Category Archives: Operations

Keep Your Business on Track and Growing: Measure What Matters

By Laurie Breitner and Karen Utgoff

There is more to keeping your business going in the right direction than looking at standard reports from QuickBooks or other accounting tools on a regular basis. While these reports can give you numbers, determining and appropriately tracking what matters — which numbers are important, how they are derived and what else you need to watch — is an essential responsibility of the owner(s) and management team.

In assessing current operations, it’s often useful to compare today’s results with past performance — prior period (year, quarter, month, or week) or effort (job run, project, or program) depending on your industry and particulars of your business. While this isn’t always possible for newer ventures, be assured that if you are diligent, ultimately these measurements will help reveal your company’s strengths and weaknesses, opportunities and threats, as well as performance.

For example, after one year in business you can only guess how seasonal factors will affect your cash flow. However, if you keep track, with five years experience you will be confident in anticipating how seasonal ups and downs might impact your business. When you hire a second employee in a particular role, you have some idea of how long it will take them to come up to speed; by the time you make your fifth such hire, you have a much better idea of how long it should take, as well as what it takes, to be productive.

For new initiatives, measuring is tied closely to looking forward (planning) for likely and intended outcomes. What will initial success look like? What events (milestones) are critical to track progress? How much will it likely cost? Are there gaps in your capabilities or resources that need to be filled before you can realize the potential of the new initiative? How much revenue and/or profit is the project expected to add and when?

What initial operational measures should be monitored? Here’s where it’s helpful to look at assumptions you made in making predictions. Did you assume that if you opened a second location in a nearby town that your strong positive reputation would automatically give a boost to the new site? Did your plan hinge on getting speedy municipal approval for a larger parking lot at the next planning board meeting? What key assumptions do you need to track?

Add to the standard routine of just reviewing (daily, weekly, monthly, quarterly, and annual) results with the following specific approaches that are critically important to measuring what matters:

Assess profitability and the fully allocated cost of goods sold from an operational perspective: For background review pages 8 and 9 of Laurie’s Thriving: Get and keep your business on track. Also, check out Karen’s Succeeding in Small Business post on Four tips for putting your business plan to work for your small business.

Project results for new initiatives with limited or no experience: For background, read Four steps to help small business owners evaluate the financial wisdom of new business-building initiatives and Small business management and entrepreneurship: Two key ingredients for sustaining success.

For additional information read Josh Patrick’s article on Every Business Has a Special Number, or Metric. Do You Know Yours? in the NY Times’ “You’re the Boss” blog and A Winning Culture Keeps Score by John Case and Bill Fotsch in the HBR Blog Network.

Here’s how to get started: On a single page, document the (up to) five most important measures, metrics, milestones, and/or numbers that you follow (or plan to track) to gauge whether you are on the right road, moving into the fast lane, or facing an unwanted detour. Review these metrics with your management team, board of advisers, mentors, and/or appropriate professional services providers. Evaluate them regularly to make sure they remain relevant guides for growing your business. Plan to fine tune them over time as your needs and business landscape change and you learn more.

© 2015 Laurie Breitner and Karen Utgoff. All rights reserved.

Regarding Your Company’s Value Proposition: Is Everyone on the Same Page?

By Laurie Breitner

Recently my colleague, Karen Utgoff, wrote a post to help business owners, entrepreneurs, executives, marketers, and product managers better understand the important role value propositions can play in ensuring business success. Whether your business has been around for a year or for decades, evaluating the relevance of and adherence to your value proposition is well worth the effort. What you learn can serve as the basis for unifying and aligning marketing and operational priorities to ensure you stay on track for long-term success even as you respond to immediate demands.

Silhouettes of Business People Meeting with Business SymbolsOnce businesses get off the ground, business plans often get set aside in favor of greasing whatever wheel is squeaking on a day-to-day basis. Perhaps past assumptions about who your customers are and what products/services they need were off or markets have changed, and you find yourselves busily serving other customers with different needs. Or, maybe your value proposition is crystal clear in your mind, but not carried out as you might hope by employees or well supported by your company’s capabilities. Especially when customers keep walking in the door, it’s easy to lose sight of the big picture. Read on for some ideas about how to get started on your VP Assessment.

Get a team together. Involve everyone whom you rely upon to implement your value proposition. Don’t overlook your support areas like HR, customer service, and systems or key external professionals including your suppliers, creative agencies, channel partners, banker, or tax accountant. To keep costs down, you might have a small working group, but get input from all corners and run results by all key stakeholders.

Review your assumptions. Start with the basics; clearly define your customer. Consider demographics (age, gender, and economic status), psychographics (likes, dislikes and values), and geography. Start by listing as many attributes as possible and from that list pick the top few that most accurately describe your customer base. Your company may serve more than one market, but start with one and then repeat this process with others.

Make a list of customers’ needs that your company addresses. Note whether it is an operational, economic or emotional concern. Pay close attention to needs your business meets that the competition doesn’t. These important differentiators can inform your internal and external communication and help you maintain margins.

