Twelve Questions Your Leaders Must Ask Now

Every leader knows when their business model is working. Revenue is growing, profits are high, customers are loyal, employee retention is high, and so on. However, getting ahead of the curve is important when market factors change. Often, leaders wait and see rather than face the brutal facts.

TEN ISSUES THAT WILL AFFECT YOUR BUSINESS

As leaders, we need to step out of the daily grind and monitor the factors around us. It is likely that you may be aware of what is going on around you and are not making the shifts necessary to thrive in the future.

The decisions we make and actions we take in business should not be made in a bubble predicated upon past circumstances. Instead, we need to monitor conditions, and when our assumptions about those conditions change, we need new decisions and actions. The following are the most common issues that need your attention when conditions change:

1. Growth rate percentage is shrinking
2. Gross and Net Profit Margin is Shrinking
3. Inflation is rising
4. Recession is coming
5. Wages are rising
6. Fluctuating Exchange rates
7. Pricing is contracting
8. Difficulty in finding and retaining people
9. Supply chain issues
10. Political unrest and war

Whether you believe we are in a recession or not, conditions have changed. As you review the list above, I am sure you can see that your business is likely affected by at least seven issues are affecting you today. It is a market Tsunami that should not be taken lightly. How you respond will determine your future success. There will be big winners, many losers, and little in between.

TWELVE QUESTIONS EVERY LEADER NEEDS TO ASK RIGHT NOW!

“We have the answers, all the answers. It’s the question we do not know!” – Anonymous

When any of the above factors change, your team needs to start asking questions, seeking answers, and, most importantly, taking appropriate action! Asking the right questions is the key to continuous success. Often you are answering the wrong questions. And, you are probably playing Whack-a-Mole to address the many issues cropping up. And entrepreneurs tend to solve easier problems quickly and may address a symptom instead of the problem. We often see factors changing and our conditions are changing but too slow to react. We often act but work on past principles rather than considering our new reality. The faster we can identify the right questions that solve our root problem, we can get the answers and make the proper adjustments to thrive or survive in any conditions.

At Activate Group Inc., our business coaches help CEOs and leadership teams grow their companies further and faster with less frustration, making what appears impossible possible! Over the last 20 years we have developed a database of hundreds of questions that our experts draw upon to shine light on our client’s Factors. I recognize no one has time to go through this many questions so I asked my team to identify the ten most important questions every leader must answer right now! Our secret is a repeatable compound growth system causing leaders to ask better questions sooner. The following are the questions we think every leader should ask today

CASH:

1. Have you done scenario analysis to determine if you have enough cash reserves or available credit to take you through should the worst case happen?

2.Do you have enough capital to take advantage of opportunities that may present themselves (e.g., acquisitions, acquiring talent, etc.)

3.Is your financial model deteriorating by slowing revenue growth, shrinking margins, and aging accounts receivables?

STRATEGY

4.How much and often should we be changing our pricing?

5.How are current and prospective client needs shifting, and does this require a modification to current or creation of new products and services?

6.How do marketing messages need to change to meet people where they are today?

PEOPLE

7.Is there anyone on your team you would not want to rehire enthusiastically, and do you have a plan to address them?

8.Do you have a repeatable talent acquisition routine used by all leaders that consistently fills your positions quickly with the right people?

9.Is your staffing plan tied to your forecasting process?

EXECUTION

10. What are the current broken links or potential problems in the Supply Chain?

11. Company have documented Contingency Plans in place?

12. Does every employee know the company’s goals and priorities, is it clear how each contributes and is the answer specific and measurable?

NEXT STEPS

“It’s the questions we can’t answer that teach us the most. They teach us how to think. If you give a man an answer, all he gains is a little fact. But give him a question and he’ll look for his own answers.” ― Patrick Rothfuss

The above questions are the starting points. I learned long ago that the first question is not where our focus needs to be. We often have to ask several questions before we know the problem we are solving. For example:

    • Is there anyone on your team you would not want to rehire enthusiastically, and do you have a plan to address them? No, but we have not identified all of them.
    • Why Not? Because we don’t have a consistent process for identifying nonperformers.
    • Why Not? We are too busy and even if we did, we can’t afford to lose anyone right now.
    • Why Not? We can’t find enough candidates, and the ones we do are worse or equal to the ones we want to eliminate.
    • Why Not? Because we do not have a repeatable talent acquisition routine that is used by all leads that consistently fill our positions quickly and with the right people.

 

I will stop here as I can go on. Make sure you debate the real questions before running off and trying to solve the symptoms. Change is going to happen. Is your organization asking enough questions? How much confidence do you have that you are ready to thrive?

Howard M. Shore, Founder and CEO of Activate Group Inc., is a bestselling author and serial entrepreneur. A business coach specializing in liberating leadership teams from the barriers holding them back personally and professionally. Howard has helped create over $1 Billion of value and authored two best-selling books, The Leader Launchpad and Your Business is a Leaky Bucket.

Business Coach Growth and Profit Tips

Three Issues Likely Disrupting Your Growth and Profits

Having worked with several Fortune 500 organizations and many fast-growing mid-market companies, I am alarmed by how inefficient and ineffective many have become. Often, the leaders were unaware of their inefficiencies and ineffectiveness; they acted like the large institutional companies they swore they would never become.

Consider this, the CEOs and leadership team rarely recognize they have a problem. They may feel that something may not be right, but it is usually worse than they imagined. Despite facts to the contrary, CEOs will indicate pride in their leadership teams and the organizations. Influenced by external circumstances, leaders justify their approach to decisions, overcomplicated processes, and bloated organizations. Meanwhile:

  • Revenue growth rates are inconsistent or shrinking
  • Headcount is growing faster than revenue
  • Overhead as a % of revenue is increasing
  • Turnover is higher than the industry average
  • Net profit margins are shrinking.

I will never forget a discussion I had with a $5 Billion CEO. Growth rates were lackluster, and profits were dismal. They were considered a leader in their industry, yet performance did not support the hype. Others in their industry grew far faster and had much higher profit margins. When I talked with the CEO, I identified two moves that would double their profits, eliminate four layers of management, and eliminate several contracts that represented 10% of their revenue. These moves were worth $200 million in net profit, could likely double or triple the stock price, and would remove a lot of bureaucracy. The CEO decided against it and was replaced 18 months later after the company failed to break through lackluster performance.

Are You Efficient but Ineffective?

Today’s world is full of rapid, unpredictable changes and complex inter-dependencies. Traditional organizational models built on efficiency and optimizing predictable systems are no longer suited for these challenges. In “Team of Teams,” General Stanley McChrystal presents a new way of thinking and leading that allows organizations to adapt and innovate nimbly in a complex world.

Team of Teams is about the General’s process of restructuring the Joint Special Operations Command and making it more adaptable. The military was efficient at fighting traditional wars but not effective against Al-Qaeda in Iraq. General McChrystal began questioning whether a rigid structure inhibited their ability to respond quickly to threats and meet mission requirements and objectives.

Modern military management originated with Frederick Winslow Taylor’s work at the 1900 World’s Fair. He believed that there is a right way to do anything, and he built reductionist processes to streamline how production employees work. In these schemes, employees focus only on their role and don’t have to communicate with other employees or ask their managers about the bigger picture.

Taylor’s ideas revolutionized the way people work. His ideas were implemented in soldiers’ lives through rigorous routines, uniforms and equipment, and a lack of communication and involvement with decision-making processes. This excessive compartmentalization between intelligence operators and analysts in Iraq contributed to the failure to prevent the 9/11 terrorist attacks on U.S. soil.

General McChrystal describes how he built his team of teams, inspired by the Navy SEAL training and Brigham and Women’s Hospital. His core principles to create an efficient and effective team were awareness, empowerment, and a common purpose in an unpredictable environment, where hands-on command management styles are rewarded.

The general taught us that an efficient system is not necessarily effective. For example, if the output of a system doesn’t meet the needs of its users or it’s not using available resources effectively, it’s considered inefficient. To make an ineffective system more effective, you can sometimes reduce its efficiency by adding new features that improve performance and usability. To be more effective, we must create the right vision and empower people to make decisions at the front lines. We need to stop the need to run decision-making up the ladder to execute change, maximizing flexibility and agility.

A Bloated Workforce Equals Ineffective!

Many organizations use the wrong measures for determining how to manage human assets. Labor rates, turnover, and other commonly used measures only take you so far. In Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential, Greg Crabtree and Beverly Harzog introduce the Labor Efficiency Ratio™ (LER). LER is used to determine how well your company manages its human assets.

I like LER because it gets more to the heart of the matter. LER expresses labor as a multiplier, not a fraction. In simple terms, it helps quantify how many dollars in gross profit is returned to you for every dollar you spend on labor. When you begin to learn how to look at LER, you may start calculating how to increase your multiplier instead of looking at labor as a cost of sales. When you look at labor as a cost of sales, you can observe each person in a role, see varying returns, and understand why that return varies. It helps you get comfortable paying one person twice as much as another in the same role—you can see that you receive a more substantial return from one person than the other. LER is also a crucial tool in forecasting and planning scenarios and makes profitability analysis much more straightforward than other methods. LER is the ultimate measure for helping management determine whether they are optimizing labor properly or not.

Commonly, we view high performers as outliers and remove them from our calculations to determine the right Labor Efficiency Ratio™ for a position. My challenge to leaders is to gain an in-depth understanding of why the outliers perform as they do. Usually, these people do not have exceptional talents, do not appear to work harder, and are not smarter than the rest of their team members, but they are doing something different. If you can identify that difference and disseminate it as a best practice, you will increase LER for a function or role.

There are three general categories of labor efficiency: direct labor, sales labor, and management labor. Many leaders make the mistake of trying to use one overall LER calculation, which can be very misleading. One of my clients was trying to use the one-size-fits-all method. After breaking down the calculation into the three categories, they learned that they were overinvested in the management-labor area, masking that they were understaffed in indirect labor to handle growth. Had they not realized this, they would have instituted a hiring freeze and missed a big last-quarter surge in sales. Additionally, we find in the many organizations whose sales teams are not performing that instead of addressing the issue, they start cutting labor costs in areas such as customer service and product quality, unintentionally causing severe problems for those functions.

Are You Playing to Win or Not to Lose?

Emotions were running high in the last quarter of 2008, with the banking debacle, stock market meltdown, the soaring foreclosure rate, job losses, poor earnings reports, and dismal projections. Finally, the government, which had long denied the obvious, admitted that we were experiencing an economic recession.

Nobody wanted to use the word “depression” about the economy, but that’s the word best describing the country’s mood. The result: Businesses and Consumers put on the brakes. Most everyone started operating in a “playing not to lose” mindset. They stopped trying to win and completely went on the defensive. However, an opportunity had just knocked for a small group of well-informed individuals. They took advantage of the inexpensive real estate market, stole market share, acquired quality talent, and bought stocks and other investment products at bargain-basement prices. In the process, they ended up making millions of dollars. It reminds me of that famous Kaizen principle –

”Chaos, for those that are prepared, bring opportunity.”

Great leaders and strong businesses recognize opportunities and proceed accordingly. Their desire to win is so strong it overcomes their fear of losing. They do it through sheer will and the right balance of a positive attitude. I am hopeful your business does not find itself in the dire situation we experienced in 2008. Still, the absence of dire circumstances doesn’t mean attitude and desire shouldn’t remain like the small group of opportunistic individuals who took advantage of the situation. A “scared to lose” mentality can be costly for your career or business.

The mind does funny things when faced with adversity. Negative events result when people fail to look at their businesses and careers in an informed and critical manner. When you aim to preserve the status quo, it is not unusual to draw ill-advised conclusions. Below are five common bad decisions that are often enabled by a protectionist mindset:

  • Decide not to replace “B” and “C” players with “A” players, using cost as an excuse. This is a silly decision because “A” players can do the work of as many as three average players. “A” players are employees who consistently meet productivity requirements (performance standards) and consistently live your company’s core values. If you hire “A” players, your overall wage costs will be lower as a percentage of revenue because fewer people accomplish better results.
  • Stop advertising. This decision, in some circumstances, results in a threefold increase in the acquisition cost per client in the long run and dramatically reduces the leads that come to the sales force. In other words, you increase your costs and reduce your sales.
  • Fail to do the things that create a positive environment for your people and cut off training. Employees thrive on positive energy; when they lack it, they do not take on extra assignments, do not develop innovative ideas, and are not at the top of their game. In the end, your business suffers.
  • Management accepts external events as an excuse for not meeting targets and stops holding people accountable. Common logic leads us to conclude that most companies own less than 1 percent market share within their target market. Therefore, there is no reason not to grow and achieve targets.
  • Executives become very conservative and averse to any risk in their decisions. This usually means doing what they have always done. Following that logic, if you had a bad year last year, you know what you can expect this year. Also, you miss challenging your people to see the opportunities right in front of them

These practices can be very harmful. It may not be today, tomorrow, or even a month from now. But you will eventually feel their impacts and fall short of your potential.

I challenge you to determine how you allow negative people and your environment to prevent you from maximizing your potential. If everyone was playing to win within your value system every minute of every day, what would or could they be doing differently? What are the top one or two things you could be doing right now to make a difference for your company? Are you spending most of your time focusing on that? If not, can you say you are playing to win? Michael Jordan said, “I play to win, whether during practice or a real game. And I will not let anything get in the way of me and my competitive enthusiasm to win.”  The same could be true for you and your business. You have to play to win. Its value is almost immeasurable. Creating a strong business plan and strategy, and finding the right balance between efficiency and effectiveness will help you maximize Growth and Profits. Maintaining an opportunistic attitude and even remaining open to assessing and taking a risk will help you win and maximize your potential.

Next Steps

Be self-aware and provide yourself with honest answers. Are you efficient but ineffective? Are you playing to win or not lose? Are you using the wrong measures for determining how to manage human assets? More importantly, are you asking the right questions to help your organization reach its full potential?

Most companies have a lot more growth and profit potential staring them right in the face. I have found that most executives are great at solving problems but are bad about asking the right questions. And, when they ask the right questions, they are not good at answering them honestly. This is where outside facilitation can help. They focus you on the right questions by providing the tools and processes to help you make better, more informed decisions, leading to more Growth and Profits.

If you want help unlocking your potential, don’t hesitate to contact us at activategroupinc.com or 305-722-7216.

Howard M. Shore, Founder and CEO of Activate Group Inc., is a bestselling author and serial entrepreneur. A business coach specializing in liberating leadership teams from the barriers holding them back personally and professionally. Howard has helped create over $1 Billion of value and authored two best-selling books, The Leader Launchpad and Your Business is a Leaky Bucket.

Learn How to Make Better Decisions as a Leader

Leadership and Decision Making

How is Decision Making Affecting You as a Leader?

Do you consider yourself an emotional or a rational decision-maker? If you are like many leaders I have met in the entrepreneurial ranks, you’ll think you are both. Some of my clients would just argue that their emotions are rational.

Regardless, what I would like you to consider is that your decisions may not be as good as you think they are. Depending on your circumstances, you may need to use different approaches to your decision-making process.

Leadership Tendencies Affecting Good Decision Making

Do your tendencies get in the way? I find that many leaders are capable of making good decisions, but their leadership tendencies get in the way. This can include:

  • Proclivity towards intuitive decision-making
  • Bias toward action
  • Failure to listen to others
  • Listening to unqualified people
  • Looking for people that share their opinion
  • Failure to use available data
  • Not understanding the complete set of questions that should be answered in order to make the decision

Many outgrow these tendencies after they lose enough money and/or relationships. However, too often they don’t make enough adjustments, and many do not realize they have the above tendencies. The problem is we do not keep score of wrong and right decisions. Many times, it is impossible or too costly to find out whether a decision we made was the right one.

Revenue and Decision Making

Do not confuse your ability to earn wealth with good decision-making. I have encountered many wealthy executives that would be great candidates for reality television shows because of the way they go about decision-making on a day-to-day basis. They would have crowds laughing for days.

Picture an investment broker that advises you to purchase 10 stocks. Nine of those stocks lose money pretty badly, but one makes a lot of money, so the portfolio shows a profit. Would you want to keep that broker? My wealthy reality TV candidates would try to convince you they were great stock pickers because they made money.

Questions to Consider to Avoid a Bad Decision

In any given day, a leader makes many decisions. Here are some questions that I suggest you consider before you possibly make another bad decision:

  • What is the goal of the decision?
  • What are the consequences/costs of making a bad decision?
  • What should my role be in this decision?
  • Do I (we) have the expertise to make a proper decision?
  • What criteria should we use to make a good decision, and how will we rank and weight each item’s importance?
  • Are there proven tools to help us make this decision?
  • Who else should be involved in this decision, and what role should they play?
  • How much information is appropriate for this decision?
  • How much time should I spend on this decision?
  • How long am I willing to wait to make this decision?
  • How many alternatives should be considered?

