bradfair.com - Entrepreneurship

Professional Service Firm Improvements

nospam@dontspamme.com (Brad Fair) — Fri, 30 Jan 2009 05:47:00 -0600

While searching the net for how to increase billable hours, I found an interesting article about business improvement in a professional service firm. It struck a chord with me, so I thought I'd share it with you. I have a few comments below about what I think of the article.

-- Brad

One thing is for sure, we are all busy busy busy on a daily basis. To the point that sometimes we get lost in it. We all know that being busy doesn't always mean being profitable, unless of course, you are concentrating your efforts on moneymaking activities.

Years ago, we did an experiment with our team at Scenario Design as we needed to increase our overall efficiency and profitability. Before we made any shifts, we needed to know how much time we were all spending per day on non-billable activities. On a Monday morning, in our regular daily huddle, I asked everyone on the team to get a white piece of paper, a red pen and a green one (Being a very creative team of designers, I probably asked for specific Pantone Colors like PMS 485 for red and PMS 382 for green...ha! ha!).

The mission was simple. To keep this piece of paper handy at all times for 14 days. Each team member was to draw a red line when doing Non-Billable tasks and a green line when working on Billable tasks or activities with an approximate time log for each task. The results were mind-blowing. Everyone was surprised as to how much time and energy was spent on non-billable or non-moneymaking opportunities every single day. It was a real eye opener for me, as an entrepreneur, needing to be more profitable without necessarily hiring more employees.

THE FINDINGS:

We were shocked to find out that our main production designer, who was hired to be our #1 "production profit centre" because of his amazing talent and speed, was only working on billable activities at an astonishing low rate of 46%. Our senior designer was on average billing only 39% per week, and the list goes on. Trust me when I say knowing is half the battle.

THE #1 PROBLEM:

It's amazing what you can find when you are actually looking. Our #1 problem was our unprofitable habit of working way more hours than estimated or proposed to the client. Sound familiar? In actuality, a lot of our team's time was billable...but was not accounted for nor billed because the project had gone over and beyond our initial proposal and no one felt like we could bill those extra hours at that point...and they were partially right. Rule of thumb: never spend someone else's money without letting them know first.

THE PIVOTAL SHIFTS:

Once we were aware of everyone's efficiency or deficiency patterns, we then made 6 pivotal shifts:

We established Billable Percentage Targets for each team member to hit weekly according to their position and responsibilities. We even included our admin assistant in the mix.This is what it looked like:

Production Designer's Billable Target: 90% (mission findings: a low 46%)

Senior Designer's Billable Target: 75% (mission findings: a low 39%)

Creative Director's Billable Target: 85% (mission findings: a low 45%)

Admin Assistant's Billable Target: 25% (mission findings: a crazy 0%)

Project Manager's Billable Target: 65% (mission findings: a low 26%)

We started Estimating with Ranges to allow the team a buffer of time to work within and added a clause to our proposal letting the client know that we would advise them in advance should the project go above 10% of the project range.
We tweaked our Client Meeting Rhythm to allow for entire days of design production without interruptions. For example, Mondays + Wednesdays became meeting days for some of us and Tuesdays + Thursdays became production days for everyone. It does not mean that we never had exceptions...but this was the new "productivity" norm.
We implemented BubbleTime. BubbleTime is a block of uninterrupted, productive time. No calls, no emails, no talking...just pure productive energy. It is recommended to have at least 2 blocks of uninterrupted time per day of at least 1 hour and a half.
We tweaked our Monday Huddles to include each team member's billable % average from the previous week. It is very important to publicly celebrate the team members that are making it happen week after week and to also look at which team members are falling behind and why so you can either tweak the expectations, find solutions together to reach the target, or simply evaluate if this employee is assigned to the right seat on the bus.
We continually Measured Efficiency and Profitability against our targets and our client proposals to ensure that we stayed the best "well-oiled machine" that we could be.

THE RESULTS:

We grew an astonishing 85% that year alone without hiring anyone new...and we did it pretty effortlessly when all considered. This simple mission allowed us to uncover and course-correct a few major growth blocks, or potholes as I like to call them.

Don't operate your business blindly. Know your numbers...including your team's efficiency rates and go from "Survive" to "Thrive."

