Passionate Management

One of the keys in running a successful business is understanding what the core business is. With my bookkeeping venture it took quite a long time to understand that. And I had to radically change direction a few times to really get to it.

Now we are there. We convert data from MYOB (and soon Quickbooks) to Xero. It is a tiny niche in the bookkeeping/accounting world. But we have developed some unique tools and processed that allow us to deliver this service better than anyone else.

It is time to scale. Sometimes, it is scary to let go of non-core activities, especially when the core activities are not generating huge amounts of return yet. But the focused energy is worth it and I am expecting that we’ll move a lost faster, the clearer we focus.

We have started this process of rejecting non-core activities a while back by not accepting any clients who want their books done in MYOB.

Passing on Non-Core Activities

When they come, we just pass them on to a bookkeeping business that is focused on clients on MYOB. Books On Site are delivering  bookkeeping services in Sydney, Melbourne, Brisbane, Perth and the Sunshine Coast. They are one of the fast-starter companies in BRW and just as focused as we are, but with a different core business.

I really like it when it is possible to collaborate with businesses that seem to be a competitor on first glance. The more both understand their core business, the better that is possible.

Changing Core Business

What happens when the core business changes? Sometimes what starts out as a useful relationship turns into competition. It is really hard for me to leave aside the personal relationship and move do what is best. And I have to remind myself that it is the clients we are serving. And that it is all stakeholders that need to benefit. The profits will follow if we do that well.

And I do not want to be protective to benefit a few (including myself), but focus on the best outcomes for our clients, our suppliers and all other stakeholders including this Earth we are living on. (It is not always clear to me how I do that with Jet Bookkeeping, so I probably have to go for more walks in the National Park.)

It has been a long time. Mobile Telecom is running. It worked, even without micro testing.

We moved through a major transition where we had to change the complete system of how we operated. Jason and Belinda are handling that really well, so that I do not have to do much at all.

That meant new time for my next venture: Jet Bookkeeping

I always enjoyed figures and what could be learned from them for a business. With the advance of online accounting packages, we can now deliver profitable intelligence to small businesses.

Jet Bookkeeping started in late April (two weeks before I went on a 2 week holiday) and my team handled everything perfectly.

Since then I have focused on marketing and the ads are starting to appear today. So I hope that we can deliver the vision I have about our bookkeeping services.

I had a few months of relaxation, visited friends, connected with our beautiful National Park, swam in the Ocean.

Then it was time for the next venture. A new business partner (actually a very dear friend, so we’ll see whether there is any truth in what they say about friends and going into business together).

He has been running Mobile Telecom for many years. I kept saying that I am not interested in the phone industry until a conversation I had with my wife. In it I remembered how much joy it had given me to create an amazing culture in SolarPay.

So here we are, the first day with a team of 3 sales people plus the back office support. We are back in the office in which I was with SolarPay.

It is a different start to my bootstrap one man show. We invested in computers, office furniture, salaries. The difference is that the business was already with an income, so the focus is on scaling it, rather than developing it from scratch.

But I am conscious that we did not micro test as well as we could have.

What an exciting and stressful week (month?).

We have just signed all the paperwork (about 200 pages) to sell SolarPay to another solar company (Ingenero). We had found that through a contact from my business partner, talked to them briefly in January and were approached again in June when we tried to find a solution to our cash-flow situation.

They were the solution we took. The negotiations reminded me again of how important it is to concentrate on what the other party wants. The better we can deliver that, the more successful the negotiations.

It was a tough decision and I was open to both outcomes (sale or no sale) until the last day when we actually signed.

We move forward with excitement, both my partner and I are employed by Ingenero. So we’ll see how the integration works out.

What is theory and what is practice? My team has grown to 8 people. I am continuing to pass on responsibility. They are great at taking it and making it work.

The biggest challenge I took with regards to spending time was to go on a 2 week holiday. I went without a mobile phone, I did not look at a computer, did not call in to see how things were going.

My team cursed at times, but it worked. Sales continued, systems were installed and they even dealt with a major calamity of one of our contractors stealing the functionality off our website.

An operations manual is nowhere in sight, the day-to-day things are always more important. But I did have the organisational chart for the finished company from the start, even when I was just on my own.

Overall I am still spending a lot of time at the office, and I love it.

This is the most difficult and most involved, but has the greatest long-term results. In reality all preliminary steps just prepare you for this ultimate vision: becoming redundant.

There is an emotional component to it. To a large extend we are defined by the things we do, especially at work. Becoming redundant is challenging that.

And this is where the mastery of the first step (spending time) becomes essential; life needs to be filled with meaningful and joyous activities. Otherwise there is no point in working towards redundancy.

