Know your sales least common denominator

Break Down Your Customer Numbers

By | Accountability, Accounting, Cost Controls, Finance, Marketing, Strategic Planning | No Comments

Walgreens over the last few decades has become the most prominant drug store in the United States. When I was growing up, Rite-Aid and Eckerd pharmacies where the top two “corner pharmacy” giants. Jim Collins, in “Good to Great,” details how Walgreens went from a struggling family-run corporation to a national brand.

 

Know your sales least common denominatorOne of the key components that Walgreens focused on for their growth was their per-customer sales. This is a simple number that averages a store’s receipts per customer. Everything including the location, store layout, sales, and product positioning is sculpted towards increasing their sales-per-customer numbers.

 

It is critically important to know your “least common denominator.” For a primary care medical practice you would use charges and collections per visit whereas a surgical practice would use charges and collections per surgery because of what insurance calls global fees that cover all follow-up visits. Every business should know it’s least common denominator to drive business.

 

When you look at your ratios from your your P&L and Cash Flow statements, you take a 30,000 ft view. By looking at your least common denominator you can begin realizing sales and cost-savings that you are missing on a macro level.

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Know your numbers and ratios

Understand Your Business’s Ratios

By | Accounting, Cost Controls, Finance | One Comment

Know your numbers and ratiosEarlier this week, I talked about knowing your numbers. The key to knowing your numbers is having good ratios that tell you how your business performs relative to your sales.

 

I believe in having strong budgets that tell your money where it is going before you spend it. A budget is created based on past experience and how your numbers have performed in the past.

 

However, sales and performance are not always predictable. So having your ratios set up help you to know if your expenses are in control and appropriate for your sales.

 

First, make every expense a percent of your total sales. While reviewing these ratios, determine what the ratio SHOULD be. Next (this is the hardest part) make a plan to get that ratio into the right range.

 

A quick example: in most restaurants, the food cost as a percentage of sales should be about 33%. If your food cost is around 40%, then there are several factors to investigate. There is spoilage (buying too much and not selling it before it goes bad), portion control, your pricing is too low, complimentary meals, theft, etc.

 

You can’t fix it if you don’t know there is a problem. . . .

 

Thou Shalt Know Thy Numbers

Thou Shalt Know Thy Numbers

By | Accounting, Cost Controls, Follow-through, Leadership, Strategic Planning, Systems | One Comment

Thou Shalt Know Thy NumbersDo you watch Shark Tank?

 

Let me give you the basic premise if you don’t. Entrepreneurs and inventors present their ideas to a panel of investors. They are then grilled about their business (or lack thereof) and then investors bid for investment in the business. Sometimes you see an amazing deal made – and sometimes the entrepreneur walks away with nothing.

 

One of the biggest “red flags” is when an entrepreneur doesn’t know his/her numbers. Here they are, in front of big-dollar investors asking for large investments and they don’t have a handle on how their business performs on important financial measures.

 

This is no different than any other business leader –whether you are looking for an investor or not.

 

As I work with my clients, I often see that they manage their accounts based on the number in their bank balance. They cannot tell you what they spend on marketing and what the return is. They don’t have ratios for measuring their COGS, supplies, or other variable expenses.

 

The numbers are not there for the IRS or to know how much money you made. The numbers exist for you to know how to improve your business from the inside and increase your profit.

 

The key is understanding your P&L and your Cash Flow Statement. Make sure you know the difference between the two and how to review both of them.

 

If you already know what they mean, review them. Often.

Getting too much sleep?

Better Productivity

By | Uncategorized | No Comments

The other day I awoke refreshed, but still wanting to wallow in my comforter for a few hours more. It’s not that I didn’t get enough sleep; on the contrary, it was one of the best nights for sleeping I have had in a week! Last week I was sick as a dog and had a difficult time sleeping.

 

I was shocked to find myself in bed at an earlier than usual hour and Getting too much sleep?looked forward to the full eight hours of sleep I needed. I slept nine instead and still felt groggy. I should have known better.

 

If I get more than seven hours of sleep – I always feel more tired than if I got less. There is something about my biology that makes me sluggish and lazy on days when I get too much sleep.

 

So how does that impact your business? Why am I sharing all of this with you in a business blog? Simply put: Know yourself and your work habits. We can often derail ourselves if we don’t observe how we work best.

  • Know what your body needs to be at peak performance. How many hours of sleep do you need? What foods energize you and which drag you down?
  • Watch your peaks and valleys and try to observe what happens around them. Do you work better on a full or empty stomach? Are you energized after visiting with your team or more drained?
  • Find out when your peak productive hours take place. Are you better in the morning, late afternoon or at 11:00 at night? Find when you are most creative or social. Schedule your work appropriately.

 

Every one of us is different in our biological rhythms.

