The 7 Habits of Highly Chilled Small Business owners
This is the first article in a monthly series on small business owners I have met or worked with over the years who developed beautiful successful businesses.
Stories of real successful business owners
In 35 years of doing business and working with some of the most inspiring people I’ve ever met, I’ve learned a very important lesson: Success in small business starts by building great habits. I call these practices the “7 Highly Chilled Habits” and I find they’re best illustrated with the stories of real business owners who I happen to have had the pleasure of coaching.
The articles are based on my E-book, The 7 Habits of Highly Chilled Small Business Owners. All of my books and other resources are available for free here
Highly Chilled Habit #1:
To be successful in business, be Dependable
I can’t sell what I don’t stock… Colin
A client I once worked with imports wine from Europe and sells it to restaurants around Australia. One day, a particularly cheeky rosé from his range sold out and his Italian suppliers were running behind with fulfilling orders. The situation wasn’t going to be resolved for at least a month and some of my client’s favourite eateries were going to have to put a different rosé on their menu.
Not only were sales lost in that month, some of the substitute rosé from other distributors stuck. My client lost several big accounts and tens of thousands of dollars in revenue throughout that year alone.
When working through this challenge with my wine importing client, I was reminded of Colin. I first met Colin in the eighties during my early days as a builder in Sydney. Colin owned a builder’s timber and hardware store in the inner city, and I became a regular customer of his. This is his website: http://www.swadlingstimberandhardware.com.au/ . Colin was a grumpy bugger, but he ran an incredibly successful business that was far superior to most of his competitors.
It’s All About Trust
One of the things that made Colin’s business so successful was that they always had what we needed in stock. The team virtually never ran out of their product lines and on top of that, they generally provided same-day delivery.
I asked Colin once about the enormous range and quantity of stock he carried. It looked, to my inexperienced self, like an expensive business to run. All that money tied up in stock. Colin’s response was brilliant in its simplicity and I’ve always remembered it: “I can’t sell what I don’t stock,”.
Colin continued to build a Highly Chilled business as a Highly Chilled small business owner. By the time I left the building industry, he had 6 massive stores in locations all across Sydney and most local professional builders had a trading account with one of them. We all relied on that simple philosophy of his.
My wine importing client now holds at least a 3-month supply of any label he sells because Highly Chilled business owners make a habit of making great promises to their customers. What’s more, their customers know they’re in the habit of keeping them!
Your Homework (The Chilled Kind)
Here’s a short exercise you could carry out to start the process of making this habit your own.
Practice Highly Chilled habit #1: Take a look at all of the promises you make to your clients.
Ask yourself: Do I go to every length I can in order to fulfil every promise I make? Do I, like Colin, have everything that my clients expect me to have in stock? Or, if I say that I deliver in 24 hrs, do I actually deliver in 24 hrs – every time?
Hungry for less Netflix, more chill? Explore all 7 habits. you can download the whole E-book for free here
Next Month, We’ll talk about Habit #2: Be Specific and my brother Sebastiaan in Holland
And the hard hitting truths about business management
Would you like to move out of overwhelm and start building a Fun Business that sustains you for years to come? The truth is that once you’ve laid the foundations (using the Hedgehog Principles), it’s all about learning to manage your Fun Business properly.
I won’t lie, you will need to focus on a few fundamentally dull things, small business management in other words, like goal setting, team management, planning, systems and measuring. However, I have a few shortcuts and strategies up my sleeve that make the process markedly more exciting…
A Fun Business Has Flexible Goals
Everyone knows that goal setting is a good idea. It engages your team. It improves your decision-making. It helps your business deliver on its promise. What’s more, I don’t believe your business will ever become Fun if you don’t practice goal setting effectively. To manage your business well, to build a great Fun Business, you simply can’t avoid Goal setting.
Still, goal setting is surprisingly difficult to do well. It’s hard to get people onboard. It’s even tougher to keep everyone accountable. Our world is also changing every day, so goals must be continuously adjusted to suit new realities.
SMART is a well-established tool for creating impactful goals:
I like the idea, but I believe that adding three more letters to the acronym makes it exponentially more powerful:
S tretch (you can just see yourself reaching for it)
I nspiring (for you)
P ersonal (about your personal achievements and growth. Read: not about achieving a particular profit level or buying a Porsche because unfortunately, those material things won’t motivate your subconscious brain!).
I always invite my clients to decide on a large, visionary goal for the future (Jim Collins refers to this as the BHAG or “Big Hairy Audacious Goal” in his book, Built to Last) that meets the SMARTSIP criteria and then break it down into a medium-term goal and a goal for the year.
A Fun Business Engages Everyone
Lots of businesses proclaim that their people are their greatest asset (and to be honest, whenever I read that statement on someone’s website, I run a mile), but most of them generally belie their beliefs with their actions.
Most companies prefer not to think about the fact that a business IS its people, and your business only gets to make money if your people let you. Business Management is about people first and foremost.
If your employees are only interested in their paycheck, you will always struggle to make a dollar and business will feel anything but FUN. On the flip side, if your whole team is enthusiastically pulling in the same direction then your business will move mountains.
So, how can you achieve said nirvana?
Hire the brightest: Find people whose attitude, energy, enthusiasm and resourcefulness matches your culture and team dynamics.
