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Grow Your Business!

Improve Your Services and Gain Productivity

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The SCORE Foundation

would like to thank for showing their support of America’s small businesses by sponsoring this series. The content provided in the Grow Your Business! materials is intended as a business resource only and does not guarantee a successful outcome when applied to individual business use. To find additional resources on growing your business, visit www.score.org

and www.openforum.com

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A Special Thanks to Our Local Sponsors

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Classroom Safety – Argosy U

Emergency Exits Restrooms You are HERE

Please do not wander around the building!

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Classroom Safety –ComCenter

Emergency Exits Restrooms You are HERE

Please do not wander around the building!

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Douglas S. Cavanaugh

About SCORE

• Successful and experienced business owners and executives acting as volunteers • Free ongoing mentoring: One-on-one E-mail Signup on our website – Mentoring Tab • Seminars and workshops • Resources for small business: manasota.score.org

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Assessing Your Business

The SCORE Business Needs Assessment, it is in your packet. Download at: http://tinyurl.com/8j7fkgw It will help you assess the current state of your business in 5 key areas: 1. Management 2. Marketing 3. Sales 4. Finance 5. Operations

Review with your mentor to help you: Decide what additional workshops to attend Develop a customized business improvement plan

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Workshops - Focused on key business processes Improve performance to

Grow Your Business!

Customers – Impacted by All Functions in Your Business

Marketing Marketing Essentials to Attract More Customers Focus on Customers to Increase Your Sales Sales Customer Service Service Delivery

Improve Your Services and Gain Productivity

Purchasing / Manufacturing Distribution Find Ways to Improve Cash Flow and Profits Finance

Business Owners / Management - responsible for Business Performance

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Katrina Markoff 9

Let’s Get Started

Briefly tell us about you:

• • • • Your name Your business (30 second “elevator” speech) Do you already have a SCORE mentor? What you hope to achieve during and after this workshop 9

Theresa Alfaro Daytner

During this workshop we will discuss how to

• • • • • • • • Adjust operations to achieve company goals Identify, manage, and measure critical processes and operations Prepare for growth Train or re-train employees for peak performance Decide when to hire outside professionals Manage your time more effectively Use Key Performance Indicators (KPIs) to help measure your success Use dashboards can to help you monitor your KPIs 10

Operations and Company Goals

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What are Operations?

John Christakos, Maurice Blanks & Charlie Lazor •

Operations is all of the important core activities of your business that you do on a day-to-day basis that generate income and expenses tied to your product or service.

Examples: •

Service company

Providing service(s) to customers • •

Manufacturing

Making products for sale

Distribution

Moving goods from manufacturing to warehouse to customer

Retail sales

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Operations Can Build Company Value

Martina Arfwidson & Gun Nowak • • • • High performing companies have a competitive advantage Consistent excellence in operations performance helps retain customers Improve productivity to increase capacity and reduce cost Customers buy based on service, quality and delivery (Operations performance) and price 13

Competitive Advantage

New Product or Service (“invention”, functional improvement, geographical) Market Acceptance Required Primary Characteristics Business Success Drivers Market Demand Can Result Low Cost / Price Differentiated Service • New products or services may initially be unique and give your new business a chance for initial growth • Over time, new features/functions, low price and/or differentiated service help you to win in the marketplace – primary Operations impacts!

Look for the right balance to achieve your goals

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Operations Affect Profitability

• Operations should be where you increase financial performance by decreasing costs and improving profits • Frequent and consistent measurement of activities is important to identify what is working and what is not • A “lean” approach to reduce waste, cycle time, and complexity will improve your cost position and business competitiveness 15

Company Goals Compared to Operational Activity

Company Goal:

 Increase gross profit margin company wide by 10%  Decrease final product defects by 20%  Decrease call backs for faulty service delivery by 10%

Operational Activity:

    Decrease the time it takes for a job by 25% Modify a manufacturing process so there is 10% less waste of raw materials Implement a quality-control program to yield accuracy and completeness 99.9% of the time Training and measurement of service delivery by technicians for “first time right” Not all company goals will have operational activities tied to them, but many will. Goals should be attainable, measurable and specific.

