Entrepreneurial Articles

Is Customer Service That Important?

2012-02-12T03:32:00.000-08:00

"Quality in a service or product is not what you put into it. It is what the client or customer gets out of it." ~Peter Drucker

If you have been reading my columns for a while (you should, by the way, if you have not), you know that I compete in dog obedience trials with my wonderful black lab, Sophie. As part of these competitions, we travel all over to compete before different judges. Most recently, we were at a venue in Charleston, SC.

During last week's trial in Charleston, Sophie did a great job, but the trainer was marginal, at best. One night during this event, all the Tallahassee dog trainers and some of their family went to this very special, long-established restaurant on Johns Island. The local folks raved so much about this restaurant that we just had to take their strong recommendations.

When we got there around 6:30, I noticed there were at least 200 folks just standing in line. Little did I know at the time that they were standing in line just to place their orders and pay.

Once I realized that you ordered your meal and paid before sitting down to your dinner, I asked several veteran customers how long it would take us to get through the line. They said it would be at least an hour to an hour and half, but that it was worth the wait.

As I stood outside in the chilly evening wishing I was warm inside the restaurant, I had a chance to observe the way orders were processed. They had one very hard-working man taking all of the orders, accepting payment and bartending as well. Between meal orders, he would fill drink orders and keep the beer coolers stocked.

He was working as fast and as hard as he could, but there was no way he could keep up with the sheer volume of customers. Despite his best efforts, the bottleneck was slowing down the entire process and keeping the line backed up.

Excluding this one employee who was surprisingly cheerful despite the workload, the customer service at this restaurant was horrendous, at best. They had no greeters, no kind words about our wait. They were just not customer-driven at all.

If you ordered oysters, they dumped your portion in a pile on the table in front of you using a large shovel. The tables themselves were slabs of rugged plywood with a hole in the middle to capture both garbage and discarded oyster shells.

Based on my experience, I could not help but wonder why a restaurant like this with such bad customer service would have such a strong following. When I asked several people in line why they were willing to tolerate the long wait, poor customer service and no wait staff, every one of them said the food made it worthwhile. I, too, found the food very fresh and tasty, but for me, it was not enough to make up for the lack of customer service.

I think - make that, I know- this restaurant is successful because it serves very good seafood at reasonable prices in a very unique atmosphere. Patrons are willing to trade off poor customer service for the quality of the food. They told me as much again and again as I surveyed them while waiting in line to order and pay (over an hour and a half).

In the case of this restaurant, the food quality and value clearly trumped customer service. Customers were willing to make this concession because, to them, the tradeoff was worth it.

Now, I am not making an argument for poor customer service. The only point I am making is that sometimes - but very infrequently - customer service does not have to be very good if there is something extraordinary to make up for its absence. However, I would still prefer to have great customer service along with top quality products or services, and I am certain even this restaurant would do much better if customer service was incorporated into their operational recipe.

Now go out and make sure that you have great customer service. Customer service should be there regardless of what other excellent benefits you provide your customers.

You can do this.

Accountability is so important.

2012-02-05T03:13:00.000-08:00

“A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury.” ~John Stuart Mill

People are constantly talking about accountability, yet so few businesses really make their staff accountable. According to my dictionary, “accountable” is defined as an obligation to report, explain, or justify something; responsible; answerable. For me, accountability means that you lay out your expectations for your staff and measure their progress, both rewarding their success and taking appropriate action when they fall short of the desired results.

So many businesses call us for help and admit that their performance is weak because they do not hold their staff accountable. When asked why, they typically say either that they do not know how or that their business culture has simply grown up without it. In the beginning they were working too hard to hold anyone accountable, and this philosophy just became embedded in the organization’s culture over time.

A large service management company we were assisting was having significant profitability issues. They shared with me that their issues were due to the near total absence of accountability. When I probed further, they admitted the real problem was that there were four partners in the organization and no one really wanted to be in charge – yet they all wanted to control everything.

The hardest part of this assignment was getting the partners to understand that their problems rested with them. If they could not hold themselves accountable, that kind of accountability would never trickle down through the ranks of the organization.

We started by listing the strengths and weaknesses of each partner, then based on this list, we identified areas of the organization each partner would manage. The partners were all accepting of the plan to assign them management areas, but we had quite a bit of push back when the discussion turned to selecting a general partner who would have authority above the others. There had to be someone who could make decisions if partners disagreed.

The partners could not agree on who that general partner would be. While not optimal, we established an annual rotation schedule where each partner would rotate into the position of authority for a year. They were not completely sold on this plan, but they accepted it realizing it provided a tolerable solution to their large problem.

After establishing accountability at the top, we were able to turn our attention to the rest of the organization. We are currently moving through the ranks, implementing incentives and performance evaluations to develop accountability at all levels. Each employee is assigned monthly goals and they meet with their manager every month to review their performance.

While it is still early in this process, I am sure that this plan will improve the business’s profitability and culture.

Now go out and make sure that accountability is at the center of any reward or management system. I promise your management job will become much easier if you establish a company-wide accountability program.

You can do this!

Sign Wavers Might Help Your Business

2012-01-29T15:05:00.000-08:00

“A mediocre idea that guarantees enthusiasm will go further than a great idea that inspires no one.” ~Mary Kay Ash

Where formerly sign wavers were found exclusively at residential subdivision open houses and on car lots, now they are everywhere! In fact, it is hard to go down the road without seeing two or three of them trying to catch your attention by tossing a business’ sign around.

One of the earliest adopters of this marketing tactic was Liberty Tax Service. Liberty had to do something to solicit business from H&R Block, and their solution was a sign waver dressed in a Statue of Liberty costume.

AArow Advertising, a leading sign waving company, was started by two young entrepreneurs who were formerly sign wavers in 2002. They now have over 500 employees and are franchising their operation internationally. When training their new employees, AArow emphasizes the importance of eye contact and a grin.

So why would a company hire a sign waver? Simply put, they work. Where it is easy to lose a company’s sign in a sea of static signage, a moving object attracts attention.
Sign wavers are useful when you are announcing a sale, promotion or special, are particularly beneficial with grand openings, and can be employed at tradeshows and political events. Probably some of the most common users of sign wavers are the shops that buy and sell gold. Many, if not all, of these establishments have sign wavers out seemingly 24 hours a day.

In addition, businesses that suffer from a less-than-prime location can use sign wavers to help overcome the challenge of an obscured storefront. For example, a business located on a side street or the rear of a shopping center can station a sign waver on a main street for added visibility.

For those who would ask if a sign waver is truly an effective form of advertising, I would say yes. The higher your gross margin, the more attractive a tactic it is. And, where the cost can range anywhere from $30 to $75 an hour, depending on the effectiveness of the waver, many restaurants report that sign wavers bring in 10 new customers for every hour they are deployed.

But should sign wavers replace your existing advertising? An emphatic no. Sign wavers are simply one more arrow in the quiver of tools you can use to help market your business.

For the greatest results, sign wavers should drive traffic to a specific location and should be placed where there is a large volume of passing traffic.

Right now, many governments are considering eliminating sign wavers, or at the very least, imposing some pretty steep restrictions on the activity. The city of Delray Beach, Fla., for example, has prohibited sign wavers on public property, which normally includes sidewalks. My opinion on this is governments should not be allowed to affect our freedom of speech, per the U.S. Constitution. After all, just look at all the sign wavers used during political campaigns.

Now go out and evaluate if sign wavers are a tactic that can make sense for your business. Sometimes the best way to find out of something works or does not is simply to try it for a day or two and see what you get.

You can do this.

Look at your Leading Customer

2012-01-22T03:04:00.000-08:00

“Whatever words we utter should be chosen with care, for people will hear them and be influenced by them for good or evil.”~ Siddhartha Gautama or Buddha (563-483 B.C.)

One thing that each entrepreneur should consider is the demographics of its leading customers. Knowing and understanding who your best customers are will enable you to find and attract more great customers like them.

We are working with one firm that thought its best customers had incomes in excess of $250,000 per year. They aimed all of their advertising at this demographic, and the firm was doing okay. However, upon further analysis, they discovered that their best customers actually had incomes between $100,000 and $150,000 per year. Following this revelation, they changed their advertising to target the new group, and their sales increased.

Another firm that we were assisting discovered that, while men made the actual purchase, their spouses had a powerful impact on the decision. As a result of this process,the firm learned to pay more attention to the person who influences the decision, and using this information, brought a softer edge to their advertising.

After conducting a thorough analysis of its customer base, another business found that its best customers took advantage of their sales much more frequently than any others. As a result, the firm geared its advertising to this group, targeting them with direct mail and personal calls to remind them of the sales the business was having.

It is so important that you analyze all of your customers’ habits, particularly those who account for a large share of your sales. To conduct this type of study, you will need to sort through your customer base and pick out those who account for the highest volume of sales. From these, select approximately 30 to analyze.

Once you have identified this group, you can use surveys or phone interviews to figure out the commonalities that exist among these customers. While the commonality might not be obvious at first blush, in most cases, it can be ascertained by combing through the data and looking for similarities. If you do not find any on the first pass, you should check to make sure that your questions are structured correctly.

Now go out and start collecting data from your best customers that you can analyze for commonalities and use to help develop more targeted and productive advertising.
You can do this.

Promoting from Within.

2012-01-15T03:02:00.001-08:00

“Promotion should not be more important than accomplishment, or avoiding instability more important than taking the right risk.” ~Peter F. Drucker

Clearly every business wants to demonstrate loyalty to its existing staff by promoting from within. However, this just is not always the best policy.

