Learnings from the Management Consultant: Be Impeccable with Your Word

Years ago a mentor recommended, The Four Agreements, by Don Miguel Ruiz. The book offers the readers four agreements you can make with yourself that, if followed, have a profound affect upon how you live your life and the effect other people have on you. The book changed my life.

The first of these agreements, “Be Impeccable with Your Word” is so basic and rudimentary one would expect it would be one of the basic tenets of both our personal and business lives. As with any lesson, the approach you take to applying it to your life is based upon what it means to you.

Being impeccable with your word takes many forms and has many implications in business:

Telling the truth: We each know when we’re telling the truth and when we’re stretching it. Whether I’m representing myself, my company, or my client, there should be one version of the truth as I see it. It involves acknowledging that what I understand to be the truth might not be someone else’s truth and that it’s wise to be open to a understanding their perspective.

Keeping commitments: This is something that’s so essential in business that is one thing you can do to improve the probability that your business will be successful. Only make commitments you believe you can meet. Once you’ve made a commitment do everything within your power to meet it, whether it’s to a client or a colleague. If you find, for some reason you can’t meet it, be honest with the person to whom you made the commitment and tell them when they can expect the promised results.

Doing a fair day’s work: When you are working at a rate, whether it’s daily or hourly, put in the effort. Don’t waste time. Get and s

Producing the product you advertised: Don’t substitute products of lower quality or take short cuts on the quality of your products. They represent you and your business. We’ve all been the victim of bait and switch.

No one wants to do business with someone they can’t trust. Be impeccable with your word and people will come to trust you because they know they can depend upon you to be honest regardless of the cost.

Tips from a Management Consultant: “Day in the Life Of” (DILO)

When a team of management consultants are brought in to optimize a company’s results one of the tools they often use is “Day in the Life Of” (DILO) studies. These studies are conducted with managers to determine what percent of their time is spent in value added versus non value added activities. These studies are usually conducted with enough management team members to have a representative sample that represents what’s going on in the company.

When I conducted my first set of studies I was shocked to find an average of only 24% of my client’s management time was spent productively. However, after conducting and reviewing hundreds of these studies for dozens of companies I realized that, in aggregate, the management of most companies spend less than 25% of their time in value added activities.

Having said that, in almost every company there were people who spent their time productively. Over the years I’ve determined some consistent differences in what they didn’t do versus what they did.

  1. They had little to say about what others were or weren’t doing so spent little time commiserating with their peers.
  2. They didn’t feel like victims – the empowered themselves to cut through the organizational malaise.
  3. They didn’t let someone else’s objectives get in the way of them completing what they needed to do each day.

As an entrepreneur and new business owner, your time is one of your business’s most valuable assets. If early in the life of your business you figure out how to optimize your time you’ll improve the chance of your business’ success immeasurably.

Here are three methods of increasing your effectiveness:

  1. Set the goals you want to achieve by the end of the year, then break them down into weekly increments, and every week measure where you are against that weekly goal. If you look at it every week you’ll know where you are and will be more apt to step it up when you need to. It’s so easy to get lost in the minutiae of running a business that you forget to see where you are against the big picture.
  2. At the end of every day write down what you accomplished and what you plan to accomplish the next day. This is short-interval management, the consultant’s secret to success. If at the end of each day you look at what you accomplished and insure you’re on track to achieve your goals for the week you have a higher probability of success than if you get lost in daily activities.
  3. Have a routine for closing down at the end of the day that includes preparing for tomorrow. Decide where you’re going to keep each of your business materials and supplies. This is essential, particularly in the early days of your start-up. It’s easy to lose a half an hour looking for your stapler, scissors, printer ink, or whatever. It’s even worse on the other end. Coming into a mess can stop you from being focused on what you really need to accomplish that day and waste valuable time getting started.

How would you score if a management consultant observed you and categorized the time you spent today as value added or non-value added?  Would you score better than the average? It’s your business. Decide to you’ll spend your time productively.

In my book, $1,000 Start-Ups there’s a “Day in the Life of” section for 60 businesses that spells out how entrepreneurs in that business spend their time.

Setting Yourself up for Success: Making the Right Decision at the Right Time

There is a natural inclination for new business owners to spend an inordinate amount of time making even simple decisions: What will I name my business? What hours should I be open? Should my logo have two or three colors? Where will I open my business account? Which supplier will I use? At what point can I quit my job? What will my product or service be? How much should I charge for my product or service?

Delaying a decision can lead to a situation where you’re forced into making a knee jerk decision. It’s important that during your start-up phase and, if possible, before you launch your business to develop a list of decisions you’ll need to make to get the business launched and grown to solvency. It’s also essential to revisit that list often to record what decisions you’ve made and what other decisions you need to make.

The Army has a wonderful method for insuring officers have the information they need to make a decision.

  1. Define the problem: Write a succinct statement of the issue.
  2. List facts relating to the problem: This is the step when you gather the intelligence that’s going to help you make a decision.
  3. Develop alternate solutions: Three seems to be the right number remembering that doing nothing is a decision.
  4. List the pros and cons of each solution.
  5. Review and make a decision.

Years ago I had a boss who told me, “Make a decision even if it’s wrong. I can always change a bad decision. I can’t change no decision at all.” I’ve found that, more often than not, to be the truth.

