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Meet Doug & Polly

Doug and Polly White love working with small businesses. Through their columns, which appear weekly in several online publications including Entrepreneur.com, their books, videos and speeches, Doug and Polly focus on helping small business owners and their managers grow and improve profitability, understand and manage their people and their finances and achieve organizational efficiencies.

Doug White
Doug White spends his time solving business problems for entrepreneurs and their organizations. His background in physics, math, engineering and business gives him an ability to go beyond the easy, surface solution; to dig deeper and find unique answers to the problems that plague small businesses. Read more...
Polly White
Polly White spends most of her time on the "folks." Whether it is helping owners and managers learn how to get the best out of their people or walking companies through a complex HR situation, Polly's expertise is unparalleled. She has that unique ability to understand people, their behaviors and personalities. Read more...
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How to Hold Your Employees Accountable

Q.  I have a small business and know that I should hold my employees accountable for delivering results, but, truthfully, I’m not sure I know what that means or how to do it. Can you help?

A.  Delegating decision making authority without properly holding people accountable is a recipe for disaster. Decision makers must be held accountable for the results they produce. However, there is much more to holding people accountable than telling someone they are responsible for results and chastising them when you aren’t happy with how things go. Effectively holding employees accountable requires four steps:

1.   Set Clear and Measurable Goals – If you are going to hold employees accountable for delivering results, you must be explicit about exactly what results you expect. To be most effective, the goals should be:

•     Written – If you don’t write the goals down, the chance for a misunderstanding regarding exactly what the goal is increases exponentially.

•     Harmonious – Ensure that the goals you set for an employee are aligned with each other. They should also be aligned with the company’s overall goals and with the goals of other employees.

•     Specific and Measurable – Broad, generalizations such as, “Improve performance,” are not helpful. “Achieve sales of $1.3 million” is a much better goal. It is specific, measurable and not open to interpretation. There can be no disagreement regarding whether the employee achieved the goal.

•     Achievable with effort – Goals that are too easy to attain aren’t useful. They will not drive performance. Goals that are unattainable will frustrate rather than motivate employees. Employees should see the goals as a real stretch, but achievable.

•     Time and Resource constrained – Be clear regarding when the goal must be achieved and the resources that the employee can use. Growing annual sales by 10 percent may be a wonderful goal, but if the employee achieves this by hiring six new salespeople or spending a million dollars on advertising, the cost may exceed the benefit.

2.   Delegate Authority – You must delegate to the accountable employee the key decisions that will affect results. For example, we often see well-meaning business owners attempt to hold an employee accountable for delivering results, but they do not give the employee the authority to choose his/her team. This is a mistake. Nothing impacts results more than the choice of who will do the work. If you are going to effectively hold people accountable for results, you must empower them to make the decisions that impact the results.

3.   Measure and Review Results – You must measure, track and review results with employees. Too often, we’ve seen goals developed, written down and put into a drawer. Either they are never discussed again or they are discussed only a year later at the annual review. Periodically reviewing the employee’s progress versus the goal is much more effective.

4.   Address Deficiencies – During the reviews, if the employee is not on track to succeed, require him/her to develop a plan to address the deficiency. Berating the employee is not helpful. Instead, ask her/him what he/she will do to correct the problem. If the response isn’t sufficient, coach the employee by asking leading questions. Help your charge develop a set of action steps that will allow her/him achieve the goal. Remember, as the manager, you are accountable for ensuring that your employees succeed. At the end of the day, if your employees fail to achieve their goals, you have failed as well.

Holding employees accountable is a critical skill for good managers. The four steps above will help ensure that you are successful.

Read more...

How to Manage Disrespectful Employees

Q.  I have an employee that I need to fire. He has done things like cuss me out at the top of his lungs in front of the entire company. Unfortunately, he is the only one in the company who knows how to do his job, so I don’t feel like I can let him go. Do you have any suggestions?

A.  Losing an employee with a valuable skill set is a setback. However, letting an employee get away with being publically disrespectful will undermine your ability to manage your business and almost certainly be worse in the long run. Or advice is to terminate the disrespectful employee. It may not be easy, but everyone is replaceable. Below are five tips that may help.

