My Business On Purpose

4 Four Lessons Learned from Year 1 with BOP

It's been a year at Business On Purpose for me... and one thing I can honestly say is it's been a roller coaster. So what are the 4 things that have truly stopped me in my tracks this year? Well, let's talk about that today. Happy Monday friends, Thomas Joyner here with Business on Purpose.

Coaching 20+ businesses, writing new content, helping clients put out fires, hire new employees, manage supply chain shortages, opening a new office in Nashville, you name it! It's been a challenging year to say the least.

With all of that, there have been a few things that have stuck with me. A few things that fundamentally changed the way I view work and are things I will carry with me for years to come. I wanted to share them with you not to brag about all that I've learned, but to offer you the chance to marinate on them with me.

Maybe they change your perception a bit. Maybe they push you to tweak the way you do things and grow in your own ways. We should always be growing, always learning and I hope that this stirs your mind in a way that you will process, then act on whatever you're challenged by.

So... the 4 major lessons I've learned from the past year.

1. You must know your why

Knowing your why! We have to start here. I've seen this over and over again. Business owners that don't know their why end up one of two places. They either burn out in the process of chasing their goals. Just bored and exhausted from the mundane day to day. No true fire in their belly to storm the next hill, but just going through the motions because their work is not attached to anything.

Or... they end up in another place. They accomplish their goals, survey the scene and realize it's not all it's cracked up to be. They look around and realize that this goal is only meaningful if they grow next year or go bigger next year. The goal had no why behind it and so it felt completely empty at the end.

I had lunch with a business owner last week who had some BIG goals... growth, expansion, and new locations. I was so excited for him. I'm a dreamer at heart and I love listening to other people's dreams.

After he finished telling me about what he hoped for in his business, he made such a profound statement. He looked at me and said, "I've got to figure out why I want to do all that though." I was kind of shocked he went there. I asked him to explain what he meant by that. "Well, I know that if I accomplish all of that, there's just gonna be more goals on the other side of it and it will feel really empty if I don't create spaces for people to meet, places for people to work and provide for their family, and a place for a community to come together."

That's it. That's everything. When the why is firmly in place, it frees you up to chase after your goals knowing that there's more behind it than just money and growth! Don't forget that and know your why!

1. There are no bad teams, only bad leaders.

If you've read Jocko Willink's book, Extreme Ownership you know that this is one of his main points. This may seem harsh. "You don't know my team, Thomas!" You're right, I don't. But I have seen time after time over the past year, when a leader in a business takes extreme ownership, believing that every shortcoming in his business lands squarely on his shoulders, it frees his team up to operate at peak efficiency.

Why? Because now, the owner takes it upon himself to train, train some more, and then retrain. They take it upon themselves to listen to their team, learn from them, and lead them towards a common goal. They build processes to free their team-up from questioning every move and delegate authority for decision-making to develop leaders on their teams.

I've watched teams go from barely functioning to absolutely crushing it as the owner decided to finally lead instead of just getting by. It's a beautiful thing to watch when a person takes that ownership. Doesn't pass the blame, but views it as their sole responsibility to make sure their team succeeds.

That's what leads to high-functioning teams. Now, that weight is heavy. The responsibility of running a business is heavy. But it is one that should never rest on the shoulders of your team. It's too heavy for them. But when you shoulder the load, train your team, and equip them to do their job... it leads to a business functioning exactly the way it should.

1. Whether you believe you can do something, or believe you can't do something... either way you're right! It all starts with belief.

Someone told me this years ago and I've seen it over and over this year. It's why we start with Vision. If we can see it, if we can believe it, it becomes possible. But the moment we doubt and think that it can't be done in our minds, we lower our ceiling and seal our fate.

Belief and positivity are such powerful forces in our businesses. Our teams need to know we believe in them and believe that they can get the job done. Our teams need to know where we're headed and feel the belief that we can get there. It has to be a part of your culture. Many times we, without even realizing it, put a ceiling on our business by the way we communicate with our team.

But when we set the bar high, equip our team to perform, constantly review the goals and show our belief that we will get there... the impossible becomes possible.

But... this leads me to my last lesson.

1. There are no shortcuts to success

The difference in my clients who are knocking it out of the park and the ones who are just getting by and still wondering why they haven't picked up momentum is directly correlated to the amount of work they put in. It's that simple. There's no shortcut to success.

Elon Musk made me laugh recently when I heard him say this… "People always ask how I became an overnight success. I tell them by working 16 hour days for 10 years!"

It's so true, there's no such thing as an overnight success. There's no shortcut. Behind every successful business is someone who put in the work!

Don't believe the lie that you can cut corners. Anyone selling you that is lying to you.

