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Running a location Dependant Business
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Great post mate.
I'm in business too. I relentlessly drive down overheads and dead money by better planning and systems.
Have you considered getting a Pro in to look at your overall business and offer a plan for improvement?
A BA type, or a six-sigma ninja should be able to wrap their head around your systems, business and process flow and offer you a plan an expert insights into cast iron improvements. Cheap to get a weeks review/report to see what they turn up anyway.
Moving to delegate and getting the business to run itself more is a worthy goal, I find the self employed benefit of being able to "choose" which 17 hours a day we work so lucky....
I've tried to get young, ambitious or keen others to step up and take a share in the risk, rewards... But most people lack the balls and mentality to be self employed, take risks and go for the big rewards. They just want a safe low effort staff job. Anyone good enough to do it, would do it themselves anyway I reckon.
I'm in business too. I relentlessly drive down overheads and dead money by better planning and systems.
Have you considered getting a Pro in to look at your overall business and offer a plan for improvement?
A BA type, or a six-sigma ninja should be able to wrap their head around your systems, business and process flow and offer you a plan an expert insights into cast iron improvements. Cheap to get a weeks review/report to see what they turn up anyway.
Moving to delegate and getting the business to run itself more is a worthy goal, I find the self employed benefit of being able to "choose" which 17 hours a day we work so lucky....
I've tried to get young, ambitious or keen others to step up and take a share in the risk, rewards... But most people lack the balls and mentality to be self employed, take risks and go for the big rewards. They just want a safe low effort staff job. Anyone good enough to do it, would do it themselves anyway I reckon.
I have a bachelors in business and I'd say an MBA, from what I've seen, probably won't help you much. I think your money would be much better spent hiring someone to come in, clean shit up, while you basically shadow them and learn from them for 1-3 years.
And as you said, if things went well with that person, you could offer them a piece of the company freeing up more of your time and allowing you to focus on doing the things you want, or are good at in regards to the business, as opposed to trying to fix it all yourself. Even if they took a sizable chunk of the business, your family still could end up making way more money if they are good at what they do and significantly grow the business.
I had a professor who was a self made millionaire tell me that he ALWAYS hired people smarter than he was for his business. He also told me that often times his top sales people made more money than he did. A lot of business owners don't like that. They feel they should make more than the employees, but for him he wanted the absolute best people he could get, so he gave them large commissions and in exchange they sold their asses off and made him rich. It didn't matter that they sometimes made more than him because overall he was making a lot of money and growing his business like crazy.
And as you said, if things went well with that person, you could offer them a piece of the company freeing up more of your time and allowing you to focus on doing the things you want, or are good at in regards to the business, as opposed to trying to fix it all yourself. Even if they took a sizable chunk of the business, your family still could end up making way more money if they are good at what they do and significantly grow the business.
I had a professor who was a self made millionaire tell me that he ALWAYS hired people smarter than he was for his business. He also told me that often times his top sales people made more money than he did. A lot of business owners don't like that. They feel they should make more than the employees, but for him he wanted the absolute best people he could get, so he gave them large commissions and in exchange they sold their asses off and made him rich. It didn't matter that they sometimes made more than him because overall he was making a lot of money and growing his business like crazy.
Alright, my business experience is north american and european based so I may be missing australian perspective but let me add my own insights.
If you perceive any of my opinions as personal slights, don't, I just don't want to be long winded.
1. Taking an approach of moving an established family business into a completely overseas and outsourced operation means that you are now 'entering the big leagues'. You can't market on quality, or 'local' or AUS made, anymore. You are going to go for 'best price' for the win, and compete against the giant animals of industry to go for that win.
2. "Maintaining family relationships while firing their redundant asses" combined with a long game of 'not ever having to walk into a factory ever again' combined with "moving 100% manufacturing overseas"...do this and you are going to get fucked in the ass. Chinese suppliers for example are ruthless mother fuckers and they KNOW when no one is watching or keeping tabs on them. Thats when they will start to cut corners, undership orders, substitute materials, modify designs and/or start selling your shit out the back door and go around you. You will only find out when your customers start to flip out that they are getting bad product if you aren't watching your suppliers.
