Image: Creative Commons

Your operational plan should be a roadmap for the who, where, and how of your business.  There is less number-crunching involved than with the marketing and financial plans.  You’ll want to think about how your business is going to function.  Your plan should answer the following questions:

• Who are the key players in your business?  If you haven’t done so, create an organizational chart to plan out the future of your business.
• Do you have contractors, interns, and/or employees?  Will they continue on for 2012?
• Will you hire additional people in 2012?  How will you find them and train them?
• Will your team have enough work to keep them busy?  Will you need to hire additional people to keep up with the demands of your clients?
• Will you outsource any tasks and responsibilities in your business?
• Who are your suppliers/vendors?  If you don’t have suppliers, who are the wedding professionals that you partner with most often?
• Will you work with new suppliers?  Other wedding professionals?
• Where will you meet with clients in 2012?  If you don’t have an office space, where is a good match for your company’s brand?
• Which processes will you create systems for?  How can you service your customers better?  How can you improve your processes?

Goal-setting for Operations

If your plan is looking like a list of 100 to-dos, let’s narrow it down to the most manageable tasks.  Select 3 operational goals that you’d like to accomplish in 2012.  Pick the ones that are your favorites and ‘top of mind’.  It’s easier to stay inspired about your goals if you are passionate about them. Use our SMART goal-setting sheet to help.

Join us tomorrow to craft your financial plan for 2012!

A holiday deal for you…

Throughout these 3 weeks, we’ll be offering $100 off The Simple Plan Exclusive which is our one-to-one partnership with small business owners to help build a business plan.  Simply visit The Simple Plan website to learn more about The Exclusive and enter the discount code “2012” when you enroll.  This offer is only good through December 30^th and space is limited to first-come-first-served.

Over the next 3 weeks we will be helping you put together a plan for 2012.  This week, we’ll be examining our past.  In week 2, we’ll be focused on the present.  And, in week 3, we’ll be building for the future.  We’ll be examining our marketing, operations, and finances.

Make sure to revisit our post from yesterday where we reviewed your marketing strategy in this past year.

Let’s continue!

Image: Creative Commons

Do an inventory of your business operations…

Your business operations are the ‘who, what, and where’ of your business.  How does your business function?  How did it run in 2011?  Was it smooth as silk?  Or were there any hiccups?  It may be a good idea to whip out a calendar and review the year month by month.  OR, examine your 2011 clients to see if your operations best supported their needs.

Here are some questions to ask yourself:

• Did you have any personnel?  Were they interns, contractors, or employees?  Did you feel they were hired and trained effectively?
• How about your suppliers?  (These are the people whom you order raw materials from or the outside people who help service your clients?)  Did they deliver when promised?  Are they good partners for your business?
• Do you have an organizational chart?
• Do you have systems and processes?
• Do your systems and processes help you run a smoother business?  Do they bring consistency to the client experience?  Do they help you in training personnel?
• Do you have solid accounting procedures?
• Have your contracts been reviewed by a legal professional?
• Do you have trademarks and copyrights to protect your company name and your intellectual property, respectively?
• Where do you meet with clients?  Is it a good representation of your company and your brand?

Now, make 3 columns on a sheet of paper and label them each: “Operational Factors, Strengths, and Weaknesses”.  Spend a few minutes listing strengths and weaknesses for the following operational factors:

• Your personnel: interns, contractors, and employees
• Your hiring and training procedures
• Your suppliers
• Your business systems (particularly your sales process and your ‘production’ process – or the process by which you make your goods or the process by which you service a wedding)
• Your legal protection
• Your accounting process
• Your location (if you work at home, where do you meet with clients?)

By examining your strengths and weaknesses you should be working towards areas of improvement for 2012.

Come back tomorrow and we’ll review your financial strategy in 2011.

A holiday deal for you…

Throughout these 3 weeks, we’ll be offering $100 off The Simple Plan Exclusive which is our one-to-one partnership with small business owners to help build a business plan.  Simply visit The Simple Plan website to learn more about The Exclusive and enter the discount code “2012” when you enroll.  This offer is only good through December 30^th and space is limited to first-come-first-served.

Image: AVClub.com

I’ve talked about this before, but it’s worth mentioning again.  If you have an unpaid intern, you better make sure you’ve hired them legally.  The New York Times reported yesterday on two interns who are filing suit against the makers of the film “Black Swan”.  According to The Times, Fox Searchlight Pictures “had the interns do menial work that should have been done by paid employees and did not provide them with the type of educational experience that labor rules require in order to exempt employers from paying interns. ”

Yes – gone are the days where we can have interns make pots of coffee and photocopy papers for FREE!  Making coffee is hardly an educational experience.  The law requires that interns be hired for training purposes only.

