Lessons from Small Business Owners
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Real Lessons for Small Business: Running a Business by the Numbers Join serial entrepreneur and small business owner and advisor, Scott Juetten to hear a perspective on how he manages by the numbers and what a few minutes a month can do for a business.
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Lessons from Small Business Owners
- 1. Real Lessons for Small Business Running a business by the numbers Speaker Series Scott Juetten, CEO, Small Business Advisor FASTSIGNS, SJ Consulting Bellevue, WA Introducing…
- 2. What are We in Business For? Job Pass it along to family Build and Sell Cash Cow Inspired to be your own boss Hobby Next Apple Combination of the above
- 3. Pains of Being a Small Business • At the mercy of …. • We’re specialists in our field, not in finance
- 4. Working IN (vs. ON) the business The E Myth (Gerber)
- 5. What’s the Temperature of Your Business Today?
- 6. Who’s Flying the Plane? ….Are you ready to land at any time?
- 7. “What gets measured gets done.” • What are your key performance indicators? • Figure out what can be measured and then delegated so you don’t have to be the CEO of every metric in your business • Imagine what your business could look like if you improved it just 1% per week or even better 1% every day.
- 8. Finance is essential Accounting Looks back Because we have to comply Finance Looks forward Because we want to plan
- 9. Other KPI Opportunities • Financial – Budget to Actual – GP,COGS – By lines of business- what’s your most profitable? – Revenue per employee – Production Rate Per Hour • Customer Satisfaction • All of these help a business owner get a temperature read on the business.
- 10. Share to Execute Sharing with the team Manage by the agreed upon metric rather than to a personality. Accountability: Who owns which metric? Make an employee CEO of something. They need to own something because you can’t own it all. 26% Revenue growth (sales) $23k Avg. cost/FTE per month (staff) $1,700 Avg. marketing spend/ month (marketing)
- 11. Your Advisors Need to be part of your vision dashboard too. • Relationship with: – Bookkeeper – CPA – Advisors/Coach – Key Staff – Trade Associations how am I doing?
- 12. What Next? • I Started Small – Picked 3 most concerning areas – Build a solid budget you can plan from – Monitor your results over a defined time period. – Interpret the business intelligence – Assign & Adjust
- 13. Share the Results • You can’t react alone • Make the results visual to everyone • Share in the winnings • Reset expectations • Re-measure – “What gets measured gets done.” • Stay the course!
- 14. Thank you! I can be reached at Scott.Juetten@Gmail.com
- 15. What’s happening with your business while you’re busy working in it? Practice Proactive Management and in 30 minutes a month you’d know “In a few minutes each month, we get to see a clear picture of our finances and can manage our goals” $69/mo + setup
- 16. Our Customers
- 17. Thank You!
Editor's Notes
- I’d like to welcome everyone today to Real Lessons for Small Business And Running a business by the numbers I know everyone is busy, but thanks for taking time today to work ON your business today. My goal over the next 15 or so minutes is to provide you with some perspective and thoughts I use on a daily basis to run my business. I figure if I can get you all to think a little differently about your role as a business owner it might help lead to some break throughs. My background a an entrepreneur goes back 30 years. I’ve started and sold 3 business’s and have consulted with many others on ways to improve their enterprise value. Most recently I re-acquired an underperforming Fastsigns location in Bellevue Washington. When I owned it, it was one of the top performing locations in the entire US. I’ve had to start over on this one. It’s a great challenge……So our talk today is a healthy exercise for me as well. So let’s get started….
- I think the first thing a small business owner has to ask themselves is why are they in business. The answer to that question helps set the stage for defining what “success” looks like for you. For me it was simple. I’ve always preferred building and working for myself. The challenge for most business owners is there really isn’t a how to manual on how to effectively run a small business. Short of franchising, but even a franchise model doesn’t fully prepare you. So we learn a lot by mistakes we make. I opened my first business in 1990 and very quickly outsold the model and the technology. I began to learn what it meant to out sell your manufacturing, wondered why I wasn’t as profitable as my piers, learned what cash accounting vs accrual accounting was, why my balance sheet was just as important as my income statement, the value of a good hire, the importance of having quality advisors, and the list goes on a and on. Right? So like most small business owners I started my journey of digesting business books, trade journals, went to small business networking functions and what ever else I could to get on top of my business. I was looking for an edge that could provide me with a sense that I was fully on top of my business. Ultimately I landed on a few key readings, aligned with some key advisors and began to break my business apart. I started measuring everything. White boards and graphs were and still are an important tool in my business’s.