If all you control is the design for this stuff and the marketing staff, what do you really have? Nothing. As least in Australia you can take some asshole subcontractor shop to court if they steal your designs and you are 100% outsourced. Are you really going to sue someone internationally?
The problem with moving all of your manufacturing overseas then becomes YOU have to be overseas. You have to be other there checking on them, keeping them 'honest'...would you rather be there, or like a 20 min drive from where you live now?
3. Custom work...you are throwing away money by shutting it down. You should spin it off into a different branch, have people who are 'details' borderline aspbergers perfectionists to manage it and then jack the price up because its 'custom high quality' You then also double your 'custom' branch as your 'research and development' branch. Stuff that works out well in custom you modify for mass production. See Honda/Accord, Nissan/Infiniti, Lincoln/ford as large examples.
4. Hiring a CFO/and or HR manager...what kind of HR manager are you going to hire? Some classic HR bitch that is just going to make your life hell when she tells you all of the myriad of rules and diversity policies you need? How are you going to hire these people? Does your family have good referral connections or is it just going to be via a job ad. You are better off hiring an outside accounting firm to educate you and become your own CFO vs. outsourcing...why? because CFO's come in and know financials but nothing about your product. You want it to be the other way around...know your business first, financial experts second. Same thing with HR, train someone on the inside to be your HR expert and use consultants if needed...don't just import some outside cunt full time.
5. You come across as an asshole, aka 'typical lawyer' in the way you post. If you bring that mentality into this business you are going to piss off alot of people, get burned by contractors and stabbed in the back. You need to be able to build relationships with people, and not come off as an arrogant prick. Having good relationships with your internal key people, and outside suppliers gives you better information, service and more flexibility when you have a crisis (and you will, thats the nature of business). If you are an asshole they will just work to the letter of their contracts and rape you for money when you need to bend them. You can afford to be an asshole if you dominate your industry or market, but not really until then.
Last, if you want to really get good at running this business. Get the fuck into the factory. You've got to do your time in the trenches so to speak before you can relax and be a hands off CEO. Doing it the other way around is how you get screwed...if you don't have the time, sell it or find the best employee you've got and promote them up to run it for you while giving them a big consultants budget to work with.
If you perceive any of my opinions as personal slights, don't, I just don't want to be long winded.
1. Taking an approach of moving an established family business into a completely overseas and outsourced operation means that you are now 'entering the big leagues'. You can't market on quality, or 'local' or AUS made, anymore. You are going to go for 'best price' for the win, and compete against the giant animals of industry to go for that win.
2. "Maintaining family relationships while firing their redundant asses" combined with a long game of 'not ever having to walk into a factory ever again' combined with "moving 100% manufacturing overseas"...do this and you are going to get fucked in the ass. Chinese suppliers for example are ruthless mother fuckers and they KNOW when no one is watching or keeping tabs on them. Thats when they will start to cut corners, undership orders, substitute materials, modify designs and/or start selling your shit out the back door and go around you. You will only find out when your customers start to flip out that they are getting bad product if you aren't watching your suppliers.
If all you control is the design for this stuff and the marketing staff, what do you really have? Nothing. As least in Australia you can take some asshole subcontractor shop to court if they steal your designs and you are 100% outsourced. Are you really going to sue someone internationally?
The problem with moving all of your manufacturing overseas then becomes YOU have to be overseas. You have to be other there checking on them, keeping them 'honest'...would you rather be there, or like a 20 min drive from where you live now?
3. Custom work...you are throwing away money by shutting it down. You should spin it off into a different branch, have people who are 'details' borderline aspbergers perfectionists to manage it and then jack the price up because its 'custom high quality' You then also double your 'custom' branch as your 'research and development' branch. Stuff that works out well in custom you modify for mass production. See Honda/Accord, Nissan/Infiniti, Lincoln/ford as large examples.
