Archives for March 2019

Dave Ramsey’s Entreleadership: Conquering the Fear of Failure

*Published with permission in the April, 2015 Newsletter*

Running a business can be scary. You put your heart and soul into your company and can’t imagine doing anything else. Then, you realize that no matter how successful you are, you might be just a few bad decisions away from losing your dream and disappointing your team.
Luckily, it doesn’t have to be this way. In my EntreLeadership Master Series I teach people to face their fears. I talk about how, years ago, fear paralyzed my decision-making abilities until I came up with a system. In fact, one of the core values of my company today is that decisions are never made based on fear.

So, how can you conquer your fear of failing?

1. Face up to it
You’re going to mess up at some point, and that’s okay. Own up to it, and realize you’re likely to stumble many times before you achieve success. Henry Ford, Bill Gates and Thomas Edison all screwed up numerous times before they hit it big. As Eleanor Roosevelt said, “You gain strength, courage and confidence by every experience in which you really stop to look fear in the face.”

2. What’s the worst that can happen?
Always take into account a worst-case scenario when exploring new projects or options for your company. Ask yourself, Will we be able to survive if this new idea falls apart? When the answer is yes, the decision is no longer so frightening. Once you realize you’re not going to die from making a decision — even if it turns out to be the wrong decision — it releases you to make the call.

3. Talk it out
Remember how it was always better to have a friend by your side when you faced something scary as a kid? The same holds true for adults.
Find a business mentor who has been through tough times. Discuss your biggest fears with them. Once those concerns are out in the open, and you’ve gained insight through another person’s point of view, you just might find that they’re more manageable.

4. Always have a contingency plan
Having several options is a great fear killer. For example, use several vendors so you aren’t relying on just one. That way, if something goes wrong, you already have a back-up plan. Options give you power, and power lessens fear.

Now, understand this. There will always be some fear associated with your endeavour. Whether it’s being scared of losing customers, revenue or even being sued, these are all legitimate concerns. But it’s how you handle them that can mean the difference between success and failure.

It’s wise to recognize that some fears may be well founded, and you should not ignore the potential consequences of the decisions you make. But never, ever allow the spirit of fear to drive you!

Managing Your Service Department:Newton’s 3rd Law Applies to Techs and Business Owners

It’s time to think way back to your eighth-grade science class. Do you remember studying Newton’s Laws? Do you remember what Newton’s 3rd Law says? If not, let me refresh your memory. His third law says, “For every action there is an equal and opposite reaction.” This law is exemplified by what happens if we step off a boat onto the bank of a lake. As we move in the direction of the shore, the boat tends to move in the opposite direction (leaving us face down in the water, if we aren’t careful!). How does that apply to technicians or small business owners? Actually there are some direct parallels.

Have you ever gotten angry with a friend, family member, or even a customer? What is the “other” person’s immediate reaction? They generally get defensive and/or become angry in return. That is Newton’s 3rd law in action. Remember, “For every action there is an equal and opposite reaction.” It works every time! Remember, to the customer you are the company. Your negative (as well as positive) reactions to the customer are forming a direct reflection of the customer’s image of who your company is. When your wife, or child, does something that irritates you, have a choice. You can instantly react in a negative way, therefore further weakening the relationship, or you can stop, take a deep breath, and react calmly. It makes a huge difference in the relationship and will surely affect the customers understanding of who your company is as well.

When it comes to the business side of your business, the principle is the same. Have any of your costs of doing business changed over the past 6-12 months? Maybe your insurance went up, the price of gas changed, you added a cell phone, or perhaps hired an addition technician or office worker. Like Newton’s law, any change in your cost of doing business is going to necessitate a change in your pricing. If you decide to pay yourself an extra $10,000 per year somebody has to pay for that. That somebody would be your customer! The bottom line is the customer pays for everything. The principle is again clear. Any change in the cost of doing business will necessitate a change in your pricing!

Keep Your Customers Paid Up

Receivables are a major problem for nearly every contractor. It’s not unusual for contractors doing gross sales in the $1 million range to have anywhere from $100,000 to $200,000 outstanding at any point in time. Of course it depends on the mix of business. If the company is heavy commercial the $200,000 range could easily be exceeded since payment, by contract agreement, is often 30, 60 or 90 days. If the company is primarily residential replacement and service the number should be well under $100,000 for a $1 million business.

When times are busy the paperwork often gets left undone. We’ve all thought the same thing: “Yes, I know I should collect on the job, or at least bill immediately after the completion of the work. But I’m busy! We are behind schedule, the parts are late, and I have three jobs to quote this evening. I will invoice my customers when things slow down a bit.”

