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Setting Expectations Is Important, Start With Your Own by Dave Ferguson
We are all aware that setting expectations for our customers will determine their level of satisfaction. But, what about setting your own expectations?
Read the following words out loud:
Did you notice that there are two ways to read the phrase? Which way came to your mind first? I can't take credit for the exercise, it's been around for a while and I use it in my workshops to make a point about expectations.
We're now in a period of economic turmoil. How are you viewing your opportunities? Do you think you will do better this year than last? Or, do you think this year will be worse? What I can tell you for certain is that whatever you think, those are the results you can expect.
I saw an episode of America's Next Supermodel on television the other night. (Don't worry, it's not a program I usually watch. I was working and my daughter was watching it.) One of the contestants was about to act in a cosmetics commercial and kept reminding herself: "Don't be nervous. Don't be nervous." When she got in front of the camera what happened? You're right, she couldn't remember her lines. If you expect to be nervous you will be. You have focused on being nervous.
There is an antidote, of course. You can focus on the results you want, not the results you fear. As I write this we are coming up on Super Bowl Sunday. Granted, it is an historic occasion because if the New England Patriots win they will set an NFL record. But, it's hard to believe that people have spent the past two weeks discussing and dissecting two teams and a three-hour football game. It will be interesting to see how the teams actually perform. I know the Patriots expect to win. The question is what the Giants expect.
Can you create success based on expectations alone? Of course not. The rest of the pieces must also be in place to support those expectations. But, without the expectations the other pieces won't matter.
Recession Is A State Of Mind by Dave Ferguson
Recently, some prominent people have been warning that we are headed for a recession. As a business owner, I have decided that I’m not going to ride that bus. You can make the same commitment.
Let’s look at the facts. According to the Census Bureau, businesses with fewer than 20 employees in 2002 constituted over 97 percent of all businesses and generated over 17 percent of total sales. And, that figure has been growing. I think we can agree that small business has influence.
So, why are people suddenly talking about recession? It’s true that there are segments of the economy affected by the slowdown in home sales. But the “subprime crisis” was not the cause. According to Federal Reserve statistics, subprime loans are only about 14 percent of all loans and the default rate, including subprime loans, has been less than 3 percent of all loans outstanding. According to my friends in the mortgage business, anyone with good credit and an accurate appraisal can get a mortgage at a reasonable rate.
So, what caused the sudden panic? It’s simply the result of greed and fear. It was greed that drove people to make those high interest loans and now fear of losing their investment has caused them to retrench. Why should we accept their irrationality?
As businesspeople, our job is to look at the facts and plan accordingly. We spend our money to generate revenue and the difference between what we spend and the revenue we receive is our profit. But my revenue comes from what others spend, and so does yours. If we all suddenly fear that we can’t generate as much revenue, and then decide to cut expenses, everyone’s revenue goes down. Our profits will disappear. We will create the recession we all fear.
Before transportation and technology transformed the way we do business, we did business with our neighbors. We were keenly aware of the opportunities and threats and tried to help everyone in the village succeed. Business is still all about creating and maintaining relationships - with customers, suppliers, and the people who provide professional services. As I work with business owners I am constantly surprised at how few regularly talk to, or even know, their neighbors. These are the people who could refer you business, who would be willing to help you if you only asked.
Being smarter about the way you do business means looking for win-win opportunities. Spending money locally is one of those opportunities. Remember that the lowest price might not be the best solution. Before making a purchase, consider quality, reliability and the value of your time. Instead of supporting the other economies of the world, see if there’s a way to do business with your neighbors. And, don’t keep it a secret, let them know why you are doing it. Inspire them to see the possibilities. You will be investing in your own success.
Franklin Roosevelt said it best: “We have nothing to fear but fear itself.”
The Seven Deadly Business Sins by Dave Ferguson
During my years in the corporate world and as a coach I’ve found seven practices that can adversely affect any business. It’s my Top Seven Business Sins list. These sins are not the mortal sins spoken of in religious doctrine. They won’t condemn you to an eternity of torment. They can, however, be fatal. Fatal to your business, that is. Many business owners believe that they won’t get punished unless they get caught. But, if you commit these sins, by the time you realize you’re being punished it’s much too late to claim ignorance.
You may recognize some of these sins in others. If they make you feel uncomfortable, good. Take action now to correct the problems standing in the way of your success. In ascending order of importance they are:
7. Not using your professional team
You’ve got an accountant, a lawyer, a banker, an insurance agent, and probably a financial planner. They are a resource that you can choose to use or ignore. These are knowledgeable professionals whose expertise is invaluable, if you use it wisely. When I hired my lawyer, I told him I expected him to keep me out of trouble, not defend me after I got into trouble. Make them members of your team. Keep them informed and get feedback before you make any major decision or commitment.
6. Lack of Systems and Procedures
If you were in an accident and unconscious for three days could your business run without you? Do you have an operations manual? Even if you can be at your business every day, would you hire a fox to guard the henhouse? Of course you wouldn’t. You’d even keep an eye on your trusted dog. So why would you let a single employee control all your deposits, write all your checks, or provide pricing to customers without a second pair of eyes checking the transactions? As President Reagan said, “Trust, but verify.” Put procedures in place to protect your business.