4. Hiring a CFO/and or HR manager...what kind of HR manager are you going to hire? Some classic HR bitch that is just going to make your life hell when she tells you all of the myriad of rules and diversity policies you need? How are you going to hire these people? Does your family have good referral connections or is it just going to be via a job ad. You are better off hiring an outside accounting firm to educate you and become your own CFO vs. outsourcing...why? because CFO's come in and know financials but nothing about your product. You want it to be the other way around...know your business first, financial experts second. Same thing with HR, train someone on the inside to be your HR expert and use consultants if needed...don't just import some outside cunt full time.
5. You come across as an asshole, aka 'typical lawyer' in the way you post. If you bring that mentality into this business you are going to piss off alot of people, get burned by contractors and stabbed in the back. You need to be able to build relationships with people, and not come off as an arrogant prick. Having good relationships with your internal key people, and outside suppliers gives you better information, service and more flexibility when you have a crisis (and you will, thats the nature of business). If you are an asshole they will just work to the letter of their contracts and rape you for money when you need to bend them. You can afford to be an asshole if you dominate your industry or market, but not really until then.
Last, if you want to really get good at running this business. Get the fuck into the factory. You've got to do your time in the trenches so to speak before you can relax and be a hands off CEO. Doing it the other way around is how you get screwed...if you don't have the time, sell it or find the best employee you've got and promote them up to run it for you while giving them a big consultants budget to work with.
Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
Quote: (11-09-2015 03:54 PM)Dr. Howard Wrote:
5. You come across as an asshole, aka 'typical lawyer' in the way you post. If you bring that mentality into this business you are going to piss off alot of people, get burned by contractors and stabbed in the back. You need to be able to build relationships with people, and not come off as an arrogant prick. Having good relationships with your internal key people, and outside suppliers gives you better information, service and more flexibility when you have a crisis (and you will, thats the nature of business). If you are an asshole they will just work to the letter of their contracts and rape you for money when you need to bend them. You can afford to be an asshole if you dominate your industry or market, but not really until then.
It's interesting that you say this. I've met CobyB and he comes across as anything but what you've described in person. I can't really comment on his writing on the forum, since my perceptions are coloured by the fact that I know him, but I'd be curious if others here have had a similar impression from his posts.
I'm the King of Beijing!
Quote: (11-09-2015 03:54 PM)Dr. Howard Wrote:
5. You come across as an asshole, aka 'typical lawyer' in the way you post. If you bring that mentality into this business you are going to piss off alot of people, get burned by contractors and stabbed in the back. You need to be able to build relationships with people, and not come off as an arrogant prick.
Haven't met CodyB, but he just comes across as very Australian to me...a cocky bastard who can't spell "dependent" but graduated law, probably has abs, cash and chicks.
CodyB, I mean all that in the nicest way you cunt :-D
Dr Johnson rumbles with the RawGod. And lives to regret it.
It sounds like your two biggest problems are inefficient operations and wasteful spending. Here's how I would like at these problems:
Problem 1) Look at the last 12 - 16 months of expenses, what is the biggest wasteful expense. Why are they taking so much overtime? Maybe, you need to higher more employees for minimum wage to reduce the amount of overtime for existing employees. Why all the emergency shipping, last minute flights. This is a major operational issue, if you can't streamline your operations you are going to run into huge problems especially in manufacturing. Forget the HR Manager or even CFO, you need an COO or some operations expert that can analyze your entire operational process. Where is the lag/breakdown occurring that is resulting in unnecessary expenses? I don't think you have a finance/accounting problem so CFO might not be that necessary at this point.
Problem 2) This is a tough one, it can be hard to do business with family especially if some members rely on the income. You have to cut deadweight somehow. How many family members are employed? Are some really doing jack shit?
