Business Coach | Build An Enterprise Part 2

This business coach post explains how to build an effective and successful enterprise.

Business Coach Tip: Create or use DATABASE SOFTWARE that your salespeople and office staff use to keep track of your customers’ information, needs, and history.

If you are like most small business owners, you know all of your customers personally. You are the “Lord of Your Sales Dominion,” and you take pride in knowing everything about every one of your customers. This is not cool because if you get hit by a bus and you go into a coma for a week, nobody knows who your repeat customers are, what they need, and what unique pricing structures they all have. If you ever want to sell your business in the future, the next owner is not going to be too excited about having to rehire you full time because you are the only one who knows anything about your customers. If you are like most semi-successful small business owners, you probably have a salesperson who is really good and so you depend on him/her (too much) to generate your company’s sales. Basically, if this salesperson leaves, your sales are going to really hit the crapper. If this dude decides to take your customers with him when he leaves for that next “career opportunity,” you are really screwed. This is not cool either. And finally, if you are like most small business owners, many of your loyal customers will grow increasingly frustrated with you and your service the larger that you get. The more customers that you add to you repeat customer list, the more your old loyal customers will get frustrated. This continues to be un-cool; however, this does not have to become your reality.

If you follow my business coach advice and use a unified sales and lead database for all of your customers, these issues will almost all go away. I highly recommend that you use the sales program called ACT! by Sage. This program, and other ones like it, will allow you to keep track of your customers, their phone numbers, e-mail addresses, physical addresses, occupations, desires, account history, buying tendencies, feedback, and all of the information that your company needs to know about every customer in order for you to offer that tailored customer service and product delivery that everyone loves. And thus if you do hit your head on the toilet seat while you are attempting to create the flux capacitor, your company, your company’s sales, and your livelihood will still be intact. If your top salesperson decides to become an egotistical, type-A, terrorist-style employee (as one of our top sales guys did), you can fire him and your customers (and your company balance sheet) will not notice the difference.

I also advise my business coach clients to create a service and product delivery checklist to ensure high quality every time. You basically have to create a checklist that documents everything that you expect your people to deliver to your customer every time and how it is to be delivered with very specific detail. If you do not document your expectations for your product and service delivery, your people will only be able to hit this ambiguous and murky target occasionally, and you will find yourself making previous customers disloyal through the randomness of your inconsistency. People on family vacations generally do not pull off of the interstate to experiment with their lunch dollars at some oddball and shabby-looking diner. They generally pull off the interstate to eat at a brand of restaurant they know and trust such as Subway or McDonalds. Although Subway and McDonalds might not offer the best food ever, they do offer the most consistent food ever. Thus, people are buying lunch based on the predictability of the good-tasting food, not the great-tasting food. Your delivery system must build your reputation with each customer you service. Business coach truth: Your company must strive to get it right every time, not 50 percent of the time.

Create a merit-based pay structure, and relentlessly pay all your people based on the quality of their job performance and not based on the number of hours they work. Tie your merit-based pay structure to a mystery-shopper program or to a quality-control survey completed by your customers. When it comes to quality control, I have found that all the pep talks, charts, and illustrations do not mean anything unless you praise and punish your employees in their wallet (where it counts). With business coach and a properly implemented merit-based pay structure, your top employees will feel appreciated through higher wages, and your poor performers will either feel as though they need to improve or quit. Either way, with a merit-based pay structure in place, your company will never be stagnant; and you will create the “intentional turnover” of the bottom one-third of employees that all great companies need.

