Bruce Eckfeldt 11/2/21 Bruce Eckfeldt 11/2/21

Thinking About Getting Into The Cannabis Business? Make Sure You Follow This Advice From The Experts First

As legal cannabis continues to spread, entrepreneurs are stepping up and taking notice. The winners will heed these four key pieces of advice.

While cannabis's future has dimmed ever so slightly over the last year as the regulatory environment has become slightly less certain and economic legislation has feathered the breaks, cannabis still remains one of the most attractive industries for entrepreneurs looking to start businesses in promising markets.

However, for anyone looking to get into this growing industry, there are several questions to ask and considerations to weigh before jumping in with both feet. Like any dynamic market, there are opportunities for big wins, but also big losses. Knowledge, foresight, and careful planning can increase your odds.

As a business coach who helps companies scale, I've worked with several cannabis-based businesses with interesting and exciting business models. And along the way, I've met several entrepreneurs, consultants, investors, and advisors who are bullish on the sector, but also advise caution.

1. Pay for good advice, and follow it.

The laws around production, distribution, and sale of cannabis-based products vary greatly from state-to-state and they are constantly changing and being interpreted differently. Invest in a good lawyer, or two, who knows the laws and has experience working with them in the state and county you're planning on doing business in.

David Feldman, Partner at the law firm Duane Morris, stresses that it's critical for any entrepreneur entering the cannabis space to have lawyers with real experience in the area. He explains that the legal complexity of the cannabis business is significant and there are a morass of state regulations that differ dramatically from state to state, and the federal government's attitude toward enforcement continues to shift.

2. Get a good banker, or four.

The fact remains that cannabis is still illegal at the federal level and many banks and financial institutions will not do business with companies that deal in weed. Make sure your banking partner is comfortable with your involvement in the industry before you become overly reliant on them.

Rick Martinez, a cannabis entrepreneur and investor out of San Antonio, Texas, says the biggest thing to pay attention to early on is your merchant processing. He suggests you have a backup, a backup to the backup, and then one more backup. While most people agree that the banking industry will create more stable solutions in the coming years, it's still extremely volatile and is a significant risk for companies in the business.

3. Have a firm grasp of the fundamentals.

Many entrepreneurs get into the cannabis business thinking they just need to grow and the money will magically follow. While it remains one of the most profitable crops, you still need a solid business model and the right management skills to turn your product into profits.

Vinay Tolia, founder and managing partner at Bengal Capital, says if you strip away the hype around the cannabis industry it's really no different from other existing business models: in order to be successful, you must produce a quality product at a competitive price and sell/distribute as efficiently as possible.

Defining a clear core customer, core product/service, and core channel will help you accelerate growth. And getting a tight control over your cost of goods sold and overhead will ensure you are making a healthy profit that can use to fuel your growth.

4. Think outside the bud.

Many people get into cannabis thinking they will be either growing, distributing, or selling plant products themselves. While this is the core of the market and a huge part of the revenues in the business, there are a myriad of opportunities in the cannabis industry that have little to do with the plant itself.

Jenny Argie, founder of Baked at Home in Brooklyn, New York, is becoming the Betty Crocker of pot with her set of dry mixes that allow you to add your own canna-butter or canna-oil to make homemade treats. Argie is just one of hundreds of entrepreneurs carving out their own segment of the cannabis industry without running amok with federal law.

Serious and significant businesses are being built around technology, training, packaging, standardization, real estate, wellness, and many other ancillary products and services to support the market. There are literally hundreds of niches for willing players and serious money to be made.

Cannabis is a huge market with immense potential, but it's not without its complexities and risks. While some will get lucky and strike it rich despite themselves, the majority of winners in the industry will be sharp business minds with savvy entrepreneurial skills.

Bruce Eckfeldt 10/28/21 Bruce Eckfeldt 10/28/21

You Can’t Manage What You Don’t Measure, Here Are 10 Ways To Measure Anything In Your Business

To properly manage a business you need to know what's happening. These 11 types of metrics that will give you the insight and awareness you need.

They say you can't manage what you can't measure. Quantifying your business allows you to see patterns, set targets, and measure progress. However, many things that are important to business success can be difficult to assign a number to at first.

Measurement can happen in many ways and can take many forms. By trying different ways of measuring, you can often find helpful data that is both easy to capture and meaningful to the business. Here are eleven different ways to measure just about anything in your business.

1. Absolute number

This is the simplest of metrics. Use it when you only want to know the count. Some examples include number of widgets produced, total headcount, and total revenue.

2. Equivalence number

The best example of this is Full Time Equivalent or FTE. This number is helpful when you have lots of fractional or partial units and you want to know what they all add up to. Use this when you want to see the net impact or total effect.

3. Relative number

Often times, it's better to see things as a ratio or a proportion. For example, if you're growing quickly, I like using Accounts Receivable (AR) as a percentage of recent revenue to check to see if our AR is growing faster or slower than the overall business. Many times I've seen AR grow but the ratio decrease, which means that we're actually doing a better job of collecting.

4. Number per unit of time

If you want to track a rate or pace, you need to introduce a unit of time. Calls per day or visitors per hour will give you insight into changes in activity and rates are better and more meaningful than simply looking at cumulative numbers.

5. Percent of target

If you have a clear number that you're trying to reach, try measuring results as a percentage. For example, if you're trying to hit $24,500 a day in website orders, showing $22,345 as 91.2 percent is easier to compare and interpret.

6. Percent of forecast

If your target is changing over time, set your percentage relative to the changing forecast. This is critical if your business has any seasonality or business cycles. If you're in retail and you use straight line monthly sales targets you'll be grossly misled. Instead, set monthly or weekly targets based on known peaks and valleys and report actual sales as a percent of those forecasts.

7. Rate of change

When a company is growing, we expect numbers to increase or decrease. So instead of looking at a straight percentage, also show the change in the percentage as a percentage. For example, while page views might be going up, seeing that this week's increase was 34 percent lower than last week's increase will catch your eye.

8. Rolling average

If your data is highly variable, it can be difficult to see trends. In this case, take the average of the most recent few days or weeks to get a rolling average to smooth out the ups and downs so you can see the bigger picture. If you want, you can also measure the sigma on this data to see if things are more or less active than usual.

9. Within limits

This comes up a lot when there is an acceptable tolerance in industries such as manufacturing and product distribution. Here you want set a target and then report on the absolute difference between the actual and the target.

10. Step functions

If things are a little more complicated, you might need to use a step function. This helps when you have measurements that require different levels. For example, if different resources are paid different amounts, if different processes have different costs, you'll need ranges.

11. Multivariate functions

If you have multiple variables that feed into a calculation, you need to create a function. Sophisticated sales forecasts take into account the size of the deal, the type of client, how long it's been in play, and the service being proposed in order to come up with a total pipeline value.

Regardless of the metrics you use, be sure to balance the complexity and cost of collecting and analyzing the data with the benefits you get once these metrics become management tools for your company. While I typically see overly simplistic dashboards, I sometimes find convoluted ones that take hours to update. Like many parts of business, it's a balance you must get right to be successful.

Bruce Eckfeldt 10/26/21 Bruce Eckfeldt 10/26/21

There Is More Than One Way to Make A Decision. Here Are 9 Techniques Great Teams Use

Great teams use different decision-making strategies in different situations. Here are 11 things you should consider when starting the process.

Having worked with dozens of teams at all organizational levels, I've found one of the critical skills that all high-performance teams have mastered is their ability to make a good decision. These teams strike the right balance between quality of the decision and the time involved in making it.

There are all sorts of ways to make decisions. Here are eleven methods that I most commonly see in the teams I coach. Choosing the right method is based on the type of decision, the time frames involved, and the potential impact of the outcomes.

1. Unanimous

If it's really important that everyone be 100 percent behind the decision, then I suggest getting a unanimous agreement. To get there, everyone needs to be in full support of the decision without reservation or coercion.

2. Consensus

Unlike a unanimous decision, consensus doesn't require the same level of commitment. Some team members may have reservations or concerns that are not completely resolved. These team members just need to be at the point where they are willing to agree to an option being selected for the sake of moving forward.

3. Objectionless

Sometimes one or more team member just can't get the point of agreeing to an option, but they don't want to block the vote. In this case, you can have them abstain from the decision and get an objectionless decision. I usually use this option when the team has spent a fair amount of time trying to get to a consensus, but one or more of the members does not seem to be budging.

4. Supermajority

This requires two-thirds, or 66%, of the members to agree on a decision. I suggest supermajority when you need to make sure you have solid support, but know that the team will never completely agree or that it would take too much time to develop an option that might satisfy everyone.