Contact Howard Shore for a FREE consultation at 305.722.7213 to see how a business coach can help you make better decisions and become a more effective leader.

Is Your Structure Evolving with the Growth of Your Company?

Is your structure evolving with the growth of your company? Is your structure properly designed to support both your internal and external strategy? In other words, do you have a structure best designed to serve your ideal prospects’ needs better than any of your competitors? Are you set up to acquire those ideal customers? If your business is like many of the companies I have seen, the answer is probably no to many if not all of these questions.

It Is Common to Underinvest in Administrative Functions

It is probable that you will not hesitate to invest in positions that you believe are critical to creating and selling your products and delivering your services. In fact, you may even overinvest in these functions. However, it is also likely that you underappreciate and underinvest in areas that are truly critical to your success. I often find companies will not have the right level of investment in functions and roles in human resources, finance, and technology. The last case is especially true where your business is not considered primarily technology related. You may justify that you only have a certain amount of resources and therefore have to make tough decisions. However, in many cases you are unable to see what not investing is costing you.

Not Investing in a Position can Cost you 26x the Salary

Too often you are so worried about how much a payroll is going to cost you that you do not realize what it will cost you not to fill a position. I had a client that had been reluctant to add the human resource function to their organizational structure. Their concern was that hiring the type of talent that would do the job well would cost as much as $75,000 in annual salary. Historically the function was absorbed as a secondary activity in everyone else’s job function. There was no one person accountable that could truly say they were one hundred percent focused on human resources. As a result, there was no consistent process for recruiting, the biggest issue for their company. Worse, with no one in the company that you could say was great at recruiting or selecting talent, the function was failing miserably. With everyone responsible and no one accountable, positions were not being filled, subpar talent would go unaddressed because of lack of ability to fill open positions, and a lot of strain was being placed on the management team.
This issue was a topic of discussion at every monthly and quarterly senior management meeting, and at each meeting it was concluded that a human resource person should be hired. However, the Chief Financial Officer carried too much weight in decision-making, was cost-oriented rather than growth-oriented, and the function organizationally reported to him. As a result, over the course of nine months the leadership team continued to allow this void to go unaddressed. Then, the perfect storm hit. Operations could no longer handle the sales volume it currently had, so sales had to start turning away business. The organization was now almost at a standstill because they failed to have the necessary people on the team. All of which could have been prevented had their human resources function been operating properly. The leadership team concluded that not spending the $75,000 cost the company about $2 million in cash flow.

Are You Unconsciously Stunting Your Growth?

It is common for leaders to unconsciously stunt their own growth by not evolving their structure to support that growth. You have to build it before and not after. Sometimes, you have the right structure but are not filling the positions with the right level of person or type of person. Continuing with the human resources role, one crucial mistake is not appreciating the role of Human Resource Manager and the many variations there are for this position. Not having the right person or people could stunt your growth. Many leaders either fail to fill this position with a competent trained professional, thinking of it as an administrative role, or they fill it with someone with the wrong skill sets.
In a firm’s early days, it needs someone that can increase the speed of recruiting, help avoid some critical miss-hires, develop the infrastructure for onboarding and training the new talent that is hired, and help build the systems for accountability. Having the right person in this function can accelerate your ability to grow and scale and takes a tremendous amount of pressure off the other leaders in your organization. Often organizations fail to hire because they do not want to make the investment. What they do not realize is that while there is not a financial statement line for failing to fill positions fast enough, failing to fill positions with the right people, and the cost of all the lost productivity in the organization from failure to fill this role, these are real liabilities with real price tags. Essentially having the right person can pay for itself at a minimum multiplier of 10. You can never recover the lost revenue and profit in the lost time from not adding the human resource person to your infrastructure in the first place.
Visit our business coaching page for more information or call  Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Your Philosophy Around Talent Makes A Difference

Your Philosophy Around Talent Makes A Difference… Having a company full of “A Players” does not guarantee success, but it significantly raises your prospects.

As a Business Coach, I have worked with many organizations and see the differences between the companies that produce short-term success, long-term success, and those that flounder. There is a vast difference in how the long-term winners build their organizations and their results versus everyone else. The factors that cause these results are known, often discussed, and rarely emulated. Your philosophy around talent matters!

Identify any company you consider great, and you will find that the greatness was 20 years in the making. You have probably heard revenue is vanity, profit is sanity, and cash is king. If you are producing high levels of success in all three measures, you should be proud. Not many companies can boast such performance. And still, you may not be built to last. What worked in the past may not work for the future. 

Most businesses will never be innovative, transformational, or trailblazers. However, all can have extraordinary growth in revenue and profits. An example most of us know is Southwest. They don’t have the most revenue (10th), largest fleet size (5th), or passengers flown (3rd). However, they broke the mold when measuring cumulative profit over 30 years. And, they copied and better executed another companies business model. 

As a business coach, I help companies build great companies and develop the best leadership practices to stay great. I help address organizational habits that cause growth ceilings. Or worse, your habits could lead to a decline or even failure. I see my job as a blind spot remover. One of the keys to your success is your leadership philosophy around talent.

First Who Then What

You can’t discuss enduring success without addressing the elephant in the room. Your business will only be as good as the people that operate in it. Jim Collins nailed it in “Good to Great, “first who then what!”

Many companies have a few great people, but few can boast the best talent throughout the organization. Most leaders will tell you that they are great at selecting people, but the data proves otherwise. Most companies don’t have the measures to know and only use their income statements as their measuring stick. The stark truth is that at least 30% of your employees are not performing and hiding in plain sight.

As I wrote in Your Business is a Leaky Bucket, even great leadership cannot overcome the limited abilities of “B” or “C” talent. Often, leaders can only go as far as those they lead. Think about it from a coaching perspective. You could have a world-class coach, but if you have a team of players with mediocre athletic ability, you’ll only get so far. The coach can draw up all the plays he wants, but the team has to execute them on the playing field. Players have to make split-second decisions and make the plays as the game unfolds. The players determine whether you win or lose. Business is no different.

Great leadership puts a person in a position to excel and succeed, but that person still has to do all the heavy lifting. It has been said that a great leader is like a gardener who plants seeds, makes sure that the soil has the right nutrients, and then nurtures the soil. The gardener cannot grow his crops, and he can only provide the right conditions for growth and plants the right seeds. 

Trust me when I say it is imperative to have A-rated talent to obtain optimal results. Then it takes leadership to keep them at that level. Now, don’t think of this as a process of rating people. Instead, it is about establishing the standards for every employee. Only after specifying measurable objectives can you hold your team accountable. Incomplete hiring and accountability practices, not putting people in the right seats where they can excel, failure to hold people accountable to key outcomes, and weakness in your culture represent poor leadership.

One of the biggest profit leaks in your company may be related to your philosophy regarding personnel. The highest cost in most companies is payroll; therefore, your biggest asset or investment is people. How seriously are you and your company taking this investment, and how disciplined are you in demanding that it produces an adequate standard of performance?

I have enjoyed coaching excellent teams and have experienced the pain of excessive numbers of wrong team members. It is no surprise that when the leadership team is weak, so is everyone else. An “A Player” will not survive a “B” leader or tolerate being surrounded by “B” coworkers. Birds of a feather flock together. We have looked at the success rate of our engagements, and Clients that put heavy investment in filling their organizations with “A Players” far outperformed the rest. Worse, companies with “B” leaders, particularly CEO, moved sideways at best. We would use the same process, same coaches, and double the effort to help the “B” team. We always fail to make sustainable progress with a “B” team.

What Are “A” Players?

 “A” players are employees who consistently meet productivity requirements (performance standards) and consistently live your company’s core values. Your productivity requirements should be set at a high bar and be readily achievable. Do not place the bar so high that it takes a unicorn to fill your position. Regardless of the role, strong performers can produce at two to three times the output of their peers. Many organizations, however, label the wrong people as their “A” players. You may be favoring people you can identify with more personally, that you have less conflict with, who have organizational tenure, who have the most institutional or industry knowledge, or that you consider loyal to you. They are not necessarily “A” players. If you are like many leaders, you may be giving more weight to only a few attributes or qualities you find important. Unfortunately, those may or may not be critical to the position’s real mission, purpose, or success.

I had a client who had an issue with his controller and was leaning toward dismissal. This was a sales culture, and the CEO favored outgoing and communicative people. He felt the controller did not fit his culture. The controller was reclusive and preferred to work in a quiet place to concentrate. Also, this controller was not afraid to tell the CEO when the company was wasting money, even if it was the CEO doing so. The controller was very focused on precision and getting things right. She often voiced concerns when other leaders exaggerated their points or made decisions with no supporting data.

The CEO failed to realize the issues he had with the controller were not related to her skills and talents. Instead, they were related to her behavioral style, which differed from the CEO. The controller’s behavioral style helped balance the leadership team and was essential to her being a suitable controller. Being the decisive and outgoing communicator that the CEO preferred was not a necessary quality for being a competent controller. The controller lived all of the core values of the business entirely. Moreover, everything produced by the department was helpful and accurate. Furthermore, she treated the company as if its assets were her own, protecting the owners.

So what causes someone to be categorized as a “B” or “C” player? A “B” player consistently lives all of your organization’s core values but is not meeting 100 percent of their position’s productivity requirements. A “B/C” player performs at the required levels but does not consistently demonstrate one or more core values. “C” players are failing to meet the performance and values standards. In all cases, anyone who is not classified as “A” should only be kept on your team if management believes they can become “A” players with proper training and coaching within an acceptable period. If not, the best thing you can do is replace them speedily.

Three Types of A-Players

Earlier in my career, I took over a new role and fired our top producing salesman. The owners thought I was nuts. We had about 20 salespeople and his book represented 20% of our revenue. What the owners were not seeing was how he affected everyone else. I spent approximately 5 hours a week dealing with issues presented because of this person, including a sexual harassment claim, which turned out to be a repeat offense. I stuck to my decision and fired him. In the end, our company, which had been declining in sales the three years previous to my being hired. After firing this toxic employee, revenue started growing immediately. Within 30 days of firing him, our largest client (representing 10% of revenue) called the President and said it was about time. They had been diverting business to our competition because they found him toxic. They immediately began ordering more from us.

There are three types of “A Players:”

A1 – They are great in their current position. We would hire ten more just like them. These people are not promotable, love what they do, and are passionate about their work.

A2 – Is someone you believe can be promoted 1 level. They have done very well in their current role and have the skills, desire, and ability to take on higher responsibilities. They can help produce more people just like them by sharing their knowledge and experience and representing your core values daily.

A3 – Is someone you believe can be promoted to two levels or more. They have traits, capabilities, and the desire to lead others.

One last comment about “A Players.” Too often, leaders create arbitrary performance standards. I have found this to be a large problem. The standards are set, and no one consistently hits them. When people miss them after giving 100%, they can be labeled as “not performing.” This leads to lower performance and eventually termination. I recommend you use much rigor in developing reasonably high-performance standards. Failure to do so costs you a lot more than you realize.

Eight Questions to Ask When Someone Does Not Perform at an “A” Level:

(1) Have you adequately communicated expectations?

(2) Has this person been an “A” player in the past? If so, what has changed?

(3) Does the person have the skills and knowledge necessary to perform his or her job at a high level?

(4) What training is required to get this person to peak performance?

(5) Has the organization created unnecessary barriers to this person becoming successful?

(6) Do you believe this person will achieve productivity within a reasonable amount of time?

(7) Does this person believe in your core values, and is he or she willing to live them?

(8) Which processes, if fixed, would lead to better success in the future?

Answering these questions will help you diagnose the issue(s). Sometimes team members are well past the rebound zone. That is, you simply cannot resurrect their performance. Other times, with a little redirection and emphasis on coaching, mentoring, or training, an underperforming person can bounce back. Either way, you have to determine the exact problem and then take great strides to address it.

Why is the “B” and “C” Performance Issue Not Being Addressed?

The primary reason employees are permitted to underperform is a lack of clarity in leadership. Leaders are often too busy doing their jobs to focus enough time and energy on what they want from their team. And when they have a good idea of precisely what they desire, often they do not adequately communicate it. Even then, performance is usually not being measured to allow a person to be held accountable.

Most sharp business owners do measure the performance of their businesses on at least a monthly basis. Still, they fail to relate that measurement to individual employee performance properly. By not requiring a specific level of performance, monitoring that performance, and holding employees accountable, you allow your employees to establish their performance requirements. Common sense tells me your employees will set lower work standards for themselves than you would.

You may be wondering how “B” and “C” performances can cost a company millions and go unnoticed and unaddressed. The primary reason: There is no financial statement line item to quantify the cost of the lost clients, lost productivity, mistakes, and lost opportunities attributable to these nonperforming players. This begs the question: Why would you ever even consider keeping a “B” or “C” player?

 When Do You Keep “B” or “C” Players?

Keep a “B” or “C” player when you confidently believe they will become an “A” player within a reasonable amount of time. If you cannot define how and when that will occur, stop fooling yourself and cut the cord. With that said, you may have to keep a person on board until hiring their replacement. At times, prematurely forcing a vacancy will be too disruptive. Be careful. I find that keeping the wrong person is costing you far more than you ever imagined.

Leaders have many excuses for not replacing their “B” or “C” players. All of the reasons boil down to either leadership laziness or just plain poor leadership. Let’s again clarify the definition of the “A” player. They are not extraordinary. They are people who meet the requirements of their positions and fit your culture. Anything less, and you are overpaying for a position.

Every company leader I have met who had a cash flow problem or was unsatisfied with their growth or profits also had a people problem. Growth problems attributable to bad strategy are the result of people problems. Companies that choose the right people (including advisors, consultants, and coaches) are less likely to have strategy problems. Think about it. The employees of any business are like the cogs that keep a machine running. Doesn’t it make sense that the machine won’t operate at optimum performance when you have broken, incorrect, or rusty pieces inside of it?

It is rare to find a company that already had the processes in place to allow them to demonstrate that at least 75 percent of its employees were “A” players. In fact, most had 40 percent or even less. Many initially believed they had 75 percent or more, but that was a wish and a prayer, as they were not tracking any performance indicators to prove their people were performing.

Research shows that replacing even one “B” or “C” player with an “A” player has a significant impact on a business. Some companies misunderstand what could happen if they commit to doing what it takes to achieve A-player performance in every position in their company. They create walls or personal obstacles, some of which sound like this:

 – There are not enough “A” players out there.

 – It will take much longer to hire people.

 – It is too complicated.

 – It takes too much workforce.

 – It can’t happen in our industry.

 – I have to fire everyone who is a “B” and” C” player.

 – “A” players must be paid more than “B” and “C” players.

The truth is that these are all myths and limiting beliefs, allowing leadership to continue to justify poor hiring practices and maintain the status quo.

The Container Store provides one of the best examples of building an organization with “A” players. I was fortunate to hear Kip Tindell, founder of The Container Store, share his formula for making a great organization. He built his company from a small start-up to one of the most respected businesses around. By enforcing an “A” player mantra, his company grew 20 percent a year to well over $1B in revenue. His formula has five crucial keys to success:

(1) Pay – They paid 50 percent to 100 percent above the industry average. Tindell knew one great person could do the work of two to three ordinary people. “A” players pay for their “extra” salary threefold, so overall labor costs are lower than the competition. His people are incredibly proud to be part of the company.

(2) Recruiting and Retention – To win, he knew he must only hire great people. “A” players only like to work with other “A” players. They do not want to be surrounded by mediocrity. They would choose to be in his company to be on a great team. They wanted more of the best and brightest out of school. This means his recruiting process had to be phenomenal to find and select the right people and never settle. This resulted in less than 10 percent turnover in an industry that typically experiences over 100 percent turnover.

(3) Training and Onboarding. Tindell provides eighty-four hours of formal training in the first year compared to the industry average, which is eight hours.

(4) Real transparency and communication. Your leaders and managers can thrive with clear communication and transparency. If they don’t feel sufficiently informed, they feel left out, and their performance will suffer.

(5) Culture is everything. Free the employees to choose the means to the ends, but tell them the foundational principles to use in making those decisions. All employees will give you 25 percent of their efforts, considered the bare minimum amount of productivity required to keep your job. To get the other 75 percent, they have to love their manager and culture.