Isabelle Mercier Turcotte is a business performance and brand management coach, speaker and business growth catalyst, who is driven by a relentless passion for helping entrepreneurs and business leaders accelerate their success. Isabelle is an expert at helping clients overcome major obstacles, deal with tough decisions and capitalize on new opportunities to achieve breakthrough results.

For more information and easy-to-implement, proven strategies to increase Efficiency, Brand Equity & Profitability, visit us online at http://www.leapzonestrategies.com.

Article Source: http://EzineArticles.com/?expert=Isabelle_Mercier-Turcotte

My View on Isabelle's Article:

In working for a professional services company, it's amazing to see how the profitability of the business affects the culture and future growth. When you've built a company based on service, you should remain aware of the costs associated with doing business, and realize what margin you can reasonably expect. As you increase your billable time (by following what Isabelle did), you'll notice that you're able to provide quality work and get compensated for the value you add. In the end, everyone benefits. This increases morale of clients and employees alike, and begins what I've recently learned is called a "Virtuous Cycle." More on that in an upcoming post!

Please, tell me what you think of Isabelle's article, and how does it relate to your business?

Crucial Factors in the Five Stages of Growth

nospam@dontspamme.com (Brad Fair) — Wed, 28 Jan 2009 06:17:00 -0600

Another one straight out of the Harvard Business Review, this time from well before I was born!

The authors of this article assert that there are five stages of growth in a business, and that they are non-linear in nature. Not all companies will go through all stages, and the stages don't progress in the same order for every company. Here they are:

Existence - getting customers, meeting their needs. These two things mean that a company exists.
Survival - Switching focus from existence to the relationship between revenues and expenses. Here is where you worry not only about whether you can make money or not, but whether you make more than you spend!
Success - This isn't the end of the road, by any means. By the time you're here, you've created a viable business that brings in sufficient profit. You have two things that you can do:

Use the success of the company to finance the owner's lifestyle/other activities, or
Use the success of the company to finance further growth.

Take-off - After making the decision for more growth, your primary concerns are managing the growth and financing the growth.
Resource Maturity - The authors say that this is the point at which you have "arrived" in your business. Less than one percent make it here, but that is by choice for most. Here, you must take hold of the business after its high growth stage, and implement systems to help control the company.

The authors were kind enough to point out eight "key management factors," half company-specific and half owner-specific. They are as follows:

Company Specific

Financial Resources (cash and borrowing power)
Personnel Resources (how many people, how awesome are they, what level are they)
Systems Resources (Business Process Automation, planning/control systems, info systems)
Business Resources (customer relations, manufacturing/distribution processes, reputation, etc)

Owner Specific

Owner's personal goals and business goals
Owner's operation abilities
Owner's managerial abilities, and willingness to delegate
Owner's strategic abilities

The interesting thing about these "key factors" is that they are ALL important, but that in each stage some are more important than others. According to the authors, here is what you should focus on in each stage:

Existence

Business resources - what little you do have needs to be quality.
Owner's operation abilities - your ability to do what the business does.
Cash - For without it, nothing survives.
Matching personal and business goals - if your business goals and your personal goals are dissonant, get out now.

Survival - at this stage, doing what your business does, and keeping an eye on revenue & expenses is your focus.

Owner's operation abilities
Cash

Success - There are two sub-stages here, disengagement and growth.

Disengagement

A little less on your ability to do, but that's still the #1 focus.
Of the eight factors, all are rising in importance but cash, ability to do, and business resources.

Growth

Matching business and personal goals. This is a risky and stressful time, make sure you really want it!
Operational abilities
All of the rest are important here, but not the PRIMARY focus.

Take-Off - It's ALL important in this stage, but here's the order of focus according to the authors.

Cash - if you can't finance growth, you'll fold
Strategic planning - You must have the road map to get there.
Systems and controls - Since you can't do everything personally in a high growth stage, you must have systems in place to bring you the results you're looking for.
Business/Personal goals
People - Do you have the right kind of people, in the right positions? How's your culture here?
Delegation - if you can't delegate, you carry the weight of the world on your shoulders. Your people are there for you, to do what you tell them to. Give them things to do, and let them!
Your ability to do - Since you're delegating and focusing on growth (strategery), you shouldn't be in the day-to-day of doing what your business does. It's less important, but since you're a teacher in this stage (delegate!), it's still important.
Business resources - these are becoming increasingly a natural byproduct of business operations. Manage your relationships, but don't give it all your attention.