5. Majority

A simple majority requires one more vote than half of the members of the voting group. However, I find that simple majority vote isn't that useful for most business situations. For decisions with three or more options, I tend to suggest high vote (see below) instead. For a vote between two options, I find that a simple majority can and tends to divide a group. In these cases, I usually recommend using supermajority or introduce other options.

6. Minimum Vote

In some cases, you may want to set another threshold that is below one-half of the voting members to get a clear winner. If there are five options on the table, you might want to set a minimum of one-third or one-quarter. Decisions among a large number of options where one wins by a fraction of the vote can create weak decisions.

7. High vote

When you have three or more options in the situation, the decision is not critical, and time is important, it's often easiest to move to a high vote model. Whichever decision gets the most votes wins, regardless of how many options and voting members.

8. Authority with input

For the authority decision with input method, there is no voting. Everyone has the right to give input and then whoever has the most authority in a situation makes the decision for the team. The vast majority of business decisions are made in this way. While it may appear that teams are voting, they are really just giving input to the leader who is ultimately making the decision.

9. Delegate

In this case, the team delegates the decision to someone else on, or off, the team. I suggest this method when there is someone else who is in a better position, because of information or expertise, to make a good decision.

10. Defer

Sometimes a team can defer a decision. And while it's not conclusive, a deferral is a valid and sometimes import strategic move. I make sure to advise teams that they should identify a "last responsible moment" to make the decision and that they shouldn't surpass it, but often waiting will give the team more information, better perspective, and time to gather thoughts.

11. Abdicate

In this case, a team consciously decides not to decide. Abdicating is not the same as the team failing to reach a decision. Abdication means that the team actively decided not to engage in the decision making process. This is rare, but it can happen as the result of political or external issues where the team doesn't want to get involved or is willing to let another team or process run its course.

Choosing the right approach is not always easy, but it is important. Teams that don't make decisions well will only end up having to redo them later when the decisions don't stick, or worse yet, having to live with the outcome after it's too late to change their minds.

Bruce Eckfeldt 10/21/21 Bruce Eckfeldt 10/21/21

5 Lessons Learned From Rowing Which Will Help You Be A Better Leader

Business is about planning, coordination, and discipline. Which is why rowing is such a great sport for forging corporate leaders.

While in high school, I had the fortune of being a part of a competitive rowing program. I went on to race in college and club teams over the years. Later, as CEO of the tech company I founded, I realized that I had been applying many of the lessons learned on those boats to my leadership team.

Many great business leaders have backgrounds in competitive sports. However, there are some unique aspects of rowing that transfer well to the business world. As a business and executive coach, I use these examples regularly with great success, and you can too.

1. Every action is a balancing act.

During the majority of my rowing career, I was in an eight-person shell. That's eight rowers, each with one oar (not two!), four on port and four on starboard. Because each person controlled only one oar, it was vital that we were in sync and in balance with one another. If I pulled harder or softer than my fellow rowers, the boat would veer to the left or to the right. To keep the boat going straight, everyone had to pull with equal pressure.

In business, everyone's actions need to be balanced. If the sales team brings in 100 deals one week and zero the next, delivery will be outnumbered one week and twiddling their thumbs the following. Even, regular, and consistent results are what win the race in the corporate world.

2. Coordination and timing is everything.

When you get to the end of a stroke, everyone lifts their oars to return to the catch for the next stroke. However, with all of the oars in the air, the boat becomes completely unstable and precariously tippy. If I lifted my oar too late or dropped it back in too early, I dragged the boat down to that side.

I've seen business teams create chaos by not coordinating projects, delivering on agreed upon dates, or sticking to operational procedures. Defining key milestones and interface details and then trusting everyone will hit them is what successful business delivery is all about.

3. Trust the people who have a better view.

One of the most unnerving aspects of rowing is that you have eight people pulling as hard as they can to make a difficult-to-maneuver, paper-thin, rowing shell move as fast as it can down a narrow course... backwards.

The only person who is actually looking forward is the coxswain and they only have a little, six-inch rudder to nudge the boat left or right. But as rowers, we learn to trust the cox when the call hard strokes on port or starboard to help steer the boat.

Business leaders actually have it worse. There is no course and there is no rudder. Leaders must do their best to understand the market landscape and what competitors are planning to do and then they must create a successful plan. Managers must trust that they have read the tea leaves correctly and have plotted a course free of obstacles.

4. Respect everyone's time as if it were your own.

Rowers are known for getting on the water at ungodly hours of the morning. And without this expectation, getting everyone up and to the boathouse on time could be a challenge. However, because everyone has to wait for all of the team members to arrive before the boat can get in the water, showing up late once is usually all it takes to avoid tardiness in the future. Punishments were swift and painful.

I know a business culture is in trouble when people are showing up late to meetings and team members are on their cell phones while other people are presenting and discussing. Tardiness is a slippery slope. Executives in great companies are the first to meetings and come prepared and ready to engage in work that has to be done.

5. Make many small corrections to stay the course.

Eight-person rowing shells are over 62 feet long and just 21 inches wide which make them impossible to turn. Fortunately, races are generally a fairly straight line, however, corrections frequently need to be made for wind, current, and uneven pressure. The trick is to act early and make lots of little adjustments with the rudder and the oar pressure. If you wait to long and then oversteer, the boat will lurch to one side and ruin the set.

Business is about having good metrics and foresight to see what's coming down the pike so.you can take measures to capitalize on opportunities and avoid pitfalls. Frequent reviews and minor adjustment make this process easier and more successful.

Hitting home runs and scoring touchdowns are great metaphors for company wins, but the discipline, focus, and precision of rowing captures the day-to-day demands of business in a way other sports cannot.

Bruce Eckfeldt 10/19/21 Bruce Eckfeldt 10/19/21

Struggling to Build a Great Internal Software Engineering Team? Here Are 5 Things You Can Do to Improve Your Tech Talent

If you're an early stage company, building a technology team can be a real challenge. Here are five things you can do to make it easier.

Most businesses rely on technology. But for some companies, technology is the lifeblood of the organization. If you're building a software product or using data analytics or data science to create value for your customers, you don't just rely on these skills, you completely depend on them.

In these cases, creating a top quality engineering team is critical to success. But if you're an early stage or even mid-market company, attracting and retaining the engineering skills you need to be successful can be extremely difficult. Companies like Facebook, Twitter, Amazon, and Google are offering unmatched compensation, benefits, and opportunities, leaving the remaining market extremely tight.

However, not all is lost. With some smart strategies and a clear set of priorities, you can attract the right talent you need. Here are five things you can do to increase your chances of getting the best people for a price you can afford.

1. Represent technology on your leadership team.

Before you starting hiring technical staff, make sure you have someone on your leadership team with credibility and reputation in the industry. Most technologist want to be surrounded by other smart technologists. They want to learn and share ideas and improve on their skills.

This doesn't need to be a CTO who is a coding guru or a Chief Scientist with a double Ph.D. Find a COO with significant technical experience, or a CFO who has run a technology business previously, or one or two members on your advisory board who have strong technical backgrounds.

2. Build a culture of quality.

Every engineer I know wants to build a quality product they are proud of. Nothing frustrates a developer more than not having the time or resources to create something that is well constructed. Technology is as much a craft as a science and pride is a key reason people go above and beyond to create superior results.

Make sure your internal culture embraces the pursuit of quality, even under the pressure of deadlines and budget restrictions. Quality doesn't' mean you need to gold-plate everything. Instead, make sure you have a process for investing in the organization and maintainability of your systems; don't just pump out new features.

3. Select innovative and appealing technologies.

You won't attract the best talent if you're using technology that's ten years old. Most top technologist want to be working with the newest and best tools and systems available. Further, expect that systems and frameworks will need to be replaced on a regular basis as new and better tools are developed and adopted by the industry. Allocate a reasonable amount of time and budget to investigating and upgrading your platforms and infrastructure as you go.

4. Provide high-quality, focused time.

More technical work is extremely complex and requires highly focused time. Nothing bothers a technology team more than when it's frequently interrupted by questions or changes when they are deep in thought. While it can appear that technologist are aloof and don't care about the immediate business needs, this observation is not actually the case. My suggestion is to appreciate the work they do and the problems they need to solve are complex. These teams need large chunks of uninterrupted time to really wrap their heads around the challenge.

Commit to a process for planning and estimating the work based on defined iterations and a daily work cycle. Then make sure everyone in the business knows not to tamper with the plan or interrupt the daily flow between these sessions. Companies who offer a structure that has large blocks of focused time carved out for their engineers will be highly desirable to the best people who want to work on the hardest problems.

5. Foster a sense of community.

One of the biggest challenges for smaller companies is that they can't offer an internal culture fueled by dozens of technologists. Instead, focus on providing time and resources for your people to connect with, or even build, their local communities.