In fact, every time I have a sales meeting with a new business, people ask me, "Thomas what is BOP's secret sauce? Why do the businesses that work with you guys keep getting better?"

The first thing I tell them is that there's no magic wand, and if there WAS a magic wand to make everything better, we would charge a lot more for our coaching!

The second thing I tell them is we hold all of our clients to a high standard and we hold them accountable to putting in the work every single week. And if they don't want to put in the work, we tell them we may not be a great fit.

Because there's no shortcut to success. It's hours of training, hours of implementing, and hours of work before the business gets to the point that it's "Made it." But you know what? Even the businesses that have made it are still working hard behind the scenes to stay there.

So that's year 1 in the books with BOP... take these lessons and think about them for a bit today. Ask yourself where you stand with each of them and allow them to make you better like they have me.

1. You must know your why!
2. There's no bad teams, only bad leaders.
3. Whether you believe you can do something or believe you can't... you're right either way.
4. There's no shortcut to success

Alright! Let me know what you think in the comments below. If you want more content, make sure to follow us on YouTube and subscribe to our podcast. As always, we'd love to hear from you!

Have a great week!

Must Have Tool For Hiring: An Organizational Chart Template

Human anatomy is simply the study of the structure of the human body.

In 1862, an antiquities dealer from Bridgeport, Connecticut named Edwin Smith was living in Egypt and connected with Mustapha Aga, another dealer.

Smith purchased an ancient Egyptian medical papyrus that dates back to the 17th century BC and had taken residence for all of those years in a tomb near Thebes, Egypt.

The Edwin Smith Papyrus as it would become known, is the oldest surviving deep-dive into 48 various cases of trauma to the human body.

The Edwin Smith Papyrus served as an external map to an internal world so others could quickly and systematically build on the prior learning of others. The papyrus is the oldest trauma text in existence and is remarkably cutting edge for its antiquity.

Each of our businesses has a structure, an anatomy.

In the same way science has uncovered eleven primary systems in the human body (i.e. cardiovascular, musculo-skeletal, etc.) it is crucial that we understand and publish the primary systems of our business along with the muscles that allow them to function.

It is time we value the simple business org chart in the way we value a simple anatomy drawing realizing that it brings empowering internal clarity for all of our employees to see the systems and muscles of the body.

To build a simple org chart need not be complex.

First, write out the four systems that are found in every business.

Administration (to include accounting and finance), operations or production, marketing, and then sales.

Each business is supported with these four structures, and each of the four structures will have various muscle sets to help them move.

Second, write out the minimum number of roles within each system that will enable the business to move.

Be very careful to not start writing the names of people in those roles, but instead to have a mindset of role first, people agnostic.

We must be careful to not build the business around certain people (because people may change), but instead to build the business around specific roles that we will then place in the skilled custody of people down the road.

It is rarely a good idea to find a person and then write a role. Instead, ask the business what roles it needs to best operate towards its identified mission.

Third, determine who is responsible for the day to day oversight of the entire body (business), and then who will be responsible for the oversight of each individual system and the roles that make that system work.

Once the roles are complete, only then do we fill the roles with people.

For some, one person may fill multiple roles (i.e. office manager, bookkeeper, etc.), for others, multiple people may fill one role (i.e. superintendent, customer support).

For the basic org chart, focus on the roles first, the people will come later.

Once built you will have created clarity for you, your team, and future team members to come. You will then be able to get on with the business of writing powerful job roles that are aligned with the proper structure of your business and then align the right people with the right role!

Happy Friday folks. Brent Perry with Business on Purpose here. It's June... we made it. Summer is here, and I hope you are ready. My best piece of advice... don't let your clients ruin your vacation.

Story of 2 clients this week talking about summer.

Mexico story

Freedom fishing in Florida

What are your summer plans?

So the question of the day, how do you save your vacations? And yes, I think you can save them before they even start!

Let's get practical

1. Plan your time away! Hopefully, you have already done this.
2. 1. It can be a week with the family
   2. Golf trip with the guys
   3. Traveling home to see parents or your child who is away for the summer
   4. 2 day trip with the girls
   5. You name it
   1. This is crucial
   2. 1. I am leaving town in June for a week with my girls, and I have already let my clients know.
3. Communicate with your clients/customers the days you are going to be out! The days you don't want to be available.

• Don't be available! It's that simple.

1. If you have planned in advance and communicated, then you don't have to feel the pressure to be on.

Change your voicemail

Set your email with an automatic response

Don't open text messages

Thanks for your time. I hope there is something here that you can take with you.

We will talk again soon... but do yourself a favor this week. Enjoy these summer days!

Vision, Mission Statement, And Core Value Examples You Will Actually Use

It was beautifully designed and placed on the wall of their printing business in the cosmopolitan city on the southern coast of Nigeria; three wall plaques side by side by side.