Move beyond money: Listen to people, recognise their achievements and give them the right tools to do a meaningful job well.
Get the team involved: Bring your people into all the processes, planning meetings and rhythms of the business.
Remember that employees are people too: Don’t just dictate – get people involved in developing their own goals.
Play the game of business: Get your people to start thinking like team members who are playing a game that they all enjoy and want to win.
A Fun Business Has a “Living” Business Plan That Drives It Forward
Human beings don’t accomplish anything without a plan. In fact, some say it is our ability to plan that sets us apart from other animals. However, most small businesses do not have a formal business plan, and if they do, it generally lives in a dusty bottom drawer.
Having a written plan (AKA one that exists outside of your head) allows other people to engage with it and understand where the business is going. It allows you and others to check progress, brainstorm, make good decisions and maintain focus on the important stuff.
Most business owners know this. I’m sure you do too.
The sticking point comes from a simple misunderstanding. It comes from believing you are expected to develop an externally focused plan in the format we are taught by accountants, consultants and government bodies (read: not designed to be useful for you, the owner) when an internal business plan is what you need.
An internal business plan is a shareable and succinct “living” document. It is created collaboratively and revised frequently. It is designed to support decision-making and internal communication about the direction of the business.
Trust me, once you let go of your idea of what a business plan “should’” look like and just get around a table with a flip chart and a group of your people, you’ll find that business planning is not actually daunting at all, but instead really powerful and Fun.
A Fun Business Has Rhythm and Regularity
Entrepreneurs are the busiest and most guilt-ridden people on the planet. They work long days, dream about their businesses at night and repeatedly scorn themselves for not living up to some impossible standards laid out by a critical inner voice [HYPERLINK TO BLOG POST 1].
As a result, most business owners operate as crisis managers. This situation has many undesirable consequences: dropped balls, neglected business development, burnout, missed family time, stomach ulcers, or all of the above. An atmosphere of stress and last-minute problem-solving also starts to develop company-wide, leading to low morale and high employee turnover. You get stuck in a loop where you don’t have time to foster predictability, develop systems or train people to handle the crises themselves and because of this, there will always be another crisis.
The way through this dilemma? Building rhythm and regularity into your business.
One of the best first steps you can take is to start a weekly operations meeting where everyone reviews the previous week and plans for the next one (a better one). Want to make it effective? Start and finish on time. Follow an agreed agenda. Ensure everyone is present. Don’t allow distractions. Focus on solutions.
Next, you might decide to look at the systems in the business because systemisation is an important contributor to a sense of calm predictability. This could be as simple as creating a script and a standard form/checklist for inbound office calls.
Remember, people want to feel safe, and safety starts with knowing what the future holds.
A Fun Business Measures the Fun
Beyond the most obvious measurements, every business has different priorities. However, there is one key measurement that all business owners should consider starting with: Fun.
Fun is the only success factor that cuts across and influences every aspect of business.
One of the reasons Fun doesn’t usually get measured is that most people believe you can’t because it is intangible. But you can measure intangibles such as Fun. Quite easily and accurately as a matter of fact.
Let’s say you asked your team every Friday afternoon to give an anonymous rating on your Fun in Business scale from 0 to 10, with 10 being the most fun you’ve ever had in business and 0 being the opposite. Next you collate and average those numbers and come up with a single “Fun number” for the week in business.
You could then have a staff meeting every Monday morning and share last week’s Fun number, asking the team what you could all do to get the number just a couple of points higher in the coming week.
The first few times you do this, your team will make silly suggestions about doubling their wages and paintball outings because it is all such a novel idea. However, I guarantee that soon enough it will become obvious to everyone exactly what real business Fun is all about and you will start having practical, productive conversations that make exciting things happen.
Your Homework (The Fun Kind)
Here’s a couple of steps you might take in the coming week(s) in respect of each of the management truths:
For Goal setting:
Thinking about the SMARTSIP structure I describe above, pick a date, ideally no more than a year from now and no less than 6 months away ad create a Goal (or set of Goals) for you and your business that inspires you and is both a stretch, yet achievable,specific and measurable and meaningful to you personally and motivating for your staff
Create a rough draft monthly plan for achievement of your Goal with monthly milestones
For your team:
Get your team involved. Organise a meeting with your team and introduce the Goal and draft plan to them and work with them to firm up the plan
Assign specific tasks from the plan to team members or groups of team members
Agree on monthly meetings with your team to update the plan, and agree on next months actions and responsibilities
For your business plan:
Incorporate your Goal in a longer term plan. Where do you want your business to be in 5 years, what is it going to look like, what is its focus, how big is it, what new developments have taken place.
On your own or with your team (or part of your team) create a SWOT and create actionable targets to address the top 3 items from each of the sections (see more about SWOT here and also here )
Start by blocking out a small amount of time each week for yourself (as little as an hour each week or as much as you can manage), to do nothing but think and plan and develop new ideas. Phone off, can’t be disturbed, go off site to a cafe if you need to make sure you’re not disturbed.
Implement a weekly half hour meeting with your staff to set up the week… Celebrate the wins from last week and plan to have more wins this week. Make sure it’s quick, efficient and doesn’t talk about why certain things went wrong last week, simply acknowledge the things that went wrong and focus on making sure things go right this week instead.
