Tag Archives: Leadership Articles

Creating Success: The Role of the Owner

By Tony Murray

Each year I visit many companies in different industries. I concentrate on the development and growth of my clients and consequently, these companies tend to be small to mid-sized organizations where the owner is the key to the success or failure of micro manage the enterprise.

There is a definite correlation between the owner and whether the operation is struggling or succeeding. But, is not always the ability of the owner that determines the health of the business. Rather it is the way the owner spends their time. I am sure that if will be no surprise when I tell you the owners that micro manage control the less successful operations.

When I point out to people that they need to free up some time, the main objection I hear is that there is no one who can do the job they do. This, of course, is rubbish; none of us are indispensable. When I go into it further, the real reason that comes out in most cases is that they don’t think they can afford someone with all the abilities which are need. And, they can’t afford to add more staff.

My next question; what do your charge for your services? I have to say that almost without exception, this is the problem. In most cases, these owners have no idea of the true costs of providing service to their clients. Therefore, they don’t know what their profit margins are.

This is a vicious circle and once again, it relates directly to the price issue. If you do not know your true costs, then you cannot charge the right price. If you under charge for your services, then you cannot afford good staff. The owner then gets dragged into the operation and this cycle suffocates the growth of the business.

One of the businessman whom I admire is Lee Iacocca. He took a company that was on the edge of extinction and turned it around to one of the most profitable vehicle producers in the country. He did not do this by going to the shop floor and beating panels; rather, he surrounded himself with good people and he orchestrated the recovery.

The owner is the conductor. A good conductor cannot play all the instruments but must understand how they all work and how to blend them to achieve perfect sounds. The owner has the responsibility to blend the team to achieve a perfect business.

So, we come back to the beginning. The owner must allocate their time to looking at the big picture and avoid the nitty-gritty. They must find one or two reliable trustworthy managers who can look after the day-to-day problems and the owner must allow them to manage. These people actually exist in most operations; they are just not given the opportunity to prove themselves. The owner must, and this is the most difficult part, allow the manager the freedom to use their style and to manage their way.

Having delegated the day-to-day, the owner now has time to do some meaningful planning. The first step is to look at all the statistics that are available, both operational and financial, then make an assessment of how the service is perceived by the clients. There is now time to visit some of the more important clients to hear directly what their opinion of the service is and to look more closely at their needs.

The owner should also look very carefully at their financial information and get answers to the following questions:

  • What is the cost per minute to run my operation?
  • What is the ratio of operator expenses to income?
  • How much overtime is being paid per month?
  • What are my true fixed costs?
  • What is the income per minute?
  • What is profit/loss per minute?

The next step is to look at each account. Where possible, calculate the number of minutes used per month. Then calculate income per minute. This is where you will start to see where your problems are. It is my experience you will see that some of these “big accounts” are producing very little.

Now you have to start to make some decisions. There is no point in servicing clients who are not producing a profit, so you must increase their price or ask them to go elsewhere. You see why your visit to your large clients was important, as you should have gained an understanding of their opinion of the operation. With this first hand knowledge, you can plan how to increase their price without losing them.

This is all very time consuming and if you are involved in the day-to-day detail, it will never get done. However, by delegating the day-to-day, you have put yourself into the position where you can truly start creating more income for your company.

Next, have a clear plan as to where you want to be in the next five or so years. You need to know where you are going in order to plan how to get there. Do you want to retire? Double the size of your operation? Have an annual income of $? per year? Sell your business? These are all objectives that I have helped clients to plan for…and there are more.

Understanding where you want to go leads us to the next step creating a financial budget for the next 12 months. This is nothing to be afraid of; all you are doing is mapping your future.

Start by listing all your income by product, i.e., paging, wake-up, etc. Then list all your variable costs operators, telephones, etc. If you subtract income from costs, you now have your gross margin. List all fixed costs rent, leases, etc., and also costs that do not relate directly to the operations room, such as accounting fees and legal fees, stationary, etc. Subtract this total from the gross margin figure and you now have your pre-tax profit.

If you start with the last month’s actual figures, then you know that your base is correct. You now need to look at where to cut costs from last month, and plan what the increase in sales revenues is that you can achieve monthly for the next year. Remember, you are gong to increase some prices and you need to add these in.

Now you have a map. You must bring your managers into the loop and tell them what they have to achieve to ensure that the plan is successful. This is where you start setting objectives for your managers.

Objectives should relate to net growth, operator costs as a percentage of income, telephone costs as a percentage of income, etc. There are many more, which are dependent on your operation.

