Tag Archives: 55 Questions

It’s Almost Mid-Year… How Are You Doing?


To learn more about the 55 Questionssm process click on the logo. The end of June is near, are you on target to have a good year? If not, you have really two choices…change the pace of your current activities or change your goal.

As an example…if at mid-year you’re at 40% achievement of the goals for the year then you really need to go 50% faster the second half of the year than you did in the first half of the year to make plan.

Achieving only 40% of your goal in the first half means you must achieve 60% in the second half…that is truly 50% faster. Is that realistic? And what has to be done for you to be able to achieve that dramatic increase in the pace of your business?

If in fact it is not realistic then maybe you need to consider changing your goals to ones that are more realistic. Remember bonus and performance shouldn’t be necessarily altered. Lowering the goals does not automatically mean you have to give a larger bonus or a better raise. (I’ll come back to that in a moment).

One of the reasons to change the goals is so that your team doesn’t become sloppy. Because they are pursuing real goals, not goals they know they cannot make. And another reason is that out of reach goals create apathy… lack of concern and may lead to even more mistakes and bad habits.

The intent is to build a feeling of success, of achievement, of accomplishment, instead of having a demoralized group of employees who basically say… who cares and gets used to failing.

Making sure you have the right people in the right seats doing the right things the right way is critically important and it’s time for you to sit down and have an honest review of your goals for the year and if you can pick up the pace or need to change the goals. Next sit down with the individuals who are the key performers in your company and have an honest review with them about their performance to date and your expectations for the balance of the year or …

There aren’t enough “ors” in the world…I was sitting recently with a CEO who said well…”My people are just going to have to do a better job”. And I asked him…”OR” and he had no response. So while I know you want your people to do a better job, are there consequences? If there are no consequences then what you have is an empty threat. So explain very clearly the consequences of lack of performance.

Now let’s go back to that bonus and performance thing. If in fact you’re going to change the goals for the second half of the year, consider this…If we failed in the first half to achieve any of our goal, we get a zero for the first half of the year, if we hit the goals for the second half of the year we get a 100% for the second half of the year. So for the full year that would be 0% + 100% or an average of 50% achievement.

So even though you changed the goals that doesn’t mean you reward people by giving them a full bonus for achieving less than was expected. Prorate the bonus based on the performance for the first half of the year, and prorate the bonus based on the performance for the second half of the year and give people the combined, prorated bonus.

And that’s a way you can keep your people motivated, interested but not reward them for goals not achieved.

Do you have any “ORS” in your company?

Dave Baney is the CEO of 55 Questions, LLC, a certified Gazelles coaching firm. Hebrings over 30 years of Fortune 500 management and leadership experience to growing businesses nationwide through 55 Questions’ tools and processes. Known for crisp execution, marketing insight and thoughtful direction, he is now a trusted advisor for CEOs. Contact Dave directly: dbaney@55questions.com.

Who Went Into a Business to Break Even?


To learn more about the 55 Questionssm process click on the logo. If you listen in on business conversations you will hear lots of talk about breaking even. “What is the break even on that project?” “Will we break even on that investment?”

Who went into business to break even?

The conversations have been about break even so that business leaders know the minimum level of sales that needs to be achieved so that there won’t be a loss for the day, week, month, year, project, etc.

Here is a simple formula to calculate the Break Even Rate in Sales

Fixed (Overhead) Costs = Break Even Sales

Gross Margin

Fixed or Overhead Costs refer to the ongoing expenses of operating a business, such as rent, utilities, telephone, internet, accounting fees, advertising, interest expense, taxes, travel, office supplies, employee benefits and wages not directly associated with the production of a product, etc.

In other words all costs on the Profit & Loss Statement except direct labor, direct material costs or other direct expenses.

If the ABC Company, a manufacturer of widgets has Fixed Costs of $750,000 and a Gross Margin of 25%, then the Break Even is $3,000,000 in Sales.

It is a little less intuitive for a service firm. If the XYZ Law Firm has Fixed Costs of $750,000 and has a Gross Margin of 90%, then it has a Break Even is $833,333 in Sales.

Manufacturers spend a lot of money on direct labor and materials in the production of their products and therefore have a much lower Gross Margin and a much higher break even level than service firms. Service firms have very little in Direct Cost so most of their expenses are Fixed Costs and so they have high Gross Margins.