I will never forget the reactions on the faces of our disc jockeys when I announced our dramatic and immediate move to a merit-based pay structure. Under the old structure, every DJ made a 33 percent commission on all their shows (with $575 being the average price tag). However, under this new system, our average price tag was going to move up to $675 (larger and higher-end events), and each DJ would make a guaranteed 25 percent commission on all DJ shows while he stood to benefit by about 10 percent for each favorable customer-service survey he received. Under this new system, every DJ would be meticulously reviewed and rated by his past performance. Disc jockeys who were found to be in the top 10 percent of our staff would be paid a guaranteed 35 percent (as opposed to the guaranteed 25 percent the other 90 percent earned) with an ability to earn a 10 percent bonus based on their reviews. Essentially, the disc jockeys who were not performing to our standards would be paying for the bonus checks of our top people. It was Robin Hood in reverse. The underachieving DJs were going to be paying for the increased bonuses of our top people. This system really irritated some plankton-eating, bottom-feeding carp disc jockeys, which I was glad to see.

Create mechanisms, rewards, and penalties to incentivize every aspect of every job in your business. In order for this system to work, you must mercilessly penalize lateness and religiously praise promptness. You must celebrate quality like it’s the best thing in the world, and you have to make dramatic examples out of those who intentionally and consistently deliver poor performances. Telling people they should try harder because it is the right thing to do is about as bogus as telling a sophomore in high school that they have to sit in the timeout chair if they don’t behave. If you want your team to see what you value, reward and penalize all behaviors financially. I believe that one third, if not more, of all pay should be merit-based. If your bookkeeper is saving your company thousands, show him appreciation by offering to pay him a percent of all the additional money that he saves your company. If your HR guy is phenomenal, you need to reward him (or her) with bonuses for each new recruit. However, if your HR guy is underperforming and consistently not delivering, you have to show him that it matters by setting up financial penalties for lack of performance. Pay everyone with performance-based pay scales, and your company will always be profitable. If you start guaranteeing everyone hourly wages (except for yourself), you are going to find yourself yelling at and pleading with lifelong underperformers. Praise your top people, and fire your bottom people. Repeat as needed with a sense of urgency. Warning: your bottom feeders will get mad, which is good.

Build an operations manual for every aspect of your business. If there is any aspect of your business that only you know how to do, you must make an operations manual to document how you do what you do and how others need to do this process as well. Build an operations manual detailing how to hire, how to fire, how to train, how to recruit, how to market, how to sell, how to deliver your product, and how to do your favorite sexual move.  Leave the operations manual on how to do your favorite sexual move at home, and only use it in the context of marriage. Once you have completed your linear chart, relentlessly ask yourself, “Does my workflow chart systematically exceed my customers expectations?” If it does, you are on the right track. If it does not, you need to keep tweaking your workflow until it systematically exceeds your customer’s expectations every time.

Build a proven business coach system that is designed to hold everyone accountable for his or her actions and deeds. For an incredible example of what not to do, we can look at the DJ Connection 2004 version. During this time, the sales guys were allowed to tally up their own commission totals in a way that was designed for each guy to hold himself accountable without any checks or balances. President Ronald Reagan was famous for encouraging America to “trust but verify” when dealing with people; and I would recommend a similar course of action when dealing with your employees. Do not ever allow your people to be put in a situation where there is zero accountability. Do not ever allow yourself to get in to a position where there is zero accountability. Accountability prevents good people from turning to the dark side. There are enough Darth Vaders out there as it is; we don’t need to be out there enabling and creating them by leaving the light saber closet unlocked every night (I think I took that analogy too far).

Build a hierarchy chart that clearly outlines who is in charge of who and what their responsibilities are. For me, writing this hierarchy chart seemed a little tedious and ridiculous at first. We only had fifty DJs at the time, and I kept wondering what the point of building a management chart was in a small organization. But as I went through it, I noticed that there was no system in place; and through default, everyone felt as though they needed to report directly to me. This was frustrating, but as I was making the chart, I started realizing that it would frustrate me if I worked for me. Without someone to report back to, how were my people supposed to know if they were doing a good job or not?

