SIMPLE PLAN: Employee Retirement For Small Businesses

simple plan

What is a SIMPLE Plan?

A SIMPLE plan is a retirement plan that companies can offer to employees, given they have no more than 100 employees. SIMPLE means Savings Incentive Match Plan for Employees of small employers. In insurance, insurance companies often serve as trustees who manage SIMPLE plans on behalf of the employer.

Who Can Start a SIMPLE Plan?

SIMPLE planning can be achieved by employers of not more than 100 employees who earned $5,000 or more in the preceding calendar year. But despite meeting this requirement, if an employer is already sponsoring another retirement plan, they cannot engage in SIMPLE planning.

SIMPLE plans can be sponsored by various business types and organizations, including S-corporations, C-corporations, sole proprietorships, and partnerships. Related employers (businesses under common control, for instance) are categorized and treated as single employers. Even a tax-exempt employer or governmental entity may start a SIMPLE plan insomuch as they meet the basic requirements.

Pros and Cons of SIMPLE Planning

SIMPLE plans are no doubt necessary, with marked advantages and disadvantages. Here are a few advantages and limitations of SIMPLE plans.

Pros of SIMPLE Plans:

Minimal paperwork to set up

There are instances where you can set up a plan online, depending on the provider, and the paperwork associated with SIMPLE planning is essentially less than what you’d be required to fill out for other types of accounts, like a 401(k) plan.

Low start-up and maintenance costs

There are retirement plans that demand costly fees to open and maintain the accounts. With SIMPLE plans, your business typically is demanded lower upfront and managing costs.

Money put into the plan is tax-deductible

It is possible to deduct contributions on tax returns when using SIMPLE plans.

No IRS filing requirements

Your plan provider handles reporting requirements to the IRS.

Cons of SIMPLE Plans

Employer-matching requirement

SIMPLE planning requires businesses to match employee contributions exactly, up to a certain percentage.

Lower contribution limit

The contribution limits placed on SIMPLE plans are lower than those on other retirement accounts. For example, as of 2020, 401(k) plans have a contribution limit of $19,500 and $6,500 for catch-up contributions.

Withdrawing requirements

With SIMPLE plans, you cannot withdraw any money from the account you reach age 59½. If you take money out before then, a 10% penalty and income taxes on your withdrawal will be levied.

No Roth contributions

With SIMPLE plans, there’s no option to have a Roth version of your SIMPLE IRA. So, you can’t fund your account with post-tax money and successfully evade taxes on the money when you withdraw it.

SIMPLE Plans Contributions

SIMPLE planning makes it possible for small businesses to join millions of other employers who have established retirement plans. They also allow some flexibility in the type of contributions employers provide to employees.

Employees contribute to SIMPLE plans by establishing and consenting to a salary reduction from each paycheck, as much as $6,000 a calendar year. Contributing employees receive a matching contribution that is equal to their salary reduction contribution (i.e., up to 3 percent of their pay).

Alternatively, employers may institute a “non-elective” or fixed contribution of 2 percent of pay for eligible employees. It is also acceptable for employers to reduce the matching contribution amount to a limit of one percent of compensation, but certain restrictions will apply to this choice.

Trustees execute SIMPLE plans, and the contributions towards SIMPLE plans are transferable from one SIMPLE plan to another tax-free SIMPLE plan in a trustee-to-trustee transfer. However, to effect such a transfer to tax-free contributions in another type f retirement plan, there is a 2-year waiting period after the employee first enrolls in the SIMPLE plan. Until this 2-year period elapses, any transfer from a SIMPLE IRA to an IRA other than a SIMPLE IRA will incur tax repercussions.

Employee Elections

When it comes to SIMPLE planning, everything is based on a calendar year, except in a situation where an employer initially sets up a SIMPLE plan effective as late as October 1 of the calendar year. At least once a year, employees must be offered the chance to enter into a SIMPLE plan salary reduction agreement. Election periods must last at least 60-days, and employees must receive notice about an upcoming enrolment opportunity before the stipulated period for the election.

Other election features

Election periods should fall annually before January 1 of each calendar year (i.e., November 2 to December 31). Another suitable date range can be chosen given that there is more flexibility with the election period requirement when a SIMPLE plan is initially established.

