Business In Washington - Business Operations Consulting

Everyone seems to be in an uproar over the economy.  It has reached the point where some concern is certainly warranted.  The pressure is on our government to take immediate steps.  But is this the right approach?  Should our government dive in with big bailouts and big government programs?  Running up more national debt is not going to help our economy.  It will hurt in any number of ways, including further weakening of the dollar.

Over lunch today, I listened to reports and discussions addressing this subject.  Most of it was focused specifically on the mortgage “crisis”.  There is much wailing and gnashing of teeth over the poor homeowners who can’t manage their increased mortgage payments and may be faced with losing their homes.  Although I feel real compassion for anyone in danger of losing his/her home, I think the current discussion is taking place without adquate context.  That context is this.  Only a very small percentage (around 2% is the number I heard on the news today) of homeowners find themselves in this bind.  The other 98% are meeting their obligations, in spite of adjustable rate mortgages adjusting upwards.  So the crisis is really overblown, at least when considering people losing homes.  You’d hardly know this, to listen to the average newscaster, not to mention the politicians.

So is it right for that responsible 98% to bear the cost for the 2% who overextended themselves?  Because that’s who will bear the cost if the government starts buying mortgages or bailing out homeowners - we, the taxpayers.  I don’t think so.

Should we find ways to offer information, guidance and other support to help struggling homeowners wend their way through the mortgage morass?  Sure!  I’m all for education, coaching, and guidance.  That’s a far better way to deal with the current crisis.  It’s cheaper and more effective in the long run, since a better educated consumer will be more responsible with their choices in future.  Perhaps we can prevent a repeat.

Lest you think me hardhearted or lacking in compassion, let me assure you that I don’t think we should be bailing out corporations, either.  I would much rather see our free market and strong capitalism function without government interference.  It works better that way, ensuring a strong economy for all of us!

Lots of us shoppers out there are Costco addicts.  Speaking for myself, I have to say I love the thrill of the hunt, finding something unusual and exciting at a great price.  I appreciate the more mundane benefits of shopping at Costco, too - the high quality and really good prices for stuff I need and use every day, even if I wind up buying a quantity more suited to an army than to my small family. 

 The thrill of Costco’s  “treasure-hunt technique” was described in a recent Wall Street Journal article, from an interview with Costco CEO Jim Sinegal.  It’s a great article, one I highly recommend.  What I found even more important, however, were his comments about hiring and keeping good people.  Here’s the quote:

“WSJ:  Costco offers better wages and benefits than most of its rivals.  Why is that?

Mr. Sinegal:  We think that you get what you pay for.  If you hire good people, pay them good wages and provide good jobs and careers, good things will happen in your business.  We think that’s proven true in our case.  We are the low-cost provider of merchandise, and yet we pay the highest wages.  Wouldn’t that suggest that we’re getting better productivity?”

Well, duh.

We have seen this principle used and abused among our clients.  One, who had a serious cheap streak when it came to employees, had a constant problem with turnover.  Employee morale and attitudes suffered and the results were reflected in reduced productivity and lower profits.

In contrast, another client was known for paying extremely well (almost too well, IMHO).  He demanded a lot from his employees, but gave them the tools, training, and freedom to deliver.  And they did.  They worked hard and well.  Productivity soared along with profits.  And the employees stayed!  They were an effective team and were rewarded for their hard work and loyalty.

What is your experience?  Please share your stories!

We thoroughly enjoyed our holiday weekend.  We slept in, relaxed, and got some projects done around the house.  On Sunday, however, we decided it was time to get out of town, at least for the day.  So we hit the road.

 We stopped in a nearby town and strolled along the main drag, enjoying the shops and galleries in this tourist-focused spot.  Eventually, the delicious smells and attractive menu posted outside a bakery/coffee shop pulled us in.

The pleasant interior of the shop featured several tables, augmenting the few that were outside, and a large display showcasing those desserts I try to avoid.  (I swear they stick to my hips when I walk by and drool!  I don’t even have to eat them.)  Behind the counter were 3 young women, plenty of staff to handle the very modest late-lunch crowd, consisting of us and a family of 3.

