Richard B. Sanford launched eleven successful small enterprises over a 40+ year career, creating 11 successful companies during that time.
He joined the show recently to talk about how he accomplished this and his new book: SUCCESS BY DESIGN: How to Create Ever-Increasing Income, Profit & Wealth in the World of Small Business.
You can listen here.
You can read Part One of our conversation here.
In his book, Richard compiled what principles, steps, tip and practices brought him this success over 40 years. His book shows the reader how to think and use "SIMPLIFIED STRATEGIC BUSINESS PLANNING" to generate ever increasing income, profits and wealth in the world of small business.
One of the reasons I love your book is you wrote
There are many things out of our control. Customer Service is not one of them.
Dumb question, but it seems no one answers it well: why do so many companies either ignore customer service or control it by minimizing it?
They don’t have a strategic plan. And, in the strategic plan you address an objective about how are we going to treat the people who buy from us, the people we want to buy from us.
How will we consider them?
Why is it important to nurture them and in nurturing them does service play animportant part? Yes.
How will we define our service?
So, in reading these annual reports, it’s so interesting to read them not only in bug business, stock company’s annual reports but in small business. Look at the cars and trucks driving around the advertisements and they talk about service. And most, usually, it’s a joke.
“We’re the best in the valley!”
These big fat claims that are all subjective and not objective. You can’t evaluate them. how do you hold a business accountable, if you’re the customer and you’re buying pool services, which I did this week. And I needed a new pool service company because the company I’m using isn’t getting the job done. And so, I looked at the ads and I finally made a selection.
And I asked them how do you rate your service. And they said:
“Well, we give the best.”
“ I don’t know what best means. Could you define it for me? “
Several of the company stumbled all over themselves. They couldn’t define it. I want an objective statement.
About 25 years ago, I started working on that. I was preparing some sales and marketing materials about our service, which was incredibly outstanding. Finally, I came to the conclusion that you have to make the service statement quantifiable, so it can be measured by the customer. And I came up with a 3-part statement on our service.
And that reflected on my strategic plan about how I would manage effective service in the company. And it worked like magic. And I share that in my book as well. I give it to the world.
That’s such a great answer, especially the quantifiable answer. I see the same stock stuff of world class customer service.
Yeah, how can you hold them accountable for doing that? You say:
“You didn’t give me world-class customer service!”
“Well, what do you mean...?”
“It’s your statement. Define it for me.”
“I don’t know how to do it.”
“ What value is it?”
And right there is an integrity issue.
Your next step is the Action Plan and the Action Planning Process. What are the 5 steps with the Action Planning Process?
Well, first of all, that would be skipping over the next step in strategic planning. It goes Mission to Purpose and then doing your research and development and establishing objectives. And I establish objectives in the 5 or 6 or 7 areas of business function.
What will finance and accounting objective be, our personnel objectives be, our sales objectives be, our marketing and promotions objectives be, our manufacturing process objectives be?
Because in each of those functions of your business needs a values statement or objective. For instance, Finance and Accounting. An objective is:
“Never spend more than we take in.”
Sound pretty simple?
Pretty straight forward.
“Never fail to report every penny of income.”
Why is that important? Well, if you fail to report a penny of income you are defrauding the government. And there’s some pretty severe penalties for that.
Now, on the expense side, Thurgood Marshall - a Supreme Court Justice - wrote a treatise on the fact that you take every business expense you can then you can argue with the IRS is legitimate or not. And that is not breaking the law.
You report every penny of revenue otherwise there are serious penalties for defrauding the government.
And there are others. So, you set up these objectives.
And once you have your objectives then you say, the question comes:
“How will we do it?”
And there in lies your strategies and action plans.
Listening to you talk about the need to report every penny of income, there’s an adage that if you’re going to defraud the IRS on that level then you are likely to defraud your self or your partners on another level.
Exactly. It’s a value.
And that’s going to manifest into defrauding your employees, your customers, your investors.
I had to laugh when you pointed out what I overlooked. I tend to be impulsive and quickly assess what needs to be done and just jump ahead to the action plan.
Yeah. Most entrepreneurs do that.
“Let’s get in there and do some action.”
“Ok. What kind of action? How are you going to measure it? What do you do if it doesn’t work? ”
So, once you have your values in place, your values of business, meaning your objectives, in each of those elements then you can measure your action plan. That starts with a strategy, that’s followed up by the tasks and tactics and the timelines and who’s going to do that.
You have a strateguy. And that is to say Expand our marketing budget and reach this new market. That’s a strategy.
Well, what’s the task involved? Well, Charlie needs to sit down and create some new sales material. And then we need to decide which advertising medium we’re going to use. And what frequency and how will we measure it? And once that’s done, we let the contract. And, our timeline to complete this is 3.5 weeks by this date. And Charlie’s involved in making this happen.
There’s one unit of strategic action. And you write it down.
Well, why do you do that? Because next week you have a business meeting with your leaders or managers and you ask Charlie:
“What’s our progress? Show me.”
Does that mean you always make your timelines? No. But at least you know you have to adjust them.