- DOES THIS LOOK FAMILIAR? Note that’s not me You’re at the mercy of customers, employees, vendors, partners, the market… Something’s coming at you all the time…….and unless you’ve built a great infrastructure around you to interpret and adapt, you’ll eventually get caught. I call them gotcha’s.
- I mentioned earlier that I came across some key readings that helped galvanize my skills— One of the best I’ve come across is Michael Gerber’s E-Myth and the E-Myth Revisited Overview of Gerber’s concept: One of Gerber's most striking observations is that most small businesses are started by "technicians", that is people who are skilled at something and who enjoy doing that thing. (A technician can be anything from a computer programmer to plumber to a dog groomer to a musician or lawyer.) When these technicians strike out on their own, they tend to continue doing the work they are skilled at, and ignore the overarching aspects of business. Without clear goals and quantification benchmarks, they soon find themselves overworked, understaffed, and eventually broke. Worst of all, they may come to hate the work they do. Rather than owning a business, they own a job, and they find themselves working for managers who are completely clueless about how to run a business- -themselves. This might sound familiar to some of you. The solution, Gerber argues, is for every business owner, especially the technician-owners, to balance their business personalities. According to Gerber, every business owner needs to simultaneously be an entrepreneur and a manager as well as a technician. The technician is the worker-bee, the one who produces the product. The manager makes sure operations and finances run smoothly and consistently. The entrepreneur formulates the goals, and steers the business in the direction needed to reach those goals. Of these three personalities, the entrepreneur is key- -without it, the technician will work himself or herself to death or bankruptcy. As the business grows, the business owner will need to draw away from the technician work and manager work and delegate this work to others. So WHAT’S THE TAKE AWAY FROM WHAT WE’VE DISCUSSED SO FAR……
- I mentioned I started measuring everything. I think about it like this— Imagine a doctor trying to diagnose a patients overall health without having some pretty key instruments to measure the key indicators of the patient. The data these devices provide a doctor are synonymous with the buzz word used in business today…. Business Intelligence An example in my manufacturing business is that my production and sales manager know
- There’s a reason a plane or car has a dashboard The Speedometer tells us how fast we are going The Fuel gage tells us how much fuel is left The altitude Indicator tells a pilot how high they are in the air Imagine trying to drive a car without a dashboard of indicators. Although my 16 year old son who just got his license may think differently The same holds true of a business. We need to set the dials to ensure a proper take off and landing each day. It starts with what many small business owners know the least about. Their financials.
- One of the best sayings and now initiatives I use in business is “What gets measured gets done.” It means regular measurement and reporting keeps you focused — because you use that information to make decisions to improve your results. Your most critical measurements are called Key Performance Indicators. OR KPI’s. KPI”s are the dashboard I showed you earlier. KPI”s provide the temperature of your business at any given time You can boil it down to the difference between what’s urgent and what’s important, and often they are not the same. One is aimed at helping individuals and another provides a new way for a whole team to create a shared understanding of what’s really important. Focus on providing value. Ask yourself, “How much value will this provide me, or someone else?” Think long-term. Ask yourself, “Will this make a difference in a week, a month or a year from now? Five years?” Have a clear vision. If you can’t envision it, then you can’t measure it; if you can’t measure it, then you can’t manage it. Think about whether or not the work you’re doing is moving you closer to your vision, or if it won’t make much of a difference tomorrow or next week. I need to be able to walk into the business each day and be able to see immediately whether our business is going OK today. Things like: Machines are running; 20 jobs on the board This helps me know what “mode” we’re in today? e.g. This might be a day of execution, we can’t do planning today….
- Here’s a few examples of ways to look at some key indicators of your business- I’ve chosen a financial example because It’s relevant to all small business's. This slide shows a clear divide in how most of us look at our financials and how most of us would like to look at our financials. A typical accountant provides you with your monthly financial statements and an annual tax return. It’s what I call compliance work. There is usually very little advisory on how to influence future outcomes. What’s the saying….the devil is in the details I challenge everyone to take three years of financials get them on one page side by side and begin to identify the key trends in your business. If you haven’t done this before you will learn a lot about current trends in your business.
- Get your team to self-lead. Have them Own something. Give them “just enough” information to make decisions without sharing the entire Accounting Software data. Make them the CEO of something.
- Talk about the relationship with CPAs – what do you share? How do you interact? What do you need to tell your advisors How do you share with key staff How are you doing compared to the industry and what can you learn from them?
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