A trend I’ve seen within the last couple of years as been to measure performance of employees through a series of metrics, which are numerical representation of performance, service, quality, etc. A couple of thoughts have come up as I’ve spoken to a few business partners:
- You will always have a couple of people who want to have high numbers – and while that may appear good on the surface, make sure that they are not sacrificing unmeasured areas to make the measured numbers look good;
- Make sure that you’re using sound statistical calculations – when your numbers don’t appear to correlate to real life, there is a problem – don’t trust the numbers of themselves, make sure they make sense in real life;
- Have a combination of public and confidential metrics. That is, have a series of measurements which are published and discussed. These are areas where team members can strive to achieve and improve. Then hold a second set of metrics you use to measure your own management of these employees. Keep those measurements private. Do not disclose to the employees how you’re measuring in this area. Simply address problems as they occur, but kept your actual measurement system private;
- Your business goals, including customer service and profitable should be measured. Again, keep disclosed and undisclosed numbers.
Also, in the context above, everything is referencing “within the company” — an even smaller set of numbers (if any) should be published to the outside world.
Filed under: Uncategorized
Are you looking to close your business in 2009? A quick tip: be sure to complete all of your closing paperwork with the various federal, state and local agencies. Penalties can still add up for failure to file, even in there is no dollars or information to file, your returns must be complete. Most forms have a checkbox to mark on your final quarterly/annual filing stating that you’re closing your business.
What are you doing to make your website work for you? Here is a couple of tips I’ve picked up along the way, and we’ve implemented ourselves…
1) Get a website champion – someone who is really living the website, thinking about it in the shower, staying on top of what’s out there and going on. Let them try to become the leading website for your industry.
In preparing your budgets or cost anlysis for providing services, is as an essential to calculate the cost of warranty service. This can come in the form of warranty service due to internal causes (not completing work projected, not performing the job properly, etc) or external causes (a problem with newly installed equipment). These costs exist and need to be calculated as part of your overall overhead. For example, say you sell and install a brand new piece of equipment that you sold to your client. So your capturing both your margin on the hardware, plus the labor of installation – perhaps even advanced consulting/sales services. Now, what happens when the product you receive from the distributor comes in and is broken, or isn’t really the correct item (not compatible with application) — should your client be expected to pay the labor and costs associated with the inital install and then again the reinstallation? Likely not.
We’ve been spending the last week reviewing our client which have outstanding debts from last year. We have let our collection efforts slip, primarily because we have enough capital to keep moving, and understand that not every company does. It’s sort of our laziness, we called grace to our customers. However a quick look back and we see about 5% of last year’s total revenue in uncollected debt.
One thing we utilized in the past which has resulted in excellent success has been to send collection notices by FedEx. There are several reasons for this. First, if you’re sending a collection letter, you’re probably going to send it certified, so you get that included. Second, you’re probably wanting your money soon, and this certainly ensures that you clients will receive the letter sooner. And finally, and perhaps most critical, is that your collection letter will be opened. Nobody ignores a package delivery. The simple fact that it is sent via a priority message will pique their interests and they’ll open it. It will be an unavoidable truth to them.
What have our results been? We’ll we haven’t sent letters out yet – that’s coming next week. But in the past we’ve seen about a 75% rate of return on these collection letters, which is extremely good. There have been several customers we have mentally written off who have ignored prior collection efforts, who shocked us when the remitted payment promptly after receiving our priority mail.
Give it a try next time and comment on your results.
In the professional services arena, there is typically three types of service industries: innovation, experience and processes. There are some industries, such as your oral hygienist, which you’re primarily looking for someone who knows the process well and can repeat it forwards and backwards. Yet you want them up to date on all the latest trends and skill sets, but you’re not really looking for anything special in this individual that you aren’t already expecting from the next professional.
The other group, experience, is called by some the gray haired group – these are people who have a lot of experience under their belts. It is why we are often drawn to older people for our accounting, taxes and medical needs. We want them to be highly educated and smart, and have some form of a routine and process – but most importantly we want them to have seen our situation or condition before, and have the experience to deal with it. Anyone who has tried to fix a leak under their sink has learned that there is a bit more to plumbing than knowing what to do from an intellectual standpoint, but rather there is some experience involved. Especially when you discover that your sink, isn’t quite like the one they showed you in the store. You’ve had to take 3 or 4 trips back to the hardware store to get the right parts, while the plumber has everything in his truck and has seen it before. Same goes even more so for your tax accountant, who has seen your special circumstance before, and not only knows the law about it, but how the IRS actually treats it in the real world.
Finally, the third group are those who are on-top of innovation, that you’re going to for something new and innovative. These would be your problem solvers with a new way to resolve it. We all often think we’re the innovators, and probably love that element – however in a great deal of cases, we spend the majority of our time, and make the greatest revenue from the other two areas.
The balance to most successful managed service companies is discovering your exact blend that makes you successful to the clients you serve. Realize this blend and make sure that your staff reflects this blend. There should be a match between the two. If you have a bunch of clients looking for experience, and you have a bunch of young, hip innovators – your clients or staff need to change. You’re working less than optimal and efficient if you’re not.
Did you find a CPA for your team yet? You probably have a bookkeeper, but you want an independent CPA firm at your beck-and-call. The better off you think your company is during this economic situation, the more you might want to panic. So far I have seen two companies fall this year because their books were being cooked. Money was disappearing right from under the owners nose!
So what do you need to do – have your books audited by an external, independent CPA. A few reasons:
1) To ensure that things appear on the up-and-up with everyone who is involved with the finances at the company, from on-paper to actually having check authorization. Make sure all of the money is properly accounted for. Be prepared to dig-deeper as necessary;
2) To ensure that you’re doing everything properly. You simply don’t know about the things you don’t know. A CPA is paid to know these things.
