As I think over last year, I wonder why some companies increased sales and were happily forging ahead while others never moved out of the starting gate, or worse, closed their doors. I’m going to begin with the premise that you’re attempting to build your business in an industry that has potential. For example, I assume you aren't fighting the odds against industry and market trends. There are examples of niche companies that have been successful at this, companies like LC King Manufacturing Company in Bristol, VA, a quintessential American success story. Remaining family owned for four generations, LC King maintains the standards and quality of the founders’ vision while still working with designers and manufacturers around the world. For sake of focus, let’s put specific niche business aside.Let’s talk about businesses that are in stable or emerging industries. For these companies, what keeps them vibrant and alive? What I’ve observed is that there are at least five secrets to their success in making happy money. Whatever your description of happy money, and I’ve heard many, the definition usually includes living your Core Purpose while paying employees fairly, sharing bonuses with the team, investing in new technologies and equipment, giving back to the community you serve or work in, and more.
If the following five secrets were each a separate book, then you’d want them between bookends near your desk to have them prominent and at the ready. As you think about why you started your business, employ these five secrets to make happy money with your team:
#1: Keep Smart
For Rhythm Systems, this is a Core Value. We hire to it and for it. Job interviews at Rhythm Systems include many questions about how the candidate stays on top of trends, gains information, expands their learning, and build education habits. Most don’t know it, but we’re looking for team members that have a habit of keeping smart, rather than candidates that we can make smart.
#2: Talk – and Talk a Lot
You’ve heard that communication is important – and, you may have said so yourself. Communication or talk alone, won’t work. Instead, talk a lot about what you’re most focused on now, like priorities for the quarter, the handful of KPIs that are most important, or challenges and obstacles in the way of a successful quarter. Talk about them weekly, or more often, with your team, and talk a lot about solutions. Develop the discipline of a preplanned agenda for your weekly team meetings so each team member can come prepared week over week.
#3: Everyone Needs to Know the Money (at least on the executive team)
Our financials are discussed at every monthly meeting. Our financial person has tweaked and improved the data we discuss so that only 3 slides tell the story that we non-financial people need to know. I recommend a cash report for example, some form of a straightforward cashflow runway that links data from accounts receivable and payable to quickly communicate where the company should be at the end of each period. If financial information is held closely, consider a CEO cashflow forecast so the CEO is not blindsided with negative financial data.
As an extreme example, if you knew from the above reporting that in two weeks your line of credit was maxed, and that you could only make it three weeks further on cashflow before you could not make payroll, you now have clear triggers. You should of course try to set them earlier than in my example ;>).
When you clearly link a trigger to a number, you reduce the emotion involved in making capital or headcount decisions.
If you were to trigger a change, you’ll then want to be able to insert a revised forecast of three less heads vs. five less heads, etc. and see how that affects the cashflow runway. When a trigger point is hit, being able to plug in headcount reduction monies will help you make fast, accurate, and appropriate decisions no matter the emotions involved.
#4: Solve Problems that Others Won’t
There are three questions from the book Rhythm to help you determine winning moves, or growth strategies that will 2-3x your revenue in 5 years or less. Determining winning moves and prioritizing which to work on, is usually an extended discussion. The most basic thing you can determine is to SOLVE THE PROBLEMS YOUR CUSTOMERS FACE and that your competition is unwilling (or unable) to solve. Accepting credit cards when others didn't was example of this. Downtown hotels with separately owned adjacent parking are more attractive when they've solved the issue of your paying separately. You get the picture.
#5: Name That Customer
Know your customer so well that you could describe them as if you knew personally. You may be familiar with the term persona. Personas are created by you, your knowledge, and your research as you track user/customer needs, expectations, habits, their ways of making decisions and more. There may be many iterations of persona as you learn more. They are in effect, a fictional character, named and described by you. More than one persona is fine – it helps you identify for whom you’re designing products and services and ultimately a good experience for each by naming that customer.
With the above 5 secrets securely on your leadership mantle, let’s put up the final bookend: Family. As an entrepreneur, I’ve worried about making payroll, making loan payments, losing good employees, finding business, employee theft, running afoul of local, state, and federal agencies, etc. I’ve come in early, skipped lunch, and stayed late. I’ve worked when others were sleeping and put in 90+ hour weeks. Not one minute of it would have been worth losing my family or personal relationships.
I have observed that most of us as leaders and entrepreneurs work as hard and as long as anyone else. As you apply these 5 secrets, be clear on what you believe is important. Your family could be compared to a garden. Once the garden is planted, you have a responsibility to water and nurture the plants, add fertilizer as needed, prune occasionally, and remove the weeds. If you don’t follow on this responsibility, your garden will wither and die. In the same way, nurture your family “garden” and it tends to flourish. Neglect your family “garden” and it will wither. I trust that the above secrets will give you time and resource to invest in the things you determine most important.
Looking for more Annual Planning information to help get you started? Check out our additional resources:
Rhythm Systems Annual Planning Resource Center
Photo Credit: iStock by Getty Images
Photo Credit: iStock by Getty Images