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This podcast is for small to medium business owners. You've got a lot to gain, a lot to lose, and business is tough; there's a lot at stake. Business acumen is what every business owner needs, it will make a profound difference to your business.
This podcast will cover marketing, positioning, branding, lead generation, selling, negotiating, customer service, managing staff, managing finances and accounts and much more.
https://www.businessveteran.com.au/
mark@businessveteran.com.au
A business owner friend recently told me that they had successfully won some business off a competitor. The competitor was doing a shoddy job, and the customer swung the business over to my friend. That got me thinking. Both of these companies were about the same size, both employing people in the same industry with much the same skill set. So why should one company do a better job than the other? What is to stop my friend’s company doing a shoddy job and losing the business to yet another competitor?
Now, in a very small business, the owner is working on the tools and is ’on the ground‘ to ensure quality directly. But as the business grows, the owner cannot be everywhere at once, and that’s when the problems start - the quality of the workmanship or service deteriorates, and the customer is lost. Too often customers just change provider rather than work with the incumbent to solve the problem. The business hits a growth ceiling.
If the business in its current state is going to make you enough to retire and ‘live the dream’, then its fine the way it is, but if you need to get past this ceiling and grow some more in order to turn it into a saleable asset and realise the equity you’ve built up in it, then a solution is needed. If a potential buyer of the business decides that it cannot run when the owner steps away, they are not going to pay very much.
The solution to this problem is quality control. You, as the boss, need to receive a report on the quality of all the work your people are delivering. There are two critical aspects to this report: independence and objectivity.
Why independence? There is an old maxim that one cannot be the judge in one’s own cause. In other words, you cannot rely on the person who is doing the job to report back to you on the quality of the result. It is simply asking for trouble to expect that to work. Even if they had the strength of character to dob themselves in for a sub-standard result, they might have a very different idea from you on just what is the required standard - their idea of satisfactory might be your idea (or worse, the customer’s idea) of a disaster. There could be the occasional individual who can get this right, and you may even employ one, but they are unusual and I wouldn’t depend on finding enough of them to grow your business.
How can you get this independence? Two possibilities come to mind. You can have different teams, say team A, checking on the work of team B and vice versa. Scuba-divers as will be familiar with the ”buddy check“ (checking each-others equipment pre-dive); anyone who has travelled by air would’ve heard “disarm doors and cross check“ from the pilot (two cabin crew check each-other’s door procedure). In the case of a safety check, this would well work however for work performance, collusion is always a risk.
Another possibility is to employ a person whose only job is quality checks. This might at first seem expensive for a small business, however they need not be full time. It could be a great role for a retired person who wants only a few hours of non-manual work per week. There must be plenty of retired tradesmen, for example, who find that they are too old for physical labour who would relish the opportunity to apply their skills and experience to ensuring a high standard of workmanship for the company. In other industries, a follow up phone call to the client might be the answer.
Of course there will still be a cost to this, so you need to decide if you want to be the cheap offering, or the quality offering - you can’t be both. Most customers will ultimately appreciate the reliable quality, especially after trying the cheap competitor.
Then there’s the objective nature of the report. This means that you have some sort of standard for the level of quality you require, and each job is measured against this standard. You list out the 8 or so aspects of the job, then rate each aspect as:
• Above standard
• At standard
• Sub standard
• Terrible
The reason to include “above standard” as an option is that the high standard may be achieved at considerable additional cost, and the client may not appreciate or need the additional quality. Sometimes this is referred to as ’gold-plating’. Remember that the point of business is to make a profit, so in this case your profits are disappearing in unnecessary extra work.
When coming up with your list or aspects, consider not only the workmanship, but also the efficiency with which it was completed (without efficiency its hard to make a profit) and customer service. Anything done in business comes with a ‘wrapper’ of customer service. From the customer’s perspective, this is often just as important as the workmanship or result.
The advantages of objectivity are numerous. It gives clarity to the employees. They get feedback on precisely what they are doing right and wrong. Employees love this objectivity as their performance doesn’t depend on someone’s whims and moods - there’s a perceived fairness. It also makes giving feedback easier. The conversation between a manager and a front line worker becomes about how to achieve the standard and not a debate on whether or not the work is good enough, which can become personal.
There are so many other advantages. Without this independent objective measure, you will likely first find out about a problem when a customer leaves. Then you have the employee who delivered the poor outcome to deal with. That is probably not going to go well and result in the employee also leaving. While this sometimes might be the right result, wouldn’t it be better to find out about the problem before the customer does, and give feedback and training to the employee early in their tenure with you? Most employees will either step up (ideal outcome), or step out (avoiding the necessity to dismiss them with the associated unpleasantness and risk).
Most businesses who have survived long-term in a competitive environment, have solved the quality problem. They generally grow until they hit the next growth ceiling, which will either be the sales cycle problem or the account management problem - topics for future articles.
As always, if we need any help with ideas, insights or implementing any of this, reach out.