In each of these steps, you’ll quickly come to a singular conclusion: Great leaders invest enormous time and energy into their team. They create a culture that invites in “A” players and demands an A-level performance.

 Actions to Take

What steps can you take to build a high-performance organization? Just like any machine that takes proper maintenance and attention to run smoothly. Lack of timely care to problems leads to more costly repairs. So likely, we can all agree it is much more efficient and cost-effective to ward off those repairs. People already spend enormous amounts of time interviewing candidates. They need to learn the right techniques and processes to determine whether the people they interview are the right choices for the positions. The real challenge is instilling an organization-wide commitment to high-performance standards, and practice makes perfect.

There is no one-size-fits-all sort of remedy. Different companies require different solutions. Remember that you’re dealing with real people and problems, so do not remove the compassion from the equation. Classifying someone as “C” or “B” in their current role does not mean they cannot become an “A” player in another position or possibly in their existing position, with just a little more training.

It has been said, “That which gets measured gets done!”When measurement tools are in place, leaders are shocked by how many employees fit the categories of “B” and “C” players. This performance gap costs companies millions in profit leaks. However, you can take several steps to resurrect and improve your organizational productivity.

 Six Steps to A-Player Status:

(1) For each position in your company, identify two to three key performance indicators that the person in the position has direct control over and would prove they are performing well in their job. Establish a high but realistic standard for each indicator.

(2) Communicate these indicators and the standards to the person in the position and measure actual performance versus the rules you’ve set.

(3) Establish a process for continually reinforcing your core values with all of your employees.

(4) Every quarter, review how consistently each member of your team lives your core values and meets the performance expectations of their role

(5) Put employees who are not living your core values or meeting performance expectations on definite performance plans to direct them toward achieving the desired performance.

(6) Take immediate action to help employees who are not meeting their requirements. Those who cannot meet your standards should be replaced.

 

Howard M. Shore, Founder and CEO of Activate Group Inc., is a bestselling author and serial entrepreneur specializing in liberating leadership teams from the barriers holding them back personally and professionally. During his 35+ year career, Howard has helped create over $1 Billion of value and authored two best-selling books, The Leader Launchpad and Your Business is a Leaky Bucket. Howard cut his teeth as the owner of several successful companies and executive for Fortune 500 companies like Ryder Systems, AutoNation, and KPMG. Howard has become a sought-after business mentor, executive coach, and keynote speaker. His clients work in family-owned, multi-national, public, and private companies ranging from $1 million to over $1 billion in annual revenue. With a 30-year track record of success, he guarantees any organization using his methods and systems will become more profitable, stable, and scalable.

How to Increase the Value of Your Business Before You Sell

How to Increase the Value of Your Business

Is selling your business a future consideration? If you are like many business owners, you know you will one day sell your business. Too often owners take time for granted. They always believe they have more time to consider how best to prepare their businesses for sale. The flaw in their thinking is that they really do not know whether the best time to sell is this year, next year, or 50 years from now. I have heard so many stories from people who were offered a lot of money to sell their businesses and turned down the offer, only to find five years later that they could only attract fractions of that offer. It is important to understand how to increase the value of your business before you sell, and it’s equally as important to determine the right time to sell.

3 Primary Reasons For Buying A Business

The primary reason for buying a business is return on investment. They will pay what they consider is a fair price based on 3 primary factors:

  1. Does the purchase remove a business barrier?
  2. Does the purchase eliminate competition?
  3. Is the purchase a strategic fit in terms of :
  • Geography
  • Customers
  • Employees
  • Tangible and/or intangible assets

7 Ways to Increase Valuation

You should build your business as if it might sell tomorrow. By continuing to improve and monitor the following valuation levers you can increase the value of your business and possibly identify when it is time to sell:

1. Profit Growth Rate

Profit Growth Rate – how predictable and consistent is your profit and revenue growth rate? The higher, more predictable, and consistent the pattern, the better. These are two crucial measurements that determine the health of your business. Great businesses are able to reliably predict their profit growth rate, and are rewarded handsomely when they are ready to sell. Understanding, monitoring, and improving the predictability and consistency in your profit growth rate will help increase business value for the right sale.

2. Industry or Market Segment

Industry or Market Segment Attractiveness – What does the future look like? What do experts say about it? How is your company uniquely positioned to get its fair share? Positioning your business in a growth industry and targeting the right market segment will be an important factor in the continued success of your company. Being in a growth market will improve the valuation for your business as buyers will pay more for companies in growth markets.

3. Low (Relative) Market Share

You want to be seen as a business leader, but you don’t want to be seen as a risk because you have saturated your portion of the market. As a business effectively continues to grow and increase its market share, the more profit potential they have.

4. Customer Concentration

Customer Concentration – a company must not be overly dependent upon a single customer or customer group. Customer (or revenue) concentration can be one of the biggest risks to your company’s profit. No customer should make up 10% or more of your revenue. With the right business strategy and tactics, you’ll be able to bring that number down to 2%. Having a low concentration risk will increase your business valuation, making buyers more likely to pay more.

5. Recurring Revenue

Recurring Revenue – this is one of the most favorable ways to increase business valuation because it supports consistency and predictability. It also allows for focus on decreasing delivery costs to customers over time – thus increasing profitability through time. The higher the level of recurring revenue, the more you will increase the value of your business before you are even ready to sell.

6. Company Size and Location

In terms of revenue, employees and geographic locations play a role in salability. Buyers see smaller companies as more of a risk than larger companies. The same goes for geographic location. If the business is in an area with a dwindling economy or even a lower population than one with a larger / steadily increasing economy, they automatically see this as a risk to potential profit that they more than likely won’t be willing to take.

7. Management and Executive Team

Management – seasoned and experienced managers in the industry with a track record of success are very important. It is hard to find great management talent. Skilled employees and executives often times will know exactly what it takes for the business to see growth in profit, making them key aspects to a new business owner. Buyers want to see a team of employees who are willing to work hard and are dedicated the overall success of the business. Hold on to your top-performing players and offer them incentives to want to be with the company long-term.

Need help with increasing the value of your business before your sell?

An executive business coach can help increase profit margins, improve predictability, and increase valuation to properly prepare your business for sale. Call Howard Shore, one of the top business coaches in the United States, for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business and become a more effective leader.

Cost of Hiring New Employees

It is not often that I hear my business coaching clients use “hiring new employees” and “strategy” in the same sentence. In fact, before hiring me and beyond the typical tactical issues with employees, it was rare for human resources issues to be considered during strategic planning meetings. I recently met with one of my clients regarding challenges they encountered in recruiting sales personnel, and it became obvious that their tactical issues were really related to their strategic model for hiring employees. Worse even than their tactical issues was the fact that it was costing them a huge amount of money to hire new staff members.

Commonly Overlooked Costs Associated With Hiring New Employees

Before discussing the strategic issues of my Florida coaching client and how we wrestled them to the table, I want to clarify what I mean by the “cost of hiring new employees”. Here are some costs you probably do not measure, and they are the big ones:

1. Hiring Success Rate

The lower your hiring success, the more people you have to hire to get a full set of performers. For example, if you need to add 10 people, but your hiring success rate is only 25%, you will ultimately have hired 31 people before you have the 10 people that will perform at your required performance levels.

2. Hiring & Performance Standards

Most companies are lowering their performance standards rather than raising their hiring standards. They get frustrated by their inability to recruit the right people and take whatever they find available. The lower performance requirements result in excess employees, lower customer service, more mistakes, lost opportunities, and lost customers.

3. Leadership Time

Leadership has to divert significant time to interview extra people, manage superfluous people, and address the performance-related issues of substandard employees. This brings far less value to the company than the leadership activities they would perform otherwise.
Unfortunately, there is no separate income statement line item for the above. In every company I have visited, the financial statement impact is huge when we start trying to quantify the above numbers. This is what I am referring to when I am concerned about the cost of hiring new employees:

How Business Strategy Impacts the Hiring Process

As I was working with one of my customers in Miami, they were explaining to me that 2,000 candidates had applied for 10 open sales positions over a 6-month period. They ended up being very disappointed with their results. Very few candidates were qualified. They had tried hiring a few new employees, several of whom never showed up for the first day, and, of the ones that did show up, they were not pleased.
They were looking at all the time that was passing and how much money the employee hiring process was costing them. They were losing money on sales that were not generated by having an open position, sales that were not generated by people that could not perform, and the cost of management time applied for recruiting. After reviewing their situation, we realized the situation was a strategy issue.

Considering All Factors in the Employee Recruitment Process

When developing a strategy, you need to consider the people decisions related to that strategy. In every company, there are several key positions that must be filled quickly in order to grow your business. In my client’s case the need was for additional salespeople. If your business model requires a unique individual (in other words, someone with a skill that is very unusual, hard to find, hard to attract, etc.) and you will need a lot of them to grow to the levels you want, you have a bad strategy. The solution to this is to change the model so that you will be able to staff your model.
My coaching client and I looked at the cost of hiring problem and realized that he was not considering all the factors in the recruitment process and addressing them wisely. In their case, they wanted people to work on a commission-only basis, be highly experienced in my client’s industry, and be a seasoned salesperson. It should not have been a big surprise that none of their ideal candidates were biting. The people that were biting required different internal support systems, and the company was not set up to help them be successful.

Understanding the Costs of Hiring the Employees You NEED

So here is how we attacked the problem. We broke down candidates into 3 groups: No Experience, Sales Experience/No Industry Experience, and Sales Experience with Significant Industry Experience. We then discussed the implications of risk, internal system support, ramp-up time required, compensation systems needed, and search strategy. What we learned from the process was that they had 4 different sales positions, two of which could not be successful without significant industry experience. Compensation needed to be very different for these people versus the others. We concluded that the client’s current internal systems and processes to support the strategy they had chosen were severely inadequate.
These revelations were critical. Failure to identify and address them would certainly have resulted in continued frustration. By addressing the disconnect between how they were approaching people decisions, their operations, and their strategy, my client was in a much better position for success. This was a clear case where the cost of hiring new employees was much greater than they realized.

Improve Your Hiring Strategy

Howard Shore is an executive coach and founder of Activate Group Inc. based in Miami, Florida. His firm works with companies to deliver business coaching to improve executive leadership development. To learn more about executive leadership coaching through AGI, please contact Howard at 305.722.7213.

Identifying Time Management Issues and How to Fix Them

Do you Have a Time Management Issue?

You cannot manage time itself, but you can manage yourself and how you choose to use your time. These days we are under more time pressure than ever, and those little gadgets we use to make our lives easier may actually make our lives much harder.

Improving Time Management

Time is the great equalizer. Everyone gets the same amount of time: 24 hours in each day. You cannot buy more time. No matter how many people you know, they cannot give you more time. So the most important question you can ask daily is: “How can my team use time more wisely?”
One of the essential keys to maximizing success as an individual or an organization is to effectively determine where your time should go now and into the future. Where you used time in the past only serves as a guide and learning mechanism for your decisions as to where time should go in the future. One person in your group losing focus on congruent goals can impact everyone’s time, and even create a huge barrier for success.
Too often people search in the wrong places when trying to find out why they are not achieving their goals. They think there is something wrong with their time management program, so they buy a new one. They create long lists, and they eliminate certain things, only to find that they had no realistic effect on the organization. The real problem is not the process they currently use to manage or use time. Rather, it is the habit of thoughts or attitudes they use to decide how they will use their time.

How Belief Systems Influence Behavior

Belief systems lead to actions that cause results, which then impact your time management. If you or your people behave in counterproductive ways, try to identify the belief systems that cause that behavior. For example, let’s say you decide to exercise 3 days a week to improve your health. However, your primary belief system is that exercise is boring and painful. What do you think the chances are that you’ll exercise three days a week?
A common issue I hear from CEOs is that they spend little or no time on their strategic priorities. Instead, they spend their days putting out fires and dealing with their employee issues. They usually insist that this is just part of business as usual. However, a closer examination teaches us that there are people who like to put out fires and enjoy the immediate gratification of handling the daily emergencies, want to be the ones with all the answers, and have trouble telling others “No.” These habits directly impact their ability to effectively manage their time.
We seek immediate gratification in our society. The benefit of better health is a long-term goal. In the short term, a person avoids the pain of sore muscles and the loss of self-esteem that goes along with confirming one’s own bad physical shape by not going to the gym. In other words, they feel better about not going to the gym than they do about going. This is immediate gratification, even though the decision is a bad one for achieving long-term goals.

Identify Gratification Received From Bad Behavior

In order to change behavior, you must identify the immediate gratification you get from your bad behavior and the thought patterns that cause you to continue to practice it. Once identified, it is then necessary to find something more motivating to replace them. For example, many people would start to exercise if their doctor told them, “If you do not start to exercise tomorrow, you’ll have only six months to live, and if you do exercise, you will live another 25 years.” That is quite a carrot to dangle.

Tracking Time Spent

Most people do not have a good sense of where their time goes. At least once every six months, executives should track their time to see where they spend it. Once you have a solid understanding of how you spend your time, you can then try to increase the amount of time you control, or productively use your time by delegating activities to others, eliminating waste, and reallocating time to make it more productive.
Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Setting Priorities Starts With A Good Business Plan

The trademarks of a great operation are how well its leader and team use time and set priorities. Too often people confuse activity with productivity. Setting priorities starts with a plan. A good plan creates focus, sets goals, creates alignment throughout an organization, and provides a means for accountability. Have you reduced organizational activity down to the minimum necessary to achieve maximum results? Are anyone’s priorities working at cross purposes to those of the organization? Are the organization’s daily activities properly aligned toward its goals? You are likely emphasizing the wrong set of priorities to your team if you don’t address these issues.

Two Indications That You Have a Problem

As a Business Coach, one of my essential roles is to assist you in determining the key components of your business plan. My experience is that many companies do a poor job of creating their plans, costing them serious growth in revenue and profits. If you are like most leaders I’ve worked with, your annual planning process may need some fine-tuning. Often, I find leaders spend too much time focusing their attention on goals rather than on the components of their plan that will cause them to achieve those goals. Two indications that you have a problem are:

  1. You do not find the need to visit your plan weekly, monthly and quarterly with your executive team to make sure you are following it.
  2. You are not consistently hitting your revenue and profit numbers on a monthly basis. Or, you are hitting those numbers but because of reasons other than your plan. In other words, you are growing by chance rather than by planned actions.

Creating a business plan helps to find the simplest path for your company to follow to produce maximum results. Lack of prioritization is by far the most common issue preventing companies from reaching consistent performance. While most leaders like to blame external conditions, it is usually an internal shortcoming.

What are the 8 Key Components of a Business Plan?

In order to accomplish focus, prioritization, alignment, and accountability, your business plan should clearly answer the following 8 concerns:

  1. Why does your company exist (purpose)?
  2. How are you different (unusual offering)?
  3. Who is the core customer that you will build your business around?
  4. What are your goals?
  5. Which critical number(s) will you elevate this quarter?
  6. What are your 3 to 5 essential annual priorities? Remember, these are the difficult changes that need to be made in terms of products and services, systems and process, and people.
  7. What are the 3 to 5 quarterly company priorities that will drive the annual priorities?
  8. What are the 3 to 5 quarterly personal priorities for every leader that aligns with the company priorities and functional priorities?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Planning Your Annual Initiatives

Setting Business Priorities

Setting business priorities starts with a plan. A good plan creates focus, sets goals, creates alignment throughout your organization, and provides a means for accountability. Have you reduced organizational activity down to the minimum to achieve maximum results? Are anyone’s priorities working at cross purposes to the company’s? Are your daily activities properly aligned toward your goals? You are likely emphasizing the wrong set of business priorities to your team if you don’t address these issues.

Planning Equals Prioritization

Planning requires prioritizing business initiatives. This will help you to send the right message to your team, and prevent time and resource loss. As with most business plans, I recommend there be no more than five annual initiatives (less is preferred). Once you have your Critical Numbers, you can determine which business initiatives are most important to undertake, maintaining at least one annual initiative focused on just your critical number(s).

After meeting hundreds of business owners, I find that most fail to create a good business plan. The secret is in the annual initiatives. Many leaders confuse budgeting with business planning. Others confuse action steps with business priorities or initiatives. Others are not thinking big enough when creating their plans. Are you finding it challenging to create a good business plan? How often is there a difference between the plan you create and the actions your team initiates? How big is the gap between expected and actual performance? In my experience, poor business planning may cost you serious growth in revenue and profits.

Strategic Business Initiatives

A good business plan should help you determine your business priorities. These are the 3 to 5 annual initiatives that should move your business forward. Many business leaders ignore their weakness in this area because they fear impacting their financial goals. Business priorities are usually strategic in nature or are items that do not show directly in the P & L, such as strategic initiatives that strengthen customer loyalty. The natural tendency is to worry about today, which is why most strategic business plans are never executed.

