Some people see the cup as half empty. Some people see the cup as half full. I see the cup as too large.” ~George Carlin
First impressions are so important, and entrepreneurs need to remember that a business’ first impression is made by its physical appearance. If you bring a potential client to your facilities and it looks as if you have not made any improvements in 30 years, they are not going to be inclined to work with you.
We were working with a very successful business that had high sales levels and was growing incredibly fast. The business operated predominantly online, and as it grew, they never took the time to step back and evaluate the physical appearance of their operation as a customer would. They just never had the inclination to invest in keeping their premises up.
On one occasion, a large customer stopped in and, after seeing the condition of the facility, refused to order anything from them again. The customer just could not believe it was a quality operation based on the way they kept their building and facilities. The business owner was shocked by this occurrence. Until this incident, he did not recognize they had a problem.
Another business we were assisting was operating out of their home office in an effort to keep their brick and mortar investment at a minimum. Normally, this was not a problem as they were able to meet customers at various coffee shops. However, a client showed up unexpectedly one day at the home and, after seeing their physical facilities, concluded it was no longer a viable business.
A third business had a nice location, but their warehouse was a disorganized disaster. When a couple of customers got a look at the warehouse behind the counters, they wanted to stop doing business with the firm.
Finally, a business was located in such a bad area of the city that many prospective customers refused to go there. In the interests of keeping their costs at a minimum, the firm had chosen a terrible location, forgetting about how important first impressions are. This business had so much potential, as they had a product that many customers desired, but the location was so bad it made a terrible first impression and significantly affected their sales.
For many entrepreneurs, it is difficult to judge their own business objectively. Frequently, they operate in the same environment for so long they just lose the ability to see their business without bias. One way to get an impartial assessment is to ask an outsider to come in and evaluate your firm’s first impression. In many cases, I have seen these outsiders give great advice at little to no cost.
Now go out and make sure that your business is making the best first impression possible.
You can do this.
Sunday, May 29, 2011
Sunday, May 22, 2011
Asking The Right Questions.
““A sudden bold and unexpected question doth many times surprise a man and lay him open.” ~ Francis Bacon
I was helping two wonderful ladies who own their own public relations and marketing firm. They had been working together for more than seven years, but they only had less than $100,000 in revenues last year.
They had taken other part-time jobs to make ends meet, but otherwise, they did not seem to be overly concerned with the lack of adequate revenue. In fact, when I asked them about it during numerous conversations, they just said over and over again that they did not know what to do and had basically given up.
When I probed further and asked why they did not have enough clients, they blamed the customers, they blamed the economy, but they never took any responsibility themselves. They just expected some miracle to give them great revenues and profits, which of course, did not work out.
Their situation was so surprising to me. These ladies help other firms with their marketing but had clearly forgotten how to apply these skills to their own business.
I asked another question that made them more receptive to our discussions. I asked them, “If you were called in as a marketing consultant for a firm that had the track record that you have, what would you do?” This one question allowed them to clearly see the big hole they had dug for themselves and forced them to look at their situation with a different set of eyes.
They knew they needed to do something to reenergize their business, and they are now spending one day a week on marketing efforts. They have started calling on former customers and are exploring alternative markets that might work for their business.
Did I fix the problem? No. I just asked the right question allowing them to see their situation from a different vantage point and recognize what needed to be done.
It was far more beneficial for them to figure out the problem on their own instead of having me just tell them. If I would have just given them the answer, they would not have owned the solution, which is so important.
In all my 40+ years of teaching at various universities, I have always used the Socratic method with my students. The key to this method is asking the right questions to allow the students to figure out the solution to a real life problem for themselves. Just giving someone an answer is quick, but it does not instill any real sense of ownership of the solution.
So how does an entrepreneur realistically apply this concept to their business? When a staff member comes to you with a problem, benignly guide them by asking the questions that will reveal the best solution. Following are a few examples of these types of questions:
• If you were to do it over again, what would you do differently?
• What are the ramifications if we do not do this project?
• If you were called in as an outside consultant, what would you recommend?
Now go out and make sure that you are helping your staff figure out the solutions to their problems by asking probing questions. While initially this is a slow process, in the long run, it has so many benefits.
You can do this!