For measuring the Fun:
In your weekly and monthly meetings, start by asking everyone for one small tiny little thing they can do themselves to mak the week ahead more Fun
In your weekly and monthly meetings ask the staff for one thing you can do to make business more fun for everyone in the week ahead
Do these 5 things right every time and your business will never stop growing
I’m often asked by clients to help them grow their service business. I nearly always tell them that growth is easy in a business based on services, anyone can grow a small business.
All you need to do is this:
Deliver what you promise
At the time you promise it
For the price you promise it
For a profit and
With a smile.
That’s all… Honestly
If you do those 5 things, every day, customers will break down your doors, because so few small businesses do.
Most small businesses fail doing those 5 things consistently and stunt their growth, because of the classic problem of small business growth:
It’s easy when you’re small
You see, when your business is small, you and a couple of people delivering all the services, be it plumbing, washing machine repairs, fixing cars, bookkeeping, designing websites or building houses, then it’s easy to manage and be in control of everything. You can make sure things happen the way you want them to happen.
Once you start to grow with 5, 10 or more employees, and you have a number of teams, or vans on the road, suddenly you’re not in touch with everything that goes on anymore. You don’t even get to meet all the customers and you won’t personally see all the services that get delivered. You have to rely on others, and hope they do things the way you want them done. That they communicate with customers they way you expect them to and that they take their dirty boots off before they traipse in through the house.
Managing by keeping your fingers crossed.
And guess what? It doesn’t work. Your customers start being less than happy, they start looking elsewhere, you’ll believe you need to lower your prices to keep them and it all becomes a dog’s game.
So here’s the biggest secret of all to growing your business:
Learn to say no.
Learn to say no, until you can handle the growth. Never taken on any work, any new business, unless you are confident you can deliver it to those 5 standards above.
If you do that, you’ll be in control of your business, you won’t have to compromise on price and you will build a Beautiful Business and Life. And the customers? They’ll keep coming. There is never a shortage of customers for businesses who deliver on all of their promises, with a smile… I promise you.
This is the ninth post in the series of The Ten Priorities: Laying the Foundations for a Great Business and Life. The ninth Priority is about your Managing the quality of your Products or Services. The introduction to this series on The Ten Priorities is here.
One of the most insightful modern business gurus I know, Seth Godin, said it really well:
“To do well in business you only have to do two things:
Deliver a great Product or Service
Make sure lots of people know about it”
As usual Seth Godin nails it, and the last two Priorities are about those two simple rules of Seth’s.
Because the problem is, they’re a lot easier said than done.
To have any hope of following Seth Godin’s 2 Rules, you have to have gone a long way to covering Priorities #1 through #8 first.
It’s really hard to be uncompromising about the quality of the thing you sell, in the face of the day to day challenges of business. The temptation to let a less than perfect widget go out the door, because a customer is screaming at you, can be hard to resist.
But resist it you must.
If you give the customer his widget and it turns out to be not quite right, the customer won’t be happy and tell his friends that the widgets you sell aren’t always quite right.
Come what may, your business must deliver what it promises. You don’t have to build Rolls Royce motor vehicles, but if your company name happens to actually be Rolls Royce, you better not build any Hyundais.
Not until you’ve mastered the arts of:
Looking after yourself
Giving yourself the time to think
Ensuring that business is Fun
Asking for help
Having your people do great work
Will you be the kind of business owner who can build a business that delivers what it promises, all day, every day… I promise you
How to grow your business is the most enduring of The 7 Big Questions. All of us business owners have felt frustrated at some stage in our journey to building a Beautiful Business The business feels stuck at one level and we are not sure how to get it to the next level.
So many misunderstandings and myths about business growth:
I have written about the general topic of business growth in many different places. I think there are a number of misunderstandings about business growth that are not helping us, as business owners, to feel better about ourselves. The first article is about that (and you can also read about the misunderstandings about growth in my book: The Ten Truths for Making Business Fun):
I believe that to grow a Beautiful Business that Stands the Test of Time you must be able to answer the question: Why does your business exist and why would anybody care? Most business owners can’t answer that question succinctly and powerfully. That’s bad, because if you don’t know why your business exists, your customers certainly won’t be able to tell, and then all it comes down to is price. Competing on price is a dog’s game, unless you’re Aldi, where price is your Purpose. The second reason you need to be able to answer the question clearly is that if you can’t, you will never master the greatest skill of effective business owners, namely the ability to say “NO”.
We’ve all heard that to grow your business you must start with Goal setting. But effective Goal setting is more complicated than you might think. Most Goals we set for ourselves and for our businesses are at best ineffective and at worst actually hinder our progress. Goals are often arbitrary, unrealistic, and unrelated to what really matters in our lives. A Goal to make $2 million revenue is an arbitrary and meaningless number, why $2 million? why not $1,956,384.13, or $2,163,927.46 for example? And so what when you reach the goal? Will you be better off somehow? What if you fall short? By $100, or by $1,000, or by $100,000? Does that mean you are a failure? Goal setting really makes a difference, as long as you understand that Goals are like a compass, they provide a direction on your journey, they are not the destination.