There is room for employees to make a new salary reduction agreement during the election period or modify a prior agreement.  A copy of the SIMPLE plan’s “summary description” must be sent to employees when they receive notice about the election period.

There is also room for employees to elect a termination of their salary reduction contribution towards a SIMPLE plan whenever they so choose. However, suppose employees opt to end their contributions at a time other than a designated election period. In that case, employers may preclude them from participating again until the commencement of the following calendar year. Employees may also be allowed to select the financial establishments they would like to receive their SIMPLE plan contributions during their election periods.

Notification Requirements

Employers should give each year’s notice about the enrolment period, and they should ensure to:

  •  Include a copy of the summary description of the terms of the SIMPLE plan. They may achieve this by providing a completed copy of IRS Forms 5304-SIMPLE or 5305-SIMPLE, and this includes the procedures set in place by the financial institutions for withdrawals.
  •   Provide information on the employer’s method in contributing to employees’ SIMPLE plans, for example, whether they would match employee contributions by up to 3% of their pay or by some other authorized method.
  • Specify to employees that they can choose their financial institutions to serve as trustees for their SIMPLE plans. If the employer takes the responsibility of deciding the financial institution to receive contributions for all employees under the SIMPLE plan, then be sure to include this information, stipulating that employees have the right to transfer their contributions to a SIMPLE plan at another financial institution, and this should incur them no cost or penalty whatsoever.

There are two additional facets of notification employers should consider:

  • Mention that employers may provide extended periods of election time to their employees (for instance, extending the election period to 90 days or providing quarterly or semi-annual election periods).
  • Employers should also mention there are substantial penalties for failure to notify employees before an election period.

Trustee Requirements

A critical aspect of SIMPLE planning is choosing a financial institution to maintain employees’ plans. This is, perhaps, one of the most essential decisions employers or employees will make regarding SIMPLE planning. Trustees work closely with employers to receive their contributions, invest those contributions and issue certain required information. Within the confines of SIMPLE planning, some types of institutions can be designated as trustees: banks, savings and loan associations, insurance companies (that issue annuity contracts), insured credit unions, or IRS-approved non-bank trustees.

Trustees must agree to:

  • Accept and deposit contributions.
  • Detail and make available to the employer a summary description each year that includes:
  • the specific name and address of the employer and trustee;
  • a detailed description of eligibility requirements;
  • a the specific benefits provided;
  • a the time and method of making salary elections; the procedure for and effects of withdrawals and rollovers (including the penalties for early withdrawals).

There are three additional trustee requirements:

  •  the trustee must provide a statement of the account balance and activity of the account for the year within 30 days after the close of each calendar year to the individual.
  • The trustee reports SIMPLE plan information to the IRS, the same as with any IRA account.
  •  A trustee that is a “designated financial institution” by agreement with the employer should also agree to transfer, upon request, an individual’s SIMPLE plan balance to another IRA or SIMPLE plan IRA without cost or penalty to the individual.

How to Start SIMPLE Planssmall business coach

To start up a SIMPLE plan, here’s a step-by-step approach:

  • Choose a financial institution
  • Develop a written agreement to provide benefits to all eligible employees
  • Give employees specific details about the above agreement
  • Set up an IRA account for each employee

Choose a Financial Institution

SIMPLE planning requires choosing a financial institution to serve as trustee of the SIMPLE plan to hold each employee’s/participant’s retirement plan assets. These set-up accounts will receive the contributions you make to the plan. Another route would be to allow employees to choose the financial institutions that will receive their contributions.

Execute a Written Agreement

You can use forms to set up a SIMPLE plan. You can make use of SIMPLE form templates or prototype documents from a mutual fund, insurance company, bank, or other qualified, as well as an individually designed plan. These documents detail the SIMPLE plan and may not be filed with the IRS.

Annual Notice to Eligible Employees

You must notify each employee before the start of an election period of:

  • The employee’s right to make or change a salary reduction choice under the SIMPLE plan;
  • The employees’ ability to choose any financial institution as a trustee of the employees’ SIMPLE plan;
  •  The choice to make either matching contributions or non-elective contributions;
  • A summary description (usually provided by the financial institution); and
  • A written notice that the employee can freely transfer their balance without cost or penalty if they opt for the employer’s default institution.

