Archives for July 2022

Cultural Contribution

By Gary Hazelberg - Grandy & Associates

What type of company are you?  Are most of your staff very direct, all about getting things done; or very talkative, meetings go on forever, but nothing ever seems to get decided; or are you perfectionists that get stuck in the details. 

The best companies have a mix of communication styles.  In addition to having a mix of styles, each person should feel comfortable expressing their ideas and opinions. This seems obvious, but in many companies, there is a majority of the team that are of one or two types of communication styles and the minority styles feel uncomfortable expressing their thoughts and ideas.

For example; If the majority of the team are perfectionists and interested in making sure things are correct but they can get analysis paralysis, how does the person who has the visionary mindset fit in?  When the visionary talks about an idea about the future, without having all the details worked out, they very likely might get looks of disdain or what planet did that come from? 

What’s wrong with being all of one communication style?   There is less friction at meeting, everyone talks the same language and life just seems more pleasant. The problem is nothing is getting challenged and the company has a difficult time growing.  Companies that are all the same communication style will wither and die, because no new ideas are brought up.  Opportunities will be missed

We can identify the communication style of everyone on your staff. When we do this, we can identify in a very logical way what kind of company are we.  What kind of people are in your company, every communication style is valuable but you must understand what kind of communication styles make up your company.  We recommend the DISC behavioral assessment tool. 

The DISC system divides the personality styles into four quadrants.

  • D = Dominant.
    • People with D personalities tend to be confident and are focused on getting things done even if someone’s feeling might get hurt.
  • I = Influencer
    • People with I personalities tend to be optimistic, very talkative and their emphasis is on relationships and influencing or persuading others. They tend to be less focused on the details.
  • S = Steadiness
    • People with S personalities tend to emphasis cooperation, sincerity, loyalty and dependability. They tend to hide their emotions and can be slow to change
  • C = Compliant
    • People with C personalities tend to emphasis quality, accuracy, expertise and competency. These are the perfectionists.  They can get lost in the details. 

 

These communication styles are identified through a simple test that can be given to each current employee and should also be used during the hiring process. 

Once you identify the communication styles of your current staff, especially owners and managers, you can see what kind of communication style is most common and least common in your company.

Once you identify this, you need to incorporate this in your hiring plan, to try to come as balanced as you can.  The hiring process is difficult, it is hard to get to understand someone in a brief series of interviews.  Often times managers and owners wonder, who is this person that showed up Monday morning, they are sure a lot different than what I interviewed. 

A pre-hire behavioral test can help to get to know the potential employee and see how they will provide value to your company.  You will also learn how to communicate with this person.  If they are a

  • D type personality they will like communications very direct, to the point with no small talk
  • I type personality will appreciate small talk before we talk about business
  • S type personality will focus on the process, what is step 1, 2 and 3
  • C type personality will want to hear and see the details usually in writing.

As a manager or owner this information is extremely valuable, so you can change your communication style so the person you are speaking with will have a better chance of understanding the point you are trying to make.

So, get to know your current staff, find out what kind of communication style is most common in your company and then go out and try to find people that will complete the picture and give you a more well-rounded company.  Make sure everyone feels comfortable stating their opinion by encouraging everyone to contribute.  It will pay off in a company that respectfully challenges the status quo and out performs the competition.

If you would like to learn more about this process, please contact us at:   https://www.grandyassociates.com/contact or give us a call to discuss how we can help you.

Trades Companies Don’t Die Easily – PART 2 OF 2

By Tom Grandy, Founder

Last month we talked about how many trades companies are in the process of going out of business…and don’t even know it.  Typically, the process takes 1-4 years during which there are usually three distinct steps or stages.  Step 1 and Step 2 were discussed last month.  If you missed last month’s article, click Part 1 and review it prior to moving forward.  This month we are going to discuss Step 3, which is often the final step prior to closing the doors.

Step 3

The company is now four or five years old. Gross sales have contin­ued to climb. Most of the low-profit, new-home construction work has been phased out, with residential and commercial sales climb­ing. The company has gained an outstanding reputation in town for doing quality work, and support staff and a couple additional techs have been added to the payroll. The trucks are looking a bit ragged but as soon as the company makes a little more money, it will be able to afford the additional loan payments to at least replace the service trucks. The owner has really missed having dinner with the family, but things will smooth out soon. Before long, the owner hopes to be able to attend one of Billy’s ball games and/or take the family on a real vacation!

