4 Stages of the Small Business People Pyramid

4 Stages of the Small Business People Pyramid

I am not clairvoyant, but I can get a quick estimate of the stage of your business based on answers to three simple questions:

  1. How many hours a week did you work in last year?
  2. How much has your profit grown in the last three years?
  3. What percent of your team are A Players?

The answers to these three questions are inextricably linked – the quality of your People is essential to your business profit and your personal work-life balance as a small business owner.

To describe these business growth and health stages, I created a model that I call the People Pyramid.

Stage 1: Fires Chaos & People Drama

When you don’t have a trusted reliable team, you are left to deal with fires, chaos and drama. You and the rest of the team are exhausted dealing with everyday crisis, and feel frustrated rather than productive.

You might have a few Debbie Downers who squelch the whole team, and leave things hanging or a mess that surface later. Good employees are annoyed they have to pick up the slack or deal with someone who doesn’t work as hard or care as much as they do.

Tensions may be high or between co-workers, lowering the team spirit and creating interpersonal drama. The chaos lowers the customer experience and distracts you from pursuing new sales and customers. The focus is on getting through the day, not improving the business.

This creates a vicious cycle that is definitely not the foundation for growth.

Often owners work too many hours, and go home feeling like they didn’t accomplish anything. They feel burnt out and overwhelmed, and think about exiting the business.

Stage 2: A Few Good (Wo)men

At this stage, you have a stable core of long term employees who share your values about how to care for your customers and are good at their day job.

Most people are decent performers but a few don’t seem committed to doing a great job all the time. These lower performers tend to drag down the team, and take a large part of your day assigning and monitoring work is done on time and correctly.

Work flows fairly well and employees are mostly clear about job expectations, although procedures are informal and not written down. New employees struggle in their first few months getting used to how you do things. You have a fair amount of turnover as some of the people you hire leave after 2-3 years, and you are not sure how you can keep the good ones.

To make decisions, staff ask managers questions and get approval for anything they think should be run by the boss. There may be a continual flow of people asking questions and running things by you.

Your days are busy but progress is slow, and you have a wish list of business improvement ideas that you never seem to get started [much less finished].

You would like more free time and you are afraid to leave since issues or problems surface when you take more than a few days off.

Clearly the business is relying on your presence and guidance to function. You have the CEO Syndrome [Chief Everything Officer].

Stage 3: Silos and Soloists

The natural progression for a business is to start to organize around functional areas- sales, operations, customer service, accounting.

This is typically the stage where you have team leaders or managers who now coordinate the daily work in each area. Just like an orchestra, each area head is a soloist- concerned with the work under her section. Sales is concerned with selling more to more customers, operations is concerned with onboarding and servicing the customer, and accounting is counting the beans and controlling the cash.

It is also natural for these soloists to make decisions in a “silo” [a tall structure sitting directly next to another structure, yet not touching or connected.] Sales might promise 7 day turnaround without checking with the team who has to do the work and has a 14 day backlog. Purchasing might find a great deal on supplies and place an order without checking with accounting, and now there is a cash flow issue.

You now become the conductor of the orchestra—making sure that each soloist complements each other’s work and that decisions are made based on the impact on the whole business, not just one area. This requires daily effort on your part, because silos can’t see what is happening outside their walls, and often don’t hear about the impact of their decisions unless it is a crisis.

At this stage, there are often team leaders or manager who now assign and coordinate the work of your employees. These key people now are responsible for the daily monitoring of employees and customer care, and putting out small fires.

Most employees are clear about expectations and you have another layer to assist with performance and attitude issues, so you only need to get involved with serious and persistent People issues.

Now you have time to have informal team meetings to keep people informed and tackle current problems, although you may not stick to a consistent meeting schedule. You and your staff may not know what to talk about and when, and some people find these meetings boring.

You want to grow your revenue but sales may have been flat the last few years.

Your business has a good reputation and sales often comes from referrals and repeat customers. You may have sales people who use the traditional methods of networking, advertising and responding to leads that are generated to convert into customers. You may not have a specific sales pipeline or track sales metrics on a regular basis.

You feel like you are progressing on the business, but may feel like you “pay for it” when you take time off.

Stage 4: Trusted Accountable Team [Ready for Growth]

If you want to grow beyond a few million in revenue or 20 people without imploding, these are the elements you need to for scalable business. (Or if you want your smaller business to be more valuable and less reliant on you.)

This is a business that runs on “autopilot.” Just like an airplane, the captain is setting the course and still there for oversight and monitoring, but the routine work of flying at the same attitude is delegated to the co-pilot and systems.

This is a business that does not revolve around the CEO, who can then focus exclusively on strategic long-term planning and implementation.

This is the highest valued business, since it doesn’t need the expertise or effort of a single person to create value.