This could be as simple as providing time and budget for people to go to conferences or meetups. You could actively promote and support industry groups through partnerships and affiliations, or even better would be to organize and host a regular event in your local community to promote ideas, share information, and build social connections.

While the war for talent is not an easy one to win, following these suggestions will greatly increase the odds that you'll attract and keep the best talent you need to be successful.

If you're an early stage company, building a technology team can be a real challenge. Here are five things you can do to make it easier.

1. Represent technology on your leadership team.

2. Build a culture of quality.

3. Select innovative and appealing technologies.

4. Provide high-quality, focused time.

5. Foster a sense of community.

While the war for talent is not an easy one to win, following these suggestions will greatly increase the odds that you'll attract and keep the best talent you need to be successful.

Bruce Eckfeldt 10/14/21 Bruce Eckfeldt 10/14/21

Here Are 6 Ways to Turn Your Board of Advisors from a Chummy Dinner into a Powerful Tool for Growth

Many early and mid-market companies have advisory boards, but most don't take full advantage of them. Here six ways to make sure yours serves you well.

As a company grows and the business becomes more complex, one of the best moves a leader can make is creating a board of advisors. Unlike a board of directors, a good set of advisors can give the top executives honest and direct feedback on strategy and planning without bias or reservation.

Unfortunately, many of the CEOs and leadership teams I meet have failed to create a powerful advisory team. Many make it a social event over a boozy lunch or dinner. Others use it as a perk for their friends and colleagues and plan boondoggles to exotic locations.

In order to create a highly effective board of advisors, you first need to assess the strengths and weakness of the current leadership team. With that insight, you can build an advisory team using the following factors; these factors will diversify and expand the capabilities of the CEO and their key executives.

1. Gain knowledge and insight into your business domain.

The first--and easiest--area to consider seeking advice for is the specific domain knowledge your team lacks. This can be general business domains such as sales, market, reach, and development, or it could be more specific technical knowledge like solid state computing, pharmaceutical manufacturing, or perishable food distribution networks. Your board of advisors is a great chance to bring in the expertise you need to get to the next level of your business.

2. Bring functional skills and expertise.

Another way to leverage your board is to bring in the specific functional knowledge you don't have internally. This expertise includes sales, marketing, finance, operations, production, distributions, risk analysis, and human resources. Early stage companies can't often afford senior experts in all of these functions. Your advisory board is a great way to bring in these skills without having to hire full-time staff.

3. Include experience in key areas of business.

Some businesses need special experience to execute their plan. If your strategy includes a roll-up of smaller companies, franchising your business model, or building out a software-as-a-service business, having senior executives on your board who have been through the process you are going through now can be invaluable to your team.

4. Diversify your thinking styles and perspectives.

Many teams overlook this factor. Some people are highly analytical and others are very intuitive. Some are process oriented and others are big-picture thinkers. Seeking advice from others with differing perspectives is important and it helps you cover all your bases. For example, if your leadership team is analytical technologists, your advisory board should have more intuitive sales and marketing experts to give you a balanced perspective. Find people who think differently than you.

5. Limit your sensitivity and tolerance for risk.

Many entrepreneurs are naturally risk tolerant, some might even consider themselves risk-seeking. This is critical in the early stages of a business when great odds need to be overcome despite the risks and uncertainty involved. However, as the company grows, a more balanced approach should be implemented.

If your leadership team is made up of all high-stakes poker-type players, you'd best balance this tendency with an advisory board which can point out the risks and potential consequences that need to be fully realized and considered

6. Access the right networks and people.

Finally, your board of advisors is a great opportunity to extend your network and access the right people to grow your business. If you're planning a round of financing, a board member with a deep money network is critical. If you're building out a technical team, someone with great connections to developers is key. And if you're planning on manufacturing product overseas, then someone with contacts in foreign factories is extremely valuable.

You probably won't be able to address and balance all of these factors at one time. Start by discovering where the greatest needs are relative to the current leadership team and future strategy. Then, see where you can find the right people willing to be members on your board and select the best overall team.

Make sure your board is treated well and make sure they enjoy the experience of working with you and your leadership team. Good dinners, nice venues, and fun trips all help. But don't forget the main purpose of the advisory board is to engage in open debate and constructive conflict to advance ideas and perspectives. My suggestion for your advisory board--as with leadership teams--is work hard, then play hard.

Bruce Eckfeldt 10/12/21 Bruce Eckfeldt 10/12/21

One of the most powerful meetings you can run for your team has no agenda. Here’s why

While most productive meetings need an agenda, an Open Space meeting intentionally doesn't use one.

Many years ago, when I was CEO of the first technology company I founded, we started having all-day quarterly meetings with our staff. Because many of our people worked remotely and on client sites, we rarely all saw each other at the same time, so these meetings became important for maintaining our cultural cohesion.

The first quarterly meeting we held was full of presentations and breakout sessions centered on different topics we knew. While the meetings were successful, we also got a lot of feedback reminding us that we missed several topics and that some of the topics could have used more or less time.

It's important to mention here that our company was one of the first Lean/Agile consulting firms. We were steeped in new ways of building teams and processes. So, when one of our developers came back from a conference where they used a crazy meeting format called Open Space Technology which has no predefined agenda and let's attendees choose the topics. We tried it. And ever since then, it's become one of the most powerful meeting formats I know.

Open Space meetings don't work for every meeting, so you can't do away with agendas forever. However, Open Space meetings are great when you are bringing together a group of people who have many different potential topics to discuss and the priorities are not immediately clear.

I use this format for summits and retrospectives where we need to uncover the topics as a group and prioritize them as we go. Open Space meetings are also great when you suspect new topics will come up during the process and you'll need to re-prioritize them in real time.

Here are a few simple guidelines for running your own Open Space meeting.

1. Choose a theme or a focus

While I keep the agenda open, I do create a general area of focus for the meeting. I've used "sharpen the axe" to focus on process improvement or "stronger bonds" to think more about team engagement and culture. Choose something that identifies a know concern but still leaves the topics open.

2. Set good ground rules

A meeting with no agenda needs good ground rules to stay focused and work well. Here are the three that I use.

"Vote with your feet": If you're not learning or contributing, move to a different topic.

"Yes, and": (No "buts" rule.) Don't tear down ideas; find a way to build on it.

"Tackle issues, not people": Focus on the underlying issue, and don't make personal attacks.

3. Start with a brainstorm

Every Open Space meeting starts with a discussion of the theme and a brainstorming of topics. Make sure you're not being critical at this stage; be open to any potential discussion topic. Don't rush this step; often the best topics come up late in this process and after a long moment of silence.

I have team members write ideas on index cards (one per card) so that we can organize as we go. I keep extra index cards around so we can add new ones as they come up during the session.

4. Select discussion facilitators

The power of an Open Space meeting is that you are empowering people to talk about what they want to talk about. Choose, don't assign, facilitators who are most passionate about the topics.

5. Work in self-organizing teams

I generally set up multiple rounds of meetings in time slots of 30-45 minutes with 15-minute periods for regrouping. For each round, I get volunteers for 3-5 topics and then have people self-organize into meeting groups.

After the round ends, we regroup and each facilitator presents a short summary of the discussion, key insights, and any recommendations for the larger group.

6. Document notes and action items

Make sure to have each team submit a one-page summary of the discussion including the topic, the facilitator's name, names of those who attended, key discussion points, takeaways, and any other recommendations.

This summary can be handwritten on paper and taped to a wall so people can see the results. If you have good connectivity, you can also collect information on an online document as you go.

7. Reflect on the process and learning

At the end of the meeting, take some time to reflect on the process. At the end of the meeting, I like to have each person share their biggest takeaway along with one personal action item. You can also have people rate the meeting and suggest changes for future formats.

Open Space meetings are not a lazy-person's substitute for properly planned meetings. Instead, they are a tool you can use when the situation calls for deeper dives into emergent topics. And remember: like all powerful tools, you need practice to use Open Space meetings. You also need to know when, and when not, to apply them.

Bruce Eckfeldt 10/7/21 Bruce Eckfeldt 10/7/21

5 Key Financial Metrics You Need to Know to Manage Your Business And How To Calculate Them

Many CEOs struggle with choosing which financial metrics to pay attention to. While every company has unique numbers based on their own business model, here at five that every leader should watch.

Every business has its own set of critical numbers and metrics. If you're a software-as-a-service business, you'll need to know cohorts and total lifetime value. If you're a manufacturing company, you'll be tracking production lead times, quality variances, and raw material costs.