Too often, I have seen small businesses promote their best salesperson into the sales manager’s position, and so many times, this turns out to be a disaster. This rarely works out since the skills the employee has mastered as a salesperson are so different from those needed to be a great sales manager.

Salespeople are normally in control of their own destiny and do not necessarily have any management skills. Their method is to form a relationship with a client and then close the sale. These skills just do not translate to the role of a manager.

Assuming the responsibility of a manager means they must shift emphasis from “my sales” to “the group’s sales.” Managers must also be accountable for motivating and enabling the team to sell more.

In addition to disparate skill requirements, staff perceptions can be an added complication of promoting from within. The staff naturally sees each salesperson as more-or-less equal, but an internal promotion elevates one employee above the others, which can be a hard situation for your staff to buy into. A person who was once their contemporary and friend is now their boss, and an abrupt change in positions like this can cause frustration and anguish among your staff.

Many years ago, I served in the Air Force Reserve during the Vietnam Conflict. I joined the Reserves out of college – Georgia Tech (I just had to put that in) – and even with a degree in engineering, no firm was willing to hire me since they knew I could be drafted at any moment. Because of this, I joined the Air Force Reserves as an enlisted man.

During my third year of service, I was selected to receive a direct commission as a second lieutenant. I did not have to complete Officer Candidate School or any other training program, which means one day I was an airman second class, and the next day I was a second lieutenant. Though I was elated about now being an officer, the commission came with a few unpleasant issues.

Prior to the promotion, I was an equal with just about every enlisted member of our squadron. We worked together, went to summer camp together and complained about our officers together. This promotion, however, elevated me above all enlisted men, meaning those who used to be on equal rank with me now had to salute me and treat me with deference. Even after seven more years as an officer, many of my former fellow airmen never accepted that I was now their boss or respected the fact that I was an officer.

After everything I have seen and personally experienced, I really believe the military and businesses should make sure that when promoting from within, the new manager does not supervise any of his or her former colleagues whenever possible. This will ease the new manager’s transition in so many ways.

There may be cases, however, when the promoted employee will have no choice but to supervise their former colleagues. In these instances, it is key that you ensure the new manager has the skills required to assume the job as soon as possible.
Sending the new manager off to school after announcing the promotion is not a bad way to handle a situation like this. The time the manager is away will act as a buffer, allowing the team an opportunity to wrap their heads around the change.

If schooling is not possible or necessary, the CEO should attend a meeting called by the new manager. The CEO’s role during this gathering will be to express their support for the new manager and reassure the staff that they will be a great leader. Before concluding the meeting, the CEO should also invite employees to come talk to them if they have any concerns about the change.

Now go out and make sure you have a plan in place for internal promotions. Remember, in the event you have to promote a staff member into a management position, you will avoid much of the turmoil if the new manager does not supervise anyone from his or her old team.

You can do this.

Pricing Your Products or Services

2012-01-08T03:54:00.000-08:00

“What is a cynic? A man who knows the price of everything and the value of nothing.” ~Oscar Wilde

Pricing your products or services in a way that encourages sales is so important to each and every business. You spend so much on advertising and promoting your products or services to bring customers in the door, and pricing is the way you close the sale once they arrive. After all, you can have great advertising and great products or services, but if your pricing is wrong, you will just not make the sales you need.

Is there an optimal pricing strategy? No. Pricing is one of those things that you have to fine tune as you go. Normally, the narrower your gross margin, the less able you will be to reduce your prices, meaning you will need to compete on everything else without giving on price. However, if the gross margin on an item is 50 percent, you might be more amenable to reducing prices as you have this padding built in.

It is easy to increase sales if you keep prices very low, but doing so will destroy your profits and cause your business to fail. On the other hand, prices set too high will destroy profits as well since no one will choose to spend more on the same product. The key to a strong pricing strategy is finding a price that is neither too high nor too low, but fair from the customer’s viewpoint.

Does this mean you should not give on price? My thought is if a great customer comes to you with a price from a competitor, you might have to reduce your prices to preserve the relationship. However, this should be the exception rather than the rule.

One method of retaining your margins through pricing is to make sure that your prices cannot be compared to your competitors. For example, financial institutions frequently make it so consumers cannot compare CD rates by selecting unique days the CD matures (e.g. 11 months and five days).

Lately, I have noticed a trend among drug stores and clothing retailers. They keep the same merchandise in stock but re-price many of their products every week, making it hard for the consumer to remember the actual price of the item.

One large clothing store does this so effectively that every time you walk in, you feel as if it is brand new inventory. In reality, though, it has just been re-priced so that it feels new.

The problem with competing on price is that you attract only those customers that are interested in the lowest cost without regard for all of the other services you bring to the table. If they are shopping just for the best price, they will not be loyal to you, and in a heart beat, they will flip to the next vendor who offers a cheaper price.

For most small businesses, pricing should be the last component you compete on. Rather than price, you should try to compete on service, ambiance or quality. The more you can convince the customer that your products or services are unique, the less you have to compete on price.

Now go out and look at your pricing strategy for each of your products or services to ensure that you are charging and receiving a fair price.

You can do this.

Resolutions for 2012

2012-01-01T03:51:00.000-08:00

"Be always at war with your vices, at peace with your neighbors, and let each New Year find you a better man." ~Benjamin Franklin

The older I get – "better," as some would say – the years seem to pass faster and faster, and it is always so hard for me to believe that another year is behind us. However, no matter what your age or occupation, the New Year presents a wonderful opportunity to begin anew.

New Year's resolutions are a great way to kick off a new year, and this year, I would like to share a few of my hopes and resolutions for every business owner:
I hope each of you continues to show growth and improvement in profitability during 2012.
As the unemployment rate continues to fall and more people return to gainful employment, the economy will continue to improve.
Every business owner should make a commitment this year to ensuring that each employee feels like an appreciated and valued member of your team.
Consider reading a new business book every month. If you do not have time to read, an audible edition works just as well. This is an alternative I often use.
Make a commitment to replacing marginal workers with the best staff you can find. As part of this resolution, recognize that the sooner you remove a poor employee from among your ranks, the better your business's morale will be.
Start developing plans for an exit strategy knowing that you will not be at the helm of your business forever. The sooner you have a concrete plan in place, the more content both you and your spouse will be.
Make a commitment this year to having better balance among work, family and spiritual pursuits. After all, no one on their deathbed ever wished they had worked more. Life is just too short not to enjoy more of it.
Consider getting involved with a non-profit organization beyond just providing monetary support. Go out and help however you can. Many non-profits are on thin ice and need so much guidance. Helping others will make you a better leader and a better person.
Eat right and exercise every day to ensure you stay healthy this year. I promise you, the better care you take of your body, the better you will feel and the more productive you will be.
Finally, do your best to reduce your stress level by eliminating as many interruptions in your day as you can. Nothing kills your productivity or increases your stress level more than dealing with interruption after interruption.
Depending on your business's individual circumstances, you may not be able to apply all these resolutions, but please consider making a commitment to at least three of them. Identify monthly goals and track your achievements to help invigorate yourself as the year progresses.

You can do this!

The Holidays

2011-12-25T06:19:00.000-08:00

"A lovely thing about Christmas is that it's compulsory, like a thunderstorm, and we all go through it together." ~Garrison Keillor

The holiday season is such a great time of year and it is one time when you can go overboard to make your staff feel good about their job and your company.

In many ways, your generosity makes the holiday season for your employees, however, I do not like giving monetary holiday bonuses as they tend to become something the staff learn to expect every year rather than as a genuine gift. I find, however, profit sharing bonuses to be a great option to be given out at this time of the year.

Over the years, I have tried many different things during the holiday season to help spread holiday spirit among my employees. My favorite activity is probably coming together as a staff to provide holiday presents for an impoverished family. After all, this season is really about giving and not receiving, and there is no better way to get in the holiday spirit than to reach out and help others. Every time we make one of these special deliveries, we all feel so good for the next week.

Sometimes at this time of year, I try to give gifts that meet some specific need of my staff. I try to find that thing that will really make a difference in their lives, and in years past, I have given "gifts" of time off and cash bonuses.

I have also given unique presents – gifts that have special meaning to the individual employee. On one occasion, the only thing one of my employees could talk about all year was wanting a karaoke machine for her parties. Guess what she got for Christmas that year! Giving gifts like these requires that you know your staff's needs, which means you have to be observant all year long.

Though most consider the holiday season a great time of year, many people suffer from severe depression, known as Seasonal Affective Disorder. The important thing to note here is that some people have it very rough this time of year. If you notice someone struggling with depression, the best thing to do would be to kindly refer them to a mental health professional.

Now go out and make sure that you and your staff have a wonderful holiday season. Remember, your kindness and generosity help create and propagate holiday spirit in your workplace.

Sending you my sincerest wishes for a wonderful Holiday Season.

Fairness and the Internet Sales Tax

2011-12-18T04:21:00.000-08:00

Amazon supports "an even-handed federal framework for state sales tax collection." ~Paul Misener, Amazon Vice President for Global Public Policy

Generally, I try to steer away from political issues and, for that reason, I do not think I have ever written a column about taxation. However, I have reached my boiling point over the issue of imposing a tax on Internet sales.

Let me begin by saying that I do not like to pay taxes and wish the government could manage our money better. I have never recommended a tax increase before, but I am an advocate for a tax on Internet sales. Now I am not arguing that this is a necessary source of revenue – which it is – but rather, I am suggesting that levying a tax on Internet sales from out-of-state merchants can help level the playing field for small businesses.

