Employee vs Owner Mentality

Over the last several years I’ve met many business owners – single operators and partners within a group.  What I’ve noticed is that some owners lack the right mentality to own (and manage) a business.  I call it the “owner mentality”.  Instead,  they still hold onto an “employee mentality” – a mentality developed over many years while working for others OR relying too heavily on other business partners to make things happen.  When you have an employee mentality, you expect things to change or get better, but you expect it will happen somehow naturally- or you depend on someone else to make it happen.  That’s not the mentality of an entrepreneur or someone who’s successful.

If you’re in business for yourself, you need an owner mentality.  With this mentality, you know it’s up to you (and only you at times) to make it happen.  Don’t look for others to carry you or bail you out.  I can personally speak to this topic because I’ve had to wear many hats in my company.  It’s my name on the door.  I have no formal training in sales & marketing.  I’m not the most outgoing person, so networking doesn’t come naturally to me.  But I know that if I’m going to make my company successful (especially in one of the worst economies of all time), I need to step out of my comfort zone and do the work.

What’s your mentality?  Are you waiting for the phone to ring? Or…Are you making the phone ring!

Recruiting – A Full Time Job

Hiring good people is one of the most important tasks you will face as a business owner. Surrounding yourself with smart, talented and creative people will make you successful, just as making bad hires will cost you thousands of dollars. You’ve got to put Recruiting Good People at the top of your to-do list, and never mark it off. I say that because good workers are hard to find. Can I get an “Amen”?

Most owners and managers only think about hiring when they need to fill an immediate need:

1. Someone quit
2. Someone was fired
3. Someone is out for an extended period (illness, pregnancy)
4. Increase in workload

In a perfect world, employees would give us a month’s notice before they quit or got sick. In a perfect world, we’d never have to fire anyone. But we all know it doesn’t work that way. Employers are rushed to place an ad in the local paper and forced into making a quick hiring decision. They can’t put the necessary thought and time into finding the right person. I’m not saying that it won’t ever work out in your favor, but I don’t like the odds.

I would rather see you make the time and put in the effort to constantly recruit for good people. I don’t mean that you run a continuous ad in the paper. I mean that recruiting, through networking, should be in your thoughts and actions constantly. The most desirable workers are typically not looking at help wanted ads. You have to find them – and it’s not as hard as you think it is. You will run into them at church, at school functions, at baseball games, at seminars – everywhere you go in your daily life. Strike up conversations and tell people what you do for a living when you get the chance. Build relationships and contacts through networking. That time and effort will pay dividends the next time someone quits on you or you’re ready to upgrade to a more productive worker.

Negotiate Everything

A word of advice to all business owners.  Review your vendor contracts – at a minimum – once a year.  Shop the competition and negotiate everything!  Examples of things you should be reviewing on an annual basis include – medical insurance and other employee benefit plans, workers comp insurance, liability insurance, auto and property insurance and lease/rental agreements on office equipment such as printers and copiers.

Your vendors and suppliers would love nothing more than for your contract to automatically renew without any questions or  resistance.  They receive their renewal commission from their employer and they’re on their way!  I know that if you do this – shop for better rates, terms, etc. – you WILL save money.  There is room to negotiate in every deal.

Think about it – with all the careless companies out there who DON’T shop the rates, these vendors are getting price increases and making high margins because they can.  For this very reason, they have some “wiggle room” to make deals with the customers who do shop them or negotiate for better terms.

Even if you don’t negotiate a great deal, at the very least you’ve accomplished two goals:

1. Many things can change in the course of a year, personally and professionally, so you want to make sure your policies are giving you adequate coverage.  Sitting down with your agent to review your policies will give you piece of mind.
2. You’ve sent a strong message to your vendors and suppliers (as well as your employees) that you’re keeping a close eye on them and you won’t settle for less than the best.

Steiner Business Solutions can help you negotiate with your vendors.  With our network of industry contacts, we can review your contracts and agreements to determine if you’re getting the best deal possible.

Pay for Performance

Use effective pay plans to get the most out of your employees.  Face it – most employees are driven and motivated by money.  Intangible benefits are important, but when it comes down to it – employees respond to cash in their pockets.  A pay plan that is structured around performance measurements benefits both the employee AND the employer.   If your only method of compensation is the traditional annual salary, then you can pretty much plan on getting the same results (good and bad) from your employees.  You’ll also end up hiring the same type of employee throughout your organization and possibly developing a corporate culture of complacency.

I’m not saying you should completely eliminate the traditional salary, but rather supplement that plan with a performance based plan that offers incentives/commissions based on performance metrics such as customer service, gross profit, departmental profit, company profit, etc.  For example, if you’re trying to increase your sales, you might consider paying your sales team a commission based on achieving a predetermined sales goal or gross profit percentage.  If you’re trying to reign in expenses and get your employees to focus more on overhead expenditures, you could offer a commission to employees for reaching a departmental profit goal.  Try to include as many employees in your bonus program as possible.  It will create excitement, purpose, and unity throughout your company.  A few good examples might include bonuses paid for customer service excellence, zero defects, or zero safety violations for a set period of time.  These objectives include everyone in your company from top to bottom.

Important tips before you get started :

• Define your objectives clearly – If you don’t know what you’re trying to achieve, your employees won’t either.
• Monitor the results on a consistent basis – Don’t wait until the last minute to review your progress.  You won’t have enough time to make corrections or adjustments to change the final results.
• Communicate with your employees – Clearly state your objectives to your employees.  Be available to answer questions and provide guidance.  But most of all – be a cheerleader!