Key tasks and results are defined in standard operating procedures and are followed consistently. There is a method in place to review and improve process to eliminate bottlenecks, increase efficiency and delight the customer.

There are “A-players” in every main role and the majority exceed performance expectations. There is an ongoing coaching process in place to give regular performance feedback, and everyone has a training and development action plan. People are engaged, committed and loyal and the culture is positive and values accountability.

Everyone is clear about their responsibility and how they can impact business goals, and have individual metrics and projects with “line of sight” to key business priorities.

The business has a strong brand, and a consistent repeatable process to find leads and turn into customers. Sales is not dependent on a single rainmaker. The sales pipeline is clearly defined and semi-automated, and is reviewed and refined by the sales team in regular meetings.

The business uses dashboards to evaluate key company & individual results weekly and monthly. Business decisions are based on data analysis of past, present and future modeling. Managers meet regularly to evaluate and revise their plans and projects for continual improvement and long-term value creation.

Owners of businesses at this stage spend most of my day doing what they love, and choose how much time they take completely unplugged from the business.

7 Roadblocks to Your Small Business Growth

7 Roadblocks to Your Small Business Growth

Most small business owners wear many hats—service provider, marketer, salesperson, accountant, customer service, and for your team – trainer, project manager and coach.

But the more the business depends on you, the more you are limiting it’s potential .. you can’t do it all well.

In fact, only 8% of businesses grow to over $5 million in revenue.. something happens to most firms and they plateau around the $1-2 million mark.

Actually, not just one thing…

There are 7 main roadblocks to achieving your business potential— a lack of systems in 7 key areas.

  • If your firm lacks these 7 systems, it creates a bottleneck that flattens sales, prevents great customer experiences, and reduces profits.
  • Once you get the key elements right, you can grow smoothly and consistently, with a business on “auto-pilot.”

1. Plan

Roadblock - lack of dashboards measurement

Dashboards

Remember Steven Covey’s habit “Begin with the end in mind”?

There are four main plans to guide your activities and decisions to create the business you desire:

Strategic plan: It is crucial to provide a roadmap to guide your major decisions.

Budget: An annual budget is a planning document, report card, and decision tool.

People Plan: This plan outlines your current and future people roles— and forecasts what additions and changes to roles are needed to support sales growth and new business lines.
It also outlines individual’s work with organization goals (see People and Process below).

Owners plan: Owners, just like every team member, should be in a role that maximizes their strengths. Many owners continue to be the CEO- the Center of Everything Officer. This creates a huge roadblock for growing the business as the owner becomes overworked and overwhelmed.
An owner’s plan considers their current and future desired involvement, and outlines a plan to transition responsibilities to key people over time.

2. Sales plan

Most businesses have a reactive approach to sales—they do a bit of advertising or hire a sales person and then respond to the leads that come in.

Often the owner is heavily involved in all or part of this process. It is typical for a busy owner to be slow to respond to inquiries and provide proposals, and leads can be lost quickly without a tracking system.

There are several roadblocks in such an informal process.

Not only are you losing new sales that you already proposed, but you are also not pursuing qualified ideal prospects to have a consistent flow of new sales opportunities. A third sales area often overlooked is repeat business from current or prior customers—most organizations don’t have a solid process to keep in touch and offer additional services.

If you want to find, attract and cultivate leads into new and repeat customers, the solution is to have a consistent optimized sales process plan that is semi-automated.

3. Process

Process Plan

Define your process

We all have our own way of doing things.

While that is just fine in our personal lives, a business needs to ensure consistency and quality of the product and service we deliver to our customer.

This roadblock is the lack of three little letters: SOP—Standard Operating Procedures. 

Maybe you consider this super-boring, but this is the foundation of growing and scaling your business with few fires and chaos, not more. If you throw gasoline (more sales) on a fire (inconsistent work) you have an explosion.

If you want to grow smoothly, you need SOP’s.

SOP: Two key elements to a streamlined and consistent process are 1) to identify key tasks and results in standard operating procedures – SOP, 2) continually refine those SOP and implement projects to improve your process and delight your customer.

Employee involvement: To best way to process improvement ideas is to actively involve your employees in the process—they are closest to the customer and are more likely to see ways to do things faster, better, and cheaper.

Business success is about delivering an exceptional customer experience– and systems allow you to do this easily as you grow.

4. Rhythm

Your standard operating procedures are enhanced further by creating job responsibility profiles with key performance indicators (KPI) for each employee.

When everyone is clear about their responsibility, how it supports business goals, and how they will be measured, they perform better and are more engaged with their work.

One optimal practice is to create a firm-wide dashboard of key metrics, and then “cascade” the goals and metrics to the specific people responsible. These “report cards” show when company and individual results are on target, allow for quick adjustment in  areas that need attention, and  ensure focus on the main items to achieve this year’s goals.

