Feb 2007 Eastside Business monthly print issue
www.eastsidebusiness.com
The Eastside Hot 100
Best Practice Number 1: Vision Statements
By Corey Hansen, MScOD
Business ownership can be complex and confusing. Most people think that is true only for new entrepreneurs, but on average, most entrepreneurs start four businesses over 20 years before they build a sustainable and profitable success. What can be done to make a business successful and sustainable the first time? The key is to focus on building business systems that get consistent and profitable results by putting in place proven best practices. The following is the first of 300 best practices featured in Best Practices of High Performance Entrepreneurs.
Best Practice 1 (of 300). The owners have envisioned and written what the business will be like in five years (Vision Statement).
Although Mission Statements are fairly common, Vision Statements are not. A vision statement is not customer-focused but rather owner-focused. Your vision statement should state what you want your business to become for you, the owners of the business. "We are building a business that will help the owners to __________ (fill in this statement)."
A vision statement must incorporate all that’s important to the owners in relation to the business. Long-term values will have significant impact on what’s included in the vision statement. Since this statement is used to evaluate business decisions that affect how the business benefits the owners, it’s essential that it be developed by the owners and their trusted advisors. Every attempt should be made to achieve consensus on the vision statement by all who have an interest in the business and it should be reviewed at least annually to see if it’s working and needs updating. Significant changes in the business environment and personal lives of the owners should also trigger a review.
The following is an example of a vision statement from one of the High Performance Entrepreneur clients: “Our vision is to be the most profitable company in the industry and a fun place to work.” We like this one because it’s easy to understand and it focuses on sustainable profitability.Some businesses also have a vision statement for what the business is becoming for the employees. This is appropriate as long as you do not try to incorporate it into the owners vision statement as well.
In 2006, local small businesses using these best practices grew a total of $30,000,000 or +65%. They also impacted 264 jobs, and raised funding of almost $9,000,000 in new equity investments and loans.The next column will feature Best Practice 2 (of 300). “Owners and managers have written the benefits that customers can expect from the business (Mission Statement).”
The Eastside Hot 100 program is sponsored by EastsideBusiness.com, Viking Bank, City of Bellevue, City of Kirkland, Bellevue Community College, and the Washington Small Business Development Center @BCC.
The Hot 100 are local small businesses that are working to accelerate growth and profit.Corey Hansen is co-author of the Best Practices of High Performance Entrepreneurs, center director of the Washington Small Business Development Center at BCC, and instructor of the Build a Hot 100 Business offered Feb 16th, Mar 23rd, or Apr 19 at BCC. Corey can be reached at chansen@bcc.ctc.edu or 425.564.2888.
Friday, February 16, 2007
Eastside Hot 100 monthly column - Jan 2007
Jan 2007 - Eastside Business monthly - Bellevue, WA
www.eastsidebusiness.com
The Eastside Hot 100
Featuring best practices of high-performance entrepreneurs.
Corey Hansen, MScOD
Million Dollar Decisions
In private-owned businesses the role of owner and manager are often synonymous. One critical part of building a high-performance business is differentiating between ownership and management roles. Management is typically focused on daily operations and incremental profit growth. However, average profits can be dangerous because they can create a false sense of security. To build a high performance business, owners must make what we call, “million-dollar” decisions.
Business owners develop systems to deal with routine business activities because they must be done, but the owner isn’t always the right person to do them. One client owned a hydraulic parts and repair business and struggled with average profits for several years. Eric had two shops in different cities and sold parts and repaired equipment. His efforts to increase his return on investment (ROI) were ineffective, as he spent much of his time monitoring the price points of his competitors and negotiating with vendors to get lower prices.
After completing a high-performance business evaluation, Eric realized there were too many action items for him to do on his own. As a result, he split up his duties and delegated some of them to his supervisory staff, requiring them to regularly report back their progress. He discovered that: “Delegation is a million-dollar decision.”
Eric found he had more time to concentrate on his personal income and ROI. By reviewing detailed financial reports prepared by his controller, he discovered the repair business yielded higher returns than the sale of parts. He then delegated to his branch managers and sales staff the creation of a written marketing plan, and directed them to push repairs and find new repair customers. “Financial analysis and planning are million-dollar decisions.”
