That underperforming employee is your fault

Happy to be here.

Well, okay, that world specifically was a traveling job. It was a hundred percent travel, which meant that I would get on a plane on Sunday night and I'd come back maybe on a Thursday night or a Friday night, and then I would do the same thing the following week. And in March of 2020, which was when I stopped doing that, it became not so advisable to be having a hundred percent travel job with COVID coming up and staying in hotels, living in hotels. So I took a package from that company that I was working for. It was International Services Incorporated. and worked on a few smaller things since then. I was a fractional chief operating officer for a small startup for a couple of years, got going, got them to taught them how to spin the plates on their own and and keep things going and and understand the business of the business. in That went until the end of twenty twenty three. I was there for a couple of years. and I'm still an advisor for them. I'm still a shareholder in the company. and then needed to put together what I had to wrap it up into focal dynamic. And it's been a bit of a road. I've been doing a a few smaller things while we've got this thing going, but now we're up and running. the the company's been around for a long time. Originally I started it just as a way of controlling my tax burden within the confines of the law when I was doing contract work for Delta Airlines. I started focal dynamic so I could be it was like a a what we call a corp to corp connection with the with the contracting company that put me at Delta Airlines. and so I could save money on taxes if I had an S-corp and used it for certain types of deductions and that kind of stuff. So that's what I did. And then I kept the company and kept the website for a long time, kept the email address and just now have put it into more of a practice. practicing what I've been preaching to those four hundred small businesses, which are oftentimes the lessons learned from working at large companies and the principles and the processes and and why they work when they're working and trying to do that same thing into the smaller enterprises, into the small businesses, which is where most of things get done in the world, to tell you the truth. At least in the United States.

that's a really simple one and it's and and it's and the the challenges are wide and varied. Sometimes we would have people that didn't understand what we're calling the business of the business. And the business of the business is systems, processes, controls. It's having a good understanding of what's going on with your numbers, right? How are you making money? Why are you making money? You know, what's your purpose? What's your why? What's the whole why are you doing this kind of stuff? And if it's working great, that's great. Now what does your tax situation look like? If you minimize your tax burden within the confines of the law, or you're looking at doing a succession plan and you wanna give this off and your and your kids are not interested in the business, and so you've got a person that you might want to sell it to, how do you package up package up the business for sale to For example, a top employee that wants to take it over when you retire. Those types of things are the things that we worked with. The common thread was people either didn't really get the business of the business because most small businesses start as technical experts. They're very good at what they do. And sometimes if they're working for somebody else, then they'll go and say, Well, I can do this on my own and he's billing me out at a hundred dollars an hour and he's paying me thirty five dollars an hour. What if I go out and sell my services on the weekends for fifty or sixty dollars an hour? And before you know it, he's making as much on the weekends as he's making during the week. And he decides, okay, I'm gonna go into business for myself. And if that works out well because he's price competitive and does good work, then he grows to a certain level. And when he gets to a certain level, now he has to hire employees, and that's where the problem starts. Because he doesn't know how to deal with everything you need to deal with when you're a real business, when you have employees, when you have people that are depending upon you, when the payroll is all on your shoulders, right? It's not you're just worrying about yourself and your own family, but you're worrying about other people and other families. And that doesn't need to be stressful, but it needs to be organized, it needs to be planned. And a lot of them have difficulty from their own success. and and some of those examples are things that I go into. I mean I go into a couple of examples on my website of companies that were doing very poorly. They did well when things went well and then they did poorly afterwards because when things get when the top line gets smaller you need to worry about what's going on in the guts of the company. when the top line is really big when there's so much money flowing in you you can afford to be inefficient. When the top line gets smaller because of changes in the economy, the price of oil, whatever, then it becomes very, very important to understand what the business of the business. What are what are your systems? What are your how are you managing your cash? All of those types of things.