 

Find yours.

Positive Employee Turnover Because of Great Leadership

Postive Team Turnover

By | Accountability, Hiring, Leadership, Motivation | No Comments

Positive Employee Turnover Because of Great LeadershipI’ve talked quite a bit over the last few weeks about how bad hires happen and how to avoid them. I’ve also discussed what to do when you have a rotten employee.

 

However, not all turnover is bad turnover. Here are some positive turnover situations:

 

  • Self Promotion – What a great moment for a leader when he sees that a team member has learned and grown so much, that they are ready to take on a better position outside your organization!
  • Dream Launch – Similar to the self-promotion above, the team member has been building up to launch their own business and wants to continue the business relationship and not as a competitor.
  • Promotion Within – A team member is ready to take on a leadership role within your organization.
  • Life – Sometimes an employee leaves us because their life changes: a family move, parenthood, marriage, volunteer work, etc.

The challenge is to celebrate with them and don’t rain on their parade because you are inconvenienced by their growth. Unless their departure requires an immediate change, a team member leaving your ranks is glad to help you select and train their replacement.

 

The hardest part, though, is setting the expectations for the new team member coming in. Most frequently, the new hire will need some time to get ramped up – especially if the person leaving had been there for a few years. Give them the necessary training and a step-by-step expectation to get up to speed.

 

Happy Hiring!

costly hires

By | Uncategorized | One Comment


How Much a Wrong Employee Can CostEver hire the wrong person, but you wanted to “give them a chance” anyway?

 

I once hired the wrong someone for a physician group practice. This individual was going to be working directly with one of the doctors and she had impressed him by digging up some research he was part of during his residency. I had my misgivings and had someone else as my first choice. I set aside my hunch and decided to offer the job to the physician’s choice since he was going to work so closely with her.

 

From day one, we could see the writing on the wall. She came in with an unfortunate odor (not noticed during the interview). She had a “frumpy” appearance, did not mesh well with the team, and struggled with the computer. The physician was clamoring for her to be let go. I let her hack it out for about two weeks. Two weeks of time, effort and her salary WASTED on the wrong person. The process of hiring restarted all over again.

 

Too often we let a small interaction determine the fate of our business. Your whole business pivots on the one-hour (or less) interview.

 

Many of us are in such a hurry to get “someone” that might fit, we overlook what is staring us right in the face. We have so much to do, that we don’t follow due diligence before giving them the keys to the kingdom. 

 

Take your time, decide what your expectations of the position are and devise a series of interviews and tests to make it work.

 

I always cover the following in my selection process now:

 

  1. Technical Ability – This can usually be seen from the initial application or resume. You would be surprised how many positions require minimal technical skills. Most can be trained on-the-job. Unless it requires a knowledge base (accounting, bookkeeping, programing) or a license (nurse, therapist, doctor), you can skip this part. There is a reason many financial advising, real estate, insurance and other firms and agencies requiring a license offer the training and certification directly.
  2. Problem Solving – Give your interviewees some specific options situations and problems they will face. No right answers here. You just want to see if they can think through the problem. There are a lot of wrong answers – “I don’t know” is the worst of all.
  3. Personality – This is a question that can only be answered by listening. You can spur questions that help peel back the layers, but it often requires spending a little time with them.
  4. ReferencesALWAYS check references. Make sure they didn’t give you their best friend’s phone and tell you it was a previous employer.

Happy Hunting!

 

I have a feeling . . .

By | Leadership | No Comments

As part of my business education, I would often sit in a managerial or leadership class and hear an instructor carry on about how important “culture” in an organization is. I would sit, take notes, nod my head, and even contribute to the conversation parroting what I had heard in other similar conversations. In the back of my mind I always questioned the concept of “culture.”

 

Don’t get me wrong – I recognized that when I walked into one place it had a different feel and environment. But, I didn’t truly understand how it came together.

 

One day while I was doing a turn-around project in Texas, it dawned on Culture is a reflection of the leaderme. Creating a work environment that is healthy and productive is not an accident and can mean the difference between an engaged team and a mutinous staff.

 

In a nutshell, culture is a reflection of the leader. The bad news is, as a leader you are the problem. The good news is you are also the solution.

 

So, if you don’t follow through on your promises, your staff won’t with your customers. If you easily lose your temper, so will your staff. If you are informal and unstructured in your leadership, your staff will be informal and unstructured in their performance. If you distrust others, your staff will suspect your customers and each other of dishonesty and ulterior motives.

 

You probably have an idea regarding what kind of work environment you would like to see. Begin by thinking about how you interact with customers and staff yourself.

