The Effort To Effect Ratio
Yai Yai said, "Settle down. What is he wearing right now?"
Wearing? "Uh ... a diaper," I sputtered.
"Nope, just a diaper. We have the heat cranked up pretty high so he will stay warm," I added, trying to sound responsible.
"Ellen, you need to wrap that baby up - tight. Get one of those little flannel blankets and wrap him up like a burrito."
"Gosh, I would think he likes stretching out," I replied, not having a clue. This was my first (and only) baby.
"Nope. He doesn't. He wants to feel safe and cramped, like that nice place he used to live before you gave birth," Yai Yai responded with the confidence of a mother of five and a grandmother of six.
So I wrapped Max up like a No. 6 combo meal at Taco Bell. He settled right down.
Yai Yai knew the one thing that would make the biggest difference in a pretty challenging situation. It wasn't anything fancy. She just knew because she had been there herself, and seen it enough, and learned from her own and others' experiences.
That's the inspiration for this month's Small Shop Talk. What are the best things to do at your company to produce maximum positive effect with the least possible effort on your part? From my own experience, and from paying attention to others', here's my Top Ten list.
No. 10 - Clean up your financial statements.Your balance sheet and income statement should be an accurate reflection of your business. Gail Gudell, bookkeeper extraordinaire, coined the term KFP - known financial position. You should be able to go through every line item on your balance sheet and income statement and understand what is reflected in that number. And, you should be able to print a Balance Sheet and Income Statement at any time and have those reports be up-to-date and accurate. How can you know whether or not you are getting better if you are not keeping score?
The positive effects on your business from this one thing - getting to a KFP - are enormous. Imagine NCAA basketball without a scoreboard, then adding the scoreboard. It's that kind of impact. Once you keep score, then you have a game.
No. 9 - Say 'Yes' instead of 'No.'Have you ever walked into a store with a desire to buy and an open wallet only to have the salesperson refuse to sell you something? Has anything like the following ever happened to you?
"I'd like a red blouse."
"Um, I don't think we have any more red blouses."
"Well, can you find out?"
"My manager's at lunch and I am not allowed to leave you alone in the store while I check the back room."
"No, um, yeah, no, I am pretty sure we don't."
Is something like that happening at your shop? Cultivate a culture of YES. Just say, "Yes." Yes, you have a new toilet to replace his stinky old one, and yes, you would be delighted to find out if it's available in avocado green, and yes, you would be happy to find out more about his remodeling project, and yes, you would love to show him some cool alternative colors, too, and yes, a new tub and pedestal sink will add equity value to his home. Make it easy for customers to buy and teach yourself and your team to say yes to business.
No. 8 - Put it in writing.Write down how you want things done, from how to answer the phone to how to take out the trash. You can start with a three ring binder, loose leaf pages and a pencil. Ask the person doing the job to write down what it is that they do. It is that simple. At some point, you can enter it into the computer, spell check it and update it. However, even the penciled notes on how to switch to the back up generator will keep you in business on the record-setting snowfall day. (Ask Al Levi about this one.)
Put it in writing and you will save yourself an enormous amount of time. Time that would be otherwise spent responding to, "Oh, I didn't know I was supposed to do that."
No. 7 - Put 'like' things together.This basic organizing concept has two components.
First, create an organizational chart. Who is in charge of your company? Only one name can go at the top. Then, who is in charge of the money? Who is in charge of sales? Who is in charge of marketing? Who is in charge of getting the work done? Don't worry about this being too "corporate" for your small shop. It's the right thing to do.
A small shop doesn't need an organizational chart. By imposing one, you clear up who does what and who reports to whom. By imposing an organizational chart, you are causing your company to grow. This small effort will generate big returns.
The second component involves putting like things together in your financial reports. In a word: divisions. Create divisions for types of work that you sell and do, for instance: service, remodeling, HVAC, over-the-counter sales. Track the expenses associated with each type of work, at least to the gross margin level. Accurate financial information by division will cause you to confront how to best spend your precious resources of time and money. The key word is accurate, which leads to ...
No. 6 - Audit your data entry.Suppose you commit to creating divisions at your company. You establish accounts for the sales and expenses for each division. Great! Then, at the data entry level, your bookkeeper has no idea what expenses go into which accounts, and she or he just lumps them all together. Sound familiar?
Spend time defining just what goes into each account in your chart of accounts. Put it in writing (see No. 8). Insist that each purchase order is correctly coded with the appropriate expense account number. Go through the mail and put the proper account number on each bill with a Sharpie. Make sure that your sales invoices are clearly labeled with the appropriate sales division.
Go through this process and the understanding you will have about your company - financially and operationally - will outweigh the effort involved 100 to 1.
No. 5 - Be sales-focused.Get over any reservations you have about sales. The game is sales. Good sales, sales that stick. Sales that cause customers to want to call you again to sell them something else. Keep score in sales. Put up a scorecard and measure performance. The goals for sales come from your budget. Each plumber should bring in his share of the total goal. Make it fair. Help those who need help reaching the minimum. Reward those who go above and beyond the call of duty.