3) A good honest look into your company. The CPA has seen it all before and can give you a good sounding board, or perhaps devil’s advocate with you. They can be a reality check on where your company “really is” – how bad things are effecting your company.
So, what are you waiting for, make that call now…
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This is not intended to be specific legal advise, but general information and a guide to help you work with your professional team including lawyers to provide the correct amount of protection for your company. This is part of a 4 week series which came out of a luncheon discussion with several close business associates of mine.
Filed under: Uncategorized | Tags: clients, customer service, employees, wisdom
Non-competition agreements have been standard for many trades throughout the capitalistic history. However, at some point California, being an at will employment state ceased to recognize these documents as binding. The logic is that an employer should no be able to restrict a person from taking a traded they know and using their skills at another company. Equally this applies to employees starting their own firms. How many of us have been apprenticed by another, perhaps even working as an employee at their firm.
While the business logic for a NCA is apparent, so does it logic for why California does not enforce these agreements.
So what is an employer of contract services to do to prevent employees from stealing clients from their former employer? There are a couple of things:
First thing is to make your clients a raving fan of your company, it’s model and brand. Your company brand should be disassociated from individuals likes – yes, they should love your people and have a great working relationship with them; however they should love what the company brings to them even more. Beyond simply avoiding problems with former employees, or even simply because of great customer service; this can make it much easier to exit your company (sell, merge, etc) when the time comes.
Next, market your customers with the value of a larger company (or simply larger than an independent contractor) – such as greater stability, higher availability, diverse skill sets, etc.
Third, remind your staff of the high costs of doing business, the value you provide to them: job and income stability, benefits, holiday and vacations (even if unpaid, they have a job to come back to – try taking a 2 week vacation from your contract clients without problems), administrative and business services — they can simply focus on their trade instead of the business end of things.
Finally, you can bind your clients in their contracts to not recruit, hire or retain your employees, former employees or contractors during the duration of their contract with you, and perhaps 1 year thereafter. This can simply be placed in line with your regular contract terms, but you also want to include two important elements: (1) a stated minimum monetary amount (we placed it at 50% of the annual salary of their regular technician) and (2) a provision for you to receive reasonable attorney fees. Most clients will understand this in the onset of an agreement. You can also gently remind your employees about it – in a non-threatening way.
Now failing all of these, you can likely litigate with your former employees because they’ll likely violate terms of their non-disclosure agreements. But proving this and determining a monetary damages could be difficult.
Realize that this does not prevent this from happening, but rather it is a big deterrent. You also still need to collect from them, which will take much longer than you would expect. With major clients this could be devastating to a company. What would happen if your employee was able to woo your largest client away? How would this affect your business if you could not collect any monetary damages from anyone for 24 months?
We recommend being proactive by making sure that your clients are happy and fiercely loyal. Second to that is having your contacts reviewed by a business trial lawyer.
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This is not intended to be specific legal advise, but general information and a guide to help you work with your professional team including lawyers to provide the correct amount of protection for your company. This is part of a 4 week series which came out of a luncheon discussion with several close business associates of mine.
Wow! 2008 ended up with a bang! We are really excited around the office with everything that has been keeping us going, and growing! We celebrated into the new years with some close business partners, and are excited about the prospects of the new year. We are beginning to see how those who are able to adapt to the new economy are thriving.
For those of you who haven’t figured it out yet, there is still millions of dollars to be made out there, waiting to be spent – you simply need to learn how to adapt your business to capture it.
However, to that end, we’ve also seen some close friends lose their business, and sometimes go into personal bankruptcy as well. To this end, I’ll be offering a few articles in January about what we’ve learned while talking with this partners, friends, and associates.
Enjoy the new year!
Last week I was having lunch with a business associate who owns a computer consulting firm in the East Bay Area. We were discussing the way his business works with Corporate Procedures for their business operations. As a small business typically we begin with one person per task, and they are an expert at what they do, more because they created their process. However, as a company grows we begin to delegate tasks and then eventually form teams of people who do the same processes. At this point, it becomes important to have a written procedure.
Procedure manuals can become large an tedious. For the small business, it is important to scale your procedures – even beginning with the very simplest bits of information. We have seen employees come to the owner/manager/etc and sometimes say their should be a procedure. Or other-times, it is more simply stated, how do I do this task. Those should be the indicator to begin a written procedure policy.
It does not need to be something complicated. Even a simple: 1-2-3 checklist of bullet items – no detail. But begin somewhere. Start simple and as the needs grow, expand your documentation.
What you don’t need to do is replace formal education, industry standard training or other certifications with documentation. In the computer consulting industry, your technicians should know “how” to create a user, or setup a “security group” — but as a company you may have established a “methodology” that you want to remain consistent.
Another good example is creating checklists — such as a Quality Assurance – before we return a computer to the customer, we will always check….bla, bla, bla.
As a small company, really there is no hierarchy, nor is their a technical writer. So what I’ve helped some business associates do is to setup a wiki, such as MediaWiki and permit all of their employees to add content to their hearts delight. It is search-able, and has great version control. You can then empower them, if they think there should be a policy, they can create it. Even if it is a simple 3 bullet point list of what you need to know when…
Begin with a culture of documentation early. There is no need to perfect it, just start getting procedures down on paper. Let it grow from there. Commit to spending 15 minutes per day, or at least an hour per week contributing and growing what you have. Brain dump your knowledge. Once it becomes something used frequently by your staff, you’ll find you have a bit more time — and your employees will be more empowered with the information and knowledge they need.