I was helping two wonderful ladies who own their own public relations and marketing firm. They had been working together for more than seven years, but they only had less than $100,000 in revenues last year.
They had taken other part-time jobs to make ends meet, but otherwise, they did not seem to be overly concerned with the lack of adequate revenue. In fact, when I asked them about it during numerous conversations, they just said over and over again that they did not know what to do and had basically given up.
When I probed further and asked why they did not have enough clients, they blamed the customers, they blamed the economy, but they never took any responsibility themselves. They just expected some miracle to give them great revenues and profits, which of course, did not work out.
Their situation was so surprising to me. These ladies help other firms with their marketing but had clearly forgotten how to apply these skills to their own business.
I asked another question that made them more receptive to our discussions. I asked them, “If you were called in as a marketing consultant for a firm that had the track record that you have, what would you do?” This one question allowed them to clearly see the big hole they had dug for themselves and forced them to look at their situation with a different set of eyes.
They knew they needed to do something to reenergize their business, and they are now spending one day a week on marketing efforts. They have started calling on former customers and are exploring alternative markets that might work for their business.
Did I fix the problem? No. I just asked the right question allowing them to see their situation from a different vantage point and recognize what needed to be done.
It was far more beneficial for them to figure out the problem on their own instead of having me just tell them. If I would have just given them the answer, they would not have owned the solution, which is so important.
In all my 40+ years of teaching at various universities, I have always used the Socratic method with my students. The key to this method is asking the right questions to allow the students to figure out the solution to a real life problem for themselves. Just giving someone an answer is quick, but it does not instill any real sense of ownership of the solution.
So how does an entrepreneur realistically apply this concept to their business? When a staff member comes to you with a problem, benignly guide them by asking the questions that will reveal the best solution. Following are a few examples of these types of questions:
• If you were to do it over again, what would you do differently?
• What are the ramifications if we do not do this project?
• If you were called in as an outside consultant, what would you recommend?
Now go out and make sure that you are helping your staff figure out the solutions to their problems by asking probing questions. While initially this is a slow process, in the long run, it has so many benefits.
You can do this!
Sunday, May 15, 2011
Small Business and the Fair Standards Labor Act
In law, nothing is certain but the expense.” ~Samuel Butler
I am by no means an advocate for more government regulation, but when in place, we all must follow the law. The Department of Labor, Wage and Hour Division administer the Fair Labor Standards Act (FLSA), and because there is no minimum number of employees for enforcement, it applies to almost every business whose sales are in excess of $500,000.
Whether or not the FLSA is reasonable can be argued, but the fact is, it is the law and it is being enforced. Last year, the Department of Labor hired 250 additional investigators just to look into whether firms are adhering to this law, and the number of court cases involving FLSA violations is increasing by more than 70 percent each year.
Overtime pay is one of the key areas of focus. So many businesses are not compliant with the FLSA overtime pay mandates, nor do they keep adequate records, which are critical when facing investigation by the Department of Labor. If it is found that you have not paid your employees correctly, you will have to repay the employees in addition to a stiff penalty for not following the law.
A major piece affecting overtime pay is classifying employees as exempt or non-exempt. The Department of Labor has identified specific conditions defining exempt and non-exempt employees. These guidelines are detailed on their website.
If a non-exempt employee works more than 40 hours a week, they must be paid overtime at a rate of at least one and a half times their normal salary. For example, if a non-exempt staff member sits at their desk doing business during lunch, this would be considered time worked. Because of this law, some firms tell their employees that they must leave their desk during lunch to ensure that they are not working.
Even if your business has a policy stating that overtime is not allowed or requires prior approval, you will still have to pay when a non-exempt staff member works more than 40 hours. In addition, the FLSA mandates the employer will still have to pay even if the employee waives their right to be paid for their time.
The most troubling part of this law is the “off the clock” time. Employers must be so careful with this. For example, if you sent e-mails or texts to a non-exempt employee in the evening, this could and would probably be construed as overtime. For this reason, some employers only permit e-mails to non-exempt employees during their normal work hours.
The FLSA, like so many other labor laws, is so complex and expansive. For this reason, it is really so easy to violate it without even realizing. To be absolutely certain your business is in compliance, you really should seek guidance from an HR professional or labor attorney.