This is when the sunny day dimmed a little.  The young women seemed to look everywhere but at the customers.  It took an inordinate amount of time for them to take the family’s order (they were ahead of us).  They also couldn’t seem to multi-task.  All three of them seemed fully involved with the family.  (Actually, 1 woman took the order while the other 2 watched.  Hellooo!  There is another customer here!)

They finally noticed us and took our order.  Dennis turned to me and asked if I wanted something to drink.  The girl behind the counter said, “Oh, you have to order beverages down there,” and pointed to her right.  We shifted in that direction (it was only a couple of feet!) and waited.  The other women behind the counter looked around and ignored us. 

 My order came up and I suggested to Dennis that I take it outside and claim the one remaining table while I could.  He agreed, said he would order drinks and join me shortly.

“Shortly” became quite a wait.  I could have finished my meal before he finally joined me. He brought two glasses of ice water he said took quite a bit of effort to get.  We ate our lunches, which were outstanding, and pondered the obvious business lesson.

Clearly, the owner of the shop was not there.  Just as clearly, the staff was completely clueless on the importance of customer service.  This shop could have done a booming business if they had their act together.  My experienced manager side was just dying to get in there and straighten things out!  I would have trained and supervised those employees and fired them if they didn’t come around.  I would have emphasized these important points:

• The customer is not an interruption of your day, but the reason we are in business.
• Greet people promptly, pleasantly, and look them in the eye.
• Produce their orders efficiently and quickly.
• When business is light, take the time to follow up with the customers.  Ask if their food is satisfactory and whether they would like anything else.  (”Would you like fries with that?”)

This little bakery was probably just surviving, based on their location in a high foot traffic tourist area and on the strength of really good food.  Their business could really boom with the application of BASIC business and management principles.

This isn’t rocket science, folks! 

There is a great article in the Wall Street Journal (in the Startup Journal section) today – “Recommended Reading for Inspiring Leadership.”  The writer, Dana Mattioli, makes the point that being a successful entrepreneur means finding the strength and wisdom to overcome obstacles and persevere.  The article lists a number of sources others have found inspiring, including books, movies and a web site.

I couldn’t agree more with this premise!  Building a new business is sometimes a roller coaster, with serious highs and lows.  We all need ways to defeat the lows and keep climbing.  At Next Step, we frequently turn to books for inspiration as well as practical information in order to overcome those bumps in the road to success.  Our biggest problem is buying more books than we have time to read them, but we are working on that.  See some of our suggestions on our web site book list: www.nextstepsolutions.com/books.htm

Dennis frequently turns to quotations from a wide variety of luminaries, movers and shakers.  We include quotes in our e-newsletters and on our web site.  There are lots of reference books available for great quotes.  You can also find them on the web.    I just tried that, searching on Google for “leadership quotes”.  Google produced tons of great results!  Here are just a couple of quotes I found that inspire me and make me think.

“Lead and inspire people. Don’t try to manage and manipulate people. Inventories can be managed but people must be led.”
- Ross Perot 

“…peace is the highest aspiration of the American People. We will negotiate for it, sacrifice for it, we will never surrender for it, now or ever.”

- Ronald Reagan

Kind of puts our business problems in perspective, doesn’t it?

Where do you turn for inspiration?  Please share your sources with us and our readers!

I really enjoy the Wall Street Journal and read as much as I can in the limited time available.  I have particularly enjoyed many of Carol Hymowitz’s columns.  The new one, published just today, is “New CEOs May Spur Resistance If They Try to Alter Firm’s Culture”.  She talks about the “roller coaster of changes” that usually follows a change at the top.  Her main point is this: 

“New leaders typically reshape their senior executive team and the company’s growth strategies.  The most wrenching adjustment occurs when a CEO changes the corporate culture – the core values and ways of doing things that bind people to their jobs.”