Millions of people wait their whole life for retirement, only to find
they do not know what to do. They feel bored and useless.

The Vision

I’ll assume that you have mastered spending time and want to do that with bigger projects – a six-week cruise? When was the last time you left your business that long? Ever?

Or a humanitarian project that has always been at the back of your mind…

The vision needs to be clear, focused, positive and bold but believable so that it can guide you when you are bogged down in the details.

Set Goals

It is best to attack a large vision in small steps.

Your first goals could be to reduce the daily hours, to reduce the days you work per week, the time you take off in one go (3 days, 10 days, 3 weeks?). Take it slow, everyone has to adjust to it and everyone needs to be prepared to make it a joyous experience.

And please don’t tell your team: I don’t want to work any more, just live off what you bring in. Not the smartest approach.

What’s in it for Your Team?

Employees work for a financial reward. They also like being employed for the security that job gives them. And with these two things in place, they like to be valued for what they achieve.

So in whatever you do, make sure the security stays. Do not give the impression that you have lost interest in the business and are only after freeing your time and enjoying life. Use this sense of achievement to motivate your team.

By involving them in your bigger projects and a larger vision you might actually inspire them to contribute even more.

The Basis: an Organisational Chart

If you do not have an organisational chart, draw one up. Do not think about the people you have working for you right now or what they do. Instead start with the logical areas of responsibility that belong together.

In small organisations there is usually a large overlap of responsibility, people wear many hats. That has developed over time, out of necessity to react to the circumstances.

An organisational chart is a tool to get clarity about the different hats people are wearing. It also shows the interaction between the areas of responsibility.

Determine what outcomes each position is responsible for. Quantify the outcomes (Key Performance Indicators, KPI’s), so that it is possible to check the progress.

Depending on where your organisation is at, it might be useful to involve the whole team (or part of it) in the development of this chart.

Or it might be better for you to develop the plan and slowly start grooming your team members for specific positions. That really depends on how much responsibility people have right now and the level of trust in your organisation.

After you have the chart, fill it with the names of your team to reflect reality. Put your name in as many positions as necessary to show the truth. This is about who is accountable for delivering the
KPI’s in these areas. Be honest and don’t be surprised if you end up in most of the positions. That is normal for most small businesses.

The Ideal Next Step

Determine which position you could relinquish the easiest. It is the one that is least critical to your operations and has someone who is qualified for it already. It might even be two or more positions, but it is important not to overdo it.

Large change brings about stress, for you and your organisation. It is therefore better to take small steps and see successes. Bigger steps can be made with the background of this success.

Announce someone’s new position (after having talked with him or her and determined what the responsibilities and authorities are).  That can work really well when that person is self-confident and thrives on this new challenge. It is great for you, because it establishes clear boundaries.

It could be that such a move frightens your team members. That is often the case if everyone is used to you making all the decisions. Then a new culture has to be nurtured first.

Your culture has to be a culture of trust, of support and mutual respect. Ask yourself whether you trust and respect everyone in your team. Do you support their growth and interests? Do you respect your clients?

Delegate your tasks

Start to delegate your tasks to the appropriate team members according to your organisational chart. That is a time investment. In the beginning, it will take longer than if you just did it yourself.

But it leverages your time, as you will not have to do that task again in the future.

Responsibility cannot be delegated. You can only offer it and support the people who volunteer to take it on.

Include desired outcomes. Be specific. Quantify the outcome. If there is a specific way to do the task, write it down. If there is not (or you think there might be a more effective way to achieve that outcome), let the person responsible plan how to achieve the outcome and review the plan before implementation.

Whatever you or your team writes is the basis of your operations manual and can be re-used in the future for training others (and improving your processes).

Specify the authority they have. That could be a budget to achieve the task. It could be who they can negotiate with (suppliers or clients).

Be specific and give them enough authority so that they can achieve the outcome without having to come to you. If that is too high of a risk, reduce the task to an outcome that can be achieved with the authority you are willing to give.

Specify when you will review their progress. Review frequently if the task is high-risk, but trust that they can do it.

Welcome Mistakes

One essential ingredient is to welcome mistakes. It is easy to get upset by mistakes. But they are the greatest learning experience your organisation can have.

People only dare to venture beyond their current boundaries when they feel safe. If every mistake they make leads to a scalding, they will hold back and continue to rely on you.

Think of a child that learns to walk. Part of that experience is to learn to fall. Welcome the falls as getting one step closer to success. No need to get angry, instead encourage to learn from it and continue.

When a desired outcome is not achieved, review with the person involved what went wrong and how it could be handled differently in the future. It would be ideal to let people fix their own mistakes wherever possible. Again that is a time investment, but it pays high dividends in freeing your time in the future.

Update the operations manual with the learning from mistakes.

