Fatal Business Errors Made By CEOs

Copyright © 2008, The Goldhill Group

CEO ROUNDTABLEThe Peer Group Experience


This morning’s objectives

To help you get uncomfortable

Introduce the CEO PEER GROUP PROGRAM

Provide you a flavor for 2 elements of PROGRAM

Speakers and group discussion

Have you walk out with 1-2 concrete ideas to implement

in your business


What is a CEO PEER GROUP?

• Peer consulting group of business owners• Informal Board of Directors• Coaching forum• Way to find out “what you don’t know”• Tool to create work/life balance• Real-world MBA

Today is NOT a CEO PEER GROUP meeting


Upfront Contract for Today

• Our Commitment– Deliver 1-2 good ideas for your business– Ask tough questions– Challenge you– Finish on time

• Your Commitment– Be frank, open and decisive– Turn cell phones & email off– Complete feedback form


Participant Introductions

1. Name, company, location, years in business?2. Thirty (30) second version – about your company3. What expectations you have for today, if any?

Optional About you, your family or hobbies, etc.Your vision/mission for your businessMost underrated valueHistorical figure you’d like to have over for dinner


Best Practices Discussion


Best Practices Discussion1. Activities to improve operating margins

a) Laying off non-billable/revenue generating employeesb) Reducing specific overhead itemsc) Adding more value while holding price

2. Managing the business “by the numbers” is:a) The most important function I performb) Over-ratedc) I look at the income sheet and not much elsed) How often do you look at the numbers?


Best Practices Discussion3. Employer funded health insurance is:

a) A prerequisite of being in businessb) Something the employee should pay half ofc) The employee’s problem

4. Other:


Business Education


Speaker

“The Impact of the Election on Small Business”Stuart Waldman, President

Valley Industry & Commerce Assn.

Education: J.D. from Loyola Law School; B.A. from CSUN in political science Favorite book: Art of War by Sun Tzu Team I’d most like to play on: U.S. Soccer team Most underrated value: Loyalty Historical figure you’d most like to have over for dinner: Golda MeirVision for the Valley: A Valley with great public schools, a world class public transportation system, and a thriving business community.


Host Presentation / Discussion


Facilitator

“Fatal Business Errors Made by CEOs and How to Avoid Them”Jonathan Goldhill, The Goldhill Group

Education: MBA from USC Entrepreneur Program; B.A. Sociology from UCSB Experience: 20+ years consulting, coaching, training, financing, small bus. mgmt.Favorite book: an open oneTeam I’d most like to play on: the one I’m coaching at that timeMost underrated value: EnjoymentHistorical figure you’d most like to have over for dinner: John MaxwellMission/Vision: Helping CEOs and Presidents of owner-managed companies improve personal, professional and organizational effectiveness


Source Materials


Gut Check Test

___ I crave more personal time, more freedom___ I feel, at times, like a prisoner to my business___ I say routinely, “I didn’t get anything accomplished today”___ I feel like I’m working too much, earning too little___ I feel “out of control”___ I reactively tackle urgent matters instead of important matters___ I am caught working “in” my business instead of “on” my business___ I am juggling too much and feeling overwhelmed and frustrated___ I am chained to my desk, phone, pager, e-mail, etc.___ I am the chief go-to problem solver in my business___ I occasionally suffer from the “business owner blues”___ I am stuck “doing everything” myself___ Clutter, complexity, and confusion have overtaken my life

____ Total (How many checked items?)


What DO you LOVE about being an entrepreneur?

• Freedom• Doing what I love• On my own• Profits• No one tells me what to do• Fun work• Disseminating the vision• Growth• Exciting• Control Culture• Building Value


What DON’T you LOVE?

• Unmotivated Employees• Illegal and unlicensed competitors• Bad Market Conditions• Shrinking Margins• Long Hours• Weak managers and weak team• No one to delegate to• Loneliness at the top• Ineffective marketing programs

How close to a

breaking point are

you?


Do You Own a Business or a Job?• Can you take a two-month vacation? A one-

month vacation? A two-week vacation? • Can you take a one-week, work-free, guilt-

free vacation?• If not, you do not have a successful business,

you have a glorified job!! • You do not have an effective business

system, you are the system!• If you are the system, you are limiting the

company’s growth and your freedom.


Wake-Up!• You own a business, not a job! Start thinking and acting like it

-- more brain, less brawn ! • Your business should not depend upon your daily presence,

personality, problem-solving and perspiration for its survival• You must design a business that is distinct from you and

works in your absence• You must get strategic to get free and get wealthy• Focus on becoming a Strategic Business Owner!


The Strategic Business Concept Can your business run predictably,

consistently and automatically whether you are there or not?

Is your business dependent on you, the owner, or upon your business systems?

Do you run your business? Does your business run you?

Can your business produce consistent results in your absence?


E-Myth ErrorsTypical small business owner is:10% Entrepreneur – Dreamer/Creator/Leader 20% Manager – Pragmatic/Organizer/Numbers70% Technician – The Doer

Your business mirrors your lopsidedness


The “Technician”• Represents the Tactical view of the business – not

the Strategic view• Technical work does little to move the business forward to

create value• If the business depends on its owner, the owner doesn’t

own a business, s/he owns a JOB

• Business growth is limited by how much the owner can accomplish themselves

• Transition to employees – helpers with the technical work. Abdication or Delegation?


The “Manager”• The Manager function is defined by transition

from doing the day-to-day work that produces revenue to organizing and supervising others who will do the day-to-day work

• Represents a difficult challenge because employees will rarely do the work as efficiently or as effectively as the business owner

• Value of doing something well vs. doing something that you shouldn’t be doing at all?


The “Entrepreneur”• The Entrepreneur creates the vision and direction for the business.

This is the Highest Impact activity for the business owner and the business

• The Entrepreneur is obsessed with building a business that works without them!

• The Entrepreneur prepares himself/herself and their company for growth by building a foundation and structure that can carry the demands imposed by growth.


E-myth ExerciseRole Where you are

now (%)Where you would like to be (%)

Technician

Manager

Entrepreneur

1. What could you accomplish if you were mostly “Entrepreneur?”2. What is preventing you from closing the gap?3. What will you do differently in the future?4. What is the payoff if you do make the change?


E-Myth Errors1. OWNER-DEPENDENT BUSINESS2. DOING LOW-VALUE “WORK” 3. TEETERING ON GREATNESS4. FIRE SLOWLY, HIRE QUICKLY5. NO JOB TESTING

6. NO FORMAL TRAINING PROGRAM7. INFORMATION HOGGING 8. YABUT EXCUSES9. ABDICATING NOT DELEGATING 10. SAVING YOUR WAY TO SUCCESS11. WEAK SALES & MARKETING12. OVERSERVICING BOTTOM 10% 13. FIELD OF DREAMS THINKING14. FAILURE TO GET OUTSIDE HELP 15. EXECUTIVE INDECISIVE SYNDROME


FATAL ERROR 1: Owner Dependent Business

Do You Own a Business or a Job?• Do you run your business OR does your business run you? • Can you take an extended vacation? • Can you take a work-free, guilt-free vacation?• Is everyone and everything dependent on you?• Are you limiting the company’s growth?• Is the dependence on you limiting your freedom?• Can your business run predictably, consistently and

automatically whether you are there or not?• Can your business produce consistent results in your

absence?


Owner-Dependent = Weak/Inadequate Systems

90% of small businesses have weak operating systems. All good ones do.


BUSINESS PROCESSES


FATAL ERROR 2: Doing Low-Value Work

– Working “IN” not “ON” your business– Doing the work sometimes feels good– You are the bottleneck– What does doing the work really cost you? – Do you think Donald Trump is dealing cards at the

blackjack table?– What software code did Bill Gates last write?– Did Fred Smith ever deliver a FedEx package?


Delegation Line

GREEN COLLAR WHITE COLLAR

DOG COLLAR BLUE COLLAR

Delegation lin

e

High Impact/ High Value

Low Value

Low Frequency High Frequency

$250/hr

$10/hr 20% $35%5%

Strategic Planning

Key Personnel Hires

Significant CustomersSales Calls

Bank DepositsFilling in

1x/month on a job

Driving the Truck

Supervisor on Jobs


Mindset Shift from Employee to Strategic Leader

Working “in” Working “on”

Tactical Strategic

Doing Leading

Work a job Build an Asset

Details Big picture

Role player Head coach

Reactive Proactive

Technician Architect

Doing things right Doing the right things

Day-to-day Long-term view

Working hard Working smart

Shifting gears Shifting mindset


FATAL ERROR 3: Teetering on Greatness

Great businesses look like this, right?

GREAT PEOPLE

ORDINARY PEOPLE


WRONG!Great businesses look like this:

GREAT PEOPLE

ORDINARY PEOPLE


Great businesses work like this, right?

RESULTS

HARD WORK

IDEAS

GREAT PEOPLE


WRONG!Great businesses work like this:

RESULTS

HARD WORK

IDEAS

GREAT PEOPLE

ACCOUNTABILITY & PLANNING

SYSTEMS


FATAL ERROR 4: Firing Slowly, Hiring Quickly

• Do you tend to hire too fast?• What has getting this error

backwards cost you?• What has that cost you? • Do you hire for talent or for

their experience on a resume?• What do you do to match

talent to the position?• What % of your workforce is

emotionally engaged?• How long do you wait to fire

an emotionally disengaged employee?


FATAL ERROR 5: No Formal Training Program

• Do employees know their roles, responsibilities and what is expected of them?

• Are their talents being utilized in the best way possible?• Are you coaching, challenging, motivating them?• Do they feel appreciated and valued? • What training do they get? • What authority do you give them?• Are they held accountable for results?

OR, Is your classroom empty?


FATAL ERROR 6: No Job Testing

– Start with aptitude NOT experience– Test loyalty and honesty– Test skills and job fit• Knowledge of best practices

– Sales & Management behaviors

– How respond to:• problems and challenges • influence others to your point of view • pace of the environment • rules and procedures set by others


FATAL ERROR 7: Information Hogging

• Have you shared your vision?• “I need to clone myself because my

people just don’t do it as well as I do.” You are right!

• Give your people the right to fail. • Most CEOs don’t share any

information with their people. Why?• Share data like objectives, basic

financial data like margins, goals, etc.


Other Errors1. OWNER-DEPENDENT BUSINESS2. DOING LOW-VALUE “WORK” 3. TEETERING ON GREATNESS4. FIRE SLOWLY, HIRE QUICKLY5. NO JOB TESTING

6. NO FORMAL TRAINING PROGRAM7. INFORMATION HOGGING 8. YABUT EXCUSES9. ABDICATING NOT DELEGATING 10. SAVING YOUR WAY TO SUCCESS11. WEAK SALES & MARKETING12. OVERSERVICING BOTTOM 10% 13. FIELD OF DREAMS THINKING14. FAILURE TO GET OUTSIDE HELP 15. EXECUTIVE INDECISIVE SYNDROME


FATAL ERROR 8: Yabut Excuses

Yeah but…• It is far easier to criticize than

create• Problem- and finger-pointing• Stop accepting yeah buts from

yourself• Stop accepting yeah buts from

others• Stop making assumptions

NO accountability * NO response–ability * JUST excuses, please!


FATAL ERROR 9: Abdicating Not Delegating


FATAL ERROR 10: Saving Your Way To Success

Maximum 10% savings in your expensesThe real money is in the top lineStashing your nuts inherently cuts off risk and innovation.


FATAL ERROR 11: Weak Sales & Marketing

“Because its purpose is to create a customer, the business has two and only two functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs.”

– Peter F. Druckerthe father of “modern management”author of 39 business booksconsultant to the most acclaimed

companies


Leverage of Marketing

Selling =– One-to-one persuasion– Converting leads to customers– The ground war

Marketing =– One-to-many education– Generating qualified leads– The air support

Most businesses miss out on the incredibleleverage of marketing!


• When you think of the word “salesperson”, what comes to mind?

• How comfortable are you? • Do you have a selling system?• Did you ‘crack the code’ and

teach it to your employees?

Get a new attitude! … And some solid sales behaviors and techniques


Selling Improvement

How can I improve dramatically my selling effectiveness?How can my company improve its sales effectiveness?

• __________________________________________

• __________________________________________

• __________________________________________


FATAL ERROR 12: Over-servicing Bottom 10%

Not Saying NO! to your worst customers• Over-servicing = headaches and lost profits • Have the guts to raise your prices• Eliminate the dogs (bottom 10-20%)• Cultivate the gems (top 10-20%)• Vacuum to prosperity


FATAL ERROR 13: Field of Dreams Thinking

• Hope is not a strategy!• Running your business without thinking doesn’t work• Unclear, unwritten goals and objectives• No simple business plan• Not watching your numbers• Don’t‘ know your ratios• Don’t know your KPIs – Key performance indicators


FATAL ERROR 14: Failure to Get Outside Help

Failure to fix “lonely at the top” syndromeWho do you talk to about really important issues?