Here’s an example:

A worker-owned co-operative, Pioneer Valley PhotoVoltaics (PV Squared), sells and services reliable, custom-designed, renewable energy systems for homeowners, businesses and institutions located within about 100 miles of Greenfield, MA. Through experience, they have learned that their customers are seeking solutions for operational, economic and emotional needs. Customers’ economic needs include predictable energy costs, excellent return on investment, and support for the local community in terms of good jobs for local residents. Operational needs include long-term system reliability, efficient system operation, better public health (cleaner air and water), and stronger grid infrastructure. Emotional needs include helping to address serious social and economic problems — reducing atmospheric carbon, energy independence and conflict reduction. Many customers also appreciate that PV Squared is a locally based, worker-owned cooperative.

Because incentives such as tax credits and rebates differ from year to year, interest rates vary, and energy costs fluctuate, relying exclusively on an economic appeal could be risky. Similarly, expecting customers to make an investment solely to improve public health and community job growth is unrealistic. While many appreciate system reliability and promoting increased distributed power generation, most customers seek additional benefits before making a purchase. While there are competitors who meet some of the needs, few — if any — meet all as well as PV Squared does. With this three-pronged approach, PV Squared has the flexibility to respond to changing conditions while staying on their chosen path to sustained, long-term success.

Assess your ability to follow through. Don’t fall into the trap of promising more than you can deliver or assuming everyone in your organization knows your company’s priorities. Here are some questions for self-examination:

  • Can each of your employees articulate your value proposition? Are their actions consistent with it?
  • Would your customers, employees, vendors and suppliers agree?
  • Is fulfillment of the promise represented by your value proposition achievable? Providing the highest quality, most personalized service and lowest price while cultivating a profitable business is a practical impossibility.
  • Do you have the key resources, capabilities, and partnerships you need to fulfill the value proposition? If not, what would it take to build that capability and what evidence would demonstrate that you were successful?
  • How have you tested to ensure that you really are meeting customers’ key needs?
  • Do your customer have other needs that you are not solving?
  • How does your value proposition compare to that of your competitors?

Use the results of your VP Assessment to build a list of improvement opportunities. In a future post, I’ll discuss ways to evaluate the list of possible initiatives and select ones that have the most potential for your business so that you can develop both operational and marketing goals.

© Copyright 2015 Laurie Breitner. All rights reserved.

Row, Row, Row Your Boat: Are You Missing Warning Signs of Rough Water Ahead?

By Laurie Breitner

Winslow Homer [Public domain], via Wikimedia Commons

Rowing Home, Winslow Homer [Public domain], via Wikimedia Commons

Do you know what your employees are doing? While you may think you do — perhaps not. Whether yours is a relatively new entity, or one that’s been cruising smoothly for some time, it’s easy for issues to develop and go unexamined in the daily crush of getting the job done. This slow drift off course can interrupt the smooth flow that results when all your employees pull together.

These real world stories illustrate what can happen.

  • The owner of company that sells through external, commission-based sales staff was very surprised to learn that the 3:00 PM cutoff for same-day orders was being routinely ignored. Fulfillment staff — operating on the assumption that the owner knew and approved — struggled to satisfy orders that arrived later and later. Sales staff had quickly learned that fulfillment workers were staying late to process orders and took full advantage of an ever broadening window to call in their sales. Employee morale had begun to plummet and “sick” days to increase.
  • A tech company owner could see his staff was buried but didn’t have time to examine why. Overtime hours (and resultant costs) grew and employees seemed frazzled. The owner was wearing so many different hats  — executive, senior technician, salesman, and accountant — he didn’t have time to look into what was happening. Profits margins were eroding and he worried that his skilled workers could burn out or leave.

Many business owners recognize when things aren’t right. But because root causes can be hard to find and talking to employees without a solution can be uncomfortable, some find it tempting to simply hope the situation will improve without taking action. Left unattended what starts as a small problem can rapidly become a crisis; in my experience, it’s best to act swiftly. The longer a problem persists, the harder it is to fix.

The first step is to identify issues as early as possible. What might alert you to potential problems?

  • Declining morale is often the earliest and most obvious sign that everyone is not in sync. Symptoms include increased squabbling, turnover, absenteeism and tardiness, complaints about co-workers, cynicism and/or employees acting as if they are “checked out.” One business owner asked me, why couldn’t it be the way it used to be, everyone pulling together? Do you ever wonder that?
  • An unexpected increase in cost of goods sold (CoGS) and/or decrease in overall profitability are signs that inefficiencies may be creeping in. As a business grows and becomes more complex, spending time to design new workflows or clarify roles and responsibilities often takes a back seat to just getting through each day’s work. Whether your organization has grown, taken on new customers, changed computer systems or begun offering new services, involve affected employees in determining necessary adjustments. Otherwise, you may find gaps and/or overlaps, that is, more than one person feels responsible for a new task or no one does it; either can lead to trouble.
  • Unanticipated defections (or reductions in volume of purchases) of existing customers or an overall drop off in sales may result from dissatisfaction with your company. Front line employees are your organization’s ambassadors. If they are discontent, your customers will sense it and may shy away. Similarly, if a new computer system or vendor causes disruptions in the smooth flow of work, the quality of your products or services may suffer sending customers to the competition And, sadly, long-time customers may be uncomfortable raising their concerns with you, the owner, and just disappear.