The first plaque read "Our Vision".

The second, "Our Mission".

The third, "Our Core Values"

The world of business has been uniquely lulled into apathy as to the true value of a vision story, a mission statement, and a set of unique core values.

We usually respond to such with an eye roll and a "yeah, we have those" as if we just asked you about a collection of VHS tapes in your attic, or your old cell phones from the early 2000s; "yeah, we have those."

It is also clear that they are dusty and looked at only during your annual office clean-up day with sentiment and reflection.

We have stripped the power away from articulating and casting a clear vision.

We have butchered the value of a bomb-dropping mission statement.

We have relegated core values to strategic talking points that check the box of purpose in the eyes of customers or stakeholders.

Let's reset and challenge ourselves to take a fresh look at the life-giving tools of a vision story, a mission statement, and unique core values.

First, a challenge to write your vision story.

A few thousand years ago we found a Jewish leader in a desperate place crying out to God for help and frustrated, "how long do I have to cry out for help before you listen?".

Here was the response that ultimately came, "write the vision down, make it plain on tablets, so those who read it may run... if it seems slow, wait for it, it will surely come."

Every business must have a vision, and that vision must be written and made plain to everyone because of the truth this wisdom, "where there is no vision, people scatter."

Instead of making excuses as to why a vision won't work, even though we've rarely tried, we must implement, commit, and believe that our team and our clients will have greater clarity because we have greater clarity.

Here are seven categories to work through as you write out a detailed, multi-page, bullet-pointed vision story.

The first category is the duration of the vision. How far out does this vision take you? Is it 18 months? 24 months? 36 months?

Our culture used to allow for 10 and 20-year visions. Those durations are much harder to gain clarity on because of the speed of our culture. We recommend that your first vision story be 24 to 36 months.

Instead of writing "36 Months", write the actual date that is 36 months from now like "December 14th, 2025". It makes your vision feel more substantive.

The second category of your vision story is the family and freedom section. You may ask, "but isn't this a business vision?" Yes! Business and life necessarily intersect. Although we think we can "keep work at work", we know better. What happens at home follows us to work and vice versa.

What vision do you see for your family in 36 months? Write down the ages of each of your family members. Write down what you hope for them by that time. Write down the things you wish to do and experience together. Write down everything you can think of in terms of the growth your family will experience because of the growth your business will experience.

Also, consider the freedom you hope to have as the owner of your business. Want to have your Fridays free to creatively think over new ideas? Write it down.

The third category is the finances section. What profit do you calculate your business to generate then work backwards? In order to generate that profit, you will need to spend and invest what amount? Add the anticipated profit to your anticipated expenses and you will have a rough estimate of your total revenue needed.

If it's a crazy number, then think about it. Is it ambitiously silly, or ambitiously doable?

The fourth category is the product and service category. What products and services will be needed to generate the amount of revenue that you envision in the third category?

Write them all down.

The fifth category is the team category. What roles (not names of people, but roles) will be needed in order to market, sell, deliver, and administer the products and services that you identified that will ultimately get you to the total revenue that you envisioned?

The sixth category is the client or customer category. Describe in great detail who the person or groups of people are who will purchase and procure your products and services. Be detailed!

For example, "our best clients are business owners that have between two and fifty employees, been in business for at least two years, are cash flow positive, and struggle to find the free time to spend on the things that matter most in their lives."

We also encourage you to write out details of who you do not prefer to work with as a client or customer.

For example, "we will not serve business owners who think they have got it all figured out, who demean their employees as widgets, who want us to 'fix' their employees but are unwilling to 'fix' themselves…"

The final category of your vision story is the culture category. If you were to walk into a restaurant and overheard a group of clients and community members talking about you and your business, what phrases would you want to hear them say?

For example, "I bet when you walk into their office, their team is constantly smiling and are at the same time locked in and focused on their mission."

If you write a clear vision, read it (you can certainly leave the financial section out of your public reading) to your team, and in some cases to your clients; then we know that those who read it may run.

The mission statement and the unique core values are no different.

The mission statement is simply a written, memorizable sentence, less than 15 words, that gives clarity on the impact you make and forces people to either continue asking questions or to lose interest quickly and save you both time.

Our mission is to liberate business owners from chaos to make time for what matters most.

When asked, "what do you do for work?", that is precisely how we respond. In the spirit of Simon Sinek, we do not respond with what we do or how we do it... but we respond with why we do what we do.

And what of your core values? They too should be written, should be challenged regularly, and should be unique.

Enron's core values were Communication, Respect, Integrity, and Excellence. Written, but highly cliche, and rarely challenged.

Answer this, what are those things that you value, but we may not.

