The Neo CEO

Great leadership requires the ability to control what is in your power to control, to give people clarity, direction, and a sense of security, to chart a course and set goals your employees believe are attainable. As we begin a new year, it is your job as the business leader to set and communicate expectations for the year ahead. From strategic initiatives to marketing campaigns, from new positions to new product lines, your company is waiting for you to clearly set the goals for the new year.

It also falls on your shoulders right now to make sure that your financial house is in order, that you understand thoroughly where you are today, how you got there, and have a plan moving forward.

Three areas of financial focus for Quarter One

We’re all eagerly anticipating good things from the year ahead. But hoping is one thing, preparing is another. Here are three financial objectives you really need to have in order to start the first quarter off right:

1. Set Your Budget - Your budget is the financial plan for managing and controlling revenue and expenses over a period of time. Budgeting is a core business practice and a fundamental management tool that keeps you and your employees on course, and provides the radar to tell you when you're off course. It's fairly short-range radar — most budgets look ahead month by month for one year. It's operationally oriented to help you and your employees manage the business on a daily basis.

   A budget is developed from past trends and future predictions, and is a forecast of your income statement. It emphasizes profit and the path you intend to take to generate that profit. In addition to planning how you will operate in the near future, your budget is also a control device. It helps assure that proper measurement and evaluation procedures are established throughout the company. It provides a plan so that everyone knows where the business is going and what you expect by way of performance. It also gives you a way to measure that performance.

   Need help developing a budget? The E-Myth Online program has extensive information, worksheets and examples that will help you with budgeting and much more.

2. Determine Your Financial Goals - A big part of your budgeting process revolves around the financial goals you’ve set for the year ahead. Where do you want and need your business to be at the end of the year?

   The main purpose of creating a budget is to plan the monetary results you're going to achieve during the coming year, and then ensure that you realize those results. Rather than wait until the end of the year to see what happened, track your progress monthly and make adjustments as the year progresses. This dramatically increases the likelihood that you will, indeed, accomplish what you've set out to do.

   If you haven’t already, it’s time to set annual goals (either revenue/profit or both). You can then break these goals into a series of twelve monthly goals for short-term strategy and monitoring. Remember that these are first-pass goals that will be refined as you grow your business.

3. Communicate to your Team - At E-Myth, we talk a lot about the importance of creating your Company Culture, or “the way we do it here” and communication is the key. You need to make sure that your employees understand the idea behind the work they’re being asked to do. The most effective strategy is to broadcast and reinforce your vision and goals at every opportunity. This includes your financial goals. You may do this in a special meeting or incorporate it into your regular team meetings, what’s important is that you share your goals so your team can help you get there. Ultimately, you need your team to be working toward the same goal—financial success.

   Some business owners are leery of sharing financial information with their employees while others believe in total transparency. Ultimately, how much you share is a personal decision. It’s up to you to decide what you’re comfortable with. At the very least, we recommend you share enough information so that your employees understand the overall financial health of the business.

   One way to do this is to make sure that everyone in your business is aware of the financial implications of their respective positions. People who have no financial information can’t be held accountable for managing financial performance. They have to know the financial dynamics of the positions they hold before they can make positive changes. This can be a tricky topic, and we have an entire process in our Mastery Impact! coaching program dedicated to bringing financial awareness and accountability to employees at all levels of your organization. The bottom line is that the more that managers and workers become aware of their impact beyond their own positions, the greater their appreciation of their roles within the business and the greater their positive impact can be.

How your business does in Quarter 1 sets the tempo for the entire year. Make sure that you set the right tempo for the year ahead with clear direction, a realistic budget and the support of your team. Here's to your success!

Share Your Story

Have you set your financial goals and budget for Q1 and beyond? Post a comment below and tell us about your challenges and triumphs.

Further Reading

Practicing Financial Leadership
Company Culture: A Game Worth Playing
Your Cash Management System

Six Steps to Maximize Cash Flow

Need help controlling the cash flow in your business? At our Six Steps to Maximize Cash Flow virtual seminar, an E-Myth Business Coach will help you identify and maximize the cash in your business. We’ll offer tips you’ve probably never even considered…

Learn more

The importance of effective communication for managers and business owners can’t be overemphasized. Clear and effective communication from management increases efficiency, satisfies customers and improves quality throughout the organization.

