Want To Increase Your Business Odds? Operate Cleanly.

Careful, Try Not Sweeping Your Tough Issues Under The Rug!

Repeat business.  Broom sweeping tricks.  Creative cleverness.  Closed off listening tools.  All of these business characteristics are vital to helping your business model increase its chances for success.  Every business owner finds it much nicer to see their business model perform better.  When the business model does not perform well, the pressure increases for a lot of things owners do not like to manage.  Pressure comes when the business model does not perform well.  When the money gets squeezed below what the business needs to spend to operate well, the pressure increases to the owner.  Every single business owner knows what that kind of pressure feels like.  It never feels really good.  Once that kind of pressure mounts, the owner begins to search for ways to release that pressure.

Owners start to trim back the inventory they buy and own.  They cut back on the utilities.  They reduce the amount of operational supplies they purchase.  They trim down the employee benefits they once offered.  They limit the amount of over-time and employee pay that they can comfortably impose.  They reduce the amount of personal income they draw from the business they own.  They begin to place more and more current money obligations onto their personal credit cards to buy more time before those debts need to be satisfied.  They try to find other creative ways to extend more payments and money obligations to future time frames.  They try to stretch out making complete payments to the current debts they are faced to pay.  They begin adding up many ways to place current obligations onto stretched out credit plan payments.  They lay employees off.  They sell current assets to generate new sources of money in-flows.  They liquidate items they decide are no longer needed.  They may even take on a new partner, selling part of their ownership away, to generate cash to pay off mounting debts.

Any business owner who does not recognize some of these methods of business management are owners who have been either very lucky or fairly new in the business game.  New owners may not have developed enough time to build their business up large and long enough to witness what it takes to struggle through some of these kinds of money-pinched times.  Others who have not had to manage these kinds of economic challenges are either very lucky in their model and industry segment or they have some personal access to some wonderful funding sources they can tap into to fund the losses their model produces.  Those are the ones who are the least worried about poor operations.

First of all, let's talk about repeat business.  Did you know it is the cheapest business you can generate?  What does it cost to go find a new customer?  Try to figure out what that cost is to your business.  Take your total revenues, $100,000 annually, divide that total by the customers you sold, 10 people, and use that figure, $10,000 per customer, to establish your per customer base income.  Now take your total cost of operations, $95,000 annually, and divide it by the total revenues generated per customer, $10,000 each, so you can determine what it cost you to find those 10 customers, $9,500 each time.  In this case, it costs your business $9,500 to find each customer.  What if one of your regular customers comes back to buy again?  What if 10 of them come back again?  What if 10 of them come back every single month?  Now what does it cost you per customer?  If 10 come back every single month in the year, 12 months, that makes 120 total customers annually.  Now your cost per customer was reduced from $9,500 per customer to about $792 per customer.  This example assumes that no new business volume of increases were realized during this same year.  Your model produced $100,000 of annual revenues.  The more customers you generate with the same amount of activity the lower your customer cost becomes.  Repeat customers help you to achieve those lower costs.

Your current customers are the cheapest ones to reach.  They will cost you the least amount of business expense to re-sell.  Repeat business is good to business.  Does your model do all that it can to encourage repeat visitors?  Make sure your model is designed to maximize this effect.  There are a ton of ways to make sure your customers come back again and again.  Learn how to improve these operational and marketing disciplines in your business model.  I truly understand how raw this simple example was to define.  Even though the numbers in this example are too raw for reality sake, they do highlight how important repeat customers are to your business success.  I could write several separate blogs on this single subject alone.  Get good at repeat business.  It helps your model to reduce its costs.

Broom sweeping tricks.  I like this one.  There are a lot of owners who use a lot of ways to sweep things under the rug.  They have developed many interesting ways to avoid certain responsibilities that come to surface in uncomfortable ways.  They develop really interesting broom sweeping tricks.  An employee may request a weekend off on an important upcoming holiday that usually requires every staff member to be present at work.  That employee came to the owner well in advance with the time off request.  The owner replies with some weak response like, "We will see.  Let me think about it and I will get back to you."  Wow, what a nice move with the sweeping broom!  Tuck it under the rug for now!  Maybe the hard request will quietly go away?  Broom sweeping tricks.  They are my favorite business leadership error.  I like them a lot.  Owners use the broom on too many important subjects.  Owners need to develop greater courage to be clear about what it is they need to protect.  Look that employee strait in the eye, with total respect, and describe how important it is to your business model that they be present on those important selling days.  It has nothing to do with fairness.  It has all to do with responsibility.  Do not get confused.  Remain clear about how your model needs to meet its total demands.  "No," is an alright answer to give.  Deliver it properly, however.  Try to avoid using the broom.  Sweeping too much stuff under the rug will build up a mound that will trip you later.  I like the broom sweeping tricks.  Some of them are my favorites.

