I had my tires aligned earlier this week. Included with my receipt was a page of measurements, detailing how each wheel was adjusted by just fractions of an inch. The result should be thousands more miles of wear on my tires, or a six month delay on the expenditure for new tires.

How is your business alignment? For that matter, do you have any tread left on your tires? Business metrics, like those supplied by my tire guy, provide a view into the functionality of the business. They also give hints as to future needs, expenses, or issues to be resolved. Metrics can confirm suspicions and help you determine what’s been successful, leading to more customers, more revenue and more profit.

We know we can only improve what we measure, but where do we start? From qualitative to quantitative measures, as a business owner you probably have a good idea which metrics would shed light on your business. Whether it’s performance, productivity, or growth; changing ideas, concepts or opinions these units of measurement allow for comparison and provide hints as to the future of the enterprise.

The best advice is to start your measurement efforts by looking in-house. Thanks to basic accounting software, you may already have comparative data for financial metrics (Have you reviewed? What do those mean?) How about sales numbers from one location to the next? Staff productivity numbers? As the business grows the metrics will measure your improvement (or decline).

The next step is to review your business against industry benchmarks. How does your business, and your team stack up against industry leaders?

Like any change, starting a comparative metrics system can lead to push back. Look for other opportunities – or perhaps a new year – to add on a measurement system. You need to know the effects of changes made in your business including changes in processes, entering new markets, hiring new people, installing new operating systems, buying new equipment etc.

Finally, as a leader, a business owner and chief-of-staff of your own operation, how do you measure your own performance? Who holds the measuring stick to you?  (Hint: Take a look at The Compound Effect.) The best leaders are willing to hold the mirror to themselves first.

Join me later this week at the Revenue North Small Business Growth Summit for a complete discussion on business metrics. And send us your stories on practical metrics that have impacted your business!

Blessings,

Dan Meylan

Plans are puzzles, giant jigsaw puzzles. Life plans and business plans are just puzzles.  So how do we combine our life plan and our business plan and make sense of the process.  How do you do a puzzle? I always start by dumping out all the pieces on a table.  Don’t plan on using the table again anytime soon.  Next I study the picture on the box.  What is this puzzle supposed to look like when it’s done?  The larger and more complex the puzzle the longer I study the box.

I usually start the assembly process by arranging the pieces on the table according to those that have straight edges, then by color.  We want to build the boundaries of the puzzle first.  So it is with building great business plans around Christ-centered life plans.  What are the boundaries?  What are the limits?  What are the non-negotiables?  Can we build the frame of our life plan and business plan puzzle?   Sometime by accident we discover how some random pieces fit together in the middle of the puzzle and presto we start to see an image develop but that blob of assembled pieces is still not connected to the frame.

If you are like me, about now your frustration level is starting to escalate. This puzzle business is hard. I am not patient enough; there are too many pieces, too many curves that don’t match. Even the straight edge pieces won’t cooperate. We have some choices: quit, get help, walk away for a time or control your frustration and hang in there.

Assembling a cohesive, relevant, business plan that incorporates a Christ-centered life plan looks and feels much like assembling a jigsaw puzzle. Here are the steps:

1. Build a picture in your mind’s eye, thoughtfully, prayerfully (the picture on the box)
2. Find a quiet undisturbed secure place where you can dump out all the pieces (think, write, think, write, think, write)
3. Organize the pieces
4. Determine edges, the corners and start assembling the boundaries
5. Plan to spend some time. Business plans that incorporate a Christ-centered life plan are complex structures. You are building the foundation of your legacy.
6. Don’t quit. You will want to!
7. Get help. Walk away for a while, and then re-engage. Stay disciplined, stay focused.
8. As the puzzle begins to take shape celebrate the little victories.
9. When the end is in site, stick with it until the last piece falls in place.
10. Show off your accomplishment.

Jigsaw puzzles are a wonderful metaphor but in the real process of assembling a business plan that incorporates a Christ-centered life plan:

• The picture on the box is always fuzzy.
• There are always puzzle pieces missing.
• The table is seldom flat or secure.
• The pieces of the puzzle tend to move on their own and may appear and disappear at will.

However, Christ, the Word of God, prayer and godly wisdom should always be considered when defining the frame, the boundaries of the puzzle.

