Compensation: Satisfy Only the 20% Key Employees Over the years, prices and costs have risen, but distributor profits haven't increased much. Every employee hopes for a significant salary increase, but it's estimated that over 90% of small bosses can't do this. Since you can't satisfy everyone, only satisfy the 20% key employees. First, develop key employees to buy shares: sell company shares at half price with a buy-one-get-one-free deal. If they withdraw within five years, they only get their principal back; after five years, they get three times the principal. Each year, distribute 60% of profits as dividends. After all, if there's money, everyone shares, but if a shareholder does something against the company, they are doubly penalized, deducted from their shares. This trick works well: in the past five years, no shareholder has left, and key positions are held by shareholders, saving me a lot of effort. Why not give shares to key employees for free? Actually, I don't care about the money, but people don't cherish what's given for free, and the money they invest serves as a deposit to prevent shareholders from doing outrageous things. Moreover, employees can recover their investment through dividends within five years. Without investment, how can there be returns?

Delegation: The Boss Can't Do Everything I remember when the company first started, I was the busiest person, often answering two or three calls at once, arranging purchases, settling accounts, and stocking up. I arrived earliest and left latest. As a result, the company didn't grow much in four or five years, and employees felt suppressed with no room for development. Later, I realized I had to delegate, even if employees could only do 70% of what I could. In small companies, 15 people is a hurdle, 50 is a hurdle, and 200 is another hurdle. Without improving management methods, further development is impossible. A company where the boss does everything rarely exceeds 15 people. A capable person can directly manage seven or eight people, while an average person can only lead four or five.

Cross-Industry Ventures Don't Make Money This saying holds true for 90% of companies. Of course, if you think you're in the remaining 10%, you might as well try. Generally, after a company survives three to five years and makes some money, the boss starts thinking about doing something else. Most people think their own industry is less profitable than others. Unfortunately, I'm one of them. At the end of the last century, on a whim, I opened a restaurant, and my troubles began. I thought I had sales talent, so a restaurant would be a piece of cake. But the damn restaurant needed more than just sales; if the food wasn't good, customers only came once. Moreover, running a restaurant involves purchasing, accounting, hygiene, epidemic prevention, industry and commerce, and public safety experts. You have to work from dawn to dusk, exhausted, and it's a different game from running a company. I didn't have the patience, so I hired a department manager to run it. He messed it up, losing hundreds of thousands in six months, and we closed. Now, if anyone mentions opening a restaurant, I get angry. Eating at a restaurant is fine, but anything else is off the table. If you're interested in opening a restaurant, think about the following:

  • Can you endure the hardship of working from dawn to dusk?
  • If you're taking over a restaurant, find out why the previous owner is transferring (don't just listen to one side; stay there for two days).
  • Calculate the rent, personnel costs, etc., per day per table. Determine the restaurant's positioning, target customers, how many times tables turn over per day, average consumption per table, gross margin, and whether you can make a profit.
  • Can you handle the local industry and commerce, hygiene, public safety experts, and local thugs?
  • Parking issues.
  • Is your wife willing to do the purchasing, or can you find someone as loyal as your wife to do it?

On Giving Gifts to Win Hearts Last year before the Spring Festival, I went to a friend's company and caught them distributing holiday gifts: each employee got two large bundles of toilet paper, a small barrel of cooking oil, several large bottles of cola, and a box of oranges. My friend proudly said, "Giving these things for the holidays lets employees take them home, and their families will think our benefits are good. And it only costs a little over 100 yuan per person, but it looks like a lot, so it's a good deal." My friend's company gives such gifts for holidays, but they never bought social insurance for employees. Shortly after, his key business personnel left. This is similar to many companies: they give a 100-yuan attendance bonus each month, occasionally give holiday gifts, and treat employees to a meal, thinking that's good enough. In reality, employees curse the boss for being stingy, no overtime pay, no compensatory time off, and poor social insurance and meals. So, to retain employees, cut the fluff. Employees know what's what.

The Boss Should Play the Good Cop Every day, many things happen in the company; some should be praised, some criticized. Who should execute praise and criticism? When I first started the company, I didn't feel like a boss and hated managing people, so I rarely said anything about employee issues. As a result, employees were undisciplined, no one respected anyone, and work couldn't proceed. Later, I realized I couldn't go on like this, so I started to put on a stern face. But new problems arose: almost all conflicts were between me and the employees. Employees often argued with me face-to-face about right and wrong. Being a boss was really depressing, and I didn't want to be a harsh manager. After more contact with Japanese companies, I discovered some secrets. Japanese general managers rarely scold ordinary employees; they are very kind to lower-level staff. But they often scold middle managers in front of employees, and mistakes by ordinary employees are handled by their direct supervisors. Of course, at month-end, the general manager is clear about salaries. This way, the company is managed orderly, and employees feel balanced. As a boss, you can't let employees rebel or vote with their feet. Since supervisors and department managers enjoy position allowances, they should share the boss's burdens and play the bad cop when necessary. The boss should maintain a detached attitude, stay out of events, and see things clearly from the sidelines. However, when department managers need support, as long as it's not a principled mistake, I usually support them clearly.

Pay Wages on Time This is the most basic quality of a boss. Every boss would agree (at least verbally), but in reality, many companies can't do it. During daily operations, companies often face cash flow issues, such as purchase payments, poor business, or bank loans due for repayment. For a boss, these are all sufficient reasons for not paying wages on time. Bosses think: "It's not that I'm not paying, just a few days late. The company is tight on cash; employees should understand." The truth is: no matter the reason, employees can't understand not paying wages on time and in full. An employee's wage is not a gift from the boss; it's hard-earned. They might be waiting to pay rent, mortgage, or children's tuition. If they don't get paid on time, they might face survival issues. Normally, the boss has more cash on hand than employees, so they assume a few days' delay is fine. So what to do when cash is tight? Generally, do business within your means. If you can't, borrow from a bank. If the bank won't lend, you can raise funds internally or from relatives and friends. Delaying wages is like drug addiction: once you do it, you'll do it again. Whenever cash is tight, the boss delays wages, and employees lose all trust in the company and boss. Surveys show that the most intolerable thing for employees is delayed wages. Every year-end, there are news reports of employees being owed wages and demanding payment, even bosses fleeing and employees having no recourse. Employees' wages are already low; if you flee, how can they survive? If you owe them wages, how can they be willing to follow you? So, if you don't want a company without employees, never delay wages.

Summary Being a distributor is complex, but success is a lifetime asset. The above six lessons are more like advice: don't forget your original intention, and you'll succeed. Treat employees well and know how to use people; this applies to any industry. Source: Excerpt from "Daily Management of a Small Company Boss"