The 7 Habits of Highly Chilled Small Business owners
This is the third 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 successful real 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 #3:
Be On Top of the Numbers
In order to build a Highly Chilled business, you must keep your fingers on the pulse of all your business’ key health indicators, every week
BTW, You can read up on Chilled habit #1 here.
And Chilled habit #2, here
Be Nerdy like Narinder
met!) is Narinder. I could tell a story about Narinder to illustrate almost all of the 7 Habits of Highly Chilled business owners, but this one about numbers is probably the most important.
More than 15 years ago, Narinder started his first small supermarket business in Sydney. This is his website. Over time, the business has grown enormously, and his stores are starting to pop up across the inner city.
Each of Narinder’s stores is profitable, his staff love working there and when he opens a new store, customers bring flowers to welcome him to the neighbourhood. As I said, there are many things Narinder does well, but the habit he’s developed to an art form is that of being on top of the numbers religiously, every day and every week.
Investigate the Numbers
Narinder was awakened to the power of numbers early on. He and I concluded that his first store was not performing to its full potential and we wondered what was wrong, so we decided to investigate. We started by measuring which products and categories sold well and which didn’t. We also analysed which sections of the store realised most of the sales he made. Narinder divided the store into 12 different sections and (with the help of his staff and some simple checklists) set about getting deeper insight into the shopping behaviours of his customers. A month later we had the stats.
It was immediately obvious that 2 sections of the store were visited much less than any of the others. The numbers made it very clear that people simply didn’t walk through those areas. We decided that the store needed to be re-organised and reconfigured. The 2 struggling sections needed lower shelving, more lighting and a different mix of product categories. Narinder pulled out all stops and within a week, the store had a completely different look and feel. After just a month, we were looking at a 9% increase in turnover. 6 months later, sales had grown by 25% with an improved gross margin.
Become a Devotee at the Church of Business Numbers
These days, Narinder measures everything on a daily, weekly and monthly basis. He has developed the habit of having his teeth in the numbers – and he’s never letting go.
Remember, if you want to become a Highly Chilled business owner, you must learn to love the numbers and regularly measure the ones that matter most to your business.
Your Homework (The Chilled Kind)
Here’s a short exercise you could carry out to start the process of making this habit your own.
Ask yourself: What would be the 15 (or so) key indicators of the health of your business?
Next, ask yourself: How could you have each of those indicators expressed as a number on a scale?
Practice Highly Chilled habit #3: Instruct someone else in your business to get you those 15 numbers every week and every month for you a in a single report.
Are you a small business owner in need of a chill pill? Explore Highly Chilled habit #4: Be Thrifty (with your time).
I love working with Amanda. I generally love working with all of my clients but Amanda is one of my favorites. The other two favies are John and Sue.
After a session with Amanda, John or Sue, I’m always energised and I can’t sit still. The three businesses are entirely different. One is in floristry, one is in retail and the third has a landscaping business, and what’s more, all three are entirely different people.
But they have one major thing in common, namely that their businesses are doing significantly better than most. For a while I asked myself what it was about the three of them that meant they do so well what it is about those three people that they do better in their businesses, than some of my other clients and that gets me so excited?
The Boring Numbers
Strange as it may seem for someone like me who is not a natural numbers person, I’ve realised that the one thing above all that is different about how Amanda, John and Sue run their business is their rigorous focus on the numbers. See also my article on the five P’s for 2017
All three of them have grasped the importance of numbers and have made it their business to understand them and manage their business by them. It means they’ve invested time, money and energy in setting up the right measuring and reporting systems. They ensure they get weekly reports on the key numbers in the business; they take the time to study those numbers, every week, and finally they take appropriate action based on those numbers, every week.
Managing Complex Relationships
A business is a complex thing and it needs constant care and attention to keep it functioning as it should. There are too many different facets to a business to be able to focus on all of them at once. Business owners who try to do so anyway, become micro managers, their staff will get disengaged and they’ll burn out. On the other hand, if you don’t keep track of what goes on in all the corners of your business, all you’re doing is practicing the ancient art of “managing by keeping your fingers crossed”.
I always like to think about the complex thing that is a car. You simply can’t know what goes on in all the different corners of your car’s various mechanisms and systems. You can’t keep an eye on the pressure inside each cylinder for example. If something goes wrong inside one of the cylinders, it may be that the pressure in that cylinder will change. If you have a six-cylinder engine in your car you’d need 6 separate pressure gauges just to keep an eye on that function of your car. There would be hundreds of dials and lights and gauges just to keep a normal car on the road.
Thankfully, you don’t need astronaut training. It turns out that what we need in our cars, is a single temperature gauge and a single oil pressure gauge and with those two we can know the health of our engine. Any problem that might develop in the engine will have a direct impact on engine temperature and oil pressure. If the temperature gauge on our dashboard goes up for example, we know we need to get someone to check out if it’s an oil leak, a blocked radiator hose, or a problem in the cylinder.