Marketing is about creating opportunities to sell your stuff. As such, I fervently believe that:
Marketing is everything and everything is marketing
And it is. To grow your business you have to look at every aspect of your business. Marketing is about advertising campaigns, and social media and designing your logo and your website, but it’s also about how you answer the telephone, about your pricing policies, about ensuring that your customers are happy with what you sell them. It’s about how you dress and about how you present your quotes and about your Public Relations strategies and about your warranty return policies. One of the greatest marketing strategies is a relentless focus on quality in everything the business does, in order to “Create Raving Fans”, because if your customers are all Raving Fans, they will actually do your marketing for you.
I don’t mean to imply that online marketing is somehow something different from all other forms of marketing, it isn’t. But it is useful to pay special attention to online engagement and marketing to build and grow your business, because it has become such an important aspect of any marketing strategy. Whether your business is a cafe or a building company or a law practice, or it imports widgets or makes whatsits, you can not ignore a bunch of different forms of online marketing. Email marketing, content marketing, Search Engine Optimisation, Search Engine Marketing, Social Media Engagement, Social Media Marketing, online PR, online reputation management (The ubiquitous star ratings), video marketing. The list is near endless and constantly changing.
You could easily argue (and I have in one of the articles I refer to below), that the principles of marketing haven’t changed, we’ve just got a bunch of new tools to do it with. And at one level that’s true, people still want to get to know, like and trust you before they will do business with you. But on another level things have changed drastically. Ten years ago, you’d give someone a business card with your web address on it and they would immediately want to know if you also had a bricks and mortar store. These days they want to know you’ve got a high functioning web presence and that you’ve got a presence on Facebook and on Google local and ideally a bunch of 5 start ratings on Yelp and Trip Adviser. Whether or not you have a bricks and mortar presence, simply doesn’t matter anymore. Online engagement in all forms must be part of your marketing strategies or you will not be taken seriously.
That’s a quote I saw hanging on the wall at a big office once, many years ago. And it’s true. No business growth, no business, without sales. No matter how great your product is, how beautiful your logo is, how smart your website is, or how wonderful your employee conditions are, if you’re not selling, the business will cease to exist.
Sales is often seen as a subset of marketing, but I’m giving it it’s own section here, because I think of marketing as getting the customers to your door and sales as actually getting them to hand over money. Lead generation v lead conversion. Sales is about skill and it’s about mindset and systems and above all, it’s about making it easy for people. And this last word is the key to the whole shebang. It’s always about people. The old saying is:
People do business with people they know like and trust
You must always remember it’s about people first and foremost and in small business especially it’s about people in both directions: People do business with people. Your whole approach to sales, especially in small business, all aspects of it must be built on a people to people philosophy.
A business without a Plan achieves everything in it
Nothing in other words. Your business growth depends on planning. No human endeavour ever amounted to anything without a plan. Yet planning is guessing. It can never be anything more than guessing, because we can not know the future. So if planning is guessing, why does it matter so much and how can we do it so it works? There are two important answers to those questions:
1) You must understand that there are two entirely different types of business plans: Internal Plans, and External Plans. External plans are designed to impress others about your business and form part of the documentation to obtain a loan or other form of funding or make a proposal to a third party of some sort.
Internal Plans are documents designed to help the business focus. They are combined with meaningful goals (see above) and they help people in their day to day decision making processes. Internal and external plans have different functions and are presented quite differently as well.
2) Planning is a verb. It’s not static, it’s an activity that never stops. As soon as one plan is created, we start again. John Lennon said: Life’s what happens when we’re making other plans. Planning is like that, we make a bunch of assumptions and plan our actions accordingly. Then we go ahead and check reality as it unfolds and make changes to our plans to suit the new realities, every day, every week, every month and every year. Business Plans that work, that make a difference, are living documents.
Customer service is also a subset of marketing of course, if done well it leads to more business from those customers, and as I said above, everything is marketing and marketing is everything, but it’s worth mentioning separately, because of the concept of Raving Fans. Ken Blanchard wrote a little book that said it best in the title: Create Raving Fans and have your customers do your marketing for you. It’s a great little book and there’s a link below to get yourself a copy of it.
The principle of Ken Blanchard’s book is that your business should always be working to do one better for your customers than they expect. If you do so, your customers will become your advocates (Raving Fans) and advocates will go out of their way to help your business grow. They will talk to their friends about you, they will drag their colleagues to your door. They will defend your business against the competition and best of all, they won’t quibble about price. If your business focuses on turning it’s customers into Raving Fans, you will be able to slash your marketing budget in half, over time, for a better result.
Grow your business with systems and quality improvement
My clients often ask me to help them grow their business, and I often tell them to stop worrying about that. Getting more customers is actually the easy part. The hard part of business is:
To deliver what you say you will
By the time you say you will
For the price you say you will
At the quality you say you will…
With a smile
If you can do that all the time, the customers will come flocking to your door and you won’t have to spend much money on marketing (for one thing because you’ll be creating Raving Fans, see the previous topic). And right now, you may well be doing all those things, with a smile, but the trick is to be able to keep doing that as the business starts to grow.
I can’t tell you how many businesses I have seen struggle and fail in my years in business who couldn’t maintain their product or service quality and dependability and price, at scale. Once the business starts to grow and you, yourself, are no longer in charge of every step in the process, things start going wrong. Quality becomes inconsistent, delivery times become unreliable, prices go up or profitability suffers and your smile starts to disappear. Once the rot sets in like that, your reputation starts to suffer and customers start to look elsewhere.