What is Effective?

Let’s define what we mean by “effective” from both the employee & management perspective.  Our interest here is in how information, ideas and caring flow from management to employee and also how employee concerns are transmitted from employee to manager. Remember communication must be a two-way street to truly be effective. 

As owners and managers we must communicate the company vision and objectives to each employee, along with our expectations for their particular position and role in reaching our vision. In the E-Myth management model, we do this through the strategic objective, organizational strategy and position contracts. For important agreements, getting it down in writing is often the difference between effective communication and communication that misses the mark between the person delivering the message and the receiver. Don’t shy away from the written word. The E-Myth system of management along with effective delegation and regulation, relies on written interchanges to make certain that both parties understand what is being communicated.

Effective communication is most easily achieved in an organization that has a clear structure and systematic ways to communicate. Again, let me re-emphasize, don’t be afraid of implementing written systems when they provide the most effective method of making certain both the sender and receiver acknowledge the same message or agreement. Nothing puts the team, or a manager and employee, on the same page as a written statement.  

Consistent communication between an employee and their manager is fundamental to establishing an open, trusting culture. Company meetings, department meetings, and one-on-one employee development meetings all serve this end. While “management-by-walking-around” has its place and advantages, there really is no better way to ensure effective communication than scheduling regular meetings between managers and individual employees. This regular meeting is a commitment management makes to always address any issue that arises and it gives the employee the opportunity to ask questions, express concerns or seek mentoring and support.  

Communication one can rely on with regularity along with a commitment to transparency is the kind of communication that builds trust between manager and employee.  Transparent communication is open, honest and objective and allows for disagreement. Being a good manager requires that you balance the individual employee’s concerns and requirements with the overall needs of the business, and sometimes means making tough decisions. Transparency when the seas are rough is even more important than when there is clear sailing.

Effective communication has two phases; the transmission phase and the feedback phase. The transmission is the sending of a message, either verbally or written, phone, in person, e-mail or letter; and the second is the feedback phase or the acknowledgment that the original message was received and understood, or a restatement of the original message to make sure that it was correctly interpreted, or a request for more information. Getting this acknowledgment back is an important part of communication since we can’t consider it effective unless we know it’s been received and understood.

I Hear You

Individual perceptions play a large part in the understanding of our communications. Body language plays an important role in getting our point across. Our body language may either be congruent or incongruent with the verbal message; something we want to be aware of during our face-to-face interchanges.

When asked to define communication, most of us say talking, writing or body language.  But listening is equally important; especially when confronting difficult issues. Recognizing the importance of listening and making it a part of your culture improves communication considerably. Everyone can learn the art of active listening. The key to listening effectively is relaxed attention. Listen with your whole body, maintain eye contact and give verbal and non-verbal cues that you’re right with the speaker. Do your best not to interrupt.

If half of the equation in communication is active listening, the other half is expressing what you think, feel, or want in a true and non-defensive way. Be clear about what you want and what you are willing to give. Use “I statements.”

Communication is Money

Employee surveys consistently demonstrate that ineffective communication results in poor employee morale which causes increased turnover and absenteeism, dissatisfied customers from poor customer service, higher product defect rates, lack of focus on business objectives, and stifled innovation.

Employees will put in that extra effort to create a high performance environment when they are kept informed openly and honestly on all aspects of their job and the business and they feel that they are being listened to with empathy.

A culture that places an emphasis on effective communication instills its value in each employee and provides tools and training to elevate everyone’s abilities. Fostering two-way communication gives employees adequate opportunity to ask questions, discuss and express their own ideas. Feedback loops, sharing best practices and having an open channel for ideas, innovations and suggestion for improvement ensure that employees and managers work together to achieve success. Effective communication is like cash in the bank and it helps grow your business like compound interest.

Further Reading

The Managerial Perspective
Accountability: Defining Work Relationships that Work
The Best Employee Retention System

Share Your Story

What communication challenges have you faced in your business? How have you overcome them? Post a comment and tell us about it.

A good coach will make his players see what they can be rather than what they are.