Having set the objective, you must have objective methods to measure the results. Having measured them, you must take immediate action when a manager fails to meet their objective. This is how you control your manager without having to be involved in the day-to-day problems.

Once you have competed your budget for this year, you need to develop outlined budgets for the next five years. This will show you what has to be achieved during that period to meet your plan. This may well highlight that your plan is over ambitious or that you are going to need extra capital to develop the plan.

The main point is that you can prepare for these problems in advance. You can modify your plan at any time, but by having a plan you will always know where you are going and how close you are to achieving your objectives.

You have a realistic plan. Now you have to orchestrate your success. This does not mean you go back to day-to-day hands-on, But, you start promoting your service by attending local business group meetings and making contacts wherever you can.

You are the most important sales person you have because you understand your operation totally. You should be able to see how potential clients can make use of your services in the ways your sales staff would likely overlook. You are the most important public relations person. You are the best research and development person that you have because by continually meeting with your clients and potential clients, you can find niche markets to fill in your area. You might be out of the day-to-day problems, but you will be kept very busy with the long term ones.

Gone are the days of stagnation. You are now the proud owner of a profitable and professional service. Your job now is to shout this from the rooftops. The amazing thing about this is that you will suddenly be successful and growing.

[From Connection Magazine, July 1997]

Creating Success: Delegating Authority

By Donna West

Before any company can grow, it must have a strong foundation to sustain growth. Every employee should understand the company’s goals and buy into your dream.

Let’s begin at the top and define the role of the owner. If you are the owner of an answering bureau, ask yourself if you are the one that signs all the checks, generates all the revenue, takes problem calls, disciplines the staff, answers sales calls as well as answering the calls for the clients? The problem is, the owner wears too many hats. Here is a way to delegate authority, improve morale and keep your sanity.

Public relations: It is best to give the job over to the second in command. It’s a great perk for them. This job involves more company participation. If the owner does everything, it gives the impression that it’s a one person organization – that it’s a “Ma and Pa” business with no depth.

Customer service/customer care is a difficult job to give up. However if you are with a new client and an angry client gets on the phone and needs to talk with you, that will NOT impress the new client. Likewise, if you have someone tell the angry caller that you are with a new customer, you will give the impression that the current customer is not important. Assign this position to an employee who is level-headed and has lots of patience, care and concern for your customers.

Operations Manager: This job should be given to someone who is responsible, has an overall knowledge of your company and has human resource skills.

Accounts/Bookkeeper: How much of your time is taken in financial planning? It isn’t – it’s bookkeeping. You are NOT learning how to run your company better, you are doing bookkeeping. Give the job to someone else and you, as owner, should then review it.

Sales: This job should never belong to the owner- it belongs to the person who is responsible for the growth of your company. I believe in a sales department, not a salesperson. Salespeople are not expenses. Sales people are self funding revenue generators. Each time we add a new salesperson, the closing ratio goes up from 25% to 50%. Time is the key here. Time gives you numbers. If you are an owner making sales calls, it’s not likely you will have time to make call-backs. A single salesperson will probably make three to five call-backs. A department with a sales manager will make a lot more call-backs. It’s a numbers game. He who has the personnel to make the calls, gets the customers! In our experience, it’s the customers who only need one or two contacts that are the easiest to lose and pay the least. They are NOT the ones you want. The customers with 12 locations, or who have large medical clinics, etc. do not close in one or two contacts. Diligent follow-up is necessary in this industry. In one bureau, it was discovered that the customer who calls for service stays on your bureau less time than the customer you solicit.

To start a sales department, look within your company first. You can teach technique but you can’t teach “nice”. Look for self-starters, your “extra-milers,” the helpful employees. Give them all the back-up and assistance they will need but do not interfere. Develop sales, marketing, and presentation materials. Join organizations like the Chamber of Commerce. Help them establish goals and a time line to accomplish the goals. Let them own their job. We feel that pay should be based on a low hourly wage plus the whole first month’s receivable of the account they sell.

Strong, Cohesive Leadership is a Must: Think about this – If you are so busy putting out fires in your company, then you don’t have time to do the really important things- like reading, and planning your company’s future. If this is the case, then you need to step back and re-group. You need to be the thinker for your organization. You need time, otherwise your company may run away with you. You can’t determine your company’s future if you are down in the trenches.