 

no-silver-bullet

No Silver Bullets

By | Accountability, Follow-through, Motivation, Strategic Planning | No Comments

no silver bulletThere is something in the business building and advising industry that many coaches, consultants, and gurus know. It’s a dirty little secret that keeps many clients and “followers” constantly on the hook for more.

 

I have been victim to it and I am sure some of you have, too. It’s all because of one tendency many of us have. We all tend to seek education  – expanding our knowledge of the world or techniques that will move us forward.

 

Education and developing your abilities is great and very important. However, few actually implement. Of those that implement, fewer implement well.

 

Here are the biggest trip-ups I see and what business leaders tell themselves:

  • Silver Bullet“There has to be a secret out there. If I can find the one trick that is going to transform my business, my life will improve dramatically.”
  • Strategy of the Week“Hey! There’s something I haven’t tried yet. I think I will give it a shot. All the other things I have going on can wait.”
  • Failure to Launch“I want it to be just right before I put it out there.”
  • Overwhelm“I have so many ideas, I can’t seem to decide which one to do.”

 

Now since I have diagnosed the problem, here are the remedies:

  • No Silver Bullets – There are as many paths to success as there are definitions of success. The key is measured implementation of one sound strategy.
  • Follow Through – Constantly changing tactics and strategies is going to get us no where but with a shop full of half-completed projects. Pick one and stick with it until it is operating on auto-pilot
  • Just Put It Out There – A friend of mine told me recently that “version one is better than version none.
  • Get Organized – Most people who talk about having too many ideas never write them down and therefore cannot prioritize them. Keep a notebook of ideas handy and write down anything you come up with. When putting together an annual plan, prioritize them and pick only the ones you can implement well.

 

Much of my time as a coach is not spent in education (though there is some of that). Most of what I do is help people get past the challenges they face above. You know what should be done, they have tons of ideas. But you have not figured out how to implement well.

 

Sometimes it’s just about picking something and implementing and re-implementing until it works.

 

Character Vs Personality

Character Vs Tact

By | Leadership | No Comments

Character Vs PersonalitySteven Covey laid out in his classic book, The 7 Habits of Highly Effective People <link>, the research he did regarding self-help literature since 1776.

 

One of the things he noted was the shift that seemed to have happened shortly after World War I. In the earlier years of his research, self-help books emphasized that success was a result of appropriately applied character: honesty, integrity, industry, courage, etc. More recently, self-help books have emphasized success through personality: image, negotiation tactics, communication skills, attitude, etc.

 

Using the self-help emphasis of personality solely to get what you want may work for a short period. However, without character behind it, the people you are trying to help progress will see you efforts as duplicity and fake.

 

In everything our business does – leading our team, marketing, interactions with suppliers, etc – it is important that you have both character and personality. The character is the foundation we establish on who we are and what our motivations are. The personality acts to smooth out the interaction.

 

We all recognize when someone’s character has a kink. I don’t believe that any of us intend to leave gaps in our integrity. But when leading others, whether it’s your employees or your customers, depending too much on personality to smooth it over or convince someone will end up feeling hollow without character behind it.

 

 

Don't wait too long to fire a bad employee

You Can’t Always Rehabilitate a Bad Team Member

By | Uncategorized | One Comment

Don't wait too long to fire a bad employeeI have always been attracted to learning about leadership. Partly because I seem to have been placed in leadership positions throughout my life as a young scout, as an athlete and in my church youth groups. I often felt proud, but undeserving of the position.

 

Somewhere I developed the belief that a team member’s failure was mostly due to poor leadership: me. I thought that my job as a leader is always to develop the team. I would take a team member’s lack of development as a personal failure, even though it was the choice that the team member made. I never consciously recognized it until much later and after many failed attempts to “rehabilitate” a poorly matched employee.

 

Therefore, I often worked too long with an employee long after it was evident to everyone else that he/she had to go. It made bad situations worse.

 

But I did learn the consequences of lingering too long with a mismatched employee:

 

  1. Undermines authority. Employees keep score. They know when a bad employee should go often before the leader does. When you as a leader do not recognize it, they lose confidence in you. Not only do you begin to lose the whole team, but the employee you are trying to help doubts you will follow-through with any consequences you provide them.
  2. Wastes time. If you are spending too much time with a problem employee, other team members who are doing good things are not being recognized. In addition, it distracts you from your responsibilities.
  3. Develops resentment. While your team loses confidence in you, they still have to work with the problem. Eventually they begin to resent you for it.
  4. Wastes money. I recently heard a study that turn-over in any position costs the business about 6 months of salary for that position. So if you are paying the employee $40,000/yr (about $20/hr) you will lose $20,000 in turn-over costs – including missed revenue.

After Monday’s post, I am sure many of you think I am a hatchet-man. I disagree. I have learned through my own failures the balance between Leadership and Management. There is a time to lead someone, but there is a time to manage them out the door.