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Why Isn’t My Company Making Money?

Don’t just wish for business success – plan for it.

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What does it take to be a compelling business leader? We hear all this talk about leadership styles but, really, is any one style preferable to the others? In my observation, there is no single, universally superior leadership style. Some people are in business to save the planet or share their unique gifts with the world. Some people are in business just to make money. Either way, whatever a business does, it succeeds by making money. So let’s forget about social value, put aside purpose and look at a simple question: How do I make money in my business?

For most business owners, the answer is simple: We only get what we want if we manage it consciously. Do you manage your company’s money every day, every week and every month? Whether you’re hard-driving with huge goals or you just want to see results improve a little, a simple plan and a bit of attention will go a long way.

If we don’t make a money plan and track it daily or weekly, then our subconscious attitudes and assumptions will manage our work, time and money. That will keep us locked in at the same level of profit – and net revenue – month after month. When things are going well, you put on the brakes and go easy on yourself. You do that each week. You push when it’s slow; you ease up when you are doing well. That’s exactly the mentality that limits your business’s potential. And results never improve. That’s the problem. What’s the solution? Make a plan, track work, income and expenses daily or weekly, define the work, and track progress monthly.

1. Make a plan.

Your money plan can be a simple Excel spreadsheet. The key is to link work activities to income. What does each employee do that makes money? What do you sell?
If you sell products, you need to make individual sales projections. If you sell flat-rate services, then you need to track contracts closed and the rand value of each contract.
If you sell hourly services, track contracts closed and billable hours. The basics are:

  • Up goals and consequences.
  • Let each team member know what they contribute to the team, and make sure they get incentives. Whatever is good for the business has to be good for the employee. Incentives include recognition, thanks, appreciation and, of course, more money.
  • Give each team member a choice.
  • Set a range, with a low goal and a high goal, and provide tangible incentives for achieving the high goal. This gives the employee a sense of control. During a good month, they make the high goal. During a month when their kids get sick a lot, they still know what they need to do to satisfy you and be secure in their jobs. When people feel safe but also have an opportunity to contribute to get more, they are highly motivated.
  • Avoid demotivators.

Keep distractions away from your team. If team members are worried they aren’t doing well enough, or that the company isn’t doing well enough, they won’t work well. If they feel threatened, they won’t do well. If there are unclear expectations about some part of their job, it will cut into their work time. So give everyone a clear job description and let them go for it.

2. Track work and income daily or weekly.

Check in weekly. Each week, track employees’ time and numbers with them. Ask how things are going and how they can do better. Don’t pile on pressure. Do be clear, encouraging and specific. Look at the work in relation to the plan.
This is key. Don’t look at work in relation to interruptions or excuses, or anything else. Begin with a clear commitment and, in a no-blame environment, take an honest look at the gap between the plan and actual achievement. If the team member isn’t meeting the goals, find out why. When you find the cause, determine if it’s a one-time thing or if it will happen again. If a blizzard buried your town or the guy was off on his honeymoon, then let it go and get back to work.

But what if the cause of the problem is ongoing?
This is when you need to decide whether the cause of the problem is in your control, under your influence or outside your influence entirely? Then begin working to fix things that are either in your control or under your influence. If it’s out of your control, accept what you cannot change and figure out what you can do to reach your goals. Sometimes the solution will be obvious and practical. Other times, you’ll have to get creative. Do whatever it takes.

3. Define all the work.

Employees who aren’t in sales may not be adding to revenue, but they’re affecting the bottom line. Every team member contributes to delivering value to customers, reducing cost or reducing risk. Find the critical success factor that each employee contributes to the company. For example:

  • A marketing assistant may send out notices, announcements and ads that increase business
  • Your tax accountant reduces your taxes
  • A security guard prevents break-ins, thefts and attacks on employees

When critical activities are defined, it makes the employee’s job worthwhile. This is not a job description to file with HR. This is a tool that the team member uses daily to stay focused and that you review with them to help them improve and add more value.

4. Track expenses daily or weekly.

Too many businesses let their financial information pile up in a shoebox until the end of the year. Money is the lifeblood of a business, and you should be taking your financial blood pressure at least on a weekly basis. How much money are you spending? How does that compare to your plan? Are you spending the way you planned to spend? If you know the answer to those questions weekly, you can correct course and speed, and reach your destination.