Celebrate Success

Be generous with your praise of what your team and individuals achieve. There is nothing more satisfying than being noticed for our contribution.

Operations Manual

The goal is that the operations manual defines every process in the business. It is good to stick to one page per item. Use little writing. Flow charts, bullet points and check lists make it a lot easier to use.

Where to from here?

Over time you will stop reviewing the achievement of some areas and have people oversee that. Continue to pass on areas of responsibility until you are no longer in any position on the organisational chart.

At that point, you can live off the profits, sell the business or continue to work in the areas that you enjoy. It is then your choice.

We can spend time or invest time. The difference is in the timing of the outcomes.

Spending time has two immediate outcomes:

• we receive money or
• we experience joy.

Investing time has three possible outcomes:

• we receive money,
• we gain energy or
• we free time in the future.

So the most valuable activities are the ones that bring the biggest return in a balanced fashion.

Here are some examples:

• Spending time to receive money: a physiotherapist who treats a patient
• Spending time to experience joy: the activity you selected in step one
• Investing time to receive money: building a business to sell in the future
• Investing time to gain energy: going to the Gym to stay healthy and fit
• Investing time to free time: training your team member so they can take over your responsibilities (more on that tomorrow).

Sometimes the outcomes overlap.

What do you want?

Any activities that get you closer to what you want are valuable.

Get clarity on what you want and determine whether an activity brings you closer to what you want or takes you further away from it. Do only the things that take you closer, stop doing the things that take you further away.

That is the first step, but you still need to decide which of the activities that take you closer to do first.

Selecting the most valuable activity

The most valuable activity is the one with the highest return on your investment.

For most people, the main reason for running a business is a monetary return. However once that is achieved many owners are trapped in their businesses. It would not function without them. That’s when the return in time and energy (more joy, less stress, etc.) becomes more important.

For me the focus is on freeing time. The ultimate result would be to reduce the time I spend in the business to a day a week while living off the passive income that it generates.

Your hourly return

Calculate your hourly return: how much an hour of your time is worth. Divide the total hours you worked last year by the total earnings (profit of your business + personal salary).

The result is a monetary value for each hour you spend working (your hourly return).

Select Activities

Spend time on activities that give you a greater monetary return than your current hourly return. That will immediately increase your financial return, which is necessary to keep your financial position stable.

Invest time in activities that promise a time return (i.e. make you
redundant).

Review your clients

As with most things, the 80/20 rule applies to clients as well. 80% of your income is usually generated by 20% of your clients. And often the other 80% of clients take the most maintenance.

If you have a great number of clients, think of ways you can group your clients (e.g. paying cash or on credit, small purchases and large purchases).

Determine your best clients. Don’t just use guesswork. Go to your books and get the figures from last year: what was the turnover for each client. If you can extract the profit per client from your books, go on that. Otherwise determine the profit for each client by applying your profit margin.

Determine how much time you personally would have spent on each client over the year. Multiply your hourly return by those hours and subtract the result from the profit for each client. Now divide that profit (which values your time) by the hours you spent on each client.

Focus your activities on the clients with the greater profitability per hour. Reduce your time with the clients with a lower profitability per hour.

Taking this to the next level, determine common characteristics of your most profitable clients. You can use this to target your marketing.

Review your products and services

Determine the profitability for each product and service (or groups of products).

Repeat the exercise from above: determine your personal time
involvement in each, subtract the product of the hours you spent and your hourly return from the profit and divide that by the hours you spend on each product.

Focus your activities on the products and services with the greatest profitability and reduce it for the ones with lowest profitability per hour.

Again think of ways to add products similar to the profitable ones.

Review your marketing activities

Rather than just looking at the financial return of marketing activities, deduct your hourly return multiplied by the hours you spent on a marketing project.

Again, spend more time on the ones with a higher return per hour.

One caveat

The exercises above only tell you something about the profitability of your clients, products and marketing activities based on your time involvement.

Normally the profitability is determined on purely financial terms. Just compare the profitability of clients and products to their respective turnover, compare the profitability of marketing projects to their monetary costs.

Where the top results vary you need to find ways to reduce your time input without lessening the attention these clients, products and marketing activities receive.

This is where the last step comes into play: Invest time to empower your team.

Here is a list of my time wasting activities. Thanks to Raymond Aaron, Tim Ferris and Mark Joyner for teaching about them.

Look for things that are easy to implement and have the greatest impact on your life. Do not think you need to do everything at once. That probably leads to overwhelm and you will not achieve anything. Pick one from this list of possibilities and implement it.

Most of these suggestions take less than 5 minutes to implement and do not cost a thing. But they will result in huge time increases, far more than the time you spend on the things you enjoy, so you can do more things you enjoy.