However, regardless of your business model, there is a core set of financial metrics every company should measure and monitor. I use these numbers when I coach leadership teams of high-growth companies. These numbers are based on having worked with dozens of businesses and the common challenges I have seen when they scale quickly.

1. Cost of Sales (percent sales cost per dollar of revenue)

The first question I ask when I see revenues is how much did it cost to create those sales. Why? I want to know what it will likely cost to increase those sales and if it's actually worth it based on the remaining revenue available. This number includes all of your marketing and sales costs. Don't forget to calculate the loaded costs of any staff salaries or contractor expenses.

For example, consider a million dollars in sales that cost $250,000 to produce (25 percent) versus $300,000 in sales that cost $20,000 to produce (6.7 percent). The latter is exciting. The former gives me pause.

2. Gross Profit Margin (gross profit after direct cost of delivery)

Gross profit shows how much revenue is available after you pay for the production and delivery of a product or service. For businesses such as software-as-a-service, this number can be quite large since the incremental costs are minimal. For businesses such as manufacturing, it can be quite small.

Once we calculate the gross profit and track it over time, we can see if the business is getting more (or less) efficient and how it compares to others in the industry and other geographies.

3. Labor Efficiency Ratio (gross profit divided by total direct labor costs)

The labor efficiency ratio (LER) shows us how hot or cold the organization is running and how much production capacity we have remaining from a "people" point of view. You calculate this number by dividing the gross profit (revenue less cost of goods sold) for a given period by the total labor cost (loaded staff and contractors) during that same period.

Over time, you'll see that when that ratio is high, the organization feels busy and maybe even a little frenetic. This tells us we need to hire staff before we increase sales. When the number is low, things are relaxed and people may even have time on their hands. This tells us we have free capacity and we can sell without having to add staff.

4. Accounts Receivable to Revenue Ratio

Most executives pay attention to accounts receivable (AR). However, for a growing company, this can be a dynamic target so I suggest looking at it as a percentage of revenues instead of a total amount. It's much easier to spot trends and future cash concerns when you see the percentages changing rather than trying to interpret the total AR which will naturally grow as the company scales.

5. Cash Reserve to Committed Expenses Ratio

In order to survive the ups and downs in business, you need a cash reserve. Furthermore, this reserve needs to increase as the company gets bigger. If you don't increase this reserve, you're unwittingly increasing financial risk. Generally, I suggest a company keep three months of committed expenses in reserves. This includes expenses that you cannot easily and quickly cut/reduce in a downturn.

Less than three months means that you'll be under the gun if your sales dip and will be forced to cut deeper than you'd like and make it harder to bounce back easily. If you're stowing away more than this, you're probably keeping too much cash at risk in the company.

Every company will have additional financial metrics based on the industry and stage of business, but these five are the core set that every company needs to know and watch. Having and knowing them well will give the leadership team better data and insight in order to make better decisions more quickly.

Bruce Eckfeldt 10/5/21 Bruce Eckfeldt 10/5/21

If You Do Any of These 3 Things, You’re Likely a Micromanager. Here’s How To Stop and Why You Should

If you have any of these three tendencies, you're likely micromanaging your people. If you want them (and you) to grow, here's what to do.

As an executive and leadership coach, micromanaging is one of the most common challenges I see. It's a common problem for many leaders, new and old alike. Left unaddressed, micromanaging can severely limit your people's success and advancement and can often result in the burnout and churn of their direct reports and colleagues, too.

Ironically, it's the habits that have helped micromanagers be so successful earlier in their careers--focus on details, drive for results, demanding high quality, get-it-done attitudes--that make them micromanage when they move into leadership positions. Making the transition from "doer" to "manager" is often a difficult process.

Like all professional and transformational work, the solution is a combination of changing one's thinking and actions. Both need to happen to create sustainable results.

Here are the three key suggestions that I give to leaders who are coming across as

1. Telling people what to do, rather than asking for commitments.

When your primary focus is getting the task done, you see your people as tools for completion. You'll tend to issue instructions, and sometimes orders, for specific actions to be taken in specific ways. When you're captain of a boat heading towards a rocky shore, getting compliance critical.

However, when your goal is to create a high-performance team who is growing and increasing their capabilities, compliance is not a sustainable approach. Instead, you want commitment. Commitment results only when people take on a task with their own free will and also when they had an honest option to decline.

Instead of issuing orders and commands, ask people if they are willing to take on the work. If they decline, ask why and what you need to do to get them to willingly accept. Do they need training, resources, or time? Together, figure out how you can mold the task into something that is agreeable. These discussions can lead to learning and powerful coaching opportunities.

2. Explaining the process and details, rather than the desired outcome.

Micromanagers tend to jump right into the detailed steps required for completion of the task. The problem here is that explaining the precise steps leaves no room for the direct report doing the work to take ownership or adjust the process to their way of thinking or doing things. He or she can't "own" the process if you dictate it to them. Ultimately, the problem is that without ownership, the direct report has the excuse "I did what you told me to do and it didn't work" and then it becomes your problem, not theirs.

Instead, focus on defining the end results you want and the criteria for success. I like to use a football analogy here: tell them where the end zone is, where the sidelines are, how many people they can have on the field, and the rules for handling the ball, but let them decide if they want to run or pass and if they want to get the first down or do a Hail Mary for the win. You might also give some progress milestones and set some check-in points, but they need the freedom to make decisions and to provide the best end result possible.

3. Taking over tasks, rather than coaching through challenges.

Imagine you're learning to drive and every time you ask a question, your instructor keeps jumping into your lap to drive the car for you. For direct reports of micromanagers, this is a familiar feeling. The problem is that rather than asking for help, they avoid speaking with their manager all together. And by avoiding their manager, it means they are spinning their wheels more often and making bigger mistakes.

If you want to avoid being a micromanager, resist the urge to just do the task yourself. Instead, think like a coach and ask them questions. What have they tried? What did they learn? What haven't they tried yet? What might they try next? When you approach the situation like a coach, you're helping them find options and teaching them how to find the solution themselves.

Before giving advice, ask them if they want it. Ask, "do you want me to give you some ideas?" before you launch into all the things you think they should do. Getting permission opens them up to really listening and keeps them in control. Unsolicited advice can become another reason it was your fault, not theirs, and perhaps another reason something didn't work.

Successfully making these changes can be transformational for the leader and his or her colleagues. The shift from 'manager as task master' to 'manager as coach' creates an enormous possibility for professional growth. Done well, it opens up potential they didn't have before and will undoubtedly accelerate a leader's career. Done poorly, it will unfortunately result in continued struggle, employee churn, and lackluster results.

Bruce Eckfeldt 9/29/21 Bruce Eckfeldt 9/29/21

Don’t let your air travel get in the way of your productivity by using these 5 tips

Even if you only take a few flights a year, here are five tips to help you get more done.

In my hay day as a road warrior consultant, I would spend a lot of time in the air. It wasn't uncommon for me to have two flights in a week, traveling nationally and internationally to see clients. Making the most of my time in the air was critical to maintaining in my productivity.

Today, as a business coach working with leadership teams on growth and development strategy, while I don't travel nearly as much, I still use the following techniques to get work done on each and every flight.

1. Plan your work.

Like any productivity system, planning is key. Make a list of the most important things you need to do. Then, mark those which you can do on the plane. Prioritize these and set goals for the flight. I like to give myself a list of 15-30 minute tasks to work on while I travel. I know other people who prefer to work on one bigger task for the entire ride. Experiment to find out what works best for you.

2. Have a back up plan.

I always have contingency plans for common challenges. I make sure I download all of the files I need for my key tasks so I don't need the internet. I also keep in mind that I can do work on my phone if I can't comfortably use my laptop. (In fact, I'm in the air right now, writing this article on my phone.) Don't let challenges such as no internet or uncomfortable conditions be an excuse; have a plan and a backup strategy and push through.

3. Use the right technology.

I travel with a small laptop, an iPad, and a phone with me at my seat. I also carry an external battery and multi-connector cable which can charge all of these devices. I carry wireless earbuds and corded earbuds in case the former go dead. (I know some people love over-the-ear noise-cancelling headphones, but I find them too bulky and not super effective.) Create a tech setup that works well for you and keep it up to date.

I put all of these items in a separate pocket of my carry on bag so that I can quickly grab everything I need at my seat and put my bag overhead. This ensures that I'm not "that guy" who's holding up everyone trying to board the plane. It ensures that I don't forget anything for my seat in case I can't get out of my seat during the flight.

4. Get started quickly and find your flow.

As soon as I sit down, I start working. I review the to do list on my phone and choose the first task I can begin with before we take off (and one that doesn't require my computer). Make it super easy for you to start working because once you start, it's easier to keep going. If you don't have a system to help you start quickly, you're more likely to throw in the towel and start watching a movie instead.

