Want More Profits? Make Sure You Have a High Performing Team!
Episode 144 – The Local Small Business Coach Podcast
Here is what we discuss in today's episode:
[Make More Money Series]– Are Your People Hurting Your Personal Hourly Wage?
Did you know that your people are the secret to you earning more per hour? Here in part 5 of our 5 part Making Money Series, we will take a look at the employees’ you employee and the independent contractors you hire off the street and how they impact the money that flows into your pocket.
In the first parts of our series, we discussed how your time is money. That for every hour you spend in your business, you are earning a wage. For example, if you made $50,000 last year in take home and you average 60 hours a week (taking 2 weeks off a year) then you just divide the $50,000 by 3,000 hours and realize you earn $16.67 an hour.
Whether you are selling or providing a service or doing an email, it all pays the same. In order to get your income up to the $100,000 goal and still work 60 hours a week, you must increase what you earn for every dollar you spend working on your business. In this case, you must jump to $33 an hour.
Have you done the exercise yet to see what you currently earn vs what your goal is? If not, it is quick and easy. Knock it out real quick, I’ll wait. 🙂
WHAT DO YOUR PEOPLE HAVE TO DO WITH WHAT YOU EARN?
So, you are probably wondering what your people have to do with how much you earn an hour. Well, the most obvious answer is, for every dime you pay them, that is less money in your pocket. But the reality is, without them, odds are you wouldn’t have the sales you do today either. The key is finding the right mix and the right processes around your people.
Your people are the main point of contact for your customers and the services and/or products you sell. They can make or break you. They can kill your sales and profits in an instant. Or, they can make you tons of sales and profits. Both options are yours to take. Which one are you going to embrace? Better yet, which one have you been embracing?
Let’s take a look at expenses first. As we discussed in our profit episode, your payroll is probably your number one expense. It can run in some cases as high as 25% – 30%. That is a huge number. Ideally, you should be less than that depending on your business, but the key is first, maximizing and evaluating the crew you have now.
Studies show that most employees only work at 70 – 80% of their potential. Which means you are getting only 70 cents of work out of every $1 you spend. Crazy. Can you imagine how that is impacting your sales and profits and ultimately your hourly income?
Here is where you want to develop a plan to leverage your team and start increasing that hourly income and profits.
RIGHT PEOPLE ON THE BUS AND IN THE RIGHT SEATS
Your first task is to identify if you have the right people on your team. It is best to list them each out and identify what it would take to get them to 90% capacity vs their current level.
You will then want to identify what training/development they will need to get to that next level. If their performance is horrible and they are a cancer to your team, make sure you begin the accountability needed to terminate their employment.
Plan on meeting with each person and go over their developmental plan and set clear expectations on what you will holding them accountable to.
Pay your people what they are worth. I don’t care if that is $15 or $50, you just need to ensure you are getting your money’s worth.
Also, make sure each person is in the job role they should be. Some folks are better in some roles over others. Some folks are more task orientated and some more customer service gurus. Depending on your business, you might have the ability to work with folks. However, don’t create new roles just to make a person “fit”.
In our processes part of the series, we discussed how critical it is that you go through all your processes and identify the broken processes causing you to lose profits and sales. There are quite a few processes that are tied to your employees. Just to name a few you have your hiring processes, orientation, initial training, ongoing training, accountability, scheduling, development, and on and on.
Using the same method in that part of the series, identify the A, B and C processes. Attacking the ones that are most broken first. For example, if you are hiring the wrong people, it doesn’t matter how well your training processes are if they should be there in the first place. If you hire great people and fail to train them, the same damage is one.
So start with what is more broken and go from there. Continue to fine tune your people processes and you will see big leaps in both sales and profits.
MORALE & TEAMWORK
What does your morale look like? What would your employee’s say your morale is? How well do they work together?
These two items can be costing you time and money! When people don’t care they will give poor service, do the job half-assed and create tons of waste. They move slow and have no sense of urgency. This will kill you.
