On this episode, Josh speaks with Vicki Suiter, author of “The Profit Bleed”. They discuss the benefits of top-down management.

Vicki Suiter helps people see their businesses differently, then gives them the tools to do things differently.  Since beginning her business in 1990, Vicki has helped hundreds of contracting companies achieve the kind of success they never dreamed possible.

Today, in addition to consulting, Vicki is an in-demand speaker at industry conferences nationally and internationally, where her presentations are consistently ranked among their most popular. Vicki’s articles and opinions have been widely shared in print and across the web.

In today’s episode you’ll learn:

  • Whats difference between top-down and bottom-up management?
  • What’s backlog and why it is important?
  • What is scrum and how to use it?
  • How to become operationally irrelevant?
  • How do you build teams where people own their job?


Transcript

Narrator:         Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.

Josh:                 Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business podcast.

My guest today is Vicki Suiter-McNickle. Vicki is the CEO Of Suiter Business Builders. She was a guest on my podcast, I guess, a little bit over a year ago. She has just published her first book called the Profit Bleed. Since she just published a bold, I thought It’d be a great idea to have her on the show and find out what she’s learned from writing the book and what you can learn from what’s in the book, and we’ll go from there. Let’s bring Vicki on.

Hey, Vicki. How are you today?

Vicki:                Hey, Josh. I’m doing great. Thanks for having me.

Josh:                 Thanks so much for joining us today.

Vicki, let’s use our book coach’s terminology. What is the big reveal in your book?

Vicki:                I would say the biggest things is that business has a lot of moving elements and it can feel super complicated and challenging. What I believe is that business is not difficult. It can be easy, while there’s a lot of moving parts. What I found is that, when you know how to manage from the top‑down versus the particles and pieces up, you can have much more control over the results that you produce, spend less time doing business and find more profits in the way that you run your business. And then, also more time and more fun in the way you run your business. My whole thing is, when you know the critical things to keep your finger on the pulse of – in your business, to help you run it successfully and know what are the critical elements that drive your profits and drive the systems working, then you can be managing a handful of critical items. Like, you keep your finger on the pulse as opposed to chasing after all the details.

I would say that if there was a big differentiating idea about it, it’s that business doesn’t have to be complicated. And when know the critical things to pay attention to, it gets a whole lot easier. And you have way more peace of mind and less chatter in your head about, “Am I paying attention to this? Or, am I paying attention to that?” I know you talk a lot about systems in your work. And, really, it’s just about how do you have a system for being able to manage the critical elements of your company.

Josh:                 When you say top-down versus bottom-up, what do you mean by that?

Vicki:                I mean that instead of managing all of the tasks and pieces that happen day-to-day, that when you have a system set up so that you go, “All right, I look at these reports and I track these statistics, or I track these results in my business at these intervals.” That’s having a system in place where you’re managing the most critical pieces of feedback in your business that let you pay attention to, “Am I on track for getting where I want to go?”

When I talk about top-down, I’m talking about a much smaller group of critical items that you’re setting goals for and you’re managing results against versus trying to manage all the parts and pieces – all the tasks every day, in hopes to produce a different result. It’s the distinction of managing for results versus managing for tasks.

A short answer your question is, it’s about managing from the top-down versus bottom up. Top-down is managing for results. Bottom-up is managing tasks.

Josh:                 Okay. That makes a lot of sense.

Managing top-down sounds like you need to develop a dashboard that gives you information that’s useful. First of all, what do you put into your dashboard? And then, how do you manage it?

Vicki:                Here’s how I think about businesses. I look at the entire scope of what happens in a business from “what are the things that generate revenue?”, all the way to “what are the things that ultimately drive profitability?” And oftentimes, the thing that people set goals for is like revenue numbers but they don’t necessarily set goals for and manage to profitability.

So, how I look at it is that you want to pay attention to what are all the key drivers, at the very source of where they happen, that drive your eventual profitability. What I mean by that is, like a key driver is that if you’re in business, you have to make a certain number of offers. And I will say– I’m talking about anything other than a retail store because there’s a different strategy or approach to that. But if you’re in a service business or even selling products to other businesses, if you’re in B2B, you have to do then a certain number of proposals and estimates, and you have to close a certain percentage of that work in order to be able to actually generate that work and have it show up on your profit and loss statement and have it, eventually, translate into your profitability.

So, how I look at it is, you want to pay attention to all of those critical pieces of feedback, from the proposal stage to the close stage, to the sales stage, to the production and delivery stage, through final completion. You want to track all of those different areas within your business so that you can know, “Am I on track to meeting the goals that I set?”