Set Up a SIMPLE IRA for Eligible Employees

A SIMPLE plan must be set up by or for each eligible employee, and all contributions to the plan must go into the SIMPLE plan.

strategic plan

When to Set Up a SIMPLE Plan

SIMPLE planning can occur at any time from January 1 through October 1 of a year, provided you didn’t previously maintain a plan. But this requirement doesn’t apply in the case where you were stepped in as an employer after October 1, taking over from one who had already instated a SIMPLE plan. In this case, you can freely set up another SIMPLE plan as soon as it’s administratively feasible after your business comes into existence. In the case where you had previously maintained a SIMPLE IRA plan, then you can set up a SIMPLE IRA plan only on January 1 of a year. A SIMPLE plan cannot have an effective date before the date you adopt the plan.

Eligibility to Participate in a SIMPLE Plan

An employee (including a self-employed individual) can participate in a SIMPLE plan if they

  •         earned at least $5,000 in compensation during any two years before the current calendar year and
  •         anticipates receiving at least $5,000 during the current calendar year.

When it comes to SIMPLE planning and implementation of requirements, employers can sway towards less restrictive than more restrictive measures. Employers can’t impose conditions for participating in a SIMPLE IRA plan.

However, an employer can exclude the following employees from a SIMPLE IRA plan:

  •         Those employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees’ union and the employer
  •         Non-resident alien employees who lack U.S. wages, salaries, or other personal services compensation from the employer.

Operation and Maintenance of a SIMPLE Plan

Having stipulated the persons eligible to create and participate in a SIMPLE plan and the basic steps involved in creating a SIMPLE plan, it is imperative to outline some critical operational questions to answer SIMPLE planning worries.

What are the contribution rules?

SIMPLE plan trustees are responsible for holding the contributions made for each eligible employee. A SIMPLE IRA is funded by:

  • Annual employee salary reduction contributions (elective deferrals), which is limited to $13,500
  • For employees age 50 or over, a $3,000 “catch-up” contribution is also allowed

Employer contributions

It is up to the employer to choose annually one of the contribution methods listed below and inform employees of the various contribution methods, letting them decide which method they would use for the following year.

  • 2% non-elective contribution: In this case, 2% of each eligible employee’s compensation (salary) is deferred, regardless of whether or how much the employee deferred.
  •  3% matching contribution: This involves matching the employee’s elective deferrals on a dollar-for-dollar basis up to 3% of the employee’s compensation.
  •  The employer may reduce the 3% limit to a lower percentage, but such deductions may not go lower than 1%. The figure may not go lower the 3% limit for more than two calendar years out of the five years ending with the calendar year the reduction is effective. The employer isn’t allowed to make any other contributions to a SIMPLE plan.

When deciding employer contributions, you must follow the definition of compensation as stated in the plan document. Compensation generally refers to the pay an individual receives from you for services rendered that year.

Automatic Enrollment: this feature allows an employer to deduct a fixed percentage or amount from an employee’s wages and contribute that to the SIMPLE plan without the express attention of the employee at each deduction unless the employee chooses to contribute nothing or to contribute a different amount. These automatic enrollment contributions qualify to be classified as elective deferrals.

Annual Election Period: Employees can change their contribution levels each year during the plan’s election period. Such election periods must last at least 60 days, and employees must receive prior notice about an upcoming election opportunity.

When employees want to stop contributions

With SIMPLE planning, employees can opt to terminate their salary reduction contributions to a SIMPLE plan at any time. If they choose to do so, the SIMPLE IRA may preclude them from resuming salary reduction contributions until the next calendar year begins. In such cases, the employers must continue to make those non-elective deductions on behalf of these employees.

Where are contributions deposited?

Once you send the plan contributions to the financial institution you selected, that institution takes on the charge of managing the funds. Employees can move their SIMPLE plan assets from one SIMPLE plan trustee to another. SIMPLE plan contributions can be invested in individual stocks, mutual funds, and other similar types of investments. It is up to the employee to make the investment decisions for their account.

S an employer, you’ll need to give each participating employee an annual statement that clearly shows the amount contributed to the employee’s account for that year.

When must contributions be deposited?

Employee salary reduction contributions: These contributions should be effected within 30 days after the end of the month. The amounts would otherwise have been payable to the employee (and self-employed individuals) in cash.