Instead of handling customer service problems and negotiating with parts vendors, Eric was now considering how he could afford two new service bays in his existing shops. He called local bankers to see what arrangements needed to be made to finance the expansion. He was so busy working on the expansion plans he paid his CPA to do a cost benefit analysis for the loan application. Expansion, financing and contracting cost-effective labor are also million-dollar decisions.
The supervisors and other staff felt a stronger sense of loyalty to the business because they were more involved and shared a vision of what the business could become. As important, sales that had consistently been at $1 million went up to $3 million, which was a 200 percent increase in only two years. The higher repair margins and economies of scale pushed the ROI up so much that Eric started looking to acquire new shops in new markets, rather than haggling with parts vendors for lower prices. Incidentally, the increase in sales qualified the business for bigger discounts, so the profit margin on parts sales also increased. Acquisition and economies of scale require owners and managers to make million-dollar decisions.
Building a high-performance business is a process. Recognizing the roles of owners and managers are different is a critical part of building a Hot 100 business. In February, this column will feature the first best practice from Best Practices of High Performance Entrepreneurs.
The Eastside Hot 100 is a program to help local small businesses accelerate growth and profitability and is sponsored by BCC, the WSBDC@BCC, Viking Bank, the City of Bellevue, and the City of Kirkland.
Corey Hansen is center director of the Washington Small Business Development Center at BCC; co-author of Best Practices of High Performance Entrepreneurs, and instructor of Build a Hot 100 Business offered Jan 19th, Feb 16th, and Mar 23rd. Corey can be reached at chansen@bcc.ctc.edu or 425.564.2888.
www.eastsidebusiness.com
The Eastside Hot 100
Featuring best practices of high-performance entrepreneurs.
Corey Hansen, MScOD
Million Dollar Decisions
In private-owned businesses the role of owner and manager are often synonymous. One critical part of building a high-performance business is differentiating between ownership and management roles. Management is typically focused on daily operations and incremental profit growth. However, average profits can be dangerous because they can create a false sense of security. To build a high performance business, owners must make what we call, “million-dollar” decisions.
Business owners develop systems to deal with routine business activities because they must be done, but the owner isn’t always the right person to do them. One client owned a hydraulic parts and repair business and struggled with average profits for several years. Eric had two shops in different cities and sold parts and repaired equipment. His efforts to increase his return on investment (ROI) were ineffective, as he spent much of his time monitoring the price points of his competitors and negotiating with vendors to get lower prices.
After completing a high-performance business evaluation, Eric realized there were too many action items for him to do on his own. As a result, he split up his duties and delegated some of them to his supervisory staff, requiring them to regularly report back their progress. He discovered that: “Delegation is a million-dollar decision.”
Eric found he had more time to concentrate on his personal income and ROI. By reviewing detailed financial reports prepared by his controller, he discovered the repair business yielded higher returns than the sale of parts. He then delegated to his branch managers and sales staff the creation of a written marketing plan, and directed them to push repairs and find new repair customers. “Financial analysis and planning are million-dollar decisions.”
Instead of handling customer service problems and negotiating with parts vendors, Eric was now considering how he could afford two new service bays in his existing shops. He called local bankers to see what arrangements needed to be made to finance the expansion. He was so busy working on the expansion plans he paid his CPA to do a cost benefit analysis for the loan application. Expansion, financing and contracting cost-effective labor are also million-dollar decisions.
The supervisors and other staff felt a stronger sense of loyalty to the business because they were more involved and shared a vision of what the business could become. As important, sales that had consistently been at $1 million went up to $3 million, which was a 200 percent increase in only two years. The higher repair margins and economies of scale pushed the ROI up so much that Eric started looking to acquire new shops in new markets, rather than haggling with parts vendors for lower prices. Incidentally, the increase in sales qualified the business for bigger discounts, so the profit margin on parts sales also increased. Acquisition and economies of scale require owners and managers to make million-dollar decisions.
Building a high-performance business is a process. Recognizing the roles of owners and managers are different is a critical part of building a Hot 100 business. In February, this column will feature the first best practice from Best Practices of High Performance Entrepreneurs.
The Eastside Hot 100 is a program to help local small businesses accelerate growth and profitability and is sponsored by BCC, the WSBDC@BCC, Viking Bank, the City of Bellevue, and the City of Kirkland.
Corey Hansen is center director of the Washington Small Business Development Center at BCC; co-author of Best Practices of High Performance Entrepreneurs, and instructor of Build a Hot 100 Business offered Jan 19th, Feb 16th, and Mar 23rd. Corey can be reached at chansen@bcc.ctc.edu or 425.564.2888.