Well there's I mean there's definitely people that did things that are the because they were good at it and they were good at it because they love doing it. And you know, do what you love, never work a day in your life is so the old saying goes, which is I don't think really true. I mean, to some part it's true, but there is there are parts that are just work and people get tired of that kind of stuff if they don't know how to offload it. Oftentimes, and I've I've definitely been in, I mean, there were of the four hundred that I met, I helped save eight of them from what would have been financial insolvency within the next thirty to sixty days. They were right at the edge of going out of business. and even with them, you know, they th and sometimes it was kind of because they lost their why. They lost their They lost their the fire that drove them every day. And sometimes it's an exercise getting back to that. because that type of motivation, that type of sense of purpose is what gets people to do the things that are not so easy to do or not so easy for them to do. and getting back to that discovering that purpose is oftentimes the things that happen kind of early on in the conversations when I met with the small business. Because when I was meeting with them, I would meet with the owner, you know, six to eight hours on the first day and and do a review of another four to five hours on the next day with findings. and and that was, you know, sometimes telling. I met with people that were, you know, that that that had done pretty well in their business, had built it up to a certain point and then had problems and didn't know why the problems were happening. And so we had to go through starting what they did well and then moving into, okay, let's take a look at these other people. What are they doing? How are they doing that? Or how are they performing? I went to this one guy that owned a machine shop in northern Minnesota. and he had he was losing, he was spending more money on labor than he thought he needed to and not getting the productivity. And and we went through a task with one of his newer employees that He says, Well, I tried them on everything, and I said, Yeah, but how productive are they? You know, if you take a look at your best person on a machine that's pumping out parts for, you know, this food production company. if if if that person is you take a the best person for managing the machines, and then you put this person in there, how well does he do it? He says, Well, he doesn't do it very well. He does it pretty well, and then he wanted to go over and try on how to do the Making what they call the prints for the machines. These are computer operated, they're called C and C machines, but they're computer operated machines that that make parts for other machines. and he said, you know, I'm I this guy is I said, well let's take a look at his numbers. I said you've got him on doing this, and then you move him over to doing this other thing, and he's not as good as your top guy at doing this. He's not as good as even your middle guy at doing this. I said, so when we take a look at his productivity now for his actual production, and I had a spreadsheet that counted it out, I said he's running at about fifty-six percent. And I said, That's you know, for a trainee, that's okay, but he's been here for a year now and it's at fifty-six percent. And I said, and by the way, I don't think it's his fault. I think it's your fault. I don't think that you gave him a chance to get good at something to where he's up there. Going at you know, brushing up against that eighty to eighty-five percent productivity. and then when we went through a lot of exercises like that, and I have a whole lot of exercises that I go through in my methodology, he got kind of excited. and you know, a year later we find out that he's doing really well, that he was using a little Excel spreadsheet that I made up that I gave him for calculating productivity for his employees. and you know was moving right along. So but he was just a guy and wasn't that old. I mean he was probably mid thirties, but he'd been doing it since his twenties, took the worth shop from his father, and he needed to have just somebody in there to come help him refocus and to find that why. And once he found that again, got past the discouraging stuff that made him wanna I mean I wouldn't say wanna quit, but but you know, was unhappy with it. Once things are working well, the people that do a job that are in a company usually find a way to reconnect to that purpose. It's just the the purpose is fraught with so many problems it's harder to connect to. So that's what we end up doing. We we work through the problems, we find the problems, you know. And we shoot them. I'm a troubleshooter, find the problem and

Well the and have you have you seen that study that just came out from MIT? Ninety five percent of AI pilot projects fail.

okay. So it's it's it was in the AI news recently, and a lot of people on LinkedIn are commenting about it. I have strong opinions about AI and I think AI is a tool. Like any other piece of technology, it's a tool. It's not the hero. And I say it's not the hero because AI does a very good job once you learn how to talk to it, once you learn how to use it, and then only use it.

For what you need it for to do. Now, that can open up into other co other capabilities as you get into it, but the problem is is people try to do think it's gonna do too much and they go and they make big business decisions and end up regretting them. I mean, how many people of these large companies laid off tens of thousands of employees and then, we did it and we say replacing you with AI and they realize AI can't do it without human oversight. Without human intervention. AI is really good, but AI is still sometimes artificially stupid. It's not necessarily artificially intelligent. Definitely not super intelligent as the as the orange one would have you think. But it's still incredibly powerful. And the and the positive things that can happen from it are important and measurable. problem is is you can't do it too much and you can't change too much all at once in an organization or people get too focused on the change and lose focus on what they're doing for the organization. So it is a transformation, but it should be a in my opinion, especially for small businesses, a gradual transformation. The things that happen that it can do Quickly and easily. I mean, so yeah, and I d AI is a part of my consulting. Okay, let's say you're a small business in the building industry. let's say, for example, you're an electrician. And as an electrician, you're a very good electrician. You you went off and went off on your own, did your thing, you got to a certain point, realized that things don't work, what do you need to do? How is AI gonna help you in your job? Well, in your job, not necessarily very much if you're a half-decent electrician, because you know what to do. But what you may not be good at doing is keeping track of everything you do when you go to the hardware store to buy another part that's missing. When you when you need to make an online purchase for something is it properly recorded? You know, those are the things and then and then once they're properly recorded, do they come out into your create a set of financial statements which are accurate and auditable and easy to be used for tax purposes when that time comes, without you being a very good cost accountant. Well, AI can fill that niche. You can be a great electrician, AI can do a lot of the stuff in the back office for you, as long as you know how to pay attention to it, as long as you know how to get it properly set up as long as you know how to integrate it into your purposes without changing your purpose or without your we're changing your processes so dramatically that it becomes a distraction. And I think the problem is, and you might have seen this already with other people, is that AI is so fun and so cool. I mean I write songs on Suno all the time. I just I do all this cool stuff with AI. But that's that's the playing with AI. For me that's the playing and the learning. AI is great as a tool, but it can be oversold. and especially in the small business space, I think that the the most important parts of it is that it needs to come in and slide itself into your processes, maybe change a couple of them, or but where it's easy, where where it's where it's not intrusive, where it's not becoming. the star of the show because the star of the show still has to be the person who is doing the work.