Employer matching or non-elective contributions: These contributions should be made by the due date (including extensions) for filing your federal income tax return for the year

Who owns SIMPLE IRA contributions?

Contributions to SIMPLE planning accounts are always entirely vested or owned by the employee.

What are the basic withdrawal rules?

Contributions and earnings can be withdrawn at any time. A withdrawal is taxable in the year it is received. If a participant in a SIMPLE plan chooses to withdraw before they attain age 59 ½, a 10% additional tax generally applies. If this withdrawal occurs within the first two years of participation, the tax is raised from 10% to 25%.

When a participant withdraws funds from a SIMPLE plan, the IRA may continue participating in the employer’s plan. The result of all contributions and earnings from SIMPLE plans is that they would be distributed in line with SIMPLE plan distribution rules.


SIMPLE plan contributions and earnings may be rolled over from one trustee to another with tax-free repercussions. A tax-free rollover may also be possible for a swap from a SIMPLE plan to a plan that is not a SIMPLE plan, but this can only be possible after at least two years of participation in the SIMPLE plan.

Participant loans

SIMPLE planning does not permit loans. However, SIMPLE plan accounts allow withdrawals as they are IRA accounts.

How to ensure your SIMPLE plan is operating within the rules?

It is essential to set up cheeks to ensure your SIMPLE plan operates within intended rules and boundaries. You should conduct an annual self-audit concerning your SIMPLE plan.

Other than the first year you set up your plan, SIMPLE plans must be maintained for a whole calendar year. Once SIMPLE plans are operational, you must continue your SIMPLE plan for the entire calendar year and funding all contributions promised in the employee notice.

If you decide your SIMPLE plan no longer suits your business, it is possible to terminate the SIMPLE plan.

How do I terminate my SIMPLE plan?

While SIMPLE planning is great, you may want to terminate an existing SIMPLE Plan. Here’s what to do:

Step 1: Inform your employees within a reasonable time before November 2 that the SIMPLE plan would be discontinued effective the following January 1.

Step 2: Notify your SIMPLE plan’s financial institution and payroll provider that you want to terminate your contributions, and you won’t be making SIMPLE plan contributions for the following calendar year.

Step 3: It is essential you keep records of your actions, but you don’t need to notify the IRS that you have terminated the SIMPLE plan.

So there you have it. To read more about getting help with you finances, check out this article about ways a financial advisor can help your business.small business coach

Surviving the Big Boomer Business Bust

exit plan

Why is an Exit Strategy Important for Business Success?

Do you have an exit plan? This is an update to an earlier blog post. Things have changed significantly over the last few years!

According to PricewaterhouseCooper, approximately 50% of all owners of small and mid-sized companies will exit their companies over the next few years. Others estimate that the exit rate will be closer to 75%.

This massive exodus from the marketplace will be driven by retiring baby boomers, who are now 60-78 years old. Unfortunately, of those small business owners who exit their business, only about 1 in 5 will actually sell their company. The remaining 80% are closing their doors with a big financial thud!

2020 Reality Check according to December 2019 statistics:  Baby boomers own 2/3 of U.S. businesses, that’s millions of companies. Only 8% of this group plan on selling the business.

Business Owners Have No Exit Plan

Of all boomer business owners, nearly 60% have no plan for selling their business or passing it on to an heir or successor.

Why is this happening?  There can be many reasons:

  • Their business isn’t saleable because of its lack of profitability or it can only function with the boomer owner at the helm.
  • Boomers are pushing out retirement because they haven’t saved enough
  • These business owners are failing to look ahead at hard facts and figures or to set.
  • Some business owners truly love what they do and want to do it forever.

Why Don’t Business Owners Do Exit Planning?

Business owners are reluctant to create an exit plan; it seems like planning for their own funeral. They are afraid to consider what life would be like without their business, so they do nothing.

I think most don’t realize the rewards they’ll get from having an exit strategy –peace of mind, and new opportunities — to cash out now and enjoy a secure retirement, or maybe to try something else like start another business or become a mentor, to travel or spend more time with family, to pick up a hobby or do volunteer work. Thinking about when and how you’ll exit your business can reap dividends:


By knowing when to reduce your inventory, training, or staff; when to stop investing in newer equipment, software, or supplies; and how much income you’ll need for a comfortable retirement


By grooming a possible replacement, you smooth the transition and by structuring the company well for takeover.

