Awake at 2 o'clock?

Thinking Isn’t Doing

Posted on June 17, 2012 by John F. Dini

My friend Phil owns a mobile imaging company. His employees criss-cross the major cities in South Texas in dozens of trucks outfitted with portable X-Ray and ultrasound machines, responding to calls from nursing homes and home health providers.

In th beginning, like so many of us, Phil was a one-man show. An Army veteran, he was making a good living as a salesman of portable X-Ray machines when Hillarycare, or the threat of it, dried up new equipment sales. Phil bought a used machine from a customer, and began peddling his service from nursing home to nursing home.

For facilities that take care of seniors who are by definition frail, having a procedure come to you is a huge benefit. Aged patients aren’t all that mobile to start with, and a doctor’s order for an X-Ray probably means that there has been a fall or some other injury, complicating the process of getting the patient dressed and transporting him or her to an imaging center. Phil’s business grew quickly, and he soon had 5 trucks on the road.

But Phil was a licensed X-Ray tech himself (a benefit, along with an MBA, from his military service) and still often had to deliver services personally. It was while doing this that he experienced a moment that I’ve always thought defines the difference between an entrepreneur and the rest of the crowd.

One night in the middle of the week, the tech who was responsible for taking after-hours call phoned in sick. Knowing that the chance of getting one of his other employees to volunteer was minimal, Phil decided (as he often did) to just take the calls himself. It was a weeknight, and there was a decent probability that there would be no activity at all.

Of course, that’s not how things worked out. At about 2:00 in the morning (my favorite time!) there was a call for an emergency X-Ray. In this case, it wasn’t from a nursing home, but rather from a small, rural hospital that didn’t staff its imaging department at night. There had been an automobile accident, and they needed X-Rays of a victim before transferring him to a larger facility.

Phil dutifully packed up the truck and drove 35 miles to the hospital. He unloaded the portable X-Ray, and wheeled it in through the front door.

Few places are much quieter than a rural hospital at 3:00 AM. The only sign of life was an elderly fellow pushing the ubiquitous floor polisher around the hallways. Phil asked for and received directions to the emergency room. As he walked away, the maintenance man stopped him.

“What’s that you’ve got there?” he asked. “It that a portable X-Ray machine?” Phil said that it was. “And you take it from place to place when people need X-Rays?” Phil again confirmed that was what he was doing.

“Phew,” the man said, waving his hand dismissively, “I had that idea twenty years ago.”

Phil moved on, suddenly feeling a bit better about having to be out at 3:00 AM delivering services for his own business. After all, if he wasn’t, he might have been polishing floors.

Lot’s of people have good ideas. Only a few believe in them enough to act.

Posted in Entrepreneurship | Tagged business planning, entrepreneurs, entrepreneurship, health care costs, small business advice | 1 Comment

One Response to Thinking Isn’t Doing

Phillip Rathbun says:

June 19, 2012 at 1:44 pm

LOL! You remembered!

Thanks John!

Phil

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Left Behind

Posted on June 10, 2012 by John F. Dini

As business owners, most of us understand that the people who help us get our company to one level may not be the folks who can get it to the next. A great salesman may not be your next sales manager. The sales manager who can supervise and mentor a half-dozen reps may not be able to create your sales process training for a national team. The national sales manager may not be the strategist who can identify and develop horizontal markets.

So it is also with outside professional advisors. When your business is just starting out, you have a clear criteria for retaining a professional. He or she is usually the cheapest one you can find. Then your business begins to grow. A few years later, if you are lucky, you are bringing in millions of dollars of revenue, and employing dozens or scores of people.

At that level, you are far too experienced to seek professional wisdom solely on price. You understand that the folks who charge the least usually have a reason. The ones who charge the most have a reason too. Yet your now-substantial enterprise is still running with the help of the cheapest professional you could find when you were a fraction of this size.

