Management vs Leadership Part II – Clarity to Perform

Part II
Click for Part I

In the previous installment, we discussed how leadership is one of the biggest problems in business.  Not because leadership is bad but because there is a lack of management leading to the leadership.  In reality, most people are just lazy managers.  They just give someone a task but they don’t give them a time frame or a schedule or plan to get it done by.  Then we complain that they don’t get it done on time and correctly.

So let’s take a look at how we can become good managers as well as how we can operate as good leaders.

There are 4 keys to a good manager are…

• Creating clarity on how to perform  their job
• Creating clarity on what needs to be achieved
• Asking Questions
• Provide ongoing Training

In this article, we are going to focus on the first key.  Does your team know how to perform their job well?  Do they actually know what their job is?  If you were to ask your top 10 employees to write a list of what they think their job is and at the same time you are writing you list of what you think their job is, do you think the list would be the same?

Most employees don’t actually know what is specifically required of them.  Their job description is too vague and there is no reality about what they are actually doing and why they are doing it.  Or if they know what to do, do they know what the actual outcome is that you are expecting? 

Management starts with a really good job description or positional agreement. 

A good manager will be sure his staff knows…

·        What they are responsible for

·        Who they are accountable to

·        How to do it

·        Why they are supposed to do it.

·        What is the expected outcome when they do their job well.

Give your people checklists and systems
This will allow them to be competent in what they are job doing so they deliver the actual results that you expect. 

Good management starts when people know what their job is, what they’re expected to do, and at what level they’re expected to do it (performance standard), the time frame it should be done in.  They should also be told why they are doing it.

When you give someone a job and you don’t agree on a time frame of when they need to finish that job that’s just lazy management.  Some people call it micromanaging.  Yes!  Some employees need micro managing until you built their competence and their ability to do it.  You don’t have to do it forever but this is part of the coaching, training, the managing, and mentoring of these people so they can actually become good and productive at their job.

Next, I will continue to be covering the 4 keys of a good manager.  The 2^nd key we will be discussing how to create clarity on what needs to be achieved.

Management vs. Leadership Part I - Are you a lazy manager?

Leadership is one of the biggest problems in business. Not because leadership is bad but because there is a lack of management leading to the leadership. I would like to share with you what I’ve learned from my business mentor and ActionCOACH founder Brad Sugars about the differences between management and leadership. Many of us are trying to find the golden goose of leadership. We’ve read the books; we’ve been to the seminars, we’ve watched the latest TEDtalk on leadership. If you go to the bookstore or go on Amazon, there are a massive amount of books on leadership but there are very few books on management. If we think about it, the last bestselling book on management was the One Minute Manager from the late 70s or early 80s. Let’s take a look and define what the differences are between leadership and management. Management is about creating competent and productive people. They have a level of competence, they know what they are doing and they know how they’re doing their jobs. If a company has a group of people that don’t know what they are doing, there’s a lack of competency or productivity going on in the organization, that’s a management problem or issue. Let’s flip to the other side of the coin and take look at leadership. Leadership is about creating passionate and focused people. If the people in the organization lack passion and motivation to do their job and they’re not focused on what they need to be doing, that’s a leadership issue. The challenge that I see most businesses have today is that the business might have been built very well from a leadership perspective, but because of the lack of management, we got people that are not good at their jobs, they’re not that productive. They’re passionate and excited but we’re not getting the results that we want. So how do we get the results that we want to get in our business? This is not brain surgery. It’s not actually that complex. What I have seen throughout my career if someone gets promoted to be a manager in a company they don’t get much management training. In most cases, they got promoted because it was assumed that they had those skills. One of the biggest challenges they face is the transition from being “one of the guys” to being the boss. In this day and age, the lack of management training is extortionately high. Now, why is that? Simply, it’s because businesses don’t give management training to their staff. Maybe management got a bad rap somewhere in the 90s or early 2000s. The mantra was that you don’t need to manage your people you need to lead them. It was like leadership was saying that management was a bad thing. To get the job done, we need competent and productive people if we want to get the job done in any business. We do need to learn management skills; we do need to understand what those management skills are and how they work. Let’s now focus on both leadership and management. Management is where we start because if we see negative behaviors in an organization normally it’s a lack of management. When there is a lack of management I see that they’re in denial of how competent they are. They think that they are better than they are. There’s a lack of responsibility, people are blaming others and there is no team cohesiveness. A lot of these issues are around lack of management. In reality, most people are just lazy managers. There I said it. They give someone a task but they don’t give them a timeframe or a schedule or plan to get it done by. Do you have a system to manage your people and tasks or do you just wing it? As a friend once told me winging it is not a strategy. Over the next few installments, I will be covering the 4 key of a good manager that you need to be focused on.

Steve Goranson has owned and operated the North Florida office of ActionCOACH since 2004. He is also a certified team engagement specialist and a social media educator with Luv4 Marketing.  Contact Steve to discuss how he can help your business in the areas of Team Engagement, sales & marketing, and operational efficiency.