5 Pitfalls to Setting Your Annual Priorities

Beware of the following common pitfalls while creating a good business plan and setting your annual priorities:

1. Poor Clarity 

A business initiative should be described with such clarity that a stranger would know what you are trying to accomplish and be able to hold you accountable.

2. Short-Term Focus 

Some business plans focus on initiatives that affect only the most immediate quarterly goals. Every business needs to make money and cover its expenses, but the problem occurs when you are so focused on the short-term that you are not able to spend time making the changes that are necessary for making quantum leaps.

3. Ignore the Trends 

I see companies that continue to ignore the fact that the traditional ways in which their customers purchase their products and services have changed. Blockbuster didn’t recognize these trends and has been replaced with forward-thinking companies like Netflix.

4. Accepting Your Weaknesses 

Knowing that you have weaknesses is not the same as doing something about them. Every company should make it a priority to seriously address, if not eliminate, at least one weakness per year.

5. Over Ambition 

Too often leaders see all the things they are unhappy with and try to turn initiatives into priorities. Generally, it is good practice to have 5 or fewer annual priorities. I prefer 3.

Contact Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Goal Setting Matters

Many organizations set goals and fail to reach them. Others achieve some of their goals by accident. There are some leaders that question whether setting goals is a valuable exercise at all. You can even find much written on why goal-setting is a farce. Adam Galinsky, a professor at Northwestern University’s Kellogg School of Management and one of the authors of a Harvard Business School report called “Goals Gone Wild,” argues that “goal-setting has been treated like an over-the-counter medication when it should really be treated with more care, as a prescription-strength medication.” His position is that goal-setting can focus attention too much on the wrong things and can lead people to participate in extreme behaviors to achieve their goals.

I am of the position that goal-setting serves a critical purpose in helping to provide direction, clarify priorities, cause important discussions, influence positive behavior change, and stimulate focus. Goals are an essential part of the time strategies equation. Like anything else in life, when developed in an unsound way, misdirected, overemphasized, and not used in context they will not serve their purposes and can cause more harm than good.

Often I find people do not put enough thought into their goals and thus have an incomplete set of goals. I have one client that was so focused on achieving a sales goal every year that they neglected every other priority. They never came close to reaching their target. It was not until we had a complete set of goals that they ever achieved real sales progress. When focused correctly, goals take into account customers, employees, shareholders, vendors, operations, sales, profit, and record keeping.

I have seen goals rally an organization to reach extraordinary results. A great example is a company that I have worked with for a number of years. This highly successful organization needed to refocus their organization around their core customer. After growing their business for years they realized that 75% of the accounts they serviced did not represent their core customer. They had built a business model that was better suited for the other 25% of their customer base. The smaller base of customers actually represented 60% of revenue and 80% of their profit. The owner refocused the organization to double the number of core customers. They want to achieve in 5 years what previously required 25 years to accomplish. This focus changed the course of the company. Without divulging their strategy, which is unfolding, this singular focus on core customer changed the leadership structure, sales organization, marketing, product and service focus, and operations of the company. Last year was so successful that the company far exceeded any 2 years combined in terms of adding number of core customers. This year my client is on track to double last year and should meet their five-year goal. If their projections are correct they will more than double company revenue. More importantly, profit and firm value will triple or quadruple.

I have also seen the opposite occur when an organization focused too much on the wrong goal. Usually that wrong goal is sales growth. The thought process behind this choice is that sales solves all problems. The problem with this line of thinking is that not all sales are equal. Goals can lead to extreme behaviors and if misdirected can be destructive. In many cases transactions and customers can be unprofitable. People who try to make it up on volume and do not focus on profit typically lose. One common mistake in staying focused on sales growth and combining that with nearsightedness is discounting products and services to close deals at the end of a quarter to earn bonuses. Putting this into context, you pay someone extra to earn you less money! Ironically, if you are the owner you have cost yourself in four ways:

  1. You made less profit in the long-term. You probably could have closed the same transaction for more by waiting. The time value of money is in your favor, even if you use that money to pay debt. Say you have a 10% loan. You probably save only 1% or 2% on the money by paying earlier. I bet the your discount offer is much greater.
  2. You are teaching your customers that your pricing is not firm. If they wait until quarter-end they can squeeze lower pricing out of your sales people. Worse, they have learned that you are always negotiable.
  3. You are not training your sales people to maximize margin at every turn. So in the end you will sell more but make less.
  4. You paid commission and bonus on a lesser deal.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

7 Keys to Working Smarter and Being Highly Successful

After observing thousands of leaders in companies from startups to over $20B in revenue and helping create over $1 Billion in business value, I noticed one superpower in highly successful people. They worked smarter, not harder, and derive much higher results in less time than almost everyone else. These very successful leaders tended to value highly the Management Strategies and Learnings obtained through Business and Executive coaching channels.

For clarity, I deem someone to be successful if they can accomplish three times more than their peers,  have more joy and happiness, and do all of this in less time.  Now, I have to draw a line as many of us are highly ambitious, driven, and are classic workaholics. Most workaholics do not commit to reducing the hours they work and find work exhilarating. Regardless of your view, it would help if you wanted to achieve three times the results and earnings in less time. What you do with the extra time is your business.  But everyone should want to work smarter and not harder.

I am often exposed to CEOs in the same industry and have always been amazed at how varied leader’s approaches are.  To me, the right approach is the one that produces three times the results with a similar effort.  Let’s take the restoration industry.  I have met many CEOs who started their business 20 years before and are stuck at $5M in revenue or less. Also, I have met others that were in the industry for just a few years and had revenue over $5M.   I do not only find revenue disparity. I also find profit and time gaps.  While the average company earns a net profit of 5% of revenue, we have helped companies generate over 20%.  Would you rather be a $10M company that produces $500K of net profit or a $5 Million company that produces $1M in net profit?  That was a trick because you should want to be the $10 Million company generating $2 Million profit, expecting the growth and the profits.

The most successful CEOs build far larger companies, have higher growth rates, have more free time, and have 3x the net profit margin. And, yes, there are other measures of success. I want you to consider that working more hours than everyone else, regardless of what you earn, is a fool’s choice! All I want to do is challenge us to work smarter continually.

Which leads us to the big question: “How can we make it easier to achieve our success goals faster?”  How can a person make far more, achieve their intended impact, and work a lot less? Not only is this possible, but others are already doing it. After watching these leaders, I noticed they were not necessarily smarter, more creative, lack ethics, or privileged.  I have met many highly successful people, some ultra-wealthy, and found that they were formerly homeless, living in trailer parks, had no college degrees, and so on. I am sure all of us are capable of high levels of success.

Achieving success is simpler than you think but not easy. If it were easy, everyone would do it.  The strange part is that we are familiar with the concepts but not living them. Here are the principles you must follow to work smarter and not harder:

(1) Manage Your Thoughts

(2) Have a  Strategy

(3) Be Strategic

(4) Work a Plan

(5) Be Disciplined

(6) Resilience Rituals

(7) Build Wealth

Manage Your Thoughts

There are three dimensions to managing our thoughts: awareness, intention, and perseverance. Our mind is a potent tool. How you think will change your outcomes for better or worse. Thus you need to be aware of what you are thinking. For example, if you make up your mind that someone cannot do their job, your words and actions will differ from those based on the premise they are capable of. Your thoughts need to be congruent with your intentions. If you intend on accomplishing something and focus your thoughts on contrary purposes, you will fail. Imagine you plan to have a good day but your spend most of your day angry about something. 

Once our thoughts and intentions are in unity, we need to have perseverance. When was the last time you set out for something new and challenging, and it worked out exactly as planned? Most often, we find we run into unforeseen difficulties and roadblocks.  If you allow your mind to waiver from the finish line, you may not get there in a practical manner.

Have a Strategy

Too often, I find driven people are in constant motion. They confuse activity with productivity. When they see a problem to solve, they are off to the races.  Often leaders are solving the wrong problems or not taking the best route to solve their problems.  By doing so, you may feel better in the short term, but it could have long-term negative consequences.

I recently witnessed a senior leader get angry with a subordinate because he felt they were taking advantage of the company.  He immediately launched into attack mode and let the employee know how he felt.  While the concern was merited and the employee course-corrected, there were longer-term consequences.  You see, the leader was so busy being right that he lost one of the highest-performing people in the industry. That employee decided to quit his boss.

In the end, the leader was not strategic.  Had he been, he would have waited until he wasn’t angry and would have developed a strategy to course-correct the employee in a manner that was okay for both parties involved. Instead, he may need two people to do the work the one accomplished, and his reputation may cause other competent people not to want to work for him.

While I used a personal situation, the same goes for taking on projects, lofty goals, and conquering the competition. One thing we have all learned is that there are many ways to accomplish an objective. Being strategic requires you to consider achieving the ideal outcomes, choosing what “not” to do, using the least amount of resources, and within the desired time frame. It is usually best to consider expanding your options before choosing a path.

Work A Plan

We are working on a plan ties to being strategic.  However, the critical difference is that the strategy is the vision of where you want to go, and the action plan charts your course from beginning to end—many of us are big picture people. We can see what is possible and have a “can-do” attitude.  The problem with visionaries is they believe everything is simple and underestimate what it takes to achieve the outcome.  Taking the ball down the field is usually someone else’s problem.  To achieve grand visions, I recommend the following project management techniques:

(1) Be specific – The objective has to be clearly stated so that anyone could step in and know what needs to be done.

(2) Make it Measurable – Identify the measurable milestones and deadlines that indicate you are on track.

(3) Action Steps – Identify the action steps necessary to achieve each milestone.

(4) Monitor Progress – There must be processes and systems in place to monitor progress.

(5) Course Correct – When progress is insufficient, it is essential to revisit your plan to get back on track.

Be Disciplined

Whether you are working on getting healthy, achieving your sales goals, accomplishing a major project, it takes disciplined action.  Too often, we like the idea of the outcome but are not disciplined enough to achieve it. Think about dieting. If I eat healthily and eat the right amount of calories for three days a week but overeat unhealthy foods the other 4, it will take a lot longer (if ever) to lose the weight. Where if you ate properly every day, that takes discipline.

My brother Matt is the President of Steven Douglas, one of the fastest-growing recruiting and staffing agencies in the US.  Matt has been a top producer every year since he entered the industry almost 20 years ago.  Most people in his industry only dream of producing his revenue production.  Matt shared with me that he has hundreds of employees, and none of them produce as much as he does. Given that he is President, he spends far less time than full-time salespeople. This caused me to ask his secret. Matt has a list of 300 key contacts he calls every sixty days.  He does this by setting aside one hour daily for outbound calls.  This single disciplined activity has helped him achieve more in 5 hours a week than others can produce in 60 hours.  Successful people are willing to commit to such discipline. I have shared this technique with at least 100 people over the years, and none has had the discipline to implement it.

Resilience Rituals

The airlines taught us a very important less when they told us that we must put our oxygen masks on first before helping others. I have found that highly successful people have a regimen of activities that they use to recharge themselves.  Here are my resilience rituals:

 – 1/2 hour of daily exercise

 – 15 Minute breaks between meetings

 – 15-30 of Meditation

 – 15 Minutes of Quiet reflection

 – Spending time with friends and family

 – Take 4-6 weeks off on vacation throughout the year.

 – Monitor and control my work hours

 – Weekly Massage

It would be best to have the same level of committed discipline to your resilience rituals as your business routines.  For example, if you work out 4 hours in one day, it will not have the same effect as 1/2 hour per day.

Build Wealth

Too many of us are so busy working that we don’t spend the right amount determining how to build wealth. Every very wealthy person I met has at least three streams of significant income.  It is essential that you identify, develop, and give enough attention to your various income streams.  Most people will tell you that the most significant part of wealth came from income streams outside of their day job.  The day gave them the financial start in investing in other activities. Still, many of those activities require learning about and developing strategies and plans to develop each stream. 

In Conclusion

While you can be highly successful without practicing the above activities, it does not invalidate them.  However, by managing your thoughts, being strategic, working a plan, being disciplined, practicing resilience rituals, and building wealth consistently, you will find your path to success with less friction.  Now I challenge you to determine how to use these principles to work smarter and not harder, so you have more time to do the things that are most important to you.

 


Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm, please visit his website at Activate Group Inc or contact Howard Shore at (305) 722-7216.

Trying to Sell an Apple to Someone Looking for Chocolate?

Recently, I facilitated a meeting for one of the most innovative companies I work with. The leadership team is one of the smartest I have ever worked with, and there is a clear vision about solving gaps in their market. Moreover, they arguably have the best SAAS platform to serve their target segment. Yet, they have struggled to grow.

Have you ever wondered why some companies seem to grow with ease while others don’t? I have pondered this question because I have seen far too many organizations struggle to grow. For the SAAS Company, the secret showed up in a strategy session I recently facilitated. The conversation centered around one key question, “Why is this SAAS company finding it so difficult to acquire new customers? The answer was not what you would expect.

Are You Answering the Right Question?

Often, leaders are trying to solve their growth issues by centering on the wrong questions and problems. Typically if you asked the question, “How do we increase sales faster,” you would hear answers like:
• We need more revenue.
• We need more leads.
• We need higher quality leads?
• We need better salespeople.
• Our sales manager is not doing her job.
• We need better marketing.
• We need more marketing.
• We need more salespeople.
• Our customers don’t understand why we are different.
• We have failed to articulate our value proposition well.
• Our salespeople need a better process.
• Our salespeople need better training.

Have You Identified the True Problem?

While the above may be components of solving your growth issues, it is likely not your problem. I often see companies spend significant money and time addressing all the above. After years of frustration, they find themselves right back where they started from. They find other companies in their industry growing far faster, and some started much later and far larger. Your company has likely developed great products and services, cares about your employees and customers, works very hard, and has many loyal customers. In addition, your company might have implemented best-practice execution processes like EOS and Scaling Up, and yet the growth outcomes are not getting much better. What gives?

The right approach is to change your question. In my client example, we changed the question from “how do we increase revenue” to “why is it so difficult to acquire new clients ?” I asked the leadership to answer the question with a question. We brainstormed for 10 minutes until we complied with enough inquiries related to the initial question. Here are some of the questions they came up with?
• How do we remove sales friction?
• What would we need to do to increase market share dramatically?
• Why can’t we sell product “A” to our target market?
• Why is there so much friction in acquiring new customers?
• Would it be easier to sell a product that is on par with our competition?
• What do we need to shift in sales and marketing?
• Who is our real target customer?
• What is the evolutionary path for customers?

After developing 25 questions, I asked the team to narrow down the list to one critical question that would address almost all of the questions. The answer was, “why can’t we sell product “A” to the masses?”

By using the new question as a focal point, we were able to discover their real problem. The market was desiring a product they were not offering. Worse, they had the perfect product, and it was bundled into their more sophisticated product. In the long run, their product was more complete and would better serve their target market. The problem, most companies were not ready to consider their full suite, and they were trying to force it on them.

While there is a lot more to this story, I was hoping you could recognize that these extremely smart leaders were essentially trying to sell an apple to people looking to buy chocolate. When the prospect did not see the chocolate, they moved on to the competitors. We realized that we had to metaphorically get the customer into the supermarket and sell them chocolate before they were willing to consider the apple. Chocolate was their primary need. Once they loved our chocolate, we could take them down more isles and sell them more of what they needed.

Stop Trying to Convert the Heathens?

Are you guilty of ignoring the market? This is a common mistake. My client was a great example. They had the perfect product but were so enamored with their complete solution causing them to ignore the market expectations. While they are correct, their product can and will solve bigger, more complex problems, there were too few leaders that were aware and ready to solve them. They were getting ahead of themselves. And, like a good priest or rabbi, they were delivering sermons to inspire and convert the heathens. The problem was that the disciples were not listening. When this occurs, the sermon is white noise. Their best approach was to get the easy win, earn the customer’s trust, and use that as a platform to cross-sell later.

Conclusion – Ask Yourself… and Take Action!

If you are like many leaders, you know that your company can and should be growing much faster. Have you found the right question to answer? Do you know the primary problem? Are you spending enough time facing the brutal facts?


Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about Howard Shore or the firm, please contact Activate Group or call (305) 722-7216.

Three Keys to Maximum Business Performance

While people have been impacted by globalization, technology, and other circumstances, achieving business success has not changed. Over time, you will need to discuss changing conditions and have a robust operating system maneuvering these issues. But I have concluded that while most entrepreneurs pride themselves on their speed in getting things done, I see them running in circles. More creative entrepreneurs may make lots of rapid right turns instead of circles. Still, they find themselves in the same place and with the same problems as the people running in circles, never achieving acceleration.