Exit Planning

By gathering and then “selling” the benefits of buying an established company (saves a lot of work, heartache, and money).


By considering the needs of your staff, customers, and vendors and also by planning your exit with the people in mind who depend on your business will leave your mind and heart at rest.


You’ll leave a strong and respectable legacy by preparing ahead, by thinking about the effect on others, and by setting up your business for sale or passing it on to a heir.

An exit plan isn’t the end of your world. It will begin a new phase for you and everyone who’s been connected with it.

How to Prepare Your Business For Sale

Below are some things you can do to increase your chances of selling for big bucks:

  1. Create an Exit Plan.

You know the drill – “those who fail to plan, plan to fail.” The problem with failing to plan is obvious. Hire an Exit Planning Coach to help you figure out the right window for retirement and the steps needed to reach it.

  1. Plan Three to Ten Years in Advance.

Most experts say that you should have an exit plan when you start a business.  At a minimum, you should develop your plan at least three years before an anticipated retirement. Your plan should include both information pertinent to a shift in leadership, as well as certain insurances in the event of sudden change.
Consider that life happens – illness, recession, technology changes, governmental rules and compliance, divorce – so thinking ahead helps you avoid a catastrophe. If you’re curious when to buy critical illness insurance, the time is never too early. You never know what the future holds, protecting yourself in the event of a sudden illness can help protect your business and loved ones as well.

  1. Sell from a Position of Strength.

You can command top dollar for your business when it’s strong. Unfortunately, many owners wait until an economic turndown, burnout, or a health crisis forces them to sell from a position of weakness.

  1. Know the Value of Your Business.

Every business owner should get an annual valuation on their business; this is the best indicator of a company’s performance and provides potential buyers with a view into its worth.

  1. Get Revenues and Profits Up.

Your business should be growing; both top line and bottom line. Become the number one or two largest business in your market.

The top line refers to a company’s revenues or gross sales. Therefore, when a company has “top-line growth,” the company is experiencing an increase in gross sales or revenues. The bottom line is a company’s net income, or the “bottom” figure on a company’s income statement.

  1. Develop Management Succession.

If you’re the only one who can run your business, who will a buyer have to help run the business after you leave?

If none of your family want to take it on, then consider offering it to a key partner or employee; perhaps sell it to the remaining staff.

  1. Maintain Confidentiality.

This is critical to the health of your organization. If your competitors, customers, employees or vendors find out that you are selling, this could mean disaster for your company!

Addition: Silently plan your exit strategy – even to the point of having informed parties sign a confidentiality agreement.

  1. Keep Focused on the Business.

Don’t let your business performance decline because you’re too focused on the sale of your business. Continue to work on your business as if you don’t plan to sell it.

  1. Get Help From Professionals.

You will need an exit planner/business coach, a business broker, a wealth planner, a CPA, and a tax attorney on your team.

Local, state, and federal laws and regulations change frequently, so hiring an expert could pay for itself.

  1. Get Your Books and Records in Order.

Have your financial statements and legal documents in order; this will give the buyer confidence in your business.


Planning your exit strategy will help you …. to make wise decisions now … to fashion your future and … to create a legacy for yourself, your family, and your community.  For more information on this topic read this blog post: How to Succeed in Business Without Really Trying:

Even though only 20% of all small businesses are selling, it is possible to get yourself into that group. But it is going to take some planning and some more hard work to get yourself there. You should start today!

Questions about our small business coaching services?

Call us at 1-888-504-0777,


Enter your information below to start growing your revenues and profits today…

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Ten Ways a Business Coach Can Rocket Your Business Growth

Ten Ways a Business Coach Can Rocket Your Business

As a business owner, you surely want to see your business grow dynamically like successful ones. That kind of rapid growth is happening now in some businesses even with the uncertain economy. But maybe your business is not growing, or it has declined. Or perhaps it’s just not growing fast enough. Here are the Ten Ways a Business Coach Can Rocket Your Business Growth.

Why does rapid growth happen to some businesses but not others? No doubt some factors are out of your control. Take for example the economy or your business location. However, you have more control than you may realize. Your business should grow and you should accomplish the calling for your life!