The US Department of Labor has 6 criteria for hiring unpaid interns.  They are:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

The USDoL goes on to say that if a person meets all 6 criteria they are a “trainee.”

Unsure if you are doing this correctly?  Talk with your CPA or attorney to help guide you in the right direction.

The people who support you and your business go far beyond the people actually employed by you.  In the wedding industry, we expect our clients to hire professionals to handle their wedding, you should do the same with your business.  Here are some people who should be on your team:

Accountants:

• Bookkeeper – if you don’t want to manage your monthly accounting transactions
• CPA / Tax Accountant – for assistance with filing taxes
• Financial Advisor – for looking at your numbers and helping you strategize

Lawyers:

• Contract Lawyer
• Trademark and Copyright Lawyer

Marketing & PR Pros:

• Branding Specialist
• PR Professional

Human Resources Advisors

Operational Management:

• Admin/Virtual Assistant
• Cleaning Staff

Now, let’s get real here… you probably aren’t going to hire ALL of these people ALL the time.  And, you may not have a need for some of these professionals, depending on where you currently are in your business and your personal ability.  But, once you can identify your weak spots (and those areas which you despise) consider hiring people to join your team.  It’s important to recognize where our abilities are limited and how adding someone to our team can only make our business stronger.

Who else?  Who did I miss on this list that is helpful for your business?

Creating a system for each position

Today, we are going to create systems or processes for these positions.  A system (or process) is the step-by-step approach for accomplishing a particular responsibility.  Each position on your org chart will have a set of responsibilities.  Each one of these responsibilities will have a process or system.

I like to make my systems into checklists.  This is something I learned from one of my favorite books, The E-Myth Revisited.  In the book author Michael Gerber talks about “systemizing” your business.  This may sound robotic to you.  (I remember thinking that my business would lose its soul if I made everything standardized and systematic.  McDonald’s came to mind.)  But, in reality, systemizing your business ensures:

• that you’ll give the client a consistent experience.
• can hire and train additional personnel.
• efficiency.  When you can work through a list of procedures, you don’t have to recreate the wheel ever time you sit down to work on a project.

How to create a system or process

We covered this a few months ago in a series we did on Client Management.  You will want to revisit the post on documenting systems here.  Here are some of the tips I shared:

• Start at the very beginning: what is the very first thing you do in this specific process?  (In my example of assembly, the assembler is responsible for ensuring that they have all inventory and supplies in place.)
• Then walk through ever single step of that specific process and identify a task.
• Do not worry about other processes.  Focus solely on ONE process.
• Don’t over-explain or over-document.  You want to give enough detail where anyone following will be able to do it.  But don’t over-complicate things.
• Keep your checklist to a page if you can.  It’s nearly impossible (nor is it fun) when you have to go thru a checklist that is 8 pages long.  If it’s getting too long you may have to split the process into some additional separate processes.

You’ll also want to check out some of the management tools (including software) that I love for keeping my systems organized.

Have you created systems or processes for your business?  How did you do it?

On a less serious note… I found this procrastination flow chart.  Just think… you can even systemize your “Procrastination Process”!

Image: Creative Commons

Source: Wikipedia

We are going to make one of these today!

Creating your organizational chart

I’d like for you to think about your business on a larger scale.  What does your business look like in it’s complete structure?  What does your business look like if you were to break down all of the responsibilities into separate positions with different people?  What does your business look like if you were operating with various people in charge of separate roles?

In yesterday’s post I described some areas of responsibility for a stationery business.  If I were to break down the areas of Design, Sales, and Marketing… it might look like this:

VP of Design

oversees:

• Collection Designer
• Custom Orders Designer

VP of Sales

oversees:

• Sales Manager for weddings
• Sales Manager for babies
• Sales Manager for other events

VP of Marketing

oversees:

• Brand Manager
• Pricing Analyst
• Marketing Researcher
• Advertising/Promotional Manager

That’s just the start.

Sure – your org chart will be comprised mostly of you in each position. That’s OK.

Why is this important?

