Closing the Spreadsheets and Putting Your Boots On

I have a client that has been running a small business for a couple years and has experienced significant growth. They had asked me to come in and clean up their accounting system so they could start getting monthly financial statements. So I went to work reconciling bank statements and auditing balance sheet accounts. I started publishing monthly financial statements with lots of helpful metrics and comparisons.

What the financial statements showed was that the company was losing money and running out of cash. So we spent time digging into the cost of goods sold and built a weekly report for auditing job margins. We came up with a new break-even analysis and pushed sales to hit the new numbers. When that didn't improve performance, we did another break-even analysis and came up with new sales numbers.

Most of you are probably saying, "The problem isn't sales!" and you are correct. You are probably also saying, "Stop working on financial reports!" and that is great advice. Where were you six months ago? 

So I shifted gears. I closed the spreadsheets, put on my boots, and spent time in operations. I kept hearing that jobs weren't getting done on time. Customers were getting upset because there were quality issues with the work the company was doing. We weren't getting paid on time and we had to do extra work, pay overtime and perform rework every week. These were not new issues; they had been there for months, but we not addressing the root issues. 

I spent some time with the Operations Manager, who was a close personal friend of the owner, and it became very apparent that he was struggling in the role. Operations were a mess. As a result he was reacting to delivery and quality issues when it was too late to avoid an upset customer and it was costing the company.

I worked with the owner and the Operations Manager to quickly implement three simple solutions to improve scheduling and the quality of the product delivered, which were:

1.    Pre planning meetings – Each week on Thursday the owner, the Operations Manager and I would meet and review the jobs that were finishing this week. We would go over delivery, quality and payment for each and address issues then and there. Then we would look at the week ahead and make sure that we had a plan for each job that was scheduled. Almost immediately the chaos in operations disappeared and customer complaints ended.

2.    Daily status calls – This business involved operators out in the field interacting with the customers. So we started having daily check in calls with each operator to discuss the status of their project, any issues with the project, and any support they needed. These calls were less than five minutes, but the operators loved them and it eliminated surprises that used to pop up at the end of jobs.

3.    Closing checklist – We wanted to make sure the customers were satisfied when we left a job, so we put together a very simple checklist that the operator would use to make sure they had completed the project correctly, the worksite was clean and the customer was satisfied. This reduced rework and callbacks.

More importantly, I cautioned the owner that the Operations Manager was probably the wrong person for this role. This was not a popular opinion given their relationship, but I encouraged the owner to get more involved in operations and see if the Operations Manager embraced these new solutions or if he reverted to the old ways. Unfortunately the Operations Manager did not work out and was let go a month later.

Now the company is digging out of a hole. I believe in the ability of the owner and the business model, so I think they can make it. But, if I had identified the weaknesses in Operations earlier on, we would have been able to stop the loss of money and customers much earlier. The moral of the story for me was that sometimes you have to close the spreadsheets and get involved in operations to truly see the issues a company is facing.