Empowered

by Dominica Lumazar

  Look at the last six months and compare it to the previous year's P&L. Look at the overall summary of the previous year, and then look at this quarter. While you are doing this, look for trends.

  Was there exponential growth in one month versus another?

  Was the company down one month versus another?

  Were there circumstances outside of your control, such as weather?

  Was there theft?

  Employee Theft

  We never want to have to be the bad cop, especially in our own business. We assume that no one would ever do anything to intentionally hurt us. But the fact is that people lie, cheat, and steal all the time. If you sense something is off, you’re not wrong. Trust your leadership intuition and don’t find yourself in a position where you wish you would have acted sooner.

  A common trend I’ve found is employees creating gift cards under customers’ names. If an employee is standing in front of a customer and the customer has a credit card, the employee is responsible to just swipe or insert a credit card for that one transaction. However, employees are sneakily taking pictures of the credit cards under the counter. Then, they're buying gift cards for the business. When their friends come in, they're using the gift cards to pay for the friend’s purchase. It looks as if the customers are coming back in, when in fact, it's credit card fraud.

  Employees are also creating gift cards and adding fake money to them. I caught a gift card situation where the employee had their friends come in time and time again for expensive services, and they kept paying with gift cards. When suspicion arose, I went to the records inside of the POS (point of sale system) and noticed a significant increase in how many gift cards the company had sold within the last six months. I saw that trend and knew right away something was wrong. The company hadn’t received any cash for the gift cards “sold.” Someone had taken it upon themselves to create fake money and use it to their advantage. The bookkeeper hadn’t caught it, and the company lost around $5,000. The employee was also putting the gift cards under other employees’ names and badge numbers, as if to frame their co-workers, so make sure to dig deep before jumping to conclusions.

  Depending on the dollar amount that is being stolen by the employees, it can be a federal offense. In this situation, the business owner didn’t want to ruin the person's life, but still wanted to teach him a firm lesson. The employee was let go and was never allowed on the premises again.

  To help businesses avoid this happening in the future, I frequently work with the bookkeeping departments and show them examples of what I've seen firsthand and what has taken place at other companies. I then educate the bookkeepers to find similar red flags or trends within their own company.

  It’s small business owners who are most often taken advantage of, because they have everyone's best interests at heart and are excited about giving people an opportunity. It's sad to see that optimism get crushed quickly when someone does something to betray your trust. It's good to be optimistic, but you must also be very strategic about who you're bringing into your business.

  Outstanding Liabilities

  When you sell a gift certificate for your business, you receive money up front in exchange for an agreement that you will honor the dollar amount paid when someone returns to redeem their “credit” with your business, at their convenience. This is also known as a liability. Even though you have the money sitting in your bank account already, remember that you still have to provide the service or product. If you’re a business that sells lots of gift cards, you may want to only consider gift card revenue as income once the gift card has been redeemed. Do you know how many outstanding liabilities your business has? How many people have not yet redeemed their credit? How can we get those people to come back in to not only redeem whatever service their credit might be for, but upsell them as well?

  I've created and implemented automated systems where, for example, when someone purchases a service, a gift card, or even an item, we have raw data of the time and date the purchase was made. We can then use that data to determine the ideal time to follow up with them when they need the product or service again and give them a returning customer discount. For an auto detailing client of mine, if someone purchased a complete exterior detail, we know within six months that person should come back in for the exact same detail to preserve and protect their paint. So, I would send out an automated email specific to their last service, reading, “Hi! It’s been six months since your last complete exterior detail, and it’s that time of year when your vehicle’s paint could use another coat of polymer sealer wax. We also noticed you have a balance of $25 on your gift card. Feel free to bring that in and, additionally, we'll give you 10% off on your next detail of $100 or more. We look forward to seeing you soon.”

  With this system, you’re incentivizing the customer to get them back in and, in the case of gift cards, redeem the liability, while reminding them they have value (monetarily) with your business. You’re even giving them an additional discount because it inspires them to take action.

  Spending

  I firmly believe the single biggest mistake any new business owner can make is having undisciplined spending or unfocused budgeting. Are you currently overspending? Does the business really need those ten new Macbook Pros when your current computers work just fine? Spending money on the wrong things at the wrong time can sink a business before it even had a chance to float. Be strategic. Think frugally and realistically.