There are only two answers to this dilemma: Either, don’t grow, stay small, learn to say NO and say it all the time… Or systematise. Developing systems for all aspects of the operation is the only answer. Systems for how the phone is answered, systems for estimating, systems for quality checking, systems for calendar management, systems for inventory management, systems for callbacks and warranty repairs. Systems for marketing, systems for hiring and firing etc etc. Above all, systems allow you to create Continuous Improvement Loops into your organisation. And continuous improvement is the Holy Grail of business. It’s what made companies like Toyota great.
Inventory management is a big specialised topic, and it’s really a subset of the systems section above. There are whole management libraries written about the various philosophical approaches to managing stock when building and growing a Great business that Stands the Test of Time. My earliest lessons of inventory management came from the owner of a big hardware store I dealt with a lot in my days as a builder, Colin. One of the reasons I bought so much of my material from Colin was that he always had everything in stock. Colin clearly knew what it took to create business growth, because his business was booming.
I asked Colin once if keeping such high stock levels of everything a builder such as myself might need from time to time was economical for him. I imagined that it was a very expensive way to run a business, having all that money tied up in timber and hardware and bits and bobs. His answer was:
If I don’t stock it I can’t sell it.
I have often thought about that statement in the years since, now that most operations run on the principle of “just in time”. Supermarkets have made an art form of stocking just enough and not a jar more than required, to minimise shelf apace and inventory cost.
I don’t know what the answer is, but I know that Colin got all my business for 20 years and most Sydney builders had an account with him, because everything we needed was always ready to be picked up.
Grow your business with hiring, firing and engaging people
Michael Gerber in his famous book “The E-Myth” wrote that it’s impossible to manage people and hence great businesses focus on systems, and manage those instead. And that’s certainly what grew McDonalds into the enormous business it is today, no argument. And as I’ve written elsewhere before, if you set out to make as much money as possible from selling restaurant food, it is undeniably the case that the McDonald’s model is the one to emulate. But, I can’t tell you how happy I am that not everyone in the restaurant industry wants to build McDonalds, because the world (and my palate) would be the poorer. The same philosophy can be applied to any industry.
If you’d like to build and grow a unique business, a business with an individual character, you’re going to have to manage people. You’re going to have to get good at putting the right people on the bus, sitting in the right seats, facing in the right direction and also know which people to get off the bus. If you don’t learn how to find and keep the right people and get them to do great work, your business will always struggle.
That means developing hiring policies, being prepared to hire people who might be better than you are at certain things, learning how to do great interviews, implementing induction and development training programs. It means learning how to coach your people, encourage them and hold them accountable. And it means learning about effective delegating. It means doing the HR admin and compliance effectively, writing job descriptions and doing performance reviews. It means learning what it takes to be a leader and it means being prepared to take the tough decisions when required, and take them quickly and respectfully.
To build and grow a Great business that Stands the Test of Time, you can’t afford to be left behind. The pace of change and innovation is relentless and what was ok even a few years ago is no longer ok now. Not long ago it was still fine for a cafe to have a sign saying “cash only”, but in 2018, you’ll lose a lot of business if you don’t accept cards in payment. Even in a business as simple as mine, people expect me to be able to accept online bookings. Cloud computing combined with smart phone technology and advanced GPS systems mean that customers now expect to be informed that their plumber is on its way and can be expected to pull up in front of their house in 13 minutes.
You don’t need to be Uber or AirBandB to implement new technology and come up with new ways of doing business. I just bought a house in a different state of Australia. The real estate agent gave me a private showing of the house via Skype. I engaged the conveyancer, the building inspector and a surveyor all without setting a foot in the house or the state.
A client of mine with a creative marketing agency has a team of designers and copywriters and marketing assistants all over the world and she rarely even meets her clients face to face. Another client with a small supermarket chain has technology in his stores that allow him to see what’s going on in any part of any store and to get live access to each of the store’s Point of Sale systems. He’s also just implement a bunch of tablet screens in his stores allowing people to find dinner recipes incorporating the fresh vegetables he has on special.
And all this stuff is only the beginning. It won’t be long before artificial intelligence is integrated in doctor’s surgeries and lawyer’s offices, and copywriting agencies. If you think that technology and innovation isn’t going to have a massive impact on the way you do business and how to create business growth, you are kidding yourself.
Your best employees may not all eat bacon and eggs for breakfast
The Shipbreakers of India, Pakistan and Bangladesh became famous after a documentary showed the other worldly scenes of the places in the subcontinent where the ships go to die. Here is an amazing video showing what goes on.
Shipbreaking is just one of the many professions that get outsourced all round the world. International outsourcing is big business in Australia too. More and more of the work we used to do here in Australia is being done in other countries where wage rates are lower.
A client of mine is a tax accountant and he has outsourced part of his operations to India. Another client of mine is an architect and he has started to outsource a lot of drafting work to the Philippines. It’s the way of the world whether we like it or not and I’d encourage you to put your toe in the water as well.
I have engaged various assistants and specialists overseas for the past 3.5 years.
I’ve hired a designer/ illustrator in India to help me with a couple of my books.
I have had various SEO specialists in India work on the ranking of my website in Google.
