figure Formula. This video explains more.
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