The Fremont Group Academy

The Fremont Group is proud to announce the launching of The Fremont Group Academy.  Through TFGA business owners can earn certificates in business management and acquire the skills required for success.  The courses are free to members.  Go to http://tfgacademy.prfessor.com/home and learn more.  We are currently enrolling for “Minding My Own Business”– a comprehensive review of the six responsibilities of a small business owner based upon the book of the same title.  This course is FREE to non-members for a limited time.

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The Right Incentives

By Patrick A. Genovese from American Business Owner Magazine published by GPS consulting—major small business consulting firm out of Buffalo Grove IL

LINK

The use of incentives is often overlooked as an effective way to increase market share in a shrinking economy. Productivity-based, excess profit incentives can be designed with no upfront cost. Better yet, they are paid only when the desired sales and excess profits are actually produced.

There are three ways companies can develop effective incentives to increase market share. First, provide production employees incentives to produce more, which lowers direct labor costs, allowing the business owner to lower prices to increase market share. Second, give the sales team productivity incentives to sell more. And, third, offer incentives to existing customers. Adding incentive plans for both customers and employees will increase sales and lower costs at the same time.

Incentive Don’ts
Unfortunately, even in today’s economy, many owners still are unaware of the true operating costs of their companies. Or, because they lack the expertise to develop effective incentive programs, they guesstimate their expenditures and offer ineffective or costly incentives. Either is detrimental to the business.

A common and simple incentive program is to drop prices or entice customers with free upgrades (another way of lowering the overall price). Owners are inclined to lower prices when business is down and customers are not spending money. This position is based on the belief that a price reduction will enable companies to woo buyers away from their competitors or to schedule customer work now rather than at a later date. Even though this approach may increase business in the short term, the reality is the company is likely to lose money, weakening its ability to sustain operations until economic conditions improve.

Owners also err in setting up employee incentive programs. In many instances, the program does not offer enough incentives to make it effective or achievable. Some owners set the goal too high because they are unwilling to give up much. Or they make the program too complicated with many levels that must be reached before the incentive is released. Both types of incentives are counterproductive because they deflate the productivity of the employees. Effective incentive programs need to be credible and sustainable.

Effective Production Team Incentives
When employees do their jobs properly and productively, the company achieves and sustains profitability. Employees receive their paychecks and owners receive their profits. However, when employees are more productive than normally expected, companies should achieve greater, or excess, profits from those efforts. This is the right scenario to introduce productivity-based, excess profit incentive programs.

For example, a home remodeling company accepts a job for a flat fixed bid. When preparing the bid, the owner determines the job will take 150 labor hours. The employees are properly motivated and complete the job in 125 hours, generating excess profit for the company (the remaining 25 hours included in the bid). With a productivity-based, excess profit incentive program, a portion of the unused 25 hours of labor wages is allocated to the employees involved in this job. In other words, the owners share some of the excess profits with the employees. Similar incentive programs can be developed to use with other production-related employees, where they earn additional compensation through their increased productivity.

Effective Sales Staff Incentives
Incentives for the sales staff are structured differently from those of the production team. The sales team can be incentivized through a combination of top-line revenue increases, maintaining or exceeding gross margins and cross-selling and up-selling certain product and service mixes. One example of a sales staff incentive is to offer additional commission for achieving sales at a specific level above the previous year’s amount or above a baseline amount. Many companies only use these top-line incentives because they don’t know or understand how to offer other programs. These can be effective when managed correctly.

It is important to remember that increased sales do not always equate to increased profit. Some sales staff are given the freedom to manipulate pricing to get the bid and, in doing so, may give away too much margin to get the increased top-line sales. Instead, structure the incentive program so the sales staff is paid only on the margin or the profit from their jobs.

Additionally, owners can design an incentive program based on a particular product or service. For instance, the company may previously have purchased roofing materials that are just taking up space in the warehouse. The owner may decide to pay a higher percentage on roofing jobs sold by the sales team to make use of the existing materials. In this way, the incentive program benefits the owner by reducing overhead costs, the sales staff by increasing their paychecks and the customer, as the roofing job can begin quickly since the materials are already available.

Effective Customer Incentives
There are several approaches for offering incentives to customers. In any contractor’s business, there are slow off-peak times just as there are certain times when companies cannot keep up with the demand. Owners can take advantage of the slower times by offering to reduce the price of the job for those customers scheduling work during this period. In this way, the owner brings in revenue and keeps staff employed during the sluggish months.

However, it is imperative for owners to pace the work so they are not overextending their own cash flow and line of credit, thus finding themselves cash poor waiting for final payments on all this new work. The successes are from assertive sales, not necessarily aggressive scheduling.

Rather, there needs to be a combination of new business scheduled at a reasonable pace. In this way, the company can afford to do the work based on financial and labor related conditions.