I have had someone translate one of my books into Dutch. (In the Philippines of all places)
And I currently engage a marketing specialist to help me with my content marketing and engagement strategy.
Some have been great and some haven’t been so wonderful and some could have been great, if only I’d understood the challenges better. Those challenges are what I’d like to talk about:
BRIDGING THE CULTURAL GAP
India, Pakistan, Indonesia, the Philippines are overflowing with highly skilled people who want to work. Some of them are incredibly cheap (like scary cheap) and some less so. You know this already of course. But here’s what you may not have considered. The gap in cultural understanding between you and a freelance contractor in the northwest of India, is real. Very much so. You need to be aware of that and you need to set your engagement structure up to suit.
A couple of years ago, I engaged Rajiv in India to do the typesetting and layout of my third book. Part of the project was to create 36 illustrations to be dispersed throughout the book. This caused me no end of trouble for a while, because I simply hadn’t foreseen that my visual reference points were so very different to Rajiv’s.
One example still makes me smile. For a particular illustration, I had in mind an image of a classic strong man in a circus, except instead of being dressed in a Hercules costume he was dressed in a business suit and instead of carrying a big weight above his head he would have a pyramid of office workers standing on his shoulders.
THERE’S NO CIRCUS IN NORTH INDIA
To me it was an obvious image. Rajiv didn’t get it. I had to send his drawings back several times, it just didn’t make any sense until I suddenly realised that Rajiv, who was born and raised in the country in north India, had probably never seen a circus nor a classic circus strong man. So I found a bunch of photos of strong men and old circuses and sent them to him and then he got it. The end result was great I think.
THE LESSONS I’VE LEARNT
So here’s a few of the lessons I’ve learned in engaging Rajiv, Jasmin, Aanchal, Sridhar, Oleg and various others over the past 4 years:
Understand that even if your employee speaks English, they won’t necessarily have the same understanding of a situation that you have.
Set out your expectations excessively clearly. When you’re working with someone who is 10,000 km and 6 time zones away from you, you can’t walk past their desk and look over their shoulder to see how they’re going. Agree how often you are going to talk in what format. Agree on what the key deliverables are, weekly, and how you measure and report on them.
Before you hire someone, pay them to do a specific test job and see how they go. I recently got 4 new marketing assistants to rewrite an old article of mine to see how they went and I paid them 2 hrs each for the article.
And then after you select someone based on the test job, still only engage them for two weeks and ask them to perform specific jobs in those two weeks and again compare.
Accept that your first hire is probably not going to work out well. It’s ok. Freelancers are generally engaged on a week by week basis and you can simply let them go and find someone else and apply the lessons you’ve learned.
Outsourcing to overseas contractors can work like a charm and it can allow you to do things you might otherwise never consider. But if you want it to work, you have to start by accepting that not everyone in the world has bacon and eggs for breakfast.
Get the boring stuff right in your business and make the competition irrelevant
It’s not hard to sell more, what’s hard is to deliver on your promises, week in week out
Early in my days as a business coach I read a book by Jason Jennings: “It’s not the Big that eat the Small, it’s the Fast that eat the Slow.”
Besides the unwieldy nature of the title, it became one of my bibles. There are various chapters in the book that I have re-read several times and I often find myself quoting from the book to my clients.
But I’ve decided that Jason Jennings and I part company on one specific idea about business. The premise of the book is that in the modern world, small fast business always outcompetes big slow business. Mr Jennings uses a number of examples to illustrate that every time a big powerful Goliath of a business comes up against a nimble little David, the Goliath gets defeated time and again, and hence the book encourages small business to grow fast and stay nimble.
I’ve stopped believing in fast growth as a strategy. These days, I believe in the “Slow and Steady Wins the Race” principle.
Growth is the easy part
As I have written previously on Smallville, growing your business is the easy part. If you do what you say you’re going to do, for the price you say you’ll charge, by the time you say you’ll do it, your customers will find you and flock to your door… guaranteed. The hard part is doing those three things… under-promise and over-deliver… every time, and make a profit… every time.
It’s relatively easy to deliver on your promises, and control your costs and your income, when it’s just you and a really small team, but once you’re not actually doing the work of the business yourself anymore and you don’t meet every client and see every job and you don’t know how your staff are doing the work every moment of the day anymore, that’s when it becomes challenging to continue to deliver your three promises and remain profitable.
Jane’s worried about the competition
I’ve written before about my client Jane whose business sells flowers online in little bunches (Read about Jane here). Jane’s has a unique business model and when I first started working with Jane, she was nervous, because she thought others might, steal her business model. She was keen to grow really quickly, expand into other markets around Australia and move to the UK, Europe and the USA in the shortest possible time.
I helped her to stop worrying and to slow down. When we started working, the business wasn’t profitable yet. A lot of details in the business needed ironing out yet, nearly all of them in operations and cost control.
Boring stuff, like finding new couriers and negotiating better rates, working with her staff to increase their productivity, improving the work environment, developing better online systems, implementing better financial control systems, simplifying the admin.
Doing the boring stuff
None of it was very exciting, none of it got Jane’s creative juices flowing, none of it seemed important when seen against the threat of armies of competitors flooding in and taking away her markets.
And a bunch of different competitors did come into the Sydney market and at last count there have been three different competitors trying to get something similar off the ground in Melbourne.