The two ubiquitous consultants for any business are the attorney and the CPA. In my book “11 Things You Absolutely Need to Know About Selling Your Business” I relate the sad stories of estate attorneys, divorce attorneys and litigation attorneys who have been asked to handle business transactions beyond their expertise. Unfortunately, the glut of unemployed lawyers in the market leads any number of them to take all the work they can find, and their license allows that to happen without penalty.

You know, a medical license allows a physician to perform any medical procedure as well, but none would dare practice outside their training. I wonder why lawyers can regularly screw up things for which they weren’t qualified, but their profession does little or nothing about it?

Even more frequently, I see accountants whose client has long ago outgrown their skills and capabilities. These are companies who need to be advised about investment tax credits, research credits, buy vs. lease decsions, and hiring incentives, but whose accountants roll merrily along preparing basic tax returns that leave thousands of dollars in the IRS’ pocket unnecessarily.

There are many competent solo accountants, but I’ve never met one that could handle all the needs of a complex organization. I’m regularly surprised by owners who brag that their $5,000,000 business still pays $700 for a tax return. Do they think that’s buying them top-shelf services?

I knew a retailer who was rapidly expanding. His solo and very inexpensive home-based CPA got pregnant. She filed an extension for his tax return, then another, then a third. Finally she filed a special “It’s my fault, not the taxpayers” professional extension. (I’d never heard of that one.) All that time he kept right on building new stores.

By the time she finished the tax returns, it was a year after he had closed his books. Most of his expansion had been done under with the wrong kind of contracts, with the wrong leases, and with a misunderstanding of how depreciation worked. Too late, he found out that he owed the IRS hundreds of thousands of dollars from the previous year just as he opened his biggest store ever. Negotiating a tax payment plan consumed all of his working capital, and the new operation had to start in an untested market without any advertising budget.

That store failed. His CPA had never discussed why he should isolate his risk by separating the new venture from his other, profitable operations. He lost everything.

That’s one story of a business owner paying the price for using an advisor who couldn’t keep up with his business. I have another, and another, and more after that.

Right sizing your outside services should be instinctive. You wouldn’t have a 30 gallon aluminum garbage can for a manufacturing plant. When the garbage starts to pile up, you get a dumpster. It’s just a cost of doing business. Why would you stick with professionals whom you’ve long ago outgrown?

Picture Credit

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Is It All About the Money?

Posted on June 3, 2012 by John F. Dini

If you have more than ten employees, and an outside observer (like me) asks them confidentially to say in one word what their boss cares about the most, what do you think they will answer?

We’d like to think that answer will be “quality.” Or perhaps you might prefer “service,” or “customers,” or “employees” or “vision” or “culture.”

I often get the opportunity to ask that question indirectly because I coach the owner of a company, but in many cases may also be teaching a management class or leading a key executive group with his or her employees. Do you know what they think the answer is? “Money.”

I know very few business owners whose first concern is money. They aren’t fixated on it, but it just seems to always be the topic of conversations with employees. Take this conversation between an owner and a manager last week (slightly disguised for anonymity).

Q: “Why didn’t you get the compliance reports done for the last two operating periods?”

A: “I was covering shifts for an employee who called in sick.”

Q: “Why didn’t you bring in an on-call person?”

A: “No one wanted to do it for $10 an hour.”

Q:” Why didn’t you offer more?”

A: “Because that job pays $10 an hour.”

Q: “But when you are doing it, I’m paying you $24 an hour, and the compliance work isn’t getting done. Wouldn’t offering $12 or even $15 an hour to someone have made more sense?”

A: ” I thought you said that taking care of the customer came before anything else.”

It’s two different conversations. The employee is pleading that his priority is service. The boss isn’t disagreeing, but is pointing out that the delivery method chosen wasn’t cost effective. The employee only hears “money,” which in his mind is mutually exclusive with service.

The perceived conflict exists in most businesses. For the owner, taking care of the customer is of primary importance. He also realizes that he can’t take care of customers (or employees for that matter) for very long if he is losing money on each transaction.

It happens at every level. A master’s degreed employee recently told me “The boss says he can’t afford to have me wasting non-billable hours on side projects. I get paid $60 an hour. When he bills for me, it is at $150 an hour. I could be unbilled for two days every week and he’d still be fine. He just wants to make as much as he can.”