I also immediately put in my earbuds and start playing some good productivity music. I have a pre-set series of playlists so that I don't have to spend time choosing songs. Each playlist has a different mood and keeps me focused. For me, I choose songs without words and nothing too jarring. Play around with different styles and combinations, and select a few for different moods and keep them handy on your device.

5. Eat and drink to stay focused.

My first and number one rule is no alcohol. The only time I drink is on a longer flight, in the evening, and after I've done a lot of good work. Only then will I relax and watch a movie or read while enjoying an adult beverage. Drinking not only makes it harder to stay focused, it dehydrates you. Instead, I drink lots of water and maybe a black coffee while I work.

For food, I always make sure I have a few protein bars and snacks for the flight. Generally, I find airline food not very appealing and often heavy on carbs which kills my focus for flights. Nuts, jerky, or even a sandwich grabbed from the terminal are better options. Again, always have a plan.

While I try to avoid airline travel whenever I can, it's still required to reach my clients and attended conferences and speaking events. Making the most of my time in the air is the best way I stay productive and focused. Even if you only fly a few times a year, the strategies above can help make the most of the flights and help them go by quickly.

Bruce Eckfeldt 9/28/21 Bruce Eckfeldt 9/28/21

Most Entrepreneurs Pitch To Investors’ Pocketbooks, They Should Pitch To Their Hearts Instead

Most entrepreneurs focus on pitching just the nuts and bolts of their business model. Research suggests that is not the best strategy.

As a business coach who has worked with dozens of successful leadership teams, not a week goes by when I don't get a request to discuss a business plan or review a pitch deck. People want me to tell them if their strategy is right, whether their technology plan is doable, or if their leadership team has the right experience. I tell them all the same thing.

The first thing to address in your pitch is not your return on their investment. Instead, you should focus on the impact their investment will make. Don't get me wrong, you need to show a return, but that's not enough to get them to write a check. You need to show them their money will have impact.

Impact can take many forms. It could be anything from how you're going to change the way people shop for clothes or how you're going to provide construction loans to people who don't have access to credit to how you're going to bring new treatments to people who are suffering. The impact doesn't need to be grand or noble, but it needs to be personal.

Research shows that while people do need factual, rational data--things like financial forecasts, returns on investments, and risk profiles--to make decisions, they only use them to justify decisions they have already made using their emotional gut.

In other words, investors will first decide if they want to invest in your business based on personal and emotional factors. Then they consider the rational factors to decide if they should invest.

This means you need connect investors to the impact you will make with your business if you're going to effectively sell them on your business and get your funding. To do that, you need to do these things.

Explain the problem you are solving.

Start by explaining the problem. Whose problem is it? When do they have it? When did it start? What options do they have? What does it feel like to have the problem?

For example, if you're selling a new type of mouse trap, talk about how current mouse traps and poisons don't work very well, are difficult to use, and can injure people. Focus on the feelings related to the problems: frustrations, danger, and fear.

Explain why the problem is a problem.

Once you've detailed the primary problem, dig deeper and show the impact of the secondary problem that the first problem created. Ideally, this next level is not initially obvious and will be a surprise to the investor. Show them the impact they will have with their investment, and try to show something he or she didn't initially see.

In the mousetrap case, you could talk about how not catching the mice leads to increased chances of the spread of disease or the damage to homes that can lead to significant and costly repairs. Show how the problem is actually bigger than one might initially think.

Explain the better future that results once the problem is solved.

Once you've detailed the primary problem and the deeper impact, describe a better and highly desirable future. Paint a vivid picture for your investor to become emotionally attached to. Get them to want to see your vision for the future realized.

In the mousetrap example, describe how great it will be to have mice-free homes where healthy children can play freely, without parents worrying they will be hurt by traditional traps and toxins.

Organizationally, the visualization can happen at different points of the investment conversation. I like to flood the investor with the rational data prior to making the emotional pitch. I might also focus my pitch differently depending on what I know about the investor's values and what I know about him or her as a person.

In the end, a successful pitch will need both rational and emotional content. The ways the human mind works and the ways each individual makes decisions are multifaceted. Our investment pitches should reflect that.

Bruce Eckfeldt 9/23/21 Bruce Eckfeldt 9/23/21

Tired of Meetings That Suck? Here Are 5 Things You Can Do to Make Sure Yours Don’t

You can't run a company without meetings. Unfortunately, most meetings are poorly run. Here are five things to make yours better.

As I grew my business from a team of three people to a five-time Inc. 5000 company, I became overwhelmed by the number of meetings I was in. Not a day went by that I didn't have at least one meeting, and not infrequently, I was in meetings all day. The only meetings worse than the ones I attended were the meetings I ran. I had no clue what I was doing and it showed.

At one point, I decided that if I was going to grow and scale my business, I needed to take the bull by the horns and learn how to run better meetings. After dozens of books, articles, videos, podcasts, and two workshops, I began to understand how to run better meetings that were both effective and efficient.

Here are my top five takeaways you can use to run great meetings with your teams:

1. Have an agenda.

Every meeting needs an agenda. This includes what the goal or purpose of the meeting is and the key points to be discussed. If you don't have an agenda at the start of the meeting, creating one is your first point of order.

Ideally you have an agenda that is published before the meeting. The agenda should state the goal, the key points, who's attending, start/stop times, and location. Additional information might include any background information that needs to be read before the meeting, notes from previous meetings, time frames for each topic, owners of each topic, and ground rules.

2. Use a facilitator.

Having a good facilitator is a game changer. A facilitator's sole job is to make sure that the meeting is run well by keeping the group focused on the topic, balancing the conversation so everyone's voice is heard, keeping the group on time, and capturing the key points and decisions that are made.

A facilitator is a neutral party and focuses on guiding the meeting. They can ask questions to stimulate group discussion, remind people of ground rules so debate stays healthy and productive, and keep people on point and on time.

3. Start on time, end on time.

Starting meetings on time is critical. My rule is that meetings start at the published time, regardless of who's there and who's not.

In severe cases, I might set a rule that if you're not there by the start time, you can't join. I encourage people to get to meetings five minutes early. A fish stinks from the head, so if you're the CEO or a key executive, set the example.

Finishing meetings is just as important. In many cases, people have back-to-back meetings, so I try to end five minutes early. People will love coming to your meetings when they know they start on time and end early.

4. Set good ground rules.

Ground rules define agreed upon behavior and processes that make the meeting more effective. These can be little rules like one conversation at a time or more significant rules like everything said in this meeting is confidential. Your ground rules set the stage for greater engagement, sharing, and productivity.

Start each meeting by quickly reviewing established ground rules and encouraging people to suggest new rules for the team to consider. Rules might cover how the team is engaging in conversation, topics which are on/off the table, how to deal with specific situations, and what happens before and after the meeting.

5. Keep a parking lot.

A parking lot is a place where you can "park" ideas or topics that come up during the meeting that are outside of the current agenda item(s). Flag anything that comes up which is off topic but important to address, and write it down in the parking lot and return to your original discussion. Then, later, come back to the parking lot and discuss how to resolve those items.

Here's the trick with the parking lot: You need to be sure to address the items by the end of the meeting. You don't need to resolve them, but you need to show that there is a plan in place to resolve them. Otherwise, people won't trust the parking lot and they will continue to interrupt and speak over others to make sure their points are addressed.

Better meetings mean better decisions will be made, faster, and with less drama. These five are the basics, but there are many more practices that you can, and should, adopt. Become a student of the topic and continuously review and refine your approach. It's an investment with exceptional returns.

Bruce Eckfeldt 9/21/21 Bruce Eckfeldt 9/21/21

Want to Improve Both Your Culture and Your Performance? Stop Looking for Problems and Look for This Instead

While it's completely natural to look for problems, it's not always the best approach if you want to improve your work environment and results.

Just about all of the leaders I work with are chronic problem solvers. They love to search for things that are broken, need improvement, and present risks, and then they love to try and fix them. Much of the time this does, in fact, deliver value to the organization. But not always. Like many tools, if overused, being overly-focused on problem hunting has some liability.

First, people who are overly-focused on finding problems are also typically tinkers. They like to go in and make changes to try to get improvements. However, they often make changes that have broader impacts that end up creating more problems than they solve. At best it's net neutral, but it often makes things worse.

Second, if you look hard enough at any situation, you'll always find lots of problems. Problems are never ending. And if you focus all of your time and energy on pointing out problems, you'll create a tough culture for your colleagues. Nobody wants to be surrounded by people who are pointing out everything that is wrong or not good enough.

So, how do you avoid creating a culture where people are creating more problems than they are solving and bringing everyone down in the process?

