Winning Advice #5 – (Business) Management
If you don’t understand your business, who will?
That’s the question that came with the 5th and final piece of the business advice given by a dealer peer/mentor in 1997. This one was the bullhorn that screamed the significance on not only working IN the business, but working ON the business.
As mentioned in the previous Winning Advice posts, the total length of this handwritten manual for business success was only 1 ½ pages long and barely contained 200 words. But, compared to the four bullets of advice that preceded this, #1 People, #2 Customers, #3 Profit Margins, and #4 Collections, almost half of the words in this business manuscript were reserved for this final secret to success.
It was about ….Working ON the business…!
….And, as it was originally written, this was the 5th and final instruction.
“5. Manage & understand all phases of the business.
A. Manage Purchases according to Sales & Potential Sales. Turning _X_ times a year.
B. Watch parts sales, paperwork flow, direct ship orders, attached to factory invoices, accuracy of parts to internal repairs, customer machine repairs, obsolescence, top parts customers.
C. Actively watch service dept operations, talk openly with customers as to how the service dept. is doing for them. Identify all problems or issues. Know Lip Service versus Real Service. Make sure all hours worked on any machine is log’d correct. Make sure return rentals are inspected for repairs, and invoiced with a week. Look over rental equipment repairs for patterns.”
Now let’s white wash and scale the message to benefit your business…
On the surface,”Manage & understand all phases of the business” doesn’t need a lot explanation. But notice he used the words “manage and understand” not“individually master and be an expert of” all phases. That was important to note; the underlying message is effective delegation is part of long-term strategic growth. Lack of delegating can be a ball and chain for business owners when they try to be involved in every detail of their business.
Example: A business owner should have a general understanding of their financials. However, as a business owner, is it really the best use of their time to be involved in every step of creating each financial or other business tracking report? Even for smaller businesses, it can easily be more cost effective to have an outsourced CFO, bookkeeper, or CPA assist with these functions. The business owner or management team can then monitor the information generated.
- Managing Purchases (Inventory)….
- If you carry inventory, do you know & track your turns per year?
- Are you tracking what is in the pipeline for potential business?
- What about seasonal purchasing and tracking?
- All this involves “forecasting”, some business owners still discount the importance of managing their inventory but ….if you sell hotdogs & mustard you need them on your shelf before July 4th.
- Watch Parts Sales….etc. Though the focus was about “Parts Sales” as it related to the equipment business, the bigger message in this bullet was the significance in having reliable systems and procedures in your business.
- How much work are you doing for free?
- Does your business capture all the billable materials or services it performs?
- Do your employees unnecessarily give away billable labor?
- What do your top customers value most about your business? Maybe it is time to ask them.
- Actively watch service….etc. There was a statement in these final sentences that has stuck with me as much as any piece of business advice I have ever been given.
The statement was “Know Lip Service verses Real Service”. Strong customer service was one of his mantras, so I am sure he still preaches that today. The thing that always puzzled me was the spelling of the word “Know”. Was it intentionally spelled that way or by accident?
Honestly, I think he meant to write “No” as in, “Don’t say something you can’t back up”. As time went by, I was always glad he wrote it as “Know”, because in the context of “Know lip service” the sentence took on a much broader meaning that reminded me that as a business owner, one must always be managing, asking, listening, observing, and leading.
It would become an ongoing decree of responsibility that as a business owner one must not only keep their own commitments, but they would also be held accountable for the actions of their employees and all who represented their company. As the owner, you need to “Know”. And when employees don’t act or speak in a way that aligns with your values, it can’t be overlooked.
Well that covers it; People, Customers, Profit Margins, Collections, and Management. The five key areas generously shared by another dealer to ensure a healthy dealership in 1997. By sharing these in a way that applies to business in general, hopefully you have been able to pull some useful nuggets out of his words and put them to work in your business.
Thanks Jr., know that a copy of your hand written document still remains inside my business folder today.
As always we value your thoughts and feedback.
Chris Steinlage Kansas City Business Coach