Blessings,

Dan Meylan

* Part 2 of a 3-part series on the role of life planning in business planning *

Like an architect’s design for a building, a Life Plan captures the hopes, dreams, needs and wants of the owner (you!) on paper. The following Life Planning Exercise is designed to help you (and your spouse, if applicable), identify and reach a consensus on the priorities and direction of your lives. The purpose of the exercise is not to complete it, then file it away, but rather continue its development, use it to inform your business plan and evolve the plan as some goals are reached, and others are sidelined.

I look forward to hearing your feedback on this process.

Blessings,

Dan Meylan

Life Planning Exercise

Phase 1. Planning to Plan.

Step 1. Pray, dedicate the process to God.

• “In his heart a man plans his course but the Lord determines his steps…” Proverbs 16:9
• “Commit to the Lord whatever you do and your plans will succeed…” Proverbs 16:1

In recognition that alignment with God’s will is the single-most important factor in the planning exercise, enter the process in a spirit of discovery, humility and learning.

Step 2. Identify the participants, ask for participation.

While the business may be your enterprise, your dream and your vision, no man is an island. Consider this a “life” planning exercise, and as your life partner, your spouse’s input is paramount. And their thoughtful buy-in should not be taken for granted. Ask for their time and attention. Select an appropriate time (or series of times) to complete this process.

In addition, consider a review by a trusted mentor, pastor or advisor. While this is your plan, wisdom can be borrowed, rather than earned the hard way.

Phase 2: Compiling the Plan.

Step 3. Where are we today?

Together with your spouse, write a short overview of you current life situation. Start with your age and a description of the season of life you feel you are in. Then cover the current situation in each area of the “6 Fs” that are below. Be sure both partners’ opinions and feelings are covered in your descriptions.

• Age and season of life
• Faith
• Family
• Friends
• Finances
• Fitness
• Fulfillment

Next, write out answers to these questions.

• Guiding Principles – What principles and priorities guide my decisions? Write the high level guiding principles that you plan to live your life by.

• Vision – Where do I see myself? Write the vision for your life as you see it now.

• Mission – What is my life going to be about? Write a mission statement for your life.

Step 4. Identify the objectives.

Both the husband and wife separately individually write down as many life objectives as you can identify. Use The Six ‘F’s – Faith, Family, Friends, Finances, Fitness and Fulfillment – to categorize your long and short term goals and the lifestyle you’d like to maintain along the way. These are objectives you want to accomplish with your life in the next 30 years. Be creative. Think about the possibilities. Write about your dreams and ambitions. Write about what the Lord has put deep in your heart.

Step 5. Prioritize.

Next the husband and wife each take their individual lists and put it in order of God’s priority.  This may take some time. Recognize that over time these priorities will change.  What are they right now?

Step 6. Compare.

Now set your two lists side by side. Compare your list with that of your spouse. Identify those desired accomplishments that you have in common. Combine your descriptions that you have in common to one statement that both of you can agree to. Identify those that are unique to each of you. Take the time to explain to on another why those desired accomplishments that are unique to you are important to you. Be sure to honor each other’s objectives and priorities.

If you are single, and seeking a spouse, consider how flexible you are in your priorities. How do you imagine a spouse, children and all the accompanying activities fitting into your list? In the case of the single – not looking for a spouse – how do you account for balance in your life without the influence of a spouse?

Step 7. Finalize Priorities.

Build a list of desired accomplishments in order of priority that includes those that you have in common and those that are unique to each of you. It is essential that you agree to the priority order of all the things that you want to accomplish.

Step 8. Create short-term goals.

Now write out very specific goals for one and five years, that will put you on track for your long-term objectives. For one year goals, write out a separate heading for each of the “6Fs”. You may find that you want to add some short term goals that may not be directly tied to your five year and Lifetime goals.

Remember to use SMART goals.

S    Specific
M    Measurable
A    Attainable
R    Realistic
T    Timed (due date)

Step 9. Seek God.

Both individually, and as a couple, seek God’s input into your plan. Pray, discuss your plan, or elements of the plan, with a trusted mentor, friend, or senior church mentor. Listen for God’s input, guidance and direction.

Phase 3: Review, react, recalculate

Step 10. Review.

Not more often than every six months but not less than every two years get out this list you have created and review it. Ask these questions?

1.    How are we doing on our desired accomplishments? (We give ourselves a grade.)
2.    Has anything been achieved?
3.    Do we need to revise our priority order? Did God change our priorities?
4.    Do we need to add or delete an item on our list?
5.    Take notes and include the date and time when you did the review so when you do the next one you can read those notes.