Let’s go back to the original question: who went into business to break even?

Instead of Break Even set your targets for Acceptable Level of Profit, that is the break even plus an amount of profit that is acceptable to the owners of the business.

Here is a simple formula to calculate the Acceptable Level of Profit

Fixed (Overhead) Costs + Desired Profit=Level Profit in Sales

Gross Margin

So if the ABC Company, a manufacturer widgets, has Fixed Costs of $750,000 and the owner wants to make $250,000 in profit and has a Gross Margin of 25%, then the Acceptable Level of Profit Sales is $4,000,000.

If the XYZ Law Firm has Fixed Costs of $750,000 and the owner wants to make $250,000 in profit and has a Gross Margin of 90%, then the Acceptable Level of Profit in Sales is $1,111,111.

Start targeting your Acceptable Level of Profit instead of Break Even; you will be happy that you did.

Dave Baney is the CEO of 55 Questions, LLC, a certified Gazelles coaching firm. He brings over 30 years of Fortune 500 management and leadership experience to growing businesses nationwide through 55 Questions’ tools and processes. Known for crisp execution, marketing insight and thoughtful direction, he is now a trusted advisor for CEOs. Contact Dave directly: dbaney@55questions.com.

5 Ways to Find the Best Business Pros


To learn more about the 55 Questionssm process click on the logo. 1. Ask the best people
To find a great lawyer, accountant, or other adviser without sorting through dozens of names, get references from the five most successful businesspeople you know. That’s what I did to find a business coach — and discovered that three of my contacts worked with the same one! Joining an elite group of CEOs, like San Diego-based meeting facilitator Vistage, can also help you mine a global network of connections.

2. Screen carefully
That said, the expert who did a great job for your friend in the Fortune 500 may cause a train wreck if you run a fast-growing midsize firm. Interview several candidates to get the right cultural fit. Have they served firms your size on similar projects? Are they familiar with the nuances of your industry? The answers should be yes. Ask advisers for references from clients who have worked with them for years — and actually follow up.

3. Spread the money around
I use a two-tier system for hiring advisers, turning to the priciest pros only when necessary, and more affordable experts for routine work. For instance, if I’m dealing with giant corporations or I need to carry a big stick, I hire attorneys from a brand-name law firm (and breathe easier knowing I’ve prevented the folks across the table from retaining them!). For basic documents, I hire a local lawyer who’s very responsive — and just as competent.

4. Trust your gut
Take stock of your advisers when you get their first bill. Was it worthwhile to hire them? Do you feel they have the potential to help you earn — or save — multiples of what you’re paying them? The best advisers will more than pay for themselves in the long run. If you’ve hired pros who didn’t deliver, don’t second-guess yourself about it. Fire them immediately and start over. Mediocre players won’t improve with time.

5. Don’t be a cheapskate
Many entrepreneurs try to avoid paying high fees to their advisers by not spending enough time with them. But if you take this approach, you’ll lose out on the benefits of their expertise — which will pay off big time in the long run. Make regular time to consult with your advisers and you’ll build a much stronger, faster-growing business. Remember, the fees you pay these pros are tax-deductible.

Verne Harnish is the CEO of Gazelles Inc., an executive education firm.

Dave Baney is the CEO of 55 Questions, LLC, a certified Gazelles coaching firm. He brings over 30 years of Fortune 500 management and leadership experience to growing businesses nationwide through 55 Questions’ tools and processes. Known for crisp execution, marketing insight and thoughtful direction, he is now a trusted advisor for CEOs. Contact Dave directly: dbaney@55questions.com.

55 Considerations for You and Your Business in 2013 Part 1 – Focus on You


To learn more about the 55 Questionssm process click on the logo. This is the first of a two-part article offering 55 considerations for not just your company but for you as well.

Read the list and find something to commit to for 2013 that will make a difference in your business and your life.

Only select one or two things; you are already busy so don’t over commit because the end result will be that none of them will get done.