While these are common signs, each organization is unique; no list of triggers can be exhaustive.

Here’s where your business plan comes in handy. If you have projected what will occur in terms of sales, staffing, and profitability — and documented your assumptions, of course — you can look periodically (at least monthly) for any deviations from what you thought would happen. Work with employees to get to the bottom of unexpected results — whether they are better or worse. Most employees sincerely want to do a good job and will appreciate being involved.

Are you looking for other ideas to help create and maintain a harmonious and efficient organization?

In my next few posts I’ll explore how to get and keep your organization on track, including ways to address inefficiencies and issues related to employee discontent.

© Copyright 2013 Laurie Breitner. All rights reserved.

To Tell or Not to Tell?

By Laurie Breitner

Your healthcare practice is doing well. After some tough beginning years you’ve added partners and pulled away from the pack by learning not only how to survive — but better yet — how to thrive in a changing regulatory climate.

You and your partners feel it’s time to expand geographically. You found a practice in a nearby town that seems to present an opportunity. Despite their large patient base, they aren’t doing as well as they might financially and the senior partners are ready to retire. A deal is struck and a take over date picked — three months hence. You plan to keep the current support staff and remaining clinicians at the current location, and expect to retain the bulk of the patients, reasoning the key to that is staff retention.

Only your partners and a couple senior staff are included in transition planning. No else one in your current operation and no one at all in the “new” practice is informed, which raises the question: when do we let everyone else know?

A couple of your partners argue for immediate and full disclosure. Get everyone together, share the good news — because it really is good news — and get them involved in the transition.  They feel some staff might leave, but overall, there would be better buy-in.

Others are concerned about staff in the acquired practice seeking employment elsewhere over the course of the next three months. Who would want to stay on knowing that they would have to cope with a transition? Better to tell them the day the transition is effective. There might be some initial discontent, but if they were told on Monday morning, they’d have to pull together to serve the patients scheduled to arrive.

There is no consensus. You’re the one who started this practice. All eyes are on you. What do you say?

First take a deep breath. Ask yourself, what are you trying to accomplish?

This is a long-term play and in the long run you want a larger, financially viable practice. You know that while patients are often loyal to their doctors, it’s the staff that keeps the business on track. Schedulers, billing staff, nurses, and technicians support you and your partners. Can you really afford to keep them in the dark? Is that a way to start a new relationship? How would you feel if the roles were reversed?

Is there another way? You have an opportunity to build a good long-term relationship with the new team, which should minimize possible turnover in your current operation and in the one you’re acquiring. A little selling is involved. So, get the group together and tell them the good news. Plan to have one-on-ones with (at a minimum) key staff — ideally everyone — to answer their questions, make new staff feel welcome, and current staff feel appreciated. Hear, and if possible use, their ideas for the transition. Listen to those who mourn the loss of what was; those feelings will pass more quickly if they are acknowledged. Let everyone know how much you respect and appreciate them. Encourage them to be part of the future you envision.

Remind yourself and others that this good thing for both practices. There will be more opportunity for staff advancement, better job security, and additional coverage. Patients will have more choices of locations and practitioners and perhaps even longer office hours — one office could cover early hours and the other late; there would be many possibilities with a bigger practice.

Keep everyone informed of progress or even lack thereof. Email or written updates posted where everyone will see the latest news will suffice between formal meetings. Show your appreciation for all the hard work and acknowledge the extra work that your current and new staff does to make the transition go smoothly. Consider some kind of celebration to start building those critical relationships between people.

Wouldn’t it feel better to start off this new chapter with honest communication as a foundation for future employee-employer relationships? Once past this hurdle, you can turn to the question of how best to inform future patients and others in your new community.

© Copyright 2013 Laurie Breitner. All rights reserved.

What’s your SWOT Spot?

By Laurie Breitner

In real estate the old saw is that the three most important things are location, location, location. In business — especially a small business — it’s focus, focus, focus. My colleague Karen Utgoff and I have been encouraging business owners to think this way for years, each from our own perspective.

Karen is a market strategist and often looks at businesses through that lens. That is, what are the opportunities and threats that could impact a business? As an operations person, I have a different viewpoint. I consider a business’ strengths and weaknesses. Of course each of us does that within the context of the business’ specific mission and target market. When we work together, we joke that I handle the S-W while she deals with the O-T. It’s our effort to bring a little humor to the topic and it usually gets a laugh.SWOT spot

So, expect to read about ways to determine and operate within your organizations’ SWOT spot — the place in your market where you can take advantage opportunities, mitigate threats, utilize your strengths and minimize your weaknesses.

 

© Copyright 2013 Laurie Breitner. All rights reserved.