Ms. Hymowitz illustrates her points with several examples culled from large corporations.  I am reminded of my own experience at IBM during the “wrenching adjustment” (to use Ms. Hymowitz’s excellent choice of words) of the early 90’s.  That was when Lou Gerstner came in as CEO, the first outsider to take the post in the company’s very long history.  In hindsight, I see the necessity of bringing in the fresh viewpoint of an outside executive.  It was a very tough time in IBM’s history and change was critical to survival.

As an employee at the time, however, I remember the magnitude of the change as it hit the average employee.  It was like a solar plexus blow.  We were all left gasping for air initially.  For example, the company experienced its first layoffs – ever!  Even during the Great Depression, IBM kept its employees working, building machines that were warehoused due to lack of sales.  We were all steeped in this tradition, “dipped in blue paint” during initial Big Blue training, as we used to say.

IBM survived the upheaval and thrives today, but with a very different culture.  This is the usual “good news, bad news” fact, I am sure.  Ultimately, the news is good because a great company still exists, producing products, services and lots of jobs.  Could the changes have occurred with a less traumatic approach?  I don’t know.

Ms. Hymowitz offers the example of Staples as a different way of affecting much needed change.  Kinder and gentler?  How about other examples?  What are your experiences with company cultures?  Did you experience a change in leadership?  Has your company experienced a merger or acquisition?  How did that impact the culture?

Read Carol Hymowitz’s  excellent article, consider your personal experiences, and let me know what you think.

Step 1: Business Structure and Governance
There are several viable forms of business entities, each with pros and cons relating to personal liability, income tax, payroll tax, limits on the number of owners, and taxation on profit distributions. Your business can be a sole proprietorship, a partnership, a corporation (S or C), or a limited liability company (LLC). You may start out with one structure and find it appropriate to switch to another during the life of a company. The point is to analyze and understand the differences and make an active, rather than passive, choice based on your situation and requirements.

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Business is both exciting and dynamic. The variety is endless. Products and services are constantly expanding, as are the ways they are offered to the public. New industries emerge regularly, with attendant new opportunities. And the personalities of the diverse businesses out there reflect the equally diverse personalities of their many owners.

We’ve had the opportunity and the pleasure to work with literally hundreds of companies over the years and the variety keeps us entertained, challenged, and constantly learning. However, there are threads of operational consistency woven through nearly all companies. In our experience, the quality of these “threads,”the basic operational foundation of a business, will make, or break, the best of companies.
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At Next Step Solutions, Inc., we are business operations consultants focused on small- to medium-sized companies. We are passionate about business and strive to help businesses grow, thrive, and make more money. Our clients are entrepreneurs who have built businesses with their hard work and passion, but who have been unable to realize their full growth potential. We help them overcome the internal obstacles holding them back and make the transition from an informal operation with the founder involved in everything to an organization with formal structures, professional management and a CEO leader who is free to focus on a vision for future growth.

When we begin working with a client, we start by learning as much as possible about their company, how it operates, its successes, and more importantly, its challenges. Working closely with the business owner, we perform an assessment of the business as it stands currently. Over time, we have found that there are 12 key areas of business operations that require attention and action, and this has become what we call our 12 Steps to Business Operational Success. This is the basis of our initial assessment. We can then rank the steps in priority order for the specific client and tailor our services to address his/her primary needs.

We work with our clients face to face, by phone and via email. A lot can be accomplished with the assistance of 21st century technology, but it can never totally replace the value of being onsite with our clients. Built into our service packages is a regular onsite status meeting which allows us not only to assess a client’s progress, but to observe and take the pulse of the business. This allows us to spot a potential issue our client may not see and address it before it becomes a real problem.

Our principals have extensive cross-industry business experience, spanning 2-3 decades in time and all types and sizes of companies. We offer our expertise to our clients in a number of ways, packaged to maximize the value they receive. Several consulting programs are available for a monthly fee, each including a specific set of services. Additional services are available as needed on an hourly basis.

Looking for a way to offer our expertise at a lower price point for very small businesses, we developed a version of our 12 Step program which can be offered over the telephone, making most efficient use of both time and money, scarce commodities for business small business owners. The 12 Steps are offered as individual teleseminars or in a unique tele-forum, which combines group training and one-on-one consulting.