Resource Maturity - in this stage, the systems are in place. Most things are important, but managed - not a CRUCIAL focus. The only crucial focus is:

Strategic planning. Many companies forget that the market moves with or without the company, you might as well move with it.

The points that I think every young entrepreneur should remember are:

Every business goes through these stages differently. Some stages may even be skipped or not touched.
Use this as a guide to what you should be thinking about in the future. If you're in the Survival mode now, but you intend on getting into the Growth stage, make sure you account for the crucial factors of the growth stage.
When considering advice from other business people, consider how their businesses evolved. The evolution of Wal-Mart was not the same as the evolution of Facebook, so Sam Walton's and Mark Zuckerberg's advice about the same business issue may vary quite a bit.

I'm interested in hearing comments about this article. For those of you who have a business, how did your company go through these stages? Did you notice that you were in one stage with respect to one part of the business, while in a completely different stage in another regard?

12 Characteristics Essential for Entrepreneurs

nospam@dontspamme.com (Rob Garibay) — Fri, 23 Jan 2009 05:49:00 -0600

I am fortunate to stand on the shoulders of Brad Sugars, founder & CEO of ActionCOACH, and the more than 1200 ActionCOACH business coaches located in 29 countries. While thinking about the topic for this article, I came across an article published in ActionSTEPS, our weekly newsletter to business owners. This article so effectively expounded upon my recently published six part series on the Entrepreneur Ladder, that I decided to use it as the basis for today’s column.

By examining the 5 levels of the Entrepreneur Ladder we gain a better understanding of the fundamentals that distinguish ordinary entrepreneurs from the extraordinary. There are certain traits common among successful entrepreneurs. While individual entrepreneurs have many unique traits that are not common to others; all entrepreneurs do share a kindred spirit, a certain type of constitution and outlook, with a special drive and willingness to do what it takes. This article examines a dozen characteristics that are within successful entrepreneurs, without which most people fall short of success in entrepreneurial endeavors.

#1 Confident

Confidence, a hallmark of the entrepreneur, can be developed over time. Many confident individuals gained their sense of self esteem and faith in their ability to overcome challenges by acting, even when they lacked the confidence, and then growing in strength and belief through seeing results.

#2 Sense of Ownership

Entrepreneurs take responsibility for problem solving. Rather than viewing a problem as someone else’s, entrepreneurs see it as their own and take pride in finding solutions. Rather than controlling situations in an attempt to possess them, entrepreneurs teach others how to take charge. Clever entrepreneurs use individual accountability in the ultimate pursuit of profitability, teamwork, and overall success.

#3 Able to Communicate

Communication is the key to successful relationships with people. Entrepreneurs work to hone communication skills, written, spoken, and non-verbal body language. Above all, entrepreneurs develop a keen ability to listen to what others are trying to say.

#4 Passionate Learner

Entrepreneurs are often “autodidactic” learners, which means that much of what they know they learned on their own by seeking information, asking questions, reading, and research. They are also quick to learn from their own mistakes. True entrepreneurs surround themselves with those who know more than they do in related disciplines.

#5 Team Player

Business owners who have not mastered team building become enslaved to the daily tasks of running their business. They

shoulder the whole burden for themselves, and will never advance up the e-ladder to building a business that works without them. Entrepreneurs master team building.

#6 Systems-Oriented

Good systems leverage entrepreneurs, allowing greater results over time with less exertion or resources. Entrepreneurs rely upon systems before they rely upon people. They implement system-based solutions before human solutions, recognizing that most routine problems are not people problems, but system problems.

#7 Dedicated

Entrepreneurs dedicate themselves to the fulfillment of their plans, visions, and dreams. It is that tenacity of purpose that generates focus and electricity throughout their entire organization.

#8 Grateful

Being grateful for what we have opens us to receive more. Those who are grateful appreciate and nurture what they have. Entrepreneurs learn to take nothing for granted in this world. Thankfulness for their skills, employees, and blessings reminds them that riches and wealth are not about “stuff”, but are about fulfillment, satisfaction, and the pleasure that comes from one’s accomplishments and contributions.

#9 Optimistic

Entrepreneurs see setbacks as bargain priced tuition for the business lessons gained through firsthand experience. They remain steadfastly faithful to their vision and refuse to give in to fear.