1. Practice patience…

2. Lose weight…

3. Exercise regularly

4. Focus more, be fully in the moment…

5. Schedule some “me time” on your calendar…

6. Lower your golf handicap or improve another athletic skill…

7. Schedule family time on your calendar…

8. Select some family events/activities that would be meaningful to do together…

9. Plan for “learning time”…

10. Read more, set a goal for number of books read…

11. Write down 3 learnings from 2012 and how you will apply them…

12. Help one youth per month…

13. Get rid of stuff in your closet or basement…

14. Learn a new language…

15. Go on a picnic with family and/or friends…

16. Visit a park that holds childhood memories for you and share it…

17. Schedule your wills and trusts…

18. Update your vacations for 2013 now…

19. Evaluate your retirement plans…

20. Set 3 year goals for yourself…

21. Define your personal core values…

22. Schedule “think time” for yourself…

23. Define your personal core purpose…

24. What will your biggest purchase for yourself or family be in 2013…

25. Define your personal core competencies…

26. Laugh more…

27. Help an elderly person each month…

Next week we will focus on commitments for your business.

Dave Baney brings over 30 years of Fortune 500 management and leadership experience to growing businesses nationwide through 55 Questions’ tools and processes. Known for crisp execution, marketing insight and thoughtful direction, he is now a trusted advisor for CEOs. Contact Dave directly: dbaney@55questions.com

Are Goals Mandatory?


To learn more about the 55 Questionssm process click on the logo. Goals and objectives provide organizations with a blueprint that determines a course of action and aids businesses in preparing for future changes.

Do all of your people have a set of written goals? If not, why not?

Goals tell employees what is expected of them and provide a measuring stick for their performance.

Have you ever noticed that when a person or a group of people has really committed to doing something they always find a way to get it done?

The energy is incredible. People brainstorm to find solutions. They work extra hours, find extra resources, and most importantly their mindset is different.

Now, when it comes to goals, are yours…soft or generic or specific?

A soft goal might be to complete the XYZ report, while a generic goal is gross sales, but for a specific goal you might have increased sales of current customers by 20% in the first quarter in 2013.

You can see the difference between these 3; clearly specific goals are the best.

What makes a goal specific?

A specific goal is a goal that incorporates an action plan that outlines how you will achieve the goal, and a performance measure that tells you how you will evaluate the goal.

Many times we make our goal too general, which makes it difficult to follow through on.

For example: “Increase my sales” is a good goal, but it’s so vague that it does not provide a means by which you can judge your success. You can modify your goals by making them specific. All goals should be specific (Get new clients), measurable (Get three new clients), and have a time frame (Get three new clients by November)

It is common for employee goals, set as a part of an annual performance review, to be forgotten during the year. Goals get written down on a paper and filed away, and only looked at when it’s time for the next annual review.

Try asking your people what they should be held accountable for. Some will provide you a great set of accountabilities and some will provide you soft accountabilities and some might even tell you “ah…the job I do really can’t be measured.”

I now offer you a simple four word phrase that you need to get used to using: “no metrics, no job.”

Another way is ask “why do you get paid”? When they provide answers, request that they develop a way to measure their responses.

Every one of us is paid to accomplish very specific things.

Let’s get those things in writing and agree how we’re going to measure them and by what date that performance should be accomplished. Once we’ve got that written set of goals the next question is…are goals mandatory?

My answer is to tell a simple story…the next time you go to an airport, just before you get onboard the plane, remember that the pilot’s goal is to land the plane safely at its destination.

So here’s my question, what percentage of the pilot’s goal is acceptable to you? Is it okay if he gets 80% of the way there and sticks it in a cornfield?
So, your response to the question about the pilot’s goal should give you a hint as to what the goal should be for your people. So…are goals mandatory?

The answer is very clear…

Managers can set goals for employees, but without some measure of accountability your staff won’t necessarily feel responsible for meeting those goals.

Employees who are made accountable for goals will be more invested in the goal itself and have higher personal satisfaction about the results and this will extend to the morale of the organization in general.

Having clear, defined, mandatory goals is a great way to keep moving your business forward and ensure you’re on the path to success.

Dave Baney brings over 30 years of Fortune 500 management and leadership experience to growing businesses nationwide through 55 Questions’ tools and processes. Known for crisp execution, marketing insight and thoughtful direction, he is now a trusted advisor for CEOs. Contact Dave directly: dbaney@55questions.com