5. Track progress monthly.

The final step of this plan is checking progress – or income – monthly. Ask yourself what you can do to earn more and spend less, and how you can deliver results sooner and get paid faster. As you keep finding ways to improve in these areas, you’ll build momentum and reach greater net revenue sooner. Businesses succeed by linking each job to earning money, reducing cost, delivering better results sooner or reducing risk. Motivate your team members by letting them know that what they do matters. Then show them how to make more of a difference, week by week and month by month. Do this and you won’t just meet your goals – you’ll exceed them.

Sid Kemp is an author, motivational speaker, trainer, consultant and executive coach. He is the author of the Amazon.com bestseller “Ultimate Guide to Project Management for Small Business” and eight other business success books.

Strategy

What’s The Worst That Can Happen With A Disgruntled Silent Shareholder?

Whether a shareholder brings capital to the business, experience or connections, you need to ensure everyone has the same vision and values.

Kyle Torrington

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While we often hear that it can be bad to have a silent shareholder that does not want to play ball, it is not often that we make enquiries about how the governance of a company can be hindered by a disgruntled shareholder.

Most of us assume that as long as they own more than 50% of their own company, they are entirely in control of all aspects of the company and how it is governed. This is not true: Even if you are a majority shareholder, holding less than 75% of all the shares in your company can still result in headaches if a minority shareholder, holding at least 25% of the company, becomes disgruntled and neither participates in the decisions of the company, nor consents to the decisions being made.

What is set out below highlights, among others, why it is so important to give shares in a company to prospective shareholders over a period of time, rather than from the outset. This allows for shareholders to prove their worth without you potentially placing your company in a position where it could be held at ransom for many years.

Related: 7 Factors To Determine Who Are Your Employees (And Who Aren’t)

The illusion of holding more than 50% of the shareholding in a company

  • Many people assume that by holding more than 50% of the shares in a company they are free to do with the business as they please. This generally only holds true for basic decisions of the shareholders, such as the removal and appointment of directors. The most important decisions of a company are based on special resolutions. A special resolution requires that shareholders, either individually or collectively, holding at least 75% of all the shares in a company, vote in favour of a specific decision.
  • Examples of decisions that require a special resolution include:
    • Amending a company’s Memorandum of Incorporation
    • Approving the issuing of shares or granting of other similar rights
    • Authorising the basis for determining directors’ salaries
    • Disposing of company assets
    • Mergers and acquisitions.

So, what does this mean for you and your company?

  • If you are a start-up looking to raise funds, apart from some exceptions, you will not be able to issue further shares to new shareholders or anyone other than existing shareholders if there is a shareholder that is effectively dead weight.
  • Should you manage to vote a new director to the board, you will not be able to determine the basis on which they are compensated (their salary) without a special resolution.
  • If you intend to merge with another company, you will not be able to pursue this without a special resolution.
  • If you plan to raise money by disposing of or selling most of the assets of your company you will, once again, be prevented from doing so.

Related: Reality Check: You Probably Don’t Own That Work You Outsourced

Accordingly, it is always best when starting a venture to vest your shares over a period of time. This means that, for example, shareholders are only entitled to have their shares allocated to them after a certain period of time to avoid a situation where you have a dead-weight equity shareholder hindering the governing of your company, and requiring possible litigation to remove them.

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Strategy

There’s More To Team Management Than Leadership

When you’re running a business you need to ensure that your employees are on your side, helping you to make profits. Giving them job security, taking them seriously and treating them with respect, will go a long way in enhancing loyalty and productivity.

Henry Sebata

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The staff that work for you determine:

  1. How happy your customers are with your business
  2. The quality of the things that you sell
  3. The costs that you incur to sell your products and services
  4. Your risks – the things that can go wrong and how much it costs you

All of these things determine your profitability and how competitive your business becomes. How do you ensure that everyone is on the same side and helping you to make profits?

At work everyone believes that they are getting something (such as money) and are giving something in return (such as time and effort). They are weighing up in their mind “how much am I giving, how much am I getting in return and is this fair?” If they believe that they are:

  • Giving too much or
  • Getting too little
  • Then this is unfair, and they won’t work well (poor productivity – how much they produce).