So, if it’s like sales, if I say I want to do a million dollars in revenue this year, then I know I need to sell a million dollars in revenue. And, let’s say, if I have a 50% close rate, then I know I need to bid $2-million worth of work. I’m going to make sure that I’m paying attention every month to– and that’s one of the things I’d have on a dashboard report, is my volume of estimates that I’m doing and my close rate staying on track so that I can meet my revenue goal.

The cool thing about doing that, really early on, is I can see way in advance of seeing a financial statement or a profit and loss statement what my revenue is going to be because I’ve been tracking it way back here at the source of where that revenue got generated. That’s just an example of one of them.

Josh:                 It’s actually a really good example because too many people, when they track sales activity, track close pieces of business which is just a result. What you’re tracking – which is really key, is what creates that result. We don’t care about the result because a result’s a result. We know that if we’re doing the right activities to create a result, the result shows up. But too many business owners don’t even track how much they’re putting out in proposals, nor are they tracking their close ratio to make sure they’re staying within what their expectation is. And the truth is, if you track this stuff, you now have an early warning system for when things fall apart.

Vicki:                Absolutely.

I have clients that I meet with every month. That’s part of what they bring to our meetings, is their stat sheet. And we talk about, “All right, so are you not making the phone ring enough? Are you not creating enough opportunities to make offers and to do proposals? Are you getting way more than you need but you’re just not closing enough? Or is it a combination of those two things?” When I can see it, early on, I can do something about it.

Now, that gives me way more control. They have that ability to be able to see it early and go, “Oh, here’s the gap of how much more I need to sell. Or, here’s how close or far away I am from my close rate. Or, I need to get more in terms of proposals, opportunities to make offers.” I now have way more control over what shows up on my profit and loss statement way down the road.

Josh:                 So, do you also track backlog?

Vicki:                Yes, absolutely.

Josh:                 Can you tell us why that’s important?

Vicki:                Yeah. I had a client meeting last week and we were talking about how they’re going to end up at the end of the year, right? And that’s another thing, by the way, I do recommend that people track their backlog on this pulse point report or key stats report – whatever. You know, different people call it different things.

Josh:                 I just call them dashboards.

Vicki:                Dashboards report.

So, you’ve got your estimating. And then, you’ve got signed work, right? So that’s the next stage of it is, “How much work do I have signed and in contract that’s not compete?” Really important number to know, to know how far out that work is going to take me. Also, I recommend that they do it by month so that they can always compare, “How much are you going to bill by month over the next six months or all the way up to 18 months?” – depending on their size of the project. And “What’s your revenue goal for each of those months? And then, what’s the gap?”, so showing the variance that’s the difference between what do I have booked, what my budget is, and how much more I have to go.

Now, another really key place to be able to control my results in the future is if I go, “Oh, I’m missing $20,000 in work in this month, or $5000 in that month.” Now, I go, “All right, my focus becomes much clearer to – “All right, in the next 90 days, I need to close this much work.” And, again, that’s the managing from here – because I have a specific thing that I’m managing to – it’s a much smaller chunk, versus, “I’m working as hard as I can and I’m– you know, I’m just like chasing after it and everything has equal weight.” “Well, now, it doesn’t have equal weight. All I need is $25,000 for the next 90 days. Okay, I can do that.” Now, I go look for my low-hanging fruit and say, “Where do I have bids and projects that are in process in my pipeline that I can maybe go close?”

Josh:                 Vicki, you work with contractors, correct?

Vicki:                Yes. And interior designers [inaudible 00:09:58].

Josh:                 And interior designers. Well, that sounds like a contractor to me.

Vicki:                Yes. Yes, you’re right. It is.

Josh:                 When you work with your contractor, do you do anything about using lean strategies or more specifically scrum?

Vicki:                No. I don’t even know what that word means.

Josh:                 Oh, okay.

Vicki:                What that acronym stands for.

Josh:                 You’re out in Silicon Valley, correct?

Vicki:                No. I’m actually about 120 miles north.

Josh:                 Okay. Do you have any friends in the software business?

Vicki:                I don’t.

Josh:                 Okay. That’s why you’ve not heard of that.

Scrum is being used in the software world to radically improve how fast software projects get done and how they’re done. Now, the issue is– and I think this is a huge opportunity, by the way, in the world of contracting, is that most construction projects are done with what’s called waterfall planning. Waterfall planning is where you plan the whole project at once. You have these gigantic part charts or dependency charts on the wall.