Planning an Execution in Your Business

Certainly, business growth can happen spontaneously. But more often than not businesses grow through planning and execution. Wise owners bring in an expert to help. A good business coach will help you get clarity on your personal vision, calling and goals. Your business coach will identify and remove obstacles to your growth. Business coaches help business owners to develop a growth plan. They are experts at developing a shared vision with your team and stakeholders. A good business coach will renew and inspire you and your entire team!

Ten Ways a Coach With Rocket Your Business Growth

Planning works! A good coach is a great way to go. Here is my top ten list of how a coach can rocket your growth. The first five items relate to how an effective business coach will impact you personally:

1. You will have a clear vision of where you personally are headed.

The most important key to business growth is you, the business owner! Most business owners have big goals like “Be the biggest business in town,” or “Make a lot of money” but you need more clarity than that. Breaking out of foggy thinking can transform and grow your organization.

2. You will get renewed clarity about your personal passions and gifts.

Your passion will overflow into your prospects, customers, and employees. It is very rewarding for me to see discouraged, burned-out business owners “light up” as they see how to break out of the day-to-day monotony of doing the same thing and getting the same results.

3. You will discover “hidden” obstacles that sabotage your growth.

Once these obstacles are removed, business growth will naturally begin. A business owner of a mid-size business recently told me, “I thought I would be making more money by now. I’m about ready to quit.” Pay attention, you don’t need to leave your business to find success! A simple redesign of your job description and your processes can change everything.

4. You will possess a crystal clear vision of actions you need to take personally.

During a recent coaching session, a business owner told me that he is “always putting out fires.”  I am helping him to learn ways to stay focused on his calling and “highest and best use” as a business owner. You can too! A coach will help you develop actions to address the obstacles, reach new prospects and keep your business growing.

5. You will be renewed, inspired and energized personally.

Your energy and inspiration are the most important factors in a good business plan. If you are excited about where you are going, you will keep moving forward. If you love what you are doing, you will persevere. Persistence will lead you to reach your business goals.

Once you are personally energized, you should engage your employees and other stakeholders. This is like pouring gasoline on a fire!  Take a look at the last five ways a good business coach will rocket your growth:

6. An outside, unbiased perspective will help you to discover obstacles in business.

A business owner of a growing business told me that he liked the fact that employees are more honest with me because I am unbiased. No matter how hard you try, it is very hard to identify obstacles on your own.

7. You will have clarity on where you are taking your business.

Everyone around you will sense your passion, your clarity, and your leadership. No more nebulous thinking.

8. Your vision and enthusiasm will “rub-off” on your team.

Now everyone will have clarity about the direction of your business.  As your employees and stakeholders see and feel a new passion and resolve in you, many of them will also become excited!

9. Your employees will be pulling in the same direction as you.

Fragmented groups going in different directions will be reduced. Others will be handling tasks that drain your energy.  You will all begin moving in the same direction, and this is a powerful thing. Like a freight train, at first, you will slowly begin to build momentum. Soon your growth will accelerate!

10. The new passion in your business will overflow into your community.

You won’t need to push, cajole or lay guilt trips on your team anymore. Prospects and customers alike will be attracted to your energy and will want to join you in your efforts in telling others about your business. You will experience dynamic growth because you are fulfilling your purpose in life.


In summary, a good business coach will lay a good foundation for you to achieve your personal goals. Then he will bring clarity and unity to your business. Doing that will change your community and beyond!  A good business coach will guide you to develop a clear plan to achieve your goals. The plan will include specific achievable goals to help improve not only your business but fulfill your calling and passion to help others.

Alan Melton makes personal and small business coach training easy and energizing for business owners. Whether you simply need business or personal coaching or an effective plan for your business, Alan can help. To get a clear vision for your life or business:

Questions about our small business coaching services?

Call us at 1-888-504-0777,


Enter your information below to start growing your revenues and profits today…

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Building on Systemic Change as a Small Business Consultant

Small Business Consultant

Small Business Management is a difficult task that very few are equipped to master. Building on systemic change is not difficult. And yet, the effective small business consultant can often help accelerate change in a client’s business by applying a very simple technique.  The technique that escapes most business people is usually right in front of them, and they almost always miss it.