Ara Parseghian, Notre Dame Football Coach

In many ways, business coaching is at the heart of what we do at E-Myth Worldwide. But the question often arises as to why a business owner would need a coaching relationship and how to make the most of it. It is important to realize that coaching works best for people who are successful at what they do and are ready to go to the next level in their business. And, much like a sports coach, a business coach works with you to develop the skills and abilities that are already within you.

Why Have a Coach?

Coaching involves a number of different qualities that are not always employed with consulting. For example, in sports, a coach will help you understand not only how to do something, but why it is important or necessary. A coach will guide you, provide feedback and insight, while holding you accountable to the goals and objectives you have agreed to accomplish. A coach will facilitate your progress and work alongside you to help you achieve your vision.

Consultants, on the other hand, typically engage in an analysis of a particular problem, issue, or project while providing recommendations and suggested courses of action. While their role is usually advisory in nature, they will often perform specific work for a client. Their focus is generally on what needs to be done and not the why and how of the processes involved. Although some may disagree, it can be said generally that a consultant offers a fish, while a coach helps teach one to fish for themselves.

There are also significant and instrumental roles to be played by family, friends, and mentors in the life of a small business owner. Motivational materials, books, and seminars are useful as well. But as critical as these individuals and resources may be in the success of the business owner, none of them can fill the role that a coach can have in helping that business owner achieve his or her vision.

A Vision, a Journey, and a Guide Along the Way

Here’s a real-life tale of one our clients: Rick's dad was a plumber, and Rick grew up working in his dad's business. Then one day Rick decided that, since he's a plumber and has lived in and observed the plumbing business all of his life, it was only reasonable that he establish a business of his own. And so he did.

Rick is a terrific plumber, but he found that while he could clear clogged pipes and repair broken toilets, he did not know very much about such things as how to hire and manage employees, use an income statement or financial balance sheet, or even develop marketing strategies to attract new customers. His dad had some good advice to give, and Rick’s wife tried to help with the books, but as his business grew he began to find himself working more and more hours and yet never getting a handle on the “business” of running the business!

A day came when he realized that, just as he invested his time and energy in learning his trade, he also needed to learn how to run a business. He knew that he needed to develop skills and acquire new skills to be an effective business owner, but he was reluctant to seek help. Fortunately, Rick had a friend—the owner of a successful hardware store—who offered some insightful advice and directed him to E-Myth Worldwide.

Armed with a clear vision of where he wanted to go with his business, and assured that he could indeed develop the skills he needed to successfully lead and build his business, Rick soon found that his business coach became an essential guide for navigating the path to business success and achieving his objectives. Along the way he also discovered that his relationship with his coach enabled him to see himself in ways he hadn’t before, and to find his proper role as a business leader and entrepreneur. Rick the plumber with a plumbing business became Rick the business owner who also happened to be a terrific plumber!

Dual-Vision and the Gift of Objectivity

What Rick and others like him have discovered through the coaching relationship is the need for what we call “dual-vision” and the value of a coach’s objective viewpoint and feedback. This dual-vision involves the art of keeping focused on the present and the needs of today, while always keeping the goal lying ahead clearly in view. The overriding value of the business coach is his or her ability to provide the critical objectivity to the business owner. This objectivity is supported with feedback and input to assist in that business owner’s progress.

Another aspect of the coach/business owner relationship that cannot be overlooked is the accountability that is provided. There is tremendous value in sharing one’s goals and objectives with another and then striving to accomplish them. In a very real way it becomes a partnership wherein the business owner is accountable to himself and his coach to fulfill his obligations, and the coach is accountable for facilitating the business owner’s experience along the way.

No one person has all the answers to the challenges faced in life or in business. But everyone can benefit from the insights, knowledge, and perspective of another. This is especially true for business owners who want to move beyond the place they find themselves today. Having a vision for your business is essential and getting the help you need to achieve that vision is priceless. Or, in the words of Tom Landry:

Setting a goal is not the main thing. It is deciding how you will go about achieving it.

Share Your Story

How has you and your business benefited from having a business coach? What is it about having a coach that is valuable for you?

Are you ready for an E-Myth Business Coach?

Learn to lead your business in a way that supports your life objectives and create a business that works for you without your constant involvement in the daily operations. We can show you how. Business owners, contact us today for a complimentary business consultation to learn more.

Flickr photo credit: Markfive