Related: Why Innovative Employee Benefits Are Your Competitive Advantage

The manager needs to:

  • Know what people are thinking about what they are giving and getting and
  • Manage the giving or getting side
  • So that people become more productive

In a smaller business you sometimes cannot afford to pay more or provide the sort of benefits (pensions, medical aid, bursaries etc.) that larger firms can and so the staff may be unhappy, not be productive and be on the look-out for something better.

How do you increase happiness without money?

Everyone wants:

  1. Job security – knowing that you will still have a job next year – and that you will get paid on time.
  2. Contributing to the success of the business. If you train staff to have the knowledge and skills to do a better job and you then encourage and support them to do this then they are happier, and you increase profits. If you then share some of these profits with the staff that helped you to make them then everyone wins!
  3. To be taken seriously and treated with respect. If you do this then staff are happier, and they will also treat your customers with respect.
  4. To be part of the team. You can often do this by having a regular briefing on what your plans are and discussing ideas. Because staff are doing the actual work they will often have good ideas and then will be motivated to implement them – it was their idea after all!

Staff leaving you all the time is a can destroy significant value. If you implement the strategy above, you will have happier staff that are more productive and a more profitable business.

Read next: Understanding Your Responsibility As An Employer

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Strategy

Jeff Bezos Reveals 3 Strategies for Amazon’s Success

One of the richest men in the world shared his leadership tips for running a company.

Hayden Field

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“It remains Day 1.” That’s how Jeff Bezos, founder and CEO of Amazon, signed off in his 2018 letter to shareholders. He’s been propagating the “day 1” mantra for decades, and it’s meant as a reminder that Amazon should never stop acting like a start-up – even though the company now boasts more than 560,000 employees and more than 100 million members of Amazon Prime, the company’s paid service for free shipping on select items.

Here are some of the most useful nuggets of wisdom Bezos shared in his letter and during a recent onstage interview:

1. Standards are contagious

Bezos says he believes high standards are teachable rather than intrinsic. “Bring a new person onto a high standards team, and they’ll quickly adapt,” he writes. “The opposite is also true.”

If a company or team operates with low standards, a new employee will often – perhaps even unwittingly – adjust their work ethic accordingly.

He also says that high standards in one area don’t automatically translate to high standards in another – it’s important for people to discover their “blind spots.”

Related: Executive Director Hasnayn Ebrahim’s 5 Rules For Strategic Growth In Your Business

Try making a list of your duties, then ask trusted colleagues to tell you which responsibilities are your greatest strengths. If certain things from the list don’t come up during the conversation, it might be useful to think about how you can up your personal standards in those areas.

2. Set clear, realistic expectations

If you’re looking to raise your standards in a particular area, the first course of action is to outline what quality looks like in that area. The second is to set realistic expectations for yourself – or for your team – regarding how much work it will take to achieve that level of quality.

Exhibit A: You won’t find a single PowerPoint presentation at an Amazon company meeting. Instead, teams write six-page narrative memos to prepare everyone else for the meeting.

Bezos says the quality of the memos vary greatly because writers don’t always recognise the scope of the work required to reach high standards.

Related: Jeff Bezos: 9 Remarkable Choices That Shaped The Richest Man In The World

“They mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more!” Bezos writes.

3. Stay involved with the people you’re serving

Whether you’re selling a product or service, it’s a good idea to make sure you never lose touch when it comes to the people you’re serving – no matter how high up the ladder you climb.

Related: Lichaba Creations Founder Max Lichaba’s Inspiring Journey To Entrepreneurial Success

Bezos says he still reads emails from his public inbox (jeff@amazon.com) as a way to keep his finger on the pulse of what’s happening with Amazon customers.

He says he believes focusing on what customers are saying is much more important for success than focusing on what competitors are doing, and he often compares customer feedback to company data to see where they misalign.

“When the anecdotes and the data disagree,” Bezos said at a recent leadership forum at the George W. Bush Presidential Center, “the anecdotes are usually right.”

This article was originally posted here on Entrepreneur.com.

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