When working with teams and companies, I suggest they strike a healthy balance between focusing on things that are working as well as things that are not working. My rule is at least half the time should be spent identifying and acknowledging those things that are going well and talking about how they keep them going well.

Here are a few things you can do to increase the amount of time and focus you spend on the things that are going well.

1. Start every meeting with wins.

I start every meeting by having each person mention one win they had recently. The goal here is to find and focus on things that are going well for people. It sets a positive tone for the meeting. It also lets other people know what was successful, and it can inspire people with new ideas and models for solving other problems.

2. Do a Root Success Analysis.

Many people do Root Cause Analysis when they are dealing with a problem. The goal here is to dig underneath the problem to find the source problem and fix it so that it never happens again.

Root Success Analysis is similar but the opposite. Here we want to identify something that is working well and then ask the all important question of "Why?" Ideally we should ask the question four to five times until we get at the root source of the success. Then we want to make sure we keep doing it and find other ways of repeating that success.

3. Define your core capabilities.

Francis Frei, Harvard Business School professor and co-author of the book Uncommon Service, says the key to strategy is defining what you are willing to "suck" at in your business. The idea is that in order to compete, you need to select one or two attributes that you are going to be the absolute best at in your market. These are your core capabilities. However, since resources are limited, you need to be willing to suck at everything else.

Knowing your core capabilities becomes a very powerful tool when it comes to problems solving. Knowing them means that not all problems, are in fact problems you care about. You only care about the ones that directly impact your core capabilities because they impact your strategy.

4. Create a "keep" list.

In any meeting or review, it's easy to create a list of things you want to change and fix. Do this, but also create a list of things you need to "keep" as well. Too often, when you go into fix one thing you end up breaking something that's working well. Creating a "keep" list draws your attention to the things that are creating value and reduces the chance that you accidently make that changes something for the worse.

By bringing attention to the successful parts of the business, you are doing two things. First, you are decreasing the likelihood that someone will accidentally make a change to something that's working well. Second, you are creating a culture of positivity and optimism. Both of these initiatives will have significant impacts on your overall success.

Bruce Eckfeldt 9/16/21 Bruce Eckfeldt 9/16/21

Here Are 12 Ways to Make Emailing a More Effective Tool for Your Team

While many businesses are switching to collaboration tools, email hasn't gone away. Here are a dozen ways to make it more productive.

As a team coach, I'm focused on elevating the performance and results of the organizations I work with. And regardless of whether it's leadership, management, or project teams, communication is critical to their effectiveness. Unfortunately, email tends to be an area that generates a lot of problems and drama for these teams.

The problem with email is that it's easy to send a lot of information and create a lot of work for everyone else. Here are twelve rules I generally suggest teams adopt to reduce the number of emails, make them more effective tools for communications, and help people prioritize and manage their inboxes.

1. Don't email when a phone call will do.

If you can pick up the phone and have a conversation, do that. Anything that is not a simple yes/no will require some back and forth and it's better to that by phone than a long email thread. And if someone is just down the hall, a short walk is better than typing.

2. Stick to one topic or issue per email.

I generally suggest one issue or topic per email so that people can reply with just that answer or response. This way, you'll get faster responses since the person is not waiting to pull together all of the answers before they reply.

3. Only put people in the "TO" field who need to respond.

Only put the people who need to be directly addressed or need to reply in the top line. And think twice about who you put in there and if they can be excluded or just CC'd. I assume that if I'm in the "TO" I need to read and reply.

4. CC everyone else who just needs to know.

For anyone who just needs to know about the email or needs a copy of it for their records, put them in the CC field. By separating these out, you'll help people prioritize what they need to read and reply to.

5. Make reading CC emails optional.

Make reading CC emails optional or at least low priority. Create filters that put CC'd emails into a separate folder and skim once a week.

6. Don't hijack emails.

It drives me nuts when some replies to an email with an unrelated topic or issue. Even if it's related but a different thread, make an new subject line or start a fresh email.

7. If you have a lot to say, start with a summary.

If your email is going to have in-depth details, lists, and background, then start your email with a short summary that includes what actions need to be taken. Long emails will not be read right away, but a summary might.

8. Name people who you want to respond.

When you need specific people to respond with answers or decisions, make sure to call those people out by name with a clear description with what you need from them. Ideally list the call to actions on separate lines so they can reply inline.

9. Confirm receipts with reply timeframes.

If you get an email but can't reply to it right away, send a note saying you got it along with anything you can give or share at that moment as well as a timeframe for when you'll finish your reply. Don't leave emails hanging out there for more than 24 hours if you can avoid it.

10. Include documents as attachments (unless they are huge).

If you have documents, attach them rather than sending links. Many people have emails downloaded to their phones and tablets which don't have internet connections and they will be unable to see the information offline. If the documents are extremely large, consider attaching the key pages with links to the full documents.

11. Use numbered lists with more than three items.

When you're listing items or points, use numbers when it's greater than three. This allows people to refer to the points in replies or other conversations. It also helps you see how many things you're including which can help you to prioritize.

12. Set no-email hours for your team.

Emails can be very encroaching on personal lives. If people on your team have a habit of emailing at crazy hours, set up "no email" times where people agree to not send emails or cannot reply to emails. Create fun penalties for people who break the rules. Giving people time off email will prevent fatigue and burnout.

While there are many more rules you can, and should, consider, these are my top twelve recommendations that will help you and your team get your emails under control and your inbox to zero more often.

Bruce Eckfeldt 9/14/21 Bruce Eckfeldt 9/14/21

The 12 External Factors You Need To Consider To Create An Effective Business Strategy

Too many companies create their strategy in a vacuum. To be successful, you need to consider and react to these external factors.

If you want to grow quickly and successfully, you need a solid plan that positions you well in the market and gives you plenty of business opportunities. Strategy is fundamentally about how you are going to respond to what's happening in your market and what your competitors are doing. If you're only looking at what's happening inside your company, you'll miss the bigger picture and many of the great opportunities--and risks--that are out there.

Developing strategy is one of the main things I do with leadership teams as we plan for how they are going to scale and grow their businesses. When we conduct our strategy sessions, we start with a broad assessment of the external factors that we need to look at. From these, we can pull insights, predictions, patterns, and trends that are going to play key roles in the decisions we make about where we go.

1. Customers

Knowing what's happening in your customers' business and having insight into their market is critical. Ask them how things are going, what they are worried about, what their big plans are, and where they are investing their time and energy. Look at your best customers and worst customer and see what they are doing differently.

2. Prospects

Beyond your current customers, what are your prospects doing? Try to understand why they are the not buying, what else are they buying, and how it is different from your product or service. Look at what criteria they are using to make decisions and what channels they are buying through. See if you can develop insights into what's preventing them from buying.

3. Direct competitors

Knowing what your competitors are doing is critical. Have they launched or announced new products or services, made key hires, or opened new locations? One of the best sources of this information is the people who have recently left said companies. If you're connected to someone who just left, take them out to lunch and see what you can learn.

4. Indirect competitors

Too many teams only focus on direct competitors. Instead, you need to consider all of the options your customers and prospects have to solve their problems. Don't forget that coping with the situation is a viable option for some of your current and prospective customers. Knowing the options that these people are considering is key to positioning.

5. Markets

Knowing what's happening in your local market is critical. And if you're in multiple markets, this is even more important because it's easy to become blind to local conditions that might impact your business. Understand what's happening on the ground in the place you do business.

6. Industry

Stay aware of shifts in your industry that will impact you and your business. If everyone else is moving staff from 1099s to full time hires, this will impact access to talent and the expectations of your potential employees.

7. Technology

Staying current with the changes in the underlying technology and the infrastructure of your industry is critical. Many companies have gone belly up or been swooped up in acquisitions because they missed a key shift in technical trends. These tend to happen quickly, so suss them out early.

8. Labor

If you're a growing company, access to good talent is critical. Understand what's happening with salaries, benefits, and who else is competing for the same people you are. If labor is tight or expensive, it will hinder your growth and cut into your margins.

9. Economic

Macro issues like interest rates and general economic growth will impact the business environment. But you should also pay attention to how these impact your specific industry. For example, interest rates will impact real estate, which will hit construction, which means building supplies will be less in-demand.

10. Political

Politics define policy which can have a significant impact on business conditions. New regulations or changes to existing ones can make or break businesses. Make sure to look beyond national politics; pay attention to state and local issues because hese can often fly under the radar.

11. Cultural

Trends and movements can change customer expectations, behaviors, and priorities. And sometimes this happens more quickly than we anticipate. Companies that respond quickly can take advantage of the slower competitors and gain market share.