5. Failing to plan
Some businesses succeed by accident and some people win the lottery but most who consistently succeed in business do so because they develop a good plan and then follow that plan. Sure things change, but if you don’t know where you want to go it really doesn’t matter which road you take. Failing to plan is planning to fail! So, plan the work and then work the plan.
4. Ignoring your customers
Have you told your customers lately that you love them? Unless you are the only business in town, your competition is trying to convince your customers to become theirs. Research has shown that for the majority of consumers the intangibles like customer service, quality and convenience are more important than price. If your business is like many service businesses, you probably get 80% of your revenue from 20% of your customers. Invest 80% of your attention in your best customers.
3. Doing, not leading
Many people spend too much time working “in” their business instead of working “on” their business. Leaders determine the goals and the direction of the company. Managers implement that plan and employees do the work. You are responsible for setting the tone, not doing the work. Get the train moving and then control the speed. Don’t shovel the coal. Ask yourself, “What is the highest and best use of my time?” Focus on the important things in business and life.
2. Not collecting receivables
I had a client once who said, “Billing is one procedure, Payment is another.” He believed in one but not the other. The majority of businesses that fail do so for lack of cash flow, not debt burden. Make sure your customers understand and agree to the price and terms and then follow up with them before payment is due to prevent problems. Recognize and reward prompt payment.
1. Making your business the most important thing in your life
Okay, I admit that this will probably not result in the failure of your business. As a coach I have to ask you to think about it, though. Why are you in business? What’s the purpose? What’s your goal? If I asked your friends and family what’s important in your life, what would they say?
Committing these sins won’t guarantee your failure, and renouncing them won’t guarantee your success. But, as a business owner, wouldn’t you prefer to invest your time and money in something that is more likely to pay off? Business owners who embrace good practices are much more likely to achieve their goals, experience less stress, and enjoy a more rewarding personal life.
The 80-20 Rule by Dave Ferguson
Have you heard of Vilfredo Pareto? 2006 was the 100th anniversary of his statement that 80% of Italy’s wealth was owned by only 20% of the people. This became Pareto’s Distribution or what we think of now as an 80-20 rule. You’re probably familiar with some rule-of-thumb statements: 80% of the work is done by 20% of the employees, 80% of your revenue is generated by 20% of your customers, 80% of your problems come from 20% of your employees/customers, and so on. We accept these as fact, but we would be hard pressed to prove them. We do, however, know from our experience that they are fairly accurate. If you know it, why not use it?
Let’s assume that 20% of your customers provide 80% of your revenue. That’s the positive side of the business. On the negative side, it’s probably also true that 20% of your customers are responsible for 80% of your unprofitable work and company effort. If this applies to your business, doesn’t it make sense to spend more of your time and effort cultivating the good 20% of your customers and firing the bad 20%? Better yet, send them to your competition and go find more great customers. Increasing your market share is only good when it generates greater profits for you and results in stronger cashflow.
Maybe it’s not 20% of your workforce that does most of the work, but I’m sure you have some who contribute more than others. Remember, your competition is always looking for good employees, so keep yours. What are you doing to reward the producers and weed out the employees who are costing you money instead of generating profits? If they don’t fit in their present position, create one where they do or help them get the skills they need to succeed. Most employees want to do a good job. They appreciate knowing what’s expected of them and getting honest feedback on their performance. When they’re doing a great job, show your appreciation.
The rule applies to you too! 80% of your success is based on 20% of your effort. Many business leaders and managers wind up spinning their wheels working in their business doing tasks that don’t contribute to the bottom line. As a coach, I recommend that business owners spend at least 15 minutes a day working “on” their business instead of “in” their business - thinking about the things that would make their business more successful, more profitable and more fun. One day a week make it a half hour. One day a month make it 2 hours. And, one day a quarter devote the entire day. Go out and ask your customers what you could do better. How much more successful could you be if, instead of working on the things that take up your valuable time and don’t generate results, you focused on the things that could truly make a difference to your business and life?
Your High Wire Act by Dave Ferguson
As a business owner do you ever feel like the high wire artist in the circus? There you are, high above the crowd, without a net, doing your best to maintain your balance and cross to safety. And that’s not the hardest part. You’re juggling at the same time, trying to keep all those business and personal items in the air. The spotlight is on you and in the audience below there are those who are cheering you on, those who are afraid you won’t succeed, and those who can hardly wait for you to fall. Sometimes you wonder why you chose this path in the first place.
The fact is, as a business owner, you are a risk taker. The trick is to minimize the risk in a prudent manner. The most important thing to remember while you are on the wire is to maintain your balance. If you fall, no one will care how well you could juggle.
How can you maintain your balance? Get some help. It’s easier for two people to juggle the same set of items than it is for you alone. Recognize that they probably need some help also. Share the load, work as a team and it will easier for all of you to maintain your balance.
Sometimes the business requires your undivided attention. How can you reconcile that need with the needs of your family or loved ones? Make sure they understand ahead of time that this might happen. Give them as much notice as possible and, when it does happen, make sure they understand the problem and why it requires your undivided attention. Finally, give them a conservative appraisal of when you can get back to your normal schedule. Don’t be excessively optimistic - under-promise and then over-deliver.
And, make sure your business is prepared when your family needs your undivided attention. Isn’t that really the point of owning your own business in the first place?
Dave Ferguson, President and Head Coach
Lake County Business Coaching, Inc.
Libertyville, Illinois 60048
Updated July 24, 2015