Business Operations 301
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Transcript of Business Operations 301
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Business Operations 301: Getting your employees to
think like owners
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Sessions are in series
Business Operations 101: Building the business of your dreams
Business Operations 201: Getting the most out of your team
Business Operations 301: Getting your employees to think like owners
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Lets unplug for a while
All of the following should be off:
●Cell phones ●iPads ●Bag phones ●Pagers/Beepers ●Squeakers●If it has a battery…
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Let’s Review
Business Operations 101 - Building the business of your dreams
●Your business should work for you and not you for your business
●Muzzle the technician●Allow the Entrepreneur to work
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Let’s Review
Business Operations 2011.To get the most out of your people
you must fight entitlement 2.As an owner focus on the 4 keys to
performancei. Clarity ii.Caring (the right way) iii.Have fun together iv.Have expectations of high
performance© Triangle Pest Control LLC. All Rights Reserved
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Business Operations 301
Is it better to earn a penny or save a penny?
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Business Operations 301
Example #1: 5% Profitable Company
For every $1 saved, how much goes to the bottom line?
For every $1 earned, how much goes to the bottom line?
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Business Operations 301
Example #1: 5% Profitable Company
For every $1 saved, how much goes to the bottom line? - $1.00
For every $1 earned, how much goes to the bottom line? - $0.05
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Business Operations 301
What does that mean?
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Business Operations 301
What does that mean?
For every $1 saved, you would have to sell 20 TIMES that amount to match that in profit.
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Business Operations 301
Example #2: Move just a few %
1.2.5M @15% = $375,0002.2.5M @20% = $500,000 3.Diff = $125,000 4.What would the 15% company have to
sell in order to match the same profit dollar of the 20% company?
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Business Operations 301
Example #2: Move just a few %
3.3M (or 800k in NEW sales for the year)
Which is easier? 125k or 800k?
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Business Operations 301
What is the point of these two examples?
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Business Operations 301
What is the point of these two examples?
●It is much easier to save profit than to earn it
●No great company becomes great just by focusing on cost controls…
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Business Operations 301
Two basic questions to consider
●Are there inefficiencies in your business?
●Are there opportunities that you are not aware of?
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ABSOLUTELY THERE ARE
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Business Operations 301
What is the reality?●As an owner you cannot possibly
know them all●Most people doing the work, are in
the best position to identify opportunities and inefficiencies
●Wouldn’t be great if you had that knowledge? -- You do….
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Business Operations 301
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That is the point of this session●How do you engage your people to
think like you? ○How to get them to identify and
eliminate inefficiencies ○How to get them to identify
opportunities
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Business Operations 301
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The 2M Man…
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Business Operations 301
My favorite Scott quotes
●“Donnie you should pay for more benefits”
●“Donnie you should pay higher wages”
●“Donnie you should pay for our cell phones completely”
●“Donnie you should pay more because I don’t have enough money to pay my bills after paying my child support”
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Business Operations 301
What is the reality?
Your employees think that you make wheelbarrows of money
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Business Operations 301
Why do they think this?
●Most people (including some business owners) have NO CLUE on○How a P&L works ○How taxes eat 40% of your profit ○The P&L doesn’t include capital
payments●In the absence of information,
people just make stuff up© Triangle Pest Control LLC. All Rights Reserved
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Business Operations 301
How do you prevent the “Donald Trump” syndrome?
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Business Operations 301
Imagine a Basketball game●There is no scoreboard ●Only one person in the ENTIRE room
is keeping track of the score●No matter what each team thinks
they are doing fine
What do you think will happen? Why?
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Business Operations 301
How to prevent the “Trump” syndrome?
●Teach your employees how a P&L works
●Communicate where you are at constantly
●Don’t have people playing a game in which they don’t know the score
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Business Operations 301
Employees to think like an owner?
1.Teach them about business
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Business Operations 301
Anyone ever read this book?
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Business Operations 301
Freakonomics is one of my favorites
Central theme of the book:
People respond to incentives, but be careful in how you deploy them….as they sometimes have unintended consequences
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Business Operations 301
Incentives in the wrong way?
What is police work?
The 80MPH police car may have an agenda
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Business Operations 301
What is the reality?