Another method to incentivize customers is to offer a job discount when customers prepay. An additional benefit of this cash flow is it allows owners to save money by not tapping into their lines of credit and accumulating extra interest. Also, in some instances, manufacturers offer special incentives to contractors. The owners can pass along these incentives to customers as enticements for scheduling work at specific times or prepaying a portion of the job. When implemented correctly, customer incentives offer owners added methods to grow their companies.

Incentive Do’s
Returning to the basics is a simple but effective concept. Companies today are fighting the “Joe Pick-Up Truck” phenomenon. This occurs when laid off individuals with trucks and tool boxes are bidding virtually every available job.

In today’s economy, it is now even easier for customers to focus on cost alone and for construction owners to give in to the temptation to compromise. However, if the companies give the work away, they won’t survive. Or, they might even end up tarnishing or destroying their reputations. Intelligent companies follow the age-old advice of “doing what you say and saying what you do.” They stick to the basics rather than compromise quality by submitting the lowest bid to get the job.

In this way, they become known in their market areas for providing quality work and fair prices without taking the shortcuts. However, the others will not be able to sustain their businesses as they acquire jobs at little to no margin and lose money on the jobs that they underbid.

Successful companies also understand the importance of pacing their work so they are not overextending their employees or their cash flow. By adding effective incentive programs for both the customers and the employees, the construction companies can grow their market shares in the shrinking economy.

4 Vital Interview Questions to Ask

By Jeff Haden, from Inc Magazine

Most candidates can hack your interview questions to tell you what you want to hear. But if you approach it right, not these.

Most job candidates feel interview questions can be decoded and hacked, letting them respond to those questions with “perfect” answers.

And they’re right, especially if you insist on asking opinion-based job interview questions.

(Quick aside: Is there really a perfect answer to a question like, “What do you feel is your biggest weakness?” I think there is: “If that’s the kind of question you typically ask, I don’t want to work for you.”)

Asking opinion-based questions is a complete waste of time. Every candidate comes prepared to answer general questions about teamwork, initiative, interpersonal skills, and leadership.

That’s why you should ask interview questions that elicit facts instead of opinions. Why? I can never rely on what you claim you will do, but I can learn a lot from what you have already done.

Where employee behavior and attitude are concerned, the past is a fairly reliable indication of the future.

How do you get to the facts? Ask. Ask an initial question. Then follow up: Dig deeper to fully understand the situation described, determine exactly what the candidate did (and did not do), and find out how things turned out. Follow-up questions don’t have to be complicated. “Really?” “Wow… so what did he do?” “What did she say?” “What happened next?” “How did that work out?”

All you have to do is keep the conversation going. At its best, an interview is really just a conversation.

Here are my four favorite behavioral interview questions:

1. “Tell me about the last time a customer or co-worker got mad at you.”

Purpose: Evaluate the candidate’s interpersonal skills and ability to deal with conflict.

Make sure you find out why the customer or co-worker was mad, what the interviewee did in response, and how the situation turned out both in the short- and long-term.

Warning sign: The interviewee pushes all the blame and responsibility for rectifying the situation on the other person.

Decent sign: The interviewee focuses on how they addressed and fixed the problem, not on who was to blame.

Great sign: The interviewee admits they caused the other person to be upset, took responsibility, and worked to make a bad situation better. Great employees are willing to admit when they are wrong, take responsibility for fixing their mistakes, and learn from experience.

Remember, every mistake is really just training in disguise… as long as the same mistake isn’t repeated over and over again, of course.

2. “Tell me about the toughest decision you had to make in the last six months.”

Purpose: Evaluate the candidate’s reasoning ability, problem solving skills, judgment, and possibly even willingness to take intelligent risks.

Warning sign: No answer. Everyone makes tough decisions, regardless of their position. My daughter works part-time as a server at a local restaurant and makes difficult decisions all the time – like the best way to deal with a regular customer whose behavior constitutes borderline harassment.

Decent sign: Made a difficult analytical or reasoning-based decision. For example, wading through reams of data to determine the best solution to a problem.

Great sign: Made a difficult interpersonal decision, or better yet a difficult data-driven decision that included interpersonal considerations and ramifications.

Making decisions based on data is important, but almost every decision has an impact on people as well. The best candidates naturally weigh all sides of an issue, not just the business or human side exclusively.

3. “Tell me about a time you knew you were right but still had to follow directions or guidelines.”

Purpose: Evaluate the candidate’s ability to follow, and possibly to lead.

Warning sign: Found a way to circumvent guidelines “… because I know I was right,” or followed the rules but allowed their performance to suffer.

Believe it or not, if you ask enough questions some candidates will tell you they were angry or felt stifled and didn’t work hard as a result, especially when they think you empathize with their “plight.”

Good sign: Did what needed to be done, especially in a time-critical situation, then found an appropriate time and place to raise issues and work to improve the status quo.

Great sign: Not only did what needed to be done, but also stayed motivated and helped motivate others as well.

In a peer setting, an employee who is able to say, “Hey, I’m not sure this makes sense either, but for now let’s just do our best and get it done…” is priceless.

