Company Debt

The more debt you have the more risk you have.  Debt costs money in interest, and that raises your breakeven each month.

Of course, debt can be a necessary tool, or even a voluntary one.  If you don’t have the money to invest in (real estate, capital equipment, vehicles you need), then you need to finance them to move forward.  But pay attention.  

How much are you paying in interest each month?

Are the assets you financed good investments that are making you money or enabling you to make money?

If business gets REALLY slow, can you still afford the payments?

I have always tried to avoid debt.  Of course, you need a successful business that makes money to pay cash for new buildings or vehicles.  If you always need financing, you might think about how to run the business better so you can make money and don’t have to borrow.

Innovate, add value to your customers you can charge for, become more efficient, and get better at marketing and better at selling.

A leader needs to understand money – a debt is a part of that.

Engaged Employees

Pretend each of your employees has a sign around their neck that says “Make me feel important”.

If you can do that, they will engage with what they are doing, and do far better.  They will smile more, care more, give more effort, be happier and more pleasant for everyone else to work with, and stay longer.

So acknowledge them, show you care, make sure they have everything they need to succeed, talk to them, tell them the goal, ask for their ideas, smile and celebrate them, and celebrate with them.

The truth is, your organization is nothing without them.

Private Equity is Ruining Companies

From many actual first-hand observations, I can say that private equity firms are ruining companies all over America.

They are funds that collect investment money from individuals and other investment firms, with the goal of buying whole companies, trying to maximize their value, and reselling them in 3-6 years.  

They think short term.  This is a really big problem.  They don’t build companies for the long term, only to maximize their value now.  Employees are treated like expendable assets.  They don’t care long-term about what happens to employees or customers.  They only say they do so they can flip it and get out.  Their tools are to raise prices, cut costs, and use financial engineering to make a profit.  The use of these tools is not evil in itself, but when combined with short-term thinking it results in win-lose-lose for the parties affected.

This gives the rest of us businesspeople and entrepreneurs a bad name.  I don’t like that.  I don’t do business where some groups – customers or employees or any other parties involved with my company lose.  

I’m sorry to be negative, but I have to call it like it is.  When private equity comes around, beware.  It seems they only care about themselves and they will sacrifice you to win.

The good news is that since their employees will hate working for them, they are easy to beat if you are competing against them and run a good business.

Entrepreneurs are necessary

No entrepreneurs –  no successful businesses – no jobs, no taxes paid, no products or services, no investment, no retirement, no leisure, no food, no place to live, no nothing. 

Thank you to all the entrepreneurs! 

What makes the world go around…

Successful businesses make the world work.  

Successful businesses hire people.  People make money and then pay taxes.  The successful business pays taxes.  The government uses the taxes to build roads, provide for defense and education, etc.

The people want to spend their money to make their lives better and go to successful businesses that provide what they need and want.  The owners of successful businesses invest the money they make into new buildings and capital improvements which creates jobs.  

Successful businesses invest in innovation to create more things that people want at even lower prices per unit of value so they can beat their competitors.  Employees then get more for their money.

All this is because a lot of someones took a chance to start that business, accepted lots of responsibility and personal challenge, and went all in for a long time.

Free market capitalism is the ecosystem this happens in.

You are a participant, and you can be proud of that.

Do your managers get along?

If a manager from one department doesn’t get along or is at odds with the manager from another department – that is how departmental wars get started.  You don’t need that.

I’ve had that situation before.  I was torn because I thought both were good managers.  But there is probably something you are not seeing or understanding.

Every situation is different.  But dig in, and find out what their grievances are.  Ask questions independently and listen.  Then investigate.  Then get them together and talk about it.  Tell them that you can’t have disagreements between departments.  (You know it is spilling over to the teams in those departments.)

Give them a chance to work it out and fix it.  If they don’t, you’ll have to.  If someone has to go, then so be it.  Choose the one who is the cause of the problem.

You have external battles to fight.  You can’t be burning organizational attention and energy on internal battles.

Giving praise is free.

A leader or manager’s voice means a lot to people.  It has an outsized effect because of your position.

People can be flying high feeling great all week with one sincere compliment.

And people that feel good about themselves perform better, smile more, and work better with other people.

Who needs to hear praise, recognition, or a compliment from YOU today?

Accounting is important!

Accountants know accounting is important.  But how important do YOU think it is?

Often small business owners are so busy doing stuff and running the business that they don’t take enough time to work with their accounting department and make sure they have good numbers, and to study them.

The numbers tell you what results you are getting from doing what you are doing.  If they aren’t coming out well, you need to do things differently or better.

I have been inside many companies.  I can tell you that some accountants are better than others.  Get a good one.  

It’s a good idea to SIT DOWN with your accountant and review the financials together.  Ask questions.  

The “Chart of accounts” in simply the categories your Balance Sheet and Income Statement (Profit and Loss Statement) is broken into.  You can simplify it when you don’t need that much detail, or you can ask them to break categories out more to see particular numbers you are interested in each month.

For example if selling Pepperoni is important and something you were pushing your salespeople to sell, then you could ask your accountant to show pepperoni sales separately under the revenue category.  You could also ask them to assemble on ongoing chart of pepperoni sales each month.

I like charts.  I take key numbers from our financials (I look at financials from 35 companies each month) and have them put on charts.  One chart for example has sales (revenue), receivables, payables, cash and the “Spread” on it. (The “Spread” is cash + receivables – payables).  This way I can see these numbers compared to what they have been historically over the last three or four years and see the trend.

Make friends with your accountant and the Balance Sheet, Income Statement (P&L), and Receivables Aging report they are producing.  

They help you be a better leader.  Besides, if not you, then who?

How do you train managers to be good managers?

A leader needs more leaders and more managers to scale.  If he/she doesn’t get more people to help manage teams and run the company, then he/she will be stuck with the whole job themselves – and as we know, YOU don’t scale.  You’d be maxed out and stuck.

Often a leader appoints managers because they are people that came up through the company and were competent in their previous role, or they are people the leader likes or trusts.

But how do they know how to be good managers from there? 

Do you just let them do what they think is best the way they want to do it?  That’s a mistake.

Do you train your managers to be good managers?  Where do you get such training?

You could use books and study them together or find a course.

Tell others with the comments below – it may help someone find the right training!

Marketing works better in a good company

Marketing generates prospects. 

However, whether those prospects turn into paying customers depends a lot on what happens next.

In a bad company, the leads are not handled well, and salespeople do a poor job.  The product is not the best.  Production/delivery is lacking and previous customers do not have good things to say.

In a great company, the leads are treasured and handled like gold.  The salespeople are great people, well trained and care.  They have the best products and know how to communicate the advantages.  Production and delivery make people say “Wow!”, and the company’s reputation is excellent.

Same marketing.  In one company it doesn’t lead to much business, and in the other it does.  So next time you want to blame marketing for a deficiency, think about the rest of the company first.

It’s always easier to market a great company’s product or service.