Small businesses are the heart and soul of our country – retailers, in particular. Retailers have to compete with Internet companies in so many ways and they just cannot compete effectively if they are working with one hand tied behind their back.

By exempting out-of-state sellers from having to collect sales tax, you are giving these non-resident merchants a six to seven percent cost advantage. Now the government in Florida wants residents to voluntarily send the state taxes earned on Internet sales. You can guess how well that has worked out. Additionally, merchants who reside in Florida still have to pay sales taxes to residents on all goods sold via the Internet.

State governments should impose a tax on Internet sales of non-resident companies. California now collects taxes on large, out-of-state Internet providers and is expected to pull in over $300 million dollars in additional revenues. Seven other states have also closed the loophole and now collect sales tax from all Internet merchants serving their states.

The National Governors Association estimates that states are currently missing out on more than $22 billion each year in potential Internet sales tax revenue. Both the House and Senate have introduced bills to remedy this.

We need to do everything we can to promote small business retailers, especially since they do not have the luxury of being able to hire lobbyists to protect their interests like large retailers can. Imposing a tax on out-of-state Internet merchants will not give local small businesses an advantage but will just allow them to compete on a fairer playing field.

What can you do? Please write your state representatives and senators as well as their U.S. counterparts and request, not that they impose a new tax, but that they level the playing field between Internet businesses and small business retailers. We need small businesses to flourish in order for local economies to do well!

You can do this!

Making Your Business Unique

2011-12-11T03:39:00.000-08:00

"Only a man who knows what it is like to be defeated can reach down to the bottom of his soul and come up with the extra ounce of power it takes to win when the match is even."~
Muhammad Ali

With so many businesses out there providing products and services similar to yours, it is critical to find that element that differentiates your company. In order to be successful, you must be able to stand out in the crowd. It is not always an easy thing to do, but it is immensely important, and each business owner should think about what makes their offering unique.

I recently attended a family function at The Peabody Hotel in Orlando. The hotel is a great property, and the famous Peabody ducks really make it special and unique.

In 1930, upon returning from a hunting trip, the general manager of The Peabody in Memphis had a tad too much to drink and decided to put some live ducks in the fountain of the hotel as a practical joke. It turned out, however, that the guests of the hotel loved the ducks, and they have been there ever since.

The five ducks now make their daily appearance at 11 a.m., arriving on a special elevator to be escorted down a red carpet by the official Duck Master to a John Phillips Sousa march. At 5 p.m., the processional is reversed as the ducks turn in for the night. A crowd of people is always there to observe this daily ritual.

Clearly, the processional of the ducks is unique in and of itself, but The Peabody has truly made the duck theme part of their identity. The theme appears everywhere, from the hotel’s logo to a large mural of three ducks painted on the roof of the hotel. Additionally, the gift shop is brimming with duck paraphernalia, everything from duck doorknockers to duck jewelry.

The ducks are one way The Peabody sets itself apart from countless other hotel franchises. What originally began as a practical joke has now become one of the most memorable elements of the guest experience.

Ben and Jerry’s ice cream is another example of a very unique business. In 1977, Ben Cohen and Jerry Greenfield completed a correspondence course on making ice cream from Penn State and started their first store in Vermont in 1978. To celebrate their first anniversary, they had a free cone day, an event that still occurs to this day. They are, of course, known for their quirky flavors – Chubby Hubby and Late Night Snack, for example. Additionally, they take 7.5 percent of the company’s before-tax profits to support community-oriented projects.

Ritz-Carlton provides another example of uniqueness in a business. The guest experience at a Ritz-Carlton is, by far, one of the best and most unique experiences around. They are known for their superb customer care.

Take some time to consider what makes your business different and think about how you can call attention to that aspect. To get you started, following are just a few examples of how you can highlight your business’ uniqueness:

1. Locally owned for X years.
2. A three-generation family business that has been serving our customers for over 30 years.
3. Providing leading-edge technology to our customers since 2000.
4. The only store located in [an area] that can help you with [your product or service].
5. Have been in the same location for X number of years.
6. The only independent store that provides [a product or service] in [an area].

Now go out and make sure you know what makes your business unique and remember to emphasize that uniqueness in all your customer interactions.
You can do this.

Dealing with Disruptive Personal Habits of Staff

2011-12-04T03:59:00.000-08:00

"One ought to hold on to one''s heart; for if one lets it go, one soon loses control of the head too."~Friedrich Nietzsche

One of the most difficult conversations a manager will ever have with an employee is when they have to address personal habits like hygiene. Many managers think this is too personal to discuss, but you just do not have the luxury of looking the other way. Poor personal hygiene can negatively impact your business by making the environment distasteful, annoying co-workers and even affecting how your customers see your business. Ignoring the problem only rewards the behavior and undermines your credibility as a leader and a manager.

I just recently had to help two entrepreneurs address issues where an employee’s offensive body odor was causing problems for their businesses. In one case, the server/cook’s body odor was affecting the entire restaurant.

Although the whole staff knew about the problem, the employee just did not seem to be aware of it nor did he recognize the effect his hygiene was having on his co-workers and the restaurant patrons. Because the employee was unaware of the problem, the situation required that the manager use a certain amount of sensitivity when initially addressing the situation.

When handling situations like these, it is so important to talk about the behavior and not the person. It is easier for the employee to hear that a behavior must be changed rather than the person has to change. This approach is also much less threatening to the employee.

My suggestion would be to invite the employee to your office and ask them if it is a good time to give them some “feedback.” The employee will probably be anxious about the type of feedback you are about to share, so you will want to start by telling them how valuable they are to the company. Next, the employee needs to hear that you feel very, very uncomfortable giving this type of feedback.

During your discussion, you need to be as direct as possible. Getting straight to the point is critical. Dancing around the topic will just weaken the point that you are trying to make. You might say that their body odor is affecting the business and you feel sad bringing this up to them, but it is very important to them and the business. Do not mention the complaints you have gotten from their colleagues. Sharing that information serves no useful purpose. The employee will be embarrassed already and this would just pile it on unnecessarily.

Before ending the conversation, you need to talk about how changing this behavior will affect the entire organization and what the ramifications will be if they do not change. In some cases, an employee may have a medical condition that causes their body odor, but you should not assume this is the case. If it is within the employee’s control to correct, they should be held accountable for doing so. If the employee says that a medical condition is the cause, however, ADA may dictate how the situation can be handled.

With these types of conversations, it is sometimes helpful to write out your main points and practice making these points in advance of meeting with the employee. Again, this is going to be uncomfortable, but practicing what you are going to say will help make the situation more tolerable.

Now go out and make sure that you have a plan in place so you are prepared in the event you have to address a difficult hygiene problem.

You can do this!

Making Meetings Work

2011-11-27T03:54:00.000-08:00

"Football incorporates the two worst elements of American society: violence punctuated by committee meetings."~George Will

It is important to limit the amount of time you spend attending meetings. The most successful meetings are ones where you need to give or receive critical information or where face-to-face interaction is important. One entrepreneur whom we assist runs from one meeting to another and hardly has time to breathe. When asked the value of all these meetings, his eyes just roll. Here is a very hard-working entrepreneur who just has a case of "meeting mania." By meeting mania I mean a belief that one has to attend a series of never-ending and usually, very unproductive meetings.

Before you schedule a meeting, make sure that one is really needed. An update or status meeting can generally be done with email. A worthwhile meeting must have an interactive component; otherwise, an email or memo will suffice.

There are four rules for planning great meetings. First, insure that there is a great reason to have a meeting in the first place. Meetings have a way of defying death and, once started, are hard to extinguish. So if you must have a meeting, make sure there is a darn good reason for it. Do not have a meeting just to have a meeting.

The second rule is to insure that there is a detailed agenda. An agenda keeps you on task and makes clear what subjects will be covered. The agenda should be mailed to participants ahead of time and it should clearly state what the participants need to bring to the meeting. Too often I see folks show up for meetings expecting to be spoon-fed. It is much better to get people to do some homework on the agenda items before they come to the meeting. Preparation ahead of time goes a long way toward insuring an effective and efficient meeting where people feel they have accomplished something worthwhile.

Setting up time limits for the meeting is the third rule. State the starting and ending time for each meeting on the agenda and stick to those times. I always include the following meeting rule on the agenda: "The time available, however much there is, will be filled with discussion on the agenda". A one-hour meeting frequently is much more effective than a three-hour meeting as participants know they must get through in a timely fashion.

The final rule is to make sure that the person in charge of the meeting can keep the group on task and also has the skills needed to deal with the thorny interpersonal issues that arise. Frequently, when someone in a meeting feels threatened, he or she closes down. The meeting leader must be able to recognize this and tactfully bring this person back into the conversation.

Meetings can be major time wasters. Summarized are the four simple rules to help plan and conduct worthwhile meetings:
Have a good reason to schedule a meeting.
Make sure there is a well-defined agenda.
Set time limits for the meeting.
Select a leader who will keep the group on task and is sensitive to the needs of each member.
If you follow these rules, your meetings will be shorter, more valuable, and possibly more fun. You can overcome meeting mania and save a lot of time in the process.

You can do this!

