My Thoughts by Rick Stephens

Scalable Processes

Posted in Continual Improvement,Developing Processes by Rick on the February 25th, 2007

Scaling MountainI talk a lot about the importance of having solid processes in your business operation. Establishing processes that have been tested, refined, and continually examined for improvement is probably, in my humble opinion, the most important thing a business owner can do to insure success in the business enterprise. When you have good working processes in place, your business runs more smoothly and the stress levels associated with the “daily grind” are minimized.

I was working with one of my clients the other day and we began discussing a process that he had put in place to display his product in the show rooms of some of his buyers, on consignment. His plan was simple and seemed like a good one. He would allow the buyer to show off his product in their showroom without invoicing the buyer until after the product was sold to the end customer. There is nothing really unusual about this process except that my client’s product was the only one that the buyer was keeping on consignment. Because this was not a normal practice for the buyer, the buyer had no process in place to notify my client when the item was purchased by the end consumer. So I asked my client how he would monitor that.

My client is a small startup company and is currently doing lots of marketing by hitting the streets and knocking on doors. So he said to me, “While I am out cold calling on new prospects, I can just drop by and see if the item is still in the show room. If it isn’t, then I’ll invoice them and send them another.” He added, “This will also be a good way for me to stay in touch with my new buyers.”

This sounds like a good idea until you begin to scale this process into a larger version. There are two important concepts one must keep in mind if you are developing a good process. The first is that it must be simple and easy to follow. The second is that it must be scalable. By scalable, I mean it must work when you are small and also work if your business explodes and becomes extremely huge. In this example just given, my client’s process would work fine while he is small, but if his business suddenly expanded and instead of two or three businesses displaying his product on consignment, there were hundreds, the process would fall apart because there is not enough time in the day for him to visit all of these businesses. Eventually he would lose track of where his products were and whether or not they had been sold.

Sometimes we will develop a process that appears to be a good one, and over time we discover that it does not work as our business changes. That is ok if you are continually examining the process and improving it as you grow. The important thing is to have the process, make sure it is scalable, and continue to improve it.

To Your Success -

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Your Image Makes a Difference

Posted in Attitudes,General Business,Marketing Strategies by Rick on the February 14th, 2007

Raising the Flag on Iwo JimaThe other day I watched a very compelling movie produced and directed by Clint Eastwood called “Flags of Our Fathers.” It was the story of the WWII battle of Iwo Jima and the resulting media coverage in the US promoting the famous picture that resulted from that event. The message that came from that movie was interesting and one that we as business leaders should understand if we want to be successful.

The message was that image is more important than reality. According to the movie, the celebrated picture of the six Marines raising the flag atop the pinnacle of Iwo Jima was not taken when the flag was first raised, but in fact, at a later time after the battle, during a relatively calm moment. Although not staged, the raising of this flag did not occur during the heat of battle, as implied, and the men who raised it were not the same ones that planted the flag initially.

Our leaders at the time were quite aware that this photograph, and the men portrayed, was not as it seemed, but they seized the opportunity to create a gripping image of our brave Marines at a time when this country needed hope and the support of those at home. It worked.

As a business, it is vital that you maintain an image that reflects exactly what it is you want the public to see. If you own a restaurant, you don’t want patrons to walk in and see dirty tables, floors, or counters, the negative image will stay with them and your business will suffer. If you own an auto repair shop, you want your employees driving clean undamaged vehicles. If you own a florist, you want all of your flowers to be fresh and attractive. If you are a doctor or a lawyer, you want your clients to see you as being successful by creating images of professionalism in your office or waiting area.

Be very careful when making decisions about your image. What people see is what you will become. It only takes one moment for your prospects to decide if you are credible or not. The image they see will determine your success or failure.

Hanging in my office, is a picture of Pete Rose, the baseball player and manager, sliding into home plate in the style that made him famous, headfirst. He was once quoted as saying.” …And there is one more important reason that I slide headfirst. It gets my picture in the newspaper.” Be careful with your image, it is more important than reality, because it defines reality.