The org chart will help you…

• see responsibilities/jobs for which you can outsource or hire.
• develop a vision of what your business will look like as it grows.  (This is always exciting to me!)
• separate responsibilities and “areas of management” if you do have employees.  (No more duplication of work or confusion as to who does what.)
• keep yourself accountable to run your business with each of these responsibilities in mind.  We tend to focus on our strengths, and neglect what we cannot do well.  But, by assigning the job of “VP of Finance” to yourself it ensures that you know this is your job and it has to get done by you (or, by hiring an accountant.)  Someone’s name has to be in this role.

There is no formula for this.  There are some great org charts out there (just google).  Make this yours.  Make it easy for you to work from and build from.

Have you created an org chart before?  Was it helpful?

A self-employed business owner does it ALL.  If you have a small team, or no team, this is no exaggeration.  We sell, we create, we clean, we tweet, we calculate, we compute, we write, we publish, we collect trash.  We know we do it all… but, what does all really encompass?  Have you ever sat down to write down EVERYTHING you do as a business owner?

Today, I’d like you to do just this.  Write down EVERYTHING you do.  I’d also like you to write down everything you should do but don’t have time, energy, resources, experience, knowledge to do.  (These are the things that should get done in your business but don’t.)  Make a list of responsibilities within the spectrum of your business.

I find it helpful to make my list in sections separated by area of responsibility.  For example:

Design

• Design Samples
• Design Client Custom Orders
• Design Website Collection

Sales

• Schedule Appointments
• Meet with Clients
• Write Proposals
• Write Contracts

Marketing

• Define target market and market’s buying trends
• Determine pricing that is most suitable for products/services (and reassess annually)
• Determine where to advertise, where to market, where to network
• Assess promotional activities for return on investment

(and so on!)

I come from a business background so I tend to talk in “business jargon” in my own business.  Yours doesn’t need to sound like this.  Make it yours.  Make it something that represents your business.

What exactly is that you do all day?

I often hear small business owners talk about the challenges of hiring and training good people.  I hear about the challenges of finding hard-working people who are loyal and responsible.  If you have employees, contractors, or interns that you manage, do you find this to be the case?

Consider a Mentoring Approach

In all of my jobs prior to me owning a business, and also in my business, I’ve had to oversee and manage people.  And, my approach has always been to take on the role of being mentor with each individual on my team.  As a mentor, your job is to guide your employee in their career.  Your job is to give them skills and competencies.

I think we often make the mistake of thinking (or hoping) an employee will be with us for eternity.  These days, people change careers and jobs often.  We can’t expect that the people who work for us will be a part of the company forever.  (Haven’t you, yourself, changed jobs and/or careers a few times?)  Knowing that the people who work with me will not be with my company forever, frees both parties.  It frees me to guide them as a mentor in their long career.  I now can frame their work as a learning experience.  It frees them to realize that their employment with me is valuable education.

Here are some examples of how I use my mentoring management approach:

• I tell my employees: “I know you may be with me for 6 months or 60 years.  Whichever it is, I want you to learn from your job every day.  What we do here, big or small, is all part of your lifelong career.”
• Even with a task that is boring on the surface, I can frame it is something greater if I link it to a life skill: “This is basically just copying and pasting.  But take some time to learn the quick keys on the computer so that you can get it done quicker and easier.”
• When teaching them something new, I go in with the approach of a mentor:  “I’m going to show you how this spreadsheet works.  I think it’s really great for you to have experience working on this sort of tracking, especially if you’ve never done this before.”
• If an employee is disappointing me, I look at the longer-reaching affects: “I’m concerned that you’ve been coming to work late.  Is everything OK with you?  I’ll be honest: it’s disappointing.  I want to know I can rely on you.  Can I do that?”

By acting as a mentor to your employees, you have the ability to give to them insight and guidance on their career.  Their job working for you becomes much more valuable than the hourly wage you pay them.  This in turn makes them more committed and loyal to your company and more invested in the work they do for you.

And best of all… it creates a pretty awesome employee-employer relationship.

Have you had the experience of mentoring your employees?  What worked for you?

Yesterday I introduced the topic of Leadership, as we’re going to start expanding more on the Human Resources aspect of owning a business.  Specifically, I shared what NOT to do as a leader of employees.  Today, we’re going to be looking at what TO do as a leader.

