Some people are in business to save the planet or share their unique gifts with the world. Some people are in business just to make money. Either way, whatever a business does, it succeeds by making money.
So let's forget about social value, put aside purpose and look at a simple question: How do I make money in my business?
For most business owners, the answer is simple: We only get what we want if we manage it consciously. Do you manage your company's money every day, every week and every month? Whether you're hard-driving with huge goals or you just want to see results improve a bit, a simple plan and a bit of attention will go a long way.
If we don't make a money plan and track it daily or weekly, then our subconscious attitudes and assumptions will manage our work, time and money. That will keep us locked in at the same level of profit--and net revenue--month after month.
When things are going well, you put on the brakes and go easy on yourself. You do that each week. You push when it's slow; you ease up when you are doing well. That's exactly the mentality that limits your business's potential.
And results never improve.
That's the problem. What's the solution? Make a plan, track work, income and expenses daily or weekly, define the work, and track progress monthly.
1. Make a plan.
Your money plan can be a simple Excel spreadsheet. The key is to link work activities to income. What does each employee do that makes money? What do you sell?
If you sell products, then you need to make individual sales projections. If you sell flat-rate services, then you need to track contracts closed and the dollar value of each contract.
If you sell hourly services, then you need to track contracts closed and billable hours. The basics are:
- Set up goals and consequences. Let each team member know what they contribute to the team, and make sure they get incentives. Whatever is good for the business has to be good for the employee. Incentives include recognition, thanks, appreciation and, of course, more money.
- Give each team member a choice. Set a range, with a low goal and a high goal, and provide tangible incentives for achieving the high goal. This gives the employee a sense of control. During a good month, they make the high goal. During a month when their kids get sick a lot, they still know what they need to do to satisfy you and be secure in their jobs. When people feel safe but also have an opportunity to contribute to get more, they are highly motivated.
- Avoid de-motivators. Keep distractions away from your team. If team members are worried they aren't doing well enough, or that the company isn't doing well enough, they won't work well. If they feel threatened, they won't do well. If there are unclear expectations about some part of their job, it will cut into their work time. So give everyone a clear job description and let them go for it!
2. Track work and income daily or weekly.
Check in weekly. Each week, track employees' time and numbers with them. Ask how things are going and how they can do better. Don't pile on pressure. Do be clear, encouraging and specific. Look at the work in relation to the plan. This is key. Don't look at work in relation to interruptions or excuses, or anything else.
Begin with a clear commitment and, in a no-blame environment, take an honest look at the gap between the plan and actual achievement. If the team member isn't meeting the goals, find out why.
When you find the cause, determine if it's a one-time thing or if it will happen again. If a blizzard buried your town or the guy was off on his honeymoon, then let it go and get back to work. But what if the cause of the problem is ongoing?
This is when you need to decide whether the cause of the problem is in your control, under your influence or outside your influence entirely? Then begin working to fix things that are either in your control or under your influence. If it's out of your control, accept what you cannot change and figure out what you can do to reach your goals.
Sometimes the solution will be obvious and practical. Other times, you'll have to get creative. Do whatever it takes!
4. Define all the work.
Employees who aren't in sales may not be adding to revenue, but they're affecting the bottom line. Every team member contributes to delivering value to customers, reducing cost or reducing risk.
Find the critical success factor that each employee contributes to the company. For example:
- A marketing assistant may send out notices, announcements and ads that increase business.
- Your tax accountant reduces your taxes.
- A security guard prevents break-ins, thefts and attacks on employees.
When critical activities are defined, it makes the employee's job worthwhile. This is not a job description to file with HR. This is a tool that the team member uses daily to stay focused and that you review with them to help them improve and add more value.
5. Track expenses daily or weekly.
Too many businesses let their financial information pile up in a shoebox until the end of the year and then hand it to an accountant. Money is the lifeblood of a business, and you should be taking your financial blood pressure on at least a weekly basis. How much money are you spending? How does that compare to your plan? Are you spending the way you planned to spend? If you know the answer to those questions weekly, you can correct course and speed, and reach your destination.
6. Track progress monthly.
The final step of this plan is checking progress--or income--monthly. Ask yourself what you can do to earn more and spend less, and how you can deliver results sooner and get paid faster. As you keep finding ways to improve in these areas, you'll build momentum and reach greater net revenue sooner.
Businesses succeed by linking each job to earning money, reducing cost, delivering better results sooner or reducing risk. Motivate your team members by letting them know that what they do matters. Then show them how to make more of a difference, week by week and month by month.
Do this and you won't just meet your goals--you'll exceed them.