Business Advice… Stop Discounting and Start Increasing Value!

Discounting if used properly can be an effective strategy to increase profitability and cash flow, but if not used properly it can cause serious consequences to the growth and profitability of your business.

Most of the time discounting is a gut reaction to a slowdown in business.  Businesses find it easier to discount the value of their product than to sell on value.

One of the biggest negative consequences of discounting is that we are training our clients to buy only on sale.  This can have a big affect on our bottom line.  I’m not really sure a business understands how much more they have to sell just to stay at that same profit level.

For Example if you have a…

30% margin
You discount your product or service 10%
You will have to sell 50% more to make the same amount of money.
Contrast that with…

If your margins are 30%
You increase your prices by 10%
You can sell 25% less and still make the same amount of money.
Now isn’t that interesting…

Discounting is an appropriate strategy if your inventory is high and you need cash to pay bills or if it’s a perishable item that you will have to throw away.  However instead of just discounting your product, use it as an incentive for your customers to purchase more.

Let’s assume you have a product that costs you $5.00 and you sell it for $10.00.  If you were to have a sale of 25% off, you would now be selling it for $7.50 and only making $2.50 instead of $5.00.

Instead of discounting the full price you can have a buy one get the 2nd item at ½ price.  Now you’ll at least be making the same $-profit if you sold 1 at full price.  Another option is a buy 3 get the 4th free.  You are in essence still providing a 25% discount but you are now making $10.00 profit per sale instead of just $5.00 if you sold just 1 item.

The advantage here is that you are moving more inventory and turning it back into cash.

When it comes to marketing, “perception is reality”.  If you have a 25% off sale you become labeled as a discounter.  If you have a buy 3 get the 4th for free sale, or buy 1 and get the 2nd item at ½ price, you now are perceived as a place where you get more for your money.  You are now distinguishing your business from your competition by providing adding value to your customers instead of being viewed as just another discounter.

5 Tips to Instantly Grow your Cash Flow

Profit and cash flow are not the same.  Profit is just a theory.   
A business can go broke by not setting aside enough financial reserves to meet its commitments, even while making a healthy profit.  

Here are five ways from ActionCOACH founder Brad Sugars' book Instant Cash Flow to supercharge your cash flow:

1. Sell More Big Margin Goods/Services …
   Why not move to products that offer bigger profit margins?  Can your business offer a slightly more expensive product on which you can make a higher profit?  Or can your business buy or produce smarter to make available more goods or services with lower prices and greater profit margins?  You should know exactly how much each product nets you, and emphasize those products which make you the most money.  If you work in the service industry, you should consider which services offer the most money for the least amount of time spent.
2. NO Discounting 
   If you constantly discount, why have a regular price?  Many businesses are always discounting instead of coming up with effective marketing, or an actual reason to buy their product.  Discounting not only costs you money, but gives the impression that your normal prices are a rip-off.  Customers may also hold off buying, thinking that the item that's $100 today may only be $80 tomorrow.  It's better to not discount and simply offer more add-on value.
3. Stop Running Ads that Don't Work …
   If your ads aren't making you money, then stop running them!  It is important to test and measure each ad to make sure that you're getting the maximum return possible.  Be sure to find out how many customers were referred to your business by your ad.  When you find an ad that works, keep using it.  It may take six months of testing and measuring before you find the right ad.  You need to view this outlay as an investment in your business -- it's an investment in finding out what works and creating that 'magic ad'.
4. Re-finance …
   If you have a number of loans, then you may need to consolidate them into one.  Consolidation gives you the advantage of paying only one interest rate and having one repayment.  Shop around to find the best terms.  The best terms don't always mean the lowest nominal rate, so make sure you choose the loan that suits your particular needs.  With banks becoming more and more competitive, there's a bank out there willing to give you a loan for less.  If your bank isn't willing to match their rate, then try another.
5. Where's the "Silver Bullet" in your business?
   Every business has something that they are doing (or not doing) that - when attacked - will generate instant cash flow.  Brainstorm with your employees for products that can generate instant cash flow.  Talk to your mentor, business coach or experts in your industry with which you have relationships.  Let them help you find the hidden dollars in your business that will allow you to move to the next level.

Looking for more ideas to increase the value in your business to make it sellable one day?  

Take this quick 15 questionnaire to learn how valuable your business in right now and the 8 areas to work on to begin increase its value today!  www.actioncoachsellabilityscore.com 

BE pro-active, NOT reactive!

When I go out and speak with business owners I hear a lot of mixed comments.  Unfortunately, most are complaining about how bad the economy is and that their competition is under cutting the market.

At the same time, many businesses are not sitting back and waiting to see what’s going to happen.  They are being pro-active!

