Tag Archives: Business

How Do You Cut Excessive Overtime? Five Suggestions

Situation: A family-owned business has a family member on hourly pay who puts in excessive overtime. The cost of overtime significantly cuts into company profits. The CEO wants to cut back these overtime hours and get the employee to work more efficiently. At the same time, she feels that maintaining peace within the extended family is important. How do you cut excessive overtime for a single employee?

Advice from the CEOs:

  • Situations like this within a family business are delicate because of relationships beyond the work place. Treat this individual respectfully, but make it clear that you have to act in the best interests of the company and all employees.
  • Develop a job description with this employee that will help to get their overtime under control.
    • Communicate to the employee: “I don’t want to take advantage of you by requiring this much overtime.”
    • Let the individual know that you are looking for additional talent and want to more tightly define the roles.
  • Develop a company policy on overtime that limits the amount of overtime that any one individual can accrue. If anyone starts to approach this limit, then have a process in place that shifts additional overtime to others.
  • This is a serious problem for the company. It calls for company transformation. Enlist the employee as a champion for the cause of transforming the company. Keep this a positive vision.
  • If the individual is not a keeper: start controlling hours, but don’t give a raise. Let them leave on their own time.
  • If the individual is a keeper: give them raise, while cutting overtime hours.

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What Changes in Benefits Do You See for 2015? Five Points

Situation: A CEO is doing benefit planning for next year. The company is small, with just under 100 full-time employees. They are growing, and anticipate reaching over 100 FTEs in the next 12 months, unless they consider either contract or less-than-full-time employees. The CEO is curious about what other companies are planning for employee benefits. What changes in benefits do you see for 2015?

Advice from the CEOs:

  • Including employer-paid social security and Medicare matches, CEOs in the group are seeing a range of from 12.5% to 30% in benefits. This does not include 401K matches or bonuses.
  • Over the last five years, there has been a big shift in benefits, in particular a move from traditional health coverage to high deductible HSA plans.
  • ACA requirements for businesses kick in during 2015/2016. In 2015 employers with more than 100 FTEs will need to provide coverage to at least 70% of full-time employees. Starting in 2016 employers with 50 or more FTEs will need to provide coverage to 95% of their full-time workforce.
  • Much depends upon your annual cost per employee is for health coverage as well as your philosophy on employee benefits.
    • Starting in 2015, if a business is supposed to insure its full-time workers but does not, they will have to make a $2,000 per uninsured employee payment on their year-end federal income taxes.
    • The fee is $3,000 if the employee gets health insurance subsidies through the Health Insurance Marketplace.
    • Some companies who currently pay more than this in annual premiums per-employee are considering boosting employee pay and having their employees self-insure through the Marketplace, or by purchasing the same policies available in the Marketplace directly from health insurers. The policy cost is no different, assuming that the employees will not qualify for subsidies, but policies purchased directly from insurers may provide a better network of physician providers.
  • Before you make any decisions, it is best to consult an outside HR professional who is knowledgeable in both health care alternatives and the ACA.

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How Do You Work with an International BD Person? Seven Ideas

Situation: A company has been approached by an international business development specialist who wants to help them expand into Asian markets. The company would need to hire local resources to support business that was generated. Most of this would be cookie cutter as opposed to creative work. How do you work with an international business development person?

Advice from the CEOs:

  • Research the country markets where the specialist can help you and focus on the more developed and promising markets first.
  • If the specialist that has approached you has a local presence in the markets in which you are interested, lean on this person for help getting you started – office space, staff support, and so on.
  • One company started a subsidiary in Canada. The CEO believes that you must have a highly trusted person to own the project. Success is all about the relationship with this individual and their knowledge of both local and American culture.
  • Another company hired very promising business development person for a large Asian market. As the relationship progressed, they found that this individual was double dipping – working for them and their competition at the same time. Apparently this is acceptable in that culture.
  • Many cultures are relationship based. Local contracts are critical. Does your specialist possess these, and are they premier companies or also-rans.
  • Talk to individuals in your industry who have experience in the region.
  • Have your eyes open and recognize that this is will not be a quick process.

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What are Best Ways to Boost Cash Flow? Five Guidelines

Situation: A company is frequently short of cash at payroll time. It has good revenue and profitability, but timing of receipts can make it difficult to meet payroll. Are the CEO and CFO doing something wrong, and what changes should they look at to better manage cash flow needs? What are best ways to boost cash flow?

