Business IS the community

Most people spend more time at work than with their families.  For this reason, by creating (and yes the word is creating) a business that people like to be at, perform in; one that has a community of trust and high standards, we can literally make the world a better place.

What a privilege to have this job!

Cash is Oxygen

We don’t think about oxygen until we run out of it.  Then we die – quickly.

In business, oxygen is cash.

It’s critical you have extreme clarity about your cash position and how it will change in the near future.

The following is from Keith Cunningham –

Doomsday Scenario

Let’s say that for some reason the government shut down your business for three weeks.  At the same time consumer demand is soft going into and coming out of that period.  You’re the leader.  What do you do?

Well, here’s a plan – 

Send employees home and lower fixed costs to as close to zero as possible, while one employee answers phones from home to capture what leads there are and get them scheduled for after the shutdown.  Your employees collect unemployment.

Here’s another scenario – 

Go to your bank Monday and get a CARES act loan (was passed Friday) for the average monthly payroll from last year X 2.5, plus your rent, mortgage interest, utilities for two months.  Send the employees home and keep paying them with the money you get.  In three weeks get started again. In 16 weeks, ask your bank for loan forgiveness because you have not laid anyone off.  They will forgive 8 weeks of payroll (including PTO and health care costs associated with the payroll) 2 months of rent, and utilities.

You should be good.

Call an FDIC insured bank.  Now.  (If your regular bank can’t help, go to another one.)

Advertising now

A friend of mine called the TV station he advertised on. 

His rep said “I know why your calling.” 

“Why?” my friend said.

“Because you want to cancel your advertising.  I’ll get back to you in an hour” he said. (That was not the reason.)

In an hour he called back and offered my friend twice the tv spots for the same price.

Heads up.  Go get ’em!

Employees First

A disgruntled, disconnected, disengaged, untrained, unmotivated employee thrills no customer.

The customer can’t be happy unless the employee is.

Employees first.

The Black Swan

The economy was the best I had seen it in my 55 years.  Everyone had a job, interest rates were low, confidence way up and nothing seemed to phase us for long.  What could go wrong?

The Black Swan.

It has been hard to lead during this crisis.  The reason is that leaders do not have much control over it, and we don’t know what will happen tomorrow relative to the virus or any announcements that come out from the government.  The media has fed the hysteria and scared people.

I had 670 employees at the start of the crisis.  Here is what I know.

I am responsible to see that this business comes out the other side intact.  We need to preserve our ability to operate.  I must NOT run out of cash.  If I cannot pay my employees, we are done.  Finished.

I am monitoring leads coming in and sales very closely.  I am monitoring my Spread every seven days (Cash + Receivables – Payables = “Spread”).  I am calculating my breakeven (Fixed costs / Gross Profit Margin = Breakeven) each time we make a change to our fixed costs. 

To set things right, you have to see things right.

If my sales are less than my Breakeven and my Spread is shrinking, I must take action to make my company smaller and reduce fixed costs.  Obviously I prioritize keep the best people so we may fight again tomorrow.

I could ask for volunteers to be laid off (there are some).  I could lay people off.  I could reduce their working hours to four days a week or even three.  I could even cut pay and bonuses.  I could do combinations of all of these.

I have been financially conservative all these years.  We have no debt of any kind.  I have positioned my company to weather this crisis.  We have a great reputation and great employees with a caring culture and environment of high trust.

At the same time I am playing this strong and firm defense, I am working to play a strong offense.  This can be a bit unpredictable.  Consumers are not acting the way they usually do.  Some are using fear, and not their usual criteria. But some are home and taking advantage of the time off to call us to get things done around the house. We work closely with our salespeople each day and focus on each sale.

I keep the spirits of my people up.  (Many are working from home).  I do not get hysterical myself.  If people freak out, I go calm and think.  I do my best.  I eat right and get enough sleep, and still work out every other day.

I have a job to do and I will not mess this up.  We will survive and thrive.

The Black Swan will disappear, and we will still be here.

I am the leader.

People ARE the strategy!

What’s the strategy? 

Get the right people!  Put them in the right places so their superpowers can be used to quickly close the gap on what your goals are.

People ARE the strategy!

Staying above breakeven

What costs do you have to pay even if you do no business?  Add them up.  Do it now.  Today.

What is your gross profit margin?

Fixed cost/ Gross Profit Margin = your Breakeven.  

So if all the people you had to pay, the rent, the insurance, the vehicle payments, utilities, etc. added up to $20,000 a week and your gross margin was 40%, then $20,000/.40 = $50,000 a week.

If, during this slowdown due to the virus, you are selling less than $50,000 a week, you will lose money.  

Don’t do that, because if you run out of cash, it’s game over.  Instead, cut your costs now.  Then recalculate your breakeven.

Play a big offense and do all you can to get sales up.  But keep your breakeven below sales.

Lunch – cross-functional lubricant

A little friction between departments?  

“Lunch is a cross-functional lubricant” – Tom Peters

The Powerful, Invisible Force at Work

Caring.  Love.  

Do people care about each other?  Do leaders care about employees being successful here?

OR do employees care about watching their backs and looking out for themselves?

It’s all around the team; a powerful force…inescapable.  

Could it explain the saying “the good guys always win?”