Problem 3) Seems like a major operational issue. If you are a manufacturing company and you can't consistently produce and ship orders on-time you will incur a lot of unnecessary expenses. If you got the coin I'd consider hiring one of the major consulting firms(Bain, BCG, Mckinsey). They have operational experts, but are very expensive. No shame in hiring an outside party to help analyze the problem in depth. You could always have them come in and pitch their services to see how much it would cost. Also, you can't balance your books? That's accounting 101.
Problem 4) Don't know too much about Australian labor laws. Why is so hard to fire them? Have you thought about the possible negative effects on quality if you shift more production overseas? This could screw you. You should make sure you implement a stringent quality control process, while increasing the manufacturing abroad. I think someone mentioned this above, but moving this process overseas will likely result in you making more trips. Unless, you can find a competent full-time employee to do this. He might be expensive though.
tl;dr Fix you payroll. 750k in unnecessary expenses is absurd. Why so much overtime? Consider hiring consultants or an experienced COO to analyze and fix your operational problems.
Problem 1) Look at the last 12 - 16 months of expenses, what is the biggest wasteful expense. Why are they taking so much overtime? Maybe, you need to higher more employees for minimum wage to reduce the amount of overtime for existing employees. Why all the emergency shipping, last minute flights. This is a major operational issue, if you can't streamline your operations you are going to run into huge problems especially in manufacturing. Forget the HR Manager or even CFO, you need an COO or some operations expert that can analyze your entire operational process. Where is the lag/breakdown occurring that is resulting in unnecessary expenses? I don't think you have a finance/accounting problem so CFO might not be that necessary at this point.
Problem 2) This is a tough one, it can be hard to do business with family especially if some members rely on the income. You have to cut deadweight somehow. How many family members are employed? Are some really doing jack shit?
Problem 3) Seems like a major operational issue. If you are a manufacturing company and you can't consistently produce and ship orders on-time you will incur a lot of unnecessary expenses. If you got the coin I'd consider hiring one of the major consulting firms(Bain, BCG, Mckinsey). They have operational experts, but are very expensive. No shame in hiring an outside party to help analyze the problem in depth. You could always have them come in and pitch their services to see how much it would cost. Also, you can't balance your books? That's accounting 101.
Problem 4) Don't know too much about Australian labor laws. Why is so hard to fire them? Have you thought about the possible negative effects on quality if you shift more production overseas? This could screw you. You should make sure you implement a stringent quality control process, while increasing the manufacturing abroad. I think someone mentioned this above, but moving this process overseas will likely result in you making more trips. Unless, you can find a competent full-time employee to do this. He might be expensive though.
tl;dr Fix you payroll. 750k in unnecessary expenses is absurd. Why so much overtime? Consider hiring consultants or an experienced COO to analyze and fix your operational problems.
Quote: (11-10-2015 01:47 AM)Suits Wrote:
Quote: (11-09-2015 03:54 PM)Dr. Howard Wrote:
5. You come across as an asshole, aka 'typical lawyer' in the way you post. If you bring that mentality into this business you are going to piss off alot of people, get burned by contractors and stabbed in the back. You need to be able to build relationships with people, and not come off as an arrogant prick. Having good relationships with your internal key people, and outside suppliers gives you better information, service and more flexibility when you have a crisis (and you will, thats the nature of business). If you are an asshole they will just work to the letter of their contracts and rape you for money when you need to bend them. You can afford to be an asshole if you dominate your industry or market, but not really until then.
It's interesting that you say this. I've met CobyB and he comes across as anything but what you've described in person. I can't really comment on his writing on the forum, since my perceptions are coloured by the fact that I know him, but I'd be curious if others here have had a similar impression from his posts.
Nothing personal to the OP, but he does come across as an arrogant prick. I get the impression that he is young, coming from a low-level legal job and now he is going to set this family business right, by God! Never mind that he has no experience, he knows how to do it better.
I say 'nothing personal' sincerely, because I realize that I too can come across as an arrogant prick.
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