If you are trying to grow, this may be your Eureka! moment, too. Why so momentous? That’s what our story is about this month.
COMPLICATED VS. COMPLEX
My challenge in franchising was to introduce new business owners to window coverings—to start them up and train them to grow. It was hard (still is!). As we all know, a window coverings business is complicated. Try to teach it to a new person. This crazy business is like a huge blob with lots of pieces, hard to sort out. The trick is to break it into bite-size chunks. One management consultant said, “A business is complicated if you don’t know what the components are. If you do, it is merely complex.”
When you break our wonderful business into components the complexity is manageable. Any experienced window coverings operator can look at the adjacent organization chart and with a little coaching know exactly what is needed for his or her own operation. It’s a reference for management, a blueprint for growth.
If you want to explain your business to your employees, it is easy to visualize their jobs. The chart tells the role of each person. Like power steering, once you experience it, you never want to be without it.
As with any great work of art, the first introduction may leave one underwhelmed. The words and boxes seem obvious, but its subtle power blossoms when put into use.
As you grasp its meaning, this innocent graphic can become your touchstone reference, your fountain of knowledge, to return to again and again to solve business problems and manage for growth.
THINK OF DEPARTMENTS
The first thing the model tells us is how to define the “departments” of a window coverings business. Each, except the owner’s department, can be assigned to a responsible person. The benefit is you know exactly the job of the next person you want to hire.
As the owner, you wear all the hats of every department until you hire, train and assign accountability to others. Now you know why you have that feeling of being overwhelmed so many years. When you break the pieces down, you can see all the things you have been doing . . . and many that you should be doing.
Another message relates to pricing. If one person is the department head for every function, then that one person can sell cheaper than the person who pays someone else to manage a department. The first rule of pricing is that any business with employees is going to have to charge more—and justify it to the customer—if she or he wants to grow with added staff.
Here is a brief outline for what could be a month-long course of study. But it will start you on the path to defining, clarifying, crystallizing and, ultimately, assigning departmental responsibilities to others.
• Owner’s Role—This is the one job you cannot delegate. Only the owner can have the vision, goals and plans for the business. Only the owner can set pricing, hire employees, approve expenses, set a budget and be accountable for profitability.
• Client Development—This is any expense or activity that causes potential customers to call for an appointment. For many, it will be an eye-opener to see a “department” that is roughly equal to the sales function—or even to the production of window coverings. In other words, this is a function that could have one person full-time or an investment of tens of thousands per year “only” to get appointments.
• In-home Sales—This department requires one or (many) more persons to go to customers’ homes to present ideas and products to close a sale. The professional performing this function will succeed by a combination of design skills, product knowledge and sales skills. Think about all three of these skills; each can be a lifetime, full-time requirement for any professional to acquire.
• Operations—This department is responsible for everything after the order is written with a customer. It includes ordering from vendors, contracting for drapery making, purchasing products from suppliers, contracting or hiring installers and everything else required to take a customer order from written specifications to a final installed product the customer will pay for.
• Administration—This department is responsible for bookkeeping, accounting, legal compliance and anything else necessary to fulfill good record keeping and state and federal laws and tax filings.
FRONT SIDE AND BACK SIDE OF BUSINESS
One of the most profound insights that flows from this chart is that money is only created by activities and investments in the first two departments—the front side of the business. The second two departments are cost centers that sap money, but do not create it—the back side of the business.
This explains why some business owners without any employees except themselves struggle to sell $50,000 per year, while other owners can sell up to $400,000 a year.
Every business owner chooses the window coverings and decorating profession for his or her own reasons. If a person enjoys sewing as a craft, then let us respect that person for the craftsperson he is. The industry needs every window designer and drapery sewer who takes pride in her talent. When we match a skilled craftsperson with a dedicated salesperson the result is a wonderful business where each enjoys a fulfilling career.
We must never judge any business owner by his sales level. The important issue is whether the owner consciously chooses the type of business he enjoys and then achieves the profit potential inherent in that choice.
The value of this powerful chart is to help every person in window coverings from salesperson to installer to workroom sewer to understand the valuable part each plays in the whole—and to provide the business owner a blueprint to grow correctly.
Steven C. Bursten is the retired founder of Decorating Den Interiors and author of a how-to book on new business start up, Bootstrap Entrepreneur. He is president of custEmers.com, specializing in affordable Internet marketing tools along with tried and true techniques. Bursten welcomes your questions about marketing, sales and customer relationships. Request his new report for businesses that sell $1 million a year—or want to: “Solutions for Million Dollar Managers” via e-mail: million.dwc@custEmers.com.