5. People

Fabulous Team A Players

Fabulous Team A Players

Even with perfectly optimized systems and all the pretty dashboards with your key metrics, you won’t grow with a fabulous team of People, who work together to achieve business goals.

A Players: There is a simple measure to know if you have this—do you have 100% “A-players” in every role?

Virtual bench: When you have qualified candidates on a “virtual bench” (ready to hire as business grows), this allows you to plug in the team you need when you need it, rather than overwhelming your staff and disappointing customers as you reactively scramble to find more teammates.

6. Personal

Personal work life balance ikigai

What is your ikigai?

As the owner, you are both the key to your success AND your biggest roadblock.
If you want your business to run without your daily involvement, you need to:

  1. Build a trusted management team to optimize the business
  2. Delegate to handle the daily operations (no meddling)
  3. Hold them accountable via the goals and dashboards tied to strategy
  4. Focus your efforts on your genius—what you love to do, what provides the greatest long term value for the business

7. Profits

A lack of profits is a huge roadblock to your business success. Low cash flow causes you to make decisions out of scarcity— cheaper labor, old broken equipment, taking on low margin jobs,  not investing in process improvement, and working yourself harder.

When you have the Right Plan, Process and People, the Profits start flowing (I call this the 5 P’s model).

This upward spiral of success finally provides you the security, freedom and funds to step out of the daily “running” of the business, and let you focus on your ideal role and ideal week (and ideal life). 

Download the Guide and discover Which Roadblocks are Limiting Your Small Business.

Blog Author Diana Southall

Article by Diana Southall

About the author: Diana Southall is the creator of the People Plan. She helps owners who want to grow their small business but are too personally involved, and who want to learn how to “run a business” and build a trusted team to handle the day to day.

Who killed your summer vacation?

Who killed your summer vacation?

The average manager has 2-3 weeks of paid vacation each year, but most do not use every day off.

Time Magazine cover article for the 6/1/15 edition asked “Who Killed Summer Vacation?”

In fact, this has become so prevalent, there is a commercial featuring kids asking “can we just have one more day?”     Pretty heartbreaking!

Do we love our jobs so much that we can’t possibly get away for 5 days at a time? Or are we creating conditions at the office where our teams and colleagues can’t function without our genius and brilliance?

I have a global client with multiple locations in Europe. Last summer we were working on a high priority sales compensation project. I was struck by the attitude of the sales manager from France and the regional operations Director in the UK. They simply mentioned “I am on holiday those two weeks (or month)”—no apologies, no offer to call into the meeting from the beach. And somehow their divisions seemed to survive the summer, and re-emerge in the fall with plenty accomplished.

If you own the company, you truly have no excuse.

What are you doing that can’t wait 5 days?

Who can you train to make decisions while you are gone?

My mother’s wisdom applies here – she used to say “I became a manager when I opened my second store. I had to put systems and people in place, since I couldn’t be there to handle everything.”

What can you do? I say book a 10 day cruise or vacation without email or phone access, and prepare as best you can. Then leave! You would be surprised by how your team can “hold down the fort” without you.

(In fact, have everyone keep a list of things they normally would have discussed with you, but they somehow figured out … then add these things to your training plan for next quarter).

Need some tips for taking charge of your schedule?:

Read my article about how delegation actually leads to more engagement: Engagement Driver 4- Training and Development

Entrepreneur Magazine article- 12 Habits for a Better Work-Life Balance

12 No Cost Ways to Reward Your Employees

12 No Cost Ways to Reward Your Employees

The beginning of a new year and also that time of year when employee thoughts turn to… (well on the East Coast everyone is thinking wistfully of spring) “When am I going to get a pay increase?”

Thanks to 50 years of prosperity and a small dose of influence from union contracts, the American worker has been conditioned into thinking (expecting) that they will get a regularly schedule raise in pay in January. The legacy of 20 years of consistent pay practices lives on.

I don’t need to rehash the economic news of the last 6 years, but pay increases since 2008 have been well below the former 3% standard set by the prosperous years, and wage freezes and 18-24 spans between increases are fairly common.

If you are smaller employer or one who has limited profits to continually raise your payroll budget 3% every year, how will you possibly attract great people and retain your top performers?

The good news is that you actually have 12 non-financial ways to reward your employees. Here is a list with some possible solutions.

1. Voluntary (employee paid) benefits—many employers now offer the option for employees to purchase additional benefits at their own cost. The employee typically receives a lower cost for the coverage and it may have tax advantages.

Solution- insurance plans- dental insurance, long term disability or life insurance

2. Work itself– the number one factor in job satisfaction is a sense of achievement. Ask employees how you can improve their work with more variety, sense of purpose or meaning, and challenging assignments

Solution- give your high potential employee a project to manage

3. Autonomy— show of hands- who likes to be micromanaged? Anyone? If you train someone and give appropriate guidelines you can trust the work will be done as needed.

