When its calm it is easy to be complacent

I am worried that too many business owners are unprepared for the unexpected.

Their businesses are like ships on the open ocean. During periods of calm, it is hard for them to imagine how rough the waters can become during a storm. However, when riding out 40-foot waves, there isn’t a captain alive who wishes they prepared less.

The recent wild swings in the Dow, and the headlines predicting more volatility ahead, started me wondering how many small business owners are currently unprepared for a sudden, unexpected downturn in the economy. It also made me recall my many wonderful conversations over the years with Joel Berman, a Chicago-based Architect (www.BermanArchitecture.com), who is grateful that he was prepared when the unexpected occurred.

I hope his story inspires you to take action.

The story begins…

I met Joel about 10 year ago, before the great recession, and before the real estate bubble burst. At that time he was a solo-entrepreneur who was just a few years in business. He was bright-eyed, super-intelligent, and full of all of the hope, excitement, and worries that you would expect from a budding entrepreneur.

We met at a workshop I gave at the Federal Reserve in Chicago, on behalf of a local entrepreneurship center. The attendees were all small business owners, solo-entrepreneurs, and founders of startups. As always, my topic focused on explaining my step-by-step approach for building a solid business that can grow quickly while avoiding the typical growing and slowing pains.

Part of my message encouraged the business owners to write down the operating procedures related to their company’s key operating processes. I explained that it was the key to achieving the “three S’s” — a Sustainable, Scalable, and Salable business.

For some in the audience, writing down their company’s SOPs, (standard operating procedures), was not welcome advice. They were already super busy. They worried they were not good enough writers. They did not think writing their company’s SOPs was relevant because they were “too small.”

I easily explained away all of these objections by listing a treasure-trove of benefits that flow to business owners who take the time to “do it right.”

-Increased quality and consistency

-Improved productivity

-Lowered costs

-Increased profits

-Increased sales

-Increased innovation

-Increased customer satisfaction

-Increased organizational flexibility, resilience and responsiveness

-Engaged employee who really care about the business

After the workshop, a group of participants hung around to ask me follow up questions. One of these participants was Joel Berman who fired off every possible reason for not writing his SOPs: 

-He did not have time.

-He was “the business”, so there was no need to write SOPs.-

-He could not capture his creative process in SOPs.


I don’t have time.

I answered each one of Joel’s objection in turn. I started by explaining that a “lack of time” is no excuse for not writing down his company’s step-by-step operating procedures. Instead, it was an indication that he needed to start delegating some of his responsibilities to others. It was the only way he would free his time to grow his business and enjoy his life.

Joel nodded his head in agreement.

Then, I taught Joel my golden rule:

Never delegate a business-critical task to anyone without first understanding it yourself, documenting it with step-by-step operating procedures, and having a system in place that ensures it is being performed according to your expectations.”

I explained that doing otherwise lays the foundation for a dysfunctional culture where employees hoard knowledge, and ultimately use their power to hold you hostage.

I am the business.

Next, I turned to Joel’s second objection, that he did not need to write SOPs because he was “the business.”  I asked him another question, “What would happen to your business if you came down with appendicitis?” 

All expression drained from Joel’s face. He admitted that everything in his business would grind to a screeching halt: Billing, client communications, architectural drawings, permit submissions…

At this point Joel started to realize that if his business was to succeed in the long-term he needed to build it a safety net. Otherwise, EVERYTHING he worked so hard to create was at risk. He began to understand why the first step to achieving a sustainable business was writing his company’s SOPs.

 

What about creativity?

There was one more concern to resolve. Joel, reminded me, “What about creativity?  I cannot document my creativity! In fact, having SOPs will destroy my creative process.”

Ah…. Creativity…  Most service professionals fall back on this excuse for avoiding the grind of writing their SOPs. I asked Joel a third and final question, “How would you rate the creativity of the top Architectural firms in the world, like, for example Frank Gehry’s firm?”  Joel had to admit, “His firm’s creativity is excellent.”

I continued to explain that every successful, long-lived professional services organization — from architectural and accounting firms, to medical practices and marketing agencies — rely on having standardized procedures as the basis for systematizing their creative process. They use client questionnaires. They have audit guides. They use pre-formatted progress notes. They have a systematic review processes that approves work-product prior to sharing them with a client. I explained that SOPs do not suppress the creative process. Instead, they set the creative process free by guiding teams, performing completeness checks, and avoiding common mistakes that sap energy wasted putting out avoidable “fires”. They also establish a standard of excellence that can be continuously improved.

 

There is nothing “guru” about writing SOPs.

I concluded by assuring Joel that I was not proposing he follow some “guru” approach. I reminded him that I was only asking him to adopt the same essential management methods used the the largest, most successful, and long-lived companies. “It worked for them,” I said, “It should work for you too.”