Make a place for everything (including the scissors). In 2006, there was one day in particular when I felt a meltdown coming. Maintenance had not finished fixing all the karaoke systems from the previous week’s repair list, and thus 4 of our 8 karaoke systems malfunctioned on the same weekend. Customers were calling in to complain and to “talk to the owner,” which was not fun. One by one they were ripping me a new one, and I knew it was 100 percent my fault because I was not being hard enough on our underperforming maintenance guy. After being chewed out verbally by four consecutive customers and finding out my e-mail was not working properly either, as luck would have it, the last straw was . . . I couldn’t find my scissors! I don’t remember why I needed scissors (probably to kill myself), but I do remember that I could not find them, and thus I was super pissed. I started yelling out (I wish I had a more descriptive vocabulary at the time): “Holy shit! What the hell is going on with those karaoke systems? What the hell is so DAMN HARD about repairing a F&*$ing karaoke system? Are those guys idiots? And where the F%$& are my scissors?” For some reason, as soon as I went nuts about not being able to find my scissors, it occurred to me that there was not a place for everything. That night I stayed up ALL NIGHT reorganizing and labeling everything. I was riding a wave of anger and frustration, and I did not want to miss out on this ambition surge. The next morning when everyone arrived at work, they found a neatly organized office and a delirious, yet oddly cheerful, eccentric boss waiting for them with the good news that “everything is now organized.” My friend, your time to label and organize everything is now. Go get a RedBull and start tonight.

Make a company culture checklist. You must have mechanisms in place to keep the continuity of your office culture in place as you transition from one employee to the next. Over time, your people will change, but the consistency of your product and service cannot if you want to maintain viability. At DJ Connection, our number-one export is sincere “humorous enthusiasm, adaptability, and over-deliverance.” That is what we are known for, and that is what people want. If Mr. Somber wants to come to work for us because he hears that our pay is good, that is ok; but he must change because we will not. Your people must know your company mission statement, and they must live it every day. It doesn’t matter whether they know the slogan or not; it matters whether they live it or not. At DJ Connection, we make fun of each other; we crack jokes; we do not take lunch breaks; and we get stuff done quickly. At your company, you must figure out who you are, and you must relentlessly talk about it, celebrate it, and encourage it every day in every way. If your current culture is falling short of your mission statement and your ideals, you must work tirelessly to force your reality to conform to your ideal.

Make a previous-customer follow-up system, and stick with it every time. Although it might be a blow to most of our egos (as entrepreneurs), the reality is that most people are bombarded with mailers, calls, flyers, and e-mails; and they don’t always read what you send them. Your company must develop a way to cut through the sensory overload in a real, memorable, and sincere way. How? I do not know what will work best for you, but you must stay in touch with your former and currently satisfied customers. If you ever make a customer mad (and you will at some point), you must rush to recovery so that you can take the blame, make it right, and find out what you can do to make sure that this type of mess up does not ever happen to someone in the future. For the record, if you show me a businessperson who has never accidentally upset a customer, I will show you a businessperson too afraid to ever earn new customers. Boo!

Make you marketing calendar based on the seasonal aspects of your business and the American culture. If you are in lawn care, don’t do a huge marketing push in the dead of winter for your spring clean-up services. However if you are a landscaper, you might want to market your Christmas-light installment services the week before Thanksgiving every year. The point is, as an entrepreneur, you must analyze your market and determine what the best marketing programs are and the best time to implement them. Don’t be an idiot like I was and mail a ton of schools about your prom packages while all the teachers are on break. Don’t be a moron like I was and spend all of your marketing dollars airing radio commercials throughout the summer to book weddings (when very few people are getting engaged during this time). Sit down, brainstorm, and get specific about what products and services you should be marketing in which months. Poor returns on marketing campaigns are an “idiot tax” on people like me who did not take the time to think before spending those marketing dollars. Almost all business owners and entrepreneurs quickly find out what promotions and types of advertisements work and at what times of the year they work best. Thus, it is time to take the randomness out of the equation by taking the time to make a marketing calendar that can be used every year to maximize your marketing efforts.