Letting Staff Know Their Authority

2011-11-20T03:54:00.000-08:00

"Every man should keep a fair-sized cemetery in which to bury the faults of his friends."~Henry Ward Beecher

One of the most important things for a decision maker is to know the limits of his or her authority. That is, when they have to come to you or their supervisor for approval before a final decision can be made—as with expenditures, staffing decisions or disciplinary actions, for example. Unless you clearly specify these limits, you can not expect them to know what they are.

Knowing how much authority they have to make decisions is critical to a manager’s ability to do their job efficiently. You just do not want your staff coming to you for permission on every decision. This is such a terrible waste of time for both you and the employee.

I was working with a very successful technology business and had been meeting with the managers to evaluate the effectiveness of the staff. During one of these discussions, a new senior manager started talking about the trouble he had been having with a problem employee.

When I asked the manager why he did not do anything about the employee, he said he just did not have the authority. As a side note, he also commented that he did not have the authority to make any decisions about spending money either. I asked him how he knew this and he said he was never told that he could make these or any other decisions.

As I probed further into the situation, the manager said he had never initiated a conversation about authority with the owner because he did not have the courage to broach the subject. He did say, though, that he hoped the owner would tell him soon what his decision parameters were.

I wish I could say this was an isolated example, but I see situations like these on a regular basis. In these cases, I believe the entrepreneurs or managers are hesitant to give their staff any authority because they do not know if they can trust them to make good decisions.

The problem with this mindset is that employees can be coached in their decision-making, but if they are never given the opportunity, they will never learn how to make good decisions. In the event a lower-level manager has been given decision-making authority, received coaching and you still can not trust their judgment, it may be time to consider that the employee is no longer serving the needs of the company.

Now go out and make sure your employees clearly understand the extent of their authority. The sooner you convey this information, the better. Obviously, these parameters will change as the employee becomes more experienced and proves again and again that you can trust their decisions.

You can do this!

Sell Value Not Cost

2011-11-13T03:20:00.001-08:00

"Customer needs have an unsettling way of not staying satisfied for very long."~Karl Albrecht

There is no question that sales are the heart and soul of a business. This is not to say that you should ignore profits, which are absolutely essential, but you will not have profits unless you produce revenue.

Part of my job is to refer clients of ours to other businesses that may be able to help them. We do not receive any commission or benefit for making the referral other than the knowledge that doing so will likely help both businesses.

Several clients were in need of web services, and I had worked previously with a very savvy web designer. He has many years experience in the business and is especially skilled at search engine optimization. The prices he charges are also very reasonable, so I thought he would be great for these clients.

I made the referrals, and in each case, the web designer prepared an estimate complete with a portfolio of his past work. After some time though, he had not heard back from any of them. With his blessing, I wrote a few of these potential customers to find out why they had not followed up with him.

When I heard back, every one of them said that they could not afford his services, though none of them said specifically that he was too expensive. They all said his quality was great and his fees were very reasonable but that they could not afford what he was offering.

After we had a chance to go through these responses, the reason he had not gotten any of these jobs became clear. He was only selling the cost, not the value or the benefits of his services. The customers were seeing his services only as a cost that offered very little improvement over what they already had.

The web designer had incorrectly assumed that potential customers already recognize the value of an improved website. We are now working with him to help develop a pitch that showcases this value. Instead of highlighting costs, his new sales approach will focus on the benefits of a new website to the customer’s business, including improved sales.

Now go out and make sure all your sales materials highlight the value your product or service brings. You can do this a number of ways. The key is conveying that value clearly and succinctly. One possibility is to quantify for the customer how your product or service can improve their bottom line. If it helps them increase sales by 1 percent, for example, that is so many more dollars going to their bottom line that will reduce the cost. Additionally, sometimes you can clearly show that by spending this money on a project you will incur significant cost savings. The point is that you must communicate value not costs.

You can do this.

Crisis in Employment is Coming

2011-11-06T03:32:00.000-08:00

"Treat employees like partners, and they act like partners."~Fred A. Allen

Eventually we will emerge from this sluggish economy, I promise. We will see growth again, and when the economy does begin to turn around, retaining your workforce will become absolutely vital to your business. According to MetLife’s recent study of employee benefit trends, businesses need to return to a focus on employee satisfaction.

When the economy slipped into recession, many workers were laid off, and those that remained were left to pick up the slack. While corporate profits have soared, employee satisfaction has tanked as workloads increased and morale plummeted. The MetLife study revealed that 33 percent of the workers surveyed expected to have a new job in the next 12 months. It seems these workers would have left right then if they could have, but they stayed put only because they knew there were very few jobs out there.

The MetLife study also revealed that, in 2010, the percentage of employees who said they felt loyal to the company was 44 percent as compared to 62 percent in 2008. Despite the dramatic decline, employers have not seemed to recognize this change. The study showed that 54 percent of employers believe their employees feel a strong sense of loyalty. Even more concerning is that only 22 percent of these employers said employee retention was their number one priority.

Turnover is costly and the loss of employees is going to be a severe problem, but employers who start taking steps now can minimize turnover and its damaging effects. First and foremost, employers must make employee retention a high priority for the company. Profits are super, but your staff is your lifeblood and you need to hold on to them.

Second, an employee morale survey can provide great insight into how you can help improve job satisfaction. The key here is that the survey should be conducted by a neutral, outside party. The staff will feel more comfortable responding this way, and you will get honest answers, which of course, is the outcome you want.

A third step would be to use your survey results to develop a plan for improving employee moral in the coming year. Using the survey results, you can establish a benchmark for measuring improvement over time. Benchmarks can also help you determine how much effort you will need to commit in order to reach the desired amount of improvement.

An employee appreciation program makes a great addition to your plan for improving morale, and it is easy to implement. Basically, managers should just go out of their way to show their appreciation for their employees. Taking the staff for granted can not be tolerated.

To help provide insight into what your staff needs and wants, establish an employee committee. You could not ask for a better resource, and the committee members can provide recommendations and share ideas about what would make your staff more satisfied in their jobs. Sure, the subject of salary might come up, but awarding salary increases is a whole lot cheaper than training a new worker.

Whatever employee retention tactics you choose to implement, it is important that you adjust your strategy to fit the different generations. Gen Y (born after 1980) responds to random acts of appreciation and wants to know that the company they work for has a social conscience. Baby Boomers, on the other hand, just need you to reassure them that they are secure in their job until they are ready to retire.

Now go out and make employee satisfaction a high priority at your company and commit to developing a plan to improve it.

You can do this.

Remembering Something about the Customer!

2011-10-30T03:06:00.000-07:00

"Worry about being better; bigger will take care of itself. Think one customer at a time and take care of each one the best way you can."~Gary Comer

I really enjoy running, especially with my black lab Sophie. I have competed in a number of 5K races and am now working up to a 10K race. While my finish times are not great, I usually do pretty well among my age group.

About two months ago, while in Ft. Lauderdale, I went into a running store called Runner’s Depot. I was looking for a new pair of running shoes, and this store happened to be very close to my hotel.

The salesman at Runner’s Depot convinced me to buy a pair of Newtons, a new type of running shoe that encourages you to lean forward as you run so you land on the balls of your feet rather than your heels. This form of running, which is sometimes referred to as “Chi Running,” is great because it takes the load off my joints, especially my knees.

On my last trip to Ft. Lauderdale, I did not take my Newtons. I only had room in my luggage for one pair of shoes, and I had to pick a pair that could be used for both running and walking around.

During this trip, I stopped in the Runner’s Depot to buy a case that would allow me to carry my iPhone and listen to music while I run. When I walked into the store, the salesman – the same one who sold me the Newtons – said he saw me jogging over the 17th Street Bridge and asked me if there was a problem with the shoes. Newtons come in a very distinctive and recognizable color, and he had noticed that I was not wearing them.

As you can imagine, I felt great that months later this salesman remembered me and had noticed me running over the bridge. His consideration and concern made me a customer for life.

The point of this story is to demonstrate how establishing a personal relationship with your customers can dramatically impact the way they feel about your business. By asking about the shoes, the salesman was, in effect, telling me that he cared about me and wanted me to be the best I could. It did not take much effort for the salesman to notice me, but it made a super impression on me.

The secret here is having your employees recall some personal detail about your customers when they come back. There are many computer programs designed to help you store this information and access it easily at a later date.

Now go out and observe your staff and see how they are greeting your customers. The more personal they can make the interaction, the better. Training is very important and can be helpful in teaching your employees how to make this happen.

You can do this!

Do Not Get Stuck in Running Your Business

2011-10-23T04:14:00.000-07:00

"Fear less, hope more; eat less, chew more; whine less breathe more; talk less, say more; hate less, love more; and all good things are yours." ~Swedish Proverb

Growing a business, even in today’s economy, requires change and an ability to adapt, particularly where behaviors are concerned. You just cannot continue to operate the way you have in the past and expect to take the company to the next level.

Running a mature and dynamic operation requires a different set of skills than starting a business, and many entrepreneurs find it tough to adjust. As businesses grow, they typically get stuck at two levels: around 10 or 15 employees and around 75 employees. At both of these sticking points, it becomes necessary to introduce a new management environment with a new set of systems and procedures. The entrepreneur must let go of how he or she managed in the past – making every decision, for instance – and adopt a much more hands-off management style.

We were helping an entrepreneur in the travel technology business. The firm had been in operation for just over eight years. Sales were around one million dollars, but flat.

Since day one, the owner had been the firm’s only real salesman. This arrangement may have worked at the beginning, but as the firm grew, the owner inherited more and more responsibilities, including managing his 12 employees. He spent almost all of his time working in the business rather than working on the business. With sales efforts falling off, the company was suffering.