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Identifying, Managing and Measuring Critical Operations

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Managing Operational Processes

Goal: Effective, repeatable and reliable processes

Design operational processes for your business Determine the most efficient ways to make processes work Document process for training and replication Do it over and over again – continuous improvement 18

Paul Cernuto

Examples of Operational Processes

• • • • • • • Delivering a product or service Order Entry Scheduling Customer service Converting raw materials to finished goods Purchasing raw materials Billing customers

What are some of YOUR Operational Processes? (10 minutes)

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John Blancher

Measuring Operational Activities

If it can be measured, it can be managed

Measure those activities with the greatest impact % of deliveries on time % hours that are billable hours % Product meeting qualtity specs Manufacturing cycle time % travel time between service calls % raw material orders received on time % scrap / defects Overdue receivables 20

Operations as a Differentiator

Jennie Dundas & Alexis Miesen Operations can differentiate you from your competitors • • • • • • Customer service accuracy and responsiveness Delivery cost Manufacturing cost Product / service quality Raw material or equipment purchase pricing Employee productivity 21

Jennie Dundas & Alexis Miesen

Equipment as a Differentiator

Equipment and facilities you use can differentiate you from your competitors • • • • • Appropriate for the activity – may not need to be “high end” Reliable and safe Cost effective in operation (low cost) Properly maintained Integrated with systems to reduce multiple inputs / increase accuracy 22

David Lomakin

Customer-Facing Employees

All operations employees who directly interact in some way with a customer are customer-facing Customer service Drivers Service technicians Sales people Accounts Receivable . . . and others?

All customer-facing employees should be trained and measured for their effectiveness when they interact with customers.

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Quality Can Make or Break Operations

Quality is defined as meeting the agreed-to expectations of the customer • High quality products or services generate value • Poor quality costs your company money and may result in lost sales and customers

What are your examples of quality management successes or poor quality situations that you have had in your company?

(5 Minutes)

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Focus on Quality Management

• • • • • • Understand what your product or service targets need to be in the marketplace Focus on the process to drive the desired output / result Quality aspects need to be realistic, measureable and documented Essential in all functions of a company Design quality into your product or service Lean techniques can provide the foundation for your operating improvement programs 25

Lean Manufacturing / Lean in the Office / Lean Services • • • Lean is a process used to design and perform work more efficiently. It improves productivity, quality and reduces costs. Lean Focuses on reducing Transportation, Inventory, Motion / Travel, Waiting Time, Waste, Excess Production, Defects and Improving Quality while continuing to deliver quality products /services on-time Lean elements include: – – – – – Design / Layout of work or equipment Training of employees (both do the work AND recognize improvement opportunities) Measurement of key business variables

Continuous improvement

Continuous Reinforcement by management 26

Using Lean Techniques for Improvements

David Lomakin 1. Select a process or part of a process that needs improvement 2. Assign a cross functional team to map and analyze the process and identify potential improvements • • Employees who perform the process Quality control • • Supervision Engineering / Technical design (equipment related processes) 3. Test the potential change(s) 4. Document the successful changes (design/train/measure) 5. Verify savings 6. Check periodically to assure the change is still effective 27

Scott Lawson

Supply Chain Management

• Supply chain reliability is critical Vendors Distribution / Delivery Warehousing (products or internal needs) Agents / Distributors • Strategic relationships with vendors / distributors can improve business performance • Do your homework if you outsource activities • Consider cost, schedule requirements, quality and warranty • Consider redundant sources for reliability 28

Prepare for Business Growth You and Your Employees

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Hisao & Zuishu Hanafusa

Your Business Operations Manual

• • • • Document your processes Activities Responsibilities Hand offs to others Define critical benchmarks and KPIs Write it down in the manual so the business can operate without you in a worst case scenario Make it available for all employees - hard copies and/or online on your server or private web pages 30

Paul Cernuto

Planning for Growth

• Small businesses often grow in spurts • As businesses reach a plateau, they must break through before they can go higher • Employees may need new or better skills • Growing involves juggling priorities and finances 31

Financing Growth

Growth may require: Increased inventory Larger space More employees Increased receivables • • • Consider financial impacts of funding growth Many companies in growth mode run short of $$ and fail Make sure you are adequately funded to finance the growth Potential Source of funding – Internal – Bank / Lender – Customer – Vendor terms 32

Theresa Alfaro Daytner

Employee Skills Inventory

• What skills do your employees have?