The hardest thing for a leader to do is, to look in the mirror and admit they have a problem with their employees. It means holding yourself accountable for them not caring, not working as a team. The problem isn’t them, it is you.
You might not be doing it on purpose, you might be so overworked that you just took your eye off the prize and found it easier to just deal with it. Maybe you use the excuse you can’t find better people. But the reality is, they aren’t bought into you and your mission.
If you treat your people as numbers and don’t care about them, they will sense it. If you don’t ask them their opinion and listen to their ideas, they will check out and give you that 70% we discussed earlier.
Hold your team accountable, teach them expectations and continually train them, seek their feedback and get them excited about sales and profits. Heck, even set up bonuses on how they can earn a little extra for how they contribute to the bottom line. Think outside of the box. Fire these folks up!
The next key to increasing your profits and sales is to ensure that your people are giving excellent customer service. That they are “wowing” your customers/clients!
If we already know that the #1 marketing tools is word of mouth and referrals to family, friends, and neighbors, then this wow factor is what spirals your business upward to new heights!
Another great thing about awesome customer service is how your team can provide upsells, related items and ensure your customers/clients get all they need. This leads to happy customers and increased sales and profits.
By teaching your people how to give great service, you set a great tone.
Don’t forget to also teach them how to handle upset customers. This is make or break time. Upset people tell even more people about what went wrong. This is a great time to minimize the damage and hopefully, have a happy ending to the bad story.
USE YOUR PEOPLE TO INCREASE YOUR HOURLY WAGE / EARNINGS
As you can see, the people you have represent you and your business play a huge role in what you put in your pocket. You want the best people on your team and you as their leader, want to make sure you give them the tools and resources that help them be successful. It is a team effort on both sides.
Think about it, if you are spending 30% on payroll and you realize that you can go from 10 average to poor employees down to 8 great employees, you will see an increase in sales and profits while at the same time see your payroll line remain the same or decrease thus adding even more profits!
Think about what your numbers would look like if you could gain 10 – 20% more in sales and profits? Depending on your business and current sales, you might even see higher numbers.
TIME TO WRAP UP
As we wrap up this series, I hope you can see that by improving your sales, profits, processes, and people, you can start the ball in motion to grow your income per hour and ultimately your year-end take home.
It will not be easy, but it will be worth it!
Here are the links to the other parts of the series below. But wait, we aren’t done, I have put together a Business Health Check pdf to help you stop and analyze each area of your business and identify core opportunities in all the areas and form a gameplan by quarter on the items that will make the biggest impact not only today but going forward as well. Check it out.
Meanwhile, if you have any questions, feel free to email me at firstname.lastname@example.org. I love hearing from you!
Here are those other posts and good luck and kick some ass!
Here are the links to the five parts of the series. You don't have to do them in a specific order, but I do highly recommend that you do all five.
Time to start making more money!
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Don’t forget, if you are looking to take your local small business to $100,000 in profit, head on over to LocalSmallBusinessCoach.com/8steps to download the free ebook & workbook called: 8 Steps Local Small Business Owners Need to Take to Make $100,000 in Profit. Where I’ll walk you through how to double or triple your current profit level.
Also, don’t forget to shoot me an email on any topic or question you would love for me to cover in an upcoming episode of the show. Just send your ideas to email@example.com.
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My Recommended Bookkeeping Program for Local Small Business Owners: Freshbooks Link
Why? Helps you invoice quicker and more importantly, get paid quicker. Let’s you know when your clients have opened the email and they even help send reminders. Clients / customers can pay right from their phone or computer. Give it a Try: Freshbooks
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Two Great Books to Help You With Your Small Business:
Highly Recommend all Local Small Business Owners Read the eMyth by Micheal Gerber. You will learn some critical things about running your business.
The second book is one I wrote based off a popular example I always use when folks are trying to understand their role as a leader with their people. Check it out.
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