Fingers On The Pulse
And that’s exactly how you can “keep your finger on the pulse” in your business. A minimal series of gauges can tell you what is going on at a high level, so you’ll know where to focus your attention.
Amanda and John and Sue are doing exactly that. They have tasked various people in the business (the bookkeeper, the shop manager, the foreman) to provide them with weekly and sometimes daily reports on the key numbers that matter most in their businesses. Every time they get their reports, they quickly scan them and they know instantly where they need to direct their energy. Managing your business with such a dashboard, means your attention where it’s needed, without keeping your fingers crossed.
Focusing on the numbers is boring (if you’re not an accountant), and it takes discipline to get KPI dashboard reporting in place in the way that works best for you, undoubtedly. The payoff is great though. It’s exciting to watch business owners like Amanda, John and Sue, at work, because their focus on the numbers means they get to focus on building their Visions rather than extinguishing brush fires all the time.
If you want to build your Vision too instead of running around from crisis to crisis all day long… learn about the numbers.
Not all KPI’s are created the same… Some are more equal than others
Mastermind about numbers and measurement with Rick Polito from AXSAPT
The podcast of the Small Business Masterminds Foundation Webinar on Numbers and measurement in May 2105. I am joined by Rick Polito from AXSAPT in Sydney www.axsapt.com.au to help us get to the bottom of how we can go about growing our business with control… how we can gaze into the future with our fingers fiormly on the pulse of the health of our business weekly.
1001 Business Bedtime stories…… Truth 3, Finger on The Pulse
Here follows another one of the “1001 Business Bedtime Stories” … Every story comes straight from the New Perspectives Small Business Bootcamp, stories of business and courage and they illustrate an aspect of one of The Ten Truths… You might recognise some of them from your own experience.
Once upon a time… a long long time ago in a country not unlike Australia… Michael had a carpet cleaningbusiness …
Michael owned a carpet cleaning business in Sydney. Michael had 10 vans on the road with carpet cleaning equipment and Michael would book the jobs and do the marketing and generally run the company.
Michael’s life was full of crises, in fact most of his days involved extinguishing brush fires and he would never know where the next crisis would come from. Most of the crises involved his staff not delivering the customer service or quality that Michael’s clients expected and the only way to manage these issues was by Michael going out and fixing the problems himself.
There were many factors at play of course but Michael found it difficult to keep his staff accountable to specific performance criteria on quality and customer service. How do you measure the quality of a cleaning job and how do you measure the level of customer service and satisfaction you have delivered? But as the saying goes, you can’t manage what you don’t measure.
“If only I had a simple way to measure “Good Work” and “Good Service” that I can apply across the board and use to manage the performance of the guys ?” kept going round and round in Michael’s head. Michael was at the end of his tether.
Working in The Bootcamp with me, Michael learnt that you can create relative measures for intangible things. For example If you were asked to give a score out of ten how happy you felt at this moment, where “10” was that you felt delirious and “0” meant that you were at risk of self harming, you might say “6”. If I were to ask the same question again tomorrow you might answer with “7”. This would lead us to reach a valid conclusion on your state of happiness tomorrow relative to today.
This same principle can be used to measure all sorts of intangible things in life and lends itself really well to measure quality and service and satisfaction levels.
We went to work to create a self scoring system, where a staff-member filled in a small form at the end of each job in which he gave himself and the just completed job a series of scores out of 100 on a number of different measures (for example: “Give yourself a score out of 100 for being punctual”)
The forms would be collated in a spreadsheet and the numbers averaged for each staff member and for the business as a whole. Every week on Monday morning Michael received a report from his admin assistant with the average performance numbers across the company for service and quality in the last week. At the same time Michael had his assistant call 10% of all clients every week and ask them to rate the completed jobs in a similar manner and these ratings were listed side by side with the staff member’s own ratings. The staff members would be given access to the customer ratings as well and as required Michael would sit down with individual staff members, compare notes and generally help the staff improve on their ratings and become more accurate in their self-scores.
This scoring system completely changed the way Michael thought about managing his business and he realised that the way to build a great company and great business value was to step back and create management systems, scoreboards and dashboards.
So she did… and it took a lot of courage… Michael created 3 different weekly dashboards: one for operations, one for marketing and one for finances.
Now 5 years later Michael is negotiating to sell his business. The price he is likely to sell for is at least 3 times what he would have been able to sell it for a few years back, because now he is selling a business that operates almost independently from Michael himself.
And Michael as well as the new owners of Michael’s business will live happily ever after… The End
Ask yourself… Where will you find the courage to make Profound things happen in your Business?