Well, the the basics are still important. Know where your money comes, know where your money goes, right? When you start a business, you're making a business to to if you're doing it in a place like the United States in a capitalist country, you are in business to make to make living, to make money. And there is no mission without a margin. Without a profit margin, there's nothing that you can do. So Understanding your numbers at a base level is absolutely paramount. The thing about AI is AI can make you understand your numbers because it explains it to you like you were 10 years old easily. And it does a very good job of doing that. That is a common theme that I think because AI is here, because AI is not going anywhere, because AI is a good multiplier, is a good piece of technology. the business owners need to understand that AI can help them do the things well that they do not do well themselves. So that really comes down to being What is AI doing, you know, well? anything that is well described, a task that is well described, that can be mostly done, you know, here. I I I I I take the example of you go to the hardware store, as an electrician you want to buy some parts, and now you've got a piece of paper that's that has to get recorded because it's an expense that goes into the project that you have. but but You know, you're really not very good at handling paper. You shove it into your pocket, it's crumpled up with a couple of coins and your keys, and before you know it, you might not have a receipt that you can even read. Well, the nice thing is that with AI, with with bots that are easily available, that are telegram bots or WhatsApp bots or anything, or or little apps that you can write and put on your iPhone or your Android phone pretty easily, take a picture of it and upload it. And AI can take a look at that receipt, the picture of the receipt, parse it out, say these are the items that you have, these are the categories they belong in, this is the project that is assigned to, and you're done, and you can throw the paper away. That is something very simple that would take a little bit of worry off of the people that are the subcontractors, for example, who are the the very good with their hands, but they're not so good with paper. So those are the types of things. Learning AI, I think, is gonna be somewhat paramount. Again, you're the most of my customers, most of my clients are the ones that are not going to be really threatened. Their jobs are not gonna be threatened until we have robots that can climb under houses and redo plumbing in hundred-year-old buildings, right? Or two hundred-year-old buildings or five hundred-year-old buildings because You know, I was in Austria for a year and a half and I was in a place called Steyr, which is one of the oldest cities in Austria, and the church there had a cornerstone of twelve five AD. So it's you know, and how do you redo the plumbing inside of that, Mr. Robot? Right? Optimus Prime. So that those are a a ways off yet. robots that can do what electricians do, what plumbers do, what what carpenters do. They might be able to do the painting.

well, first thing I'd tell myself to buy Microsoft stock and then a few other stock tips that I have. Yeah, yeah, and then find Bitcoin and buy Bitcoin in two thousand ten. between the two, I mean if I would have bought anyway. but I I would say the thing that I would tell my younger self and business is stuff that I had to learn. I started learning it when I got to graduate school, but is the understanding of

If you're going to go into business for yourself, you need to understand the business of the business. You need to understand what makes your business run. And that comes down to what systems you have in place for being able to handle the business that you have in front of you and then grow it. If that is your thing, if you want to grow your business, you need to have a greater understanding, a great understanding of The things that the accountants do. and you don't need to have be an accountant for that. The basic cost accounting that you need for businesses, which I still think is that that every business owner should know or have somebody that they trust that knows it well, is is understanding what's going on with your numbers and then understanding what's going on with your processes for whatever it is that you do so that you can do things not only efficiently, not only effectively, but with excellence. And I wish I had been able to convey that to myself when I was twenty and had my first business, which is something that was a precursor to the internet called a bulletin board system. So but those are lessons that I learned over a over a lifetime in business.

focaldynamic.com www dot focaldynamic dot com. And then I'm Scott with one T at Focaldynamic. And of course I'm available on LinkedIn and Facebook and you know, all the socials. So it's it's pretty easy to find me if you're looking. And I'm Scott Nattress with one T. And that there's another Scott Nattress who's a friend of mine on Facebook. It's a Scott Nattress with two T's. We have very different lives. so I'm pretty easy to find.

my pleasure. Thank you.