Ted’s Rules

What gets measured gets changed

I’m working with a raw milk, grass fed, dairy farm client on metrics for his organization.  He’s keen on developing Metrics to help run his organization—here’s some rules for you to use when creating metrics for your organization that I’ve developed from 20+ years and nearly 100 businesses that I’ve developed metrics for:
 
Five Rules of metrics:
 
a)      SIMPLE:  Keep it simple/easy to do and not more than 10.
b)      DO IT!  Just do it-daily.
c)       SO WHAT?: Change it if it’s not telling you (and everyone else in your company) something, but don’t stop doing it.
d)      POST IT: Post it for everyone to see.
e)      What’s GOOD/BAD:  You have to have something to compare it to, yesterday, last week, last month, last year, budget (not all but some of these).

Ted’s Rule #4: Don’t Punch Too Far Over Your Weight

 

Don’t Punch Too Far Over Your Weight.

In order to be a successful business owner, you have to have self-confidence and be willing to take on a certain amount of risk.  A little “Build it and they will come” attitude is a healthy thing.  HOWEVER, you have to balance that attitude with a dose of reality.  Know your limits and your company’s limits (that includes the limits of your employees, equipment, infrastructure, suppliers, etc.) and don’t punch too far over your weight.

Tracking Inventory

Take an inventory at the end of the month, and then make sure you do it at the end of EVERY month.

a.       Inventory only those things that are part of the finished product, whether you made them or not.

b.      There will be 3 categories:

1.       Finished Product:  Actually done and waiting to be shipped

2.      Work in Process: Some Stage of assembly or a sub assembly you’ve put together or worked on but isn’t done yet

c.       Raw material:  this would be something you’ve purchased from the outside and haven’t changed yet.

Create a spreadsheet, count each of the parts on the last day of the month, then decide on a value and make that value consistent month to month.  The value should be based upon COST:

a.       For a part you bought that’s easy—whatever you paid for it

b.      For work in process, it would be the cost of what you paid for it + the amount of labor (at cost) you’ve got into—for this use whatever hourly rate you’ve paid someone in the shop—I’d pick an average of everyone and just use that—keep it simple.

c.       For finished product, take out your perceived profit margin.

Then is the easy part—you put it in Quickbooks.

The reason for doing this is so that you line up your costs and revenues and profits on a monthly basis.

Ted’s Rule #3: Don’t ask me a question you don’t want the answer to

Don’t ask me a question you don’t want the answer to.

To see what Ted means, please click on his 33-second video.

Ted’s Rule #2: Don’t lie and don’t commit until you have to

Don’t lie and don’t commit until you have to.

As a business owner/CEO, it is inevitable that you will find yourself in situations where you are tempted to stretch the truth or even lie. If a vendor asks you how soon you’ll have his check, you don’t necessarily need to tell him that you barely made payroll last week.  Don’t panic and say, “I’ll put it in the mail first thing in the morning.”  Instead, acknowledge that you owe him money and that he deserves to know when he can expect payment.  Tell him that you will be in touch as soon as you can give him reliable information.

The second half of this rule, “Don’t commit until you have to” is a corollary to the first.   Consider this:  we all want immediate answers to our questions; it’s basic human nature.  It follows that we all feel obligated to give immediate answers to questions asked of us.  Guess what?  You don’t have to.  Sometimes, in order to give the most accurate information, you may need to do a little more research.  Sometimes, in order to reduce the likelihood of “changing your answer” three more times, you need to delay giving an answer.  Sometimes, having a little more wiggle room on the time line can make a big difference to your business.  The point here is:  consciously decide how much information, which information and at what time that information is best shared with which individuals or groups.  When you are asked a question, don’t automatically answer; pause and consider your response.

Ted’s Rule #1: Never write/record anything you don’t want on the front page of the New York Times

Never write or record anything that you don’t want on the front page of the New York Times.

With the convenience of voice mail, email and texting, we are now able to communicate even when we can’t reach someone by phone or in person.  While that convenience has huge advantages in getting things accomplished faster, there are some potential pitfalls to these methods of communication. Consider how easy is it for an email or voice mail to be misconstrued as the recipient does not have the advantage of hearing your voice or seeing your body language.  Being misunderstood can wreak havoc on relationships, whether with employees, vendors, customers or investors.  So think before you type/record and you will reduce the likelihood of these misunderstandings.  At worst, you could find yourself in legal trouble.  Recognize that anything you put in writing or on a recording is “discoverable” in a lawsuit, so if you’re not sure you want it memorialized for eternity, don’t write it or leave it on a voice mail.

JRI Consulting, LLC