In a supervisory setting, good leaders are able to debate and argue behind closed doors and then fully support a decision in public – even if they privately disagree with that decision.

4. “Tell me about the last time your workday ended before you were able to get everything done.”

Purpose: Evaluate commitment, ability to prioritize, and ability to communicate effectively.

Warning sign: “I just do what I have to do and get out. I keep telling my boss I can only do so much but he won’t listen…. ”

Good sign: Stayed a few minutes late to finish a critical task, or prioritized before the end of the workday to ensure critical tasks were completed.

You shouldn’t expect heroic efforts every day, but some level of dedication is important.

Great sign: Stayed late and/or prioritized – but most importantly communicated early on that deadlines were in jeopardy. Good employees take care of things. Great employees take care of things and make sure others are aware of potential problems ahead of time just in case proactive decisions may help.

Obviously there are a number of good and great answers to this question. “I stayed until midnight to get it done,” can sometimes be a great answer, but doing so night after night indicates there are other organizational or productivity issues the employee should raise. I may sometimes be glad you stayed late, but I will always be glad when you help me spot chronic problems and bottlenecks.

Like with any other question, always evaluate a candidate’s answers to this question based on your company’s culture and organizational needs.

Few candidates can bluff their way through more than one or two follow-up questions. Turning the interview into a fact-based conversations helps you identify potential disconnects between the candidate’s resume and their actual experience, qualifications, and accomplishments.

And you’ll have a much better chance of identifying a potentially great employee, because a great employee will almost always shine during a fact-based interview.

Small Business Management Consulting Company: Potential ways to choose the best one

After the recent economic turmoil of 2008, a lot of businesses, particularly small businesses, have experienced a period of low cash flow, where debts seem to exceed profits. Under the existing economic scenario, small businesses are incurring incredible losses. While some businesses succumb to the pressure triggered by debt, others survive and flourish through various debt help solutions. However, if you’re planning to start your own business or even thinking to take your small business to the next level, there are certain things that you need to keep in mind.

For a majority of the people, owning their personal business seems like a dream come true. When you’re a business owner, you have the freedom of being your own boss, choosing your working hours, and taking all the important decisions concerning how you’ll distribute your resources. In addition to these advantages of business proprietorship, there are also some severe drawbacks. Any real business entrepreneur is aware of the truth. He knows that running a business is generally much more intricate, time-consuming, and tricky that most individuals think it to be.

A huge majority of the small business proprietors make an earning of exactly the amount that’s left with them after paying the entire expenses. Sometimes, that may amount to a fine living. At other times, it might not be an appealing picture. If you do not have a proper planning arrangement for your business, those margins can simply go negative. It is at this point that you need the help of a small business management consultant.

When you launch a new business, you often think that everything is going to be fine. However, as the business develops, people realize that you hadn’t even considered the important aspects of running a small business. This is where a professional small business management consultant can help.

Understand your requirements

Once you’ve decided to hire a consultant, you’re faced with the big question of which consultant. After all, there are countless consultants providing consultancy in definite sectors such as Marketing, HR, Finance and other bigger organizations offering loads of consultancy services. When you’re making your choice, you need to first recognize your weak points and where exactly you require help. In case you see that there are several problems in your business which you cannot tackle, it’s advisable to go for an organization that’s capable of providing consultancy for your entire problems. Appointing the services of a specific consultancy firm for various functions will be burdensome and expensive. Nevertheless, if you see that it’s the one and only function that you’re facing a problem with, for instance HR or Finance, it would be better to hire a function specific consultancy. The choice that you make today, will determine the fate of your small business tomorrow. A right selection will result in a profitable relationship and a remarkable development in your small business.

The top selection

While making a choice among several consultants of the same kind, you need to focus on the relationship that you hold with your potential consultant. Go for a consulting company you’re comfortable working with and one who’ll be an excellent guide and counselor for you. A consultancy is another kind of business schooling services. The work of a business consultant is to guide and train you so that you may tackle those aspects of your business single-handedly. Thus, make sure that you opt for a consultant you think will be capable of devoting the necessary time and effort.

Post submitted by Paul Smith.

5 Things Great Mentors Do

By| Jay Steinfeld  Reprinted from Inc. Magazine

Your employees can achieve greater things with your help than they can alone–if you give them a chance.

Mr. Miyagi and Daniel Larusso. Ezra Pound and T.S. Eliot. Dadabhai Naoroji and Mahatma Gandhi. History (OK, and the box office) is full of examples of people who have accomplished tremendous feats—far more than they could have done alone—with the help of mentors.

That’s why I find it odd when I see CEOs spending so little time mentoring their employees. You may not find it in the required curriculum of a fancy MBA program but mentoring is crucial to business success.

I don’t have a polished and refined mentorship program like Zappos (yet). Nor do I set aside the day-to-day to spend hours locked away in intense mentorship discussions with my employees. But I do some mentoring.