Building on Systemic Change as a Small Business Consultant

Case Study 1: Business not achieving goals

Recently I visited a moderately successful small business that is experiencing problems in making progress against the key goals outlined by the organization.  As I carefully listened to the Management group it was clear to me that they both soundly identified the objectives, and they also suggested some workable solutions.  However, they were befuddled with why they could make little progress on these all-important areas.  These areas were critical to help sustain momentum and to justify further investments.  As a Small Business Consultant, I spent a number of days observing, interviewing key personnel, and studying the reporting tools and measurement methods.  The answers to what was holding up the progress became obvious after just a few “Coaching” analysis sessions.  I will get back to this later.

Case Study 2: Inconsistency in implementation

Recently my wife and I were visiting a well-known breakfast restaurant chain to enjoy some relationship time.  My wife always begins her meals with a glass of water and never drinks in a restaurant without a straw.  Because of this, before even beginning to study the menu, I know to automatically suggest that the waitress provide her a straw and extra napkins.  In this case, when I asked for the straw, my wife interrupted me and informed me that the restaurant had wrapped the silverware and straw inside the napkin on the table.  This was something I had not observed before and based on life experience was a very nice thing for my wife.  I observed the straw inside my bundle also, and quickly asked her if she thought the idea came from a new waitress inside the business or was it part of the restaurant chain’s new policy?  We both surmised it was from a bright new employee, but I couldn’t help but wonder if this was an attempt at systemic change within the organization.  When our waitress returned, I asked and she cheerfully said….”Oh no, it was not from our team……it was something they had started about three weeks ago”.  I told her that we thought it was a pretty good idea.  She responded, “Yes but half the time the girls don’t do it and what good is it if you can’t count on it?”

This is a great example of poor systemic change.  This is just another great idea without great implementation.  Until a great idea becomes imbedded within the business practices of the organization it is always going to produce sporadic results and insignificant positive impact on the business.  Perhaps you have heard of the term “best practices” but have you considered that the role of a great small business consultant may be to teach implementation?

The Root Cause: Lack of Reinforcement

Now back to our small business story above.  The problem that this business has is just like many other businesses.  They know the problem, they know how important it is, but they simply can’t implement it.  This situation was made clear by interviewing the staff and business personnel.  Again and again, in interviews, I recorded exactly what Management said and did when they visited each of these people.  I compared what Management said and did with many of the staff against the results from that interaction.  What became very obvious is that the business reflected the tangible actions of Management, and it was part of the systemic success of the business.  But what was painfully obvious was that Management never reinforced the goals (with actions) that were applied against the all-important business goals.  In other words, Management was getting great results in areas that did not matter as much as the core business objectives.  Where the systemic success of the business occurred, they were very good, but against the business goals, there were no applied actions or systemic success.  In short, the employees could tell me every single thing that each management person would discuss or observe, but none of these highlighted interactions mirrored the business goals.

So what is systemic change within an organization and how as a small business coach do I provide meaningful solutions? The answer lies within the existing successes of the business itself.  Look for the things they do well that is a result of everyone implementing a practice routinely, such that it is part of the unconscious process of the business.  For example, the business I referred to earlier had spotless and clean restrooms, had beautiful front walkways windows and doors, and the employee uniforms were crisp clean and well fitted.  When I explained that these successes inside the business were a result of anticipated Management reinforcement, the small business could easily relate and better understand the changes needed and the game plan for the small business consultant to initiate change.  Of course, this is only the beginning of a program to install training, reports, and measurement into the business methods of the organization.  But it all starts with helping the Leadership build upon the successes they have, and visualize the future.

You Get What You Focus On

True systemic change involves integrating the goals into the daily business practices of the business.  Build on the systemic victories in place to mirror the future changes.  Help the business align themselves with the core needs, and coach them to imitate the existing business victories.  This is a classic “teach a man to fish” example, but don’t oversimplify the process.  If they simply add on to the existing communications they may cause confusion and may actually take a step backward in performance.  Management must be taught to reinforce the core business goals and to only lightly release and maintain the current business standards.  When a business has developed systemic qualities there is no end to the number of excellent things they can implement, but they must learn how to embed the core goals into the business as a primary objective.  Teach systemic change and your value as a coach will soar.

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