Now go out and make sure you are abiding by the labor laws affecting your company.
You can do this.
I am by no means an advocate for more government regulation, but when in place, we all must follow the law. The Department of Labor, Wage and Hour Division administer the Fair Labor Standards Act (FLSA), and because there is no minimum number of employees for enforcement, it applies to almost every business whose sales are in excess of $500,000.
Whether or not the FLSA is reasonable can be argued, but the fact is, it is the law and it is being enforced. Last year, the Department of Labor hired 250 additional investigators just to look into whether firms are adhering to this law, and the number of court cases involving FLSA violations is increasing by more than 70 percent each year.
Overtime pay is one of the key areas of focus. So many businesses are not compliant with the FLSA overtime pay mandates, nor do they keep adequate records, which are critical when facing investigation by the Department of Labor. If it is found that you have not paid your employees correctly, you will have to repay the employees in addition to a stiff penalty for not following the law.
A major piece affecting overtime pay is classifying employees as exempt or non-exempt. The Department of Labor has identified specific conditions defining exempt and non-exempt employees. These guidelines are detailed on their website.
If a non-exempt employee works more than 40 hours a week, they must be paid overtime at a rate of at least one and a half times their normal salary. For example, if a non-exempt staff member sits at their desk doing business during lunch, this would be considered time worked. Because of this law, some firms tell their employees that they must leave their desk during lunch to ensure that they are not working.
Even if your business has a policy stating that overtime is not allowed or requires prior approval, you will still have to pay when a non-exempt staff member works more than 40 hours. In addition, the FLSA mandates the employer will still have to pay even if the employee waives their right to be paid for their time.
The most troubling part of this law is the “off the clock” time. Employers must be so careful with this. For example, if you sent e-mails or texts to a non-exempt employee in the evening, this could and would probably be construed as overtime. For this reason, some employers only permit e-mails to non-exempt employees during their normal work hours.
The FLSA, like so many other labor laws, is so complex and expansive. For this reason, it is really so easy to violate it without even realizing. To be absolutely certain your business is in compliance, you really should seek guidance from an HR professional or labor attorney.
Now go out and make sure you are abiding by the labor laws affecting your company.
You can do this.
Small Business and the Fair Standards Labor Act
In law, nothing is certain but the expense.” ~Samuel Butler
I am by no means an advocate for more government regulation, but when in place, we all must follow the law. The Department of Labor, Wage and Hour Division administer the Fair Labor Standards Act (FLSA), and because there is no minimum number of employees for enforcement, it applies to almost every business whose sales are in excess of $500,000.
Whether or not the FLSA is reasonable can be argued, but the fact is, it is the law and it is being enforced. Last year, the Department of Labor hired 250 additional investigators just to look into whether firms are adhering to this law, and the number of court cases involving FLSA violations is increasing by more than 70 percent each year.
Overtime pay is one of the key areas of focus. So many businesses are not compliant with the FLSA overtime pay mandates, nor do they keep adequate records, which are critical when facing investigation by the Department of Labor. If it is found that you have not paid your employees correctly, you will have to repay the employees in addition to a stiff penalty for not following the law.
A major piece affecting overtime pay is classifying employees as exempt or non-exempt. The Department of Labor has identified specific conditions defining exempt and non-exempt employees. These guidelines are detailed on their website.
If a non-exempt employee works more than 40 hours a week, they must be paid overtime at a rate of at least one and a half times their normal salary. For example, if a non-exempt staff member sits at their desk doing business during lunch, this would be considered time worked. Because of this law, some firms tell their employees that they must leave their desk during lunch to ensure that they are not working.
Even if your business has a policy stating that overtime is not allowed or requires prior approval, you will still have to pay when a non-exempt staff member works more than 40 hours. In addition, the FLSA mandates the employer will still have to pay even if the employee waives their right to be paid for their time.
The most troubling part of this law is the “off the clock” time. Employers must be so careful with this. For example, if you sent e-mails or texts to a non-exempt employee in the evening, this could and would probably be construed as overtime. For this reason, some employers only permit e-mails to non-exempt employees during their normal work hours.