Solution: consider the last 5 questions that someone “ran by you” – is there nugget of wisdom you can share so that you do not have to be consulted or are you just being the chief problem solver?

4. Work load— are you overloading your best performer because she will always take on more and get it done? Does this sound like a recipe for burnout?

Solution: ask your busiest person what you can take off their plate, and then create a plan to do this immediately

5. Resources one of the top reasons people leave their job is because they do not have the tools to do the job properly

Solution: have a meeting to list out hassles and pick the biggest time waster to that inexpensive resources or tools will improve

6. Reliable coworkers– If you have ever worked with someone is who not pulling their weight, then you know how this can make you hopping mad. People have one of three responses: work harder and put up with the slacker, work less so that you don’t feel taken advantage of, or look for another job. If you allow lower contributions you are actually driving out the good performers. And then you are left with the lowest ones.

Solution: If you know who is your weakest link do not wait to have a crucial conversation (see feedback below). Sometimes you have a sense someone is not doing their best but others cover for that person so you don’t know the full extent of the gap. Also allow confidential opportunities to get this feedback from your team.

7. Performance discussions- Yes everyone hates the “performance review,” but on the flip side employees want the opportunity to talk about their role, aspirations and to be appreciated for all their hard work.

Solution: change up your process- stop focusing so much on putting a numerical rating on last year, and more about how the last year provided insights for how to reach goals for this year. I when I say goals I mean how the employee can reach his/her goals within the job.

8. Feedback- Employees expect you to tell them right away if they are not meeting expectations. And they should expect that you deliver this feedback in a positive and constructive manner.

Solution: If you are not comfortable delivering constructive feedback then I suggest reading a few books (101 Tough Conversations is a good start) and then starting small. Trust me, your other employees will thank you for finally have those crucial conversations.

9. Recognition- Timely and targeted public praise is only the cheapest and most powerful reward tool a manager has. If you don’t know what to recognize then you need to sit down and make a list of what behaviors will reach your organization’s goals this year.

Solution: Be on the lookout for a person that did something terrific that is on your list of things to recognize, and publicly praise in your weekly team meeting (you have one, right?)

10. Training and development– Most people want to feel that we are “good” at our job and will be frustrated or demoralized if something is too difficult. A lack of challenging work is also a main reason people look for another job, so you may want to continually upgrade the knowledge and skills so that people don’t get bored. It’s a win-win- employees feel valued and broaden their knowledge and capability, and now you have an employee who can contribute and perform more.

Solution: employees may not be open about their so you want to ask find out what training would dramatically improve performance or if they want a new challenge.

11. Opportunity for Advancement– Surveys show that about half of employees feel there is not a chance for promotion at their employer. For the generation Y who will comprise almost half the workers in the US, a clear career path and opportunities to advance is the top reason for job engagement.

Solutions: If you want people to be loyal, committed and willing to go above and beyond (aka engaged), identify and share the “next” job (not necessarily in management), the change in duties and responsibility, and a training plan to develop into that role.

12. A great boss (I mean coach)- as the saying goes, people leave supervisors, not companies. If you feel unappreciated, criticized, or just plain frustrated by your direct manager you will consider looking for a new one. Coaches are clear about the goals, deliver feedback and train in a positive supportive and appreciative way, and focus on improvement.

Solution: There are so many books and training on how to be a coach and not a boss, but it might help to ask some of the employees you trust where you should work first. We all have blind spots and perhaps a few key changes will dramatically change how you are perceived and the impact you make.

Want to learn more about how to use Total Rewards to attract, engage and retain your best teammates?


Image courtesy of FreeDigitalPhotos.net

Total Rewards #6- Work Load and Work Conditions

Total Rewards #6- Work Load and Work Conditions

I have yet to meet a supervisor, manager, executive or business owner who tells me that their organization has it “easy “in the current economic climate.

What I do hear is that they have to:

  • Adapt to a changing competitive environment
  • Do more with less
  • Consider how to keep profits with rising costs and lowering prices
  • Respond faster to customer requests and orders

All of these business requirements trickle down to employees.

Surveys show that employees feel they are:

  • expected to do the impossible
  • overwhelmed with too much work
  • 40% are stressed to the point of feeling “burned out”
  • 64% are physically exhausted when they get home from work

This is not a recipe for creative products or world-class customer service.

If employees do not have the resources to do their jobs (time, information, approval, authority, the rest of the organization delivering on promises) they will become frustrated, lose engagement and then individual and company performance will decline.

A key element to improving your working conditions and employee work load is to collect employee suggestions and issues and then systematically address with process improvement.

Read more in Verne Harnish/ Gazelle article Dehassling your company


Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net