However, the current reality is that cash flow is really tight. The company has been placed on COD (again) and redepositing the money it borrowed from the family savings account — well, it just hasn’t happened yet. The owner’s wife is also getting nervous. She has been working in the office the past couple of years and she keeps pestering her husband about her inability to pay the bills at home, as well as the office.

Sales are up but pressures are building. Cash flow is as tight as it has ever been and profits seem to be on a downward spiral. The owner’s thinking is similar to the past several years: “If we can just hold on a bit longer, just a little bit longer, I know we will get over the hump and everything will be lovely on the other side.”

Solution to Step 3

The company appears to be doing well. It has moved into a new building and several more techs have been added to the payroll. New trucks (purchased through a variety of loans from different banks) have replaced many of the old ones and the company’s reputation in town is building. The company just needs more cash to buy time so the current bump in the road can be conquered and then everything will be wonderful on the other side.

At this point, the line of credit has been maxed out, and using the suppliers as the company’s bank has ceased now that the final supplier in the area has placed the company on COD. All unnec­essary extra inventory has been sold, as well as some of the older equipment and vehicles, just to generate a bit more cash. The reality however, is that it’s still not enough to get the company through the current cash crunch. Then, the lightbulb goes off. The house! That’s it. The owner will secure that second or third mortgage on the house. That will generate the needed cash to get over the hump and on to the greener pastures that have been dreamed of for the past several years. It will be a tough sell to the owner’s wife but she will understand, if she doesn’t divorce the owner first.

With negotiations completed, the second mortgage on the house is secured. The cash goes back into the company and everything really is lovely…for a while. Then 6, 12 or perhaps 18 months later, the company owner finds himself or herself right back in the same position he/she was in during Steps 1 and 2. However, this time there is one very subtle difference. The need for cash is there as in the past but at this point there is no place to get it from. The banks, suppliers, friends, and family have all been tapped out.

Then the light bulb, glowing like the noonday sun comes on, allowing the real question to be honestly asked: “What is the real root problem that has not been addressed in the past?”

Two things that put most companies out of business

Typically, there are two things that put most trades companies out of business. The Number One cause of business failure within the trades industry is improper labor pricing. Translated, most com­pany owners are unaware of what they really need to be charging per hour in order to cover their real costs of doing business (from a cash flow perspective) while generating a reasonable profit. As mentioned earlier, most new companies set their initial rates slightly below what the rest of the local owners are charging with little regard for what their new start-up company really needs to be charging to make a reasonable profit. As cash flow gets tighter and tighter the tendency is to bump their rates a bit, with fear and trembling again, with little regard as to what the rates really need to be to generate the profit they desire.

The Second cause within the industry is cash flow. A company can be priced absolutely perfectly and still go out of business because of cash flow issues. It takes a lot of cash to run a business. It takes cash to fund inventory and receivables. It takes cash to cover the general overhead of the business, and of course, it takes cash to make payroll each week. Lastly, it takes significant amounts of cash to fund the growth of the company. Most trades companies start out with little to no cash and are therefore at a serious disadvantage right from the very beginning.

According to the United States government, 25% of all start-up companies fail the first year, 35% by the second year, 60% by the fifth year, and a whopping 70% by the 10th year! However, after having spent most of my life working with contractors within the trades industry, I suspect the failure rate within the trades industry is a lot higher than those general numbers provided by the Bureau of Labor Statistics.

If any of the points discussed in this two-part article sound familiar, take them as a wakeup call!  Since most companies fail because of improper labor rate pricing, it might be time to take a day off to review the company’s labor rates from a cash flow standpoint.

Have you ever been part of the process of closing out a friend’s or family members estate?  It’s a tough process and I have been through it three times.  There are dozens of details that the average person never thinks to ask or record until it’s too late. Things like:  Do they have a will and where is it?  What investments do they have and where are they located?  Does the person have a safe deposit box and if so, which bank and where is the key?  How about a list of loans and/or automatic payments from a checking account?  Dozens and dozens of these kinds of questions are all found in the What’s Where When You’re Gone? manual.  This month the manual (which also includes a PDF version if you prefer to enter data that way) is only $24.00 this month. Order today

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