1.      Use short-term coverage tactics – What have you done when the problem employee is on vacation or out sick? Use these tactics to cover for your employee when he is gone. This may not be a long-term solution, but it will buy you some time.

2.      Throw resources at the problem – Can you or someone in your organization figure out how to do the job? It may take twice as long initially, but you will master the task. Working nights and weekends or paying overtime for a few weeks may not be desirable, but it can help you bridge the gap.

3.      Enlist former employees – If someone else in your organization has done this job, the answer to your problem is self-evident. If not, but there is a former employee who has done this job, enlist his/her services. Do what it takes to get this person to train you or another employee. Again, it may mean working nights and weekends. It may mean paying twice the normal rate for a while, but this may be worth it to solve your dilemma.

4.      Find someone with the same skill set – Chances are the problem employee is not the only person in the world who has this skill set. Do other companies use the same equipment or software? Hire a new employee who has the necessary skill set. At a minimum, hire a consultant with the skill set to teach you or another employee how to do the job. Again, even if you have to work off hours and pay high prices, it may be money well spent.

5.      Approach vendors for help – If the problem is operating a specific piece of equipment or software, approach the company that sold it to you. The vendor may be able to provide training. You might be able to hire one of the vendor’s employees to help train the replacement. At a minimum, the vendor may be able to point you in the direction of someone who could do the job.

Once you have solved this short term problem, don’t repeat the mistake. Make sure that you cross train someone in your organization on every job. This may require you to document the tasks your organization does and keep records on who is qualified to do which job.

Document your processes. In addition to having people who are cross trained, write down the specific steps required to do every job in your organization. Documenting processes isn’t sexy and no one is going to pay you a nickel more because you have done it, but there are several major advantages to doing this work. First, it will protect you from being held hostage by a problem employee again. As your company grows, it is how you will communicate the way you want things done to your employees. Documenting processes ensures that things are done consistently across your organization. Finally, it provides a basis for continuous improvement. Propagating improved techniques across an organization is much easier if everyone is doing a job in the same way.

We’ve seen many small businesses held hostage by a problem employee. Our advice is to bite the bullet and do what you know is the right thing to do. The tips above will help. Once you have weathered this storm, make sure that you are never in this position again by cross training employees and documenting processes.

Read more...

How to Develop a Strategy for Your Small Business

Q.  I think I need to develop a strategy for my small business. Do you have any suggestions?

A.  There have been books written on this topic. We’ve read many of them and could give you lots of high level theory on the topic. However, what we think will be more useful is a pragmatic approach to developing a strategy for your business.

If you are going to develop a strategy for your business, begin with a clear definition of the word “strategy.” For us, a strategy is simply your plan to achieve your business objectives. If you accept this definition, developing a strategy must begin with goal setting. Once goals are established, you’ll need to develop a plan to achieve the goals.

Develop clear goals – If you have effectively written goals, everyone can pull in the same direction. However, to set a clear direction, you must write your goals correctly. Poorly written goals won’t provide the needed clarity. If you want to develop well-written goals, use the acronym “WHY SMART.”

Written – First, you must write down your goals. If goals aren’t written down, day-to-day events will overtake them every time. The urgent will trump the important. To be useful, you should write down your goals and review them regularly.

Harmonious – You will inevitably have more than one goal. That’s great, but they must be harmonious. The goals shouldn’t conflict with each other. They should work in concert.

Yours – You will have to own the goals, but if you have employees, they will need to embrace them as well. We recommend involving your employees in the goal setting process. The probability of success increases exponentially when those who will have to execute against the goals are completely committed to them.

Specific – Vague goals won’t work. A goal to “be more successful” could mean many things. Does “being more successful” mean growing sales, increasing profit, improving quality, or something else? If goals aren’t specific, they won’t provide a clear direction for the company.

Measurable – Whenever possible, goals should be measurable. You need to know when you have achieved them. “Reducing rework by 25%” is a measurable goal. “Improve quality” is not.

Action Oriented – Write your goals so that there are specific actions that can be taken to achieve them. Goals that aren’t action oriented are just hopes.

