What To Take On Your Lifeboat
I tell them, “Imagine your company is a ship that's sinking out at sea. You need to decide fast what you need to take with you and what you need to leave behind if the crowded little lifeboat of yours ever hopes to make it to safety. The choices will be tough, but waiting to make them or never making them at all will surely sink you.”
Now, this is what I call a reality show. It's called “Business Survivor!”
Unfortunately, the great company you once envisioned when you first went into business has mortgaged you and your family up to your eyeballs and your ship is taking on water fast. Typically, it's because of all the overloading you did on your ship that you're sinking fast. Maybe you didn't want to address how much unproductive staff you had. Or maybe it was because you didn't learn to master the seven business concepts that it takes to run a successful business.
1. Operating Power -- Create the policies and procedures for every task in every department of the company.
2. Financial Power -- Generate the selling price and define how each person affects the financial success of the company.
3. Selling Power -- Establish how each department plays a role in the pricing and profitability in order to focus on how each employee affects the selling process.
4. Marketing Power -- Once the price is established and the tools to sell have been given, we need to market effectively to reach the target audience -- those most likely to desire what we're selling.
5. Staffing Power -- Add people with the right attitude and develop the rest in-house. Hold people accountable for the sales, operational and technical standards you create and provide all the training they'll need.
6. Leadership Power -- Set the goal, inspire a vision or belief, and take the actions to make it all a reality. To do that, you need everyone on the same page.
7. Sales Coaching Power -- Have everyone who performs work for the customer use a selling system that is linked to a system for coaching sales.
These seven power concepts are the foundation of a sound business plan and a tight ship.
You also need to prioritize the many projects and steps it will take to reach safety. A plan for prioritizing and implementing projects can trigger you to assess, plan, take action and inspect those things you know you need to implement. A thorough needs assessment should do the following:
- Learn what you're doing right so you can do more of it.
- Learn what you need to stop doing and why.
- Learn what you need to begin doing and how you'll benefit.
Sink Or SwimBefore you can get plugged into the kind of power that will save you, you'll need to make an honest assessment of where you are today -- and where you want to be in the future.
Have you been inattentive to your other overhead expenses such as marketing now that the phones are ringing enough?
Have you have skipped defining in writing what and how you do things at your company?
All these and more are the sins that get compounded when you borrowed money, because now we have the pressure of time and money working against us surviving.
The bad news is that's all in the past and you can't change what's already happened. The good news is you can change what's going to happen next. It starts with taking an objective look at what got you to this place, deciding what's got to change and then doing the unpleasant but necessary things it'll take to get your lifeboat, your company, to safety.
Begin the process by deciding what and who you will bring along with you in your “lifeboat.” It's based only on what'll give you the best chance to stay alive and make it to safety. So, decide what to throw overboard that isn't going to help you or, worse yet, risks your sinking. You don't have the luxury of overloading your lifeboat with unproductive people or unnecessary expenses if you ever hope to avoid drowning.
It's time for tough decisions, and there's precious little time.
When times are good, it's easy to get sloppy because you can make money despite yourself. You take on unnecessary expenses and don't plan for a “rainy day.”
When tough times inevitably come, they are not pleasant, but if you learn from them they can make you stronger if you approach the challenges the right way. It takes a great owner to right the ship and make money in all economic climates. But first, you need to make sure the lifeboat is there long before you need it.
My suggestion is to get to the lifeboat fast if your company is “upside down,” and use it long enough to resurrect the ship or build a new ship.
Frankly, tough times have one big advantage that good times don't. Tough times force us to defend what's really necessary and to discard what's really not. It gets us highly focused on what we really need and not on what we really want.
Here's a good thought as you're deciding who you'll take with you. In the PHC business, it's a good rule of thumb to have a ratio of two people who turn the wrenches and make us money to every one person in the company who doesn't. This is a sign of an efficient company. Even if you have 1.5 to 1 ratio, you're typically in pretty good shape. Naturally, the people have to be effective. Start adding more nonmoney-making people and keep tipping this ratio the wrong way and you're sure to be taking on water.
Is your lifeboat crammed with too much existing staff who can't help you survive? Worse yet, they may be the type who are only interested in saving themselves. And, it's not just your staff who may only be interested in saving themselves. How about your accountant or lawyer? Are they only interested in generating fees and not in helping to protect and grow your business?
Take a hard look at some of those overhead expenses and ask yourself:
- Do I really need that expensive building now?
- Am I blowing my entire marketing budget on Yellow Pages ads that get me calls only when I'm already too busy and do little, if anything, when things inevitably slow down?
- Am I carrying too much inventory in my shop and on my trucks?