When I encouraged him to bring in an assistant who could help with the operational details or hire a new sales person, he just could not do it. Bringing in someone new would mean he would have to let go of his old behaviors, relinquish management of the minutia and focus on the tasks that would help the business expand.

We had many, many discussions with this entrepreneur to show him how his behaviors were keeping the company from achieving its full potential, but convincing him was tough. He had seen his behaviors work well when he started the company and was sure they were working still.

In light of the entrepreneur’s resistance, we finally just had him try making small adjustments to his management style – delegating more and the like. He was more tolerant of these small changes, and after seeing the success he was having, he was more willing to try our other suggestions. Little by little, the entrepreneur implemented all the necessary changes and his company is now doing much better.

Now go out and see if your behaviors are limiting your company’s growth. If they are, consider making the changes that will help take your operation to the next level.

You can do this!

Marketing Research for your Business

2011-10-16T04:09:00.000-07:00

"Circumstances may cause interruptions and delays, but never lose sight of your goal. Prepare yourself in every way you can by increasing your knowledge and adding to your experience, so that you can make the most of opportunity when it occurs."
~Mario Andretti

Opening a business or expanding a product line is a big step, but so many people base this decision on their belief that there is demand or on affirmations from their friends and relatives that it is a great idea. However, your feelings or those of friends and relatives are not sufficient measures of future demand.

We were helping a very nice couple who wanted to start a pet store. The couple, who had many pets of their own, thought they would be well suited to operate a business like this, and their friends and relatives had encouraged them to move forward out of a desire to be supportive.

Despite their passion, we advised them against starting the business based on market conditions, but the couple decided to give it a shot anyway. Unfortunately, the business lasted only two years before the couple had to file for both personal and business bankruptcy.

About a year after the business closed, I ran into the couple at a restaurant and they wanted to talk. Their only real regret, they said, was that they did not do enough research on market demand in their area. In hindsight, it was clear that the market was already saturated with pet stores.

Collecting market data before moving forward with a new business venture or product line is so important. Generally speaking, doing your due diligence will decrease your chances of making wrong decisions based on insufficient information.

Marketing research comes with a price tag, but the expenditure will prove worthwhile in the end. Knowing the demand for your product or service allows you to accurately assess the viability of a business and limit your risk of failure.

When starting a business, most people generate a proforma income statement and rely on this statement to tell them whether the business will be successful. The impediment here is that the proforma income statement is driven by a sales forecast. If the forecast is not prepared correctly using valid data, the income statement will be inaccurate and viability can not be assured.

The best way to get the hard data necessary to generate an accurate sales forecast is by employing a marketing research firm. Information is such a valuable commodity when faced with these decisions and you need to make sure that you hire the best help you can afford.

There are many methodologies for obtaining actual demand information for a new product or service, but three key approaches are considered standard in the marketing research industry. The first of these is phone surveys of potential customers. A second method is the focus group, which typically produces high-quality results. With focus groups, you identify small groups of potential customers to participate in in-depth product analyses. The third standard method is conducting a survey of potential customers via mail or email.

Now before you undertake a new business venture or introduce a new product or service, make sure you use information obtained through marketing research so you are better able to ascertain future demand.

You can do this.

Twitter for your Business

2011-10-09T03:51:00.000-07:00

There is a proliferation of neat new technologies businesses can use to communicate with their customers. As these numbers continue to grow, the problem becomes determining which technology to embrace. Twitter is one that has great potential to benefit businesses, particularly if their customer base is under 40 years of age.

When I was first introduced to Twitter, my initial impression was that everyone was making a big deal about nothing. In time however, I have come to see the value in it. This technology really can be effective and for most businesses, is worth a closer look.

For those who have not delved into this technology yet, Twitter allows users to post very short messages – less than 140 characters – called “tweets.” Tweets are also occasionally called “microblogs.”

On average, Twitter’s more than 200 million users generate 200 million tweets and 1.6 billion search inquires daily, and the number of users continues to grow exponentially. Businesses with a presence on Twitter can use the technology to maintain a dialog with their existing customers while accessing vast numbers of potential new customers at the same time.

A large furniture chain provides an example of a company that has had significant success on Twitter. The firm, who targets younger markets with their products, increased their sales by using Twitter to reach new potential customers. They invited 50 or so people with large Twitter followings to visit the store and tweet scripted messages to their followers. The firm kept track of how many times each tweet was passed on and rewarded the person that produced the most retweets. As a result of this effort, the company saw large numbers of new customers visiting the store.

I see a lot of companies using Twitter to promote themselves or drive people to their websites. In my opinion though, this is a far less effective method since people are looking for much more personal messages on Twitter. Tweets such as, “Come to Joe’s for great hot dogs,” just do not resonate in this medium. Personally, if I get too many of these self-serving tweets, I just stop following the company altogether so I do not hear from them anymore.

A far more valuable way to use Twitter is to listen in on what people are saying about your company or products. This can provide great insight into what your customers want and need. It can also be an early warning system clueing you in to potential problems so you can react before issues escalate. You can search for tweets about your company at http://twitter.com/#!/search-home.

Yet another effective use of Twitter is to invite feedback from your customers. Getting a dialog going about your company promotes your brand while providing valuable information about how you can improve your products and services.

Chris Brogan is one of the leading experts on Twitter. For entrepreneurs looking to venture into the world of Twitter and use it to its fullest advantage, Chris’ tweets can be very helpful. Follow him at http://twitter.com/#!/chrisbrogan.

Twitter is a great communication tool and it has a lot of potential for businesses who use it effectively. Del, Starbucks, Comcast and Best Buy are just a few examples of companies using Twitter very successfully, and you can check them out for some ideas and best practices. However, as with any new marketing venture, it is important that you consider how Twitter will fit into your company’s overall strategy. Twitter should not be a stand-alone effort. Your strategy should be to incorporate Twitter into a well-rounded, balanced marketing plan.

Now go out and see if Twitter is a viable option for your business. It may require that you spend some time researching how to use this tool effectively, but it will be well worth it in the end.

You can do this!

Protecting Your Business From Identity Fraud

2011-10-02T03:52:00.000-07:00

"We can't solve problems by using the same kind of thinking we used when we created them.”~Albert Einstein

Managing staff is an entrepreneur’s most critical function. Some would argue that finances are more important, but I would suggest that if you do not have a great staff in place to get things done, your company will have little value.

Entrepreneurs frequently must deal with the issue of problem employees. A problem employee is not necessarily someone who is not productive. In fact, lately we have seen very good employees become problem employees.

For those wondering how it is possible that a good employee could become a problem, the answer is simple. An employee could be getting so much done but alienating the rest of the staff in the process.

Case in point, an employee at a high tech company was always able to get so much accomplished and, from that perspective, was a great member of the team. He consistently met his numbers and, at one point, was bringing in more revenue than many of his colleagues.

Despite his productivity however, all of his colleagues had lost respect for him because he had a very abusive management style. He went out of his way to tell his team how inferior they were, and in the rare occasions when he praised them, he would always follow it with a criticism. Of course, he thought he was being so clever that his fellow employees would not see how he was putting them down. On the contrary though, they saw right through this, and the morale of the team was deteriorating quickly. One by one, he began losing all the talented members of his team.

Despite the fact that the rest of the staff was constantly complaining about this individual, management refused to do anything about it. They were afraid he would leave and feared the business would suffer tremendously if he did.

When discontent reached a fever pitch however, management did finally agree to bring in an outside business coach for the problem employee. As it turned out though, all that did was give the employee more ammunition to say his coach said he was right and everyone else was wrong.

Obviously, this was a problem that had been festering for a long time. Management just chose to turn a blind eye to the situation and keep holding to the flawed hope that the issue would resolve itself.

Eventually, the high turnover and low morale started showing up in the numbers, and when business started dropping significantly, management finally had to acknowledge the problem. When three employees threatened to file a harassment suit, which would have cost the firm so much to defend, they were forced to take action.

In hopes of finding a resolution to this situation, the company brought in outside consultants. Their recommendation was to either let the problem employee go or move him to a place where he had absolutely no contact with the rest of the staff. They were also adamant that each manager should receive training in recognizing and responding to workplace harassment. It was also necessary that they work to ensure the channels of communications were open between employees and managers. As it was, staff was given the opportunity to express their concerns, but management was not listening to what they were saying. They just were not taking the complaints seriously enough.

After closely monitoring the situation for a period of time, the firm finally made the difficult decision to let the problem employee go. Though they initially feared that production would decrease, productivity actually improved since the rest of the staff now felt free to do their jobs.

Now go out and make sure you are not ignoring the problems an employee is causing just because they happen to be productive. The sooner you deal with this, the better.

You can do this.

Protecting Your Business From Identity Fraud

2011-09-25T04:29:00.000-07:00

"To build may have to be the slow and laborious task of years. To destroy can be the thoughtless act of a single day." ~Sir Winston Churchill

So many business owners think that identity fraud only happens with individuals. Unfortunately, this is just not the case. The incidence of identity fraud involving businesses is increasing, and to complicate matters even further, state laws against stealing an individual’s identity are much more rigorous than those against stealing a business’s.

I see identity theft occur most often with businesses when employees are given a company credit card. It is so easy for a thief to get your card number and use it to make unauthorized purchases. This is why it is so critical that you go over your credit card statements regularly to ensure there are no fraudulent charges. Obviously, you do not want to leave that responsibility with the cardholder as it would be too easy to hide any abuse. It is always a good idea to have some checks and balances in place.

