Out of the Crisis.Org

[Louis Altazan]

Joe has a one-man shop. He does great work and the client’s love him. The reason Joe is a one-man shop is because he cannot keep an employee. Nobody can do the job as good as he can. He has tried several times over the years, but potential employees always end up fired or quitting. The problem is Joe works all the time and has very little time to enjoy life.

Ted has a four-man shop. He also does great work and his clients love him. Ted’s employees have been with him a long time, make good money and like their jobs. The problem is Ted is not making any money.

Joe and Ted have different problems, but also have a similar problem. Either could be said to have succeeded, yet both have also failed, in a similar manner. Both have failed to meet the needs of the owner of the business. Joe has no time and Ted has no money. A business has several stakeholders. These are people who have an interest in the business, in one form or another. Stakeholders might include clients, employees, vendors, the local community and so on.

Clients that are poorly treated leave, the same with employees. Even vendors and the local community are un-likely to tolerate abusive treatment or not being paid. Yet many owners tolerate hours and pay they would never accept from an employer. In a new business, this is often necessary, also known as “paying your dues.” The owner may defray reward and invest heavily in time, hoping for future reward. This is okay to a point, but there comes a time when all stockholders must be considered.

Is there a difference in running a business and working for yourself?

What advice would you offer Joe and Ted?

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[jbrenn77]

Joe needs to find out why it is that people are quitting. Exit interviews might have helped, but it's too late for that. If Joe is profitable and has a steady flow of business he's got half the battle overcome. Maybe Joe needs to get management training and learn how to become a better manager. Employees will only do what he holds them accountable for. If there is no system of accountability then they will never do what he expects, especially no one has told them! Joe should realize that nobody will ever think like and do exactly what he does, and that he needs to start by recruiting the best possible employees, put a system in place to make them successful, offer good working situations, and reward those employees for following the system he puts in place.

As for Ted,
He's caught up in a situation where he's always working for the shop and the shop's not working for him. He needs to get management training if needed, and then evaluate why it is that he's not profitable. He may have to learn how to read a profit and loss report and balance sheet, if he's even got an accurate one. Once he puts a system in place to get accurate reporting he can use some industry standard benchmark percentages and compare them against his own. That will help him to determine what the problem might be. Once he becomes profitable he can then pay himself more and even hire more support personnel to help lighten the load. He should then be able to have set hours and still remain profitable/pay himself well.

The problem w/ both these guys is they need management training, whether self, instructor led, or books, whatever. When there's a repetitive problem in the biz it's the manager's fault. I was there a few years ago and are still learning. Actually, I'm like Ted in the phase after he learns how to become profitable. My only problem now is car count is too low.

_________________
Jason Brennan
CEO
Fine Tune, Inc.
Lansing, IL, USA

[Louis Altazan]

Hi Jason,

I agree both problems are clearly symptoms of management issues. Both men have failed to consider ALL of the stake holders in the business. Employees are stakeholders and Joe has apparently failed to realize this. Their quitting should send a clear signal of a problem. Even excessive firings are a clear signal.

The owner too is a stake holder. I find far too many owners seem to fail to realize this. Not paying themself is an extreem form of cost cutting and no route to success.

In my opinion, the manager should set a fair salary and pay themself. If money becomes short there is clearly a problem and it must be resolved. Working for low/no pay is NOT a solution. As you state, both men are seeing symptoms of a larger problem.

Thanks Jason, I appreciate your reply.

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA