King George vs. George Washington

A common phrase I've been using this last year is, "Its the difference between King George and George Washington."

I'm not going to go into a history discussion or a psychological profile of either of these guys... the difference when it comes to business is a written constitution. A set of rules of engagement that everyone has access to. Whereas under a king, the rule of law is the King's mood and subject to change at any time.

"The King's Mood"
Under a King's rule, his subjects have no idea what they could be jailed for that day. They have to wake up every morning in an environment of constant uncertainty. It creates an environment of fear; people running around avoiding punishment rather than working hard to produce or improve. Subjects have no way of knowing a clear path to bettering their situation. They must guess on what path to take to succeed. One day they may do a thing and get rewarded, on a different day the same action could lead to punishment... its all contingent on the mood of the management King.

Managing a Business by "The King's Mood"
An employee needs to know his boundaries. He needs to know what the company policies are. Working in an office with no clear path to advance in pay or position gives uncertainty. Saying things to your employees like, "We'll take care of you when we finally catch that pie in the sky the company starts to do better," or "Don't worry, just put in your time and everything will work out," doesn't cut it. These are vague and don't offer any security or any clear path of progression. How is one to act if there is no consistent guidelines?

If someone goes to there boss and asks, "How much do we charge our customers for Widget A?" and her boss tells her, "um... $15... yeah, 15 sounds good." Then later is scolded for selling a second Widget A for $15 because her boss changed his mind without letting anyone know. The manager has now created his own nightmare. Now this employee will no longer think on her own. She will ask her boss EVERY time this question comes up. She will tell her coworkers to do the same. There is no consistency in the office. Most people in this office would eventually get frustrated enough to leave in search for a more stable working environment.

Now, I'm not saying that bosses shouldn't be able to change prices or change policy... I'm saying that there should be a KNOWN procedure to do so. I'll get to this in the "Written Constitution" section.

Another issue with the manager's-mood-is-law is that the manager can never be wrong. That may sound good to you, but trust me its very bad. Think of the best basketball players in the game. They are arguably the most skilled basketball players in the world. They have instincts with the game that most people aren't even aware of and most players only dream of... and yet they all still have a coach. They all still have referees with a whistle and a rule book. Micheal Jordan could be put on the bench by his coach or Kareem could be given a technical foul by a ref. Even the greatest have accountability to someone and to a set of rules. A man who is not accountable to anything or anyone will begin to degrade. No one is that good.

A Written Constitution
Now George Washington worked under a written constitution. He could be wrong. People could read and know the laws and know when and if he broke them. The citizens of the country knew with a certainty, no matter how the president felt that morning, what the laws where. This didn't mean that the law couldn't be changed, but there was a system and steps to change the law. It had to be thought out, decided on, and then written down. Every citizen has the opportunity to know when and how the law changes. The citizens knowing that the laws are fair and stable, now can know the rules of the engagement and can see paths to success. They can know the systems and how they change.

Managing a Business by "A Written Constitution"
A business needs a price sheet and a procedures manual. I business with more than one person needs to foster an environment of stability within the office to allow for movement in the marketplace. When employees aren't worried about what mood their boss is in, then they are more likely to be able to focus on innovating and progressing in their job. If they know that there is consistency, then they can have confidence in their choices, thus freeing up their boss from being the bottle neck of the information flow. If they know what skills or quotas to meet to progress then they will look at their occupation as a career rather than a job.

This doesn't mean that the company is stagnant. I suggested to one business owner to have a procedures manual and if he wanted to change his mind and shred all the copies and print new manuals, so be it. It would be better than the Law-Of-Mood that was prevailing. There would be a procedure in place, when the boss shreds the copies and hands out new ones, then the rules have changed. Everyone would know the rules had changed. If the boss broke the rules, he could still be held accountable by his own manual. Stability, consistency and logic breed an office full of innovation, confidence and progress.

There is two reasons that a small company stays small. The first is that the management chooses to stay small as the most profitable option. The second is the company that tries to grow but is stopped by an owner who keeps trying to be the machine and not the machine operator. He bottlenecks all decision making at his desk with employees lining up outside his door. He handles all the "important" clients himself, but without enough time to do so. He changes his mind constantly with his mood and perpetuates the problem of people waiting in line outside his office. Eventually he burns out his good employees and is left with the people who can't leave for other work. He has a small company and longs for a big one. A price sheet and a procedures manual with a little delegation would be a great start.

Rules of Small Business

I've had some experience with small businesses in the last few years. There seems to be some similarities across the board. There are books written on this I'm sure, but here is my personal list that I try to live by between the hours of 8 to 5.

Does this mean that I keep all 60 of these all the time? I hope I will someday. What this list really shows is a series of pitfalls and wrong turns usually based on shortsighted, knee-jerk, emotional reactions to very difficult situations that seem to happen on a daily basis.

I'll most likely expound on these one at a time later with a few short little stories and examples. For now, enjoy my short list of rules to live by from 8 to 5.

Note: Some of these come from a religious stand point. Even for the businessman that isn't a religious person, these principles should ring true. Truth is true no matter how you package it. It just so happens that I am a religious person so I have a tendency to package things with the occasional scripture reference.