The FLSA, like so many other labor laws, is so complex and expansive. For this reason, it is really so easy to violate it without even realizing. To be absolutely certain your business is in compliance, you really should seek guidance from an HR professional or labor attorney.
Now go out and make sure you are abiding by the labor laws affecting your company.
You can do this.
I am by no means an advocate for more government regulation, but when in place, we all must follow the law. The Department of Labor, Wage and Hour Division administer the Fair Labor Standards Act (FLSA), and because there is no minimum number of employees for enforcement, it applies to almost every business whose sales are in excess of $500,000.
Whether or not the FLSA is reasonable can be argued, but the fact is, it is the law and it is being enforced. Last year, the Department of Labor hired 250 additional investigators just to look into whether firms are adhering to this law, and the number of court cases involving FLSA violations is increasing by more than 70 percent each year.
Overtime pay is one of the key areas of focus. So many businesses are not compliant with the FLSA overtime pay mandates, nor do they keep adequate records, which are critical when facing investigation by the Department of Labor. If it is found that you have not paid your employees correctly, you will have to repay the employees in addition to a stiff penalty for not following the law.
A major piece affecting overtime pay is classifying employees as exempt or non-exempt. The Department of Labor has identified specific conditions defining exempt and non-exempt employees. These guidelines are detailed on their website.
If a non-exempt employee works more than 40 hours a week, they must be paid overtime at a rate of at least one and a half times their normal salary. For example, if a non-exempt staff member sits at their desk doing business during lunch, this would be considered time worked. Because of this law, some firms tell their employees that they must leave their desk during lunch to ensure that they are not working.
Even if your business has a policy stating that overtime is not allowed or requires prior approval, you will still have to pay when a non-exempt staff member works more than 40 hours. In addition, the FLSA mandates the employer will still have to pay even if the employee waives their right to be paid for their time.
The most troubling part of this law is the “off the clock” time. Employers must be so careful with this. For example, if you sent e-mails or texts to a non-exempt employee in the evening, this could and would probably be construed as overtime. For this reason, some employers only permit e-mails to non-exempt employees during their normal work hours.
The FLSA, like so many other labor laws, is so complex and expansive. For this reason, it is really so easy to violate it without even realizing. To be absolutely certain your business is in compliance, you really should seek guidance from an HR professional or labor attorney.
Now go out and make sure you are abiding by the labor laws affecting your company.
You can do this.
Sunday, May 8, 2011
Employees Need to Understand Some Basics About Your Finances
Employees need some idea of your firm's fiscal health
May 5, 2011
By Jerry Osteryoung
“Information can tell us everything. It has all the answers. But they are answers to questions we have not asked, and which doubtless don't even arise.” ~Jean Baudrillard
A local business owner who is a distributor for a large manufacturer was considering asking his staff to help cut costs. He decided to survey his staff first, asking everyone three questions:
What percent of the selling price of goods or services do the owners get to keep?
What is the dollar amount the owners have invested in this company out of their own pocket?
By what percentage do you think the profits of this company grow every year?
When the entrepreneur compiled the results from these questions, he was floored. Like so many others, this entrepreneur understood very little about his staff's knowledge of the business. He assumed that they knew much more than they actually did.
In response to question one, several employees said the owner kept 100 percent of the sale price, and not one staff member said he kept less than 30 percent. Every one of his employees believed he got to keep 30 percent or more of the profit, and the average response was 50 percent.
Staff does not need to know the exact amount, but it is important they have some idea of the range of profits you are making. Ensuring your staff has a reasonable expectation is important for many reasons. In this case, it was going to be very difficult for this entrepreneur to convince his staff to help cut costs if they thought he was making 50 percent on every sale.
The entrepreneur showed his staff that the average public company only earned two percent in net profits last year — a shocking revelation for many. Most never imagined the number would be so low.
As for the second question, most of the staff greatly underestimated the amount the owner had invested in the business. Most answered that the owner had put in $100,000, but in reality he had contributed more than $1 million of his own money.
To correct this false impression, the owner simply told his employees how much of his own money he had invested. Again, the staff was floored. They had no idea.
On the question about profit growth, most of the staff answered that profits had been increasing by more than 20 percent each year. In reality, profits had been declining.