If you have a timeline then everyone can organize and prioritize their day to stay up with it.
Exactly. It stays in the entrepreneur’s head. And then you have people say
“Well, I didn’t know you had to have it done by March 1st. It will take longer than that.”
Then there’s always the discussion of why isn’t it done?
If you lock up the ideas in the entrepreneur’s head and don’t write it down, how can you expect anyone to perform? It gives manager’s confidence. Yeah, it puts them under pressure, but we’re all under pressure. But it gives them exactly what’s expected of them. And then if you have a personnel problem, then you can go back to your plan and ask what our objectives in the human resources area?
"Well, Number One is that we respect each employee.
We expect each employee to respect the responsibilities of the job.
Number three, failure to do so then we are obligated to help them find a job where they can perform, either inside or outside the company."
Where in your 40 years of business experience, where does this process usually break down?
One area where this process breaks down is when an entrepreneur is frightened to share their ideas and their plans for fear that someone is going to steal them and go into competition with them.
What that does is severely limit an entrepreneur’s ability to grow. And I discuss that in the book. Planning meetings where the entrepreneur finally has to say:
You know, if I treat my people right and I reward them for success, I’m not greedy, probably 75-80% of them will stay with me. And those that don’t often become the 80% that fail if they try to go into competition because they don’t pay the price. They’re the short-cutters. Not all of them...
I helped develop managers and several of them I helped go into competition with me in slightly different markets because I wanted the reputation in the company that
“ Work for Dick Sanford and his company. They do a great job, they do it right. They grow. He’s tough as nails sometimes; he expects performance. But boy I sure like making the money and the security of the job. “
That’s the kind of reputation I want.
And that’s another objective I want to have in human resources. We want to create an environment where we’re the best place to work. So, then, talent comes to you. Your employees recommend people to you. We never had a shortage of talent. And if we had a misplaced person, not at the clerical or primary function level, but in the supervisor level...not everybody is capable of performing at the supervisory and management level.
Who’s fault is that? Is that the person’s responsibility because they wanted more responsibility and money? No. It was my fault or one of my executive’s fault.
So, what are we going to do to help this person. Turn ‘em out into the community so they can hate us and say bad things about us? No, no. You call the manager in and ask them:
" Are you happy? Are you happy where you’re at? Because you’re not achieving..."
And they’ll blame everybody else but themselves but finally they’ll come:
“No, I’m not happy. It doesn’t fit here. ”
And you say:
“Well, what can we do? Can we change the job, the responsibilities, maybe outside the company?
“Oh. You’re trying to fire me.”
“No. Not at all. If you need a job that we can’t fulfill in the company then start looking. I’ll pay. Go look. And we’ll give you a good recommendation.”
And it worked!
So simple. So clear.
I like your Chapter Six. Introducing Your Strategic Action Plan. And in bold you wrote:
You Cannot Do it ALL!
That's a big challenge sometimes for entrepreneurs. Letting go, letting others.
You can’t do it all. You become tired and stressed. Make bad decisions.
Run off the good talent.
“Dammit. He won’t let me do it. I’ve got a better idea.”
Well, better ideas come out in the strategic planning, in the process. I show them how to do that. HOW. How to think. How to plan. How to execute. And that’s what’s missing out in the marketplace.
That’s what I’ve seen in my research. SUCCESS by DESIGN is the only entrepreneur book on how to do it that’s available.
Chapter 7 is all about the important of reviewing results. This next question may seem like a dumb question, but what’s the importance of frequent reviews?
A lot of our citizens in this country are church-going members. Possibly, you, yourself are.
Why do you go every week? Why do you hear the dogma every week? Why do you say The Lord’s Prayer every week? Why is that?
Why do we pledge allegiance in school frequently? Why do we sing the Star Spangled Banner?
To remind us of who we are, and where we are, and what we’re doing. Which means just saying it once, let’s say you have a strategic planning meeting and you’re woriking on the mission and you create the mission for a profit-making company I recommend - create ever-increasing wealth- why would we repeat it?
Because you forget it!
Ok, we’re going into strategic planning session. Let’s recite the mission.
Oh, we’ve done it.
No. Let’s recite the mission so the thinking that came up with it can be evaluated.
You come up with an idea...is that going to increase our income? No? Well, then we just don’t do it.
Or, we create increasing income but it won’t create any profit; it creates losses. Oh. So that’s the acid test right up front, isn’t it?
So, you repeat it and repeat it and you have them repeat it to their staff.
But you can’t ever let up or bad stuff comes in and blind-sides you.
I’ve had that happen. Things come in the back door and before we know it we’re losing money.
How did that happen?
Well, we never measured it against our mission. It just wasn’t designed to do that. What a stupid mistake! Not stupid, we’re all human.
Why do you tell people you love them? We need to be reminded every single day, the older you get. Why? You don’t want to forget and you don’t want them to forget.
Calvin Coolidge’s advice on persistence I value:
Persistence. Every day in every way, persevere.
Same way with your values, with your strategic plan. Repeat, repeat, repeat. Polish, improve. Repeat.
Part Three of this conversation will be published Tuesday, November 22.