Every Monday night Mike and I play indoor soccer at the local indoor soccer place in Boulder.

Tonight our goalie mixed up the time of the game and was not there when the game started. About five minutes into the game we were already five goals down, not completely the fault of the field guy trying to tend the goal but certainly a different start than we would have had with our regular net minder.

As the first half went on it seemed to only get worse. We were unable to mount much offense and by the end of the half we were behind 3-9. This is such a large deficit in indoor soccer that the rules actually make the winning team play down one player if they are ahead by more than five goals, a bit like the slaughter rule back on the playground when you were a kid.

Going into the second half it was clear that some people on the team had given up and others on the team were rising to the challenge to try and turn the ship around. Instead of breaking the game down into smaller chunks that we could set our sights on winning the leaders on the team spoke of how to score in general on the opponent.

We started the second half with some hustle that quickly gave way to despair as some of our key players stopped running as hard and playing defense with as much heart as they normally would, and we had a lull across the team.

I have always had the competitive drive that does not allow me to quit. We could be down by 10 goals with a minute left and I would still be running my hardest, and giving my all to try to close the gap. I suppose it has something to do with the way that i was raised. Tonight I found myself throwing myself into the boards and clashing heads with the opponent in an attempt to pull within reach of victory. The problem I had to grapple with for one moment during the game was this tough:

Why should I bust my ass, risk being really sore tomorrow, and play my heart out when that guy, one of our better guys, is not running, changing up shifts, or even doing the basics that are required to participate in the game?

Thankfully I only thought this for a moment and the majority of the team had the fire in the belly to fight on to the final buzzer. While we did not win we did bring the game back within striking distance a few times and ultimately turned what could have been an embarrassing loss into a close game.

So what the heck does this have to do with my managed services company you must be asking.

Well the fact of the matter is that if you are like every other business in the world right now you are asking or even demanding that your people do more with less each day. Each and every day you need to have someone that drives the team forward. Someone that can light a light and get the team to follow them rather than cursing the darkness with the rest of the troops. This motivation to drive forward needs to come from the people on your leadership team and it needs to be so strong it is infectious.

The other important lesson from tonight’s game is that you need to be constantly communicating, focusing the team, and setting goals. It seems like an impossible goal to go out and win the game going into the second half, but it sure was possible to win the first five minutes. After the first five minutes we could have set the goal of winning the second five minutes with the ultimate goal of winning the half. By breaking it down like this it would have given us all the motivation to dig deep and keep playing hard rather than going through the motions which is what can happen when goals are not clear or appear unreachable.

You need to do the same thing in your company. It is great, no it is needed to have gig annual targets but it is important to reset the teams targets quarterly or even monthly when necessary to keep everyone laser focused and moving forward.

From a tough soccer game to running a business in tough times we all have to realize it is about returning to the basics, communicating, setting goals to keep the team aligned, and publically recognizing those that are playing their hearts out for the victory.

Josh

I know I often have a strong opinion on all the things I think Dell is doing wrong in the marketplace but tonight I applaud their continued effort to be the greenest technology company on the planet.

I pulled the paragraph below from a letter from Michael Dell talking about the initiative and the commitment behind it. I have no doubt that Dell can make it happen and look forward to seeing what it does to our industry and to business around the globe.

Josh

Committing on World Environment Day to make Dell the
greenest technology company on the planet. More than ever
before, we are integrating consideration of the environment
into our business processes and product design to deliver the
industry’s most energy-efficient products, save energy and
deploy green power at our own facilities, and maintain our
recycling leadership. We know that people of all ages around
the globe who care about protecting the Earth expect no less.

Link to the full document outlining the initiative

We send a lot of time educating our key employees on the finances of the business (we utilize the techniques in the great game of business) and we get fantastic results as an organization.

When only Mike and I are thinking about cash flow, gross margins, expenses and net profits we certainly have the ability to affect them but as all of our key people start to be aware of and think about these things we see a fantastic result. In fact we see things happen that we didn’t anticipate or think about our selves.

We work to provide everyone a steak in the outcome of the financial health of the business and we talk evey week with the whole company about the companies gross margin goals and where we stand as a team.