  • All financing begins with your cash flow pattern! Your ability to manage cash flow is the foundation of credit worthiness. It is both a reflection of past performance and specific future performance expectations.
    • What can you do to optimize your situation?
      • First – put your own house in order!
      • Review your business model and the aspects of the business model that are causing cash flow challenges. Based on what you find, fine-tune your business model and its cash flow capacity. If receipts are the challenge, work with your customers to focus on timely payments.
      • Understand your financing needs in their full context. What short-term financing options are available? Will your bank offer you better terms on your line of credit to keep your business.
    • Stop, think and analyze before you act.
      • Framing:  View the problem in its full context!
      • Alternatives:  Consider all relevant choices!
      • Trade-offs:  Get more than you are giving up!
  • It is important to fine tune your business model, not just in slack times when you have the time, but also in good times so that you are well-prepared for the next slack period.
  • When times are flush, set aside funds to invest in analysis of your business model.
  • Special thanks and in memory of Eric Helfert, PhD for his advice in this discussion.

Do You Lead with Your Head – or Your Heart?

While doing some last minute holiday shopping this weekend, I noticed a book, The Spell of New Mexico, by one of my favorite writers, Tony Hillerman; a collection of essays by renowned authors with reflections of their visits to the state. Perusing the Contents I saw an essay “The Pueblo Indians” by the famed Swiss psychologist C.G. Jung, whom Sigmund Freud called his “crown prince and successor.”

Jung’s essay is about a visit to Taos Pueblo in 1924-25. He recounts a conversation with a Taos chief in which the chief described his perception of the Europeans and European Americans that he had met.

“See,” said the chief “how the whites look. Their lips are thin, their noses sharp, their faces furrowed and distorted by folds. Their eyes have a staring expression; they are always seeking something. What are they seeking? The whites always want something; they are always uneasy and restless. We do not know what they want. We do not understand them. We think that they are mad.”

Jung asked the chief why he thought the whites were all mad. “They say that they think with their heads,” he replied. “We think here,” indicating his heart.

Jung then reflected on the history of European civilization. Instead of seeing the “sentimental, prettified color prints” that artists painted he saw another view of European culture. “What we from our point of view call colonization, missions to the heathen, spread of civilization, etc., has another face – the face of a bird of prey seeking with cruel intentness for distant quarry – a face worthy of a race of pirates and highwaymen.”

We who pursue the practice of business sometimes fall into this face. We think about technology, numbers like ROI, ROE, growth of sales and profits, and profit per employee. We don’t always consider the impact of our focus and actions on our employees, customers, business partners, and the community and world in which we live. We don’t see the bigger picture that we might see if we thought with our hearts instead of just our heads.

So throughout this holiday season and as you enter the coming year, consider spending more time thinking and leading from your heart instead of just your head. It may soften your face and actually improve both your business and your business model.

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How Many Web Sites Should One Company Have? Three Thoughts

Situation: A company has two businesses in different locations serving different sets of customers in two separate markets. The CEO is evaluating whether it makes more sense to have one umbrella web site with pages for each of the two businesses, or to create two complete web sites with different URLs. How many web sites should a small business have, and why?

Advice from the CEOs:

  • The first question is whether you call both businesses the same or different names. Many small companies have separate businesses at different sites, and just differentiate the businesses through division names. Moreover, because you use the same company name for both businesses, you want to make it easy for customers to find your web sites. This argues for at least a single splash page, listed under your current company URL.
  • There are many corporations with diverse, unrelated businesses. Generally, these corporations don’t have any problem having a general web site, with separate links to the individual division web sites where customers and partners can drill down to detail specific to each division. The advantage to this strategy is that by having one corporate site, the larger entity strengthens its own market presence.
  • Given that the advice of the group is to have a single splash page how do you construct it?
    • You want to prominently feature your company name on the splash page, but not to include much detail. Maybe just an overall positioning message that expresses your core values or a distinctive visual that shows what you do.
    • On the splash page, create two links with distinctive pictures and names that enable your customer to easily go to the side of your business that interests them.

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How Do You Transition from Product to Business Development? Three Thoughts

Interview with Trevor Shanski, Founder, eWORDofMOUTH, Inc.

Situation: A company with a new lead generation solution is ahead of the curve for their market segment, and ready to transition from a product development focus to a full-scale business development focus. This means developing new capabilities on a limited budget. How have you made the transition from product development to business development?