My List (in no particular order)
1. Keep your promises.
2. Don't make promises that you can't or won't keep.
3. Never take filthy lucre.
4. Keep the Sabbath Day holy.
5. Beware of pride.
6. Never lose money on a job. no matter how rich, impressive, or powerful the client is
7. Tie money to each contract. for as to track profitability
8. Recognize and admit your weaknesses and other's strengths
9. Pay people what they are worth
10. Do not manage emotionally
11. Do not purchase emotionally
12. Do not become emotionally detached. apologize sincerely
13. Make a little money on each job
14. "by the sweat of thy brow..."
15. do not convince people to buy things/services that they don't need
16. recognize when its time to fish or cut bait. Unfortunately, sometimes no matter how much time or money is invested, the best decision is to bail with whatever you can salvage.
17. explain to people what's in it for them, no body cares what's in it for you unless they ask
18. give the client a good deal
19. never work without a contract
20. spend less than you earn as a business and as an individual
21. know enough about your services to manage your employees effectively
22. choose to take critizm as research instead of an insult
23. never stop learning
24. take care of your image in the business community by being honest and fair to yourself and others
25. don't screw people... even more than not screwing them, take good care of people and they will take good care of you. Make sure that everyone in all facets of a deal (whether it be employee/employer or business/client) is well taken care of. This is financially beneficial rule.
26. "what so-ever you sow..."
27. charge for custom work
28. people who are doing work for you for free are idiots or evil
29. do not do business with idiots
30. do not do business with evil people
31. There is no free lunch
32. there is no "one" job that will solidify your future financially for the rest of your life
33. chasing after that "one" job will alienate all of your employees and your family, give you a bad rep in the industry, deplete your funds, and eventually compromise yourself. you will also eventually break or ignore numbers 1,2,3,5,6,8,10,11,13,14,16,19,20,24,26,27,29,31,32
34. In this order innovate, research, develop, test, then and only then sell
35. work with good people
36. Fire bad employees. Do not run a charity or halfway house in the guise of a business. Part of getting good people is sifting out the bad ones.
37. let the LORD guide your business
38. be a person that you would work for
39. expect to lose any money that you put into spec deals
40. have defined lines between your personal and your business finances
41. Give incentives for work above and beyond
42. Accountability is a two way street between the employee and the employer and vise versa (The employer is JUST as accountable to the employee, if not more so)
43. Offers training programs for employees
42. an employee cannot “steal” experience
43. do not give people the opportunity to screw you
44. do not expect everyone to screw you
45. no matter how well dressed, rich, or powerful a snake-oil salesman is, they should not be given preferential treatment, deals, or spec projects.
46. do not try to “make your money back” on duplication. In following 6, 7, 10, 13, 14, 16, 19, 20, 27, 32, 39, 40, 43, and 45 you will rarely need to “recoup” lost costs.
47. “to be in time means to change” -C.S. Lewis. Do not lament change in yourself, your company, the business world, or technology; rather, move with it, expect it, try to predict it, and let go of the past.
48. Expect things to depreciate in monetary value. The value of equipment is two fold and has nothing to do with what you paid for it: 1. how much you can make from its use and 2. creating a professional visual image to your prospective clients.
49. Understand and heed the concept of opportunity cost. (everything that you do is at the cost of doing the next most valuable thing because of the limits of time and resources) Example: it is not cheaper to build a make shift teleprompter compared to buying one because of the expense of someone's time who could be generating income elsewhere.
50. seek to understand people's motivation for actions that they take. This will help you both better meet their needs and evaluate their integrity. This goes for everyone: employers, employees, coworkers, clients and vendors.
51. Do not expect anyone under you to do anything you are not willing to do consistently.
52. People are a company's most valuable asset, if a company treats its equipment better than its people, then a destructive cycle will begin. The self-motivated, the talented, and the high quality employees will become frustrated and discouraged; they will most likely leave, those who do not leave will give up. The company will be left with the mediocre people who feel or actually are trapped in their jobs with no way up and no way out.
53. Small business owners have a tendency to be self-starting, creative, hard working, driven, self-sacrificing, frugal people who built what they have with the sweat of their brow... unfortunately, if these qualities are left unchecked they will destroy the owner. He will become bitter, cynical and paranoid. He will start to feel entitled and start comparing his amount of effort to his employees and resent them even more (ironically at this point, he will most likely be burnt out, not having given himself a break, and will be inefficiently going through the motions at work even though he still may be working long hours)
54. Draw lines between work and home. These lines include time.
55. Go home. Do not let your righteous desire to provide for your family keep you from being with your family. In the long run, what ever meager “extra” income you brought in whilst away from or ignoring your family will quickly be forgotten while the memory of your absence will be permanent.
56. Be ok with being wrong. Let others have good ideas and recognize them when they come. These ideas may be different than how you are currently doing things. If you have a group of intelligent people who all disagree with you on something, you are most likely wrong.
57. Surround yourself with people who are loyal, tell you the truth (even if the truth is that you are wrong), and will not poison the well with a poor attitude.
58. Choose your attitude and mood. You control your mood and outlook on life, you cannot control life.
59. Do not ask, imply, or expect people to compromise their beliefs or their family relationships. An employee is the most productive when his wife is supportive of his job and employer.
60. Any way you add it up, 2 plus 2 will always equal 4. If you are not happy with your results, don't get mad at the equation, change the variables. You are the most important variable and the easiest to change.