Realistically High – Goals that are very easily attained aren’t useful. Achieving goals should require a stretch. At the same time, goals that are set so high that there is no realistic expectation that you can achieve them aren’t helpful either. The trick is to set goals so that with extra effort, they can be achieved.

Time and Resource Bound – Goals must be accomplished by a specific time.  In addition, you should specify which resources the employees might use. Open-ended goals with no time constraint aren’t useful. To ensure that you achieve your goals in a profitable way they must be time and resource bound.

Asking if each goal meets the requirements of the “WHY SMART” acronym enforces a valuable discipline. When the goals rise to this standard, they will set a clear direction for the organization.

Develop a plan to achieve the goals – Ask yourself what is keeping you from attaining each goal. If nothing is keeping you from attaining the goal, why haven’t you already achieved it? There will be obstacles between you and the achievement of every goal.

Once you have identified the obstacles, determine the action steps you will have to take to overcome each. Check to make sure that if all of the action steps are accomplished, you will have achieved your goal.

Finally, assign a single person to be responsible for each action step and a completion date. Resist the temptation to assign multiple people to an action step. The accountable person may need to call on others to achieve the goal, but having a single person responsible for each action step is critical.

The steps outlined above are a pragmatic. They will help you identify your goals and develop a plan to achieve them. This is the core of a strategy.

Read more...

How to use a decision tree to make tough choices

Q.  I own a successful restaurant, which I plan to sell in the next couple of years. I face a difficult decision between three options. I can only pursue one.

·         Option 1 – I could open a second location. This would cost me about $100,000. If this location fails, I would lose my investment. If it succeeds, I estimate that I would make an additional $30,000 before I sell the business and it would increase the price I would get by $200,000. New ventures are always risky. I estimate the probability of success at 50%.

·         Option 2 – Open a catering business. This would cost me about $20,000. Again, if the catering business fails, I would lose my investment. If it succeeds, I estimate that I would make an additional $10,000 before I sell the business and it would increase the price I would get by $50,000. I am more certain this would succeed, so I would put the chance of success at 80%.

·         Option 3 – Focus on my existing restaurant to improve its profitability and do not pursue any other ventures. By doing this, I might make an additional $5,000 before I sell and increase the price I get by $20,000.

Can you help me think about which option is best?

A.    The approach we recommend is a classic decision tree. We’ll walk through each option and calculate the expected value of each.

·         Option 1

o   Failure means losing $100,000. There is a 50% chance this will happen. Therefore, the expected value of this outcome is -$50,000 (-$100,000 X 50%).

o   Success means making $230,000 ($30,000 in additional profit prior to sale plus a sales price that is $200,000 higher). There is a 50% chance this will happen. Therefore, the expected value of this outcome is $115,000 ($230,000 X 50%).

o   The expected value of choosing Option 1 is $65,000 ($115,000 – $50,000).

·         Option 2

o   Failure means losing $20,000. There is a 20% chance this will happen. Therefore, the expected value of this outcome is -$4,000 (-$20,000 X 20%).

o   Success means making $60,000 ($10,000 in additional profit prior to sale plus a sales price that is $50,000 higher). There is an 80% chance this will happen. Therefore, the expected value of this outcome is $48,000 ($60,000 X 80%).

o   The expected value of choosing Option 2 is $42,000 ($48,000 – $4,000).

·         Option 3 – You don’t assign any probability of failure to this option. Therefore, we will assume that following Option 3 will allow you to capture an additional $25,000 with certainty ($5,000 in increased profit before you sell and a sales price that is $20,000 higher).

We will assume that you have $100,000 to invest and that if you don’t invest it in your business, you will put it in short-term CDs. Rates on short-term CDs are so low at this point that these earnings are unlikely to influence your outcome, therefore we will ignore this for the purposes of this decision.

At this point, the issue becomes your risk tolerance. If you are not risk averse, you will choose the option with the highest expected value—Option 1 which has an expected value of $65,000. However, you may be quite reasonably risk adverse. For example, suppose you saved the $100,000 for your 16-year old daughter’s college education. Although Option 1 has the largest expected value, there is also a 50% chance you will lose your investment. If this would mean that you couldn’t afford to send your child to college, you might well decide to leave the money in CDs and pursue Option 3—focus on improving the operation of your restaurant. Alternatively, if you could afford to lose $20,000, but losing $100,000 would cause you severe hardship, Option 2 might look good to you.