Anytime there is a major change that occur — or is being considered — such as a new job, a new home, a crisis of health, an extended family crisis or other life-altering event, review your 30 year goals to help guide the decisions you have to make.

Finally, consider the process outline here as a jumping off point. Make it your own. Add steps, subtract steps, add your older children’s input, and broaden the process. Be your greatest advocate by focusing on the goals God has laid out in front of you.

Thanks to the internet, the world is shrinking. As an insurance executive, I also see the pitfalls of this business platform. Allow me to stand on my cyber soapbox, and outline the special types of risks associated with doing business over the internet, and the potential insurance products designed to safeguard your reputation and revenue.

Where to start

It is becoming increasing clear that most companies need some type of cyber liability coverage. But what type should you get? For what liabilities do you need coverage? Insurance policies are available but, beware premiums and policy forms vary dramatically.

Here is a brief overview of the types of coverage a cyber insurance policy may include:

1. Breach Notice Costs. Coverage now exists for direct costs incurred by an insured to provide notice to individuals in the event of a security breach, as well as expenses to set up a call center and provide credit monitoring services. These costs involve a multiplier effect. For example, credit monitoring can cost anywhere from $10 to $200 per year, per person impacted by a breach. If one million individuals are at issue, costs could run in the millions of dollars. These costs also include attorney fees and forensic investigation expenses to determine the cause of a breach and whether notice is required under law.
2. Damages and Defense Costs. This element of the insurance plan is specifically designed to provide coverage for damages and defense costs arising out of lawsuits or claims resulting from a data security breach or an act, error or omission in the rendering of professional technology services (like data storage services). Some cyber policies will also protect your business against the cost of regulatory investigations or actions due to a security or privacy breach.
3. Service Provider Breach. With more companies outsourcing their data processing to third parties or the “cloud,” it is important that a cyber policy provides coverage if the security breach happens to one of the insured’s service providers. That will protect your company against many types of expenses. However, these policies are unlikely to provide any coverage for the hours expended internally to address the breach.
4. Crisis Management, Business Interruption and Data Restoration. This insurance can also help cover the costs for getting the network back up and running and restoring lost data. Public relations services may also be included to help restore the company’s reputation.
5. Denial-of-Service Attack. If your company or a service provider, such as a web host, is shut down by a denial-of-service attack or other type of hack, some insurance policies will cover lost income and the costs of repairing the network.
6. Cyber Extortion. In a case where a hacker decides to hijack your website, network or database, and demands money to restore it, a cyber extortion clause in an insurance policy can help to cover the settlement and the cost of hiring a security firm to track down the hacker.

Third party providers

Since you are using the internet to conduct business, you already have these exposures and should be at least considering coverage for your firm.  Additionally, if you engage with third parties such as web host providers, third party vendors and transaction hosts in such a way that they will have a certain amount of information about your clients I would highly recommend the following:

1. You purchase your own cyber liability insurance.
2. Any agreement with that third party should carry an absolute indemnification and hold harmless from the vendor for any type of cyber liability exposure.
3. Obtain a complete copy of their Cyber Liability insurance policy, not just a certificate of insurance. Be sure to review any specifics about policy limits and self insured retentions or large deductibles.

Today’s modern and technology-driven business environment provides the potential for enormous opportunities – as well as significant risks.  Just as companies have long bought insurance to cover fire or flood loss related to their buildings, organizations now should also consider insuring their most valuable asset: their data and their on-line relationships.

Blessings

Dan Meylan

I am listening in amazement to the rhetoric of the “Occupy Wall Street” protesters. Their ignorance, arrogance and pure lack of respect for the vitality of the free market system are astounding.

Before they complain about Wall Street, they need to understand why it exists and what it does.  It represents a cornerstone of the free market system that drives this land of opportunity. The goodies and freebies they want — like education, health care, environmental reform, social reform and improved infrastructure — are paid for by the taxpayers employed by the corporations traded on Wall Street.

Additionally, the premise that major corporations do not pay taxes is ludicrous. Not only do they pay taxes but their employees pay taxes.  I recently analyzed the tax impact of one of the leading publically-held insurance companies in America.  This company employs 35,000 people. The average annual salary and benefits package of this company is $70,000 per employee. The average tenure of an employee with this company is 11 years.