 

The Difference Between Speed, Velocity, and Acceleration!

Acceleration in performance should be the goal of all leaders. Most people use the words speed, velocity, and acceleration interchangeably. However, these are three different outcomes. Speed defines how much distance has been covered in a particular timeframe. Velocity is the rate of change of distance in a particular direction concerning time. And acceleration is the rate of increase in velocity. Great companies achieve far greater velocity than “good” companies.

 

Every Business Has the Same Fifteen Leaks

As I wrote in my first best-selling book, Your Business is A Leaky Bucket, there are fifteen ways every business is leaking growth and profits. The bigger the business, the bigger the leaks. No business is immune. The odd part is that you likely already know you have the leaks. And, all fifteen leaks had a centering cause…leadership. They result from poor leadership. These leaks individually and collectively slow velocity, and large leaks can cause demise in your business. My book helps you identify and quantify the leaks. More importantly, I prescribed how to address each leak. Average companies achieve speed, good companies achieve velocity, and great companies achieve acceleration. The latter spend specific leadership time narrowing the fifteen leaks.

Leaders I work with are stunned when they realize how easily they can improve a business. But are often surprised by the dollar value in the improvements. However, easy does not equal simple. It takes discipline to work on the business rather than in it. It takes perseverance to stick to your plans and focus on a limited number of objectives while saying “no” to others. It takes rigor to drive excellence.

 


The Three Primary Reason Business Leaks Occur

There are three primary reasons why those leaks continue to recur throughout the life of your business:

1. Mediocrity—You know your organization and people are capable of more, but you allow average to become the standard for your business. Sometimes, this happens because you attempted but failed to raise the bar in the past. There is also a tendency to compare your business to industry norms and become comfortable if it’s doing better than the industry average—even if that industry average is a massive bottleneck in your business. Accepting the lower standard may be common in your industry, so you accept it, too. For example, high turnover has become the accepted norm in certain positions in some industries. But excessive turnover is a significant drag on a company’s ability to grow and scale. Ask yourself, how often have you taken too long to replace someone you know is not capable of doing his or her job? These are examples of accepting mediocrity!

2. Mastery—It takes discipline and perseverance to continually improve and address the issues that cause slower growth, lower profitability, and cause leaders to be tied to their work. Let’s be honest; when you started your career, were you thinking, “I am going to be a master craftsman at culture, team cohesiveness, strategy, people, execution, and cash systems?” Each of those areas requires skills and knowledge, continuous learning, and continuously increasing your level of mastery. However, as your business grows, so do the challenges in these areas. The typical leader would prefer to focus on industry knowledge, serving customers, and making better products and services rather than think about, discuss, and address those other, less tangible issues. In reality, culture, team cohesiveness, strategy, people, execution, and cash are the business operating systems that you use to run your business.

3. Invisibility—Financial statements do not capture the substantial costs of the weaknesses in your business operating system. Generally accepted accounting principles are only designed to capture actual transactions, assets, and liabilities. There is not a place in accounting principles to capture the cost of mediocrity and lack of mastery. Like most leaders, you do not go out of your way to quantify these costs. Here are some examples of mediocrity that should be monitored and will not be found in your financial statements:

– The cost of keeping underperformers

– The cost of lost sales because of mistakes in the sales process

– The cost of customers who left because of their disappointment with your quality and bad processes

– The cost of a bad strategy leading to higher customer turnover or slower customer growth

 

There are no financial statement line items for these costs, yet they exist in every business. Such losses are much more significant than you want to face, so you don’t! You are complacent with being good enough, especially if you are growing rapidly and profitably.

To succeed in business, leaders must have a business operating system and toolkit that help them work on the business in a way that allows their team members to make clear decisions and act regardless of the noise. Success is the result of your commitment to that system and how well you use the tools that support it. For the past 100 years and into the next 100, you will find that business challenges are the consequence of how effectively leaders handle these six operating systems:

(1) Culture
(2) Team Cohesiveness
(3) People
(4) Strategy
(5) Execution
(6) Cash

 


Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about Howard Shore or the firm, please visit our business coaching page or call (305) 722-7216.

Team-Building

STOP…wasting money on team-building exercises and retreats that, in the end, fail to bring about the desired results anyway. A significant reason that team-building initiatives fail is that too much emphasis is placed on the misconception that team-building should be fun. The purpose of team-building is to improve the performance of a work group, thereby creating better outcomes. This requires change, and for most people change is not fun … it is hard work. Team-building can be fun… if the members of the work group enjoy the learning process and relish the opportunities that change will bring. This is where a business coach plays a vital part in successful team building that brings results.

Key Elements For Driving Team Performance

If you want to improve teamwork and performance in your organization you have to look at the four core elements to driving team performance: relationships, goals, roles, and rules. All four of these elements must be executed well for the organization to flourish.

Focus on Improving Relationships LAST

Ironically, improving relationships is probably the last area you should focus on. Yes, the area that most leaders spend most of their time addressing is usually the symptom, not the problem. Almost every organization that has team-building issues will find their root of their problems in goals, roles, and rules. In my experience, when we address goals, roles, and/or rules, many of the relationship problems disappear.

State Your Goals

The first step toward achieving success as a team is to state your goals properly. You know your goal is well stated when anyone who reads it knows exactly what you are trying to accomplish and in what time frame. The better a person states the goal, the easier it is to create the action plan. An acronym commonly used for stating a goal properly is SMART (Specific, Measurable, Attainable, Realistically High, and Time-based).

Understanding Your Roles

In order for a team to function properly it is important that every member of the team understands specifically the actions and/or activities assigned to them. This is not as simple as some make it out to be, which is why this is usually an issue for team. There are two different types of roles: task and maintenance. The “task” roles relate to driving the desired outcome of a team. The “maintenance” roles relate to managing team processes and relationships among people on the team.

Rules Must Apply to Everyone

Rules are a very important component of teamwork. This is one of those areas many leaders, particularly in entrepreneurial and family-owned businesses have the biggest concern with. Everyone is fine with rules as long as they apply to others. You cannot have one set of rules for some people and another set for others.

Contact us if you need team-building ideas.

Howard Shore is a business growth expert and business coach who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305-722-7213 or shoreh@activategroupinc.com.

Customer Concentration Risk: One Of The Biggest Risks To Your Business!

You may be focusing on the wrong indicators in your company. Your revenue may be growing, your profit margins good, and your net profit plentiful, yet you may be close to impending problems. Customer concentration risk is one of the biggest risks to your business so you must make it an important part of your key performance indicators. You can measure concentration both in terms of market and customer, and both areas need to be monitored for the reasons in this article.

Why Should You Care About Concentration?

Issues relating to concentration come in many forms. While I want to address both market and customer concentration risks separately, there are some broad implications you need to consider.

  • Market Cycles – Every market has a cycle. If you are overly exposed to a cycle this will cause wild swings in your revenue stream.
  • Pricing – In many industries, the larger the order size the more control the customers have over pricing.
  • Customer Acquisition – The more happy customers you have, the easier it is to acquire new customers.
  • Capital – It is easier to attract and lower your cost of capital when you have less concentration risk.
  • Margins – There is a better chance of earning larger profit margins when you lower your concentration risk.
  • Operations – Predictable revenue allows you to generate cash and makes it easier to plan and invest properly in your support structure. Thus you can serve your customers in the right way.
  • Valuation – Buyers pay more for businesses that have lower concentration risk.

Customer Concentration Risk: A Sign Of Poor Health!

Customer concentration has caused many companies to stall and many to go out of business. In small businesses this can be a challenging issue because first customers make up sizable portions of total revenue, and many times there is no net profit in the business. It is important to work your way out of this situation as quickly as possible. A critical goal for every business is to have no customer make up more than 10% of revenue or profit. Eventually you want that number to drop to 2%. I cannot tell you how many of my clients with total revenue over $10 million violate the 10% rule when we first meet.

Violating the 10% rule is critical for several reasons, but really there is one issue. This one issue becomes fully apparent when a large customer goes away. Your business model becomes meaningless. In many cases, the operating structure you’ve built up can no longer be supported by the current client base. Firing people leaves the business lacking enough structure to support growth. The company struggles to grow, and net profit margin still appears unacceptable. However, what is now obvious is that your business was struggling to grow to begin with, and the business model was flawed.

If your business does not have a regular flow of new customers coming through the front door while it keeps customers from going out the back door, you have a business model problem.

Market Share Concentration Is An Important Leading Indicator!

Securing a threshold market share is important in order for your company to be recognized as a leader or key participant in any given market. However, having excessive market share can create risk to the company in the event that something happens to adversely affect that market. Being diversified and not overly dominant in a single market is important (with a few notable exceptions: e.g. Google dominates in some markets but is focused on being well-diversified).

As management, it is important for you to decide what is a realistic expectation in terms of how much market share you can reasonably garner for your company. Each incremental share can become expensive to acquire. Many times the only way to gain a larger share is acquisition after you have absorbed a certain amount. When that is done, organic growth becomes difficult without new products and services to bring to that market. Once you have fully served that market, it will become important to find new markets, or continued growth will become elusive or too expensive.

Call Howard Shore for a FREE consultation at 305-722-7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

The Importance of Defining Employee Roles

The dynamics of your employee teams are defined by many factors, all of which determine their efficiency and effectiveness. One of the most important factors, in my experience, is defining employee roles.

In my system for Human Capital Management (the process of managing employees from recruitment to retention), I place a huge amount of focus on defining the roles of each and every employee. This starts with the job posting and carries through into an individual’s day-to-day responsibilities. As a long-time management coach, I have seen first-hand how mindfully defining each employee’s role, responsibilities and success metrics creates more success on the team and within the overall company.

I read an interesting article in the Harvard Business Review last month that really drove this point home. The article summarized a study completed by the author, Tamara Erikson, on team dynamics at the BBC and Reuters. She found that successful collaboration was better on teams when each employee’s role was clearly defined. She found that defining individual roles impacted collaboration success more than spelling out the group’s approach.

Erikson noted, “Without such clarity, team members are likely to waste energy negotiating roles or protecting turf, rather than focusing on the task.”

Carry this idea over into employees’ everyday tasks. By clearly defining employee roles from the start, not only do we target and hire the best, most qualified candidates, but we also ensure their continued success by informing them exactly how that success will be determined and measured.

What Needs to be in Every Position Description

I have been a management coach for many, many years, and I can tell you that the biggest mistake that I see managers and recruiters make time and time again, is not clearly defining individual position tasks, responsibilities and success metrics. Increase your employee and team success rate by ensuring that for each position in your organization, you have a position description that includes:

  • Job Description: Collection of tasks and responsibilities that an employee is responsible for; includes an official title.
  • Job Tasks:  Unit of work or set of activities needed to produce some result (e.g., answering phones, writing a memo, sorting the mail, etc.).
  • Job Functions: A group of tasks is sometimes referred to as a function.
  • Role(s): The set of responsibilities or expected results associated with a job. A job usually includes several roles.
  • Competencies: Abilities (skills) and capacity required to perform the job successfully.
  • Performance Management: Defines how the position’s performance is measured and its impact from an organization perspective. All the components within the performance management perspective relate and provide context to one another.
  • Critical Success Factors (CSF): Provide focus on the influences that impact the performance of the job.
  • Key Process Ownership (KPO): Identifies the critical processes owned by the position.
  • Key Performance Indicators (KPI): Provide visibility to performance through the use of metrics and established performance targets; thereby giving context to vague concepts.
  • Career History: The background experience typically required in order to have gained the level of knowledge and competency required for the position.

Without defining these extremely important position attributes, you are failing to tell employees what they need to accomplish, and without that direction your employees and your team will not deliver the results that they could be delivering.

Howard Shore is a business coach and founder of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to executive leadership. To learn more about management coaching through AGI, please contact Howard at 305-722-7213 or email him.

Is Lack of Financial Discipline Hurting Your Business? Financial Tips For Success in Business

It will blow your mind if you know how your business is being hurt just due to the lack of financial discipline. Do you have someone that helps you stay financially disciplined both in your business and personally? Do you listen?

Financial Questions to Consider

  • Have you used cash flow forecasts to determine how much money is needed to fund your growth?
  • Do you know how much of that you need to fund before banks and other external sources will agree to contribute?
  • Do you take money out of the business before considering how it will affect your growth?
  • Do you know how much cash you must leave in the business to cover taxes?
  • What is your reputation with vendors?

Financial Tips For Success in Business

As you can easily imagine, the client I’ve recently been writing about who lost millions in the sale of his business did not have good financial discipline. Fast facts to consider:

1. Raising Money

Fancy presentations, fast talking and nice smiles will not hide that you have bad personal credit, pay your creditors slowly, leave no money in the business, and overpay yourself. In general, good investors do their homework and recognize poor fiscal management in a business.

2. Leader Resentment

When partners and fellow leaders see you draining money from the business (and they will), they lose momentum because they feel that their hard work is going to waste. This then develops into an entitlement issue: the aggrieved parties demand much higher salaries, which either turns into further dilution of cash or further loss of productivity. Either way you lose.

3. Budgets

If you create budgets and don’t adhere to them, they do not really exist. With rare exceptions for outstanding individual contributions, there should be no raises unless the company is growing. If the company is growing less than forecast, raises should be commensurately lower.

4. Balance Sheet

Pay particular attention to your balance sheet. Cash is king. Cash is where you build your ability to grow and handle unforeseen circumstances.

Maximize Business Growth & Profit

If you are interested in speaking to a business coach and maximizing your growth and profits, let’s schedule a time to further discuss your business. Call Howard Shore for a FREE consultation 305-722-7213 or contact Activate Group, Inc. today.

Meeting Length vs Effectiveness: Effective Meetings Require Time

Meeting Length vs Effectiveness

Meeting length vs Effetivenss has a huge impact on how you should engage within your organization. Do you find that your organization faces the same problems and challenges year after year, with no resolution? Do you discuss the same issues concerns, people, and customers month after month? Do you find that right when you are getting to the heart of the matter in the middle of an important debate or topic, your meeting is over and you have to postpone for a later date? Do you create goals and plans that do not come to fruition?

These are typical results when you do not spend enough time meeting with your leadership team.

Cons of Not Setting Aside Time for Effective Meetings

Have you considered the amount of time, productivity, and growth you have lost by not setting aside enough time to properly make decisions, to debate and resolve issues, to align priorities and to hold leaders accountable? By avoiding meetings, critical decisions do not get made or are made poorly.

Failure to debate priorities and work through issues can bring organizations to a standstill while leaders wait until the next meeting or for a final decision, allowing your competition the opportunity to thrust forward. While it is counterintuitive to most leaders, spending more time in meetings could actually double or triple company productivity.

Optimal Meeting Lengths

The key to an effective meeting is a commitment to setting aside enough time. Assuming you know how to run an effective meeting (and experience says you probably need help), the executive team should be allocating the following time blocks to work on the business, to debate issues focused on strategy, accountability, setting priorities, new opportunities, evaluating your people, challenging the business model, etc.:

Daily Meeting Length:

10-Minutes a Day for a Huddle with Your Direct Team

Weekly Meeting Length 

1 Hour per Week

Monthly Meeting Length 

1 Full Day

Quarterly Meeting Length 

2 Full Days (1 Day is Strategic)

Failure to have these meetings and to focus on the right topics robs you of significant growth and profits. Contact Activate Group Inc. for a FREE consultation or give us a call at 305-722-7213 to see how a business coach can help you run a more effective organization.

Learn more about effective meetings:

  • Effective Meetings Start On-Time
  • Effective Meetings Focus on Decisions
  • Effective Meetings Require a Purpose
  • Effective Meetings Have Conflict

5 Ways a Business Coach Can Help Your Business

1. A Business Coach Helps You Accelerate Your Organization

Have you ever wondered what a business coach does? I get this question all the time. A business coach’s job is to help you accelerate the profitable growth of your organization. What do I mean by this? Having owned several businesses and helped hundreds, I have realized that there is a hard way and easy way to get things done. Most of us are stubborn and do it the hard way!

Whether you are just starting your business, want to improve your business, or are ready to scale up, a business coach can provide you with the processes and tools to help your organization accelerate progress. Having been around a lot of CEOs over the years I have learned that many of you are faking it to make it.

2. A Business Coach Helps Find Your Business Success Formula

Most leaders struggle many years before they find their success formula. They go from one wild guess to another, using trial and error, to find the magic equation to lead to awesome growth and profit. Until then, they have little to no profit, 100-hour weeks, and anemic growth.