Nothing wrong with that logic except for one minor detail: things never slow down! So when do we bill? Typically when we are out of money and payroll is coming up and/or it’s time to pay our distributor!

Keep your customers current and paid up. Why? So they have the freedom to continue to buy from you. Let me explain with an example. Let’s assume I am a handyman around the house, and I like to do small projects around my house on weekends. Each weekend I purchase my materials from the same local hardware store. A typical weekly purchase is $30 to $50 worth of materials, and I always pay with cash or credit card.

Now there is a three-day holiday weekend coming up. That means I can tackle that really big job I been putting off for lack of time. In order to get a jump start, I stop by my local hardware store on Friday evening on my way home from work. The bill comes to $200; however there is a small problem. I don’t have $200 cash on me and my do-small-jobs-around-the-house credit card is at the house. However that is not a major problem. I’ve been buying from this store for a number of years. I know the owner and most of the employees. Bottom line, they allow me to charge the $200 worth of materials.

A week or so later the bill comes and I put it with the other bills to pay later. My long weekend project drags on for a few more weekends; meanwhile I have not paid my hardware bill. Maybe I was low on funds or perhaps I simply just never got around to paying it. Now I need a hammer. What are the odds of me going back to my same hardware store to buy it? The odds are slim since I owe them $200. My fear is that if I go to that store the clerk will jump up and holler out “Mr. Grandy, Mr. Grandy, you owe us $200!”

The reality is that the clerk probably has no idea who owes them money and who doesn’t, but I don’t want or risk it. Instead, I went to another hardware store to buy the hammer I needed. When I went to the other store they might have a better selection, lower prices and/or better informed employees. Bottom line, I ended up liking the new store better than the old one!

Now think about what just happened. I stopped buying from the original hardware store for one reason only – I owed them money and did not want to risk being embarrassed over my unpaid bill. Not being paid up just cost the old hardware store a customer. The best thing you can do for your customer, and yourself, is to keep your customers current and keep them paid up!

Before we wrap this up let me share one other tidbit with you. Be sure your business is customer friendly. In other words, understand exactly when customers are most likely to want and/or need you. I’ll give you another example. My wife has been going to a natural food store downtown to buy honey. The honey was $17 a jar, but my wife considered it worth it. A few weeks ago, we got 12 inches of snow, which is a LOT of snow for our area. The day after the storm, the main roads were clear so my wife and I drove down town to buy some overpriced honey. The store was closed, presumably because of the weather. The next day we called, but were greeted with an answering machine telling us to leave a message. Finally, on the third day, my wife was out of honey and needed some to make granola. Since our downtown store was still closed, she went to the organic section of the local grocery store and found organic honey for $12 a jar. She got home, sampled the honey, and liked it. The grocery store’s organic honey just replaced the $17 a jar honey we had been buying downtown. Get the point? The store where she wanted to buy the honey was closed and she was forced to purchase elsewhere and guess what happened? Just like our hardware store example, the end result was a lost customer.

Dave Ramsey’s Entreleadership: Enhance Communication with Your Team

*Published with permission in the March, 2015 newsletter*

“What we’ve got here is a failure to communicate.”

You might remember this quote from the movie Cool Hand Luke. While it’s one of the most popular and often-quoted lines in movie history — and it might even make you smile — there’s nothing funny about a lack of communication within your organization. As a leader, it is your responsibility to intentionally and deliberately create a team culture where there is consistent communication at all times.

Communication is the grease that keeps the gears of your company moving, and without it team members feel detached and insecure. When they feel like they’re being left out, they can start to feel like they aren’t involved in a worthwhile venture. Just as bad, they begin to question their value to the company.

With that in mind, here are five practical steps you can take to create a culture of good communication within your business:

• Avoid “mushroom communication” – People want to know what is going on and why things are happening, even when situations are going badly. Still, many leaders use what I call mushroom communication. This means they leave their team in the dark, and feed them manure. Bad idea!

• Overcommunicate – When it doubt, share more!

• Establish predetermined goals – Make sure your team understands goals and expectations laid out by leadership. Accountability is a great motivator, so put things in writing and require regular reports of their progress. Remember, a culture of uncertainty creates fear. And fear develops quickly when good communication is missing.

• Foster unity – A team isn’t a team unless it has shared goals and visions. Create a mission statement, and have everyone memorize it. Personal mission statements help ensure what you’re doing is consistent with your life and career goals.

• Practice thoughtfulness – Avoid knee-jerk reactions, and never try to communicate with your team when you’re angry or upset. Also, communicate in ways that will ensure people are educated and enlightened, not harmed or embarrassed. Remember the Golden Rule? Handle issues the way you’d want your own issues addressed. Otherwise, people will lose respect for you and question your integrity.