Leveraging Forture 500 Business Practices: Managing Risk

Fortune 500 companies use a formal process and mathematical models to manage risk. Depending upon the industry, the appropriateness and validity of their models can be subject to regulatory oversight and require certification by an independent auditing firm. Failure of these models to gauge the probability of risk or the resultant cost associated with recovering from an occurrence is often the lead story on the morning news and can affect countless lives or the environment.

As a current or future business owner you can leverage what these companies have spent millions to learn by conducting your own risk assessment, assigning a probability to an occurrence and rating the severity of each type of risk then developing a strategy to either reduce the risk or mitigate it should it occur.

Plotting these risks on a Risk Cube is a visual method large companies with a formal risk programs have of determining where to focus.  One axis of the risk cube is probability of occurrence and the other is the severity if it occurs.  Risks that have a low probability of occurrence and low severity can typically be readily mitigated.   Conversely those that have either a high probability of occurring and/or a high impact if they occur are those you should insure against.

Risks common to start-up businesses often include the obvious such as: an absence of working capital or a low volume of sales, but the highest risk area is the owner’s ability to show up and run the business during the start-up phase.  The more common Owner’s Risks are:

Owner’s Health: For many start-ups if the owner doesn’t come to work there’s no one to run the business. Although it goes without saying – I’ll say it anyway: if you’re a solo entrepreneur who is dependent upon the business you’re operating for your livelihood, the best investment you can make is to keep yourself healthy. I can hear the collective, “duh”; however, new business owners often sacrifice getting enough sleep, eating right, exercising and getting regular check-ups while they’re starting their business.

Owner’s Reliability and Availability:  To operate a business an owner either has to be available or ensure someone is available who can fulfill client or customer requests during the established business hours.  If the shop is supposed to be open from 9 to 5 and a potential customer finds the door locked, she might not return.  If a customer calls they will probably be willing to leave a voicemail, but your outgoing message should indicate when they can expect a return call.  Failure to return the call is a clear indicator that you’re too busy to provide reasonable service.  If you fail to show up for an appointment because your car broke down or your flight was cancelled you risk not getting that customer’s business, particularly if you don’t call prior to the appointment and let the person who’s expecting you know the situation.

Loss of Income: An injury or illness can derail even the most promising business if it occurs during the critical start-up phase.   Worker’s compensation, short and long-term disability can help pay the bills should this happen.

Because payments are based upon your income and because the risk to your business is often the highest the first year you start your business, you may be able to base your income estimate on your previous salary rather than the estimated earnings from your new business during the first year. This will, of course, may raise your premium, however, you may need those payments due to an injury or illness to meet basic living expenses.

$1,000 Start-Ups has additional sage advice to reduce risk for 60 different businesses.

Staying the Course: Baby Steps

Many years ago there was a movie, What About Bob? In the film Bill Murray played a character who was getting professional help and was taught to take “Baby Steps” to reach his goal.

I was reminded of the film when I was talking with a friend recently who started a home based business last year.   He’s had some success and loves what he’s doing; however, he’s finding it tough to buckle down and get to work every day.

Most entrepreneurs who have home based businesses face this. It takes a lot of energy to get a business launched and get the product or service defined.   The first sales come and you realize just how many you’ll need to support yourself and it seems like such a huge mountain to climb that it doesn’t seem as if one day will make a difference.

You start to believe you might as well go have coffee with your friends, work on that home project, or go shopping … after all you set your own hours and you have at least x months or years before this has to pay off.

The problem is that the end game is so far off that your mind can’t wrap around reaching the goal. My friend’s goal is 1,000 photographs uploaded to a site that pays him every time someone uses one. He has the perfect business model. Do it once, pay nothing unless he’s paid, and the more he has, the more he’ll earn. He knows what’s selling and continues to learn what will sell, yet reaching that number seems so insurmountable.

If you can identify with this situation, figure out your “Baby Steps”:

  1. Set the hours you’re “Open for Business”. Write down what hours you’re going to work and what days you’re going to work. During those hours go to your work area and focus.
  2. Set daily goals. During my hours at work I’m going to produce X   Using my friend as an example, his goal might be to upload one photograph per day or five per week. Don’t forget to consider there are multiple steps involved in most processes, (He has to shoot the photos, process them, upload them, etc.) Use whatever makes sense to you and what will cause you to make measurable progress toward your goal.  It can be setting one new appointment per week or writing one page per day or whatever will make your business grow. Figure out a cycle that’s not more than a week long and set a production goal.   It’s got to be something you KNOW, or almost know that if you stick with it, you can do.
  3. Keep score. Develop a weekly metric and plot it visually every week.
  4. Set up a reward system for yourself.

When I was working on $1,000 Start-Ups, I’d done the research for several years and in the early days of writing would spend twelve hours every day in front of the computer, producing very little. I finally decided that if it was ever going to be finished and published I had to set small, achievable goals. I was lucky enough to have a little beach house and what I wanted to do every day before it got too hot was jog on the beach.

I set the goal that I would write the draft of one chapter every day before I went for my jog. It got too hot by 10 AM to jog at that time of year. I’m a morning person and I really wanted to be free to do what I wanted to do in the afternoon, so my writing hours every day were 5:00 – 10:00 AM, enjoy my jog, then edit the previous day’s work from 11-2.

It was magic. Twelve weeks after setting that goal I had my first draft.

Read more about successfully starting a business in $1,000 Start-Ups.