You can too. Here are a few ideas to get you started

1. Mentor the entire company.

I host weekly 15-minute sessions called “SayJay” where I, well, say things to our entire team of 130+ employees.  Things like updating people on company business, calling out top performers, asking for feedback on recent projects, and sharing ways that I, personally, work to help achieve our company values. They are fast, fun, and meant to keep the whole Blinds.com team informed about where the company is headed—and fully invested in that direction. They are a blast and infinitely valuable to our business.

2. Open door, open mind.

How many bosses claim to have an open-door policy? I have one, but I find it works best if I keep an “open-mind” policy, too. It took some time for me to realize that my employees often have better ideas than I do. But now that I do, I’m passionately committed to growing my team as leaders and idea generators. My open door is one of my favorite impromptu mentorship tools.

3. Set the tone for your managers.

I meet monthly with my direct reports to discuss their needs, concerns, and big projects in the queue. In advance of the meeting, they send me their agenda so I can think about how I can help. We then can dive into a one-on-one session about leadership, priorities, and anything in the big picture that one of us might be overlooking. Even better, they carry this idea forward to their own teams, too. This creates layers of mentors throughout the company that empower everyone to grow and share with one another in ways I could never anticipate.

4. Ask questions. Don’t give answers.

When you’re a mentor, it’s tempting to wax philosophical and share old war stories of business days gone by.  But remember your goal: to prepare your mentee to tackle future challenges with his or her own brain. When discussing past challenges or trip-ups, ask open-ended questions, helping your mentee to make the connections that will solve future problems. Mentor yourself out of a mentorship, so your colleagues will grow and stand on their own.

5. Make mentorship part of your company’s DNA.

One of our core values (maybe yours, too) is “Improve Continuously.” It’s not just a phrase on a business card: It’s a constant activity that we consciously engage in. When you make personal growth everyone’s job, leaders will emerge, connect with their teammates, assist new recruits and help your business grow.

 

The Fremont Group can help you establish a mentoring program.  Give us a call.

How do you Forecast Your Cash Flow?

By David Evans CEO of EastSeat, LL and reprinted from Inc Magazine LINK

Cash Is King: 5 Simple Rules for Creating a Cash Flow Plan

Cash is paramount for running a business. Here are five easy rules for creating a positive cash flow plan for your company.  With Opening Day of Major League Baseball over, I breathe a deep sigh of relief as a ticket broker. It means my company, EasySeat, has started shipping all of the baseball tickets that it has been purchasing for the last 7 months.

That means cash flow will soon turn positive again.

In EasySeat’s business model, cash is king, and ensuring that we have enough cash to fund inventory and operations is critical to our success. Successfully managing, and understanding, cash flow is not a skill reserved for MBAs. Every business owner should understand their cash flow.

Here are five easy rules for creating a simple cash flow plan:

1. Project monthly sales (and curb your optimism) When projecting sales for cash flow purposes, don’t be the optimist. Use worst-case-scenario estimated sales figures or historical monthly averages. Any sales figure used for cash flow planning should be something that is readily achievable. Remember, this process is used to make sure that the business has sufficient capital to operate, not an exercise in projecting success.
2. Remember receivables. Not every sale is created equal when it comes to cash. Cash and credit card sales are available for ongoing operations immediately, but sales with terms can take 30, 60, or even 180 days or more to turn into usable funds. Factor this timing into any projections, and most importantly, remember the potential impact on cash flow before extending terms to new customers.
3. Consolidate predictables. Every business has a core monthly cash burn that includes things like rent, payroll, and telephone service that are consistent and predictable. Consolidate these numbers into one operating expense figure that reflects how much cash must come in the door every month to stay in business.

4. Adjust for growth. It’s critically important to account for the capital required to grow. Many successful businesses fail by not having sufficient cash to fund their growth. New sales often require new expenditures for equipment, employees, and marketing. In most cases, the expenses come before the sale which requires that the cash is available in advance.

5. Plan for the unforeseen. To quote Donald Rumsfeld, these are “known unknowns.” For example, if the Yankees make the World Series, it’s a huge opportunity for increased sales at EasySeat. At the same time, it will mean extra inventory to purchase, and therefore, extra cash to buy those tickets. Scenarios such as this need to be factored into any cash flow forecast to ensure that, when opportunity arises, the business is in a position to capitalize. If there is a place to be optimistic in planning cash flow, it’s here. If the situation never materializes, it simply leaves the company in a much stronger capital position.

These five simple rules can be used to create a basic cash flow plan, but it’s important to understand the ramifications of the numbers. The monthly “predictables” (#3) is the amount of cash required to run a business status quo. To grow, enough cash must be available to fund the new expenses that will drive growth.

Whether the plan is status quo or growth, any cash flow forecast must include a contingency plan or “slush fund” to account for potential new opportunities or challenges. Keep a running total of monthly cash flow, sales minus expenses, and the lowest net total is the amount of extra cash required to run the business or achieve a sales growth goal. If this amount is negative, it must be available to the company in the form or credit or existing capital. Once planning cash flow has been mastered, cash will still be king, but it’ll be more of a figurehead.