• What skills do they need for their current jobs?

• What skills do they need to grow with your company?

• What are they interested in learning?

• Exercise 1 – Improve your employee’s skills 33

Skills Development – Exercise 1

Exercise 1 5 Minutes Work on 1 or 2 employees 5 Minutes Share your ideas with others

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Cross Train Your Staff

• • • • • Benefits: No outside assistance may be needed Greater involvement increases employee loyalty Enhance employee skills • • Uninterrupted workflow Employees share knowledge •

Methods:

Job shadowing / Rotation Delegation of responsibilities and decision making Group training sessions

Result: More engaged employees!

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Outside Enrichment Programs

• • • • • • • • • • •

Where to get external mentoring, training and education?

Online Vendors Industry/professional associations Colleges and universities Adult education/continuing education Training companies/consultants Business coaches State Economic Development Department Chamber of Commerce American Express OPEN Forum SCORE.org

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Attaining Peak Performance

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Creating a Culture of Accountability

Set clear goals and performance standards Set measurable and objective targets Allow sufficient time to complete tasks Define responsibility, not just tasks Hold quarterly performance review – annual appraisal Use best practice methods 38

John Blancher

Employee Appraisals

Characteristics of an effective appraisal process

• • • • • • • • No surprises – address issues when they occur Regular appraisals (quarterly works best, but at least annually) Objective performance standards Focus on processes and results Involve managers Include employee feedback 360-degree feedback May influence pay increases/bonuses 39

Attaining Peak Performance

What is your employee Peak Performance Potential?

Use training and enrichment to help each person reach their peak performance

Can manage others Can develop work processes Can follow work processes Can perform tasks

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Effective Delegation and Time Management

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Strategic and Operational Tasks

• How is your time currently allocated?

• Do you spend all your time working on Operational Tasks IN the business?

• Do you spend any time working ON the business doing Strategic Activities?

• Can you delegate and / or organize YOUR time better? 42

Strategic vs. Operational Tasks

Cruise Line Management vs. Ship Captain Analogy

Strategic

Not performed on ship

Advertising Bookings Competition Crew Hiring Customs Destinations Entertainment Booking Menu Planning Port of Calls Safety Ship Registrations Training Large Business

mostly separated

Small Business

overlap / shared

Operational

Performed on ship

Accommodations Baggage Handling Crew Evaluations Dining Room Service Evacuation Meal Preparation Navigation Room Service Passenger Safety Passenger Satisfaction Refueling Weather Changes 43

Strategic (ON the business) Examples

1. Conceptualize: (Vision)

Product & Service, Customers, Costs, etc.

2. Organize: (Structure)

Who will do what and when?

3. Implement: (Process)

Space, Hiring, Professional Support

4. Motivate: (Commitments)

Clear statements of what needs to be done

5. Analyze: (Information)

Market Opportunities

6. Adapt: (Changes For Survival)

Anticipate continual change 44

Operational (IN the business) Examples

Customer Relationships

Products, Services & Support

Time Management

Running Business & Fixing Problems

Price & Cost Controls

Competition & Supplier / Vendors

Employee Relations

Satisfaction & Turnover

Record Keeping

Input to Accounting Processes

Marketing & Advertising

Prospective Customers 45

Delegate to Grow Your Business

Benefits of Delegation :

• • • • • Creates culture of accountability Employees responsible for results and improvements Employees gain skills/confidence Employee satisfaction increases Business builds employee strength to handle key tasks Frees owner’s time to work ON the business 46

Better Balance- Exercise 2

List 5

Strategic

things to want to do more and how you will accomplish the change Prioritize 1(now) – 5 (within 6 months) List 5

Operationa

l things to want to do less. . . Prioritize 1(now) – 5 (within 6 months)

10 minutes – 5 minutes to share

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Better Balance - Exercise 2

Work for 10 minutes 5 minutes to share

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Using Outside Resources

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Who else do you need on your team?