Apple Computer is one of those many stories where people seem to forget what actually happened before they become the most valuable and one of the most admired companies in the world. The company averaged 3 percent growth until 2003, had removed their founder, and was a mess for quite some time. After that time, it has averaged 40% growth. The average company takes 10 to 20 years before they find their formula for success. Most never find it.

3. A Business Coach Helps Find the Right People, In the Right Seats, Doing the Right Things

There is a saying: “first who, then what!” If you have the wrong people on your team, then it really does not matter what you want to get done. The CEO is accountable to ensure there is a strong process for hiring the right people, having the right structure, filling positions quickly, growing the right people, rewarding them, and removing the wrong people. Your business coach helps you make sure you know what systems and process to have in place to make and implement these important decisions.

4. A Business Coach Helps Develop Winning Strategies

Your business coach can help you accelerate the learning process. They help you ask the right questions, take you through the right processes, and make sure you do not get complacent with bad strategies. Too many companies are great at executing bad strategies!! The coach’s job is to help you see when you are moving the deck chairs around on a sinking ship. Your business coach will help you ask the following questions:

  • What is it that you will accomplish in your industry that others are missing?
  • What client segments will you conquer?
  • How will you conquer those segments?
  • How will you capture your unfair share of the market?
  • What business model can you use that will allow you have an extraordinary profit?

5. A Business Coach Helps Use Time to Maximize Profit

Once you have the right strategy you want to make sure to optimize your use of time and maximize profits. You do this through prioritization, using metrics your business coach assists you in developing to create effective process and procedures for establishing and communicating your priorities and goals. They also help you identify the right key performance indicators to focus on at any given point in time to have maximum impact on results. These indicators help focus the organization on removing the key weaknesses in your business model.

 

Hiring a Business Coach?

Call Howard Shore, one of the top executive coaches in the United States, for a FREE consultation at (305) 722-7213 or contact Activate Group today to see how an executive business coach can help you run a more effective business and become a more effective leader.

How is a Consultant Different From a Coach?

Difference Between Business Consulting and Coaching

One of the hardest decisions for a CEO, owner, or other senior executive is whether to retain outside assistance with matters that will help strengthen themselves and their business. There are different types of advisors that can assist you. Do not assume they are all pretty much the same thing! There are similarities among the choices, but don’t be fooled. There are big differences between coaching and consulting and between business and executive coaching. It is important that you choose the right type of advisor for your situation.

I created the following table to help you understand the difference between a business coach and business consultant:

Business Consultant vs. Business Coach

 Consultant

Coach

Works with more than one person, often in a department, function, or team. Work on a one-to-one basis or with a team.
Is an “expert” who is hired to solve a specific problem. They fill a void in technical expertise in terms of knowledge, process, and experience your internal team does not possess. The Coach is an “enabler” who provides process that helps empower and hold you accountable to solve problems and cause more ideal outcomes.
Structures projects for specific deliverables or results. They may work directly with your internal team, but it is the consultant who is accountable and responsible for the outcomes. You solve your own problems using a process or framework provided by the Coach. The Coach helps challenge you to think and act in new ways, to find your blind spots. You are accountable and responsible for the outcomes.
Closes the gap for your team’s weaknesses. Builds on and unlocks the team and individual strengths.
If behavior change is needed, consultant generally does not get involved in it. A primary focus on individual and interpersonal dynamics designed to cause behavior change.
Gathers data and reports on what needs to be done. You gather the data and reports, and Coach facilitates the meetings and process.
Time-limited; generally short-term and project-oriented results. Occurs over a period that many times involves renewable contracts; focused on long-term results.
 Transactional Self-discovery leads to behavioral and mind shifts and can be transformational.
Requires limited commitment from you to implement. Maximizes your commitment to implement solutions.

 

Coaching is a personal thing. The fact that you are here and that you’ve read this far tells me that you want and/or need a Coach. However, finding the right Coach isn’t easy. That is why I am offering a FREE, no-obligation consultation to see if we’re a good match. There is no hard sell. This is my gift to you. If you feel we’re a good match, we can discuss working together. If not, I will leave you with enough value that it will be more than worth your time. That is my promise.

What’s the Difference Between a Business Coach and an Executive Coach… and Which Do I Need?

Business Coaching vs. Executive Coaching

When considering Executive or Business Coaching, you may find you need one, the other, or both. There are some similarities and vast differences between a business coach and executive coach. Regardless of type, the coach is not there to provide answers or solutions. With coaching, the premise is that the leadership team or person being coached already possesses enough knowledge, skills and capacity to develop the strategies and lead the organization, but has yet to reach their full-potential. The best outcomes usually occur when the coach does not provide you with any advice and causes transformation in individuals, teams, and organizations.

What is Business Coaching?

A business coach brings processes, tools, and concepts to help facilitate team and organizational growth.

In the case of Business Coaching, the Coach brings processes, tools, and concepts to help facilitate team and organizational growth. The methodology causes a shift in the way that you and your team view the challenges they face. The goal is to create that shift in view to cause the management team to develop different strategies, make better people decisions, be more focused, strengthen the culture, be more accountable, and better align the entire organization. For example, I have a client that, after nine months of taking them through a process and some hard questions, changed a $10 million business that had negative cash flow to one that produced over $1.5 million in cash. More importantly, that shift in strategy, people, and execution caused a sustainable business model designed to produce 20% net cash flows annually. Most importantly, all the ideas came from the organization and their leadership team.

What is Executive Coaching?

An executive coach helps individuals unlock their own leadership potential by increasing self awareness and improving their effectiveness as a leader.

The Executive Coach’s role is to help individuals unlock their own potential, and is not about teaching or showing the way. The Executive Coach helps the person being coached discover areas where their beliefs, motives, values, and/or personality traits are causing them to be less effective as a leader. The biggest part of coaching is helping the person being coached become self-aware. Research has shown that the higher the position, the higher the gap in self-awareness. A good example is a COO that I worked with that the CEO appreciated because “things got done.” However, the problem the CEO was trying to ignore was that no one else on the leadership team wanted to work with the COO, a person who had no empathy, demonstrated passive-aggressive traits, and was steamrolling everyone else in the organization. Eventually no one would cooperate with the COO, and things got really heated. The COO could not see things from anyone else’s perspective.

What Makes an Ideal Coach?

Do you ever wonder what an Executive Coach does? I get this question all the time. An Executive Coach’s job is to help you write your story. What do I mean by this? Whether you want to improve your business, career, or personal circumstances, the Coach’s role is to provide a forum and process to help you maximize your potential. In other words, as your story is unfolding, your Executive Coach’s job is to help you to write your best story, a great story. It is important that you work with someone that will help keep bias out of your story creation. Your story starts today, and you want to have unlimited possibilities. While writing your story, you will gain new wisdom and will need course corrections. Everyone’s story has surprises, and your Coach is there to help you through and to stay accountable as you reach your full potential!

A Good Coach Enters Your Story Without Bias

Your coaching relationship is one where you are given space to create. A good Coach enters your story without bias. Good coaches are not there to judge you, do not have expectations of you, and their only stake in the outcome is helping you achieve the goals of the engagement. While most everyone else in your life has good intentions, they usually also have bias. This bias causes them to consciously or unconsciously steer you in a direction that may not be in your best interests.

Here are some examples:

  • They may try to protect you by guiding you down safer paths because that is where their life choices have taken them.
  • They may suggest a different path because they think you are not capable of traveling the ideal path.
  • They may steer you in a different direction because of selfish motives. You will find even your closest colleagues to be selfish.

A coaching relationship brings you a blank canvas to work with. This does not mean you need or want to start over. It just means you should consider that your business, career, or personal circumstances should be whatever you want it to be. People mistakenly start from where they are rather than where they want to be. This thought process will always limit your possibilities. This is why working with people that know you well can be so limiting.

Coaching Helps Define Business Goals & Objectives

Given that your story start is in process and not certain, think of your possibilities. With the wisdom you have today, what do you want your business to look like? What would you want your career to look like? How would you like your personal story to unfold? As your Coach helps you write your story, they will first help you create a clear picture of what you want that story to be. This is hard work because it is not always easy to articulate and define what you want. This may take some time and need to be refined over time.

Once you have developed a clear picture of your story, you need to create an action plan. The action plan looks at long- and short-term objectives that need to be attained in order for your story to unfold. You do this by identifying the gap between where you are and where you are capable of being. Your Coach will help develop a series of 90-day goals that help lead you to achieving your full potential.

Everyone Needs a Coach

Like any worthy story, you will encounter surprises and obstacles. Your Coach is there to help you work through these challenges. They help you identify the midcourse corrections that are needed and help you stay accountable to your lofty goals.

Business and executive coaching is a personal thing. The fact that you are here and that you’ve read this far tells me that you want and/or need a Coach. However, finding the right Business Coach and Executive Coach isn’t easy. That is why I am offering a FREE, no-obligation consultation to see if we’re a good match. There is no hard sell. This is my gift to you. If you feel we’re a good match, we can discuss working together. If not, I will leave you with enough value that it will be more than worth your time. That is my promise.

To schedule your free consultation or to learn more about our coaching services, please contact us today or give us a call at (305)-722-7216.

Is Your Revenue Habit Hurting the Value of Your Company?

Several years ago, a company in the business services segment hired me because their revenue had stalled. It was a company that prided itself on its ability to market and sell. It was considered an industry leader in its space, yet its revenue was stuck in a range. The customers they had were very happy. The company had natural turnover in clientele, losing some companies that were sold or closed or had leadership turnover, and then they would add some to replace the ones they’d lost. They had been offered a very healthy price to sell, but the owner wasn’t ready and wanted to build a more valuable business.

After reviewing their client portfolio with them, we recognized a few things. First, that they had few (relative to the number of overall number of clients) customer companies that had 300 or more employees, and those few were a lot more profitable and required much less relative labor for the revenue generated. Twenty percent of their client base consisted of micro companies. Not only did they lose money on those companies, but it also required 40% of my client’s resources to service them. From a value standpoint, when the potential buyer had looked at my client they were not interested in retaining those smaller companies, for obvious reasons.

I tell you this story because, prior to this discovery, the organization was focused on getting revenue, and most of its sales activity was directed at the wrong market segments. My client was designed and built to serve larger entities whose needs were very different from smaller firms. They had a unique value proposition to offer those larger customers. Their sales force and marketing team had not isolated this proposition. With this new knowledge my client boldly divested his company of all the smaller clients and refocused his operation on the larger segments. In the four years since making that move, the company has accomplished what they had not in the prior 26. It is on track to double its size in five years, with the double the number of customers greater than 100 and 300 employees. Their customer concentration on the larger clients has led to a leap in their profitability as well as a dramatic increase in their valuation.

Below are some signs that you may be chasing revenue and not building a valuable business:

  1. You cannot stay firm on pricing and charge more than your competition.
  2. Profit margins are not holding steady with volume increase, and your profit is below the top 10% of your industry.
  3. Your marketing and sales force cannot clearly focus on a specific buyer in a narrow set of segments because you are afraid to lose out on opportunities.
  4. “No” is not often heard in the sales department.
  5. Your overall growth rate is moving with the market, and possibly your company is losing market share.
  6. You are not increasing market share in each target segment. In other words, you’re not reaching your ideal clients.
  7. None of your products/services are taking off, but you just keep adding new ones.
  8. You fail to maximize the potential of a product or service because you are distracted into chasing shiny new objects.
  9. You have a few customers that make up most your revenue. Any one customer that makes up more than 10% of your revenue and or profit is extremely dangerous.

There are 15 common issues in the areas of people, strategy, and execution that drain energy, direction and profitability from every business. Chasing revenue is just one of those common issues! In my recently published book: Your Business is a Leaky Bucket,  you will find a practical guide on how to effectively push change and ignite growth in your leadership team in order to achieve your organization’s full potential. Call Howard Shore for a FREE consultation at (877) 692-6211 to see how an executive business coach can help you run a more effective business or become a more effective leader.

3 Common Concerns of Hiring a Business Coach

Hiring a Business Coach and the Common Concerns:

You may be in the process of deciding whether to hire a business coach at this time. After speaking to many leaders over the years, I have found that there are three common reasons given for why a business investigates hiring a business coach and then does not hire one. All of them are really excuses rather than good business decisions.

1. TIME

“I don’t have time!” It is common to believe there is a better time in some distant future — once you change a few key people, complete that big transaction, finish a big project, or arrive at some other natural business crossroad. The reality…when was the last time you thought you had plenty of extra time on your hands? The answer is probably never, and if you did, you were in denial. That better time never occurs.

The right business coach works on getting better results from activities that you are already doing. A business coach helps you reallocate how you go about doing those activities. In the long run we help YOU find more time, by helping YOU figure out how you are wasting time, how to work less, and how to get a lot more results from time worked.

2. COST

You might think cash flow is too tight or that the cost of the program equals that extra headcount you would like to add. The reality is that for every day you do not hire the coach, you lose a lot more money than you realize. The reason is that every business has leaky buckets. “Leaks” are the places where your potential revenue and profits are not fully being captured.

In my blog post, “Are These 8 “Leaks” Undermining your Business Success?”, you can learn about some of the most common leaks that I see in businesses today. These leaks are costing your business far more than a coach will ever charge, so your return on investment can be huge.

In our process, your team’s first retreat is designed to help you identify the “leaks” in your business bucket and determine what those leaks are costing you. Your business coach will help you identify simple ways to practically increase your cash flow so that you can quickly yield an increase in your return on investment. We have many success stories where clients were able to increase cash flow by more than $1 million, and they had not realized the opportunity existed.

3. SELF-CONFIDENCE

You may be thinking “why can’t I do this without you?” This is a fair question. After all, you know your business better than anyone, and the practices we use are commonly known best practices. The fact is, you know you could have gotten better results and did not. You could have implemented those practices and did not. Your situation will not change without a catalyst like a coach. Even if you effected some change, why would you not want to get the best results possible? The right business coach has the 10,000+ hours of practice in helping companies like yours implement programs that work and can accelerate the process. Every week and month is significant in terms of growth, cash, and stress that you can never recover once you have lost it.

Trust the Coaching Process

You may be asking “what if this process does not work?” Business coaching is different from consulting. As long as you hire a business coach that is bringing proven business operating processes, concern about it working is the equivalent of saying “what if I inhale and air does not fill my lungs?” In our experience, the process succeeds to the degree that you commit to it and do the work. Not doing the work means you’re willing to allow the “leaky bucket” to continue leaking every day. Everything we offer as a business coach has already been proven in thousands of companies to close your leaks and help you prosper. They are the business fundamentals that everyone knows, but many don’t do.

Hire a Business Coach

Let’s identify your company goals and begin drawing your roadmap to success. With the executive business coaching services at Activate Group, we’ll help you identify current business leaks, improve your strategy, and increase your effectiveness as a leader.

Maximize your success by contacting us for a FREE consultation to learn the benefits of business coaching and how we can help your organization thrive.

Knowing the Difference Between Leading and Lagging Indicators

Lagging Indicators

If you are like most leaders, the primary metrics that you use to set goals and to manage your business come from your income statement and balance sheet. Examples most often discussed are sales, cost of goods sold, gross margin, overhead, labor costs, profit, receivables, inventory, work in process, payables and cash. While these are measures you need to monitor, they are all lagging indicators. They are results from decisions and actions taken in the past, the scorecard you use to measure the success of those actions and decisions. The problem with trying to use those measurements to manage the business is that they are after the fact. While there is some benefit to using lagging information, it does not tell you why your results are the way they are. It is also too late to change the outcome. It is the equivalent of trying to drive your car forward by watching your rearview mirror.

Leading vs. Lagging Indicators

Your primary focus should be geared to key performance indicators, the leading measures that influence the end results. By choosing the right leading indicators you can help your team improve the lagging indicators. This approach can be problematic for leaders for three reasons. First, while all numbers on your balance sheet and income statement are lagging indicators, other measures can be leading or lagging depending on what you are using them for. For example, percentage of “A Players” can be a lagging indicator when measuring effectiveness of recruiting and onboarding processes, leadership effectiveness, and how well an employee is performing. However, it is a leading indicator in terms of customer loyalty, labor efficiency ratio, and other such measures. So it is important to really isolate what you are trying to improve.

Evaluating the Most Important Leading Indicators

The second issue is how to figure out which measures require the most attention. Every business is a compilation of processes that are composed of various inputs and outputs and various decision points. At each point, when something occurs or does not occur, it influences future outcome, and a potential for measurement occurs. If your company is like many other businesses, your processes may not be well defined, which is a huge leaky bucket. You also may not be clear on how each point in the process affects the overall organization.