The Fremont Group has developed a cash flow forecasting system that is available to all members at no charge.  When becoming a member at any level, request our Excel-based program.  Predicting your cash flow on a weekly basis, understanding the way your money travels around your company, and taking proactive steps to maintain a positive cash flow are all done through this program—possibly the most important tool a small business owner can use.

8 Core Beliefs of Extraordinary Bosses

This article is from Inc Magazine, authored by Geoffrey James  LINK

The best managers have a fundamentally different understanding of workplace, company, and team dynamics. See what they get right.

1. Business is an ecosystem, not a battlefield.

Average bosses see business as a conflict between companies, departments and groups. They build huge armies of “troops” to order about, demonize competitors as “enemies,” and treat customers as “territory” to be conquered.

Extraordinary bosses see business as a symbiosis where the most diverse firm is most likely to survive and thrive. They naturally create teams that adapt easily to new markets and can quickly form partnerships with other companies, customers … and even competitors.

2. A company is a community, not a machine.

Average bosses consider their company to be a machine with employees as cogs. They create rigid structures with rigid rules and then try to maintain control by “pulling levers” and “steering the ship.”

Extraordinary bosses see their company as a collection of individual hopes and dreams, all connected to a higher purpose. They inspire employees to dedicate themselves to the success of their peers and therefore to the community–and company–at large.

3. Management is service, not control.

Average bosses want employees to do exactly what they’re told. They’re hyper-aware of anything that smacks of insubordination and create environments where individual initiative is squelched by the “wait and see what the boss says” mentality.

Extraordinary bosses set a general direction and then commit themselves to obtaining the resources that their employees need to get the job done. They push decision making downward, allowing teams form their own rules and intervening only in emergencies.

4. My employees are my peers, not my children.

Average bosses see employees as inferior, immature beings who simply can’t be trusted if not overseen by a patriarchal management. Employees take their cues from this attitude, expend energy on looking busy and covering their behinds.

Extraordinary bosses treat every employee as if he or she were the most important person in the firm. Excellence is expected everywhere, from the loading dock to the boardroom. As a result, employees at all levels take charge of their own destinies.

5. Motivation comes from vision, not from fear.

Average bosses see fear–of getting fired, of ridicule, of loss of privilege–as a crucial way to motivate people.  As a result, employees and managers alike become paralyzed and unable to make risky decisions.

Extraordinary bosses inspire people to see a better future and how they’ll be a part of it.  As a result, employees work harder because they believe in the organization’s goals, truly enjoy what they’re doing and (of course) know they’ll share in the rewards.

6. Change equals growth, not pain.

Average bosses see change as both complicated and threatening, something to be endured only when a firm is in desperate shape. They subconsciously torpedo change … until it’s too late.

Extraordinary bosses see change as an inevitable part of life. While they don’t value change for its own sake, they know that success is only possible if employees and organization embrace new ideas and new ways of doing business.

7. Technology offers empowerment, not automation.

Average bosses adhere to the old IT-centric view that technology is primarily a way to strengthen management control and increase predictability. They install centralized computer systems that dehumanize and antagonize employees.

Extraordinary bosses see technology as a way to free human beings to be creative and to build better relationships. They adapt their back-office systems to the tools, like smartphones and tablets, that people actually want to use.

8. Work should be fun, not mere toil.

Average bosses buy into the notion that work is, at best, a necessary evil. They fully expect employees to resent having to work, and therefore tend to subconsciously define themselves as oppressors and their employees as victims. Everyone then behaves accordingly.

Extraordinary bosses see work as something that should be inherently enjoyable–and believe therefore that the most important job of manager is, as far as possible, to put people in jobs that can and will make them truly happy.

The 5 Qualities of Remarkable Bosses

By Jeff Hayden and reprinted from Inc Magazine

Consistently do these five things and the results you want from your employees–and your business–will follow.Remarkable bosses aren’t great on paper. Great bosses are remarkable based on their actions.

Results are everything—but not the results you might think.

Consistently do these five things and everything else follows. You and your business benefit greatly.

More importantly, so do your employees.

1. Develop every employee. Sure, you can put your primary focus on reaching targets, achieving results, and accomplishing concrete goals—but do that and you put your leadership cart before your achievement horse.

Without great employees, no amount of focus on goals and targets will ever pay off. Employees can only achieve what they are capable of achieving, so it’s your job to help all your employees be more capable so they—and your business—can achieve more.

It’s your job to provide the training, mentoring, and opportunities your employees need and deserve. When you do, you transform the relatively boring process of reviewing results and tracking performance into something a lot more meaningful for your employees: Progress, improvement, and personal achievement.

So don’t worry about reaching performance goals. Spend the bulk of your time developing the skills of your employees and achieving goals will be a natural outcome.

Plus it’s a lot more fun.

2. Deal with problems immediately. Nothing kills team morale more quickly than problems that don’t get addressed. Interpersonal squabbles, performance issues, feuds between departments… all negatively impact employee motivation and enthusiasm.