What happens when a dependency falls out? The whole project falls behind. So, that’s why these gigantic public works projects always are over budget and way behind because they’re trying to plan the whole thing at once instead of doing it in small chunks where they take it out a backlog, move it into production. Over a three-week period, look at what they produced. And then, go back and say, “How can we’ve done this better?” That’s what scrum essentially is.

I actually saw this once. It’s sort of a methodology that came from an electrical contractor I was working with. His bottom line was 20%. All the other competitors he had in the State were 5%. I asked him. I said, “Brian, why are you so profitable?” He said, “Well, we plan our projects before we do them.” Meaning, they brought the whole team in, looked at the project, planned it before they went out in the field and actually did it.

Now, what they didn’t do was a retrospective because that’s where the real value is. And had he done that, he would’ve even been more profitable. At any rate, it’s kind of an interesting thing.

Vicki:                Yeah. I completely am on the same page with you. Thank you for the clarification of that term. What gets planned – projects really are successful once they’ve solved based on what happens at the front end. That’s all the difference in the world in how it gets executed at the backend.

The really great project managers I know are relentless with their schedules because they get that managing milestones is the most important part of their job. That, if they can do that, everything else gets a whole lot easier. And that’s one of those strategies that’s top-down strategy versus “I’m just working as hard as I can and hoping that it will all turn out.”

Josh:                 What else in your book should we pay attention to?

Vicki:                I would say that throughout the book, what I provide people is – and the book is written as a parable that follows the journey of these contractors who are struggling with – their revenue has gone up dramatically and their bottom line has dropped. And so, we walk through all of these different areas and parts of their business that drive their profitability. And so, I would say that one of the key principles in the book is learning – throughout it, I provide very specific places where you can start to get a better handle on keeping your finger on the pulse of those critical elements. And I actually provide people a link to resources that they can use and download immediately that will actually let them get into action on every element of that that I brought up within the book. It’s really teaching people and giving them the tools for being able to manage from here versus here.

Josh:                 When somebody’s doing that, what’s different about their daily life over what they were doing before?

Vicki:                Well, let me tell you a story of a client who, four years ago, came to work with me, it was two partners – not the same two partners that the book is about. When they came to me, they had been in business for over 10 years. They were losing money. They were considering filing bankruptcy. They had IRS debt and other debt. They had not taken a vacation, either of them, for several years. They never were out of the office at the same time. And neither of them ever took more than like four days off at a time.

They implemented every single tool, and resource, and distinction, and strategy that I talk about in the Profit Bleed. Last year, they were completely out of debt. They did not file bankruptcy. They have money and cash reserves. They had their largest year ever in volume and largest year ever in profits. They both got very hefty, happy salaries. They both took two weeks’ vacation. One of those weeks was at the same time. A big breakdown happened with their team but their team handled it and they didn’t have to stop their vacation, or get on the phone, or do triage. They are super happy. They spend far less hours working in their business now than they ever have in the 10 years before we started working together.

That’s what’s possible. That’s what somebody can have as a result of implementing the tools and strategies I talk about. I love that part because we get into business because we want to be able to have an opportunity to do what we love, to be able to have time doing – not only the work that we love but enjoy our life and have choices and options.

And so many times, that’s not actually what happens for us as business owners and we end up tethered to our business and exhausted and not making the return we want. Even in an economy that’s bursting like right now, that so many people are working really hard but they’re not necessarily getting the return that they want or able to step away from their business.

These clients I just talked to you about, they’re busier than they ever have been. And the two of them have now — both of them have taken three weeks off, so far, this year. So, I go, “You know, it works.” There’s a way. There’s a strategy. And that strategy, I will say, again, goes back to when you can learn to manage from the top-down the most critical elements that drive the success of your business. You will find that it’s much easier to be able to produce a consistent result.

The thing is, there’s two critical elements to that: (1) knowing what those key indicators are, (2) setting goals around them, (3) managing for results. And having specific measurable results allows you to have clarity, and focus, and certainty about what you’re really dealing with. Good feedback is a critical element of this.

Josh:                 So, what you’re saying is, you need to have great measurement systems to get good feedback so you have something that you’re working with.

The other thing which, I think, makes a lot of sense. I might use different terminology but we’re actually saying the same thing, is that when you’re working top-down versus bottom-up, to be successful at managing top-down, you have to sort of take yourself out of the day-to-day operation of the business.

Vicki:                Yeah. You can’t be the one with your hair on fire all the time. And that was a transition that they both made.

Josh:                 We call that moving towards becoming operationally irrelevant.