Advice from Trevor Shanski:

  • The reality of early stage companies is that they live on scarce resources. Founders and early executives have to be able to work for lean base salaries during the learning curve. They will be individuals who have selective characteristics.
    • They will be able to accept conservative salaries near-term, as well as during financial bumps in the road. Their focus will be growing the company’s value and their incentive will be having a material stake in the company.
    • They will have limited outside demands on their time and attention so that they can work long hours.
    • They will appreciate the challenge of heavily performance-based compensation, with the potential to win big if they can deliver.
    • They will have a network of connections and relationships upon whom they can call to gain early business traction.
  • Characteristics for successful early stage executives include the ability to work intimately with the founding team. Early stage companies are idea and capability incubators where things change quickly. Players must be able to get the job done with little support.
  • It is critical to have a clearly defined set of expectations for the first few months as you bring on new executives. Early foci will include:
    • Immersion in understanding the product capability and possibilities.
    • Sitting down with a white board and openly looking at fresh thoughts for how the market should be approached. Founders frequently suffer from tunnel vision after a long period of development and need a fresh outside perspective on the market and messaging. What partnerships could accelerate market development? What knowledgeable experts should be leveraged to build awareness? What potential is out there that the founders are not seeing?
    • After these factors are defined, the next step is to develop an action plan and milestones to guide plan execution, plus a budget and alternatives under different resource scenarios.
    • Once the plan is in place, the focus will be to gain early feedback on the company’s product and capabilities, and then iterate quickly to find the right message to target significant segments of the market.
  • The focus of early stage companies has to be on quickly developing plans, and then executing.

You can contact Trevor Shanski at [email protected]

Key Words: Product, Business, Development, Limited, Budget, Transition, Resource, Scarce, Incentive, Focus, Compensation, Performance, Network, Expectations, Action Plan, Execution

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What Three Qualities Characterize the Company of the Future?

Interview with Philippe Courtot, CEO, Qualys

Situation: Few economists predict a robust recovery. We know from past recessions that in a slow recovery some companies will fail while others rise to the top. What are the three qualities of the companies that will thrive and become the companies of the future?

Advice from Philippe Courtot:

  • Companies of the future will have three qualities. The first is a keen sense of who your customers are – what characterizes them and their buying and use decisions. You need to see yourself through their eyes. This will give you the ability to shift more easily as their needs shift. Making this shift is easier for a service company than for a manufacturing company because the infrastructure of a service company is more flexible.
  • Second is an intense focus on operational excellence. Everything is measured with the objective of obtaining the highest levels of productivity as well as the opportunity for ongoing learning and improvement. The companies of the future will have superior systems for gathering and tracking performance data, as well as cultures which allow them to learn from what they track.
  • Third is a culture of continuous innovation. The company of the future will be the company disrupting itself. Germany provides a wonderful example because of its culture of excellence in small, family owned companies. You may be surprised to learn that it is these small companies who are the true drivers of German innovation, not the big companies like Daimler or BMW. The small companies follow the three rules outlined here. Their success has been aided by the emphasis in German education on math and engineering which means that there is an ongoing supply of domestic talent to feed these jobs.

You can contact Philippe Courtot at [email protected]

Key Words: Company, Future, Quality, Customer, Shift, Adapt, Service, Manufacturing, Operations, Excellence, Learning, Improvement, Data, Culture, Innovation, Continuous, Disrupt, Family, Business, Education

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In Challenging Times Do You Cut Losses? Three Considerations

Situation: A company lost money last year, but turned the corner with a profitable final quarter. One of the company’s divisions continues to lose money, though the losses are small compared to the total picture. The CEO is considering cutting this business. What factors should the CEO consider in making this decision?

Advice from the CEOs:

  • What expense factors contributed to the loss?
    • The biggest factor was allocation of vehicle and space expense. This division has seasonal revenue but carries the allocated expenses for the full year.
  • Make sure that your allocated expenses are fair to the business. Do overhead allocations reflect utilization? Unless closing the business eliminates vehicles or space, if you terminate this business these expenses will be borne by the rest of the company.
    • Study your allocations by shifting the allocation made to this business to other businesses. What is the impact on their profitability?
    • If you find that the current allocation does not reflect utilization and adjust accordingly, does the business still lose money?
    • If this division covers its direct expenses along with most of its allocated expenses, a small loss in this division may be preferable to a reduction in profitability of other businesses from closing the division.
  • How strategic is this division to the overall business mix?
    • Is this business essential to your product/service mix or just a customer convenience? If you terminated the business will customers be upset?
    • Do competitors offer this service, and would you be disadvantaged by discontinuing it?
  • What are the alternatives?
    • Can you raise prices to increase profitability and refuse business that does not meet this pricing?
    • Can you restrict the offering to less price sensitive customers?
    • Can you refer customers to other vendors or sub out this business?
    • Can you reduce the scope of the offering while adjusting pricing to enhance profitability?
    • Can you source other labor alternatives to reduce cost?

Category: Strategy, Service

Key Words: Profitable, Loss, Division, Business, Critical, Factors, Expense, Allocation, Seasonal, Overhead, Loss Limit, Customer, Price, Competition, Offering, Scope, Labor, Skilled, Contractor

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