For us, we have a core value set that is unique.

Simply... Write It Down. Work Worth Doing.

Work Is Faith.

BIG Wins.

Learn And Implement.

No other business we know has that set of core values. We talk about these at weekly team meetings and during our weekly check-in calls with team members.

Please do not presume, "yeah, we've got those." Go back to the drawing board and put fresh attention on your vision story, your mission statement, and your unique core values so those who read them, hear them, and are influenced by them may RUN!!

Top 5 Hiring Mistakes

I once spoke with a former COO of Disney and had a brief conversation about how he spent the allotment of time he devoted to work each week.

His response was, "I spend 60% of my week trying to find the right people to bring into Disney."

In my head, I'm thinking, "you mean to tell me that you are basically devoting all of Monday, all of Tuesday, and all of Wednesday to finding and hiring people?"

He obsessed over finding and developing the right people to fit the mission of Disney because he realized that the amusement of Disney is a commodity, you can find similar amusement at Six Flags, Carowinds, or any number of other theme parks around the world.

What makes Disney of higher customer value is the non-commodity part of Disney... people.

Coffee is basically coffee. What makes a great coffee experience is the barista who remembers your name and remembers that your Kindergartener just had graduation last week.

Hotel rooms are basically hotel rooms. What makes a great guest stay experience is the person at the front desk making you feel like you are the only guest.

Our product or service, whether it is ice cream, a five million dollar custom home, or a consultation, is simply a commodity. What makes it a repeatable experience is the person facilitating the relationship.

All of a sudden you realize why the former COO of Disney would spend at least three days out of every week locked in on finding and developing the right people.

As business owners recruit and train, there are at least five common mistakes that owners make that sabotage their product experience.

The first mistake we make in hiring employees is making excuses about why we can't find people to hire.

Hiring is hard work and requires grit and grind. Very few businesses in the world have a line of people standing outside of their metaphorical door awaiting the slim chance of entry.

We must treat hiring with the same reverence, passion, skill, strategy, and accountability that we treat sales, operations, and accounting.

In a market where there are plenty of applicants, you must do the hard work of making your business attractive and irresistible, ensuring clear expectations, over communication, and motivational fit.

In a market where there are very few applicants, you must do the hard work of making your business attractive and irresistible, ensuring clear expectations, over communication, and motivational fit (aka - the same work).

Stop making excuses and start making blocked time in your weekly schedule to shake the bushes and let the world know that you've got a great opportunity available.

The second mistake we make in hiring employees is being unclear about what we are asking them to do.

Let's be blunt. Please, WRITE A CLEAR JOB ROLE.

There, I said it.

There is no magic to this. What is the role that you are asking them to do?

Write it down in plain language.

No corporate speak.

Don't say you want a self-starter or someone who is results-oriented unless you are hiring a salesperson or a visionary. Otherwise, realize that 86% of the world's population (according to PeopleKeys) have a passive personality which means they are awaiting instruction.

Map out all of the elements that you are asking of them day to day.

Don't stop there, also provide an example weekly schedule of what their week might look like hour by hour and day by day.

You might say, "that's unreasonable."

My response, "then you are not ready to hire."

In fact, please don't hire if you are unwilling to bring clarity through a written role and written model weekly schedule. You are setting your new employee up for failure and it is not fair to them or their family, and it will negatively impact your business.

The third mistake we make in hiring employees is we have no idea what a new hire compensation will do to our finances.

Breaking even on a role is not a profitably winning strategy. We've heard many owners say, "if we can just sell X widgets then we will break even on this role."

Let's shift our mindset to seeing employees as investment in growth.

Many business owners use a 1 to 3 ratio when thinking through how to compensate an employee. For every dollar invested in an employee, the expectation is that the employee's work would return three dollars of real revenue (total revenue minus cost of goods sold).

It might be more, but we hope it would not be a lot less. Each employee is not brought in to just fill time and space, but instead to push the business ahead profitably towards its powerful mission.

The fourth mistake we make in hiring employees, and this mistake is widespread, is neglecting to properly onboard and then wonder why the new employee feels lost but won't say anything.

The challenges we have with employees six months and six years from now are challenges that could be prevented if we are willing to make the time and put the hard work in now.

Hard work is not taking a mindset with employees that each should exhibit common sense. Candidly the idea of common sense may be a misnomer.

In many cases, the things that are "common" to you may not be "common" to me even if we live in the same community.

I still don't understand some of the things my own neighbors do.

Relying on an adherence to common sense is a losing strategy.

Instead, we should intentionally bake in a defined, scripted onboarding process that includes at least three items.

First item is a scripted, hour-by-hour weekly schedule over four weeks so the new employee does not feel lost.