  Provided you have a smart bookkeeper, he or she will stay on top of the spending and let you know when it’s appropriate or not to make large purchases. Here is another reason why you need to know how to read your financial statements. Your marketing team needs to be sure they are staying on track and not letting ad campaign spending get out of hand. Be sure they're on course and not spending extra money in places that aren't providing good ROI or aren’t cost-effective for the business. Some marketing strategies and tactics can take months before you see any ROI, so you will have to weigh the pros and cons of each strategy. As a business owner, you should be able to request a report any day of the month and have it available within 24 hours.

  Good news or bad, taking the time to review reports is important. You need to be able to lead from facts. If revenue is down, make sure your team is not overlooking or sugar coating the metrics. The next time you want to purchase that $2,000 office chair, be sure you communicate with your CFO or bookkeeper to be sure it’s something you can put on the expense account.

  Money Management in Difficult Times

  Sometimes a business is in financial distress and concerned they won’t make payroll. The business owner needs to step up and reach into their own pockets to keep everything afloat. When the company becomes profitable again, it slowly starts to pay back the business owner.

  The number one thing that must be covered is payroll. You must pay your people first! You need to have enough money to cover payroll because you don't want to upset your employees, or worse, have them walk out. Don’t even mention the fact money is tight to your employees, as it creates unnecessary stress. It's best to just keep that amongst the decision makers and officers. It's important to hold your cards close and not overspend until you have a little more money in the bank. The money you do have is typically allocated for the day-to-day operations, keeping the lights on, paying the lease, etc. Pay your people first and make sure they're happy, but don’t overextend yourself by giving company loans to employees who might have fallen on hard times.

  Additionally, make sure all online content and services are up to date. Never let the general public know you're hurting. If there is any money left over, it should go toward marketing efforts. From here, you can start to strategize and determine if there was too much money spent on an aspect of the business you don't need anymore.

  Do you have an employee who’s not growing with the company anymore? It may not be necessary to let go of that employee, but offer them a different position and maybe in a new role, they
will help the company to grow in new ways. Rather than leaving the underperforming salesperson in your store, maybe you send them out into the field so they can get creative finding new ways to get customers and earn a little more commission when they bring in more business for the company.

  Look at who the A-level people in the company are, and then really utilize those key players to continue to work on the business with you. If you recently purchased a business and still have employees from the previous owner’s leadership, try giving them a voice in the new enterprise. It might surprise you to find a wealth of knowledge in the employees who have been there for years.

  Managing a Cash Infusion

  When a new business receives a large cash infusion, I usually see young CEOs who are excited about hiring all their friends. They get the really fancy office with standing desks, and don’t forget the ping pong tables and free lunch for everyone! Heck, why not put a bar in the lobby? You name it, they've got it. At the end of it, after they've hired everyone they know, friends and family continue to have their hands out, and the business owner quickly runs out of money. They were supposed to develop a prototype or software, such as an app, but now they have no money to hire software architects. I’ve seen it over and over again; those companies go belly up within twelve months.

  To avoid this, spend money on individuals who have the same business-minded goals, put together a budgeting plan with the CFO, and make sure it is followed through. Whatever you do, whatever funding you've received, do not put it all into your business checking account. Put the majority of it into the company savings account. That way you can't go spending-crazy with your debit card. If your company received five million dollars in funding, put $10,000 in your checking account, or just enough to cover the monthly operational costs. I've seen companies become more successful in a shorter period of time by having a $5,000 investment than a five million dollar investment. It's all about utilizing the cash and then being accountable for how you're using it. You need to know exactly where the money is going.

  Sometimes I feel that there should be a Business Owner Spending Anonymous, where you have to get some help because it can get really out of hand. I often see thousands of dollars going to fancy dinners or top-shelf drinks to entertain clients. That can be good and that can be really valuable, but you better be certain the potential client is going to sign your contract. A business built on “hopeium” never lasts for long. Just because you’re a savvy tech startup business owner does not mean you get the whole lifestyle of the rich and famous, especially in Silicon Valley. It's not nearly as glamorous anymore. It's now all about the long haul. How long can you actually be in this game? Can you hustle? Can you actually get a return on your efforts? Can you keep your investors motivated so you can do a second or third round of funding?

  Shining a Light on Your Business

  Action Steps

  Understanding your numbers is fundamentally the single most important thing you can do in order to have longevity in your business. Take the time to review your spending and liabilities.

  Does everything look accurate?

  Is money being well spent?

  What do your financial reports reveal to you about your business?

  As a bonus, I created a priceless list of resources that I have curated over many years to fast track your business success and help you achieve your business and leadership goals. This includes valuable information on Google Analytics and other topics covered in this book.

