I believe you will agree with me that you want everyone in the company to be efficient, effective, and earning a profit for the company. The first place you start checking on is the job that each employee is supposed to be doing for the company. Are they doing their job to the best of their ability? Is their best ability good enough for what the company needs done? The key is that the person doing their job needs to be involved with setting the rules and boundaries for their job with their supervisor at the beginning of their position at the company. The last sentence of their job description needs to read along the lines of “and any other responsibilities that management deems necessary.”
So just for grins, let’s start at the top of the company organizational chart with the owner’s job responsibilities. No surprise, the owner is responsible for the company and all that it does or is supposed to do. With all of that being said, what would be a quick and easy way to know if the owner is doing what they are supposed to do? Running a business is like flying a commercial passenger jet; running out of fuel is an absolute no no! Running out of cash in a business is the same absolute no no! If you make the mistake in either situation, NO one will be able to help you quick enough, regardless of your need. The owner MUST use their smarts to make sure they do not allow themselves to get put into a situation they cannot recover from!!! In the commercial passenger jet scenario, the pilots use their flight plan to make sure they are burning their fuel over the proper time and space. The owner is using the same type of flight plan. It is composed of the company budget, the company income statement and the company balance sheet to make sure that the company is where it should be according to budget. If it is not, corrective action must be taken in a timely manner or the company may get into a situation that it cannot recover from. In order to get correct information, the owner must set up and monitor a reporting process in order to get correct information in a timely manner. Accurate and timely numbers come from keeping track of all of the company’s costs for labor, material, subs, rent and any other expenditures the company has. The process will also determine whether or not the work that the company does is profitable work and whether or not to continue doing the different types of work the company currently does.
I was recently invited to attend a company picnic with the owner. As we stood there looking at the 130 people that were a combination of company employees and their families, I noticed he was getting a little misty eyed. I asked him what he was thinking. After a minute, he said that he had just realized that he was responsible for making sure the company functioned properly and profitably. He also had just realized that, if he did not do a good job of that, it would affect not only his employees but their family’s welfare and their futures.
Most owners I work with are usually loyal to a fault and a lot of times they commit to things that both they and the company can ill afford. For instance, owners often times have a tendency to talk about what they would like to see the company do in the future. The employees that hear the owner talking, have a tendency to believe what the owner is saying is actually going to happen. The reality is that the owner is just talking (sometimes called dreaming) about what they would like to see happen, BUT it does not mean that the owner is promising any of it to happen or the owner is even capable of making it happen. An owner must get a return on their investment or things get really unhappy at home. They can get so unhappy that the family gets up in arms about not having enough money to live on, much less having a positive future. When this happens, the owner needs to listen to them and adjust their efforts into the business. If the business cannot or does not support the owner and the family with a fair return on their investment, then the owner will need to make adjustments to the business. I personally believe the owner must be paid a reasonable return on their investment, or they need to make adjustments that take them in a different and profitable direction. The government statistics say 65% of all businesses go out of business in their first five years. Those that don’t go out of business get thrown into the new mix of business owners and they have to work harder than they did in the past to compete and be profitable in the future.
A quote I have in my office and one that I give to all new clients is the following by Duncan C. Menzies;
“Profit is a must. There can be no security for any employee in any business that doesn’t make money. There can be no growth for that business. There can be no opportunity for the individual to achieve his personal ambitions unless the company makes money.”
In this industry of feast and famine; running a profitable business is a difficult task. It means all members of the company MUST be doing their jobs efficiently, effectively and earning a profit for the company.
Wishing you good luck and good profits in 2019!