I recently read a Facebook post by a friend and fellow business owner. He posed this question to his network: Can someone tell me when owning a business stops being a big roller coaster??
He had valid points. Business owners can’t pass troubles on to someone else. You always need to make the final call. It never slows down and you can’t jump off. I agree the ride doesn’t stop, but I don’t think business owners need to go through extreme highs and lows.
When I reached out with suggestions about how he could smooth out the ride, he let me in on the backstory of the post. He originally wrote it 10 years ago! For an entire decade, he’d soared and plummeted, only getting relief when he sold his business. He added the “ride” would have been better if he’d incorporated a few of the suggestions I gave him.
No business owner should feel trapped on a never-ending roller coaster. Here’s the advice I gave him. The 6 principles are based on key decisions I made in the way Sea-Level Operations runs.
1. Do It Right the First Time
Compromising principles or quality up front simply causes bigger problems later. For example, create an employee handbook before your first hire and double down on your commitment to integrating your PSA with your business process.
2. Be Intentional About Building Recurring Revenue
When I founded Sea-Level, we only accepted clients on recurring revenue agreements. Decide that your company operates at a 15% to 20% net profit. Adopt a “Pay your profit first” mentality similar to the “Pay yourself first” models used in retirement investing.
3. Know and Manage To Your Numbers Every Month
Wall Street will clobber a firm for missing earnings expectations. It also won’t be happy if you over exceed, because that means management doesn’t know what’s going on. The answer is in managing to a budget.
My mentor, Oli Thordarson, likens this process to driving your car down the road. It takes a thousand micro corrections to stay in the center of the lane. If you look away for even a few moments and drop two tires off the side of the road, it’s going to get very bumpy for you and everyone in the car with you.
4. Weed Out Bad Clients From Both a PITA (Pain In The Ass) and Profitability Perspective
If you have excess capacity, any service dollar is a good dollar. But as soon as you need to hire more staff, weed out unprofitable clients. The goal is to get those unprofitable hours back so you can use them to better serve profitable and new clients (new revenue) without having to make the hire and increase costs.
Your underperforming clients will fall into 3 categories: Least desirable; most desirable; in-betweens.
- Least desirable clients are your PITAs. Fire them outright so they go away. Employees are your most valuable asset. Don’t ask them to put up with bad clients.
- Most desirable clients are ones you can service, but they need to pay more. Start a conversation and retain the client if they’re willing to pay appropriately.
- In-between clients don’t fit your model. Find a less mature, friendly neighborhood competitor and “sell” them this client list. Help facilitate a smooth transition. It will be good for them, the client and you!
5. Find Employees Who Align with Your Core Values
Define your Core Values and measure each person against them. If they don’t live and work accordingly, they should not be in your company.
At Sea-Level, we use EOS (Entrepreneurs Operating System) as defined in the book Traction: Get A Grip On Your Business to create alignment, focus and accountability within our leadership team. You need to develop leaders who can help absorb the bumps, sometimes to the point that you don’t even feel them.
Charge more than your competition so you can pay better than your competition, which will create a company where the best people want to work. This creates a “Spiral Up” situation. Focus on the group of clients that would rather pay a little more for a better experience.
6. Always Act in the Best Interest of the Client
This one is sometimes very hard to live by but, even with a negative experience, your clients will still be raving fans.
IT Provider Coaching Turns the Roller Coaster into a Kiddie Coaster
These 6 principles only scratch the surface of turning the roller coaster get-me-off-this-thing ride of owning a business to more of a kiddie coaster. We can tailor a plan to your operations with our IT provider coaching. Contact us today to get started. Call (855) 4-Sea-Level (473-2538) or reach out online.