Therefore, your risk tolerance will determine which option is best for you. There is no one-size-fits-all best answer. However, using a decision tree to lay out your choices clearly allows you to weigh your options more clearly.

Read more...

How to forecast revenue for your company

Q.  I’m struggling to forecast 2015 revenue for my company. I think I can forecast sales for my ten existing clients relatively accurately. However, I have identified about two dozen prospects. I am much less certain how to forecast revenue for them. Do you have any tips for how to think about this issue?

A.  First, congratulations, it sounds as though you have a robust sales pipeline. We have a very helpful technique we have used many times with clients to help them forecast revenue.

You can use this technique on paper or on a whiteboard, but we find it is helpful to use excel because you can set it up to do the calculations for you. In the left most column, list the names of all of your prospects. At the bottom of this column, add one more item called “Unknown.” We’ll use this to add in revenue from clients you will pick up throughout the year that you have not yet identified.

In the next column to the right, enter the amount of revenue you expect to receive during 2015 if you close the client. Remember, if you think it will take six months to close the client, you will only bill for the second half of the year. Make sure to factor this timing into your estimate of revenue.

In the third column, enter the probability that you will close the deal (obviously, this assessment will be between 0% and 100%). If one client has more than one possible piece of work with different probabilities of closing each deal, create multiple line items. For example, consider two possible projects at the Acme Machine Company. Project A would bring in $150,000 and has a 75% probability of closing. Project B would bring in $500,000, but has only a 20% chance of closing. Create one line for Acme – Project A and a second line for Acme – Project B.

In the fourth column, for each row, multiply the contents of the second column (the expected revenue if the deal closes) by the contents of the third column (the probability that the deal closes). So for example, the fourth column for Acme – Project A would be $112,500 ($150,000 X 75%) and for Acme – Project B it would read $100,000 ($500,000 X 20%).

In the fourth column in the row titled “Unknown” put your estimate of revenue that will come from clients you have yet to identify. Admittedly, this can be somewhat of a crap shoot, but if you have been in business for a few years, history should be a good guide for making this estimate.

The sum of the entries in the fourth column will be the forecast of revenue from the list of prospects. What you have done is to discount the potential revenue from each prospect using your assessment of the probability that the revenue will come to fruition.

A simple example, where you will intuitively know the answer, will help illustrate the concept. Suppose you had ten prospects, each of which you expected to generate $200,000 of revenue if you could the deal. Further, you assess the probability that each closes to be 20%. This would mean that two of the ten would close. Two new clients at $200,000 each would be $400,000 of incremental revenue.

You’ll reach the same conclusion following the process we outlined. That, is multiply each of the ten estimates of $200,000 of revenue by the 20% chance each will close and add up the ten results (i.e., $200,000 X 20% = $40,000 and $40,000 ten times equals $400,000).

These are still estimates and reality usually varies from estimates—sometimes significantly. This notwithstanding, the process outlined above is the best we have found for estimating revenue from a number of potential sources where there is uncertainty around whether the deal will close.

Read more...
Q.  I’m struggling to forecast 2015 revenue for my company. I think I can forecast sales for my ten existing clients relatively accurately. However, I have identified about two dozen prospects. I am much less certain how to forecast revenue for them. Do you have any tips for how to think about this issue?

A.  First, congratulations, it sounds as though you have a robust sales pipeline. We have a very helpful technique we have used many times with clients to help them forecast revenue.

You can use this technique on paper or on a whiteboard, but we find it is helpful to use excel because you can set it up to do the calculations for you. In the left most column, list the names of all of your prospects. At the bottom of this column, add one more item called “Unknown.” We’ll use this to add in revenue from clients you will pick up throughout the year that you have not yet identified.

In the next column to the right, enter the amount of revenue you expect to receive during 2015 if you close the client. Remember, if you think it will take six months to close the client, you will only bill for the second half of the year. Make sure to factor this timing into your estimate of revenue.