Actually, after overhead and benefits, if the employees were unbilled for even one day a week the company would quickly be out of business. The effort of explaining the cost dynamics of the business, employee by employee, month after month, is too exhausting for most employers.

So we resort to shorthand, telling them just what they need to know. “If we don’t get revenues up, there will be no raises.” “We have to cut expenses, we aren’t making a decent profit.” “We have to get higher margins.” We have to work smarter, because we can’t afford to hire more people.”

The employees hear you, and think “All he cares about is the money.”

I’m not Pollyanna. I don’t believe that the employees would understand a whole lot better if we had weekly meetings where we only talked about quality and service, and never mentioned profit. On the other hand, the companies who say that they just focus on doing the job right and let profits take care of themselves are frequently, although not always, short-lived.

This is more of a reminder. We need to talk to employees about costs and profits, but we also need to talk about why and how those fit with the rest of our vision for the business.

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An Army of One

Posted on May 27, 2012 by John F. Dini

Hollywood has done an excellent job of defining what it takes to be an action hero. George Smiley, the grey civil servant of John Le Carre’s spy novels, is a protagonist, but not a hero. Heroes are cast in a distinct behavioral pattern. Bruce Willis, Mel Gibson, and Harrison Ford characters represent the archetype I’m describing.

We use the DISC behavioral profiles with all of our clients. Perhaps we shouldn’t be surprised that the factors that make a Hollywood hero also appear in many of the business owners we work with. The question is; do Hollywood action heroes make good entrepreneurs? Consider the action hero behavioral profile.

High D. The high Dominant personality solves challenges by overcoming them, as opposed to circumnavigation. A high-D entrepreneur takes things head on, and seeks immediate results. Action is usually more important than direction. Think about Harrison Ford’s Indiana Jones. When told that the Ark of the Covenant is on a truck to Cairo, he grabs a horse. Is that the best plan for catching a truck? Probably not, but it is the first action available.

High I. The high Influencer uses language and verbal communication to influence those around him. John McClane, the cop from Die Hard, never shuts up. He rails at the cops, at the villain, at himself, and even maintains a running commentary while he is fighting for his life with the bad guys.

Low S. The Steadiness measurement indicates a tendency towards planning, teamwork and supportiveness. Martin Riggs, Mel Gibson’s character in Lethal Weapon, is a typical loner hero. While he has personal loyalty to his partner, that loyalty isn’t sufficient to keep him from getting them both into trouble regularly, something he does without consulting Murtaugh, and often despite his partner’s protestations.

Low C. The Compliance factor relates to how well you follow the rules. The low C hates the rules; they merely handcuff his ability to act. There are hundreds of examples. “You can take my badge, you can take my gun (I have another- which is of course against the rules), you can take me off the case, you can revoke my 00 license to kill, but you can’t stop me from doing what I think I need to do.”

The low-C also refuses to consider risk in his decision process. Consider Han Solo’s response to C3PO’s calculation of the probability of surviving a flight through an asteroid field. “Never tell me the odds.”

Have I described any entrepreneurs that you know? Of course I have. It takes action, focus, fast talking and usually some risky decisions to start a small business. The problem arises when the action hero entrepreneur becomes successful. Taking your organization beyond the “Army of One” phase requires a different set of behaviors. Those who don’t adapt find themselves stuck at their maximum personal capacity, and can’t bring their organizations to the next level.

James Bond will never get M’s job. Han Solo may marry Princess Leia, but he will never sit next to her in planning meetings. At last count, Martin Riggs and John McClane have been stuck at the same detective pay grade for eleven and nineteen years respectively.

In Jim Collin’s Good to Great (in my opinion one of the three best business books ever written), he talks about the level 5 leader. The level 5 goes beyond the cult of personality, leading with a steady hand and singular focus on long term improvement.

That may work in large organizations, but it’s far more difficult in an owner-run small business. When every employee sees the owner each day, he or she has to exhibit substantial charisma and verbal influence. If you want to grow to an organization where the employees perform without seeing you every day, however, you will need to be more than an action hero.