But now, two years later, Jane’s business is consistently making close to $10K net profit every month (That’s after paying Jan and everyone else in the business a proper wage of course).
Because Jane knuckled down and dotted the I’s and crossed the T’s, all the boring stuff, and now the business is humming like a well-oiled machine. Everything that can be systemised is, from going to the flower markets, to making the bunches, to marketing, ordering, delivery and payment.
Jane’s customers love her business, the staff love working there, it’s growing steadily and the bank account is building steadily.
The competition is irrelevant. Most of them started up and fell over again, or in any case are not heard from again. The ones that are still there are barely hanging in it seems. They haven’t dotted the I’s and crossed the T’s. If anything the competitors have prepared the other markets for the arrival of Jane’s business.
Jane will expand to Melbourne, and then she’ll make sure Melbourne runs like a well-oiled machine and making money, before she opens in Brisbane, and so on.
I publish a weekly “One-Minute-Business-Tips” newsletter which is designed to help small business owners take these very small simple steps every week… Each tip I send out on Friday morning, is designed to take less than half an hour, but taking those little 10 minute steps every week will start to change your life… I promise you.
It’s my third book and I’m proud of it. I think it’s my best book yet. The Working title is “The Ten Truths for Making Business Fun and building a business that sustains you for years to come”
One thing’s very different from my first two books. To complete the book I’ve joined the globalisation movement and engaged with an illustrator and designer in India. Rajiv is creating all the drawings that will go in the book and he is carrying out the design and layout work to get it ready for the printers.
Fascinating process… I’ve never had so many of my jokes and double entendres fall flat on their face, but Rajiv’s work is excellent.
And let’s be quite clear about this. By engaging Rajiv, I’ve taken work away from an Australian designer and illustrator and I’ve done so because it’s cheaper… much cheaper.
Collectively, I think it’s clear that the world is going to go through a massive shift in the next few years. When the NBN finally gets connected to a significant portion of our homes and businesses or some other superspeed internet connection becomes the standard, the wave will become unstoppable. More and more of the work that can be outsourced to India, The Philippines, China or Tajikistan will be. Right now, there are still a lot of businesses who are resisting it, because it’s all too hard and the language problems and cultural differences etc etc.
Resistance is futile
But in the words of The Vogons: Resistance is futile.
I was talking to an architect recently about this issue and although he hasn’t gone the route of overseas outsourcing yet, it won’t be long before he will be forced to. Cost pressures will simply force it on him.
Do I think this is a good thing? Yes and no. Obviously if I was a young architect, or designer or web developer or computer programmer, I would be worried… very worried for the future. My career is probably not going to be there anymore in 10 or 15 years, maybe even sooner, because architects in the Philippines will be doing most of my work.
That’s not great for our society here in Australia or elsewhere in the Western World.
But you could just as easily argue that it is a positive development for the world as a whole. It seems to me that over time the rates we will be paying architects and software programmers in India will get closer and closer to rates we pay in Australia, and maybe that’s not such a bad thing. There is clearly a great imbalance in wealth and cost of living between the West and the Third World. Maybe this kind of movement is going to redress some of that imbalance. I’m sure that is already happening. Rajiv advertises his hourly rate on his profile as $4.50 per hour, but I’ve actually engaged him for $8.50 per hour (yeah, I know, I’m being ripped off right!).
I was talking to an Indian friend of mine the other day and he reckons that working in India, the designer would be lucky if he could charge $2.50 per hour. So contracts like mine are causing wage inflation already (on a miniscule scale, but you see what I mean).
So what would I be doing if I was a young designer or programmer, bookkeeper or architect or any other profession that is outsource-able?
Keeping your fingers crossed certainly seems like a bad strategy. The old saying: If you can’t beat them, join them, strikes me as the approach to take. You see, I think there is an enormous opportunity for people to provide go-between services for people like me and Rajiv in India. What would perfect for me is if I could engage an actual designer here in Australia who manages the process of getting the work completed easily in India or wherever. The problems I and Rajiv have faced in this project so far have largely been about language, culture and some technical glitches.
I think If I was a young designer coming out of college, I’d make sure I learn Hindi or Tagalog or Chinese and establish a network of designers in one of the prime outsourcing countries. Then I’d develop a service for people like me and the contractors that facilitates the process, so that instructions I have for my contractor actually get understood the first time. Rajiv and I find ourselves going back and forth quite a lot, because I use words and sentences that mean something very different to Rajiv than they mean for me. Having someone in the middle who understands design and has design skills and speaks Indian would be invaluable.
Not to mention that I’d love my brilliant jokes translated into Hindi and hear the raucous laughter clear across the Indian Ocean.
The world will change completely in the next 10 years. There really is no point hoping it won’t.
The holy grail of business is to have a business that behaves like a Swiss clock… Tick Tock… Tick Tock… No surprises… it just works, day in day out. Clients walk in the front door… every day, Tick Tock… the products or services get delivered out the backdoor… every day, Tick Tock… The invoices get sent by the bookkeeper… every day, Tick Tock… and the money drops into the bank… every day, Tick Tock, Tick Tock.
Is that your dream too? Do you dream of Swiss clocks?