Consistent Meetings with Focus: As an example, we have what we call a” futures” meeting at our company. Once a month, our key people meet and talk about the future of the company. We ask, are we on track from where we thought we’d be last month? What are we going to do for the next month, the next year and in the next five years? How are we reaching our five year goals by accomplishing this month’s goals? If you don’t have a goal, how are you going to know when you reach it?

If you take only one thing from this article, take away a new mind set and the rest is going to come. Strong cohesive leadership is the first requirement for a strong foundation. This does not just happen. It needs nurturing, it needs constant reinforcement and it needs the wisdom to know when to delegate authority.

Donna West is President of Focus Telecommunications, Inc.

[From Connection Magazine, July 1997]

New Opportunities

By Roy Emmett

Remember back when all there were, was telephones? Then suddenly the “beeper” became a major transition in telecommunications technology. As basic a tool as we consider the pager today, it changed the world of communication forever. But, it took years for the pager to catch hold as an every man entity. Now, absorb for a moment what all lies in the grasp of the typical business person that falls under the heading of “communication.” It’s overwhelming. Most all of the landmark innovations in communication had their start in and around the year 1984, a mere 12 years ago. They included the birth of cellular, the PC, the beginning of voice mail, alpha paging, and much more recently, fax. However, from here on in, the world of communication is going to be rocked by even more change on a regular basis. What the business world is going to need is a new category of communications professional who can guide overwhelmed business people through the terminology and technology of the new information and communication age … and then, proceed to supply the highly specialized communications needs of an individual’s business. That is in itself a whole new opportunity for an entrepreneur who sees the potential as a consultant in this explosive industry.

From the perspective of the new or transforming entrepreneurial communications services provider, what is the immediate future for those of us who wish to carve out a business niche for the future, which doesn’t necessitate our going to work for some institution or old line communications company?

I started out my thinking by breaking down what I believed to be the primary needs or concerns of the largest segment of the business public that will make up the primary prospect base for any communications service company. Right up there at the top of the list is the niche for real live human intervention in communication, particularly communication direct from the businesses themselves that need to have contact with customers and prospects. People will inherently always want to talk to real live people who actually represent the company to which they have addressed themselves.

The First Entrepreneurial Opportunity: From this assessment, we can immediately see that the future holds a great deal of potential for highly personalized communications and business support “intermediaries.” They will, I believe, be the future of what has been left strictly to “operator services” or answering services. An Intermediary though will be far more than just an operator. Operators, by their very nomenclature, are seen as non-connected, impersonal message takers, rather than members of a core team who truly represent a specific business.

I see the new dimension of true communications intermediaries as skilled individuals who, through the use of appropriate computer software and the basic telephone, can become truly representative of a client with a far more in-depth relationship than a regular operator has. As a matter of fact, this very concept could be carried out by an entrepreneur working from a home-based business. Private intermediaries could represent a service bureau that would connect them with appropriate accounts, or it could be a solely owned, home-based business for an entrepreneur going it alone.

Highly trained and skilled individuals who excel in this area can work at varying levels for four, six, maybe up to ten accounts, on an as-needed basis, to reduce the need for business clients to hire extra skilled people full time. The key here will be in communications and computer skills for the Intermediary to function professionally, and on a personalized level, with each account. I think this will be a new tele-secretary concept for the immediate future, especially as it relates to the ability for the service provider to interject specialized technology and software on behalf of its clients. This will save a business from having to invest in extra technology and avoid having to train specialists for critical and enduring jobs.

The Second  Entrepreneurial Opportunity: Second in the niche list, after real people, I see the foundational aspect of “Business Service Alternatives”. No more is communication just for messages. Communication technology has brought us additional ways to take orders, request information and enhance advertising and marketing efforts. Communication has actually become an advertising media all by itself. Communication has enhanced our ability to provide better customer service, increase message confidentiality and save money in disseminating information. Special customized service arrangements allow us to tailor just the right service package for each client, to simplify tasks and reduce the need for personnel, And, of course, to reduce overhead at the same time.

This is actually the antithesis of the “intermediary” service involving real people. Business Service Alternatives are primarily automated services, although certain alternatives could be provided by Intermediaries as well, if cost is not critical. One of the real benefits of the automated services is cost efficiency. Another key benefit is extreme diversity of service, features, and options that can really add valuable assistance to virtually any company.

Business Service Alternatives are quite simply, new ways of doing things that most people don’t know are available. Lots of new capabilities are available from the new Voice and Fax Processing Service companies that are now able to offer uniquely tailored communications services for selected accounts. Now with 2-way DIDs and ultra sophisticated software, combined with a host of new telco options and features, Voice and Fax Processing has taken on a whole new dimension as a diverse business entity.

