Defining Whom You Want to Hire

This post will be all about the starting point of getting the right person to fit an opening that you have.  This means defining the role through a Job Description.

A Job Description consists of at least 2 sections.  The first section is all about the Job Duties.  This portion of the Description is all about defining the regular responsibilities for the person that you are going to hire.  What will they have to do on a daily, weekly, or monthly basis?  The second section is all about Qualifications.  This tells the potential candidate what your expectations are of them to demonstrate that they can do the work.  This might include Education, Certification, or Experience.

Let’s start with this last point first – Qualifications.  The goal of this section is to help you screen people before you even talk to them.  You should expect to get several resumes and you will have to sort them into candidates to pursue further and those that hold no interest.  The Qualifications section should provide that first screening criterion.  In that portion of the Job Description, you might consider mandatory and preferred qualifications.  A candidate without the Mandatory Qualifications is immediately eliminated.  This does not mean that they could not be successful, but the backgrounds of the other candidates will be more reassuring that they can do the job.  Preferred Qualifications are for those characteristics that improve the chances of a good job match.  So, once you eliminate those that don’t meet the Mandatory Qualifications, you can sort those that meet the Preferred Qualifications into a priority pile.

The Duties section is straightforward.  But you do want to be complete here.  I have seen “Other Duties as Required” on some postings, but that is not what I mean.  I have seen many posts that are generic on duties.  The more specificity that you have the better you are.  Some positions are generalist positions.  The position might have a primary duty but needs to be able to fill in for other job categories.  If this is needed, by spelling it out you will likely lose candidates that cannot or don’t want to do other things.

Note, this is a selection process where you are qualifying them as a potential employee.  They are also qualifying you as a prospective employer.  By being detailed and exacting in a job description, you save everyone time.  Even candidates that you reject or never apply will appreciate the transparency involved.

 Have a great day!

 Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

 Change Your Business – Change Your Life!

How do You find the Right People?

With the very high employment rate now, this is a question that I get asked regularly.  Business Owners and Executives struggle to find good, qualified people to fill their positions.  This can limit growth as there are tasks left undone or partially done.  Freelancers and part-time employees can fill some gaps, but some positions need a full-time person.

 The right employee has a couple of characteristics.  I lump these characteristics under the term “Employment Maturity”.  Many employers have found that having a bad employee can be a real problem.  This can because of obvious problems like attendance or theft.  Worse can be the creation of a problem work environment.  Bad employees create tension and better employees feel burdened by having to take on extra work to repair the damage.  Finally, there is the poor customer impression that can come from bad employees.  Employees are often the first or only interaction that your customers have with the business.  If they are not aligned with your Mission and Values, then you can end up hurting your Brand and Business.

 This will be a series about finding and hiring the right people.  This will extend into what to do post hiring.  The cleaner and more comprehensive this process is the better off you will be.

 For today, I want to leave you with a model that I use with Small Business Owners:  Products, Process, and People.  From left to right, these are in a time horizon.  Products are what you have today and are the impact on your current financials.  Process is the way that your business operates.  Process changes are somewhat longer term and are likely to impact next year’s business.  In the long run, People are what will grow your business.  There are likely to be so many changes in Products and Processes that the current view of the Business will be very different 5 – 10 years from now.  It is your People which will enable the long-term growth and vitality of a Business.

So, this is our next topic to explore.  Have a great day!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Make Your Business Plan Work

As I wrap up this quick series, I want to talk about how to make Business Plans work for you.  Many times, people write them and then stuff them in a drawer.  This means that the exercise has some value but is not fully realized.

The way to make this activity a part of your business is through the metrics that we talked about.  Revenue and Profit are two metrics that are important for every business.  Beyond those, there are 2 - 3 numbers that you want to track.  When I was with AFC, one of those numbers was the number of DSL ports that we sold each quarter.  We were in the process of converting our business from being primarily POTS (Plain Old Telephone Service) to being primarily broadband DSL.  So, we wanted to be clear our growth in that area.  When I was with Edgewave, we wanted to move into larger customers.  So average customer size was a metric that we tracked.  Note, that neither of these numbers is directly Financial.  Even better than those result numbers was one number we used at AFC.  That number was the dollar value of RFPs that we received.  We had a pretty good view of our market share.  This meant we could project our revenue and track our market share.

How do you do this for yourself?  My best suggestion is not to make these numbers 3-level much like a Red Light.  Green is good, Yellow is warning, and Red is danger.  Using this 3-level system, you know where to focus your attention and be prepared to adjust your actions.  One downside is that there will be a desire to adjust the level to be Green all the time.  The idea of this system is not to change the goal.  The idea is to change the actions that you take to ensure you make your goal.  Back to one of our metrics at AFC, Salespeople were given targets that meant we would make our DSL expansion goals.  What we found was that there were challenges in the retrofit of existing systems to support DSL.  We created upgrade packages to simplify these retrofits.  From there our numbers took off.  Without setting those goals, we may have never known what the problems were.

One way to ensure you are not changing your goals is to engage an outside advisor.  I offer this as a service, but more traditionally this is the role of a Board of Directors.  The idea is that you have one or more people interested in your success but not invested in your plan.  That means that they can remain objective as the plan progresses.  This outside perspective can make a difference.  Many companies fall into the trap of believing their own ideas without challenge.  By having a constructive critical analysis, you can sharpen your views on how to make your plans more effective.  If you ever want this type of service, feel free to contact me.