Make an “Armageddon checklist.” If you get hit by a bus, who is in charge? If you get hit by a bus, how will your spouse or significant other pay the bills without you (life insurance, business plan, etc.)? I realize this is not a fun topic, but we’ve got to get over it and get to working on it. Think through all the what-ifs, and make a plan for everything. If your building is on fire, who grabs what and how are your information and your systems backed up?

Make an employee review calendar. If you are going to be implementing a merit-based pay system with your employees, and if you are going to be serious about rewarding your top people and removing your bottom people, you must set up a calendar for those infamous employee reviews so that everyone will always know where they stand, how they got there, and what is needed to improve. Those who are willing to improve will love the candor and the sincere feedback; and those not wanting to improve will love arguing with you one last time for old time’s sake. If you would like great additional reading on the subject of employee management, I HIGHLY recommend Jack Welch’s autobiography entitled Jack: Straight from the Gut.

Create a web-optimization and web-presence calendar. It is simply not good enough to only work on your website and Internet image every three years when you think about. You must have a system in place that will keep your Internet presence on top of your competition and in front of your customers. We work on our website every Monday morning at 6:00 a.m. What time will you choose?

Create a company budget (and stick to it). Individuals and businesses that operate on a budget spend less bottom line. Take the time to determine your annual company budget, and cut as needed (unlike the federal government who is fond of simply printing more money whenever they exceed their budget constraints). Big shout-out’s to nearly all former presidents, Congress, and the Senate in reference to your incredible deficit-spending habits. Someday you will have to explain to me how my wife and I can spend five times what we bring in and still remain economically viable by secretly imposing inflation on all my neighbors to make up for our love of spending more than we have.

Create a “customer differentiation” program and operations manual that details how your company will differentiate between apostle, loyalist, mercenary, hostage, and terrorist-style Jihadist customers.  Anyone who has ever worked a day of their life in a service or retail industry will tell you that there are some great customers, and there are some horrible customers. However, very few businesspeople and companies take the time to systematically sort their customers into groups. Why would you want to sort them into groups? We all need to sort our customers into groups because our TOP 20 percent of customers (apostles) are the ones that usually bring in 80 percent of our business revenue, while the bottom 20 percent of our customers are usually the ones who haggle with us for half of an hour about price, express no loyalty, and tend to frustrate all of our employees. Thus, if you have too many bottom-20-percent (terrorist) customers, you will quickly find yourself without any profits (as these people always haggle and want refunds) and without any quality employees (as quality employees only have a limited tolerance for companies that market to and cater to mediocre customers). Taking the time to differentiate your customers will allow you to spend your marketing dollars on retaining your top customers, instead of spending your hard-earned money constantly marketing to new ones. To save you the time, just remember this, every dollar that you spend on keeping your current customers happy will usually net your business two dollars of profit. Ask yourself today, ”How will I systematically differentiate my loyal customers from my terrorist customers? Will I enter all my loyal customers in a database after I deliver my product and service to them?

Create a “Family Time and Family Vacation” calendar. As a business owner, you can oftentimes find yourself working all the time, which is great for business, but bad for “business time” with your significant other and “family time” with your loved ones. Take the time to write out (with great detail) when you will work and when you will not. Take time to schedule times for nothing to be on your schedule. Your family will love knowing when the next family vacation will be and when daddy or mommy is coming home. To my wife and children: I apologize for not having discovered this earlier in my working career.

“Knowledge without application is meaningless.” – Thomas Edison

Help keep this business coach content from becoming as meaningless as three-fourths of the content found in pop/rap songs by seriously and thoughtfully completing questions throughout this post.  If you need assistance with building your enterprise, contact us at thrive15.com.  We help small business owners and entrepreneurs just like you build profitable and successful businesses every single day.  We’d love to help you too, so please contact us today. Visit our site to sign up for a free trial, receive a free business evaluation, or one-on-one coaching session.