Running Your Business Right 

Have you ever had one of those epiphanies that hit you like a ton of bricks and changed your life? Mine came about 15 years ago on trip to visit a friend in New York City. I had just started a consulting business and began working with members of a large flooring cooperative. My friend Steve, an investment banker who lived on the Upper West Side, wanted to go to a local bookstore to get a coffee and just chill out and read a book. For a guy who was living in Texas and played rugby for recreation, this was about the last thing I wanted to do in NYC. Quite frankly, I would have rather watched Annie on Broadway.

But I guess being in that bookstore that day was fate. The business gods decided it was time for me to refocus with a good book. At the time, I thought I had it all figured out. I had an Ivy League degree, graduated from a top-five MBA program, had some solid work experience, and a list of clients that generated an immediate revenue stream. What else could an ignorant new business owner ask for?

Then, at the end cap of the isle of business books was “The E-Myth Revisited” by Michael Gerber. Once I picked up that book I could not put it down. Other than my marriage and birth of two children, this was the most important event of my life. This was the incarnation of what became David Romano the business owner.

The book teaches the reason most small businesses fail is that they are run by a technician, someone who knows how to do the work but doesn’t understand how to be an entrepreneur or a manager. An owner should have all of these traits, but must know when to take on the role of each. It is critical that for no extended period of time can the owner get stuck in one role. 

  • The technician is an expert in his/her craft (an installer, sales associate, distributor representative). This often leads these people to go into business for themselves – they’re good at what they do, and they know it, so why not reap the rewards of their labor? The technician is happiest doing the work they are good at and ignoring the rest, which is, in the end, a recipe for failure.
  • The entrepreneur is the dreamer, the one who sets out to do something new, who reaches for the stars. The entrepreneur lives in the future, thinking about what could be (rather than in the present). The entrepreneur is often frustrated by how slow the world seems to move.
  • The manager is the detail-oriented one, who dots the i's and crosses the t's, the one who remembers to pay the bills, and wants a well-organized world with no surprises; a world where things happen in an orderly, predictable manner. 

All of these components are necessary in the founder of a business: without the entrepreneur, you might as well keep working for someone else as a technician. Without any technical ability, the entrepreneur must rely on others to get anything done, and without the organizational abilities of the manager, the other two would probably find themselves without power in the company because they had other things to do than pay the bills.

If the business is to thrive, it must move beyond the founder: a business that is wholly dependent on the founder and their abilities is not really a business, but rather a very burdensome job for founder. Every time you are out sick or take a vacation or are otherwise absent, the business stops too.

A real business is one where the founder has created a system so that the business can run itself without their constant presence, and where he/she spends their time observing and managing the performance of their team within those systems. In fact, data shows that the most profitable owners take over three weeks of vacation per year! 

So the question now becomes, what is the best system? Quite simply, the right way to run a business is to do just that - run it. Run it through managing people and systems. Meet with the team, design agreeable systems, and then ensure protocol is followed by observing and measuring. If this is done, it will allow an owner the luxury of being more of an owner and manager than getting dragged into the constant technician role.  

Listed below is a diagram outlining a productive week in the life of a business owner in the flooring industry and further explanation of each task: 

Sample Weekly Schedule

Day

Task

Monday

Review Performance of Sales Staff and Hold Sales Meetings

Tuesday

Meet with Prospective Clients and Top Accounts

Wednesday

Brainstorm New Avenues of Growth and Make Customer Follow up Calls

Thursday

Meet with Team to Discuss Results and Develop Task Lists

Friday

Alternate Weeks with Day Off and Financial Reviews


  • Review Performance with Sales Staff –
    Cover sales to goal, close rates (overall, on quotes, on measures), average transaction, traffic, outstanding quotes, customer service, change orders, open orders, outstanding issues, etc… Hold sales meetings covering selling techniques, merchandising, and installation.
  • Meet with Prospective Clients and Top Accounts – Develop a list of prospective clients to visit such as adjusters, realtors, builders and schedule meetings to secure new business. Have lunch with top accounts to ensure future business.
  • Brainstorm New Avenues of Growth and Make Customer Follow-Up Calls – Create strategic plans outlining new avenues of growth and/or new lines of business. Contact all customers that have been quoted, but have not purchased, to try to secure the business or ask why they decided not to buy.
  • Meet with Team to Discuss Results – Hold meetings with managers, administrative staff, and operations team to discuss both financial and operational performance. Utilize dashboards that illustrate all facets of the business such as receivable aging, average days to install, gross profit and sales by sales associate, etc.
  • Alternate Day Off and Financial Review of Company – Alternate every other Friday off to recharge your mind with conducting a financial review projecting cash flow, viewing written and delivered reports, monitoring receivables and payables, managing inventory aging, etc…

To many owners this may seem unrealistic or something derived from a textbook, but there is substantial data to back the importance of these tasks. Here are some examples: 

  • Flooring owners who tracked close rates of their sales team experienced an average of $51,000 more in sales per sales associate per year.
  • Flooring companies that have Policy and Procedures manuals experienced a 3.4% higher close rate and generated 35.2% more in volume per year.
  • Flooring companies that held regular management meetings had a gross profit that was 2.5% higher and generated over 48% more in annual revenue.
  • Flooring companies that held regularly scheduled sales meetings employed sales associates that generated over $43,000 more in sales per year per each sales associate.
  • Flooring stores that had someone actively scouring the community for new business, a hunter, generated over $3.6 million dollars in additional revenue.

What I had then realized, on what I viewed as a super boring trip to the bookstore, was that I was operating under a principle called “The Confidence Trap.” I believed that whatever I put my mind to I could get done. Sounds admirable right? Wrong! Studies show that the more confident an owner is in his/her abilities, the less profitable their business was. See, what I came to terms with is that hard work does not get the job done. It is hard planning and hard systems that work. One must plan for their future, build a team of people smarter and more aggressive, design systems, and never be complacent. Start working your business and not in it and create a schedule where you can create and mentor a team of All Stars and not have a company full of almosts. 

Pull-Quote:

A real business is one where the founder has created a system so that the business can run itself without their constant presence, and where he/she spends their time observing and managing the performance of their team within those systems.