The greatest problem in communication is the illusion that it has been accomplished. Communication should be attempted early, often and should be an everyday requirement on all levels in the workplace!

Team Solutions: Achieving Change … Gently

Changing habits, behaviors and patterns is not quick or easy. Nine out of 10 men shave their faces in the same patterns every day, and most of them are not even aware of it. Even small habits shape patterns that create certain outcomes. Change is often a challenging process. Gentle change also is challenging; however, gentle change is also different.

Gentle change provides people with clarity to understand the process, and trust in the people with whom you are working. Gentle change is a clearly defined guided process that begins with awareness of existing patterns with the individual and the organization. To change a pattern is difficult for most people. That is why people must feel included in the process of change. This helps people contribute to the greater purpose of the group to work together. People must be included in the process of growth through enrichment because people make the system perform.

Gentle change is designed to enrich the organizational life of a corporate culture. We accomplish this through leadership enrichment and team learning. We evaluate and clarify core values. This forward movement provides positive energy to remove obstacles that help to create organizational alignment.

The focus needs to be on healthy, organic growth, and be based on a full understanding of people and systems. Both are interconnected, dynamic environments. Safe pathways need to be created where people can connect deeply with others to cultivate synergy that stimulates forward movement. People and processes must have synergy to create organizational alignment. We focus on the intangibles of team building by developing the people before we focus on the tangibles of best practices.

Organic relational growth processes result in incremental organizational growth that result in macro changes. Change most simply defined is the progressive realization of a new state of being. Change will manifest itself in different behaviors, habits and patterns. New patterns of behavior focused on desired outcomes produce synergy of effort. This synergy is associated with performance metrics and output.

People also can restrict forward movement and growth that can limit the potential of a group. Individual enrichment and leadership development removes invisible barriers that have blocked people from the next level of growth. People need to understand their core values and motivations which are critical in understanding the process of change. Core values are solidified by habits and patterns that are repeated over a long period of time; when they are practiced repeatedly, it creates a corporate culture. Therefore, cultural diagnosis must be implemented before a change in process can be effectively initiated. We examine individual’s core values as well as corporate culture, and evaluate the disparity or congruency of habits and patterns and compare them to core values. The disparity often reveals obstacles. Gentle change is a process that clarifies core values and then removes obstacles that lead to healthy team performance and organizational alignment.

Gentle change is the recognition that change is occurring invisibly all the time. The weather changes every day. The atmospheric pressure, humidity and temperature change many times per day. Our bodies change every minute. The evening news is different than the morning news. Change is a process that is occurring all the time. Change is natural, normal and is most often beneficial. All growth requires change. Most people are in favor of growth and progress but resist change. This is normal and predictable and most often is caused by lack of understanding, lack of trust or hidden fears of not feeling safe in the process of change.

So why is change misunderstood, resisted or avoided? Change within people requires recalibration of thoughts, habits, and patterns of life and work. Most people are in favor of progress but not always in favor of change. Why is this true? Change is difficult because there often is not clarity of what benefits change will provide. Change is challenging because change is resisted on multiple levels that create obstacles that prevent change. Change within groups of people requires new connections, a common language and a sense of belonging and meaning. Gentle change occurs in environments that have clear processes, deep trust, functional relationships and open communication. Most change does not occur instantly. Change is a process that occurs over time. Change is not an event because change requires the change of mindsets, habits and attitudes. Change is most difficult among groups of people. The larger the size of the group the slower the rate that changes will occur.

If change is an essential component of growth why is change resisted? All growth requires change yet people resist it. At times, people fear change, avoid it and sometimes fight it. Change redefines people’s habits and routines and often causes a different expectation for a new pattern of behavior. Changing patterns are often seen as an inconvenience. People do not want to be inconvenienced because time and energy are such precious commodities.

On a much deeper level, people interpret change as rejection and interpret change personally. People have difficulty in separating themselves from change that is needed. The emotional reaction can interpret change as personal condemnation. Human behavior is predictable and often takes the path of least resistance to maintain homeostasis. This is why sudden change is often met with a shock reaction at a more primal level. This reaction is much more visceral than intellectual and is much deeper on an emotional level than has been previously understood. Radical change or sudden change can cause fear. Gentle change allows people to have agency within the process of growth that is needed for progress to occur. Gentle change is a process that deals with the primal forces as well as the best practices of the change process.

Change is a fact of life, to live be changed. The question must be asked: How will you react? The question is not whether change will occur: it already has and even now is occurring as you are reading this sentence. The deeper issue is how you will respond to change?

What Are You Focused On?