Sweeping Up Problems, They Don't Fit Well Under The Rug.

Creative cleverness.  This is one of the more sneaky ones that quietly kills business growth.  I hate this one.  It usually comes so disguised that it is hard to detect.  It appears at first on the scene as a clever solution to a mounting problem.  Then it transfers its face to become an irritation that costs too much to enjoy.  Creative cleverness usually comes back to haunt the original intent.  It comes back to destroy most of the good patterns of possible results.  I recently watched a trucking company owner try to solve some employee challenging issues with some clever creative moves.  He was having some issues surface with two of his regular staff drivers.  They were complaining about some organizational routing and warehouse loading problems.  The owner took offense to the way these two drivers presented their unhappiness.  Feeling the pressure to place his broom down and deal with the problem straight on, he came up with a clever plan to teach them a lesson.  He brought in a part-time driver to fill in for them on one of their routine routes.  He was going to make those two drivers spend a full day in the warehouse to experience what that job segment does.  He was upset about how they were disgruntled about how the warehouse guys performed the loading of their trucks.  He developed this clever solution.

He has used this part-time driver before, in the recent past.  However, the owner was not completely satisfied that this part-time driver was worth keeping as a full time employee.  Today he could use this part-time driver to help him solve a messy internal employment issue by using some creative cleverness plans.  He sent the part-time driver out to manage the regular route these guys usually perform.  It was a clever move to get their attention.  Like I said, I hate these moves the most.  I see owners do this stupid stuff, over and over.  They somehow permit themselves to find a temporary way to forget about their business success efforts for a little while.  I know how this one ended up.  I had a nice talk with Kent, the owner of that trucking company.  His part-time driver ran into a small snow and ice storm on that particular day.  He did not possess the needed skills to apply the chains properly to the wheels on the truck tractor and its trailer.  The chains broke apart into many fragments and pieces, damaging the underside of the trailer equipment.  Furthermore, with little traction and an under-skilled level of driving experience this part-time driver left one of the parking lots of his customer stops and jack knifed the truck and trailer in the middle of a main highway.  It got terribly stuck in the middle of the road.  A deputy fined him for improper traction devises on his wheels and the people who helped him get out of the stuck position in the middle of that road had to 'cut' the air brake lines to release the trailer from the tractor truck.  He could not finish the deliveries he set out to do.  The trucking company had to bring a second truck with an empty trailer, transfer the loads from one trailer to the other and complete the route on the very next day.  It took four employees and the rental of a forklift to accomplish that goal.  Creative cleverness.  Get away from it.  It is a sneaky little monster when it goes on fire.  I did talk to Kent on the phone yesterday.  His full time drivers are very wicked off right now, not to mention what this cost his business in added labor, fuel, rental, fines and repairs.  Cleverness is stupid stuff.  Refrain from practicing it.                         

I also witnessed one more thing this past week.  A store manager did not like how a particular customer commonly treats his wonderful sales staff.  When that customer came in to return a product they purchased last month expecting a cash refund for the item they paid for, that manager refused to give cash back for the returned item.  Instead, he placed the value of that returned item into a temporary open account for that customer to use whenever they wanted to purchase something else.  He told the customer that he did not offer cash back for product returns. (Which was not true, nor a company policy.)  He stood firm on his position about how he was going to handle this return, in front of the unwanted customer.  When the customer left unhappy, the manager turned to his sales staff and described how he did what he did to get even with this unwanted customer for all of the times this customer put them through the junk they have had to endure in the past.  Creative cleverness.  Like I said, I hate this one.  It has a sneaky way of coming back to bite hard.  This one did.

That unwanted customer was doing some work for another person who had hired him to repair something at their home.  When that unwanted customer returned back to work on the house he was employed to repair, he described this situation to that home owner.  That home owner happened to be the Chairman of the Board for the company that employed this manager.  Oops.  That home owner made a special trip to the store where his manager was employed.  They were found in a closed door meeting for over one hour.  The manager came out and in front of his sales staff was asked to call the customer up and apologize for the way he treated that person.  He took the cash for the return out of the register and proceeded to deliver it to the customer he wrongfully denied.  The Chairman of the Board left the store without saying a word to any one else.  Creative cleverness.  Wow, get rid of it.  It has no purpose for helping your business model to succeed.

Are you listening?  That is the last one I share today.  Do not close off your listening skills.  Pay attention to these little things.  They are killing your efforts to win.  They are quietly destroying how your model can grow.  They will make certain you do not develop repeat customers.  The anxiety is not worth it.  Operate cleanly.  Learn how to improve your business odds.

Until next time...