Vicki:                Yes.

Josh:                 That’s the terminology I use.

Vicki:                Excellent. [inaudible 00:17:21].

Josh:                 It would seem to me, the big roadblock that gets a contractor to move to that is learning how to delegate. Do you have any tips about how to become an effective delegator?

Vicki:                First of all, to understand the distinction between delegation and abdication.

Josh:                 Yes.

Vicki:                One of the things that– I know this happens a lot, is that people hire somebody and they go, “Oh, you’re a project manager. Here.” And then they abdicate the whole thing to them. And then, they get really ticked off when they find out that that person didn’t actually get the job done.

One of the things that I spend a lot of time talking with people about is, how do you build teams where people own their job – whether it’s accountability, and ownership, and responsibility. That is a critical role of any business leader, to understand that if you’re growing a business, your most important job is to develop your team.

And so, here’s the ways that I approach that. First of all, is having clear position agreements in place. Now, I make the distinction between position agreements and job description because oftentimes a job description, if you go look at job descriptions online or when I ask people for their job descriptions – a lot of time, what they look like is task lists. And how I approach position agreements and why I make the distinction in terms is because I’m all about, how do you set somebody up to win, to understand and manage for results? The position agreement is all about – what are the specific measurable results that you’re accountable for? And that there is an entire process of getting buy-in and agreement with that person – literally, agreement – having them sign it and sign off on it. And then, learning to manage results with that and teaching people how to self-manage result as opposed to, as a leader or manager, always asking, “So how’s that going? Did you do this? Did you do that?” That’s where people get tripped up.

But when you raise the conversation up and you say, “Joe, you’re accountable for this, and this, and this as a project manager. Are you in agreement with this?” And then, “Here’s the deliverables.” And I setup the structure with Joe to make sure that Joe is learning to self– and I’ve got to teach him this, oftentimes, because– especially project managers, I try– I find this with finance people, too. They come in all shapes, forms and sizes. Somebody who says they’re a project manager in one company, completely different role in a different company, oddly enough.

So, when you set them up so that they are clear what it means to you to be a project manager, then what you’re doing is you’re setting up a game where they and you know how to win. And that you’re going to teach them, you’re going to set up a structure whereby they’re reporting to you every week about — “Let’s talk about open change orders with the clients. Let’s talk about the schedule. Let’s talk about cost to complete.” You know, like what are those critical elements that that project manager is looking at and paying attention to so that that project manager is paying attention to those bigger chunk areas, looking from the top-down versus the bottom pieces up, so that you’re developing with your team, a strategy for them to be able to manage within their position from the top-down versus all of the tasks but based on results.

So, when you can teach your team how to manage for results, right? You first get an agreement with them. You write a position agreement that’s based on results. You get agreement with them with about that position agreement so that you and they are on the same page and have an agreement with one another. And then, thirdly, you teach them how to manage for those results. And you do the same thing with them. You create a structure for that.

What I find is that people start to develop their team and really lovely things happen because the employee has way more satisfaction because they’re not your helper, they actually have accountability, responsibility. They’re making a contribution and a difference and it’s fundamentally what we want, as human beings. They have a greater sense of autonomy and control. You and they have a better communication system. And you’re focusing on the right things. You’re focusing on results versus tasks.

Josh:                 Vicki, unfortunately, we are out of time. And I know people are going to want to buy your book, especially since it’s a fable which means it’s actually going to be fun to read.

Vicki:                It is.

Josh:                 We like reading stories.

So how do they find your book and where do they go to get it?

Vicki:                If you go to the theprofitbleed.com.

Josh:                 Okay. Cool.

I also have an offer for you. I wrote a book. It’s called Sustainable: A Fable About Creating a Personally and Economically Sustainable Business. Easy to get. You can go to Amazon. We have it there as a Kindle or a real book you can hold in your hands. But I recommend you go to our website, sustainablethebook.com because if you go there, I have a 20-minute free coaching session you can get from me. Plus, I wrote 37-page how-to book on how to implement all the stuff we talk about inside the book.

Thanks a lot for stopping by. You’ve been at the Sustainable Business. This is Josh Patrick with Vicki Suiter-McNickle. I hope to see you back here really soon.

Narrator:         You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around a hundred years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an email at jpatrick@askjoshpatrick.com.

Thanks for listening. We hope to see you at The Sustainable Business in the near future.

Topics: sustainable business podcast, Sustainable Business, managing teams, top down management, Scrum, operationally irrelevance, vicki suiter, backlog

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