Food to help you prepare for next year

Time to get serious about strengthening your systems





By Pam Slim





Bio Pam is a coach and writer who helps frustrated employees in corporate jobs break out and start their own business. She has been self-employed for 12 years and has enjoyed every bit of it.
Her first book "Escape from Cubicle Nation, will be due from Penguin/Portfolio in Spring, 2009" and Pam writes for Martha Beck's blog on a bi-monthly basis.

When I was about ten years old, our roof got in some serious disrepair. We lived in a house built in 1906, and the creaky beams and bones of wood were showing their age. The wooden shingles had been damaged by years of rain and wind, and water started to leak through the ceiling.

My hard-working single Mom did her very best to cover all of our needs, but a $3,000 roof was not going to happen. So we made due, placing pans under the various dripping spots of the ceiling.

I was lying in bed one night, listening to the rain pound outside. Then, without warning, a big chunk of plasterboard fell on my chest. It didn't cause any major damage, it just scared the heck out of me. Our system of staying dry had reached a breaking point.

The same may be true in your business, your health or your home.

I have been reading an interesting book by Sam Carpenter which is called Work the System: The Simple Mechanics of Working Less and Making More. He is a telecommunications business owner in Bend, Oregon, who spent the first fifteen years of his business operating in crisis mode.

His "plaster on the chest" moment came when he was one week away from closing his doors. His health was terrible from working 100-hour weeks, his finances were depleted, his staff was unhappy and customers were angry. He couldn't hold on any longer, and faced certain failure.

Then he had an out-of-body experience (surely fueled by lack of sleep!) when he rose up from his situation, looked down on it, and for the first time realized that his entire life and business was built on sloppy systems. Nothing was documented or planned. Stuff just "happened," which was why crisis after crisis continued.

At that moment, he got clear on what he had to do: take each underlying system in his business one at a time and clean it up. With flawless systems, clearly defined roles and excellent communication, the business would survive, improve and eventually thrive.

So that is what he did, with the help from his staff. The process took a long time, but by rigorously examining and documenting every step of every key process in their business, they were able to make leaps and bounds in efficiency. Providing better service, they raised their rates. Retention improved, and training new employees was much easier.

On the personal side, Sam did the same thing. He made health and sleep a priority. He respected the system of his body, and only ate healthy foods. He started to exercise.

His former 100-hour workweeks are now 2 hours. His company is successful and his life is flourishing.

How can you translate this systems thinking into your own life?

If you are in business for yourself, you can see that every part of your operation is based on processes and systems. They may be a home-grown jury-rigged, inefficient systems, but they are systems nonetheless. To start:
Define the strategic objective of your business. Carpenter gives very specific examples of this in the book. You can also use a much higher-level description like Guy Kawasaki's example of "mantras" in his book The Art of the Start. His personal mantra is "empower entrepreneurs." I am not totally decided on mine yet, but a key objective is definitely "promote liberation."
Define the general operating principles of your businesss. Operating principles guide your decisions, and allow you to choose which systems and processes are truly necessary to run your business. Some examples from Carpenter's business are:-We focus on just a few manageable services. Although we watch for new opportunities, in the end we provide "just a few services implemented in superb fashion, rather than a complex array of average-quality offerings.-The money we save or waste is not Monopoly money. We are careful not to devalue the worth of a dollar just because it has to do with the business.-We study to increase our skills. A steady diet of reading and contemplation is vital to personal development. It is a matter of self-discipline.
List the key processes and systems that underlie your business. For my coaching practice, there are processes like client acquisition, blogging, bill paying, teleclass delivery and forum moderation.
Work on cleaning up and documenting one process at a time. You may want to choose the most high-impact system to document first. Write down all the steps involved in clear, simple, step-by-step language.
Automate as much as you can of the mechanical processes. Outsource things you don't need to do yourself. Tools like autoresponder email systems can work great for this. (Aweber.com is what I use for this newsletter and signups for all my classes)If you haven't started a business, it would be great to keep this framework in mind as you design your business model.

What jumped out at me so clearly as I read Carpenter's book is that by rigorously cleaning up the systems that underpin my business, automating as much as I can and outsourcing any tasks that I don't need to do personally, I will have much more time to focus on providing more services, contributing more free content (blog posts!) and serving more people.

And if you are not a business owner, not to worry -- you can apply this systems thinking to your everyday life.

Some process improvement areas that spring to mind:
Email management (set up filters and rules for taming the email beast!)
Grocery shopping (I hand write my list every week, trying to remember the basics -- how about if I created a pre-printed list that I could hang on the refrigerator?)
Laundry (I used to have four different laundry baskets in everyone's rooms, then I switched to a central basket in the laundry room and it is much easier. Talk about a task I would love to outsource!)
Remembering birthdays (this is one area I have been terrible at in the last few years since I relied on my memory instead of calendaring everyone's birthdays. Maybe next year I will remember to call my best friend on her birthday (January 14) for the first time in three years)
Rotating food in the refrigerator. (We have gotten in the habit of cleaning out the refrigerator every Tuesday night, since the trash goes out on Wednesdays. It really helps cut down on "mystery scientific experiments" growing in the back of the shelf.)You can see your systems don't have to be glamorous. They just have to work well, and allow you to spend your time doing what you really want to do.
Other good resource books:

Beyond Booked Solid, Michael Port
The 4-Hour Workweek, Timothy Ferriss
Getting Things Done, David Allen
Upgrade Your Life, Gina Trapani
Connect: A Guide to a New Way of Working, Anne Zelenka

Good blogs:

Zenhabits.net
Matthew Cornell

Pam's Web page : http://www.ganas.com

Some thoughts on the "Credit Crunch"

Recession and the credit Crunch

I have been trying to spin out technology from a govt. incubator in the N.E. of England, this has been a long and convoluted track, one which is precariously coming to a major nexus. The track has seen the business model morph from a major project , with debt finance in the teens of millions and matched equity financing , to the bare bones of a model which was built on a deck of cards that are crumbling away quickly. I am sure many of my readers have been there before, where a solid plan on the exterior is actually a convoluted network of supporting items and actions, if you miss or loose a couple of them the whole becomes very unstable( or role is to makes sure we have spare aces up our sleeves). This is normal for a start up but adding on top off that the financial institutions issues with the credit collapse, it makes it nearly impossible to raise debt financing , and the terms from your VC in general is like day light robbery, but what is a guy to do, if you have a project you need to have the resource. I look at it like "Oceans 13" You have a major deal to make loads of cash and have the time of your life executing the deal (For some sad folks it's the execution and not the pot of gold that we crave), you take your money to bank roll you, from where you can get it.

(I do need to take a minute here to say that there are some good guys out there, the guys I have worked with on this deal have been some of the best I have worked with (SIGMA VENTURES), there are a few others that I have come to respect both sides of the pond. )

So today's little gem comes from a favorite blog off mines "Pure VC" www.purevc.com it talks about "the depths and extent of the financial crisis we face today", you can stop here and now turn to your favorite fiction site, BBC, The Sun, The mirror, or let these guys educate you.

Deleveraging, Recapitalizations, & Margin Calls
People still don't seem to believe or comprehend the depths and extent of the financial crisis. Here is my brief explanation. We have been in an economy built on leverage and that leverage is coming down like a house of cards. Banks and financial companies were levered 40:1 loaning monies out that far exceeded the capacity for defaults. It started with residential mortgages and sent the financial world reeling as banks packaged these loans and sold them to others. Due to recent changes in accounting rules, banks were forced to value these assets "marked to market". Thus when the market froze and there was no liquidity to trade debt, valuations declined. We saw the collapse of some venerable investment banks such as Bear Stearns and Lehman Brothers as well as thrifts such as Washington Mutual and Indy Mac and mortgage titans Freddie Mac & Fannie Mae and Countrywide - the list goes on and on. We also saw the swallowing of Merrill Lynch and Wachovia, and the near crumbling of Citigroup. Even Goldman Sachs and Morgan Stanley have not been spared.
For those of you who believe that the financial companies will be coming back anytime soon, please think again. The market no longer values any business model that relies on leverage. In order to deleverage, companies must sell assets both good and bad. This compounds the problem as these assets are worth less and less. To make matters worse, the entire industry is in trouble and there are no buyers to take on leverage (the only buyer is the Federal Government). Anybody that acquires or merges with another insitution is simply asking for trouble. How can an overleveraged bank imagine that it can purchase another weaker overleveraged bank without weakening its position? It can't. Thus, it must go back and raise funds such as Bank of America did after its Merrill acquisition. Dividends will be cut completely. Massive amounts of equity will need to be raised. And when the federal money runs out we will be in trouble.
Thus the economy is in a massive recession and is shrinking because of deleveraging. If we were levered 40:1 and we are going back to 10:1 leverage then you can imagine our economy will shrink that same amount. If you don't understand what I am talking about, think about the size of the economy as measured by credit card transactions. Imagine if your bank suddenly froze your credit cards and you could not buy anything on credit and you had to use cash. Transactional volume would come to a halt because most people use credit to pay for just about everything. Unfortunately, a freezing and cutting of credit extended to consumers may actually happen. You can imagine what this will do to retailers. It looks like we are going back to the age where cold cash is king.
Essentially, we have had a recapitalization of the entire economy. The stock market has lost trillions of dollars as reflected by the haircuts of stock prices. Open up your 401k statement and you will see what I am talking about. 99% of the population does not understand what "recapitalization" means. In the private equity world, recapitalizations are the re-valuing and re-valuation of a company's worth. When you hear "recap" it typically refers to loss of valuation to the downside - think "massive shrinkage of company's value". Sometimes a recap is to the upside but that is what we would call a "dividend recap" meaning that we are taking out money from the company at the time of recapitalization. Anyways, the key theme in a recap is this - previous investors typically get washed out unless they "pay to play."
One final thought - the entire world has been put on a "margin call". How? Well, the market has told us that any business model using leverage is no longer desirable. Thus anybody with leverage is forced to close out its leverage down to either zero or something more reasonable. This is why it is a treacherous downward spiral - the only assets to sell are those that are devalued and those companies that are publicly traded are thus in a bad position. They have margin calls on them and must sell devalued assets that are losing more value everyday.
Do you still think that the next shoe to drop is not the commercial real estate industry? Or the consumer credit industry? The market thinks leverage is evil - any business models with leverage must adapt or become the next victim of market evoluion.

http://www.purevc.com/pure_vc/2008/12/deleveraging-recapitalizations-margin-calls.html

Have a great weekend