And they’re distracting, because small problems never go away. Small problems always fester and grow into bigger problems. Plus, when you ignore a problem your employees immediately lose respect for you, and without respect, you can’t lead.

Never hope a problem will magically go away, or that someone else will deal with it. Deal with every issue head-on, no matter how small.

3. Rescue your worst employee. Almost every business has at least one employee who has fallen out of grace: Publicly failed to complete a task, lost his cool in a meeting, or just can’t seem to keep up. Over time that employee comes to be seen by his peers—and by you—as a weak link.

While that employee may desperately want to “rehabilitate” himself, it’s almost impossible. The weight of team disapproval is too heavy for one person to move.

But it’s not too heavy for you.

Before you remove your weak link from the chain, put your full effort into trying to rescue that person instead. Say, “John, I know you’ve been struggling but I also know you’re trying. Let’s find ways together that can get you where you need to be.” Express confidence. Be reassuring. Most of all, tell him you’ll be there every step of the way.

Don’t relax your standards. Just step up the mentoring and coaching you provide.

If that seems like too much work for too little potential outcome, think of it this way. Your remarkable employees don’t need a lot of your time; they’re remarkable because they already have these qualities. If you’re lucky, you can get a few percentage points of extra performance from them. But a struggling employee has tons of upside; rescue him and you make a tremendous difference.

Granted, sometimes it won’t work out. When it doesn’t, don’t worry about it.  The effort is its own reward.

And occasionally an employee will succeed—and you will have made a tremendous difference in a person’s professional and personal life.

Can’t beat that.

4. Serve others, not yourself. You can get away with being selfish or self-serving once or twice… but that’s it.

Never say or do anything that in any way puts you in the spotlight, however briefly. Never congratulate employees and digress for a few moments to discuss what you did.

If it should go without saying, don’t say it. Your glory should always be reflected, never direct.

When employees excel, you and your business excel. When your team succeeds, you and your business succeed. When you rescue a struggling employee and they become remarkable, remember they should be congratulated, not you.

You were just doing your job the way a remarkable boss should.

When you consistently act as if you are less important than your employees—and when you never ask employees to do something you don’t do—everyone knows how important you really are.

5. Always remember where you came from. See an autograph seeker blown off by a famous athlete and you might think, “If I was in a similar position I would never do that.”

Oops. Actually, you do. To some of your employees, especially new employees, you are at least slightly famous. You’re in charge. You’re the boss.

That’s why an employee who wants to talk about something that seems inconsequential may just want to spend a few moments with you.

When that happens, you have a choice. You can blow the employee off… or you can see the moment for its true importance: A chance to inspire, reassure, motivate, and even give someone hope for greater things in their life. The higher you rise the greater the impact you can make—and the greater your responsibility to make that impact.

In the eyes of his or her employees, a remarkable boss is a star.

Remember where you came from, and be gracious with your stardom.

MMOB Workshops to be offered by Metropolitan State College

The Fremont Group is working with the Center for Innovation at Metropolitan State College of Denver to offer their Minding My Own Business Workshops through their curriculum.    The workshops may be offered in their new building or on-line.  “We are very excited with the prospect of brining our workshops to the students of Metro State” stated Dirk Dieters.  Mr. Dieters is the founder and executive director of The Fremont Group and he will be the presenter of the workshops.  He is also the author of “Minding My Own Business” available on this site.

The “Minding My Own Business Workshops” follow the book’s examination of the six responsibilities of a small business owner.  The MSC Center for Innovation has empathies franchise ownership and operation and the workshops will be germane to current and prospective owners and their spouses.  “We are looking forward to helping these students and expanding the outreach of our mission to provide quality management assistance to all small business owners.”

10 items entrepreneurs must work on to bulletproof their business

Article by Patrick Burke printed in American Business Magazine published by Global Resources—a major small business management consulting firm.  LINK

Most startup businesses are little more than an “incorporated job”—a vehicle for the owners to earn a market-rate salary with the hope of future growth. Once a business can pay the owners a market-rate salary and have significant profits remaining, it becomes an asset. This marks the time when entrepreneurs must begin working on their business, not just in their business. When they stop working harder and begin working smarter, they will yield significant dividends by making the company more profitable, more durable and, ultimately, more valuable.

Over the last 30 years, I’ve worked with hundreds of businesses and I believe there are 10 items entrepreneurs must work on to bulletproof their business.

