Carefully Pruning Your "Business Tree"

May 4, 2009
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Remember, your company “family” has their own family to consider as well


“Men do not realize how great an income thrift is.” - Cicero

As a carpet cleaner, you live and die by that wonderful phrase “discretionary income.” When times are good, your clients freely spend from their “extra money” and (since they want only the best!) my guess is your phone has been ringing off the hook for years.

However, when homeowners feel threatened by current (or perceived future) economic conditions, this discretionary income spigot gets turned off!

For example, the current U.S. personal savings percentage rate is at a 20-year high. Why? Because people are worried, and socking away more of their paycheck in savings. This new fiscal responsibility is great for each frugal individual. But it may be bad news for you as a carpet cleaner! After all, the homeowner may very likely be stashing your personal paycheck in their savings account! What to do, what to do…

In tough economic times, simple logic tells us that there are only three ways to survive (or even better, prosper!) as a business:

A. Increase your total volume, or
B. Improve your net profit on the work you currently are doing, or
C. Cut your costs and overhead.

As a proactive business owner, implementing all three would be great! But for our purposes, which single item can best have an immediate impact on your bottom line?

C! Careful pruning of your overhead is by far the quickest way to increase profits in your company. Remember, I’m not talking the “cut, slash and burn” tactics of large corporate layoffs here. In fact, as one of my cleaning industry-business mentors told me more than 30 years ago, “Steve, all I have to sell is my people.” So if you have surrounded yourself with quality individuals, you should treasure them and involve them in your judicious pruning efforts during these tough times. Your people will reward you many times over with their loyalty and hard work. In fact, let’s kick off our “pruning” topic by focusing on getting your employees on board.

Reach out and reassure. Employees in every industry are quite correctly concerned about their future (hence the dramatic recent surge in U.S. personal savings!). However, if you are sure that you will keep your people working, why not tell them so? A simple message from the heart stating that you appreciate their contribution to the company and that you plan for your team (which includes them!) to survive this recession intact and to prosper together in the future will do wonders for the morale of your company. However, during this conversation you should also…

Hold their feet to the fire. No one can better help with the responsible pruning of your business overhead than individual employees who have been empowered to use their initiative to increase company and personal efficiency. If you have tied your “no-layoff policy” to increasing personal and company effectiveness, the synergistic total of each employee’s efforts may amaze you. Even small things, such as more-precise chemical use, more-efficient truck routing, and each employee simply working harder will pay off big. Part of your “holding their feet to the fire” routine should also be…

Increased accountability through better measuring. I think Tom Peters said it best: “What gets measured gets done.” So look for tasks and targets in your company that meet four criteria:
  1. Areas that can significantly impact your bottom line, plus
  2. Actions that an employee can change/ influence, and
  3. Things that can be practically and easily measured on an ongoing basis, and
  4. Items that you can give quick feedback on to each worker
Remember that these “Profit Indexes” will change depending on what area your employee works in. For example, a carpet-cleaning technician’s Profit Index should include his or her production per hour both for the current week along with a trailing three-month average. Percentages of “up-sells” such as carpet protector and deodorizer should be tracked as well as customer call-backs, along with “cheerleader praise” received about the employee in returned comment cards. An office worker could be measured on account receivables aging, percentage of phone-calls-turned-jobs-booked and amount of up-sells such as protector sold during the initial call from the homeowner.

Establish goals for your in-house people to aim for

Note: The trap with this Profit Index concept is a tendency to only focus on gross income. Many companies have gone broke doing their best year ever measured by sales volume only. So you are looking for (and plan to recognize and reward) “profitable productivity.” The standard in American business has always been monthly financial reports. However, in today’s economy a month is an eternity, and faster, tighter controls are needed, hence the need for weekly reporting.

Make these Profit Index measurements part of the daily routine of your company. Then once your Profit Index Tracking is running smoothly, ratchet up individual accountability by…

Promoting some gentle competition. As entrepreneurs, competition keeps us all on our toes. Now just imagine your company with each employee competing to beat not only the company averages but also his or her own past performance! You will achieve this goal by maintaining a running contest among your employees on the indexes above and posting their results. Then recognize and reward superb efforts accordingly. Remember that these “rewards” do not have to affect your bottom line. The single most-sought-after “reward” my company offered was our weekly “Customer Comment Card Winner.” The prize? A round of applause at our Wednesday morning meeting and the chance for the winner to tell everyone else why he or she thought the customer became a Cheerleader. Nothing more! Public recognition along with sincere commendation will always give you the most employee bang for the buck. Another great way to build employee morale and loyalty is to actively…

Encourage a fun and caring atmosphere. Today’s young workers need much more than a paycheck. They also want to be part of a family working toward a common vision. Your job as a leader is to promote this family fun mood throughout the company. Our challenge as leaders is, we get so focused on our daily trials/challenges/problems that we forget to focus on our employees and their trials/challenges/problems! While you are not the United Way, a sincere attitude of care and concern for others is a great motivator for employees.

Note: While employees will exert themselves mightily to help the company “family,” at the end of the day we are all basically selfish creatures. Your workers (and their spouses) want to feel like their job is helping them make at least some progress toward their goals and dreams. Therefore, I highly recommend you read a new book, The Dream Manager. In this slim volume author Matthew Kelly explores why and how you should:
  1. Help your employees analyze what their dreams are and
  2. Give them practical support in achieving their goals.
Involving your employees in your cost-cutting efforts will ease the load on you, bring new ideas into your company and re-energize your workforce. A group of quality individuals working toward a common vision has always been a core concept of any successful business. You just need to show your employee that their ground-roots pruning of your business overhead will contribute toward keeping them employed. Now that is a vision worth fighting for!

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