Just think, if you can get just a few % points of all the business that is happening in your industry here in Jacksonville, what would that mean to your business?  When I ask that question to business owners, the response I get is 'that is probably more business than I can handle right now'.  Now isn’t that interesting...

If that’s the case...

• Why do most businesses do nothing to get their “unfair” share of the business that’s out there?  
• Why do these businesses think that by using their same old ideas, they are going to get different results in this new economy?  
• Why do they let their sales people chase after clients like a sick puppy and do nothing about it?

These businesses are re-acting to the market, instead of creating a plan with...

                                                       NEW goals

                                                       NEW strategies

                                                       NEW tactics            

                                                                            .... bringing them different results.

Your business can be thriving today!  One of my clients just reported to me today that their YTD  revenues have increased 15% and their profits have increased 70%.  A lot of their competition has not survived in this economy.  The competition did not make it because they did not have a plan and they were re-acting to the market place instead of being pro-active.

My clients succeed because they have a plan and are pro-active, instead of waiting for the economy to change!

Please let me know your thoughts in the comments section below...

What is the Price of your Customer?

Knowing the answer to this question will help you to create an unlimited marketing budget. When I ask business owners if they know where their leads are coming from they usually say, “Yes, we ask every customer where they heard about us”.  I then ask to see the data of their results.

After squirming a bit, they tell me that the information is just in their head.  Let me be clear about this!  It is impossible to accurately measure this information in your head.  To get a clear picture of what media, headline, or offer is working, it is not enough to only ask how they found out about you, but you must also record the results.  If you don’t measure it, you can’t improve it!

Marketing is all about “buying customers." By understanding and knowing the acquisition cost of a customer, you can begin to create an unlimited marketing budget and buy as many customers as you want.

So, how do you turn your marketing from an expense to an investment?  Measure and test your results.  For every dollar you spend on marketing, more should return. 

Let’s look at an example…

1. You invested $1000 on advertising 
2. You get 50 phone calls, then you are paying $20 per lead
3. If you close 20% of those leads, you have 10 new customers 
4. If your product sells for $200, you’ve just made $1000

RESULTS:

50 (Calls) x 20% (Closing %) = 10 New Customers

10 (new customers) x $200 (cost of product) = $2000 Revenue

$2000 (Revenue) - $1000 Advertising Investment = $1000 in Gross Profit

If every time you invested $1000 in advertising and, on average, you get 10 new customers and a return on your investment of $1000 profit, then you know the benefits of measuring your marketing results and creating that unlimited marketing budget. 

Understanding your customer acquisition cost will change your mindset and how you think about marketing forever.

Please let me know your thoughts in the comments section below...

Business Advice: Top 10 Rules for Marketing Success

In business you can’t wake up one morning and say, “I want more customers”.  

My background is in sales, marketing, and marketing research but one of the first things that I learned when becoming an ActionCOACH is that most businesses don’t need more customers, what they really need is more Profits.  

To learn about increasing profits check out “What Actions Lead to Profits?”

Now back to marketing... Even though more customers are what most businesses want, most don’t have a marketing plan that will help them achieve that goal. Marketing is not difficult, but most of us don’t take the time to think through the process carefully enough.

Here are our 10 Marketing Rules (or premises) that you need to think about before creating your plan.

1. We are in the Profit Business!
2. Marketing is Math
3. Marketing is an investment where you measure and test your results
4. Spend more time producing income instead of reducing costs
5. Put 50% of your time, effort & investment into distribution and, more importantly, the other 50% into sales & marketing
6. Buying customers is an investment, so set your marketing budget by your acquisition costs
7. Never chase market share. Go after wallet share instead.
8. Establish the long term view of our customers' value and their lifetime value
9. Always aim to reduce your acquisition cost and raise their lifetime value
10. Measure & Test Everything
11. Use a marketing plan and don’t wing it

I know I said 10 but I always strive to provide added value.

Please let me know your thoughts in the comments section below...

Fast Forward to Profits - How to increase your prices

One of the 5 areas that we focus on to help our clients increase their profits and cash flow is average dollar sale.  One way to do that is to raise your prices.  In fact it is usually one of the first strategies we recommend.

Most of us are afraid to increase our price because we see our competitors keep dropping their prices just to get the sale.  That's because all they know how to do is sell on price and not value.  With that said the business advice that I give my clients is to raise their prices.

I'm serious, even in this tough economy you can raise your prices if you know how and when.  Raising your prices in your slowest season might be tough but it's a must during your busiest season.

Here are three easy steps to raise your price with no complaints.

1. Get a list of all your products and services that you sell and rank them on the amount sold for the same time last year.
2. Take out the most price sensitive items.
3. Now raise your price on the top 10% of items that are left

It's really that simple.  One of my clients that have implemented this simple strategy has reported one of his best months ever because he was able to increase his average dollar sale with no resistance from his customers.

Please let me know your thoughts in the comments section below...