I have pasted some cost control tips from a good e-myth article Mike forwarded to me the other day. I hope you find them helpful in controlling costs during these tough economic times.

Josh

Set a good example. Cost-reduction starts at the top. In good times and in bad, always show your employees that you are personally involved in reducing costs.

Keep yourself accountable. If you can’t hold yourself accountable, how do you expect to hold your employees accountable? Good leaders have systems in place to track and monitor the progress they make towards achieving the company’s objectives-objectives such as finding less expensive ways of doing things.

Manage your time. Don’t waste time. If you can’t manage your own time, you can’t expect your employees to manage theirs. Time wasted is a huge drain on profits. For example, if you come in late and/or leave early, if you are consistently late for appointments, or you don’t pay your taxes on time, etc, there are serious repercussions. Remember, your employees notice everything. So, consider reducing operating expenses by managing your time well. Your employees will follow.

Never abdicate control of your finances. As a business leader, you need systems in place to ensure you personally review financial information on a timely basis. Never give control of your finances to someone else.

Build a culture that values cost control. As your people begin to follow your good example, they will start to find new and more effective ways to reduce cost. Be sure to lavish them with praise and reward their efforts.

Refine your negotiating skills. If you don’t negotiate well, make refining your negotiating skills a priority. And remember, negotiating is not about “beating up’ your suppliers. Negotiating is about understanding your needs, their needs, the attendant market conditions and coming up with a win-win solution.

Perfect your recruiting and hiring process. A bad recruiting and hiring process can cost you dearly. You need to be very clear about the results you want from both processes.

Now that we have talked about listening to your customers regularly we need to talk about what to do with the information.

If you are running surveys and asking for feedback as frequently as suggested in my last blog post you will need a process for reviewing customer feedback and reacting to it.

There is not much worse than asking customers for feedback and then doing nothing about the feedback you receive. At a minimum your system needs to acknowledge to the customer that you have received the feedback – especially the constructive feedback - and what they should expect.

In our system we reach out to unhappy clients to let them know the immediate steps we are going to take in order to ensure the same issues do not recur in the future. The most important part of this reach out is that we do not wait to have the answer in order to make contact. We will often reach out to let the client know we received their feedback; appreciate their feedback, and the steps we are taking to find the answer for a permanent fix. If you are always waiting to find the best permanent answer you can leave a client in the dark feeling like they wasted the effort in providing you the feedback.

Once you have a client feedback loop in place you also need to develop a system for regular evaluation of the feedback you receive. Looking for trends in the feedback you receive allows you to address root process, staffing, or systems problems that could be costing you business.

I suggest putting a process in place where you and your service leadership team review trends in feedback monthly, quarterly, semi annually, and annually. You should have a way to document trends that are identified, corrective actions taken and the results of the actions.

Let me know what you are doing to keep in touch and react to your customers voice.

Josh

It will come as no surprise to you for me to say that business skills are becoming more and more important in the managed services industry every day.

No longer is it OK to suggest technology solutions for the sake of technology solutions. You have to convince the owner or C level exec of a prospect that you understand his or her business before you can begin talking technology.

This business ability is also increasing important in running your own organization. Recurring revenue comes with some business challenges that are different than the hourly business. What happens to your gross margins when you roll out and all you can eat service to a client and they have a large appetite? It may look great from the sales side of the house to sign that $8,000 per month recurring deal but if it leaves you with 30% gross margins you are in trouble.

So that example always prompts the question, what are good gross margins for a managed services business? 

This is a question that is often hard to answer as different organizations include different items in both their revenue and their cogs making the comparison challenging. I can tell you that a service business with a large percentage of their revenue coming from recurring services and not including any product revenue you want to be aiming for the 50% gross margin mark. 

In fact we use this mark as our floor and try to drive products and services that will push our gross margins into the mid to upper 50% range.

As you start focusing on the numbers of your business it is important to understand where you have been in order to lay out a plan on getting to where you want to go. I also believe it is important to know what others have been successful doing as a benchmark.

A good resource for this benchmark information comes from Paul Dippell and his Service Leadership organization. This year he is working with CompTIA to create a benchmark study that will provide us all some numbers to compare ourselves against and to strive for.

I look forward to the results and to the continued conversation about driving your margins higher.

Josh