I recently met with the CEO of a company that manufactures products for the construction industry. He was very focused on building up his sales and marketing team. Sales in the company had been hovering around $10 million for the last 3 years. When I dug deeper I learned that his company had proposed over $150 million in deals during the previous 12 months. I asked if this was a recurring problem, and the answer was yes. So his close ratio had consistently been less than 7%. My next question to the CEO was why he lost those deals. He was not sure, but it sounded like their products were not meeting the requirements of the marketplace. How was increasing the size of the sales force and improving the marketing department going to address that? He really needed to focus on close ratio and understanding what it was going to take to increase close ratio before doubling the size of his sales force and spending a bunch of money on marketing.

Measuring Leading Indicators

The third issue is the measurement itself. While there are usually systems and processes in place to compile your financial statements, many small and midmarket companies do not have measurements for their processes in place. As a result, there is uncertainty as to how to get the information you need and whether it will be accurate.

The bottom line is that what gets measured gets done. You do not want to measure too many things. If you cannot automate, it is important have the people responsible for the outcome or the step in the process to report on the measure daily. If you do not measure it, it will not improve. Many of my clients collect information in Google Docs. While this is less than ideal, it works.

Business Strategy and Leadership Development Services

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Finding Your Critical Numbers

Business Planning Tools

As a Business Coach, I have created and reviewed hundreds of annual business plans. I find many companies do a poor job of creating their business plans, which seriously diminishes their growth in revenue and profits. On the surface, these plans look like they have the right ingredients for success. However, a closer look shows that the leaders inadvertently led themselves astray. They then lose valuable time and energy, creating a profit leak.
As a certified Gazelles Coach, I help clients implement the concepts found in Scaling Up by Verne Harnish. The “One-Page Strategic Plan” is a key tool that everyone looks forward to using in our annual planning process. Whether your company uses this business planning tool or something else, the issues you must consider are the same. Only the presentation of the business plan is different.

Critical Numbers in Business

At the bottom of each of the “priorities” columns of the One-Page Plan is the “Critical Number” section. I have found that selecting the Critical Number may be the single most important decision in the planning process. The Critical Number is a key performance indicator that you have identified as the essential leading indicator for any given planning period.
Whether you are planning the year, the quarter, or your personal priorities, it is essential to pick the one or two Critical Numbers that must be achieved to drive all of the other desired outcomes. If you are not sure which Critical Numbers to select, you’ll find some clues by asking yourself questions like:

  • What is the key weakness in our business model?
  • What is the biggest weakness in our operations?
  • What is causing us not to gain customers?
  • What is causing us to lose customers?
  • What is causing our cost structure to be out of line with that of our competition?

The most common business number clients want to use is revenue. However, this is not a good choice for a “Critical Number.” If growth is an issue, you need to go deeper and find the leading indicator at the root of that problem. For example, are you not able to generate enough leads? Do you generate enough quality leads?

Example of a Critical Number

A great example of failing to identify the correct Critical Number is with a technology company that recently ran into trouble. This company had been mildly successful for years, achieved moderate revenue growth, and had great profit margins. But, this company always experienced inconsistent performance in its sales team. Revenue had always depended on a yearly home-run sale. There was no predictability in the sales performance. However, the company recently found that sales were more challenging and customers now preferred the products of competitors. After deep consideration, the company found it did not meet its number-one brand promise.
I had challenged this client a few years ago to put more specific measures around their brand promises. They had failed to do so, and this was now coming back to haunt them. In this case, believe it or not, their most important promise was that their product could do what it was supposed to do. My client failed to “get it right.” So we developed a way to measure the “% of known issues unsolved” within their technology. That became their Critical Number.

Does Your Business Need a Second Critical Number?

Once you find your Critical Number for your business, ask the question, “If we focus too much on this Critical Number, what could go wrong in the company?” If the answer is nothing, then you only need that one Critical Number. However, if you find focusing on that number hurts other areas of business, you’ll want to balance the first Critical Number with a second one. This will prevent you from unintentionally injuring your progress. In the case above, the company had a cash concern. They responded by focusing the sales team on closing a minimum number of quarterly transactions. They broke that number into 20 qualified leads that were already in the pipeline and needed to be accelerated in the sales cycle.
As with all plans, we recommend that there be no more than five annual initiatives. Once you have your Critical Numbers, you can determine what the most important initiatives are to undertake. A good rule of thumb is for three or four of those five annual initiatives to focus on addressing your critical number(s). If it does not take at least two or three, you have probably not challenged yourself enough in finding the right critical business number or are not focusing on the right annual priorities.

Improve Business Growth

As an executive business coach, I can provide you with practical business solutions to accelerate your business growth. Once you have completed your business plan, ask the following two questions to determine whether or not your job is done:

  1. Have you identified the one or two Critical Numbers that will improve next year’s results, and what is the measure that tells you that you’ve succeeded?
  2. If you complete your annual initiatives, how confident are you that you will have achieved number 1?

To learn how to improve your growth potential, contact Activate Group for a FREE consultation or by giving us a call at 305.722.7213.

What Does It Mean to Act with Purpose?

The word “purpose” gets tossed around often in the executive and organizational development world. In a previous post, “Why Purpose Matters”, I discuss the importance of purpose. However, as I continue to work with clients, I can see that they are failing to grasp the importance of having people that “Act with Purpose” on their teams. If you watch, you can really see the difference.

For some, purpose can be bold and transformative, aiming to solve the world’s biggest problems. If you are one of these leaders, you may launch impactful organizations such as City Year, Tesla, and SKS Microfinance. These purposes are really exciting because they are missions to change the world in some way. Alternatively, your purpose can be to change your industry or to fill an unmet need, like Airbnb.com, Amazon, Google, PayPal, or Facebook. Then again, you may look at these examples and say, “My company can never be that exciting.” My challenge to you is that you can still make your difference, even if it is not earth-shaking. It is important that you find that purpose. It is only with purpose that anything of consequence happens, and that purpose is what compels you and others to excel, gives work more meaning, and brings people together to want to serve others at extraordinary levels.

Have you ever noticed that when you act with purpose you perform with more energy and enthusiasm? You are willing to give more effort to something that really matters to you! Compare that energy and effort to something that may be important but does not pull at your heart. Worse, consider what your commitment is to an endeavor that has not captured either your mind or heart. You just go through the motions. Too often I find that most of the employees in companies are not engaged because they lack this kind of investment. Their leaders have failed to instill purpose.

You know you are acting with purpose when succeeding is not about the revenue or the profit. The sense of achievement is much greater than that. The purpose inspires your actions. It is compelling enough to get people to work around obstacles. They expect to encounter those obstacles and only see them as challenges to be conquered. When the purpose is important to someone they are inspired to volunteer for extra work. They volunteer to take on challenges and to solve problems. You know that purpose is missing when all of the company’s problems and challenges are being pushed up to the leadership team.

Anyone can hire employees and get minimum performance out of them. You do this by hiring them and paying them a fair wage to do something they are good at doing and enjoy doing. While I do not have empirical data, I believe this gets you 25% of what the average employee is willing to the employer. When you have the right culture, that gets you another 25% of their effort. Given the right culture, with the right hire, instilling purpose will enable a company to get 100% commitment and investment from a team member.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

How Do You Find Your Purpose?

If yours is like many organizations, you and your competitors are trying to serve a similar purpose to your respective clients. That is true if you look only at the surface. It is how you see the challenge of purpose that counts. Most times I find leaders trapped in a box. That box revolves around existing products and services and does not consider the problems and challenges of people they want to serve.

By finding your organization’s unique purpose, you can move with the changing needs of your customers and evolve your products and services. Too often business leaders are trying to force the external world to buy what they want to sell. What they fail to consider is whether what they want to sell is a real need, and whether there is already too much supply solving that need. If the need is already well served or over served, then pumping more supply into the market without identifying and addressing a new critical need for their buyers will surely result in a painful journey for them and their colleagues.

5 Lenses of Purpose

When working with leaders to assist in their strategic planning session, we work on defining purpose. A common challenge is to help the leadership team find and articulate their purpose. You may wonder how purpose is discovered. I believe you can find your purpose by looking through 5 lenses:

  1. Disrupt an Industry – Airbnb changed the lodging industry forever. They made a very cost-effective and easy way for anyone to list their space and to book unique accommodations anywhere in the world. By doing so they made traveling more affordable and accessible for many people.
  2. Uncommon Service – Provide service at a level that goes beyond your competition in a way that is essential to your target customer. The traditional companies I think of are Ritz-Carlton and Nordstrom. In a less traditional sense, think of Amazon, where you know you can go to their website and find almost anything, 24/7, at the lowest possible prices and have it delivered to your doorstep, in many cases the same day as you ordered it. And all of it done with a few keystrokes. Most vendors on their side will allow you send your purchase back for free if you are not satisfied. The challenge with service is that it is like an escalator that is always going down. Once you have delivered something considered extraordinary the first time, it becomes standard the next time. So you have to keep trying to improve your service levels every year to stay on top.
  3. Change the World – We have so many large societal and natural problems that you can address as a for-profit or not-for-profit. I am proud Board Member and Red Jacket Society Member at City Year, where we believe education has the power to help every child reach his or her potential. We recognize that children in high-poverty communities have external obstacles that can interfere with their ability to both get to school and be ready and able to learn. City Year helps with these challenges. On the for-profit side you have entrepreneurial mavericks like Elon Musk, who is trying to prove through Tesla Motors that electric cars could be better than gasoline-powered cars. The impact of such an innovation will have profound impact on issues like global warming and use of natural resources like fossil fuels.
  4. Excellence – There are always ways to change the features of products — increasing their speed, beauty, functionality, etc. No company is going to get it right with every product, but Apple, Samsung, Ikea, Dyson and 3M are companies that have produced products that have really stood out from their competitors in specific categories.
  5. Information and Communication – Technology has caused this category of purpose to explode over the last 10 years. Dominant in this conversation is Google, but you also have to consider Facebook, WeChat, WhatsApp, and the myriad of others that allow people to share information, find anything or anyone, share knowledge, discover and communicate.

I recommend that you look through these five lenses and determine which of the five you are really passionate about. Then ask “what purpose can we serve within that lens” within an industry or across industries that is not being served to the level that you believe it could or should be served. The key is to think big! Consider your purpose to be a pursuit rather than a destination. It will be a mantra that you and your organization will need to constantly improve and perfect.

Head over to our business coaching page or call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Are You a Growth-Oriented or Execution-Oriented CEO?

One question you may want to ask yourself is, “What kind of CEO am I?” My observation over the years is that most CEOs fall into two categories. The first category consists of those that are very growth-oriented, focusing mainly on sales and marketing activities. They find money everywhere. Remember my “Revenue is vanity, profit sanity, and cash is king” motto here. You may be good at growing the top line, but if you are not careful you may find weak net profit margins compared to some of the other top companies in your space. Another potential pitfall is inadequate margin on your revenue, which will cause you to be prone to finding yourself with little cash and to giving up too much equity to others to feed your revenue habit.

The Execution-Oriented CEO

The second type of CEO is very execution-oriented. If this is you, you and your team are masters of your craft. When I go into your businesses I find you are excellent at what you do. You pay close attention to every detail, and can show me tons of metrics as to why you are great. The reason you’ve hired me is that you do not have the revenue to show for it. You spend the majority of your time perfecting processes and creating perfect products and services. It is common for you to get and keep a customer forever. However, your perennial problem is getting more customers. You have little sales and marketing orientation, and if you’re honest you will tell me that you hate selling and think that marketing is a waste of time and money.

Strategy vs. Execution

You can see the real challenge. There is a never-ending conflict between strategy and execution. It is yin versus yang. Strategy is about growth and execution turning revenue into profit efficiently and removing waste. They often bang up against each other, and if you do not hear a lot of conflicting opinions you know you have a problem. Growth without discipline and making choices creates a lot of waste and burns cash. You rarely have one leader that is good at paying attention to both.

I raise the original question, “Are you growth- or execution-oriented?” If you are one or the other, it will be important to go back to your people section and ask this question, “Do I have enough of the right types of the right people on my team to scale the company?” Do you have a tendency to squeeze out the opposite type of person because of your preference?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

How Does Impatience Affect Leadership?

Every leader has a behavioral style that defines how they are seen by others. No matter what that behavioral make-up is, you will find that it has positive and negative traits. Some of those negative traits can have a significant impact on one’s ability to lead others. One trait I have found prevalent among people that need to get results quickly is that they also tend to be impatient with others. If you know yourself to be impatient you may want to read further as you may also have some other leadership traits that are holding you back as a leader and having severe consequences to your organization.

You might be thinking that there are positive aspects to being impatient. In December 2014, there was an article to that effect in Forbes: For Entrepreneurs, Impatience Might Just Be A Virtue. Many entrepreneurs believe it is their sense of urgency that causes them to succeed. By instilling this sense of urgency in others, they are able to push others through barriers in ways that otherwise might not have happened. This “just do it” mentality causes people to not overthink decisions and have a penchant toward action rather than inaction. After all, isn’t action better than no action? While there is some truth that we need this sense of urgency to move forward, it is only an ingredient, and when overused (and it often is) it causes far more damage than good.

Many of the CEOs I work with use high urgency as a management tool. They are the organizational “drivers” that push others to get things done. They are also known to get things done themselves, which in many cases has been a key factor in achieving success. There is no challenge they feel they cannot conquer, and they sometimes take things on themselves when they feel like the game is on the line because they relish the challenge. They are highly driven, bottom-line oriented, have high expectation of their people, and have vision that many of their team members lack. They get things done that others believe it is impossible to do. So you might be wondering what’s the problem?

The Impatient Leader Tends to Be Aggressive Instead of Assertive

Often organizational drivers tend to be impatient and have been known to be aggressive instead of assertive when communicating with others, not understanding the critical difference between the two styles. The key difference is that an aggressive communicator is perceived as someone that is more concerned about their own feelings and show no regard for the other people they are communicating with. They will enter a conversation or meeting with a specific agenda and will make that agenda happen regardless of the ideas, opinions or feelings of the others. Ironically, they may realize afterwards they have done this, but the damage is done.

When you communicate aggressively toward colleagues, their reaction (and of others who witness the exchange) is usually negative (resentful, angry, hurt, etc.). You may even go back to them and ask if they were okay with your aggressive style, but do not expect to get an honest response. If they did not address you at the time of the exchange, they are either passive-aggressive or passive communicators and just want to avoid a confrontation with you, particularly if your position of power is superior to theirs!

The aggressive-style leader will almost always get compliance from subordinates, but often at the expense of long-term loyalty, enthusiasm, creativity, extra effort and motivation. In extreme situations, a highly aggressive leadership style can result in other negative outcomes, such as passive-aggressive behaviors, resentment, alienation, dissatisfaction, high turnover rates, sabotage, and in some cases litigation (e.g. hostile work environment).

When you have a direct report that is not performing and you are in aggressive mode, the initial response is to be sarcastic, hurtful and/or use threatening comments. You believe that to motivate people you should show them that you and others are better than they are, tell them that the work they did was inferior, give them crazy goals that no one would be able to accomplish, and tell them they will not make it at the rate they’re going. Nothing you tell them is helping them understand how to perform or indicating that you want them to succeed. In fact, they most likely believe you are going to hurt their career and cannot possibly succeed if they stay on your team.

Coaching Can Help You With Negative Behavioral Tendencies

As you can see, someone with positive behavioral attributes needs to be careful because they also have negative behavioral tendencies. It is important to note that everyone can learn to adapt their behavioral styles to different settings to overcome their natural negative tendencies.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Why Purpose Matters?

The day you start your business, you should place “Purpose” at its forefront. This is a critical issue that fails to get enough attention. Many business owners that are asked, “What is the purpose of your business?” will answer “to make money” (or something similar). You might be thinking, “Isn’t that the purpose of being in a for-profit business?” I can confidently say “no.” By serving a purpose well and doing it in a profitable manner, you will “make money.” The greater, the more needed and more desired the purpose you choose to serve, the more money you can make.

If I met you at a party and asked you to tell me about your business, where would you start? Most people tell me about their role, title, function, or product or service. For example, one person might tell me they are the Managing Partner in an accounting firm, or a tax accountant, or an auditor. A CEO might tell me he owns a company that manufactures retail skincare products. However, if that is what they view as their purpose they are in trouble. If you look at the marketplace, there is an oversupply of just about every product and service you can name. Think about it. When was the last time you thought, “There isn’t a tax accountant or auditor to be found anywhere?” When was the last time you heard someone say “I wish I had more choices of skincare products because there are just not enough of them?” It just isn’t going to happen. Because there is oversupply, services and products are available everywhere you go, as well as online and over the phone, and can be delivered in 24 hours.

