Edition 148 – The Tip of the Iceberg
In last week’s edition 147 of Growth (It’s Only $1.50), I referenced the financial impact in a family business of undercharging in error – not only from a lost profit perspective, but also from the viewpoint of the impact on business valuation.
It so happens I spoke with some other clients recently who regaled the story of their experience in a restaurant in Melbourne of being undercharged a very expensive bottle of wine. They told me their story of how they were served by different waiters that had no idea what was going on at their table, proving this fancy restaurant was completely disorganised on the client service front.
I then challenged these family business owners by suggesting to them, the same kind of behaviour is happening in their own business. When they asked me how I knew, I relayed a story to them that they themselves had told me earlier this year.
These business owners went out on site for a week to cover a short term scheduling hole in the business. They identified shortfalls in the works undertaken by their own staff on site at the last visit. They identified a documentation process on site that was convoluted – and lead, at times, to shortcuts being taken by the staff on site. They were merely two examples of what proved to be a very valuable field study.
The challenge for every manager and owner of a family business that is reading this today is this – every day, your staff are doing stuff inside your family business that is costing you money – or losing you revenue. When that happens, profit drops – which has a consequential impact on the valuation of the business.
So, how do you solve this? For me, it’s a 7 step process.
- Get out of the office and away from your desk – you can’t observe what’s happening at street level when you’re flying at 10000 metres.
- Shadow your team in the field and observe what they’re doing and how they are doing it. Doing this for a day is great – doing it for a week is better.
- Look at your documented systems. Are they being followed? If not, why not? If so, what feedback does your team have about those processes and how they may be improved?
- Re-design any systems that need improvement – or where your staff have identified a more efficient alternative.
- Train your people up – a vastly under rated strategy in most businesses. The humble toolbox talk can cover a truckload of information in a short period of time – yet most businesses are lax at it at best – and don’t bother with it at worst.
- Re-shadow your team – and enforce the revised systems.
- Discipline and, if necessary, offload any recalcitrant staff.
As owners and managers of family businesses, you need to get out into the warehouse.
You need to check your team on site when they are digging holes.
You’ve got to wander up to their desk, open up the files they are working on and check the quality of their work.
It’s at this level where your strategy for the business is being implemented, daily.
Whiteboards, flipcharts and executive retreats to develop a plan for your family business count for nothing if you don’t know how it’s being implemented with the customer.
This Week’s Tip
To truly understand what is happening inside your family business, you need to take the time to walk in the shoes of your team to see what they are seeing, but could be missing.