Second item is a set time weekly for your new team member to meet with the owner or supervisor for a fifteen to twenty-minute check-in.

Third item is a written list of questions that the owner or supervisor will ask during that weekly check-in time. Questions like what are you seeing and thinking? What questions do you have about your role? What do you need from me?

Also, use that time to offer feedback to your new team member with your insight to this statement, here is what I see in you and what I need from you.

Most business cultures do not have a predictable platform for employees to have encouraging and/or challenging conversations.

You must make time for this and implement it.

When a new employee comes into your business, they have a fresh perspective on the business that you will never get back so make the time to mine their perspective and learn!

The fifth mistake we make in hiring employees is not intentionally building our culture and instead just crossing our fingers and hoping for the best.

Culture is a biology term and draws its roots from works like tend and cultivate.

We must stop thinking that certain businesses are "lucky" because they have a good culture and other businesses are "unlucky" because they have a bad culture.

Your culture is a direct result of what you tend and cultivate. If you don't like it, uncross your fingers and start tending and cultivating different habits, tools, conversations, meetings, goals, etc.

Build culture has little to do with ping pong tables and bean bag chairs and has more to do with written vision, mission, values, team meetings, clear expectations, regular feedback, encouragement, and challenge.

There is actually one more mistake that business owners make in the hiring process, and it starts before the hiring process even begins.

The unknown mistake that we make in hiring is recruiting.

We treat the recruitment of potential first-class employees like the beat-up computer kiosk in the dark corner of the Wal-Mart customer service area.

We just throw it out to a few people, "hey, we need an insert-role-name-here" and then hope they are powerfully motivated by our half-hearted approach and mindlessly submit an application.

We bring passion in marketing our business for external customers (those that purchase your goods and services), it is crucial that you begin to think of the pre-hiring process as marketing for internal customers (those that deliver your goods and services).

I'll never forget walking into the recruiting room at the collegiate football powerhouse Clemson University. The room was filled with life, orange everywhere, and two huge floor-to-ceiling whiteboards that were filled with the last names of high school athletes from around the world. There is a full-time staff devoted and obsessed with finding the right athletes to fill the roles they are looking for.

When you are recruited by a collegiate football team, the red carpet is rolled out and the process is clear from front to back. Do we do that with our business? Why not?

Let's stop playing games with hiring and remember that this is the livelihood of you and your family and your employees and their families.

Let's take hiring off of the back burner and let's treat it with the same vigor that we treat marketing to external customers.

Defining Your Avatar: Your One Perfect Customer"

Happy Friday folks. Brent Perry with Business on Purpose here. It's nice and rainy here is good ole' Tennessee, but we still have some good content to talk about.

If you have worked with us in the past you know that on the vision story we walk with you through, we ask a couple of questions about the type of clients or customers that you want to work with. And on the flip side of the coin, we also ask questions about what type of clients or customers that you don't want to work with.

Story about sales job at WireMasters (2 different customers)

I am reading a book right now, written by John Lee Dumas, host of the podcast Entrepreneurs on Fire. And one of his chapters is titled, Create Your Avatar. Which he goes on to explain that "an avatar is a single individual. Your avatar is your perfect customer, your model client, the ideal consumer of your content, your products, your services, and your offers."

His idea is simple, spend some time really thinking about your perfect customer.

Now, let's make sure we're on the same page. Just because you spend time thinking though, and creating this avatar, doesn't mean we expect this is the absolute only customer you will work with. That's not reality. As a business owner, you will with a doubt find yourself working with all different types of clients in the field you are working in. Then what's the point? Why spend time daydreaming about your ideal customer, when in reality you feel like you don't want to say no to anybody.

Couple of things…

1. As Dumas explains, "Allow your avatar to be your guide at every fork in the road." Meaning, as business owners you are faced with many decisions throughout the day and weeks…. and it usually involves a decision to go right or left... a fork in the road. After you have defined and dreamed up your perfect customer, you now have help in that decision. Which way would your avatar go? They are your perfect client, after all, let them help you in your decisions.
2. Use some freedom in defining your perfect customer, to say no to some people. There will be clients who will just not be worth it to work with. Your avatar will be north on the compass, and you will be able to identify someone not taking you in the right direction. Start with 1, see how it goes.

So how do you create your avatar? Well be specific, and ask some questions and jot down your answers. The more specific you can be, the better your avatar will work for you.

Some examples,

Age

Male or female

Married

Kids

Hobbies

Communication style (text, emails, phone calls)

Do they commute to work? Work from home?

What does your business provide that they are looking for?

Why would they choose you?

Thanks for your time. I hope there is something here that you can take with you.

Spend some time with your avatar over the next couple of weeks. You might be surprised how this simple tool can help liberate some of the chaos in your world.