Where identity theft is concerned, prevention is key. One essential piece of avoiding theft and misuse of your information is changing your passwords every 45 to 90 days. You should always make sure the passwords you choose are complex by using a phrase to remember them. Changing passwords often can be a pain, but it is so important to protecting your financial information against unauthorized access.

Another good rule of thumb is to never send any identifying information at your bank’s request. There are numerous scams out there that do a very good job of disguising themselves as your financial institution. No matter how valid they seem, you must always verify with your bank that the information is legitimate.

Be so careful about how you use your wireless network. If your network is not protected, your information can be stolen so easily. You should never transfer sensitive information on a wireless or any other network without encrypting it first.

Free public wireless networks are one of the biggest potential dangers. Should a staff member use one of these public networks to either send or receive sensitive data, it could leave your company open to identity theft. This can happen so easily since most of these wireless hubs have no security. Before you can access them, you have to sign off that you understand the risks of using the network and agree not to hold the provider responsible in the event of a breach.

As an additional layer of protection, business owners should establish a call-back procedure with their financial institution. The bank will call the account owner to verify the transaction before any transfers are made, especially in the case of wires.

Another important practice is always shredding documents that contain your financial information. It is so easy for thieves to go through the trash and find your financial records. For me, shredding is kind of therapeutic. I like to hear that shredder going because I know that no one else will be able to access these documents. You should make sure you have a shredding policy in place, and it is not a bad idea to start moving toward a policy that prohibits hard copies of these records.

Another easy, but effective practice is turning off your PCs when you leave at night. Many businesses leave their machines on, which gives a hacker a lot of time to run password-breaking programs against their financial applications.

Finally, make sure that your virus checker and firewall are up to date and that all downloaded documents are checked for viruses or any other malware.

Now go and make sure you have a policy in place to ensure your business identity remains secure. These steps are absolutely critical if you want your business to continue to operate safely without falling victim to identity theft.

You can do this.

Not Saying No is So Important for Customer Service

2011-09-18T03:37:00.000-07:00

"Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong." ~Donald Porter, V.P. British Airways

Customer service is so important to each and every business. If the service is great, your customers will keep coming back. If it is poor, they simply will not.

One important thing to remember is that the quality of the customer service you provide is not judged by you or your company. It is entirely about the customer’s perception. You must do everything in your power to ensure that the service rendered matches up with what the customer desires.

There probably is no better way to kill a service experience than using the word “no.” Sometimes “no” is disguised in phrases such as, “against company policy,” “we just cannot do that,” or “that is not permissible.”

Disguised or otherwise, “no” words destroy your business’ relationship with its customers because they stop the conversation and leave the customer with no choice but to walk out upset, vowing never to come back. Taking choice away from your customers is the death knell for repeat business.

If a customer comes in wanting to return an item and the clerk says the only way to accept the return is with a receipt, which the customer does not have, they will leave the store unhappy and probably not return. While intended to protect the business, this tightly framed return policy creates service experiences that customers perceive as negative and undermines the business’ ability to generate repeat sales.

Ironically, so many companies implement these rigid policies to keep from being taken advantage of to the detriment of their business. These “no” policies repel good, even great, customers who have simply lost their receipts. Where generating repeat business is a priority, a policy that undermines your ability to be successful is just not good business.

I recently bought a shirt at a store, and once I got it home, I found that it did not fit. Of course, when I went to return it, I had lost the receipt indicating how I had paid for it. Obviously, the store did not want to give me cash, but they offered me store credit instead.

The store credit alternative was absolutely fine with me. The key piece to note here is that the clerk did not say the store could not accept my return because of company policy. Rather, the clerk said they were delighted to accept my return and give me store credit to use on a future purchase of my choice.

Another person walked into a store and wanted to make an offer for an item rather than pay the printed price. The clerk told the customer that he could not take anything below the listed price. Ultimately, that may have been the appropriate response, but saying “no” should have been the absolute last resort.

The clerk could have been trained to explain the item’s value, what comparable prices are, and encourage the customer to pay retail. If that approach failed, the clerk should have been instructed to call in a manager.

I am certainly not saying that you should take less than retail if a customer comes in one day with a similar request. Rather, I am suggesting that the response should avoid using the word “no.” “No” stops all dialogue, and you want to keep the conversation with your customers going.

Now go out and make sure that your staff is trained to avoid using “no” and all its variations. The benefits will be huge and the cost minimal.

You can do this!

Capacity Is So Important When Considering Expansion

2011-09-11T03:05:00.000-07:00

"The first requisite for success is the ability to apply your physical and mental energies to one problem incessantly without growing weary." ~Thomas Alva Edison

In today’s economy, so many businesses are looking into new markets and new products as a means of maintaining sales and profits. I have seen many businesses expand outside their geographical market or offer an entirely new product to their existing customer base.

While expansion is great, you must make sure that you have the capacity to deliver the new services or products. This may seem like a simple concept, but in reality, it is a very involved process.

We are working with a medical services business that wanted to expand their services to children. The market had very little competition and a very high profit potential, so on the surface, it appeared to be a wonderful opportunity.

Once we dove into the details, however, we discovered that the service could only be provided two hours of every business day because of school. With such a limited window of time, the firm would need a high volume of part-time help, which they were unable to find. Obviously, once this information came to light, they abandoned the proposition and began evaluating other areas where support resources were more readily available.

Another firm we are assisting wanted to begin offering a new product to its existing customer base. It was a product their customers needed and something they could easily provide.

Preliminary research showed their clients really liked the product and thought it was reasonably priced. Upon further research, we found that the firm’s sales would increase by $300,000 once they added the new product. So far, everything sounded great, and the firm was chomping at the bit to move forward.

However, the expansion did have some serious problems that we did not see when we were initially considering the proposal. First, in order to expand by $300,000, the firm’s accounts payable would have to increase by $50,000, and they would have to pay the manufacturer for the products before it could have them available for sale. Secondly, once they made a sale, it would be nearly 30 days before they would be able to collect payment from the customer.

The firm needed almost $100,000 to build up their inventory and support the accounts receivable increase. This was a problem for the firm since they were not going to be able to raise the equity, and financial institutions were not going to approve a loan. The firm quickly realized that, while the expansion seemed viable initially, the scheme just would not be feasible in implementation.

Each and every business needs to go out and look for expansion possibilities, but with any venture, you must make sure you have the capacity and resources necessary to ensure it will be viable and profitable.

You can do this!

Small Things You Can Do To Be A Better Manager!

2011-09-04T03:39:00.000-07:00

"The productivity of work is not the responsibility of the worker but of the manager." ~Peter Drucker

Being a manager is tough, and every manager can use all the help they can get in this area. As is often the case, it is the little things that make the biggest difference in how your staff responds to you.

Effective communication with your staff is such a tenuous process and you want to make sure there are no obstructions. When talking with your employees, it is important that you do not sit behind your desk. A desk is a gigantic barrier that is both intimidating and nearly impossible to overcome.

A much better policy when communicating with staff is to come out from behind your desk and sit in chairs in front of it. By doing so, you remove the barrier between you so you can communicate without obstruction. It is a subtle gesture, but it goes a long way to improving your staff interactions. Some managers will have a table that they hold meetings around apart from their desk but I just like to sit face to face without any furniture in the way.

Another small adjustment to the way you communicate can help you become a better manager. Instead of just saying, “Jane, I would like to talk to you tomorrow at 10,” you should say, “Jane, can I talk to you at 10 about the status of project x?” Reason being, when you do not share the purpose of the meeting, the natural tendency of your staff is to assume it will be bad news, causing unnecessary anxiety.

That has certainly been my personal experience. In all my years in the workforce, meetings without a known agenda always caused me grief. I kept trying to figure out what my boss wanted to talk about, and I usually assumed I had screwed up in some way.

Just a simple statement about the meeting purpose alleviates the employee’s apprehension and makes a big difference in how they approach the meeting. In the short term, you will probably have a more productive meeting, and in the long term, you will strengthen your relationship with them.

I realize, however, there are times that you may not want to share the purpose of the meeting—if you have to let someone go, for instance. For great managers, these exceptions are limited in number.

The final relatively small thing you can do to improve your management skills and foster trust among your staff is to ask them regularly what you can do to be a better manager. Whether your staff responds to this or not—they most likely will not—asking the question tells them that you care about their concerns and are open to their suggestions.

I can personally attest to how effective this practice can be. When I have asked my staff, I rarely received any suggestions, but they frequently talked with their colleagues about how impressed they were with my sincerity and how they appreciated my asking for their input.

Now go out and look for the little things you can do to make you a better manager. Not talking to staff across a desk, sharing the purpose of meetings and asking how you can be a better manager are just a few simple ways to get started.

You can do this!

Good Managers Show Empathy and Firmness.

2011-08-28T03:23:00.001-07:00

"Understand that most problems are a good sign. Problems indicate that progress is being made, wheels are turning, you are moving toward your goals. Beware when you have no problems. Then you've really got a problem...Problems are like landmarks of progress." ~Scott Alexander

Dealing with staff is one of the most difficult things a manager must do. A great manager must have both empathy and firmness. One without the other just will not cut it.

We've been helping a hard-working office manager who had tremendous empathy — so much in fact, that she always tried to find homes for stray animals that wandered into her yard.

Many of this manager's staff continually came in late — always for a good reason, she thought. The staff took her overabundant empathy as weakness and never accepted any of her rulings. They would always come back with an excuse, which she would always buy.