Through this exercise, employees gained a new understanding of the business and a more accurate idea of its financial situation. Now that those major misconceptions had been replaced with more realistic impressions, it was much easier to get the staff to buy in to cost-cutting measures.
Now go out and make sure your staff has a general idea about your profitability and the amount you have invested in the business. I am convinced that the more upfront you are about this, the harder your staff will work.
You can do this!
Jerry Osteryoung is the Director of Outreach of The Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University; The Jim Moran Professor Emeritus of Entrepreneurship; and Professor Emeritus of Finance. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book “If You Have Employees, You Really Need This Book” is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com. All of Osteryoung's articles can be found in a searchable format at http://jmi.fsu.edu/Services/Jerry-s-Articles.
May 5, 2011
By Jerry Osteryoung
“Information can tell us everything. It has all the answers. But they are answers to questions we have not asked, and which doubtless don't even arise.” ~Jean Baudrillard
A local business owner who is a distributor for a large manufacturer was considering asking his staff to help cut costs. He decided to survey his staff first, asking everyone three questions:
What percent of the selling price of goods or services do the owners get to keep?
What is the dollar amount the owners have invested in this company out of their own pocket?
By what percentage do you think the profits of this company grow every year?
When the entrepreneur compiled the results from these questions, he was floored. Like so many others, this entrepreneur understood very little about his staff's knowledge of the business. He assumed that they knew much more than they actually did.
In response to question one, several employees said the owner kept 100 percent of the sale price, and not one staff member said he kept less than 30 percent. Every one of his employees believed he got to keep 30 percent or more of the profit, and the average response was 50 percent.
Staff does not need to know the exact amount, but it is important they have some idea of the range of profits you are making. Ensuring your staff has a reasonable expectation is important for many reasons. In this case, it was going to be very difficult for this entrepreneur to convince his staff to help cut costs if they thought he was making 50 percent on every sale.
The entrepreneur showed his staff that the average public company only earned two percent in net profits last year — a shocking revelation for many. Most never imagined the number would be so low.
As for the second question, most of the staff greatly underestimated the amount the owner had invested in the business. Most answered that the owner had put in $100,000, but in reality he had contributed more than $1 million of his own money.
To correct this false impression, the owner simply told his employees how much of his own money he had invested. Again, the staff was floored. They had no idea.
On the question about profit growth, most of the staff answered that profits had been increasing by more than 20 percent each year. In reality, profits had been declining.
Through this exercise, employees gained a new understanding of the business and a more accurate idea of its financial situation. Now that those major misconceptions had been replaced with more realistic impressions, it was much easier to get the staff to buy in to cost-cutting measures.
Now go out and make sure your staff has a general idea about your profitability and the amount you have invested in the business. I am convinced that the more upfront you are about this, the harder your staff will work.
You can do this!
Jerry Osteryoung is the Director of Outreach of The Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University; The Jim Moran Professor Emeritus of Entrepreneurship; and Professor Emeritus of Finance. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book “If You Have Employees, You Really Need This Book” is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com. All of Osteryoung's articles can be found in a searchable format at http://jmi.fsu.edu/Services/Jerry-s-Articles.
Sunday, May 1, 2011
Pricing and Inflation in today's economy
Price is what you pay. Value is what you get.” ~Warren Buffett
One question every entrepreneur must answer is what price they should charge for their products. The immediate impulse is to keep prices as low as possible so you are able to attract the most business, but low prices do not necessarily generate the highest level of profits.
Today, costs are increasing with inflation and you may need to evaluate your pricing. Among others, the price of fuel is soaring, the cost of medical insurance is escalating, as are the costs of airline travel and a variety of raw materials. Cotton, for example, has increased in price by more than 30 percent in the last six months.
With inflation beginning to show its ugly head and cause dramatic cost increases, you may need to raise your prices simply to balance the added expenses. If you fail to do so, your profitability will plummet.
From a customer's perspective, pricing sends a strong message, and for many, pricing is an indicator of value. If a product or service is priced too low, it will be perceived by customers as subpar. Priced higher, customers will perceive a higher value.
One of my friends truly believes that the more she pays for an item, the better it is. I have seen her contemplate two very similar products, and without fail, she chooses the more expensive alternative. She believes that by doing so, she is getting more value.