To Your Success,
Rick's Signature

Everything is Broken

Posted in Attitudes,Continual Improvement,Developing Processes by Rick on the February 10th, 2007

Have you ever heard the phrase, “If it ain’t broke, don’t fix it?” I was attending a seminar just last week when I heard the moderator say exactly that. Of course, everyone in the room understood his meaning, as we all do, but in the business world, doing things the way we always have can cost us customers, money, and good employees.

Instead of allowing processes to go on just because they seem to work, we should adopt an attitude of Continual Improvement, always looking for a way to make the process better, even if “it ain’t broke.”

Mother and Daughter CookingThere is an old story about a young girl helping her Mother cook dinner. As the Mother was putting the ham into the pan, she cut off a small piece on each side. Curiously the young girl asked, “Why do we always cut the ends off the ham before we put it in the oven?” The mother replied, “I don’t know dear, it’s just the way Grandma always did it. Let’s call and ask her why.” So they did. When asked, the Grandmother responded with the same answer, “It’s the way my Mother always did it.” So they called the young girl’s Great Grandmother and again asked, “Why do we always cut the ends off the ham before we put it in the pan?” The Great Grandmother replied, “I don’t know why you do it, I did it because I never had a pan big enough to hold the whole ham.”

So you see, we can go along forever doing the same thing, the same way we always have, even though nothing seems to be broken, when in fact, if we would adopt the attitude of Continual Improvement we would begin to ask important questions, the biggest one being, Why?

If you want to make your business “the best it can be”, to borrow from the Army slogan, look closely at those processes that “ain’t broke” and improve them, and the next time you hear someone say, “If it ain’t broke don’t fix it”, let it remind you to fix something today.

To Your Success,

Rick's Signature

Capitalism is Not a Dirty Word

Posted in Ethics by Rick on the February 2nd, 2007

Gass PumpExxon recently reported that their annual profit for 2006 was in excess of $39 billion dollars. Notice I did not say earnings, I said PROFIT. When this was being announced on the evening news, the reporters interviewed several people who were pumping gas into their Luxury SUVs at their local Exxon station. They were all singing the same song, “It is immoral for Exxon to make that much money while we are spending over $2.00 a gallon for gasoline.” Some were even suggesting that the government take action to keep Exxon from making that much money.

Does it make you angry to hear that kind of news? Not me. I believe in capitalism. It is the American way. It is why this country has propelled itself to become the world leader in commerce. It is why we have the highest standard of living in the world. It is why Bill Gates can go from being broke to the richest man in the world. It is the “American Dream.” To expect our government to put restrictions on corporate profits is an insult to our way of life. Besides, the report on Exxon did not explain the whole story. In order for Exxon to earn $39 Billion in profits, it had to spend $338 billion, making its profit margin a slim 10.46%, hardly anything to write home about.

Why aren’t we complaining about Citigroup who earned 24.03% margin by gouging us with credit card interest? Or how about Pfizer and Merck, pharmaceutical companies who earned 22.82% and 19.59% margins respectively, while many of the people in this country can’t afford medication. No, instead we cry over Exxon’s earnings, not realizing that each year we spill more gasoline at the pumps than the Valdez did off the Alaskan coast.

Exxon is no different than any other business. They sell their products at a price based upon what the market will bear in order to make money, support economic growth, and satisfy their stakeholders. If you are unhappy with the profits of Exxon, buy your gas someplace else, stop driving around in inefficient, gas guzzling automobiles, support other forms of energy as a way to reduce our dependency on oil, car pool, use mass transit, but stop whining when you hear reports that prove capitalism works.

By the way, Microsoft earned 25.86% margin last year and soon we will all be forced into buying their new operating system, Vista. Are you enjoying that big screen TV you have in your living room? Texas Instruments earned 18.51% margin last year. Face it, Capitalism is not a dirty word.

To Your Success,

Rick's Signature