●Incentives are a powerful motivator●Incentives can be dangerous
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Business Operations 301
A day in the life at Progress Energy●Software developer ●Did my job and got great reviews ●I would get a bonus ○Had no clue that it was coming ○Had no clue there was goals
●What happened the next year (no bonus)○Everyone upset… What is the
problem? © Triangle Pest Control LLC. All Rights Reserved
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Business Operations 301
How do you get your employees to think like you?
●Create an employee incentive plan●Based upon performance of critical
results
But these things are hard to get right and easy to screw up...
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Business Operations 301
Incentive Plan Do’s
●Self funded ●Only paid if the entire company wins
(otherwise you get fiefdoms)●Keep it simple and understandable
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Business Operations 301
Incentive Plan Do Not’s
●Do not make it complicated●Have no connection between the
front line and the incentive (otherwise it is an entitlement)
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Business Operations 301
The TPC Incentive Plan●The 20% Rule○I keep the first 20% ○They get whatever is left after that ○After taxes BTW
●Money goes into the pool ○Equal distribution for everyone
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Business Operations 301
Employees to think like an owner?
1.Teach them about business2.Create an effective incentive plan
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When driving...
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This ever happen to you….
●You’re driving●You are not paying attention to your
speed ●You are reminded that you should
be as you pass a cop?
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Do you agree with this?
When driving there are key things that you must pay attention to and at certain times they must be prioritized?
These are called Key Performance Indicators
Why are KPIs important? © Triangle Pest Control LLC. All Rights Reserved
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What is the purpose?
When you are driving a car, what is the purpose?
When operating a business, what is the purpose?
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What is the purpose?
When you are driving a car, what is the purpose? - To get where you are going
When operating a business, what is the purpose? - To earn a profit
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Key Performance Indicator (KPI)
KPI Defined: Nothing more than the key things that you do to drive results of your purpose
How is this measured in business?
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Key Performance Indicator (KPI)
1.Profit and Loss Statement2.Revenue3.Growth Reports4.Leads5.Customer Service
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Key Performance Indicators (KPIs)
According to the definition of a KPI, are those good enough?
“It is what creates financial performance in the business?”
Quick Question: Do those reports drive financial results?
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Key Performance Indicators (KPIs)
Just imagine…. ●The driver of the motorcycle spent
his time looking in his side view mirrors. What would happen?
●What is really creating the performance on his motorcycle?
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Key Performance Indicators (KPIs)
What really creates financial performance in the business?●The people in the organization●The stuff those people do
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Key Performance Indicators (KPIs)
With KPIs●Lag Indicators ○Tells us what happened after the
fact○Useful… but not helpful for
behavior●Lead Indicators○Identifies what actions actually
produce results○Focuses on those behaviors that
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Key Performance Indicators (KPIs)
What are the top-level KPIs?●Profit●Leads●Revenue ●Growth●Customer Service
What kind of indicators are these?
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Key Performance Indicators (KPIs)
Lag Indicators●Profit●Leads●Revenue ●Growth●Customer Service
Most companies are VERY good at tracking our lag indicators
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Key Performance Indicators (KPIs)
Lead Indicators●How many calls per sale ●Closing ratio in the office●How many services for a callback●The list goes on and on
Most companies are NOT VERY good at tracking our lead indicators
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Key Performance Indicators (KPIs)
What is the goal?
We want to as a business identify what our lead indicators are and measure against day-to-day behaviors that produce results
●This is something that each department is going to do (everyone is going to participate) © Triangle Pest Control LLC. All Rights Reserved
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Business Operations 301
Employees to think like an owner?
1.Teach them about business2.Create an effective incentive plan3.Measure through the windshield
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Business Operations 301
You cannot do it allUse Rapid Improvement Plans to accomplish one thing at a time●Don’t try to implement everything
at once ●Focus can produce amazing things
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Business Operations 301
Employees to think like an owner?
1.Teach them about business2.Create an effective incentive plan3.Measure through the windshield4.Create Rapid Improvement Plans to
make sustainable progress
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More sessions to continue this topic
Business Operations 101: Building the company you always dreamed of
Business Operations 301: Getting your employees to think like owners
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One more shameful plug
BackOffice™ ●Designed by me ●Designed to help you work on your
business not in it●Tools for your organization to grow ●Focuses on managing your people ○Training○Reviews and Inspection
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Questions?Donnie Shelton
See me at the RGA booth