At all of the companies I worked at while in Human Resources, we would conduct “employee opinion surveys”.  Without a doubt, the teams who scored highest for job satisfaction, had the best morale, and admired and respected their managers all had bosses who truly lived out tried and true leadership principles.  There are loads of leadership qualities that definitely help, but I have my Top 5 that I think are the most impactful to employees – and, what I strive to focus on in my own leadership abilities as I lead my own team:

5 Things on Which to Focus as a Leader

1. Ensuring you are providing a fun and safe work environment – who wants to work in a dreary, depressing, unsafe workplace?  Believe it or not, this happens a lot – as a leader, you can ensure that your employees are coming to work in a fun, exciting, vibrant environment that they look forward to every day.  If you’re not laughing with your team at least once a day, you might need to look around your environment and see what sort of conditions your team is working under!
2. Provide your employees with regular, consistent and honest feedback – if a manager doesn’t provide an employee with feedback – routine feedback – then they have no idea how they are doing.  Also, if you have performance issues that you need to address, they need to hear this much sooner than the point you’re ready to terminate their employment.  If you’re not conducting a regular 6 month check-in to assess their progress, goals, etc. then it’s a great idea to consider implementing employee reviews.  Your employees will thank you!
3. Ask employees for their input – what processes they would change, what they need from you as a manager, etc. – by asking them for their input this will create an open and honest environment where you can learn first-hand what they feel is working well, what could be better, etc.  Maybe they need more of your time in the office, they’d like to recommend a systems change that will save your company hundreds of dollars, etc.
4. Set goals and give employees clearly defined parameters to work with – just like children, us employees need to know what the parameters are that we can work with (our “playground”) so we know how far we can push our limits and how much freedom we have.  Once you set goals collaboratively with your employee, they will feel empowered and more excited about taking ownership with their job.
5. Listen – Oy.  Too many managers talk AT their employees as opposed to listening TO them.  People want to be heard, they want to express themselves.  Definitely practice “active listening”, looking for non-verbal cues such as body language and behavior to help you understand the employee’s message they’re trying to convey.  Too often managers are distracted, thinking about how they are going to respond next, and don’t hear the full message the employee is trying to convey.  If a manager can truly practice active listening then communication will likely improve ten-fold.

Think about the best manager you’ve ever had.  What made them an excellent leader?  Did they possess any of the above leadership traits? If you’re in a leadership role, your challenge this week is to choose on of these 5 things to focus on and incorporate it into your leadership style. Your employees will thank you!

Image: Creative Commons License

You know that person that comes in to help you a few hours a week?  That person that’s “not really an employee” but someone you’ve hired as “a contractor”?  Well… think again.  The IRS may not agree with you.  That person may, in fact, be an employee.

What’s the big difference?

Well… for starters… how you pay these workers and withhold taxes from their paycheck is the first impact on your business.  The IRS states, “Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.”  (As an aside, you DO have to provide a contractor with a 1099 annually if he or she has provided more than $600 of service to your business.)

Well… gee… sounds more favorable to have a contractor, doesn’t it?  (Less paperwork and tax expense for me!)

But, hold on one minute… there are more rules…

The IRS wants to make sure that the contractor has complete control over his or her work.  “Control” is the determinant in whether you have an employee or a contractor.  Here are the rules from the IRS:

“In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.  Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?”

Plain English Translation for You…

Let me break this down into simpler terms.  (Please remember, I am not a tax accountant and you should speak with a tax professional to get legal advice.)

1. Behavioral:
   • Do you tell your worker to be at your office at a certain hour?  If so, he or she is likely an employee.
   • Do you tell your worker that he or she has to work from a specific location (your office or home)?  If so, the worker is likely an employee.
   • Do you have specific tasks, responsibilities, methods, and procedures that he or she must follow?  If so, the worker is likely an employee.
   • Or, do you give the worker a job to do and he or she has complete control over how and when to get it done (with the exception of a deadline)?  If so, he or she is likely a contractor.
2. Financial:
   
   • Do you provide all the equipment, materials, and supplies for your worker?  If so, he or she is likely an employee.
   • Are you responsible for paying the worker on schedule, or does he or she invoice you periodically?  If you pay the worker on your schedule, then he or she is an employee.  If the worker invoices you upon completion of milestones or deadlines, then he or she is a contractor.
3. Type of Relationship:
   
   • Are there benefits in place that look more like an employment benefit?  Chances are, you have an employee.
   • Do you treat the worker like an employee?  If so, he or she is probably an employee.
   • Is the relationship open-ended, or does it have a finite “project completion” date?  If it is open-ended, then he or she is likely an employee.

Be “IN the KNOW”…

The IRS is cracking down on small businesses these days.  (Think about it: the country needs the income!)  Be sure to watch yourself and do things legally or you could be at the other end of a very ugly audit.

Any thoughts or questions about hiring employees or contractors?