Mark-up or Margin, are you confused?

I am sure most of my readers check the search words used by visitors to their website. I do almost every day, and there are some very revealing and frankly shocking facts which emerge. Perhaps the most shocking is the fact that the commonest type of search which finds my site goes something like "What markup do I need for a 25% margin?"

"Why", you ask, "do you find that shocking?" The answer simply put is that it shocks me that business owners are struggling with the concept of margin when it is the basis of almost all business analysis, and if they don't understand it, they are putting their business at serious risk. To understand why let me give you a real life example. More

Accountability: The Rim of the "Wheel of Management".Here is the full article!

There has been so much interest in my latest article that I have reproduced it here.

This is the final article in the series entitled "The Wheel of Management". In previous articles we talked about organization, delegation, measurement, evaluation, communication and discipline, each critical components of an effective management system, and we saw that all of these processes had a common theme:

- Tell your people what you expect them to do;
- Measure their accomplishment;
- Give them feedback; and
- Reward or discipline them as the case may be based on that accomplishment.

Now we must ask ourselves whether all of the processes also had a common objective and a little thought will tell you that the answer is a resounding "Yes!" Unquestionably the common objective is the fostering of a climate of accountability among our employees. Accountability, the attribute that makes the organization run smoothly, the thing that absorbs the potholes along the way, yes accountability is truly the Rim of the Wheel of Management. And accountability happens because of the way we manage!

Perhaps this comes as a surprise because the common misconception is that we look for employees who are accountable. Looking doesn't work! We have to make them accountable, and making them accountable means that it is our job! This is what managers do. So, sorry guys and gals, those of you who lament that your people are not accountable, well, suck it up because it is your fault!

Now this may seem harsh, and it is. It is because it is not hard to do all the things we have discussed, it just takes a little resolve to really be a manager, and a little effort to get the small amount of knowledge necessary. The worst part is that it is actually easier to manage well than it is to manage badly. If you take the time to master the skills that we have discussed, it will be a weight off your mind because the things you have always wanted will really start to happen.

The greatest reward about doing what I do is when one of my clients comes to me and says, "You really gave me my life back. I was beating myself up the wall, making less money than when I was employed, and you changed all that." I don't correct him even though I know that it was him who actually changed all that, all I did was provide the knowledge that he needed.

The best part about all this is that accountability also means profitability. This means that any investment you make in gaining the knowledge to become a better manager is repaid several fold by improvement in your bottom line. This must be one of the most unique of all opportunities, make your job easier, and make it more profitable. Boy what a deal!

To find other articles in the series go to my website.

The Wheel of Management series is complete!

I have just uploaded the final article in the Wheel of Management series to my website. The article ties it all together and shows that accountability of our employees arises from the way we manage. In other words we make them accountable by what we do. This is somewhat of a revelation. Read more now!

Planning, The Hub of the "Wheel of Management".

This is the penultimate article in the series. The reaction has been great so far, but wait for the finale, it will blow your socks off! To read this and other articles in the series go to the article index in my website.

The Wheel of Management

I have started a new series of Articles which I call The Wheel of Management series. Each article will concentrate on one of the spokes of the wheel, the tools or processes we all need to know and use if we are to be successful managers. The first article on Organization is already published here.

New articles in the series will be published regularly.

A Budget is so much more than just a financial plan!

In this new article on my website I discuss the merits of preparing an annual budget. I make the case that "but the best part is that the benefits given are just the beginning. Used correctly, the budget becomes a major part of your management process, and is a key element in defining goals and objectives for your people. In so doing it is laying the groundwork for the holy grail of personnel attitudes, accountability".

See what you think. Read more

New Year Resolutions for Small Business Owners.

As we enter the new year, we all make resolutions about change we intend to make in our lives. So why not give some thought to those resolutions we need to make for change we need to make in our business. Here are some I think many small business owners will benefit from:

• Cash is king, so why don't we resolve to implement a comprehensive cash planning process. Large companies do this, but most small business owners fly by the seat of their pants, and too often get caught with them around their ankles. Using data from their own accounting system, it is a really simple process to define who can be paid and when, but most importantly to also signal when problems are on the horizon.
• Organization makes the business work smoothly, so lets resolve to check that every employee has a current job description that sets out not only what his tasks are but also what his authority is, what measurements will be applied and what satisfactory performance is. Doing this lays the groundwork for creating an accountable workforce. While we are about it lets review the organization chart and make sure everyone has a clear idea of who their boss is, and that they are assigned a job only because they are the best person in the company for that position,
• We all want to maximize profit, so a resolution to ensure that our accounting system is working smoothly and providing us with the information we need to run the business, not just the information the CPA needs to file the corporate tax return. We must make sure we have a costing process that tells us which parts of our business is doing well, and which is not, what gross margin we need and when we are achieving it and when we are not.
• A final thought may be a resolution to ensure that we are providing our employees with the feedback they need. A formal evaluation process sometimes seems cumbersome for small businesses but the benefits are enormous. But don't let it stop there, make sure you and all your senior staff recognize good performance when it happens, and of course do not shy away from criticism when performance falls short.

This is not an exhaustive list of resolutions you could make this New Year, but I promise you, make and keep these and you and your business will have a better year!