Apparently, my answers struck a cord with Joel. He spent the next month, finding the time to write his SOPs.

That’s all it took, one month!

 

Calm waters…

From time-to-time Joel would call to report his progress, and to thank me.

He was exciting when he hired his first part-time employees. He called to tell me how having SOPs made it easy to train them and monitor their work.

He wanted me to know how grateful he was that I encouraged him to document his company’s processes and the other steps in my management process.

Fast forward another year or so, Joel called again to let me know his firm was growing and that his part-timers were now full-time employees. Again, he thanked me for sharing my step-by-step methods for documenting operational processes and building engaged teams. Joel said, “We really function like a unit… A finely tuned machine.”

It was all working.

It was all good.

Joel’s seas were calm.

 

A sudden storm…

Then without warning, a storm appeared. The “Great Recession” hit, and the real-estate bubble burst.

I was worried about Joel. Every day the news seemed to get worse. The economy hit rock-bottom. Every business owner was having a hard time. I imagined that it had to be worse for an architect who depended on a vibrant real estate market.

Maybe it was ESP, because Joel called to check-in. He confirmed that he was having a difficult time. He told me that the need for architectural services seemed to dry up overnight. He explained that his clients’ banking relationships faded and with them his contracts. His once thriving and growing practice was just hanging on.

I told Joel how sorry I was to hear his news. Joel interrupted me, “Actually Mike, I am calling to thank you.” 

Thank me?  I was confused.

Joel continued, “I unfortunately had to lay-off most of my staff. It was the most difficult and painful thing I had do. But, if I did not have my processes documented, I would not be in business right now. Having SOPs was critical in scaling up my business, but I never would have imagined how CRITICAL having SOPs would be as I was forced to scale down. If I lost all that knowledge, I would never have been able to carry on. It saved my business. So, thank you.”

My heart sank that day. I felt for Joel. I felt for his employees. The only bright spot was how confident he was that he could turn it around.

It took a long, long time for the economy to perk back up. The Fed dropped interest rates, and pumped cash into the economy. Still it was a slow and grueling recovery.

The months turned into more than a year. Business slowly recovered… Very slowly… Too slowly.

Then, out of the blue, I received a check-in call from Joel. I could hear in his voice the return of that same old, enthusiastic, bright-eyed Joel, that I first met at my workshop, so many years ago. “Mike, I have to thank you again. With the upturn in the economy, my company is rebounding quickly. If it wasn’t for my book of SOPs I would not have been able to scale back up. You were right.”

I have to admit, it is nice being proven right.

Over the years I have given the same advice to thousands of entrepreneurs. My mission is to help smaller organizations adopt the same essential management practices used by the largest companies to transform their businesses from struggling to success. I have since encapsulate all this content in the 4-part ManageHub Accelerator for everyone to access.

The first session of the ManageHub Accelerator focuses on identifying your company’s critical operational processes, and on performing a quick gap analysis so you can develop a prioritized improvement plan.

The second session shows you how write an effective SOP, and how to engage your employees in managing improvement of the work that they perform.

The third session focuses on implementing a decisive strategic plan.

The fourth session provides you with 7 non-negotiable behaviors that you can use to hire, on-board, engage, and promote great people.

 

Epilogue

Earlier today, I spoke with Joel asking his permission to share his story. I told him that I hoped it would inspire business owners to lead proactively, and prepare their business for unexpected opportunities and problems.

Joel generously agreed, “It would be awesome to help other small businesses succeed. What you have taught me really is the secret. I hope they listen.” 

I love talking to business owners who take the time to “do it right.”  They understand that focusing on business basics is the prerequisite starting point to replace their stress with success. It is a lesson that can only be truly learned by living it.

Joel continued, “Systematizing and standardizing my business helped me build an amazing team. We know how to work together. We really care about each other.  We continuously improve everything. It let’s us be super creative and deliver excellence for our clients. It allows us the freedom to give back to our community.”

You can do it too!

If you are a manager or leader interested in learning how you can use the ManageHub method to optimize your department or company, please visit www.ManageHubAccelerator.com for classes and support. The Accelerator consists of four 90 minute on-demand video seminars. Each class focuses on building you company’s “management machine”. A ManageHub Coach will guide you every step of the way.

If you are a business coach or professional who wants to learn how to become a ManageHub Process Coach please visit: https://managehubaccelerator.com/become-a-managehub-coach  You will receive everything you need to get started. ManageHub is a simple, practical, turnkey solution that complements and enhances all the wonderful work you currently offer.

If you have any questions, please contact me directly.

Mike Kramer, CPA
www.ManageHubAccelerator.com
www.linkedin.com/in/michaelkramer