Mary Ellen Slayter at SmartBrief has an interesting article on how she successfully hired 10,000 people in her recruiting career and did a pretty good job of choosing the right candidates. Although, she did this at a large, public companies, we think it applies equally well to small businesses. We would argue that it is even more important to hire the right people in small businesses because it doesn’t take long for your businesses to go down when one or two employees fail to do a good job.
For any small business that is hiring employees for customer facing roles the need to hire people who are enthusiastic and outgoing is critical. Mary Ellen describes a simple test – “handshake” test – she used to do when hiring employees. She would walk up to the job candidate unexpectedly, smile and introduce herself to him/her. If they reacted with enthusiastic smile and greeted with cheer, it was safe to assume that they would behave the same way with customers.
The majority of goals set by people are never fulfilled or at least fall short. If you want the proof; go and check out health clubs in the first 2-3 weeks after New Year. They are so crowded by the people who have made resolution to lose weight, that it is difficult to find free exercise equipment. And then the crowd fizzles out after 3 weeks and only the regulars keep coming.
The reasons majority of goals go unfulfilled are multiple – they are too vague or too difficult or they don’t have any time limit. Because of this, people setting the goals either don’t know how to achieve them or they give up thinking they can never fulfill them.
We came across the S.M.A.R.T. goal setting technique a while ago that can help anyone achieve what they want in a reasonable time period. S.M.A.R.T. stands for Specific, Measurable, Attainable, Relevant and Timely. Essentially S.M.A.R.T. goal setting ensures that you know what you want to achieve, how to achieve it and when to take actions. Below are the details on how to go about setting S.M.A.R.T. goals.
I came across this absurd news from Wall Street Journal yesterday about how small business owners are having problems getting financing from banks. To summarize, WSJ mentioned that many small business owners are denied loan applications for starting new business or business expansion. In some cases the business already had committed orders from customers and only needed money to ramp up production or hiring to start the work.
However, in almost all cases their applications were denied on the basis that they did not have sufficient cash flow to cover the payment. In the past, the business owners used to put business assets such as account receivables, inventory, equipments, etc. as collateral to get the loan. The valuation on these assets has declined in the recent downturn and is not sufficient to cover the loan payment.
In the previous post we mentioned that you need to hear customer and employee stories in addition to looking at formal reports and metrics.
One of the ways you can do this is by asking open ended questions to your customers, employees and other business owners to understand the reasons behind numbers. Below we have identified 10 questions that will get them talking.
In the previous several posts here , here and here we have discussed how looking at performance metrics helps understand how your business is performing. We also mentioned that you should be looking at the reports on a daily, weekly and monthly basis to stay on top of your business.
The reason you want to look at the metrics is simple – numbers don’t lie; people do. However, from our experience as past business owners we have noticed that numbers tell only part of the story when trying to assess business performance. The metrics tell you what is happening to the business. They don’t tell you why. You have to dig deeper to understand why the numbers are what they are. For example, let’s say you are looking at sales going down for the last several weeks. You want know why this is happening. Further investigation shows that the customer count has been declining in that same period. But this still doesn’t tell you why customers are not coming to your business leading to declining sales. It may be because they are not being served well; maybe there is another competitor in town and so on.
So how do you go about collecting the anecdotal stories to understand the reasons behind the numbers? There are several ways you can do this.
In the previous blog post we indicated that many types of small businesses have “standard” set of metrics that you can use as a starting point to determine the key metrics you should track for your small business. We discussed key metrics in the retail and restaurant business in the previous post. In this post we have shown the metrics for additional businesses – hotels / motels and service businesses.
Every small business owner needs to look at the business reports daily, weekly and monthly on a regular basis to stay up-to-date with how their business is performing. You need to understand what key performance metrics to look at in those reports. We showed how to identify and track key performance indicators in this post.
You don’t have to start from zero when looking for key performance metrics for your business. Many types of small businesses have “standard” set of metrics. As a small business and franchise owner you should be aware of these metrics. In this post we will summarize the key metrics for retail businesses and fast food / restaurants.
In the previous post we mentioned that many small business owners find it difficult to explain how their business is doing with the numbers backing up their words. It is even more difficult to predict how the business is going to perform few months down the road. However, it doesn’t have to be this way.
By identifying and tracking few key performance indicators (KPIs) any small business owner can not only figure out how the business is performing; but also forecast where it is headed. This is no different from when the doctor checks vital signs such as blood pressure, pulse, weight, etc. of the patient to find out what is wrong or could go wrong. You only need 5 or so KPIs to get a feel of the business performance.
Typically, these KPIs will be different for different industries. For example, the retail store should look at comparable sales and inventory turnover; while exercise facility would track customer turnover and average sales per customer. Most large publicly traded companies include these KPIs in their annual reports or in the financial analyst reports.
In the previous post we mentioned that as a small business owner you should know the key numbers of your business by heart. These key numbers provide valuable insight in your business and act as early warning indicators. Without them you may not realize if the business is heading for trouble and by the time you do it may be too late.
We also advise you to spare some time from daily operations and spend 15 minutes daily and several hours weekly and monthly to go over the reports that show how your business is performing. In this post we will provide more details about these reports and what you should look for in them.
If you answer this question with “Oh! It’s OK” or “Just like everyone else”; without backing that up with the sales, cost or profit numbers your business may be heading for trouble.
Whenever we meet with our business colleagues and clients we ask this general question to get a sense of whether the business owner has a grip on his/her business. Many times the answers are what we mentioned earlier. We probe them further by asking follow-up questions such as “why do you say so?” or “how is it compared to others or last year?” and if they don’t have good numbers to explain, we know they need to work on getting a handle on their business.