Posted in Entrepreneurship, Leadership | Tagged business ownership, entrepreneurship, leadership, small business advice | 2 Comments

2 Responses to An Army of One

Victor Perlbachs says:

May 29, 2012 at 6:57 am

Good piece. To be successful in the long run, the super hero needs to trust someone to do the day to day planning and keep the business moving forward, while he or she goes on to the next “mission impossible”.

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Paul says:

May 30, 2012 at 6:10 am

Having worked in large Multi Nationals in Senior Exec roles through to Pre IPO organisations and now my own start up in the Executive Search Space, I think this article is right to the point, when are putting out grass fires all day it is hard to get time out too look out over the top of the forest, but without this time and time for planning when your baby is going to become a teenager then you will always be a Super Hero which is not necessarily bad if that is what is important to you and you make that your end game.

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Proactive, Preventative Sales

Posted on May 20, 2012 by John F. Dini

Sometimes a topic rises to the top of my long list of candidates because it seems to come up repeatedly. It may be a coincidence (probably is), but a single business ownership issue is raised in multiple coaching sessions or Board meetings in a period of days or weeks.

I work on the theory that for every business owner I know who is dealing with an issue, there are three more in my circle who haven’t discussed it, and 300,000 out in the world who are dealing with it as well. So it becomes a topic.

I have several members who are wrestling with personnel changes in a large customer. They are all vendors to businesses that are many times larger than themselves. In a few cases the customer is an 800 pound gorilla- the single largest account in their portfolio. In others it is merely a good account, not a game changer, but certainly not one you’d want to lose.

People change jobs. The myriad of reasons that they do so aren’t important here, let’s just accept that as a fact of life. Unless you are dealing directly owner-to-owner (and sometimes even then), the employee of the customer with whom you’ve carefully cultivated a relationship will eventually move on.

Sometimes that is positive. One client of mine admits that the bulk of his new business is generated by buyers who have moved to another employer, and come to his company as soon as they are established elsewhere. That’s great, but he also admits that most customer attrition is due to other employees who come into his customer’s organization and reach out to their old vendors. It’s something close to a zero-sum game.

Another client has a product that is frequently enhanced with new features. They work diligently to tell customers about the many things their product can do, and how each improvement fits in with the whole system. Yet they regularly lose customers who move to another product, citing their need for a feature that his product already provides! The information disconnect almost always traces to a change in personnel. The feature or benefit wasn’t needed at the moment of knowledge transfer, and so was lost.

The most obvious preventative for this situation is to build knowledge depth in the customer. When I sold auto parts, I frequently increased my business by having a parts manager move on. He went to a new dealer and remained a customer, but I had made sure that the assistant manager who took his place knew me well, and was happy to do business with me. Paying attention to the second in command was one of my most effective business development techniques.

In a lot of cases, however, the second leaves and you don’t know about it, or the lead person you work with says they will do the training themselves, or they feel they know the product and it isn’t necessary to have someone else up to speed. Then that lead person moves on, and you are left hoping that his or her replacement learns fast.

Every company needs a regular process for stepping into a customer knowledge gap. It starts with regular checks to make certain your contact is in place, and maintaining a record of who your contact’s boss is. When a contact moves on, you should be offering training to a replacement, enhanced support, or even a fill-in temporary if the customer warrants it.

The alternative is to let the customer work through the change on his own. That just puts you on the list of old relationships to be reviewed.

By the way, I’m making one of my regular visits with Jim Blasingame on his Small Business Advocate radio show tomorrow, 7:00 AM EDT. Listen in!

Posted in Marketing and Sales | Tagged business ownership, sales, sales management | 1 Comment

One Response to Proactive, Preventative Sales

Mike Pattillo says:

November 5, 2013 at 11:42 am

Some excellent points. I can see where I was short-sighted in thinking I was locked into a company, when it was really a personal relationship I had — and when that person left, I was starting all over. Thanks.

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