Democracy (in the workplace)?
We have just witnessed an historic (can someone PLEASE explain to me why ‘historic’ has to have ‘an’ before it, and not ‘a’- i don’t get this grammar rule) Democratic event last night. The American people have spoken, and chosen Barak Obama. So, how do you run your small business? What kind of leader are you? Dictator (aka “authoritative leader”), Participative or Delegative?
You must be thinking - me? Authoratative? Never! I’m a good guy, and i would never want to be a “bossy” boss! Well, before you dismiss this leadership style, keep in mind, that some of our greatest leaders were authoritative leaders (ie, Patton, Trump, Vince Lombardi). When would someone want to be authoritative? Consider your industry- if you are the expert, and you’re working with entry level or inexperienced employees, or maybe a “rougher” crowd (think construction, Armed Forces or the fishing industry)- the being a bit of a dictator may make sense. And if you are working in a detail oriented industry with picky clients (think painter or wedding cake maker)- then, pick away. You can’t afford to let your employees to learn on the job and potentially risk losing a client.
As your company grows, your employees skills will improve and you should begin to rely on them to make decisions and execute the plan. One of the greatest mistakes small business owners make is to immerse themselves working IN the business, rather than working ON the business. If you want to have the largest wedding cake bakery in the country, at some stage, your going to have to stop baking. As long as you are baking, designing, building (and handling bills, fixing printers, taking out the garbage) - you aren’t building relationships, developing procedures, managing your staff and growing your business. As your company grows, you’ll want to move in to the participative or delegative role. In order to do this, you’ll have to train your key employees to meet your standards, or invest in quality employees who you can trust, and in some cases, have better experience that yourself. Don’t underestimate the power of quality employees.
As you develop good employees around you, you’ll begin to delegate tactical tasks to them. However, ensure that they are accountable to you. I highly recommend you read “Mastering the Rockefeller Habits” . This will help you manage your team more effectively while maintaining your standards. We’ve started to implement these tips, and it’s had a huge impact on allowing me to focus on strategy, new concepts and business development along with managing our staff.
As you move in to the participative style, keep in mind, that if you ask your employees for their opinion, you sure better honor it. A quick way to frustrate employees is to constantly ask for their opinion and then always go your own way. Not ALL decisions are critical. Give your employees some opportunites to OWN a decision and execute it. But, in the end, this is your business. Don’t be afraid to step in when needed and make final decisions. This is YOUR BUSINESS.
Why Outsourcing Is Critical!
We just lost our internet and phones this morning. Being that this office provides the sales and support for our whole company, saying that we rely on internet and phones would be an understatement. We were frozen, leading to dozens of hours of unproductive time and probably dozens of frustrated clients who couldn’t reach us on the phones. Fortunately, all we had to do is call our networking support vendor, Bardissi Enterprises (covers Eastern PA and NJ)- and George Bardissi came out, found the problem, and fixed it. All part of our monthly fee. And later today, i expect my monthly report from our outsourced Accountant, Accounting Plus, who handles all of our books and billing.
There are some facets of business that i don’t know very well, including networking and accounting,and frankly, don’t think i want to become an expert in them. My business is best served by me doing what i do best (marketing, strategy, management, etc.) which shoud lead to growth in my company, and letting other companies focus on their areas of expertise and maintaining the business.
How can you determine what you should outsource? Here are some quick questions to ask yourself:
- What are your priorities that will help your business grow that you have expertise in?
- What is an hourly rate that your time is worth to you? $50 and hour? $250 an hour?
- What obstacles interfere or prevent you from executing the answers to #1?
- How much time do you spend on these obstacles?
- Can you delegate any of these obstacles, or outsource them to an outside firm?
After analysis, you’ll probably find that if you are spending 5 hours per week on payroll, another 10 hours on accounts receivable and payable, then you may not be using your time wisely. Hiring someone full time may not make sense, so research and see if you can find an accounting firm that specializes in managing small business accounting.
Here are some additional tips to researching and hiring appropriate vendors:
- Try to find at least 3 vendors before you make a decision.
- A reference from another trusted business source is always helpful in making a decision.
- Don’t just look at price. Get a feel for personality, reputation, length of term in business, expertise, availability and testimonials.
- Try to negotiate a flat monthly fee that fully covers the service, rather than an hourly service. This will help you budget and set everyone’s expectations better. This is especially helpful for computer networking, which will force the vendor to prepare to prevent a catastrophe rather than reap the huge reward of spending dozens of hours on a big issue.
There is no question in my mind that outsourcing certain components of our business like payroll, accounting services and networking services have been some of the smartest decisions we’ve made.
What Do You Want from Your Small Business? (Setting Long Term Goals for your company)
First, i have to apologize, i accidentally deleted all the comments from my short list of readers that we want to grow. I”M SORRY! Please continue to add comments, i’m still working my way around this platform.
So, on to my story. Last year, my aunt Mary Jo, who has a doctorate in International Diplomacy contacted me and told me that she needed a website, logo, biz card, etc, etc. I knew that she had been traveling non-stop with tons of business, so i asked her? Why?
“Well, i don’t know, someone told me i should have one.” I asked her, “Where do you want your business to be in 5 years? Do you want employees? do you want massive growth? Are you having a hard time finding business?”
She told me that she has tons of business, and doesn’t want any employees or to have an “office”, as she works from home. So, i told her that a website wouldn’t be necessary, but i can get her a cheap logo from LogoSnap.com (only $39) and i’d take care of her business cards for her, from BargainPrinting.com - which are like $35. I probably saved her close to a thousand dollars, and more importantly, the pain and time of having to create something unneccessarily. So, what’s my point? My point is to create your short term objectives and goals based on your long term goals, and DO NOT be pressured by what others expect from you. It’s ok to be a small business that pays the bills and gives you flexibility. It’s ok to work from home part time.
So, my recommendation to any SOHO or startup is to think about where you want your business to end up. If you want to be the next Michael Dell, and end up being a huge corporation, they you’ll know what’s expected of you when it comes to the type of corporation/llc you set up, what type of marketing materials you ultimately need to have, infrastructure you are moving towards, financing, type of employees, etc. And, if you want to have a successful local flower shop with hopes of providing services to the likes of Star Jones on her wedding, then go for it. 
Something else to consider is, will you want to sell your business someday? Well, then you better have VERY clean books and document everything. If not? Then you don’t have to sweat over your books and the EBITDA - you’ll be concerned about cash flow.
Here’s what you need to do:
1) Sit with your wife/business partner and discuss where you want this business to be in 1 year, 3 years, 5 years, 10 years to include: Financial goals, number of employees, products/services you want to offer, level of service, number of stores, profitability. These should absolutely correlate with what you want at home. If you are a family person, and don’t want to work 15 hour days, don’t shoot to be the next Microsoft.
2)Determine your exit strategy (ie, if you want to die as the owner, that’s a strategy, and ok, but at some stage, life or death, you will no longer be working for this company).
3) Make a list of what decisions you need to make in order to help you get to this point (ie, type of corporation, business relationships, types of employees, building, marketing materials, etc.).
4) Have fun…owning your own business should be fun. If it’s not fun (most of the time)- then you are making some bad decisions or need to make some hard decisions in order make changes.