  1. Benchmark company results against the industry for valuable information that will lead to improved results.The relative value of a business is determined by comparing its performance to those in its industry. For example, gross margin should be examined to make sure the company is being efficient with its production costs to meet or exceed industry standards. Similarly, employee costs should be analyzed to make sure the company is both paying a market-rate wage and receiving market-rate output from its employees. A company’s net income percentage should compare favorably with the industry if it’s carefully monitoring general and administrative expenses.With regards to the balance sheet, it’s critical that the company carefully manage the working capital (current assets minus current liabilities) deployed in the business. Too much working capital is generally the result of receivables getting too old or carrying too much inventory. Some businesses tend to overstock inventory in order to guard against the dreaded stock-out, unaware of the fact that the carrying cost of inventory is prime plus 20 percent (almost two percent per month!).Though often overlooked, determining a company’s return on equity is critical. I’ve seen cases where the return on equity in a small company was below five percent. This rate of return, in a more typical stock market environment, would be fairly easy to achieve with a diversified basket of blue chip companies with far less risk than operating a business. Developing standards through benchmarking is an excellent first step for entrepreneurs who are establishing their company’s initial financial goals.
  2. Create a short-term compensation plan. Initially, the owners must conduct research to determine market salaries for the key positions in businesses of their size in their region. Owners must also decide where on the scale of “fair” they want to be. For example, does the company want to be in the top quartile of businesses its size or should it be in the 50th percentile because of its standard profitability? This sort of information is available not only to owners, but also to employees, which make these decisions particularly critical as owners seek to attract and retain the best of the best. Similarly, the company’s bonus plan should be linked to individual performance, as well as to company performance. There should never be a time when employee bonuses are forced to come directly out of the owner’s back pocket.
  3. Define an effective longterm compensation plan that’s linked to the company’s appreciation in value. This is particularly critical if a non-family employee won’t have the opportunity to own real equity. Top-notch employees will want a wealth-building opportunity in addition to their retirement plan. The long-term compensation plan should be competitive with the industry and linked to long-term company goals, which should be indicators of the company’s value. (Example: A company continues to increase profit percentages even as revenue grows.)
  4. Carry appropriate insurance coverage.For some reason, companies often get stuck in the “mom-and-pop era” when considering insurance matters. A company’s policy should include business interruption coverage (talk to the Gulf Coast businesses if you doubt this). Inappropriately low limits on this coverage are the number-one reason a company doesn’t resume business after a loss.The best property coverage insures the company’s property, building and equipment at appropriate values. Generally, it’s better to insure for replacement cost than fair-market value. During poor economic times, employee dishonesty is much more common, making covering this risk a critical addition. Consider purchasing an umbrella policy, which provides an extra layer of protection over the company’s primary liability limits.General liability coverage should also be considered. This coverage is inexpensive and worth looking into, considering the potentially significant value of the company’s assets (think British Petroleum). Similar to employee dishonesty, employment practices coverage becomes more critical in a tough economy due to wrongful termination suits. Having a competitive health plan is also essential, as costs can be somewhat controlled when employees have a chip in the game via a health savings account (HSA).
  5. Maintain an appropriate information technology system. This is a common area for deferred maintenance, particularly in a down economy. The information a company needs changes as products and services change. An effective IT system should deliver timely information that is management ready. Often, companies will demand their IT system produce a “dashboard,” which provides the key numbers management must monitor to ensure profitable growth. Part of a quality IT system is its ability to maintain adequate internal controls over the company’s cash. Once again, especially in a struggling economy, some employees’ fingers get sticky.
  6. Adopt an effective retirement plan. An effective plan needs to benefit people at the right level. There is no business reason to provide an outsized benefit to employees who don’t stay with the company. Plan design can ensure the efficient use of the company’s contribution. Plan features, which include vesting, eligibility, cross testing and integration, can result in a higher percentage of contributions going to the owners and other key personnel. The owner, as the fiduciary, is responsible for plan assets to be appropriately invested. Investment policies and investment performance criteria are essential aspects of an effective retirement plan. They also fulfill the sponsor’s fiduciary responsibility.
  7. Establish both an operating and capital budget.To do this properly, the company needs an appropriate budget process. (Taking last year’s number and adding five percent is not an appropriate process.) Once adopted, the budget should first be used to compare last year’s actual performance to this year’s budget and determine reasons for any variances.As part of the budget process, companies should challenge their sales and marketing teams to generate significant new revenue, while the administrative staff continues to cut costs so the company can drop a higher percentage of earnings to the bottom line each year. In addition, using a capital budget, companies should plan for all significant capital expenditures and complete a detailed analysis of the return on these investments. It’s also important that the company’s bank agrees with the company’s future plans (in terms of both the capital and operating budgets), as banks are particularly unresponsive to last-minute requests.
  8. Develop a comprehensive short- and long-term human resource plan.Many firms hire too fast in good times and fire too slow in bad times. That’s why it’s important to analyze the adequacy of the company’s current team. Once again, benchmarking is critical, and perhaps even forced ranking may be required to ensure a top-notch workforce. Many employers use standardized tests to screen out candidates and determine who should be promoted within the company.It’s also important to hire for a specific need, as opposed to simply hiring the “best athlete in the draft.” Few companies are large enough to absorb people with the idea that they are going to be valuable at some point in the future. Once a company has spent the time hiring the best talent, creating an employee handbook—with clearly stated expectations —is critical. Since each hire is made privy to elements of the company’s proprietary “formula,” it makes sense for key employees to have employment contracts including a non-compete covenant. It’s also important to note that such contracts are often one of the first items buyers request when it comes time to sell the business.
  9. Outline a growth plan. Management teams love targets and need to know where they are taking the company and how to get there. The plan may call for expansion of the company’s products or growing through acquisitions, or perhaps a geographic expansion. The ultimate goal should be sustainable and profitable growth, which, once achieved, creates true value.
  10. Create a succession plan. The owners must analyze their buy-sell agreement to make sure it continues to make sense in light of their current personal and economic circumstances. The company should also do an assessment of its executive team’s readiness to take over. If owners have been diligent in their grooming efforts, there may be an internal group that’s ready and able to buy the business. Since it’s likely that, as part of a management buyout, this group is going to be issuing a note to the owners, it’s critical they be able to handle this all-important responsibility. A well-thought-out succession plan can help ready the business for sale at the correct price—an appropriate reward for the smart business decisions entrepreneurs have made.