Flyer content for "Design a Hot 100 Business" FREE Workshop
How to Design a Hot 100 Business
Free Workshop, Thursday, 3:00 – 4:30PM, Mar 8, Apr 5, May 3, or Jun 7
Bellevue Community College North Campus, 10700 Northup Way, Bellevue
What do these high-growth businesses have in common?**
Business Services Company
$0 to $10 million - 5 yrs
Contractor
$3.5 million to $10 million - 1 yr
Personal Services Company
$400,000 to 1.4 million – 9 mo
Pharmaceuticals Distributor
$120,000 to $12 million - 4 yrs
Trade Contractor
$20,000 to $300,000/mo - 9 mo
Entertainment Software
$0 to $50 million - 6 years
Awards:
Inc. Magazine – “Inc 500”Fastest Growing in the US
Business Journal “Hot 100”
Fastest Growing in the State
Ernst and Young Entrepreneur of the Year
-Regional finalistsEntrepreneur Magazine “Hot 100”
Fastest Growing New Business
US Small Business Administration
Small Business of the Year -District and Regional
** All went through a unique process to help design and build a high-performance or Hot 100 business, and so can you. Businesses using this process averaged 431% growth over 3 years.
Also see how to qualify for a technical assistance grant from the Washington Small Business Development Center at Bellevue Community College.
Seating is limited and pre-registration is recommended – call BCC Customer Service at 425.564.2263 or www.gotobcc.com. Questions, contact Corey Hansen at 425.564.2888 or chansen@bcc.ctc.edu
The Eastside Hot 100 program is a public/private partnership to help local businesses create higher-performance growth, profits, and local jobs.
Sponsors are: EastsideBusiness.com, City of Bellevue, City of Kirkland, Viking Bank, Bellevue Community College, and the Washington Small Business Development Center @BCC.
Free Workshop, Thursday, 3:00 – 4:30PM, Mar 8, Apr 5, May 3, or Jun 7
Bellevue Community College North Campus, 10700 Northup Way, Bellevue
What do these high-growth businesses have in common?**
Business Services Company
$0 to $10 million - 5 yrs
Contractor
$3.5 million to $10 million - 1 yr
Personal Services Company
$400,000 to 1.4 million – 9 mo
Pharmaceuticals Distributor
$120,000 to $12 million - 4 yrs
Trade Contractor
$20,000 to $300,000/mo - 9 mo
Entertainment Software
$0 to $50 million - 6 years
Awards:
Inc. Magazine – “Inc 500”Fastest Growing in the US
Business Journal “Hot 100”
Fastest Growing in the State
Ernst and Young Entrepreneur of the Year
-Regional finalistsEntrepreneur Magazine “Hot 100”
Fastest Growing New Business
US Small Business Administration
Small Business of the Year -District and Regional
** All went through a unique process to help design and build a high-performance or Hot 100 business, and so can you. Businesses using this process averaged 431% growth over 3 years.
Also see how to qualify for a technical assistance grant from the Washington Small Business Development Center at Bellevue Community College.
Seating is limited and pre-registration is recommended – call BCC Customer Service at 425.564.2263 or www.gotobcc.com. Questions, contact Corey Hansen at 425.564.2888 or chansen@bcc.ctc.edu
The Eastside Hot 100 program is a public/private partnership to help local businesses create higher-performance growth, profits, and local jobs.
Sponsors are: EastsideBusiness.com, City of Bellevue, City of Kirkland, Viking Bank, Bellevue Community College, and the Washington Small Business Development Center @BCC.
Monday, February 5, 2007
50,000 High Performance Entrepreneurs
From Russ Allred, MBA, Co-author, Nov 2006
Please join us in our mission to find and develop 50,000 High Performance Entrepreneurs. At an average revenue increase of $1 million, our goal will yield $50 billion to the GNP and you will be an important part of that success. As HPE Advisors we want you to feel the rush of seeing your clients grow, succeed and be acknowledged among the best businesses in the country.We are pleased to share our process with you. We have proven it over 12 years with hundreds of entrepreneurs.
The best thing about the HPE business-building system is IT WORKS and it will work for you. Every week we get reports of your clients who are increasing revenue and improving their management ability to sustain their growth. I want to thank my CPA brother for his vision in conceiving this business improvement system and Corey Hansen for adding his rapid-growth approach and good nature. Finally, thank you for joining us in this abitious objective. I wish you much success!