• • • • • • • • • Key outside professionals that may help your business grow Accountant and CPA Attorney Insurance agent Consultant(s) IT services Marketing and PR Coaches / mentors Board of advisors Vendors 50

Irene Smalls

Choosing the Right Vendors

Determine areas of specialization • Business size • • Industry Areas of concern Find professionals • Referrals from colleagues • • • Social media Industry associations Professional associations Check references 51

Systems to Support your Business Growth

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Identifying Business Systems Requirements

• • • • What issues are you trying to resolve or reduce?

What processes need more automation to improve performance?

What systems need to be upgraded or changed to give more capacity or functionality?

What new systems are going to be required to expand the business scope?

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Steve Sulkin

New or Upgraded Systems

• • • • • • Considerations: Selection of systems and vendors Integration with existing systems / processes Access / usability by employees Training for effective use System support process / requirements Systems reliability 54

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Software as a Service (SaaS) - The Cloud

• New global trend - use software hosted by a third-party company and accessed through the Internet SaaS is scalable and can be cost effective for small companies • • • • Cautions: You are tied to the financial strength of the provider. If they go out of business, you no longer have use of their software You need to understand the security of your data (Wikileaks?) Vendor may change terms of service If you are not “online” your data / documents may not be available 55

KPIs and Dashboards

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Key Performance Indicators (KPIs)

• • • • KPIs should be used to show the performance of activities that generate value Chose which KPIs you want to follow carefully KPIs can be very useful, but too many can be distracting Many software packages provide KPIs and built-in dashboards to display the data they contain Quickbooks SalesForce.com

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KPI Cautions

• KPIs are great for measuring key activities and performance • Need to understand the source of the data and what the KPI is really telling you • KPIs are a valuable resource, but they don’t replace the need to understand how to read and use your company’s financial statements 58

Exercise 3 – Non Financial Key Performance Indicators Using the Worksheet in your folder, fill in the existing NON FINANCIAL measurements (KPIs) that you use for your business What value does each brings to you?

Think about areas that you think need improvement, but perhaps you don’t have good methods to measure performance.

List new KPIs, based on the workshop discussion, that would be valuable to you to improve operations. How will you measure it?

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Exercise 3 – Non Financial Key Performance Indicators

10 minutes to work and 10 minutes to discuss

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KPIs and Dashboards

61 A Dashboard is a visual representation of your KPIs – current data and historical trends To Start – Build a manually prepared Dashboard • • • • Test the ideas and determine what you can or may want to automate Get key data from your systems or logs and put the data into a spreadsheet Setup trend graphs or tables so you can track progress and see changes in performance.

Put in the current data and look at the trend analysis as often as required, but at least monthly 61

Sales Dashboard Example

Image Courtesy: Rudasoft Inc.

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Top 10 Dashboard

Image Courtesy: Rudasoft Inc..

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Financial Dashboard

Image customized from Quickbooks Pro Courtesy: Rudasoft Inc..

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References

Lean Manufacturing / Lean in the Office (initial reference) http://en.wikipedia.org/wiki/Lean_manufacturing The Superfactory Project http://www.superfactory.com/index.html

(free and $$ info) Improving Performance book by Rummler and Brache The Executive Guide to Operational Planning book by Morrisey / Below / Acomb 65

Review

• • • • • • Set measurable company goals Tie operational activity and performance to attainment of your company goals and add value to your company Train and challenge employees Use lean techniques to improve productivity Delegate to others so you can work on strategy Use business intelligence metrics and KPIs to measure performance 66

Next Steps

• • • • • Make a list of the operational activities in your company most critical to profits Identify critical activities that will increase value to your company Design one process from beginning to end around one critical activity Experiment with dashboards and KPI’s to make your key company metrics visible. Review the With Your Mentor handout for topics to discuss with your mentor • •

Don’t have a SCORE Mentor? Connect with one today!

SCORE has over 13,000 successful and experienced executives with small business know-how that want to help you Visit manasota.score.org for more information 67

Help Us, Help You

Please fill out the workshop evaluation form Your feedback is important to help us improve our programs!

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