Have a great day!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

Scaling Your Business

When we look at costs and processes, we need to examine them in the context of Scaling. That means what is the best way to spend money to grow revenue. Is it to introduce new products and services? How about expanding your Marketing? Those are both organic ways of growing a business. Inorganic growth (buying another company) is another way to grow. In some ways, it is more efficient than organic. In some ways not as efficient.

In any case, this is where we need to look objectively about what causes revenue growth. There are pros and cons to almost any of the mechanisms. For example, I often have many people tell me that they close a very high percentage of people that they actually talk to about what they do. That says to me that the best way to grow is to get more people to become active prospects. In another case, I have had an owner talk to me about having to be at every job site. That means that they needed an operations person to run some or all sites. That way the owner could spend more time developing new business.

The right way to look at this is through the lens of Critical Constraints. What are the things that are holding back your growth? Is it skill, time, money, or something else? By honestly answering that question, you can begin to put a plan together to grow your business. The thing is that fixing almost any of those items will require resources, particularly money.

As you develop a plan for the next year, you need to create a baseline which is a business that has no change to it. Once you have the baseline you can "model in" the changes that you want. In the work that I do, we use Excel and variables that allow us to evaluate the changes and the new plan separately from the baseline. This can also help you define metrics for this new activity. If you decide you need to improve your advertising, how will you know if the money you are spending is worth it?

It is those what-if scenarios that make a business plan or an annual plan a living document. By looking at these plans, metrics for the business can be determined. By reviewing these metrics and adjusting the plan to improve them creates an action plan to improve the company.

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

How to Make Employees Work for You!

So, yes I hope it is a funny title and that would help you click on this article.  But this is a serious topic as most companies spend about 70% of their Operating Expenses directly related to headcount.  That means getting the most out of your employees is an utmost priority for businesses.  To that end, people expend a lot of time thinking about leadership, morale, and retention.  The one thing that they don't articulate is:  "How do I know if an employee is successful?"

To be very specific here, I am talking about objective measures of performance.  This is well-known within at least one area, and that is Sales.  Salespeople either meet their quota or they don't.  The productivity of a Salesperson is determined by at least that result.  There are other measures that can be applied like Gross Margin or Product Mix.  All of these measures are designed to make the Business obtain their goals.  If everyone in Sales meets quota, then the company should meet its Business Plan.  If it does not, this is a failure of Planning not a failure of the employees.

The problem comes in for non-Sales employees.  Most people have a much more subjective way of judging employee performance.  They judge people that fit in with the company culture and do not cause issues.  What they don't do is think through how the work of any given employee relates to the bottom line.  I felt that pain myself when I was the CTO at AFC.  I was asked to show how my work related to the finances of the company.  I spent the vast bulk of my time in those days working on Corporate and Technology Planning.  I found it really hard to create that set of metrics.  We eventually came up with 3 "metrics":  Return on New Product Development, Cost Per Port Analysis, and Number of Speaking Engagements.

Of those 3, the Return on New Product Development was the most challenging to measure.  Some things were done to maintain a large customer with little direct revenue.  The thing is that even then, there is a need to minimize upfront costs in those examples.  If you are not going to sell many of the items, then Development Cost ends up being more important than Product Cost.  As these activities get added in with everything else, it is just part of an ongoing average.  Even a long-term planner can demonstrate a direct financial impact.

Have a great day!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

How Many Customers do You Need?

 

Last time I post about who your Customers are.  This time I want to get into a bit more of the blocking and tackling of Business Plan development and ask about the number of Customers Your Business needs.  Most small business owners and startups give me a blank stare when I ask about this.  There is a lot involved in this question.  Brian Tracy (the Founder of FocalPoint) has a concept called "The Customer Formula" as part of his Way to Wealth system.  This formula looks like this:

 Number of Customers x Average Revenue Per Customer x Number of Purchases = Revenue

Note that Revenue is a Result of having Customers buy.  I get two pushbacks regularly.

First, I am always told that there is no average customer.  True.  But it does not matter for this kind of calculation.  At AFC, we quoted to investors that we had 800 customers.  This was a true statement.  However, not all of them were active in any given year.  We had some large customers that accounted for the 50% of the revenue (call it Top 5 customers) and they remained constant.  We had active customers that were doing significant projects.  They accounted for about 30% of the revenue and several of them changed each year.  Then we had customers that were just buying upgrades or nothing at all for any given year.  But we still had an average of about $500K per year per customer.  Landing a large customer was hard and we did not get new ones often.  Most of the time we were talking about landing new smaller customers.  Over any time horizon they would generally average about $400K per year in spending.  The rest was compensated for by the large customers.

Second, they don't have an idea of the Number of Purchases. This number is highly dependent upon the kind of business that you are in.  If you are an Auto Dealership, it is unlikely that you will get more than 1 purchase per year (except for fleets).  If you are a Hair Salon, you should expect 6 - 12 purchases per year for your ongoing customers.  Every business is different, but each of them have an average.  For AFC, generally purchases were done on a location by location basis.  So, transaction count was all about the number of locations per year.  After that, we had many small orders to add additional capacity to any location. 

Now all of this depends on the amount of Revenue that you need.  Revenue is not the be all or end all of a business.  Profitability is more important.  But this analysis can help you figure out what you need.  Do you need 10 customers?  100 customers?  1000 customers?  There are businesses that can be built with any of those customer counts.  Each of them is built VERY differently.  That is why this is probably the most constructive financial question to answer first.

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!