The total federal, state and local taxes paid by this particular company plus the income taxes paid by their employees is $2.1 billion or $60,000 per employee. This company pays seven percent of their gross revenue in income and premium taxes.  They return a four percent after tax profit to their shareholders.   The top 20 executives of this company combined earn less 2/10th of one percent of the gross income of the company. Granted those executive earn significant incomes but they have significant responsibilities including the families of their 35,000 employees and their 19 million policy holders.

But let’s not let the facts get in the way of a good Radiohead concert.

Preaching to the choir

Thank the Lord that you get it. You had the courage, or are working to develop the nerve, to do what OWS crowd doesn’t have the guts to do: start a business. You make payroll. You balance the demands of paying taxes, trying to make a profit and caring for your employees and their families. You contribute to the health, welfare and infrastructure of your community with every sale.

The irony is that OWS will fail because of you.

It’s going to snow. The media is going to move onto the next big thing. You’ll be left doing what you do, and the OWS crowd will be stuck blaming “Corporate America” for their failure while simultaneously asking for more handouts.

While this all frustrates me, Jesus said, “Father, forgive them, for they do not know what they are doing.” And they divided up his clothes by casting lots. Luke 23:34

So let the OWS protest, and demand the clothes to be divided up. Bless them. And perhaps a little of that Wall Street spark will rub off on one or two of them, who can start an enterprise to employ the rest. Let them go start a business and quickly find out “free” is a figment of their imagination.

Blessings,

Dan Meylan

The eyes of discouragement are everywhere.  Those eyes are not even mad or frustrated any more. They have moved on to despair. Three times this week I encountered a story of discouragement.  Each song had a different cadence but the chorus was virtually identical. We are dying, strangled by governmental noose that is collapsing our initiative, our will and our profit.

Under the guise of a well-intentioned big brother, small businesses I encounter are languishing under the weight of onerous regulations and unaccountable bureaucrats.

Here are three tales of governmental and regulatory genocide.

Tale 1.
Cameron told me, “I am done. Sell my business if you can but I am not sure that my business is even marketable given the regulatory compliance burdens that have been imposed on us by local, state and federal agencies. In the past 12 months the cost of our projects has increased by $1,000 to $4,000, which in most cases was more than our profit. Our customers won’t stand for a 25 percent increase in our fees and will cease even considering us as an option. Due to the economy, we have had to cut our prices by 50 percent just to keep the client.  It is highly likely that the $250,000 payroll (two full time and 15 part time jobs) associated with this business will evaporate in the next 90 days.”

Tale 2.
Estelle has been a great friend and client for more than seven years. She is thoughtful, cheerful, efficient, dedicated, loyal to her employer and a part owner of the company, a financial institution.  She is a very effective leader and a cornerstone of the organization. We had not connected for a number of months. In a recent face-to-face encounter, I was appalled by her weary countenance. She looked drained, worn out and discouraged.  After our meeting I confronted one of her partners and commented on her demeanor.  Estelle’s partner said, “The regulators are strangling us and she is working overtime to fend them off. And she is losing. She takes losing personally especially when she knows the life of our entity and the livelihoods of our staff hang in the balance.”

Tale 3.
We received a bill from our state’s Department of Revenue for delinquent sales taxes.  After selling a small amount of merchandise and paying sales tax four years ago we stopped selling merchandise.  We had not sold any merchandise or filed any sales tax reports in the interim. We called the state and asked them where they had come up with the alleged sales tax due amount and explained our circumstances. We were told to complete our forms showing no sales over the last four years and they would reverse our charges. We submitted the appropriate forms within a week.  Shortly thereafter we received a phone call from a collection agency hired by the state demanding an amount that was now about two-and-one-half times the amount of the original bill.  Subsequent calls to the state to resolve the matter revealed that our original discussions were not completely documented, the file had been misplaced and the forms we submitted did not get entered completely. This matter has required not less than six 60-minute calls to our state Department of Revenue.

These are but three examples of the regulatory and bureaucratic genocide dismantling our economy.  Some regulation of business is necessary and appropriate.  I like the idea that the FAA monitors the qualification and skills of our commercial pilots. I like the regulations that make the roads safer to navigate. So where do we draw the line on necessary “regulations”? When do “regulations” become strangling?