We discovered that her lack of firmness was caused by doubts she had about her ability to lead. As we helped her build her confidence, she became much more comfortable being firm. Amazingly, the staff really seemed to like her transformation as well. They preferred her firmness, since now they knew exactly what was expected of them.

Another manager brought his military background with him to the office, managing his staff like a sergeant in the Army. There was never an exception to the rules, and he had a serious lack of empathy. In fact, he thought empathy was a weakness, and it was a trait he despised in his fellow managers.

If an employee was one minute late, they got a severe tongue lashing in front of the entire staff. Employees hated him, and those who stayed only did so because they needed the job.

In the military, a soldier must follow commands no matter what the situation; but in civilian life, it is not like that. We had to get this manager to see that there is more than one way to manage, and his way was not working.

To show him how his behavior was affecting his staff, we had him listen to interviews with several of them. We had him shadow other managers so he could see how smoothly their departments operated with just a bit of empathy and flexibility.

This very strict manager had to be reacquainted with a feeling that had been forced out of him in the military. We developed several role-play scenarios where he had to show empathy and we evaluated how he did. Through this process he learned what empathy really meant and felt like. His staff could see the subtle changes in him, and their behavior improved, too.

Now go out and make sure that you manage with a balance of both firmness and empathy.

You can do this!

Mistakes, A Wonderful Teaching Tool

2011-08-21T21:06:00.000-07:00

“We made too many wrong mistakes.” ~Yogi Berra

Think for a second about which you learn the most from, success or failure.

In my life, though my successes have been great, I have learned the most from my failures, which incidentally are many. I would venture to guess most people would say the same.

As human beings, it is natural to enjoy success, but these good feelings are fleeting. Mistakes, on the other hand, have a much bigger impact. Their effects tend to stay with us much longer.

A person's success can be five times bigger than their error, but odds are they will remember the error and forget the success. Using this knowledge, we can help our staff overcome their mistakes in a positive way.

Too often, I hear managers and entrepreneurs talking about how they wish their staff would not make mistakes because errors decrease productivity. This may be true, but mistakes also create coaching opportunities, which are invaluable. This was the approach an accounts receivable manager took when one of the clerks misplaced some checks.

Instead of reacting negatively, the manager used the situation as a coaching opportunity. She and the clerk discussed what had happened, the consequences of the error to the business and how the clerk could avoid having it happen again. In doing so, the manager transformed what could have been an extremely demoralizing situation into a very positive experience.

While the clerk felt bad about her mistake, she came through it feeling like her manager was really trying to help her improve.

Many years ago I was working as an outside plant engineer in Tampa. An outside plant engineer designs the cable layout for the telephone company and makes a multitude of decisions to ensure necessary communications. Determining cable size and pole location are just a couple examples.

On one design, I completely underestimated the size of the cable and specified a 200 pair cable when it should have been a 600 pair cable.

Just before the supplies were purchased for the job — which would have cost millions of dollars — my boss caught my error. He chewed me up one side and down the other without stopping for even a second to talk about how this error occurred or how it could be avoided in the future. He thought yelling at me would stop me from making the same mistake again.

He was partially right, I guess. My reaction to this situation was to begin asking for his OK on every decision that could have a major impact. No doubt, this was a nuisance for him, but it kept me out of hot water.

His bullying had a couple of detrimental effects. One, it killed any desire in me to be innovative and original in my thinking. My only concern now was staying out of trouble. And two, it ultimately pushed me to leave the company and start working toward my MBA.

The truth is mistakes are inevitable. You can use them either to tear the employee down or help create a positive learning experience, which is the key to being a great manager and leader.

Now go out and make sure that you approach your staff's mistakes as opportunities to coach them into becoming the best employees they can be.

You can do this!

The Three Keys to Starting a Successful Business

2011-08-14T04:17:00.000-07:00

“Only passions, great passions can elevate the soul to great things.” ~Denis Diderot

I give many speeches every year, and in each one I always include time for questions. By far, the most frequently asked question is what attributes are needed to be successful as an entrepreneur.

After observing more than 3,000 entrepreneurs, I can tell you there are three simple keys to success: passion, purpose and knowledge. Most folks have two of these down, but you really need all three if you are going to be successful.

Passion is the burning force that keeps you going no matter what happens. Many of the entrepreneurs we deal with have cash-flow crises, but they just do not quit. Somehow they find a way to make payroll or pay that bill. Instead of getting discouraged, they just make a commitment to never end up in that situation again.

Entrepreneurs who lack passion are almost guaranteed to fail. I have seen many aspiring business owners start a company because they either got laid off or could not find a job. This is a recipe for certain disaster, because not having another option does not provide the pure and unbridled passion that you must have to be successful.

Passion alone, however, is not sufficient. You must also have purpose to be successful, because purpose is the force that focuses your passion on a specific activity or industry.

Too often, people tell me they want to start a restaurant because they are good cooks. Being passionate about being a great cook is OK, but it is the combination of passion with purpose — serving clients and making money, for instance — that makes for success.

The third piece of the entrepreneur's formula is knowledge. I cannot overstate the importance of knowledge, because this is how you are able to avoid costly mistakes.

There are three critical knowledge areas entrepreneurs must master. First, you must have a great understanding of marketing and feel comfortable promoting yourself and your business. After all, there is no better salesperson for your company than you.

The second is finance. You absolutely must be able to interpret your financial statements and have a clear understanding of the financial ramifications of your decisions.

The third and final element is knowing how to manage people effectively. All businesses need people, and being able to manage those people is a requisite to success. Knowledge takes passion and purpose and transforms that light into a laser beam for your business.

Before you start a business, make sure you have the three attributes that are vital to success: passion, purpose and knowledge. If you are unsure if you have these components, you probably do not, in which case, I would advise you to wait. If, on the other hand, you are sure, now is the time to move ahead.

You can do this!

Beware of Industry Shifts

2011-08-07T06:14:00.000-07:00

“Any change, even a change for the better, is always accompanied by drawbacks and discomforts.” ~Arnold Bennett

The only thing that is truly constant is change. Some entrepreneurs make the incorrect assumption that they can resist change by working harder, but the truth is that if we do not adapt, our business will pay a high price.

In most cases, change in an industry is caused by technology. Take, for example, the complete demise of camera shops and the closing of the Borders franchise. The advent of digital cameras made the services provided by camera stores obsolete, and e-readers are replacing paper books delivering a blow to traditional bookstores. On a related note, with electronic communication becoming the norm, quick-service copy shops are also seeing falling sales.

The emergence of new product delivery methods can cause disruption in an industry as well. A perfect example of this is the frozen yogurt franchise. For a long time, frozen yogurt was served to the customer by a clerk behind a counter and payment was accepted by another clerk located at the other end of the counter. New yogurt stores are now completely self-serve with only one clerk to man the register.

Consider also how much education has changed. We are moving quickly to online classes as a cheaper and more effective alternative to traditional methods of learning.

With all these examples, the important thing to note is that whatever the cause of the change, industry disruptions will always occur. No matter how much we wish they would not, disruptions like these are the rule rather than the exception.

So, we know these disruptions are going to happen, but how do we anticipate them? I think the answer to this question is twofold. First, you must continuously monitor your sales and make sure that you have an early warning system in place to alert you of any significant changes.

Because many changes happen relatively slowly, you will typically have plenty of time to adjust your business. The key is being aware of them and giving yourself the opportunity to respond.

In monitoring your sales, it is important to know that a decline does not necessarily mean an industry shift is occurring. It could just indicate increased competition or lower prices. Whenever you see a change in sales, it is critical that you determine what caused it.

Whatever the cause, declining sales should be vigorously investigated. Are they falling because the firm is inefficient, because there is more competition or because a structural change has taken place? Obviously, we cannot take action to fix sales until the cause of the decline is understood. If, in fact, the cause is an industry shift, the next task is to figure out what other markets you might be able to effectively enter.

The second piece of anticipating change is watching the health of your industry and listening to what others are saying about it. The more you know about what other people are saying and doing, the better off you will be. You should still be cautious though as the “experts” often completely miss the structural changes.

Now go out and make sure that you have a plan in place to recognize falling sales and identify the cause of the decline. If it was caused by a permanent change in your industry, you will need to find other avenues in order to remain competitive.

You can do this.

Measure What You Expect!!

2011-07-31T06:51:00.000-07:00

“Common sense is the collection of prejudices acquired by age eighteen.” ~Albert Einstein

Being an effective leader requires that you measure your expectations, otherwise there will be no way of evaluating your success or that of your business. In addition, things that are not measured typically get relegated to a low priority by staff. Finally, if you are not measuring all aspects of your business, you can make grievous errors in your decision-making, which can be so costly.

One way to measure outcomes or expectations is by using profit centers. Identifying profit centers helps you evaluate how effective each part of your organization is.

We were helping an aircraft servicing company develop a strategic plan. During these planning sessions, we discovered that 50 percent of the firm’s profits came from airplane sales, yet they had no one assigned to this activity full time.
When they saw the hard numbers, they redistributed their personnel to better support their sales efforts. Once they had employees devoted to selling, their sales soared. If they had profit centers or some other method of measurement in place, they could have acted on this much earlier.

For another example, a service company was struggling with sales that were falling at a rate of 15 percent a year. They just did not know how to stop the red ink from flowing. Part of the problem was that they had gotten so used to business coming to them they just did not know how to respond when this changed.