  Go to www.TheEmpoweredBook.com/bonuses now to get this bonus!

  Chapter 3

  Company History

  “When solving problems, dig at the roots instead of just hacking at the leaves.”

  — Anthony J. D’Angelo

  The History of the Business

  I have found that understanding the history of my client’s business (when, what, who, where, and why) before diving into the operations can reveal more than one might think. Understanding the history allows us to start to identify patterns, some healthy and some surprisingly unhealthy.

  Identify:

  Who have been the key people in your business?

  What choices have you made that went well?

  What decisions have you made in your business that didn't go well or as expected?

  Understanding the company history should also provide an understanding on the financial reports. Take a look at the year to date and notice what months were more successful than other months.

  Take time to review:

  What happened during your more successful months?

  What promotions or campaigns did the company run?

  Did you hire someone new?

  What was the number one reason for the highest revenue generating month of the year?

  Take a look at the decisions that were made by the staff, by the executives, and by the marketing team. Has your brand’s voice been marketed properly? Are you listening to your customers? What are they telling you?

  Employee and Company Culture

  A smart business owner will take the time to look closely at their customer’s overall experience.

  If you have long-standing repeat customers, they more than likely know what to expect when they interact with your employees. They might know your employees by their first name and enjoy seeing the same friendly faces. Hopefully, your team has been trained to be kind, informed, and engaging. However, sometimes a customer service team can get a bit too comfortable and begin to take liberties, such as using their cell phone while they are on the clock or helping themselves to the customers’ refreshments. This doesn't make them bad employees, but it gives the perception of not caring and looks unprofessional. Additionally, it shows a lack of attention to detail related to the customer’s needs or the service they are receiving. This should be avoided at all cost.

  No matter what the employee history or culture has been, you, as the leader, should be taking actions to show your team what’s expected of them. As the business owner, you cannot let your employees steamroll you. You must set the standard and then hold your team accountable. Do you have a cell phone issue with your employees? Put a no cell phone policy in place and have clear boundaries with your team about their personal time on your dime.

  Create new policies all while making them fun. Have everyone sign the new cell phone policy agreement, and tell your team that if no one is found in violation or breach of the agreement for thirty days, you will personally provide everyone lunch. If they go ninety days, you will give everyone a bonus. Think about how productivity will increase and how much additional revenue will be generated by everyone putting down their cell phones and staying off social media while on the clock. Reward your team by sharing in the profits of their focused, driven work.

  Most people respond well to a reward system. Rather than focusing on their day-to-day grind for your company, which might feel stale to them after a while, here are some questions you should be asking yourself:

  Have I rewarded my employees for fantastic performance?

  Is there a bonus structure in place?

  Is there an incentive program for those employees?

  Have I built in new roles they can grow into?

  Can I send my managers and best employees to seminars and trainings for continued education?

  Has the employee handbook been updated within the past year?

  Is the staff feeling heard by the management?

  Do my employees feel encouraged to continue to grow within the business, or are they seeking new employment?

  Are my employees cutting corners or taking shortcuts that might be diminishing or devaluing the brand, product, or service?

  A good example of employee history makes me think of working with AJ Professional Detailing, formally AJ Auto Detailing. AJ’s is the premier auto detailer in the Bay Area and has a reputation for excellence. After thirty years of hard work and contribution to the community, the original owner decided it was time to retire and sold the business to
Matt Griffoul.

  When Matt stepped into his new role as owner of AJ Professional Detailing, he hit the ground running. He made improvements all over the facility to increase production, but arguably more important, he made major shifts within the company culture and set out to build trust with his new crew. The majority of these employees had been working at AJ’s for well over ten years, some even fifteen, so you can imagine the amount of history the employees had built together.

  Historically, the majority of employees had been Spanish-speaking. Neither Matt nor myself can speak Spanish fluently. Luckily, one of the long-term employees was bilingual, and Matt entrusted him with an important task. Matt held a yard meeting with his crew, and with his translator by his side, I watched as the barrier between “the boss” and employee melted away. Matt heard the concerns the crew had with the change in ownership and everyday work life. He made it clear to them that this was “their ship,” and he was trusting them to respect it, work hard and in return, he would do the same for them.

  Matt asked these questions: “How can I support you?” and “What would make your job better?” Matt didn’t want to just be the new guy who bought an existing business. He wanted to make a healthy impact on the lives of his employees and was eager to break down barriers, regardless of age, race, gender, or employee vs. boss mentality.