Think of the health of your business like a spectrum.
On the left, there’s financial prosperity — cash flow, net operating income, EBITDA, whatever you want to call it.
On the right, there’s employee satisfaction. Team members that absolutely love coming to work every day and look at their job not as something they have to do, but something they get to do.
You’re probably saying to yourself the two are correlated.
And they absolutely are. But that’s not how most of us make decisions in our business — keeping both aspects in mind.
Far too often throughout my career, my focus would be on one area or the other. I didn’t take into consideration how critical it was to straddle the middle ground between healthy morale and a healthy bottom line.
As a result, I couldn’t sustain success. Either the financials would give way to employee engagement or periods of profitability would be interrupted by accelerated turnover.
After years of deliberation and tribulation, I’ve gathered five must-do’s for each side of the spectrum to ensure neither falls by the wayside.
As deeply connected as the two are, you don’t want to miss these.
Financial Must #1 — DO think about what your business looks like 10X its current size
“Don’t be afraid to give up the good to go for the great.” — John D. Rockefeller
The vehicle will always be bigger than the driver. The office, bigger than the occupant.
As much as the leader is the choke-hold of the business, a leader that fails to understand the golden goose is the end-all-be-all will suffer dire consequences.
Things may be good right now, but if you cannot scale within your organizational structure or innovate and adjust to the growing technological advances, I suggest you start brainstorming yesterday.
Financial Must #2 — DO use a budget as a decision-making tool
“Success is not magical nor mysterious. Success is the natural consequence of consistently apply basic fundamentals.” — Jim Rohn
Your financial forecast may not be the sexiest thing to look at, but trust me — it’s your friend.
Regardless if your accountant has everything handled, don’t allow yourself to stay in the dark on this matter. Knowing how much money is in the bank simply isn’t enough.
Holding yourself accountable to make your calls within your budgeted chart of accounts will not only result in savvy decisions and timing, but it will also keep you from losing your mind should the accounts payable begin to pile up.
Stay in reality and don’t wait for the monthly reports. Your profit & loss statement should simply reveal what you already know.
Financial Must #3 — Increase marketing as you add expenses
“If you don’t drive your business, you will be driven out of business.” — C.B. Forbes
It’s always exciting when the time comes for you to move into that larger office or add the asset you’ve been eyeballing for months. It’s a time that should be celebrated — a milestone of success for your growing business.
The flip side of the coin, however, is you just added thousands of dollars to your fixed expenses. Surely you don’t want that to immediately eat away the difference in your bottom line.
Whenever you increase fixed expenses, you’re best-suited to increase marketing with it. If you cannot afford to do both, you cannot afford the added expense.
This is where knowing your acquisition cost is key, as you can determine exactly how much you would have to drive up marketing to offset the added expenses with revenue and then some.
The good news — it’s probably not nearly as much as you think.
Financial Must #4 — DO determine the ROI of every employee
“I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.” — Bill Gates
Many things contribute to the ebbs and flows of a business — seasonality, new competition, product/service innovation, just to name a few.
With this in mind, it’s important we remain grounded in what each of our team members has direct influence of — revenue, system enhancement, time/automation, etc. — and what value that brings to the organization.
It’s easy to get lost in how great a team member is for morale by overlooking their slipping production or stalled execution. As much as we love them, this can’t stop us from holding them accountable to reaching the top of their game. In fact, if we really do love them, there’s no way we’re letting them off the hook.
If we let them fly under the radar, we’ll find ourselves with a bloated payroll during difficult or transitional periods that will cannibalize our profits.
Financial Must #5 — DO step toward your financial fears
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” — Peter Drucker
You can only stretch out your liabilities for so long.
Believe me, I’m all for expenses and timing staying congruent. But if we continue to dodge what we want to avoid, we’ll soon be faced with a financial mountain that can wipe out an entire quarter’s worth of profit.
I’ve learned the hard way in this arena, having to go toe-to-toe with what was typically an entire month’s profit needing to be paid out immediately.
It hurts in the moment, but as things come up, deal with them. Stare the liability down and look past its nasty external — for buried within is another clue for your eventual success and prosperity.
Cultural Must #1 — DO find out the motivational style of each team member
“Treat your employees exactly as you want them to treat your customers.” — Stephen R. Covey
It goes without saying that team members who moves expeditiously will push the business forth at a similar pace.
This isn’t happening by accident, however. Yes, you can hire motivated and inspired people but the leader and the organizational culture is responsible for assisting in keeping the fire burning.
You don’t have to go on a witch hunt to uncover what makes each person jump out of bed in the morning — this is a simple conversation.
Weekly or monthly check-ins, whichever’s most prudent, is a great way to set the table for managing employee mindsets — which the lengthiest time-frame being a quarterly conversation, for the highest level leadership team.
It seems trivial, but knowing the difference between an employees getting fired up by words of recognition and shut down by a financial incentive can potentially save a culture from crumbling.
Cultural Must #2 — DO use hard data to coach employees
“The true measure of the value of any business leader and manager is performance.” — Brian Tracy
Numbers are by-products of the work that’s been put in. There’s no argument behind what shows up. There may be a story about it, but results are results.
For this reason, the more we leverage hard data to coach our employees, the more effective the message will get across. We’re able to depict their behavior directly influencing a number, and then provide ways they are able to change it.
No one likes a subjective criticism, as it’s always up for debate. And the minute we begin to argue with our employees, we’ve lost their respect as a leader.
Cultural Must #3 — DO use soft data to praise employees
“A man doesn’t live on bread alone. He needs buttering up every once in a while.” — Robert Henry
While hard data can be leveraged to both coach and praise team members, soft data isn’t inherently useless.
Feedback and opinions received from clients, other team members, or simply our personal views can be incredible ways to praise employees.
Most notably, when it’s our own view we’re sharing as the means, it goes the furthest distance of all. Highlighting areas such as attitude, commitment, work ethic, and open-mindedness seem to hit home the loudest. It communicates we see something in them — something that we’ll never be certain about what’s actually going on underneath the hood. It could’ve been deliberate or coincidence, yet we’ve still chosen to see them in an empowering light.
And therein lies, the ultimate compliment.
Cultural Must #4 — DO communicate openly and often
“Communication is the sister of leadership.” — John Adair
A business cannot thrive without exceptional communication. It’s what brings innovation to light and gets marketing out in the open.
Every business is different, just like motor vehicles. But like motor vehicles, none can run without a power source. Communication is that power source for businesses.
No one says you have to talk to every single team member every single day, but imagine if you did?
How far do you think that would go? If you’re answer is anything short of a light-year, you want to work on being more open with your team.
Many leaders fall victim to withholding how they really feel about their team to avoid inflating their ego and allowing them get comfortable.
Sharing how brilliant we think our team members are and them pumping the brakes as a result is a myth. Tell your team often and authentically how you feel about them. And don’t worry about this becoming an expectation — if you’re truly committed to their job satisfaction, you’ll keep doing it regardless.
Cultural Must #5 — DO treat your leadership team like partners
A leader without an equally-invested inner circle will almost always fail.
You don’t send one man into combat, you send a team. When the top of the organization stays in alignment and communicates effectively and respectfully, the entire company benefits.
This cannot be done without the leader letting go of control and allowing his leadership team to have a say in what gets carried out.
The buck absolutely stops with the leader, but a leader that pulls rank too often will alienate the leadership team to the point of cultural infection.
As Dan Oswold puts it,
“Communication must be HOT. Honest, open, and two-way.