1. When the regulation is of more benefit (i.e. A job) to the regulator than it is to the regulated ( i.e. us) it is time for that regulation to be eliminated.
2. When the cost of the regulation impairs the profitability of the marketplace, it is time to review the regulation.
3. When the regulation is redundant it needs to be removed.
4. Regulations with onerous penalties and brutal enforcement breed an atmosphere of fear, doubt and self-preservation and should be eliminated.
5. Regulations designed to control or dilute natural marketplace influences (e.g.: Fannie and Freddie) distort the market and result in injury and adversity to the very people the regulation was expected to serve. Those regulations should be purged!

Complex regulations placed in the hands of untrained, unskilled and unaccountable bureaucrats (although many are well-intentioned!) become a breeding ground for fear, anger and corruption. Unbridled regulation puts power, influence and authority in the hands of marginal leadership with little or no motivation except to perpetuate and expand that power to justify their existence.

We are living in an era of regulatory genocide: increasing pain and pressure on the businesses striving to buoy a struggling economy. Something needs to change.

The bible’s Old Testament book Leviticus precisely outlines a host of regulation. In the New Testament, Jesus turns all those rules on their head. In the book of Matthew, “Jesus said unto him, Thou shalt love the Lord thy God with all thy heart, and with all thy soul, and with all thy mind. This is the first and great commandment. And the second is like unto it, Thou shalt love thy neighbor as thyself. On these two commandments hang all the law and the prophets.” Matthew 22:37 – 40.

We need our savior to hang all the law and prophets!

Blessings,

Dan Meylan

Do you have a similar story? We’re taking up a collection of stories to illustrate the frustration that abounds. Please send me you tale of regulatory genocide. [dmeylan@weaversonline.org] I will post them on my blog, if for no other reason to demonstrate that you are not alone in your struggle!

A friend recently asked me “How do I fire a client?”

There are three key issues when considering firing a client

1. What does it cost me to fire them?
2. What does it cost me to keep them?
3. How to I fire them? (without further damaging my business)

Typically the primary reason for firing a client is money, either they don’t pay, or they’re not profitable.

Other reasons include lying, cheating, stealing, and lack of integrity. All of that is usually reflected around money.  Another good reason to fire a client or a vendor is incompetence. I have also fired clients for arrogance and sheer stupidity.

Perhaps the most annoying customer for me personally is the Christian who plays the “God” card, despite the terms of the contract.  They either expect a discount, or somehow extended terms due to your common faith.

Here are some thoughts on when and how to fire a client or customer.

When:

1. When they are delinquent in their payments as agreed in the terms of service.
2. When the costs you incur to provide the services and products exceed the revenue you generate from their relationship.
3. When you discover that their business practices, ethics morals and behaviors are jeopardizing your reputation with your vendors, suppliers and other current a future clients.
4. When your employees are not treated appropriately.
5. When their operational philosophies contradict yours.
6. When they fail to acknowledge and recognize the value of your skills, relationships and commitments. (They constantly nickel and dime your invoices or want to play the “God” card.)

How:

1. Stop offering products and services until all monies are paid in full.
2. Specify in a contract or written terms how and when you will terminate the relationship, and follow through.
3. Offer settlement terms if there are unpaid balances.
4. Advise in writing that all future products and services will only be delivered C.O.D.
5. Advise in writing that you are terminating relationship.
6. Raise the price of your products and services to that customer to force them to look elsewhere. If they elect to continue the business relationship, your income and profits will be appropriate for the brain damage the customer is causing.

Learn your lessons:

Firing a client can be traumatic for all involved. Learn from my lessons in this area by implementing procedures that protect you and your employees from “problem” clients:

1. Keep all your business relationships well-documented. Good contracts make good neighbors. Consistently enforce the terms of your contracts. (If they pay late, send an invoice for the late fees.)
2. Commercial bartering gets messy if exact values of items bartered are not specified. Regardless of the ‘deal’ with a vendor or client, make sure the paperwork is in place.
3. Know the financial condition of your suppliers and customers. Typically if they are delinquent on your account they are having financial problems, you have become their bank. Banks don’t extend credit without knowing the financial condition of the borrower.
4. You know which clients cause the most pain. When estimating new projects or services, be sure your pencil is trained to keep the margins reasonable for the effort it takes to get the job done.

Editing your client list is another lesson in stewardship. By making the tough decisions, and ending contentious relationship, you and your employees will be freed to focus on fruitful, profitable transactions.

David said to Solomon his son, “Be strong and courageous, and do the work. Do not be afraid or discouraged, for the LORD God, my God, is with you. He will not fail you or forsake you until all the work for the service of the temple of the LORD is finished.”   1 Chronicles 28:20

Blessings,

Dan