Email

Don’t start your day by checking your email. You react to other people, rather than doing what is most important for you first.

I used to check emails every 15 minutes – all they long. I would look at every incoming email immediately. Later I would go back over them and reply. It took me out of what I was doing and I had to handle them twice (at least).

Now I check them once a day, after I finished all my important tasks for the day. I answer them immediately and file them. I also use Spam Arrest, which has reduced the amount of emails I received by 90% (from a few hundred a day).

Reduce interruptions (unscheduled tasks) from your team

An open door policy gives your team free access to you at any time. Sounds great, but interrupts your workflow. Give your team specific times when you cannot be interrupted. Close your door.

It is far quicker to focus on one thing and finish that, rather than dealing with different issues and having to pick up where you stopped.

You might be surprised how much more people can do by themselves if they don’t have you at their back and call.

We’ve got a large room for an office, so it needs even more discipline to adhere to that. I catch myself asking others things that are really pressing for me, but they take them out of their workflow. So my focus is as much on not disturbing my team.

Reduce interruptions from your phone

Have someone answer your phone and take messages. Ideally, they should handle the frequent questions and issues. Where that is not
possible, they need to elicit the problem, so that you can call back
with a solution.

Turn your mobile off or leave it with someone to answer it in that time.

I’ve managed to get rid of my mobile phone when I stopped producing events. People look at you funny, but otherwise it works really well.

Reduce meeting times

The first question before any meeting should be: Is it necessary? Especially when travel time is involved.

Meetings are useful when a solution to a complex problem needs to be found. Especially when it involves specific knowledge from various people. But most meetings are unnecessary with your time spent better elsewhere.

What about meetings with clients? There is nothing better than face-to-face communication for building trust, no doubt. But your clients buy from you to solve their problems, not to socialise.

Balance the time input with the return you get from them (and possibly the joy you get from those meetings).

Meetings are more effective if you specify the expected outcome. This is more than just an agenda. It specifies the problem, possible solutions and what action you want all participants to take by the end of the meeting.

Some people suggest meeting with your team standing up. I have not practiced that, but can imagine circumstances where that might be useful.

Plan your day each morning

Write a list of all the things you need to do in the morning. Delegate what you can. Pick out the 5 most important tasks and do them before anything else. There are lots of tools to help with that. I have been using Simpleology (a free tool and in depth training on how to get things done) and it really works for me.

Surfing the Internet

It is so easy to get lost on the Internet and stumble from interesting site to the next, stop off at YouTube and end up reading a Blog of something totally unrelated to what you went on the Internet for.

That is probably one of my biggest weaknesses. What sometimes helps is that I define what I am looking for and set a time limit when I will stop looking. There is unlimited information, but the return on your research time diminishes quickly with too much time.

Handle each piece of information only once

Have an IN-tray, an OUT-tray and a WAIT-folder. Whatever comes in goes in the IN-tray without you looking at it. When you go through your IN-tray, make a decision on everything.

Either dump it, delegate it (put a note on it and leave it in the OUT-tray), do it straight away, or plan it (file it under a specific day in your WAIT-folder when you are going to deal with it).

You can do the same with your emails. If you use Outlook, you can drag any email into the calendar and specify the date you want to be reminded of it.

Use electronic phone books

Put the numbers that you dial frequently into your phones (not just the mobile, but also the office phone and the fax machine). Use speed dial, rather than searching for and typing in numbers.

Outlook or any other address book makes it fast and easy to write emails without having to type in the email address every time. It does take a little bit more time to enter all the information at the start, but it saves a lot of time in the long run.

Physical Setup

Look for tasks that you do repetitively that involve getting things from far away. Rearrange your setup, so you can access the most important (and frequent) things easily and quickly.

Driving time

Bundle appointments and errands, to reduce your driving time.

Television

Choose consciously what you are going to watch and whether it is worth your time. Remember that time is your most precious resource, so choose wisely.

I have been living without television forever. That means I cannot comment on the latest Seinfeld episode, but otherwise it frees 1,460 hours (or 60 days of non-stop watching) per year (the average American watches 4 hours a day, that is half as much time as you spend working). So if you cut out TV, you could run another half-time business. That is if you are an average American…

Get personal services done for you

Pay for personal services: get your car washed, your pool cleaned, your dry cleaning picked up. Unless you absolutely enjoy any of these things.

Basically anything that costs  less than your hourly return is worth paying for. Not to mention the joy of coming home to a sparkling clean home. I love it.

Say No

It is easy to get in the habit of taking everything on. Make conscious choices as to whether taking something on serves you. In your private life this might be easier than when clients ask. But even with clients it can be worth saying No when the time investment is too high.

Now onto Freeing Time in business.