12. Social

While there are others you can, and should, consider that are unique to you business, these twelve factors are a good starting point. By collecting what you know about each of these you'll be better informed and will make better, more insightful choices about the strategic moves you plan to make. Good teams look at all of these on a regular basis to catch changes that can have a big impact on the business and help them take advantage of opportunities and avoid pitfalls.

Bruce Eckfeldt 9/9/21 Bruce Eckfeldt 9/9/21

The SEC Has Released a Letter Written by Jeff Bezos That Reveals the One Simple Secret to Amazon’s Success

Amazon has been ranked number one by the American Customer Satisfaction Index for eight straight years. Here is how they did it.

As a business advisor and leadership coach, one of my first tasks with any organization is to help the top team set the bar. Without a clear bar, we have no target and no way to measure progress. However, my real job isn't getting these teams to reach that bar; my real job is teaching them how to raise that bar when they reach it.

For companies like Amazon, the idea of continuously raising the bar is hardwired into their DNA. The only way a company can reach and maintain such high levels of success is by systematically resetting their sights on higher and higher goals as they continue to succeed on previous ones. They are never "done" and they never stop thinking about how to be bigger and better.

Recently, I came across a letter Jeff Bezos wrote to shareholders, a letter which the SEC posted on their website. In it Bezos writes about how the constant pursuit of customer satisfaction has instilled an ethos in Amazon.

"One thing I love about customers" he writes, "is that they are divinely discontent." And it is this natural tendency of the customer to constantly want more that has driven the company to be fanatics about continuous improvement.

Bezos identifies one simple thing that drives continuous improvement within Amazon. And any company can use this simple tool to fuel growth and innovation. It's simple, but not simplistic, and it's something that you can spend a lifetime pursing and still not be finished with.

What drives Amazon's success is their dedication to always setting high standards.

Setting high standards does not just apply to the executive team, but with every team and at every level of the organization. High standard are part of Amazon's culture and ethos. It's a core value and a continual pursuit.

But setting high standards is not easy, nor is it cheap.

First, standards are infectious. Once one person raises or lowers the standards, others tend follow. It's critical to set the standards high and then push people to achieve them. It's a virtuous cycle: success will continue to build more success.

However, the opposite it true as well. As soon as one person gets away with lower standards without comment or correction, then others will quickly follow suit. And once this momentum builds, it's difficult to arrest.

For companies like Amazon, where employees tend to be some of the smartest and brightest in their fields, another problem presents itself. People who are exceptionally smart in one area will tend to assume they are exceptionally smart in many others--even when they are not.

Bezos emphasizes the need for everyone to be open to the fact they have weaknesses and blind spots. The answer he gives is to get good feedback and insights from the people around you. Reflecting back on the early days of the company he says, "my colleagues were my tutors."

Having such high standards has cost Amazon a lot of time and money.

For example, instead of quick and easy slide presentations, teams at Amazon write six-page memos to lay out ideas in narratives which are read in silence at the start of a meeting. When well-written, these frame up concepts perfectly and kick off highly-productive discussions.

But these memos are very hard to write well and people often spend a week or more creating a memo. Many companies would baulk at that kind of time investment. For Amazon, it's just one more example of the bar they are willing to set and the work they are willing to put in.

What are the practical benefits of such high standards?

The positive outcomes show up in their products and services. High standards drive the breadth and depth of Amazon's offerings and the quality of their service. Bezos lists out all of the innovation and success initiatives they have recently launched. He lists everything from Prime Video, AWS, and Alexa to the internal accomplishments with programs such as Career Choice where they pay up to $12,000 towards the education of Amazon employees.

Beyond their products, high standards drive internal culture. And while it's a demanding place to work, it's also an engaging place to work. Good people are drawn to high standards and so they are drawn to Amazon. This creates a virtuous cycle so long as these standards are maintained.

Good companies learn how to set goals and achieve them. Great companies learn how to continually raise the bar on performance to reach ever higher levels of success.

While the vast majority of companies are a fraction of the size of Amazon, they can adopt the same approach to set high standards and achieve the same benefits of this continuous pursuit of improvement. It's certainly not easy, but it's worth it.

Bruce Eckfeldt 9/7/21 Bruce Eckfeldt 9/7/21

Hate Going to Networking Events? Here’s How To Make Them Productive, If Not Enjoyable

While being an introvert can make networking events more business than pleasure, it doesn't need to be difficult.

I've been a consultant and entrepreneur for over two decades and networking has undoubtedly been the key to my success. Ironically, I test off the charts as an introvert. And while I have approached networking differently than a natural extrovert, I've found ways to be extremely effective in these social situations.

Networking is critical to most professional careers. If you're in a sales or business development role, networking is central to your ability to develop relationships and leads. But even if your primary responsibility is not lead generation, networking will have a significant impact on your success.

Networks give you access to information, resources, knowledge, and most importantly, talent. One of the best ways to find candidates for open positions is your professional network. And when you need freelancers or service providers, your network can provide you with names and recommendations.

There are many ways to network, but the most common and often most productive is the tried and true networking event. This could be a one off event some evening after work or a cocktail hour at a longer conference or industry gathering. Either way, these types of situations provide a good opportunity to meet many people in a short amount of time, if you approach it correctly.

Here are the strategies I've developed over the years and the ones I coach my clients on when they want to make the most of an event.

1. Set a specific goal to achieve.

As an introvert, I don't naturally work a room. I'd rather find someone interesting and sit in the corner and talk. To motivate me, I set a reasonable goal to kick start me into meeting people. It could be as simple collecting 20 business cards or meeting three of the speakers. The goal gives me purpose and helps me make decisions and take actions.

2. Prepare yourself mentally and physically.

I suggest that introverted people prepare both mentally and physically for the event. If I've been at work or conference proceeding all day and then head straight to a happy hour, I run out of steam quickly. Instead, I'll sneak in a workout, go for a long walk, or just find a quiet corner and grab some down time. By "pre-charging" for big social events, I give myself the energy I need to be successful at them.

3. Have a few opening lines ready.

Starting a conversation can be difficult in many social situations. Fortunately, events come with some context that make openings a little easier to develop. I like to have 3-5 general open-ended questions in my back pocket that are specific to the situation. "What did you think of so-and-so's talk?" or "Did you come to last year's event?" are great examples of openers that can kick-start the conversation.

4. Work the room to meet new people.

Too many times I see people meeting someone early in the event and then speaking with him or her the entire time. Networking events are great opportunities to meet lots of new people. Focus on moving through three steps: building rapport, making a connection, and setting a reason to follow up (my go to is to send them an article). I generally spend between 3-5 minutes per person to get these. Once I set a reason to follow up with them after the event, I move on to meet someone new.

5. Give yourself a break.

If you're an introvert, you'll need some downtime. If an event is more than two hours, I often plan a 10-15 minute break about half way. I might call and check in with my kids or just find a place to relax for bit. Be sure to set a specific time for when you'll jump back in so you don't convince yourself to call it a day.

6. Follow up on your commitments.

After the event, be sure to follow up with everyone and mention the items you agreed to. I try to do this by the end of the day or first thing the next day. You don't need to do the follow up itself, but definitely touch base with them and set expectations for the follow up you mentioned in the conversation. If I promised to send them an article, my email would just tell them I'll send it to them by the end of the week or by some date. Many times this is a better approach since it allows me to email them again which, in turn, builds more connection.

Just because you're not a natural extrovert doesn't mean you can't handle a social event like a networking pro. In fact, by using these techniques, you can often get more accomplished in less time than someone who can close the bar. You'll also feel much better the next morning.

Bruce Eckfeldt 9/2/21 Bruce Eckfeldt 9/2/21

Struggling to Set Effective Quarterly Objectives? Make Sure You’re Using These 5 Types

Many team struggle with setting effective quarterly objectives. Here are five types that will create better alignment and simplify implementation.

The core of my role as a leadership team coach is to help my clients set strong objectives each quarter that advance the companies growth strategy and critical capabilities. Without these, they only focus their time and energy on the day-to-day demands of the business. Powerful objectives align the team and create urgency and progress on long-term goals.

However, when I walk into many teams, the objectives they've set are often vague, lack key details, and don't serve to focus and align the team. Generally this results in lackluster performance and frustration with progress. With a few revisions and an understanding of what makes good objectives, these pitfalls can often be avoided.

Here are five types of objectives, and examples of each, that I find work best for driving results. If you're having difficulty with your objectives, use these examples to fix them.

1. Completion

When you have an initiative or project to finish, use a completion objective. The key with completion objectives is to define what your "definition of done" is and to set a clear date. Here are three examples,

Allow new affiliate partners to sign up via the website by October 1st

Route all new customer service calls into the new CRM system by August 15th

Complete and deliver all senior executive 360 feedback reports by June 1st

2. Proficiency

Use this objective strategy for when you want to raise the bar on performance for a specific capability in the company and keep it there. For proficiency goals, select a specific performance indicator (how to measure) and a target (the number you want to achieve).

