I don’t think anyone would argue that starting or running a business is easy. In fact, once you are over the $2 million/year or so range, your business becomes many. Besides producing your service or product for your customers, there are a million(ish) things you need to do to behind the scenes to maximize your profitability, keep your employees motivated and enthused, figure out how you’re tracking, make sure you don’t incur the wrath of the Department of Labor and a host of other issues. If you’re like most people, some of these things are more appealing than others, and you probably don’t have time for any!
Unfortunately, I’ve seen many a promising business go down the drain, or come close, when they didn’t have the processes put into place to ensure all the right things were happening, with decision-makers having access to the information they needed to make good decisions. It’s something that makes perfect sense after the fact but is very difficult to navigate in the midst of the storm. Having been through the rapid growth and contraction of several businesses in different industries in addition to coaching multiple businesses through various issues, I’ve realized there is a non-changing structure of issues to be addressed within any given business, but the priority of when and how to attack varies in each situation.
To distill it down as much as possible, I think of any business as a pipeline consisting of four major functions: the things you do to get the business (sales), the things you do to fulfill the business (operations), the things you do to get paid for the business (finance/billing), and the things you do to avoid fines, hire and pay your employees (HR).
For each of these functions, there is a microcosm of things that always need to be occurring in order for the functions be executed at their optimal efficiency and accuracy. These things are:
- Identifying the company and department goal or target
- Identifying how to achieve the goal or target
- Measuring progress
- Providing real time feedback regarding progress
- Providing consequences/reinforcement for positive performance
- Setting individual goals
- Having leaders who are strong in the 12 areas of emotional intelligence
- Having leaders who understand and champion your vision, so that people understand they are part of something bigger than themselves
- Having leaders who value the employees who work for you and let them know they are valued
- Being able to have hard conversations
- Having a way for employees to talk about concerns and feel heard
- Having a way for critical information about the company to be relayed
- Having a forum for innovative ideas to be surfaced
- Having a mission, vision, and values and taking steps to ensure the employee and customer experience is in alignment with those values
- Being intentional about what it’s like to work for and with the company
Recruiting and Hiring
- Knowing who you are as a company so you can attract the people best suited to you
- Having a consistent policy of hiring to ensure a fair and equitable workplace
- Having a solid recruiting and onboarding policy to treat candidates with respect and create a memorable first impression
- Developing metrics to understand your time to hire, turnover, cost to replace people
- Developing a compensation strategy and ensuring your employees’ salaries are consistent and aligned within that strategy.
- Ensuring you are compliant with state and federal employment law
- Ensuring your hiring, terminating, disciplinary, and performance management practices are uniform
- Ensuring you have access metrics such as labor as a %age of revenue, revenue per employee, and SGA vs Operational costs (on a monthly and trailing 12-month basis)
so you can budget effectively.
So where do you start? To quote my all time favorite finance guy (you know who you are, Norm)… “it depends”! If you have the work but can’t fulfill it because your employees are leaving in droves, you likely have either a culture, leadership or compensation issues. On the other hand, if you come up drastically short on expected revenue, you more likely have an issue with tracking the right metrics and/or reporting on it. Many times businesses are so focused on reporting on past performance for P&L statements that they don’t spend as much time as they should on forward looking metrics, and lose valuable opportunities to course correct before something becomes a true problem.
If this all makes perfect sense but you still don’t know where to start, that’s okay. I’d suggest doing a brief inventory of your business segments using the six criteria outlined above to get a read on where your strengths and vulnerabilities lie in the areas of sales, operations, accounting, and HR. It doesn’t have to be perfect, but it will fairly quickly lead you to a starting point. If this is of value, or if you’d like to learn more, I’d be happy to brainstorm with you, and share some of the things we look for as part of our full diagnostic assessment of organizations.
Remember, you can change a problem you’re aware of, but the ones you aren’t can take you down!
Carrie Maldonado is the founder of Today’s Leadership Solutions, a Seattle-based consulting firm providing comprehensive organizational development solutions for companies who are growing and who truly value their people. With certified Executive Coaches, Organizational Behavior Management (OBM) practitioners, SPHR-certified HR professionals, and Organizational Development Specialists, Carrie’s team brings a unique perspective and a cross-functional approach to providing workplace solutions that work. Carrie can be reached for consultation at email@example.com