(e.g., selling the company, bring in top executive, holding employees accountable, improving company performance)

• Friends and family?• Employees?• Your Advisors? (e.g., attorney,

CPA, consultants, etc.)

• Other owners?


FATAL ERROR 15: Executive Indecisive Syndrome

Many executive get successful then quit taking chances.

Which CEOs are more successful: the ones who take too many chances?

OR the ones who take too few?

Failure = feedback


The definition of insanity is

continuing to do the same thing and expecting a different result.


1. “Busy-ness”, Consumed by clutter2. Technical Tendencies - Habits3. Waste our time and talent4. Inadequate Business Systems5. Ineffective Leadership/Delegation6. Growing Business Complexities

Human Nature – The Challenge

RESULT Feeling Stuck

We Lose…… Focus… Opportunities… Productivity… Income… Clarity… Effectiveness… Joy


• Cash flow pressures• Constant urgency • Business is stagnating,

growing too fast or out of control• Ineffective selling attitudes,

techniques & behaviors• Inefficiency – poor systems• Ineffective leadership • Poor delegation skills

… and the signs

Feeling

ExhaustedExhausted

DirectionlessDirectionless

StressedStressed

Isolated & AloneIsolated & Alone


Nuts & Bolts ofthe CEO PEER GROUP PROGRAM


The CEO Peer Group Program• Monthly Group Meeting• Individual Consulting/Coaching Sessions• Speaker Series and Special Events


The Group Meeting

• Monthly half-day sessions with all members• Members present issues confronting their companies

to the group for review, analysis and feedback• Input on issues from peers helps members reach

informed decisions from those with experience– Host Presentations - Book Summaries– Tiger Teams - Open Discussions


Individual Coaching/Consulting Sessions• Monthly, 90-120 minute sessions at the member’s

business with group facilitator• Focused discussion– What needs attention?– Issue development for group– Strategic thinking: planning, growth, expansion,

operations, sales & marketing strategies


Speaker Series / Special Events

Speakers:– Clinical Psychologist: Using Personality Assessments to Increase

Employee Productivity– Hiring Expert: How to Hire and Leverage Top Performers– Employment Attorney: Top 10 Errors Made by Owners– Online Marketing

Special Events:– Wine Tasting Holiday Mixer– MB2 Raceway


Current member overview (Calabasas Group)

• Age range: 32 to 58 years old• Employees: 5 to 350 employees• Revenues: $550k to $9.5M• Industries: Janitorial Services, Remodeler, Market Research, IT Services, Bike

Manufacturer, Appliance Retailer, Auto accessory manufacturer, Accounting firm, Pension Consulting firm

• Successful business people (examples):– 38% net margin– $800,000 in net profits– Successful entrepreneurs with high school degrees and MBAs– Successfully sold two separate business for seven figures


Membership Requirements

• Time Commitment • Presidents, CEOs or Owners only• Minimum revenues > $500,000• Minimum # of employees = 5• No competitive or supplier relationships in the group• Strict confidentiality!!!• Completion of selection interview (60 minutes)• Payment of monthly dues


The Next Step

• Please complete feedback sheets• Do not answer “Yes” unless:– Intend to schedule a selection interview

within next 2 weeks– Will extend us the same courtesy you would

expect:• Take our phone call• Promptly return voice mail• Keep scheduled appointment


Our Programs & Services

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Company Strategic Planning Retreats

Personal Strategic Planning Retreats

Executive (1-on-1) Coaching

CEO Peer Groups

Marketing Consulting Projects

The 51 Fatal Errors Coaching Club

DISC® Skills & Personality Assessments

“Coaching for Contractors” Weekly Webinar Series

Strategic Manager® Coaching Group for Contractors

Company Strategic Planning Retreats

Personal Strategic Planning Retreats

Executive (1-on-1) Coaching

CEO Peer Groups

Marketing Consulting Projects

The 51 Fatal Errors Coaching Club

DISC® Skills & Personality Assessments

What are you waiting

for?

Don’t let time run out on you.

Documents

Fatal Business Errors Made By CEOs