For more information or to discuss implementing some of the above contact The Fremont Group.  A Success Partner of The Fremont Group can assist in this and more.  A Business Physical by a Success Partner is included in membership.  Give us a call.

The Best Way to Fire an Employee

Reprinted from Inc Magazine (LINK)

By Jeff Hayden

These tips won’t make it any easier on the employee (or you) but they will make the process go as smoothly as it can. Here’s how to make a bad situation better—or at least as “better” as it can possibly be—when you have to fire an employee for cause:

Be certain.

Seems obvious, right? Not always: The heat of the moment can cause you to make a snap decision that is neither correct nor fair.

Even if you have a zero-tolerance policy for certain behaviors, take a few minutes to make sure the employee’s action truly falls within the parameters of that policy. When you’re mad (or really disappointed) it’s easy to think, “That’s it… she has to go,” and unintentionally forget about guidelines and precedents. While you can bring an employee back on after you make a mistake, no one will ever forget what happened.

Especially the employee.

Don’t be Hansel or Gretel.

Except where zero-tolerance policy violations are concerned, firing an employee should always be the last step in a relatively formal and structured process: Identify sub-par performance, provide additional training or resources, set targets and time lines for performance improvement, follow up when progress is lacking—and document each step in writing.

Documentation not only protects your business, it also helps ensure the employee was given every chance to succeed. You—and the employee—deserve more than a trail of bread crumbs.

If you don’t have a paper trail, don’t be tempted to go back and re-create one. Start now and follow the process. Remember, it’s not the employee’s fault if you haven’t done your job.

Get every duck in every row ahead of time.

How will the employee return company property and collect personal items? What happens to his benefits? When will he receive his last paycheck?

If you don’t know the answers, you need to. The time between when you say, “You’re fired,” and when the employee actually leaves the building is awkward for everyone. Make things easier by knowing every detail in the process so it goes as smoothly as possible.

And if you need to bring in other people, like an HR staffer to talk about benefits, line them up so they will be available immediately. Never make an employee you just fired sit and wait.

Get a witness.

While not absolutely essential, having someone else in the room eliminates the risk of the employee later claiming you said things you did not. At the same time, a witness makes an awkward situation even more awkward. The employee might feel the second person is in the room simply to provide protection or backup if he gets angry.

That’s a little insulting… but in the end your job is to protect your company, so bring in a witness. Safe in this case is better than sorry.

Know what you will say.

Unsure? Try this: “Mary, I’m sorry, but we have to let you go.”

That’s it.

If you’ve done your job correctly and followed your process there won’t be a reason to explain why. Mary already knows why.

Why keep it so simple? No matter how many people you have fired before, you’ll still feel uncomfortable so you’ll be tempted to talk. A lot.

Don’t. The less you say the more dignity the employee retains. Stick to the point and be professional. And don’t feel bad for not mincing words—at this point the employee has almost no interest in hearing you spout platitudes anyway.

Never argue.

Most people who get fired are fairly quiet. Some get mad. Some argue and then get mad.

No matter what the reaction, don’t let yourself get sucked into an argument. If you’re certain about your decision and have the documentation to back it up, there is no argument. Just say, “Mary, I’ll be happy to talk about this as long as you wish, but you should understand that nothing we say will change the decision.”

Arguing about or discussing the fairness of your decision almost always makes the employee feel worse and it could open you up to legal issues if you speak without thinking.

By all means let the employee vent, but stay away from arguments or debates.

Don’t offer to help when you can’t.

If you are firing an employee for cause there are very few ways you can help them get another job. (If you are laying them off due to a lack of work, obviously there are a number of ways you might be able to help.)

So don’t toss out well-meaning platitudes like, “If there’s anything I can do, just let me know…” There almost never is. And in those rare circumstances where you can help, be specific about what you can do or may be willing to do.

Otherwise, just wrap things up by saying, “Even though this did not work out, I wish you the best.” Shake hands and let the person leave.

Then accept that you’ll feel terrible, no matter how much the employee deserved to be let go. Feeling terrible about playing a role in changing someone’s life for the worse is something you will never get used to.

Nor should you.