In the third column, enter the probability that you will close the deal (obviously, this assessment will be between 0% and 100%). If one client has more than one possible piece of work with different probabilities of closing each deal, create multiple line items. For example, consider two possible projects at the Acme Machine Company. Project A would bring in $150,000 and has a 75% probability of closing. Project B would bring in $500,000, but has only a 20% chance of closing. Create one line for Acme – Project A and a second line for Acme – Project B.

In the fourth column, for each row, multiply the contents of the second column (the expected revenue if the deal closes) by the contents of the third column (the probability that the deal closes). So for example, the fourth column for Acme – Project A would be $112,500 ($150,000 X 75%) and for Acme – Project B it would read $100,000 ($500,000 X 20%).

In the fourth column in the row titled “Unknown” put your estimate of revenue that will come from clients you have yet to identify. Admittedly, this can be somewhat of a crap shoot, but if you have been in business for a few years, history should be a good guide for making this estimate.

The sum of the entries in the fourth column will be the forecast of revenue from the list of prospects. What you have done is to discount the potential revenue from each prospect using your assessment of the probability that the revenue will come to fruition.

A simple example, where you will intuitively know the answer, will help illustrate the concept. Suppose you had ten prospects, each of which you expected to generate $200,000 of revenue if you could the deal. Further, you assess the probability that each closes to be 20%. This would mean that two of the ten would close. Two new clients at $200,000 each would be $400,000 of incremental revenue.

You’ll reach the same conclusion following the process we outlined. That, is multiply each of the ten estimates of $200,000 of revenue by the 20% chance each will close and add up the ten results (i.e., $200,000 X 20% = $40,000 and $40,000 ten times equals $400,000).

These are still estimates and reality usually varies from estimates—sometimes significantly. This notwithstanding, the process outlined above is the best we have found for estimating revenue from a number of potential sources where there is uncertainty around whether the deal will close.

“I HIGHLY recommend Polly and Doug. They have wonderful insight to help small business owners prioritize and identify strategies for growth and improvement. Wish I had met them 20 years ago!”

Sharon MaderePresident / Premier Pet Products

My team and I have had the privilege of working with Polly on our business. Polly's keen business insight and savvy is something special. She was honest, direct, and tactful about her observations and recommendations for our team and how to grow our business. It was a pleasure having her help us and I would tell anyone that’s serious about growing their business to call Polly. She’s great!

John O’Reilly, Broker/OwnerBase Camp Realty

“Doug and Polly, I want to thank both of you! The past few months have been enlightening and overwhelming all at the same time. Your guidance, direction, wealth of knowledge, and wisdom have exceeded all my expectations. No words could ever completely describe just how amazing of a “dynamic duo” you two really are!”

Dawn Beninghove, RN, CCM, CRP, PNChief Executive Officer / Companion Extraordinaire Nursing Network, Inc.

“Doug White took on an unfocused operation (in the financial services sector) and created an efficient, centralized system dedicated to excellence. He did this not by driving change from the top down, but by helping the entire team see how their part of the process could be improved. Doug then mentored us toward effecting the changes ourselves. He taught us all how to bring our “A game,” and how to take ownership and pride in what we do.”

Donna LevinVice President of Operations / care.com

"I have had the privilege of working with Polly White for several years on a variety of projects. She consistently provides clear direction on how to resolve a wide range of employment-related issues. I look forward to my continued relationship with Polly."

Elizabeth WilkinsBusiness Manager / Manorhouse Management, Inc.

I have known Polly for more than ten years. As an HR Manager, I have utilized Polly’s training expertise at my former company and with my current company. Polly exceled at assessing the needs of our management teams and tailoring training programs that resulted in visible positive change. I also know I can count on Polly as a resource on any HR topic or bounce ideas off of her when I need a second opinion. Polly has been a mentor to me and I have always appreciated her willingness to listen and offer valuable advice and expertise.

Leigh McCullar, HR Business PartnerUniversity of Richmond

I am truly impressed with the abilities of Doug and Polly White, thank you! What a difference your expertise have made in helping Associates grow in their careers. Your dedication to excellence through empowering the individual and strengthening the Company is enlightening. I do and will continue to recommend Whitestone Partners to the Executive Market.

Suzanne Pittman, MEd VAMAC, Inc.
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