A number of years ago, a fellow trainer and close friend asked me a thought-provoking question. He asked me how one of our many products was selling. My immediate reaction was to say sales were pretty good, but before the words came out of my mouth, I spent a few seconds in thought. When I finally did answer, my response was “Actually, sales aren’t very good on that product.”

Then he made a comment that threw me. He said, “Tom, you’re not focusing on selling that product, are you?” I was a bit taken back with his comment until I realized he was right. I wasn’t focusing on selling that product. His next comment was the eye-opener. He said “Tom, you sell what you focus on!”

That comment, “You sell what you focus on,” has rung in my ears ever since. The first 25 years I was in business I “focused” on presenting one-day seminars and our three-day Basic Business Boot Camps (now called Planning for Profit). The results? I was presenting several times a month, which was necessary to cover overhead and generate a reasonable profit.

As most of you know, two years ago Bill Kinnard purchased the business and the offices were moved to Green Bay, WI. When that happened, a huge percentage of my monthly fixed overhead disappeared. Now I am still working within the business, and plan to as long as I am able. However, with my overhead greatly reduced, the question I then found myself asking: “Ok Tom, your overhead is greatly reduced so what do you want to do for your remaining years in the business?”

I love teaching, and will continue to present seminars and the two-day Planning for Profit programs, but my true passion has been working with contractors one-on-one through our two-day, on-site Company Overview program. With the business sold, and my fixed overhead greatly reduced, my mindset changed and I began to focus on doing two-day Company Overviews. I started thinking of new ways to market the service. Ideas began to literally pop into my mind. When I wrote articles, the new twist was Company Overviews. As I presented at national conferences, I found myself thinking, “What needs to change about my presentation, and feedback sheets, to incorporate the overviews?” I started talking to distributors about companies that might need a bit of one-on-one help, and I am now regularly presenting free webinars for a number of national manufacturers and trade associations with the focus of creating some one-on-one work .

Bottom line, my focus changed and, as a result, 70-75% of my time is now spent doing one-on-one Company Overviews!

The question I want to pose to you is the same one that was asked of me. “What are you focused on?” That focus can take several forms. You might want to focus on one or two specific offerings like service and/or selling maintenance agreements. The focus might be internal. “How can we improve efficiency, reduce non-billable time, or do a better job of marketing?”

One of the things I have learned over the past 27 years is that there is a limit in terms of how many areas you can focus on. Trying to focus on too many areas has predictable results – you end up not doing a really great job on any area! The most profitable companies I have worked with over the years nearly always had one thing in common. They focused on doing one thing, and doing it better than anyone else. Some companies were totally service-oriented while others were nearly 100% commercial. I even worked with one company that was 100% new construction and, as many of you know, there is typically very little money to be made in the area of residential new construction. But, guess what? That company focused all their efforts on becoming very efficient at what they did from crew training to their bulk purchasing of materials. The end result was again predictable – they generated a substantial profit.

Our Labor Pricing software has a “what if” section. Take a look at the below report. Notice the results of the “what if” if the company focused on increasing their sales by 3% while decreasing fixed overhead costs by 2%. Those are NOT huge changes but notice the difference in bottom line profitability if those two goals were met. Wow……bottom line profit went from $69,260 (15%) to $84,482 (17.8%).

Samplecompanyreport

One last example of what changing your focus can do for your company. A little over a year ago I performed a two-day Company Overview for Assured Energy. The results of the computer modeling of the company, department-by-department, clearly showed that if they would shift their focus from doing several things to focusing on a couple really profitable opportunities, their profitability would substantially increase. I received the following email last week.

Tom,
I just wanted to drop a quick email and give you an update on our progress since you were out with us in the fall of 2013. When you came out and helped us filter through the information we saw where our highest profit margins really were. I decided to pursue those programs full force and examine all programs and opportunities with the same metrics.

2013- We grossed about $650,000 and lost about $70,000 when it was all done.
2014 – We grossed $1,350,000, expanded to a second location, expanded from 2 trucks to 6 trucks, and they are all paid for, and we made $235,000 at year’s end. Still don’t have buckets of money but I am not drowning in debt either!

Thanks again for the services you provide; it certainly helped us out in a big way.
Cal Pickup
Assured Energy Solutions

Notice his comment, they “decided to pursue…” which is another way of saying they began to focus on a couple of potentially really profitable areas. Wow, you can see the net result.

I want to challenge you to spend a bit of quality time alone, or with your management team, and evaluate what’s making money and what is not. Once you and/or your team fully understand which areas are the most profitable then “focus” on those areas. If you need some help evaluating your company, give us a call at 800-432-7963.