Increase the customer service NPS above 0.25

Get inventory level under 90 day inventory turn

Finish weekly leadership team meeting in under 55 minutes

3. Reduction or elimination

If you're trying to reduce or eliminate something in the business, use this approach. This one is similar to proficiency but opposite since there is a lower limit your trying to get to.

Eliminate all returns due to missing shipping address information

Have zero accidents on the shop floor due to liquid spills

Get same-day employee call-outs to zero

4. Run rate

With run rate objectives we're focused on an absolute number or volume, rather than a proficiency standard or ratio. We want to set a target rate and keep it there going forward. By focusing on rates rather than one total number, we focus on the system that needs to be put in place, not just creating a one-time win.

Increase our inbound lead rate to 25 qualified leads per week

Improve sales in the northeast to $750,000/month

Publish three new white papers per week

5. Composition

Sometimes you want to change a ratio in the business. With these goals, there is usually a range you're targeting with a high and a low. You want to achieve a specific balance, not set a bar to overcome and exceed. Numbers that are too high or too low are both undesirable.

Have 20-25 percent of new clients be small businesses

Spend two to four hours a week on learning and development activities

Keep two to three days of inventory on the top 20 best selling products

Don't over complicate your quarterly planning process. Pick three to five things to focus for the coming ninety days and leave everything else for later. It's far more productive to complete a handful of goals in a quarter than to get halfway on twice as many initiatives. And by focusing on these five types of objectives, you'll simplify your planning even more and accelerate your grow even faster.

Bruce Eckfeldt 8/31/21 Bruce Eckfeldt 8/31/21

Here’s Why Your Executive Team Struggles to Solve Problems and What You Need to Change

Many executive teams struggle with addressing issues quickly and effectively. Here's how the best ones avoid drama and get better results.

As a leadership team coach, developing a good decision-making process is one of my main areas of focus. And while many teams are good at simple decisions that come up frequently, these same teams can be challenged by new and complicated decisions that come up when the company starts to grow quickly.

The key to getting good at decision-making is to have a process that everyone knows and has had experience using. While it's true that every decision is different, the process you use should be the same. Here is the one I coach my teams to use.

1. Define

First, I have teams start every decision-making process by clarifying the problem in front of them.

In this step, it's fairly common to discover that the decision on the table is simply the presenting problem and there is, in fact, a deeper, more important problem hiding underneath the surface layer. By getting to the core problem, we will not only address the surface issue we're having but we will also be able to address other issues on a more systematic basis.

For example, one team I was working with recently had a problem with low sales numbers during the previous two months. Their first reaction was to spend more on marketing. However, it became apparent that one of the sales people was on maternity leave for three months and hadn't been replaced. The real issue was not having a good process for covering people while they were on planned leaves, a problem that would not have been solved with more marketing dollars.

2. Debate

Once the team has defined the problem well, I have them develop criteria for the options they want to consider. The goal here is to get clear on the definition of solved and all the possible ways they could address the problem.

For the criteria, I'm looking for objective tests we can apply to all of the options to evaluate and sort them. For simple problems, this might be things like cost, speed of implementation, and/or measure of impact on the problem. For more complex problems, you might have criteria that address risks, organizational change, or undesirable collateral impact.

Creating as many options as possible is critical to a good problem-solving process. If there's only two or three options to choose from, a team can easily become stuck with a less than ideal outcome. Create time and space to brainstorm ideas. Suspend judgement and generate as many ideas as possible. Often times the winning idea comes late in the game and starts out as an off-handed comment.

3. Decide

Once you have your criteria and your options, the team can start the final decision-making process. Use the criteria you've developed to evaluate and rank the options you've generated. For some criteria, the budget for example, might be easy to calculate and apply.

On the other hand, it might be harder to quantify things like risk and undesirable collateral impact, but taking some time to discuss is important. In the end, I like to see absolute numbers, scales of one to five, or high/medium/low for each criteria and for each option.

However, all of this only works if people are free to speak their mind and share what they know and see without fear of judgment or shame. If people hold back, you'll miss key insights.

Most of the time, one of your options will float to the top as the most desirable choice. On occasion however, you might find that two or more options seem good for different reasons and it's not obvious which one to choose. In these cases, try to develop a trade off value between the criteria.

For example, if one solution costs more but is faster to implement, decide how much a week or day of schedule is worth in dollars and then discount/add it to one option to compare them head-to-head. You can do this for many types of criteria and effectively normalize options to reduce the complexity.

While you won't always need to create complicated matrices to compare and score you options, when the stakes are high and the issues complicated, it's a good approach to have in your toolbox.

Good decision making is a core skill for every leadership team. It takes training, practice, and experience to build that muscle. But once you have achieve that capability and honed it, your work will become much faster and easier, and you'll have better outcomes to celebrate.

Bruce Eckfeldt 8/26/21 Bruce Eckfeldt 8/26/21

Just Because You’re a Nonprofit Organization Doesn’t Mean You Can’t Act like a For-Profit Company

Being a nonprofit organization doesn't mean you can ignore good business practices.

Any business that doesn't follow good business practices will struggle. A lack of attention to costs and profits will lead to financial troubles, a loss in customers, and an exodus of good talent.

Nonprofits don't have that same Darwinian force at play. A poorly run nonprofit can limp along for years based on the good intentions of its managers and the hopeful support of its funders. However, while nonprofits don't have the same money motive and financial goals, they can still benefit from adopting many for-profit best practices.

As a business coach who works with both for-profit and nonprofit organizations, there are several good for-profit business practices that I employ to help mission-driven organizations dramatically increase their impact and reach.

1. Clarify your organizational focus and desired outcome.

At the core of strategy is choosing a clear focus for the business. Focusing creates alignment for the team and eases the daily decision-making process. Having a clear focus allows you to concentrate your energy and resources and move the needle. A business without a focus will chase too many priorities and produce lackluster results.

The same is true for nonprofit organizations. While there are many noble pursuits, if you want to truly make an impact, choose one you can advance the most and define the specific outcome you desire. Once you've made a choice, explicitly clarify all of the things you are not going to do. This will help you avoid distraction which water down your efforts.

2. Paint a vivid picture of the future you are striving for.

Stalin has been quoted to say, "single death is a tragedy; a million deaths is a statistic." It's sad, but true. Because of the way our brains work, we emotionally attach to stories not numbers. If we want to create a compelling vision of the future, it's better to describe it as a narrative rather than with numbers.

For businesses, we create vivid visions of the future by describing accomplishments in rich detail and writing them in the present tense as if we've already achieved them. For nonprofits, we take a similar approach: we focus on the core beneficiary and desired impact for them; we describe the good we want to achieve in a rich language of success.

3. Create measurable outcomes and objective definitions of success.

In business we say, "what gets measured gets managed." By finding ways to benchmark our efforts and outcomes, we can begin to keep track of our progress and success. Only then can we know if we're getting closer to our goals and desired outcomes.

The same can be done in nonprofit organizations. Once we have a clear focus and defined outcomes, we can create a set of objectives and criteria we can measure as we proceed. Without these, we don't know if our action and efforts are moving us closer to or farther from our goals.

4. Measure and track program costs and impact.

Beyond just a way of measuring financial value, money gives us a way of directly comparing otherwise disparate outcomes. It allows us to compare the value of two different types of customers or compare to the return on investment of different initiatives.

While money is not our end goal in nonprofit organizations, it can still be used to compare costs and measure value of different programs and initiatives. A program which generates more value while using less resources is better than one who consumes more and delivers less. By tracking the direct and indirect program costs and monetizing program value, you can see which programs you should double down on and which you should scuddle.

5. Balance core programs and investing in future innovation.

In business, you need to generate results now and in the future. If you only focus on driving short-term results, you'll soon find yourself with employees who are stunted and products and services that can't keep up with the competition. But if you only focus on long-term training and innovation, you'll run out of cash by the end of the month.

The same is true with your nonprofit organization. You need to invest in your staff and create new programs and services for your beneficiaries. But you can't do so in a vacuum and ignore the short-term reality of budgets and delivery. Set aside a reasonable portion of your money and resources for each.

While running a nonprofit is not the same as running a for-profit business, there are many best practices you can borrow to be successful. Many nonprofits shun running themselves like a business thinking that purpose trumps profit. Unfortunately, even though nonprofits are not driven by money, failing to adopt good for-profit business practices will often leave these well-intended nonprofits struggling to create the impact they were designed to make.