Now imagine those same people had a different view of what their purpose is. For example, I have an accounting firm client whose purpose is to increase the wealth of the firm’s clients. They have built a set of practice areas in tax, audit, technology, wealth management, etc. For each client they create a team that uses the strengths of each team member to devise the best strategy each year to help maximize their clients’ wealth. While you might point out that every sizable firm has the same practice areas, this firm’s view of what they are doing and why they exist is the difference-maker. My client’s view causes them forge a nontraditional client relationship structure. They build specialized tool kits, hire specialized resources, and act in a way towards their client that has specific intention. I can assure you that not every accounting firm is creating the kind of relationship with their clients that would allow for such positive outcomes to occur and thus they are failing to help their clients reach their fullest potential as a result.

Only after you have established your purpose are you in the position to answer the following questions:

  1. What problem(s) does our business solve for our client?
  2. What should our business do to achieve that purpose
  3. What types of clients do we want to have, and what will our relationships look like?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Are You Targeting the Right Market Segment?

The predictability and consistency of your revenue growth rate are important measures of the health of your business. A key to driving your growth is targeting the right market segment. Positioning your company in a growth industry, market segment, or sector is crucial to the continued success of your company. In order to have future growth, regardless of how you are doing this quarter or year, there must be a market out in front of you that your products/services are focused on and that is growing.

Why Should You Care Which Market Segment You Choose?

When you are in a growth market running the business is much easier in many ways. Here are a few reasons for you to want to be in a growth market:

  • Employees – It is easier to attract, keep and grow the right employees.
  • Customer Acquisition – It is easier to be a winner in a growing market than in one that is declining or stagnant. All boats rise with the tide.
  • Capital – It is easier to attract and lower your cost of capital.
  • Margins – There is a better chance of earning larger profit margins.
  • Operations – Predictable revenue allows you generate cash and to plan and invest properly in the support structure of your business to properly serve your.
  • Shareholders – Higher returns on investment for shareholders.
  • Valuation – Buyers pay more for businesses that are in growth markets.

How Do You Find Your Market Segment?

By focusing time on a specific customer segment you can become the dominant player in that segment. A segment is a group of customers with common characteristics that influence how they make decisions. In every industry you can group potential customers into many possible segments.

Your leadership team must examine the marketplace and cluster people and organizations into groups, separating them based on common needs, behaviors, or other attributes so that they can be better served. Once you have isolated different groupings, you can look for ways they may be underserved today in terms of products and/or services. You do this by asking questions such as:

  • Do they deserve a distinct offering? How well do the current offerings meet their distinct desires and needs?
  • Are they reached through different channels? How well do the current channels work for this grouping?
  • Does this unique set of people or organizations require different types of relationships?
  • How does profitability differ, and could it differ for each grouping? What would need to change to change the game?
  • How much would each grouping be willing to pay for different aspects of the offer?

How Do You Know You’re In A Growth Market?

Failure to identify segments destroys time allocation in your business. I find that this is more obvious when your company is small and time constraints are more serious. In most cases, we consider whether or not a prospect can afford to do business with us, rather than the likelihood of their doing business with us.

However, you know you are in growth market when the following signals are apparent:

  • You can consistently grow at least 20% per year. More would be preferable.
  • Acquiring new customers seems to be easy, and your current quarter compared to the same quarter in the previous year is either the same or growing. Any quarter that shows a dip is a warning sign that an adjustment may be needed.
  • Profit margins appear to be holding steady with volume increase. There are obvious exceptions to this rule as you hit different steps in expansion.
  • You are finding more and more competition in your space. This is why you have to move swiftly and grow quickly when you find a hot market.
  • You can find news media, analysts, and industry experts talking about the trends you are taking advantage of. Follow them for signs in trend shifts.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

7 Levels of Recurring Revenue

The most successful companies put tremendous emphasis on having recurring revenue streams. Are you looking at recurring revenue in the right way? Which type of recurring revenue drives increases your business valuation the most ? The higher the level of recurring revenue, the more predictable your revenue stream becomes. The more predictable your revenue stream, the better you scale your operations. The higher the level and greater the volume, the higher you valuation goes. Every company should be constantly asking “How can we strengthen our recurring revenue position?”

Not all recurring revenue is equal. Think of it as pyramid-shaped. The higher up the pyramid you move, the more valuable your company becomes. Think of the pyramid as a way to first increase consistency and predictability, then business scalability, and ultimately market-share dominance, where customers find switching providers more costly or problematic.

Level 1 – Basic Repeat Customers

At this level you have customers that like doing business with you and come back to you repeatedly even though there is no contractual obligation to do so. A good example is a supermarket or gas station. The problem with level one is the barriers and switching costs are usually limited. So, while having repeat customers is far better than not having them, your revenue stream remains risky because you can’t count on your customers sticking with you. Many firms in this mode have built loyalty programs or personally branded products in an attempt to create stronger brand preference and make their offers “stickier”.

Level 2 – Network Effect

What this means is that the more someone uses the company’s product or service, the more each individual customer gets out of the experience. This “network effect” creates a barrier to that customer leaving, namely, the perception that no other network is as good. Automobile Association of America (AAA) Membership or AARP are good examples. You may consider joining other networks, but for anyone who is already a member, it makes no sense to switch because their membership bases are so large that their value streams have pay their members back in multiples. With that said, the cost of switching is still low, and while you can differentiate who is in your network, everyone has access to multiple networks that can provide similar benefits.

Level 3 – Capital Investment with Consumables

In this case a customer has made an investment in a product, and now they need to keep buying consumables to support their investment. The longest standing product and stickiest product in this category is the copier. Later followers to take advantage of this strategy have been desktop printers and coffee machines. However, these later examples failed to really be as sticky because the price point to buy new ones at the consumer level is not high enough to prevent someone from jumping ship. And when it comes to coffeemakers, if they like your coffee, you still get to provide the consumables, just in a different machine. Consumables are usually a high-profit recurring revenue item.

Level 4 – Capital Investments – Subscriptions

Customers make a sizable investment in capital equipment and then pay subscriptions to use the equipment. In this case, they usually do not buy the equipment. They lease the equipment due to the significant expense for the equipment, software, maintenance, and upgrades required. Great examples are WestLawNext or Bloomberg which are staples in the legal and investment communities, respectively.

Level 5 – Sequenced Product Purchases or Service Subscriptions

The idea behind this approach is to create recurring income by encouraging your customers to consistently upgrade to new product and service offerings. Consider the example of Google Drive. It starts out as free. As you begin to use it more and more to store your data, you must pay to upgrade for more storage. Next thing you know, you are using Google Photos, and they have captured another revenue opportunity. Even if the company can convert just a fraction of its customers over to the premium service, it can create an extremely valuable recurring revenue stream. This revenue stream tends to be stickier because your customer prefers (knows how to use) your product, and the cost of switching in terms of time, effort, and costs outweighs the simplicity of staying with the current vendor.

Level 6 – Good-Until-Canceled Revenue

The best examples are bank accounts and credit cards. What makes this model powerful is when it’s based on an “opt-out” model where the customer has to terminate your relationship with them. For instance, I hate my bank. They send me a new credit card almost every 4 months because of their so-called “fraud protection” department’s suspicions. So every 4 months I have to change every recurring payment to come from the new account number. It is a nightmare! Plus, they send policy changes every 6 months, usually raising fees and reducing benefits. But do we change providers? No!, because of the trouble and loss of credit history. How often do people cancel their credit cards or close a bank account? Credit cards or bank accounts are an extremely powerful way of keeping customers over the long haul.

Level 7 – Longer-Term Contracts

The longer the contract the better! Think about the contract you signed when you got your new cell phone. I do not know about you, but I feel like when I signed on with Verizon I married the mob! Not only did you agree to pay a certain amount of money each month depending on the plan you select, you usually agree to keep paying for two years. If you are like me, each family member starts at a different time, so to get out gets prohibitively expensive, becomes a family debate, possible new phones get involved, and tons of time dealing with it. I just got chills thinking about it. This is an extremely valuable model because you can predict with a higher level of certainty what your recurring revenues will be both in the short-term, as well as over the longer term.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Giving and Receiving Free Products and Services

When you decide to lower your prices, offer your time, or offer free products or services, do you change the experience that the “beneficiaries” receive compared to those that pay full price? Do they get treated as an underclass? If you do, did you clarify what the differences would be before you started, and were they comfortable with the expectations? Did you think clearly about what you were trying to accomplish by entering these transactions to begin with? Is there congruence? The reason I ask is I often see people enter into “special” business transactions with friends, family, former colleagues, and others that they respected and trusted and irreparably damage those relationships.

Should You Enter The Transaction To Begin With?

I recently entered into a transaction with someone that is recognized as an expert in a field I’d like to know more about. The other party demonstrated that expertise to me as an enticement to sign on. However, we should have never entered the transaction. Why? I will spare you the details and skip to the conclusion. The other party did not have the time available to work with me. Plain and simple! There were red flags right from the beginning —difficulty in scheduling appointments and canceled sessions. I observed them and ignored the signals because I was too excited about the outcomes I thought I could get. The other party in effect gave me an unredeemable gift certificate.

So here are the questions you should ask if you are going to offer to give service or product away for free or at a discounted price:

  • How much time will it take, and do you have the time to give?
  • Is the customer/person going to use the product or service properly?
  • Are you going to change service levels for the customer/person, and what are the consequences?
  • What are your intentions/expectations?
  • What are their intentions/expectations?
  • What are the consequences if the offer does not work out? Why?
  • What is the likelihood that the offer won’t work out? Why?
  • Would this be an ideal customer for you if they had the money to pay for it?
  • If this is not an ideal customer for you, how does this benefit your organization? Can it hurt your organization?

As you can see most of these questions work for the receiver of the services! All I would add, is “have you done sufficient due diligence? How would others judge your decision-making based on how thoroughly you approached this decision?”

Howard Shore is a business growth expert who works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation.

Do You See What Your Customers and Prospects See?

Have you been wondering why your customer retention is not higher? Or is customer retention good but new business generation is below expectations? Are you unable to attract the right employees? These and similar issues may be indications that you’re not be able to see the true you in the mirror! I often listen to CEOs and their leadership teams talk about their companies in ways that defy the facts. It is great to be proud. It’s important to be positive, and having the right attitude is critical. After all, people are not going to want to follow you down the highway to hell. The problem begins when you are not willing to face the brutal facts.

New Customer Acquisition

When new clients are not easy to acquire, it may not be a problem with the industry or the prospects. You have to look in the mirror. The marketplace is telling you that even if you are different from your competitors, the differences in your products and services are not compelling enough to the buyer; your marketing and sales efforts and materials sound like everyone else’s; or there are breaks in your sales and marketing processes that are going unchecked. If you do not address these issues, the prospective buyers will continue to believe you are just like everyone else and will see no compelling reason to use you to solve their needs and problems.

Employee Acquisition

If you cannot fill positions in your company, lack of available talent is not usually the problem. The problem lies with 1) the person you have made accountable for filling the position; 2) the process you are using for filling the position; or 3) how attractive it is to work for your company. You need to address these issues, or you are likely to hire the wrong person or not fill the position.

Customer Retention

If customer retention should be higher, it is not because customers are not loyal and the product or service you’re offering is an inferior commodity. The problem is 1) the person you have made responsible for overseeing the processes for retaining customers is not the right person (or you don’t have one); 2) the unique attributes of your products or services are not compelling enough for them to stay; or 3) you have the wrong team, and the mistakes they are making are causing you to lose clients.

Key Performance Indicators and External Feedback Will Set You Free

So I challenge you! What key performance indicators are you using to effectively look in the mirror and see where your internal problems lie. What external surveys are you using to help you see where you are losing opportunities? How quickly are you addressing these issues and seeing improvement?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

 

 

What Did You Fail At Today? Let’s Celebrate!

At the Autumn 2015 Fortune Leadership Summit in Dallas Texas, we had a short presentation from Rabbi Stephen Baars. Although he only spoke for 10 minutes, his message was powerful! While every leader in the room could understand and agree with his message, I could not help but wonder how many of them actually were violating his wisdom daily in their organizations. His title was “Think Like a Winner,” which was all about how we view and handle mistakes.

Mistakes are Opportunities to Learn.

One thing I know from my experiences in life, as I am sure you do as well, is that I learn a lot more from my mistakes or losses than from my successes or wins. Many times when you are successful you are not quite sure which actions caused your success. Often you almost feel like you have to continue everything you’ve been doing because you are not sure what worked out so well. However, when you make a mistake, those wrong moves stick out and are obvious. They are a gift. They give you an opportunity to learn. A mistake presents you with an opportunity to become better, yet many squander that opportunity.

Celebrate Mistakes.

Rabbi Stephen said that when someone tells you they never make mistakes, they are lying, unaware, or have not tried to do anything of substance. Following that logic, if you want to have a high-performance organization, you need team members that are making mistakes. The key to progress is how mistakes and the people who make them are handled. Do people frown upon others who make mistakes? How are they spoken to? Are people encouraged to discuss their mistakes? The Rabbi suggests a great question to ask everyone is, “What did you fail at today?” and then celebrate it!

Do You Allow Blame In Your Organization?

It was suggested that the worst word in the English language is “blame.” While it may not be the worst, it is definitely very damaging. When you blame, you lose your opportunity to teach and learn. When mistakes or negative outcomes occur they present you with two choices — be resentful or be creative. When you are creative you are in problem-solving mode. When you are resentful you are in finger-pointing mode, and problems multiply rather than get resolved. Rabbi Baars suggested that you practice completing your day without any blame. I recommend that you do not allow anyone to blame. Whenever something is not going as it should, everyone involved should be required to identify how they contributed to the problem and be automatically directed to solving the problem. Finger-pointing must be discouraged.

What to Do with Repeat Offenders?

You may be wondering, “Is it okay to keep someone who regularly makes the same mistakes?” That is a different decision, the key words being “the same mistakes”! First you must ask yourself how you contributed. Did you put the right person in the wrong seat? Did you provide enough training, information, support, etc.? Many times, I see people being let go when the recurring problem is an organizational issue rather than a shortcoming in the people being fired. So this is not as clear cut a decision as you think.

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Improve Decision Making By Using the Right Communication Style

Business Communication and Decision Making

Are you frustrated by the ineffectiveness of many of your business meetings? Do you find that your team cannot seem to make a final decision on seemingly basic business questions? Do the same issues continue to resurface? Does there not appear to be real commitment to the decisions that do get made? Do you make decisions in meetings and find out later that people who did not speak up during the meeting are raising issues about the topic, thus calling the validity of the decision into question. As an executive business coach, I witness these situations to varying degrees on a daily basis in every organization I deal with. What I find frustrating is that business leaders allow these behaviors to continue. I have also found that the solutions can be as simple as using the right communication style.

How Communication Affects Decision Making in an Organization

Using the right communication style can have a positive affect on decision-making and will lead to a more effective decision-making process in your organization. Unfortunately, many leaders in business think they are communicating appropriately and are not. Even worse, others are watching and are not addressing their communication issue; which is another example of using the wrong communication style in an organization. There are four ways to classify communications in which you are tackling challenging situations, and only one of them is effective.

The 4 Communication Styles in Business:

  1. Passive communication
  2. Passive-aggressive communication
  3. Aggressive communication
  4. Assertive communication

You can either be passive, passive-aggressive, aggressive, or assertive. As you have probably guessed, being assertive is the proper way to effectively communicate in business, especially to the employees working below you. Unfortunately, assertive communication is the least common approach used in business when the conversation gets difficult or uncomfortable.

If you see that business decisions are not being made, that there is no follow-through on decisions that are made, that there are problems holding people accountable, that people are kept on your team long after it has been determined they should be let go, you have issues that require a change in communication style!

The Challenges to Effective Decision Making

I have also observed that the degree of assertiveness a person uses in dealing with people provokes fairly predictable reactions by others; which in turn, helps determine how effective the leader can be within the organization. While your communication is likely situational, most tend to have a recurring style in the way they communicate in difficult or stressful situations. It has occurred to me recently that those organizations that have the biggest challenges with decision-making and follow-through have the fewest leaders using the assertive communication style on a regular basis.

Howard Shore is an executive business coach that has helped thousands of business and corporate leaders improve their communication style to run a more effective organization. Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.