#10 Gregarious

Because business is all about people, entrepreneurs tend to be socially outgoing. They have the ability to contagiously share excitement about their ideas, products, and services. They tend to be fun-loving, both on and off the job.

#11 Lead by Example

Entrepreneurs are skilled at leading others through their enthusiastic approach to life. They know the importance of teamwork, and they understand the need to appreciate others, support them, and reward them. True leaders do not become indispensable; otherwise things fall apart in their absence.

As retired United States Air Force Major General Perry M. Smith once wrote, “Leaders who share their power and their time can accomplish extraordinary things. The best leaders understand that leadership is the liberation of talent; hence they gain power not only by constantly giving it away, but also by not grabbing it back.”

#12 Not Afraid of Risk or Success

Many people could be successful if they only took calculated risks. Unfortunately many people who do take chances and become somewhat successful find the realization of their dreams an overwhelming possibility, so they sabotage their continued success by retreating back into a comfort zone of smallness. Entrepreneurs realize that due diligence and reliance upon their skills and honed intuition is far superior to paralysis by fear.

Do these characteristics resonate with you? Then join us in the great American dream of entrepreneurship!

Rob Garibay is a local business owner and business coach with 30+ years of business experience. Forward your business questions to: 405 573-6537 or robgaribay@actioncoach.com

Three Questions Every Entrepreneur Must Ask

nospam@dontspamme.com (Brad Fair) — Tue, 20 Jan 2009 20:43:46 -0600

Straight out of the Harvard Review from Nov-Dec. of 1996, these questions are still relevant today. Of all of the businesses that start, a staggering number fail. Every time I hear the number of successful businesses, it lessens and lessens. I recall hearing most recently that one hundredth of one hundredth sounds about right. As a young entrepreneur, these three questions can help your chances of success by:

Looking into your definition of success (Where do I want to go?)
Mapping the road to success (How do I get there?), and
Addressing obstacles (Can I do it?)

Where do I want to go?

As an entrepreneur, you needs to consider what you want personally from the business(es) you start. Are you looking to get filthy rich? Have an outlet for creative talent? Spend more time with the kids, or on vacation? None of these are bad things, but each one lays a separate foundation for the company you will create.

Once you pinpoint what you want from your business, you should give serious thought to what it really takes to get there. If you're looking for filthy rich, you'd better be capable of the long term risks, late night hours, and delegation of your company. If you want to spend more time with the kids, or go on more vacations, realize that the way to do that is not by spending all day every day slaving over that next deliverable. You need to create a company that will facilitate those goals! I mention this under the "Where do I want to go" heading because you may need to reconsider your goals after considering the type of business you need to create.

How will I get there?

Be clear in planning how to get where you want to be. Account for geographic reach, policies, rates of growth, decision making, and financing the business. As Albert Einstein said, "You do not really understand something unless you can explain it to your grandmother." If you can't articulate your thoughts on how to get there, you should take a second (or third) look.

Make sure that your plan, whatever it may be, can generate sufficient growth and profit. If money is to business what ATP is to humans (think oxygen), then you'll need enough of it to keep going. Also, ensure that your plan accounts for the fact that "stuff happens." Over the next ten years, there will be significant technological change, political change, and economic change. You can't be prepared for everything, but having thought through what you can definitely helps.

Can I do it?

When I read this question, I instictively said "Yes!" After further consideration, this question is much more difficult to answer. Even if your strategy is flawless, it's worth nearly nothing if you can't execute. Can you get the resources you need to succeed? Can you help develop your employees to their fullest?

When asking this question, consider that you will need to establish the infrastructure to facilitate your company's operations. If you want to grow quickly and sell, you'll need to develop systems of delegation, financial management, and much more. If you are looking for freedom to spend time with your family, you'll need to ensure that your business can handle not having your undivided attention all the time.

Lastly, know that as your business grows, your role will likely need to change. You may start on the front lines, doing the day-to-day. As time goes on, you'll find that your role develops to a management role, where you spend your time training and teaching.

Summary

These three questions are admittedly extremely difficult, but they must be asked. Make sure to revisit these questions as time progresses - goals aren't static all throughout your life. Likewise, each of these questions build off the other two, so your answers may vary widely the next time you think about them.