Pricing also affects the types of customers you attract to your business. Depending on the clientele you seek, setting your prices low may bring the wrong type. If customers are only focused on prices, they are not loyal to your business. They see you and your products and services only as interchangeable commodities.
Between bargain hunters and loyal customers, it is much better to have loyal customers. To encourage loyalty among your customers, a business should never rely on pricing as the sole differentiator. You must set prices appropriately and compete on nonprice elements, such as service, experience and speed of delivery.
We have been helping a wonderful lady who operated a medical clinic. Despite the fact that she worked tirelessly, she was struggling with low profits. When we reviewed her income statements and talked things over with her, we discovered that she had very little control over her costs. The only element she could control was her pricing, and she had not raised that in five years.
When we suggested she consider raising prices, she was strongly opposed. She feared that if she upped prices, she would lose customers and eventually go out of business. When we worked the numbers, however, we quickly showed her that if she raised prices by 10 percent, she would pull in a higher level of profits, even if her sales fell off 20 percent.
She finally took our advice and raised prices. When she did, her customers never said a word. Her sales have decreased by less than 2 percent, and overall, her revenues have increased by 5 percent. Her profits have grown by 10 percent.
For this entrepreneur, raising prices had a minimal impact on her customers, but a big impact on her bottom line. Though she was fearful that she would lose customers, she discovered one important truth: generally speaking, customers will remain loyal to your business as long as the value they receive is more than the price they pay, and value is dependent upon a number of elements, not just price.
Now go out and take a look at your pricing. As inflation returns, you may find you need to raise prices to offset cost increases.
You can do this!
One question every entrepreneur must answer is what price they should charge for their products. The immediate impulse is to keep prices as low as possible so you are able to attract the most business, but low prices do not necessarily generate the highest level of profits.
Today, costs are increasing with inflation and you may need to evaluate your pricing. Among others, the price of fuel is soaring, the cost of medical insurance is escalating, as are the costs of airline travel and a variety of raw materials. Cotton, for example, has increased in price by more than 30 percent in the last six months.
With inflation beginning to show its ugly head and cause dramatic cost increases, you may need to raise your prices simply to balance the added expenses. If you fail to do so, your profitability will plummet.
From a customer's perspective, pricing sends a strong message, and for many, pricing is an indicator of value. If a product or service is priced too low, it will be perceived by customers as subpar. Priced higher, customers will perceive a higher value.
One of my friends truly believes that the more she pays for an item, the better it is. I have seen her contemplate two very similar products, and without fail, she chooses the more expensive alternative. She believes that by doing so, she is getting more value.
Pricing also affects the types of customers you attract to your business. Depending on the clientele you seek, setting your prices low may bring the wrong type. If customers are only focused on prices, they are not loyal to your business. They see you and your products and services only as interchangeable commodities.
Between bargain hunters and loyal customers, it is much better to have loyal customers. To encourage loyalty among your customers, a business should never rely on pricing as the sole differentiator. You must set prices appropriately and compete on nonprice elements, such as service, experience and speed of delivery.
We have been helping a wonderful lady who operated a medical clinic. Despite the fact that she worked tirelessly, she was struggling with low profits. When we reviewed her income statements and talked things over with her, we discovered that she had very little control over her costs. The only element she could control was her pricing, and she had not raised that in five years.
When we suggested she consider raising prices, she was strongly opposed. She feared that if she upped prices, she would lose customers and eventually go out of business. When we worked the numbers, however, we quickly showed her that if she raised prices by 10 percent, she would pull in a higher level of profits, even if her sales fell off 20 percent.
She finally took our advice and raised prices. When she did, her customers never said a word. Her sales have decreased by less than 2 percent, and overall, her revenues have increased by 5 percent. Her profits have grown by 10 percent.
For this entrepreneur, raising prices had a minimal impact on her customers, but a big impact on her bottom line. Though she was fearful that she would lose customers, she discovered one important truth: generally speaking, customers will remain loyal to your business as long as the value they receive is more than the price they pay, and value is dependent upon a number of elements, not just price.
Now go out and take a look at your pricing. As inflation returns, you may find you need to raise prices to offset cost increases.
You can do this!
Subscribe to:
Posts (Atom)