Russ Allred, russ@hpebook.com
Please join us in our mission to find and develop 50,000 High Performance Entrepreneurs. At an average revenue increase of $1 million, our goal will yield $50 billion to the GNP and you will be an important part of that success. As HPE Advisors we want you to feel the rush of seeing your clients grow, succeed and be acknowledged among the best businesses in the country.We are pleased to share our process with you. We have proven it over 12 years with hundreds of entrepreneurs.
The best thing about the HPE business-building system is IT WORKS and it will work for you. Every week we get reports of your clients who are increasing revenue and improving their management ability to sustain their growth. I want to thank my CPA brother for his vision in conceiving this business improvement system and Corey Hansen for adding his rapid-growth approach and good nature. Finally, thank you for joining us in this abitious objective. I wish you much success!
Russ Allred, russ@hpebook.com
How to keep action items in front of staff and management
Question from Michael Franz, Washington Small Business Development Center - Seattle, WA Nov 2006:
What have you and Russ learned about how to keep the tasks in front of people, so that they are thought about? Should management institutionalize the monitoring into their normal reporting processes and meetings? I suggested using the action item report, but that might not be as “constant” a reminder that these tasks need constant attention.
Answer from Corey Hansen:
I print out a report before each meeting and then review updates. With the reminder emails twice a month they are more likely to follow through. The other issue is they need to check with their people to see that progress is being made. I recommend they do it as part of their management and staff meetings. In many cases we are teaching them how to make assignments, follow up and review. They are good at it for themselves but often don’t know how to do it well with others.
Even with little follow-up they often make significant progress in 12 months because they now have a clearer vision of what should be done. That is why the action plan needs to be redone at least annually or when there are significant changes. The challenge is to accelerate progress without becoming a drill sergeant. I have also been surprised at how at monthly follow-up meetings I need to keep reminding them of the strategic implications of their decisions. Some can do it on their own but most need an advisor to keep them moving ahead faster. The HPE action plan provides the structure but is no substitute for your expertise as an advisor.We are always looking for a better way to do this so your recommendations are always appreciated.
Corey Hansen, corey@hpebook.com
What have you and Russ learned about how to keep the tasks in front of people, so that they are thought about? Should management institutionalize the monitoring into their normal reporting processes and meetings? I suggested using the action item report, but that might not be as “constant” a reminder that these tasks need constant attention.
Answer from Corey Hansen:
I print out a report before each meeting and then review updates. With the reminder emails twice a month they are more likely to follow through. The other issue is they need to check with their people to see that progress is being made. I recommend they do it as part of their management and staff meetings. In many cases we are teaching them how to make assignments, follow up and review. They are good at it for themselves but often don’t know how to do it well with others.
Even with little follow-up they often make significant progress in 12 months because they now have a clearer vision of what should be done. That is why the action plan needs to be redone at least annually or when there are significant changes. The challenge is to accelerate progress without becoming a drill sergeant. I have also been surprised at how at monthly follow-up meetings I need to keep reminding them of the strategic implications of their decisions. Some can do it on their own but most need an advisor to keep them moving ahead faster. The HPE action plan provides the structure but is no substitute for your expertise as an advisor.We are always looking for a better way to do this so your recommendations are always appreciated.
Corey Hansen, corey@hpebook.com
Welcome to the High Performance Entrepreneur blog
Greetings:
At the request of clients and advisors this blog is to for the latest info on accelerating business performance and feedback on best practices.
See www.HPEbook.com for details on the High Performance Entrepreneur system. The authors are Russ Allred russ@hpebook.com and Corey Hansen corey@hpebook.com. The book, Best Practices of High Performance Entrepreneurs is available on Amazon.
Please post questions and responses and we will post answers we and others have to offer.
Cheers!
Corey Hansen, MScOD
www.hpebook.com
At the request of clients and advisors this blog is to for the latest info on accelerating business performance and feedback on best practices.
See www.HPEbook.com for details on the High Performance Entrepreneur system. The authors are Russ Allred russ@hpebook.com and Corey Hansen corey@hpebook.com. The book, Best Practices of High Performance Entrepreneurs is available on Amazon.
Please post questions and responses and we will post answers we and others have to offer.
Cheers!
Corey Hansen, MScOD
www.hpebook.com
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