Business Operation Magic Concepts

 Here are some concepts that I use in operating my businesses. Over the past 45 years I have learned that some things are not what you think, or the results you get will not be what you thought. I have learned that some things you think you should do, you shouldn't. I have learned that sometimes doing nothing is the best thing you can do. I have learned that sometimes it is just to costly to fix a perceived problem.

 When I look at how companies operate today I see a lot of people running around enforcing rules and polices. Then spend half their time being policy enforcers. That begs the questions?; Is the cost of having the polices more expensive in money, time, and frustration then not having the policy at all?

Hot checks; At our companies we do not check drivers license, we do not verify checks or use a check guarantee service. We just take them. Our losses are less then 1/10 of 1 percent of total sales. This saves lots of time ,and the customers appreciate it. This will not work in all businesses, but it will in most. We found the cost savings in employee time alone to be more then the losses from hot checks. We do turn all hot checks over to the DA, but we never collect anything on them.

Customer service; I use to have three full time customers service employees. I laid them all off five years ago and will never have another one. In our company who ever writes the order has to deal the customer service for that order. If no one wrote the order, who every gets the customers call deals with that customer's service, and that includes me. My customer service calls declined 80% after the sales people had to stand behind their words. Savings are huge, customer response...wonderful. (We do pay a 1% commission to whom ever writes and order). The employees have come up with all types of innovative ways to help the customer so that they will not have a customer service issue.

Employee errors; If a staff member has no errors in six months they will be interviewed by management. For example, what have you been doing? What have you done outside your area of expertize? What have you been doing to push the envelope?

If an employee makes an error they admit it and present a solution to take care of the issue or to take care of the customer, no matter what the cost is. They do this because no bad consequences are here had by making errors. You will not get chewed out or reprimanded, and no records are kept on errors. If your employees are not messing things up once in a while then they are not trying hard enough. Errors are the price of breaking new ground, of pushing the envelope, of advancement of the staff and your company. Learn to relax and charge the cost of errors off to business development. I seldom if ever see the same error twice.

Credit: We just do it. No credit checks unless from experience someone sees red flags. We do not run a lot of 30 day open accounts, maybe $20K a month, so this is a small issue for us. Our losses are less then $5,000 a year and that includes credit card charge backs. We do not get credit card signatures and we never check ID's. After a while, you or your staff will get a sixth sense about bad deals and you then deal with the exceptions rather then have everyone dealing with loss prevention procedures. This saves far more in employee time, moral and customer good will then it cost.

Take your losses for one year and divide that by your total sales, what is the %? I bet the loss percentage is smaller then the cost of the loss prevention procedures. I know some companies business and types of customers makes this impractical, but it should be a consideration,worth a least a cost benefit annalists.

Policy management; I have a rule that I have used for the past thirty years. If I want to implement a new policy or procedure for any reason I write it up and leave it lay on the corner of my desk for three days. If I still want to implement the policy or procedure I ask for a management staff review. If they can not talk me out of it, it gets implemented. Very few make it that far. This is great for cost savings and moral.

Keep in mind that every policy or procedure you put in place cost money and lots of it. Money for training, for enforcement, for the unintended consequences such as loss of customers good will, and employee moral. Is you latest idea, or solution for a perceived problem worth the cost?

Customer is wrong; From time to time a customer is just wrong. They screwed up and you are going to pay for it one way or another. We look at each situation and determine if the cost is reasonable. Most often we just say thank you customer, stuff happens, here is what we will do about it, I hope you have a nice day. If the cost is less then $50 it is automatic, any employee can fix the issue. If the loss is over $50 any manger can approve it without further review. Because we are an internet retail sales company our customer errors tend to be returns, damages or the customer ordered the wrong item. Most often we have to send the customer more of something, or replace something in the correct size or color. It has been my experience the fastest money spent to fix a issue is the cheapest money spent.

The Magic; What you have just read is contrary to the way most businesses are managed. It took me a long time to come to the realization that management by letting go is the best way of managing. Empowering your employees is the best way to reduce cost, improve moral, cut employee turnover, and free up management's time. I also found that an open book policy, open door policy, and no secrets policy, are concepts that make management easier and cost you nothing. You will find that the staff will be more protective of your business then you are.