Should you create a sales system at your company, the results could double or triple or quadruple your sales and profitability. That's a big effect for relatively little effort. Without a structured sales system, you may keep folks on the team who don't contribute to the survival of the team. And, you are in danger of burning out your top performers by going to them again and again and asking for more.
No. 4 - Quit blaming things.Quit discussing the economy. It doesn't matter. Plumbing is a recession- proof business. How bad does it have to get for a person to not call a plumber for a stopped-up drain? Quit blaming other people. If you have a co-worker or a boss who is suppressive, do what you can to expose or correct the situation.
If you are not successful, leave the company. Even if that person is your spouse, brother or mother. We waste a lot of time explaining, blaming and justifying. Instead, make a decision and take action. Much better effort-to-effect ratio.
No. 3 - Let him or her go.How much time have you wasted fretting about whether or not to let an employee go, when you know in your heart and gut that it is the right thing to do? Oh, this is abuse of the worst kind - to you and to your employee. Let him or her go.
Clear, written expectations and systems make it easier for both of you to know whether or not the relationship is working. Put in the systems. And, listen to your intuition. You have the right to go to work without a sickening feeling in the pit of your stomach. And, you are wasting so much time - yours and his or hers - when you keep a bad relationship going. Make the break.
No. 2 - Throw more pebbles in the pond.When you throw pebbles in a pond, the ripples spread out toward the edge of the water. Then, they bounce of the edge and start to ripple back to where they started. That's how marketing works. If you don't have enough calls or enough sales, throw out more pebbles.
Rally the troops. Hold a meeting with all members of your team and brainstorm ways to create more sales. Assemble a list of the ideas generated, prioritize them and put them into action. In your market, every day, hundreds (thousands? tens of thousands?) of people are calling a plumber. How do you get them to call you?
There is no silver bullet marketing piece. Try lots of things. When money is tight, think of free ways to get your name and message to the market place. 1-800-Got Junk is a fast-growing franchise that offers junk removal services. A required daily operating standard is to have a few employees don blue, fuzzy-haired wigs and stand on a street corner waving "Got Junk?" signs. When in doubt, err on the side of action. Do more. Put more pebbles in the pond. Action always beats non-action for creating effect.
No. 1 - Decide what you want.This is the essential effort-to-effect question.
What do you want? What do you want your company to be? To look like? To feel like? How much in sales? How much on the bottom line? How can you be of the most service? How can you best express your unique gifts? How can your company help you serve your highest purpose?
Spend time meditating, thinking about your business, deciding what you want. Don't worry about making the wrong decision. Ask for help from your higher power. Craft the vision of your company. Communicate the vision to your team. Help them see what you see, and you will eliminate a lot of wasted effort.
The more certain your intention, the more closely aligned with your higher power, the less effort required to bring your vision into the material universe. You'll be able to do less and accomplish more. All of the universe will support you.
"I have learned this at least by my experiment that if one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours." ~Henry David Thoreau
No. 1 is deep stuff. But it is how things work. It's how you maximize the effort-to-effect ratio.
Still, don't neglect to do No. 10 through No. 2.
Call or e-mail me and let me know how these suggestions work for you. If you have a problem calming your baby, let me know. I'll put you in touch with Yai Yai.
Rohr At ISH NA 2004
Ellen Rohr is a scheduled speaker at this year's ISH North America trade show held Oct. 14-16 in Boston. She will present "Beyond Flat Rate - A Revolutionary Approach To Pricing" Friday, Oct. 15 at 9:45 a.m. and repeat the session Saturday, Oct. 16 at 9 a.m. To register for the show, visit www.ish-na.com.
Ellen has a NEW Business Building Book for you!What are the essential elements, the bare bones basics, necessary to turn a bright idea into a winning business? How do you get started? Fix the problems? GROW your business? How can you turn things around ... from “lost with losses” to “focused profits?” Those are the questions that inspired my latest book, The Bare Bones Biz Fitness System. This book is like body building for your business. You know that a sensible diet and exercise plan will get your body toned up and running right. In business, there are a few fundamentals that, if implemented, will result in your success. The Bare Bones Biz Fitness System presents those basics in a simple, easy-to-implement plan for crafting your vision and turning it into a successful business. That's the intent.
Now, to test it. Are you interested in getting your business in tip top shape? I have a deal for you.
Go to www.barebonesbiz.com and click on The Bare Bones Biz Fitness System. Download the book. Then, all you need is YOU ... and a three ring Binder ... to build a better business. I'm offering The Bare Bones Fitness System online at a pre-published price of $12.95. I've helped lots of folks make more money and have more fun in their businesses. However, I will know I am on the right track if I can help YOU. Share your Biz Fitness story with me, and I will include it in the printed version of the book.