How To Determine A New Hire Salary

There are two areas of a small business when an owner will resort to gut feel faster than any other; who to hire, and how to compensate that new hire.

We were a few months into coaching a business owner when the time approached for her to hire a new role in her contracting business. After helping her think through what to offload to the new team member, write the role, and determine the onboarding process (something she had never done before), the next obvious question came, "so how much will you offer in compensation?"

Her response, "I have no idea."

The good news is that she is not alone. The bad news is that strategy will almost always lead to a bad outcome down the road.

Employee salaries are a bit like government programs, once set and offered they become difficult to retract and adjust.

What factors should be involved in determining a new hire salary? What factors should we pay less attention to?

It would first help to refocus on a question we rarely ask...what is the point of an employee salary?

Business owners often feel a responsibility to "provide for our employees". That is not true. It is the job of the employee to provide for themselves and their family, and it is their decision on how that gets done.

The business becomes one vehicle that can be used for the provision for each employee in the business if the business is generating enough margin to indeed provide compensation.

Culturally, we tend to believe that businesses magically make money and that employee salaries should naturally increase in direct response to time. In other words, the longer a person is on the job the more money they should make. Obviously, this is damaging.

I worked with a fellow employee years ago who was at the company for over a decade and was making double what myself and other less experienced employees were making, and yet he continuously underperformed. In essence, he was being rewarded year after year for simply showing up.

Employee compensation should be built and continued based on the value the employee brings to their role and overall to delivering on the mission of the business.

So how do we determine employee compensation that aligns with business revenue generation and profitability? We must listen to our business and hear what it is telling us based on what is actually happening in the business.

First, you must know your numbers.

As a reminder, we are not financial professionals and make it clear that we are offering suggestions based on what we have seen other business owners do. Make sure to consult with a financial professional when making these decisions.

Knowing your numbers sounds obvious and yet most business owners do not know their total revenue, cost of goods sold, or gross margin (or what Mike Michalowicz calls Real Revenue = (Total Revenue minus Cost Of Goods Sold)).

Seeing your net income on the bottom of a profit and loss statement is nice (and necessary), but it is not the entire story. We must be aware of all of the numbers below your total revenue and above your net income.

What percentage of your real revenue is spent on personnel, taxes, insurance, fees, dues, equipment, communications, marketing, etc?

Once you know those then you can begin to compare those numbers over the past few years and then determine if you are light or heavy in each area based on the return that you are receiving from each of those investments?

The money you are investing in marketing, is it generating leads?

The money you are investing in software tools, is it producing efficiency in production?

The money you are investing in people, is it producing sales?

It is impossible to set a new hire salary, or to even know if you can afford to hire a new person if you do not listen to the numbers that your business is using to speak to you.

The second step to determine your new hire salary is to set your ratio. I heard years ago that the average new hire salary should be set around a 1 to 3 ratio (1:3 ratio).

What does that mean?

Essentially, for every dollar that you invest in a new employee role, that role should either…

1. Generate an additional three dollars in revenue
2. Or, free someone else up to go generate an additional three dollars in revenue

The 1:3 ratio is not set in stone and is simply a suggested starting point. We have found experientially that the closer the role is to sales, the higher the ratio will likely be.

One business we coach runs a 1:7 ratio for each salesperson they hire. In other words, if they compensate a salesperson at $100,000 annually, then they expect each salesperson to generate $700,000 in real revenue (total revenue minus cost of goods sold).

Using a ratio below 1:2 does not make much sense because you are simply breaking even on a role that is meant to help you generate additional profit.

The third step in determining a new hire salary is to run the calculation based on your ratio, and what your numbers are telling you.

As an example, let's say that you have decided to pay your new accounting role a salary of $40,000 annually.

Before we apply your ratio, you must first apply a reality to your salary. When you compensate an employee a base salary, it is not the full story.

The business is also responsible for payroll taxes and a variety of other often unseen expenses like increase fees on software licenses and insurance premiums.

As a practice, we calculate an additional twenty-six percent on each employees annual salary when running our budget numbers for a new hire.

When deciding to pay $40,000 in annual compensation, we are actually budgeting a salary of $40,000 plus twenty six percent on top which comes to a total of $50,400 annually that the business must budget for.

We then apply our chosen ratio not to the $40,000 annual number, but instead to the $50,400 annual compensation number.

In this case we will select a 1:3 ratio to run our calculation. This means that for every dollar we invest in our new hire at a compensation level of $50,400, we expect to see a return of three dollars from our new hire at a real revenue level of $151,200.

Again, either A) this new hire will directly generate an additional $151,200 in revenue each year, or B) this new hire will free up another employee to go generate an additional $151,200 in revenue each year.

The final step in determining a new hire salary is to set the number and run the model.