Fully interconnected with the local telephone company, these tele solutions companies are picking up where the phone companies themselves are leaving off, in terms of personalized support and uniquely tailored services. In short, the telcos are bringing the communications conduit to the business world, which allow telephone traffic to take place. What is needed is for businesses to learn about all the additional applications and features that can be of significant help, that only come from outside service companies like Service Alternatives. Along with the conduit, the local telcos do provide a range of enhanced services that are actually the nuts and bolts of the new capabilities that can now be carried out by Business Alternative Service Bureaus. Such features as busy/no answer call-forward, caller transfer, and three-way calling all add to the dimension of voice and fax processing capabilities.

What such companies are offering are highly personalized introductions to an even wider range of end user services than what the phone companies are providing. This brings about the true beginning to what is called “relationship marketing,” where the smaller yet very professional company can be face- to-face with a customer for in depth planning and with more diverse applications on how a company can take advantage of the latest ideas and applications. Phone companies are institutions and do not have the ability to be on-call and on-site for select clients to cater to their special needs. That is what it takes for relationship marketing. And relationship marketing will be the absolute mandate for helping a largely techno phobic society move through the onslaught of all the new tech no-confusion that is about to explode.

Business Alternative Services are more than just basic communications companies. And, there will be a large potential for specialized professionals who will be able to create home-based businesses in this field as well. It will be a creative and invaluable career field, but not a technical field. This is a marketing application and a people business. The technical part will be available from another specialized field. This part is the creative force that can define, in lay person’s terms, just how a company can navigate through the many options, select the right solutions, and then oversee the installation of those options, making money both as a consultant and from a monthly residual paid by the vendors who make the connections and provide the ongoing services. This aspect of what is going on, and will be going on into the far flung future, is absolutely fascinating and loaded with opportunity.

The Third Entrepreneurial Opportunity: The third item on the list is the hardware/software products to be sold and perhaps installed. I must admit that I don’t have my heart in this side of the business. Mostly, because I don’t see this as the most profitable direction for a new entrepreneur and because it appears to have the greatest amount of physical labor and aggravation. The really scary part of the “hardware” business is that it will be constantly outmoding itself.

A tremendous amount of the newest technology is not going to be much better than what’s out there now, doing essentially the same thing as the new technology. Faster processing and more gizmos and whiz-bangs won’t always out date existing hardware. The big institutions such as the phone companies and mega-companies like paging companies, will certainly have a field day as they offer new gimmicks and bells and whistles on the full range of communications products. But, we as smaller entrepreneurs, will merely get the crumbs from the table as we try to compete as resellers for mere marginal profits. Products like pagers and cellular phones may actually have a greater chance for more profitable returns for us when we meld them together with alternative services as part of bundled service packages.

Entrepreneurially speaking, getting into the hardware side of the communications business is not so opportune for new entrepreneurs as what can be done in the solutions side. Of course, somebody’s got to do it, and there will be those who will venture in and make out quite handsomely as a result. I prefer to take advantage of the service side of the business, where one can build a true monthly business volume with recurring revenue services.

That leaves us with two primary service directions any of us can explore to bring us into the real opportunity potential of a subscriber based communications business with recurring revenues. One, is t he people side with personal computer skills that will allow home-based businesses to start up and supply specialized customer service, billing services, inventory control, database management, order taking, and tele-receptionist services. A skilled person could choose various services as package programs and represent their clients as an intermediary but with close ties to the companies they represent. Such a person could handle four to eight accounts on a personal level for a very respectable fee.

The other side is the automated services business to provide cost efficient alternatives to older forms of communication. Personalized relationships with clients will become a key to success as Business Alternative Service companies actually become an invaluable resource for the clients they serve. This could be a business for an independent reseller, functioning as a professional communications consultant, or it could be for a fully interconnected company with its own voice/fax processing system.

People connecting with people will be an invaluable service forever. The cost effectiveness of the latest automated services will be a must if businesses are going to function with all the best options for their own particular needs. That means there’s a great opportunity to move into areas that right now are not being filled by any of the communications companies in current existence.

Roy Emmett, President of Vital Communications, Inc., is a consultant specializing in Voice/Fax Processing service bureaus. Mr. Emmett can be reached at 407-288-0101, P.O. Box 152, Palm City, FL 34991.

[From Connection Magazine, May 1996]