Fun Businesses Have Rhythm
A Fun business that sustains you for years to come has rhythm, because with rhythm comes predictability and that’s precisely what you are looking for: to know with a fair degree of certainty what is going to happen tomorrow, next week and next month means you can plan and prepare and be pro-active.
Think about it… If you knew with a high degree of accuracy how many contracts you’d sign next month, or how much money would come in the door, or how many widgets you’d produce, or how many emergency callouts you’d have or warranty repairs you’d have to carry out… What difference would that make to how you managed your business and how much Fun you’d have in your business?
If you knew for sure that 3 months from now your business would have 25% more work to carry out than you have right now, you can start looking for the right people now and have them ready for the onslaught in time, instead of managing in crisis, madly running around trying to find someone at the last minute and begging everyone to stay back to finish the work… I know what situation I’d rather be in, don’t you?
Two Mechanisms of Business Predictability
But how can you know all that? Predicting the future is crystal ball gazing, right? The best you’ll ever do is guess, right?
Well no. You can predict the future in business through two mechanisms:
Measuring / Dashboard Management
‘Measuring’ is about taking regular measurements of various systems in your business and looking for trends. I often refer to this aspect of business as “dashboard management” and I have written about the topic extensively in various other places, for example here: https://www.newperspectives.com.au/numbers/ , so I won’t get into further detail about numbers and measurement right now but it is important to know that ‘Meetings’ without ‘Measurement’ are a waste of time… you need both to build predictability into your business.
So the second mechanism is about meetings. A business that sustains you for years to come will have a schedule of regular meetings, daily, weekly, monthly, annually. It can be no other way.
The size of the business will determine the number of meetings but an average small business in a single location based around a service, profession or trade with 5 to 15 employees will likely have a 15-minute catch up at the beginning of each day at a team level; a weekly 1-hour production team “Work in Progresss (WIP)” meeting and a weekly company-wide half hour “huddle”. The last two meetings may be expanded into more comprehensive meetings at the start of every month.
Besides these meetings there may be regular sales team meetings and management team meetings, and last but certainly not least, individual progress or performance meetings between managers and their direct reports, ideally no more than monthly but certainly no more than quarterly.
Jamie’s Panel Beating Shop
To illustrate what I’m talking about I’ll tell you about a client of mine called Jamie who owns a panel beating and spray painting business and who I worked with a few years ago:
Jamie employed about 18 people and the business ran from brushfire to crisis and back to brushfire most of the time, things used to go wrong and profits tended to get lost in the daily and weekly efforts to fix the things that went wrong.
When Jamie and I started working together we quickly realised that the crises were usually caused by a lack of effective communications throughout the business and a lack of cooperation amongst different sections of the business.
So Jamie started by implementing a weekly staff breakfast on Friday mornings. At those times the business would open a little later than normal and a nice spread was laid out for breakfast and everyone took part. At the breakfast Jamie would facilitate discussion amongst his staff to a set agenda that always included a recap of the week… what went well last week, what didn’t go so well last week… and a plan for the next week to address the question: What can we put in place as simple actions that will help us improve next week.
Jamie couldn’t believe how quickly things started to improve. Literally in weeks, he noticed a drop off in crises and the mood in the shop just totally changed.
At the end of that quarter, Jamie couldn’t believe his eyes when he printed out his profit and loss report that showed an increase in net profit of 20% over the previous quarter. Suspicious about the accuracy of the numbers he decided to wait and see what the next few months looked like and the numbers were just as staggering. After 4 months Jamie also noticed that the backlog had shrunk by 50%.
A couple of years later, Jamie has extended the lessons from those first breakfast meetings and has implemented all kinds of rhythms into the business and together with his increased focus on measuring and systems, Jamie’s business actually does run like a Swiss clock these days… Tick Tock… Tick Tock.
Importance of Staff Meetings
A simple weekly breakfast meeting like the one that Jamie instigated in his panel beating shop has two big benefits. First of all it builds team spirit and motivation. For a team to work well together there has to be a certain level of trust and the better you get to know someone the easier it is to learn to trust them.
Most importantly though, the point of a weekly company-wide meeting such as Jamie’s breakfast is that it allows the team to start to become engaged with the company goals. By sharing what went well last week and what didn’t go so well and what to put in place to get the best possible outcomes for the next week, around the table, everyone starts to understand how they fit in the Big Picture and how their efforts have a direct impact on the company as a whole. I refer to these meetings as Huddles. You often see a sporting team doing a huddle before they get onto the field and it’s designed to get everyone on the same page and pulling in the same direction.
Wouldn’t you want your staff to operate like a focused sporting team as well?
A system of formal, regular, structured meeting is an absolute pre-requisite for building a Fun Business that sustains you for years to come… I promise you… Tick Tock… Tick Tock.
Verne believes quarterly strategy meetings with your staff are not enough. You need to have a monthly, weekly and even daily schedule of meetings to ensure that the strategies and deliverables from the less frequent planning meetings are actually carried out.
I know that many management gurus would baulk at that statement, because the amount of money and time wasted in business in meetings is staggering.
But Verne is right. Strategies and plans without regular, formal and structured follow up meetings, never lead to the outcomes you’d hoped.
Do learn how to make your meetings super-efficient though (For example, I know of a company where all meetings are held standing up, so that the meetings don’t take a minute longer than absolutely necessary).