Your starter salary is always going to be a bit of an educated guess. Of course you can consult Human Resource databases of market and industry compensations, and this is not a bad place to begin to get some initial numbers in your head.

Determining salary is both art and science. The art is having your head on a swivel and looking around. The science is to know your numbers, set your ratio, run the simple calculation, and then determine your final number.

If you have to negotiate up on your salary in order to be more competitive in bringing in a new hire, that is fine, just know that it will also increase the real revenue number that the new hire is expected to generate.

Having that conversation with a new hire can be very freeing for you as a business owner, and also very eye-opening for the new hire to let them know that you've done your homework and have been very thoughtful about their role.

Know your numbers, set your ratio, run your calculation, define the number, and have confidence in your new hire process. Your business and your new hire will appreciate the hard work.

Who holds you accountable?

Who holds you accountable? To your standards, your goals, your vision?

Happy Monday friends, Thomas Joyner with Business on Purpose here.

Meeting with businesses can be a roller coaster. There are hundreds, if not thousands of variables at play every single day! So how do you navigate those? How do you work through those? How do you make sure you put the work in to build a business that matters.

What I see, more often than not, is that most of us don't have a plan so we're stuck in the same place spinning our wheels.

About a year ago, I was meeting with a heroic business owner and we spent a little over an hour talking about their business. The highs, the lows, the wins and the struggles. All of it. This guy had no problem articulating where he wanted to take this thing, and in all honesty, he had the confidence and drive to get there. He even had a plan for all of the stuff he wanted to develop in his team.

So we parted ways. I wished him well and told him to call me if I can ever help with anything. 8 months later we grabbed lunch again and I asked him for an update on business. The frustrating part for him... he hadn't done anything with those plans to grow his team.

Sales had gone up, their reach as a business had gone up, but organizationally they were struggling. He lacked the accountability to get what he wanted to accomplish done. He would wake up and there would already be a fire burning in his business. But instead of letting it smolder a bit, so he could work on some crucial elements of the business, he ran to the fire to put it out. He listened to the loudest voice shouting for his attention and, "Just never got around to it."

It's a story that is not foreign to us.

A separate heroic business owner I met with months ago wasn't much different. This one, however, needed some help with his Vision. So we worked hard for a few hours getting that written down and in place. We went our separate ways as they weren't quite ready to take on a 1 on 1 business coach.

I checked back in on them about a month ago and they haven't stuck to their Vision. They got distracted and are chasing other things that are moving them further and further from what they truly wanted in their Vision story. Again, they ran away from the accountability that would have held them to it.

Sound familiar?

A third business I met with months ago. We sat down and spoke about getting all of their processes recorded. They were hoping to sell their business in the future but really wanted a sellable business that someone could come in and run from day 1. We went back and forth for a while, but they felt they didn't need the accountability and they could handle it on their own.

Well, I checked in on them a couple of weeks ago to hear their process. Like most businesses, they just got busy, haven't started, but are doubling down to get moving. Nothing had changed for them because no one was there to hold them accountable.

So why does this happen? We have so many good intentions, we're talented and smart individuals. Why can't we seem to get the business headed in the right direction and keep it going that way?

Well, I think it's because of a lack of accountability 9 times out of 10. When we lack accountability, the wind can blow us wherever it wants us to go and there's no anchor holding us to a location.

That's part of why we named our new content the Business on Purpose Compass. It's to be a guide, pointing us the right direction.

But here's the thing about accountability. It's not a one-time event. No, it's consistent. It's unwavering. It happens over a long period of time. Sometimes it's abrasive. Sometimes it's encouraging.

That's the power behind it. It's the simple reminder to stay focused on your team meetings, to train your team to your standard, when chaos is buzzing in the background.

It's a simple phone call in the middle of the week asking about those 2 processes you said you were going to record but hadn't gotten around to it yet. No, you said you were going to do this, schedule time for it, and let's keep moving forward.

We have a tendency to self-sabotage when left to ourselves. But when someone who is fully objective can look over your shoulder and offer perspective, hold you accountable to your vision and values, and give you the tools to get there... that's freedom!

So, what kind of accountability do you have in your life? If none, how do you go about getting it?

Well, maybe you need to set up a biweekly lunch with a group of like-minded business owners? Maybe it's being fully transparent with them once or twice a month and then letting them speak the truth and hold you accountable. Maybe you need to join a mastermind group of people to help you think through what you can't understand and shine some light on your blind spots?

Maybe you need a business coach to meet with you twice a month, give you a roadmap and a compass to build a business that matters. To not let you settle or chase after your tail.

The one thing I can tell you? You need accountability. Period. Or else I can all but guarantee your problems this year may not be exactly the same as next year's, but they will all have the same root.

