THE SIMPLE TRUTH

The People Factor

Business plans are impersonal documents, but they are carried out by humans. And therein lies the problem.

the process of running and growing your business you will encounter what we call The People Factor. The nature of our advisory work requires us to deal with this People Factor as well as inventory, location, financing, and other business issues. Business plans are factual, impersonal documents, but they are carried out by people subject to all the qualities and frailties that make us human. We see both types at work, and we call them saints and sinners.

The saints are at their core good and caring souls. Their goal is to serve the family who hired them and the guests that help the business grow. The sinners create unpleasant, unexpected, and just plain evil issues that must ultimately be faced. In addition to the saints and sinners, we find a middle ground: folks who are not well suited to their positions.

We strive to share our findings about the latter two categories with owners, but it can be hard for them to act. After all, these are often people they have come to depend on and trust. Here are a few examples from our “People Factor” files.

After a thorough review of the store’s staff, we had suspicions about the abilities and real motives of a store manager. We relayed those suspicions to the owners, who refused to believe their trust had been misplaced. Sadly, our suspicions were proven true less than two years later when that manager cleaned out the store’s bank account and locked out the owners from their own computer system. Although we were able to get the owners back into their system, the funds and the manager were long gone.

The next store had an impressive staff of caring folks who not only loved the industry, but the family who had built the business. The store was growing fast, but such growth can create its own problems. Overwhelmed by the responsibility of managing such quick growth, the owners had quickly, and haphazardly, assigned duties to the team.

Our analysis found that a couple of team members had talents that would better serve everyone if they were moved into different positions. One was serving as a range check-in department head, but after watching him we could see his knack was in product knowledge and guest interaction. We recommended he be moved to sales. The following year his personal sales were just under one million dollars. The other turned out to be a talented and compassionate teacher. Moved to head the educational department of the business, she oversaw a staff of instructors that added over $250,000 in revenue in the remainder of the first year.

One operation we advised had two partners. The first partner conceived of the business, did all the initial work, and built it up to a multiple-million-dollara-year level. The second partner came from the corporate world, where he held a mid-level management position. In our initial interview with him we were surprised at his withering criticism of the business and his partner. He also touted how he (and only he) had saved his previous employer from disaster. Clearly, he was a narcissistic and divisive individual, but when we shared that assessment with the first partner (who had hired us) he could not be swayed. He simply couldn’t believe the evil nature of a person he had trusted to bring into his business.

In We later learned that the second partner continued to do things to make the first partner look bad. These acts included not paying certain bills and spreading outright lies about him. Eventually it all came to a head, and the business collapsed. Really knowing your team can help you avoid the problems explained above. Such knowledge can also open doors you might have never have even seen. An operation in the south served a diverse population, including what turned out to be a sizable Spanishspeaking group. On staff were several team members who spoke the language fluently. There were other staffers who said they were willing to take classes to learn Spanish so they all could respectfully serve this market better. When the owner acted on this information, he saw an increase in sales of 19 percent in the first full quarter. When he began actively marketing to his Spanish-speaking customers, sales increased by 28 percent in the next quarter. So, here’s another Simple Truth: Get to really know your staff. You may discover hidden talent that can make your business more profitable. Understand that blind loyalty may prevent you from picking up key signs that an employee has their own plan.As President Ronald Reagan said about relations with the Soviet Union: “Trust but verify.”

One of the most important tasks a business owner faces is properly evaluating an employee. Don’t let blind loyalty keep you from making the correct decision as to whether to keep an employee or move them to an area where they can be more productive.

PHOTO COURTESY OF NSSF Author bio: Miles Hall was founder and president of a multi-million-dollar firearms retail store and gun range in Oklahoma for 36 years. He is now a senior advisor helping FFLs around the country run more efficient, profitable businesses. (HallnHall.com)

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