We say this all the time, but people come to BOP for the content. They love our content...but that's not what keeps them around long term. They come for the content, but they stay for the accountability.

Who's holding you accountable? If the answer is no one, we would love to talk and find a way to be that for you.

That's all for today...if you're looking for some free content to hear more about us and what we do, please subscribe to our podcast and youtube channel. Just search my business on purpose, click subscribe and enjoy!

Have a great week!

When To Hire Employees For A Small Business?

He finally admitted, "we were so desperate to find people that our hiring process consisted of simply determining if they had a pulse!"

Unfortunately, this is where many business owners find themselves as their business grows and they become a slave to the soupy chaos of product creation, delivery, billing, payables, taxes, and dealing with employees.

The good news is that regardless of your business or industry, it does not have to be that way. There is hope and that hope comes dressed in what looks like hard work.

You are going to discover the first step in finding purpose-centered and value-fitting people to help you accomplish the mission of your business and it actually has nothing to do with hiring.

In early history, a team of twelve spies were commissioned and sent on a reconnaissance mission to discover a significant section of land in the Middle East to determine if they were fit and ready to take over that land.

As with most group decisions, there was dissension among the spies as to the fitness of their small nation state to annex this land that belonged to other groups.

In fact, only two of the twelve had confidence to move forward. Their confidence held firm and eventually this tiny nation state moved in to occupy a territory of land that was promised to their forefathers years prior.

Before you hire it is important to have the mind of a reconnaissance spy peeking into your own business and asking your business some pointed questions.

When in London riding the tube you will hear an automated voice imploring you to "mind the gap".

When you feel a gap in your business, there is an urge to fill the gap with an employee...and fast.

Before you send a new employee into that gap that you feel, it is crucial that you first see the gap, and to sloooow down.

Here are four questions you can ask your business to determine if it is time to fill the gap by hiring employees.

First, have we properly delegated all tasks to our existing employees?

A bookkeeper called me one day in total frustration saying, "if one more client drops off a shoebox of receipts for me to organize for them I'm going to quit!"

Her client abdicated their responsibility and my friend in a no-win situation.

Abdication is the failure to adequately prepare so that others pay the consequence.

Delegation on the other hand is the relentless and thoughtful preparation and training that sets up another person for success, and then the consistent follow-up to ensure that the delegated task is being implemented well.

The tasks that you are looking to be deployed by the new employee...have they been documented and set up for repetitive training?

Second, we need to ask if we have a predictable and consistent habit of agenda-driven and leader-led weekly team meetings so that we can intentionally communicate with our existing and future employees?

I know, you think, "more meetings?!" No. Better, consistent meetings.

Most meetings are inconsistent and rarely have any element of follow-up and accountability.

Ask yourself honestly, do we have a standing meeting every week that has a written agenda, a designated facilitator, and follow-up on action items from the previous week?

If not you are setting your existing employees and any new employees up for failure.

Imagine a marriage relationship with inconsistent and haphazard communication. It doesn't work!

Third, do we have clarity on what system in our business this person would be serving?

Each business, regardless of industry, is equipped with four major systems; operations, administration (accounting), marketing, and sales.

What system(s) will this new employee be a part of, and then what processes will they own within their system?

You as a business owner have never experienced true entrepreneurial freedom until you have experienced the joy of having an employee fully equipped to own their role and to know exactly what is being asked of them and how that fits within the structure of every other role in the business.

Your Org Chart and a Process Roadmap will allow them to see what parts of the business are fully dependent on them.

Fourth, are we willing to make the time to onboard a new employee and continually lead?

Hiring an employee is the start line of the marathon of working for your business. When you hire a new employee you have simply invited them to ninety days of stretching and preparation. Then after ninety days of intentionality, only then can the starting gun fire and the marathon begin.

Who do they need to know?

What do they need to know?

What tools do they need to learn?

What techniques for those tools are unique to your process?

What does communication look and feel like?

How does culture get intentionally installed instead of being just a cross-your-fingers hail mary?

We have to be disciplined as business owners to resist leading from our feelings because they give us false positives all of the time.

If you cannot make time to ask these four questions then you are not ready to hire because you can not see the gap you feel.

When you have answered these questions, then you are ready to evaluate your answers and then determine if the finances of your business make sense to hire.

Number One Team by Greg Gray Business Coach My Business On Purpose

Greg Gray is an international leadership and business coach, who has been serving others for over a decade. He is the author of Business Owner Freedom: Transform Your Business To Create The Lifestyle You Desire. Greg also hosts the Everyday Business Leader Podcast. He is a regular contributor to the Business On Purpose Podcast, that can be found at mybusinessonpurpose.com. He resides with his family in Southern Middle Tennessee on their farm.

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