During a strategic planning session with the staff, it became apparent that they were drowning in red ink. Sessions also showed that they were currently devoting less than 1 percent of their total revenue to sales. Once they were able to see how the lack of support for their sales efforts was sinking their business, they decided to implement a very aggressive sales program.

One caveat with measurement is that you must make sure you are measuring the right thing. Quantifying operations is so important, but they must be tied to the mission of the organization. For instance, one firm spent so much time trying to quantify its bad debts that they missed the important fact that bad debts would naturally increase as their sales did. By focusing only on minimizing bad debts, they were greatly restricting sales by making credit standards too tight.

The Florida Sterling Council, with which I serve as a member of the board, offers great training on measurement and process improvement. I encourage you to look into these resources.

Now go out and make sure that you are measuring as much as you can without getting too deep in the details. The more you measure the effectiveness of activities congruent with your mission, the more successful your organization will be.

You can do this.

Fast Tracking Your Staff

2011-07-25T09:43:00.000-07:00

Fast Tracking Your Staff

“The future belongs to those who prepare for it!”
~Jim Moran~

As an entrepreneur, one of your most important tasks is planning for the future of your business. Most know that marketing, new products, finance and growth are important components of this task, but many overlook the most critical element: staff.

Your staff will not just wake up one day with the skills they need for the new position you want them to hold. Having your staff appropriately trained and ready to go when you need them is so important for the future of your business.

I was meeting with the very successful CEO of a business that had about 100 employees. When I asked him how he was going to acquire the staff he needed to lead his company in the next 10 years, he recognized it was a valid question but did not have a very good answer. He had never taken the time to think about what the business would need in terms of staffing and skills.

To nurture future leaders, some businesses identify staff members they feel have potential and put them on a fast-track program. These employees rotate through many different assignments and are intensely mentored to ensure they will be ready to assume greater responsibility down the road. Every year, they meet with the CEO to discuss their progress.

Another very successful method is to assign employees a senior staff member who can mentor and advise them throughout their entire career. The mentor is responsible for ensuring their mentee has the training they need, both from a knowledge perspective and a technology standpoint. Additional training is also provided with input from both the mentor and the mentee.

As part of the program, participants are given assignments that force them out of their comfort zone and expose them to other areas of the company. For instance, if the person is in the finance department, they spend time in marketing to give them a more complete understanding of the firm.

Many entrepreneurs are reluctant to implement fast-track programs because they fear it will show favoritism and alienate the staff members not selected. While this is true, it is still important to identify and train the employees that are capable of managing your business in the future. Without a fast-track program, you will not have the necessary staff in place and your business will not be ready to reach the next level.

Now go out and evaluate the skill sets your company will need for the next five to 10 years and do an honest assessment of your staff. If you do not have the requisite staff in place (most firms will not), consider implementing a fast-track program to groom your company’s future leaders.

You can do this.

Pricing for Profits

2011-07-17T03:27:00.000-07:00

“It is the superfluous things for which men sweat.”
~Seneca the Elder~

One of the most difficult tasks an entrepreneur has is pricing their products. Pricing is one of those things that requires experience and experimentation. Set prices too high, and revenues fall. Set them too low, and though revenues increase, profits plummet.

I was at a large flea market in South Florida one early Sunday morning and was carefully watching the vendors at the various booths. Every so often, a customer would come in, look at a product and make an offer below the listed price. Certain vendors would turn down the offer outright, and the customer would walk away. Some other vendors, however, took a different approach to selling the same type of product. These vendors would answer the low-ball price with a counteroffer, which typically led to a deal.

The first set of vendors clearly thought they were preserving their margin by not negotiating on price, where the other set of vendors was willing to give up some margin in order to make the sale. In both cases, there was very little chance of repeat business.

The lesson here is that if you are selling a homogeneous product with little chance of repeat business, anything you can negotiate above your cost is gravy. Obviously, you want to get as much as you can without losing the customer.
We were helping a neat lady who owns a catering business that has not been doing well financially. When we started talking about pricing, she said she takes her food cost and doubles it to determine the price she will charge for a given event. However, most restaurants want food costs to be under 30 percent of the price charged. This entrepreneur was charging $200 for an event that cost her $100 in food when, according to industry standards, she should have been charging more than $300.

Once I gave her the formula to determine the appropriate price (food cost times 3.2), her revenue fell by about 10 percent, but her profits rose out of the red and she made more money than ever before in a six-month period.

There are three general pricing methods. With the first, you take all of your costs and add an amount for overhead and profits to determine price. I call this the “cost plus” approach. A second method is to evaluate what your competitors are charging and set your price accordingly. A third method is to consider perceived value, which is the value your customers assign to your products and services.

As a general rule, you want your prices to be neither the highest in the market nor the lowest. Just higher than the average price for a similar product is probably a good place to be as consumers typically see a higher price as an indicator of greater value.

Clearly, your objective is to land on a price that is fair for your customers but also capable of earning you the maximum possible profit. Finding this optimal figure takes constant tinkering and continual monitoring.

Now go out and make sure your prices are appropriate and that you are monitoring them constantly to ensure they remain at the optimal level for your business.

You can do this.

Really thanking your customers!!!

2011-07-10T04:24:00.000-07:00

“No one ever attains very eminent success by simply doing what is required of him; it is the amount and excellence of what is over and above the required that determines the greatness of ultimate distinction.” ~Charles Francis Adams

Showing your customers you appreciate them goes a long way to instilling loyalty, yet so few businesses make this extra effort. Just look at it from the customer’s perspective. If all you ever see or hear from a company is a bill, you are not going to feel a particularly strong sense of endearment to that company.

Some business owners think an occasional e-mail to clients is adequate, especially if it is sent by one of their staff members. However, I strongly recommend that you, the owner, personally call and thank your clients.

A sporting goods store in Georgia sold all kinds of athletic equipment, from footballs to running shoes. One day, a woman stopped in and bought a single can of tennis balls. That night, the store owner called the woman personally to tell her how much he appreciated her purchase.

About two weeks later, the store received an order from the local university’s athletic program that more than doubled their total sales for the year. Come to find out, the lady that bought the can of tennis balls was the wife of the university athletic director. She had been so impressed by the owner’s phone call that she convinced her husband to use the store to supply all the university’s athletic equipment. I think anyone would agree this result was well worth the few moments the owner spent on the phone with this client.

Another firm we were working with followed this policy and saw a 30 percent increase in sales just from making these calls. The owner, who at first was very resistant to the calls, adopted this process as part of his daily routine after he saw how much fun they were and how his customers responded.

Keep in mind that a voicemail will not suffice. You really need to keep on trying until you are able to talk to the customer in person. It does not have to be a long conversation. All you really need to say is, “I really appreciate your business and I just wanted to call to say thank you very much.” This one little gesture will give you such a competitive advantage, as very few other business owners take time to make these calls.

Now go out and make sure you adopt the practice of calling your customers each day to thank them for their patronage. Once you get into the routine, you will see the results reflected in your bottom line.

You can do this.

The Importance of Eye Contact

2011-07-03T13:36:00.001-07:00

“I feel that in-person contact with people is the most important thing in comedy. While I'm up on stage, I can actually put myself into the audience and adjust my pace and tuning to them. I can get into their heads through their ears and through their eyes. Only through this total communication can I really achieve what I'm trying to do.” ~Bill Cosby~

Making eye contact with the person you are talking to is so important. It does not matter if the person is an employee, a customer or some other acquaintance. You are constantly being evaluated by your sincere eye contact.

I was at a seminar recently where the speaker, who conducts customer surveys, shared that people’s evaluations of salesmen were greatly enhanced when the salesmen made eye contact. The more eye contact they made, the more professional they were perceived.

Being interested in empirical analysis, I decided to run my own test and went out of my way to make sincere eye contact with the next 10 people I talked to. I quickly learned that, while eye contact is so important, it can easily be overdone.
When I made too much eye contact—in effect, stared—or appeared to be too aggressive, the person would turn away or disengage. However, if I made genuine eye contact, the person seemed to open up like a flower bud and a strong connection was made.

When I made soft but deep eye contact, people just seemed to melt and open up with amazing warmth. You could actually watch their eyes, and if they became dilated, you knew they were genuinely and deeply engaged in our conversation.
On the other hand, if I did not make eye contact or allowed my eyes to wander, the person I was talking to would never really engage. I could almost feel them drifting off. These general reactions were true of everyone, regardless of who they were.

I was in a drug store getting a prescription refilled, and we were having trouble getting the insurance company to agree to pay for the prescription. While discussing the issue with the clerk, I made sincere eye contact with her, and she went from just tolerating me to becoming my advocate with the insurance company. It was so amazing to me that this one small thing could make such an abrupt and powerful change in her behavior towards me. I went from being just another customer to someone she had a deep connection with.

That same day, I went out of my way to make quality eye contact with a cashier at the grocery store. At first, she was uncomfortable with the eye contact and she kept looking away, but as I persisted, you could see her barriers going down. She started returning the eye contact and then began to smile, which was a dramatic change from her initial mood.

What these exercises clearly illustrated is that eye contact does matter in a significant way.

Like most things, having great eye contact takes practice. The more I went out of my way to have eye contact with the people I encountered, the easier and more effective it became. I gave a seminar recently, and as the group worked in pairs to improve their eye contact, you could actually see and feel the relationships deepening.

Now go out and do two things. First, make sure that your sales force has great eye contact with their customers. Second, develop and practice great eye contact techniques in your interactions.

You can do this.

QR Codes

2011-06-26T12:28:00.001-07:00

“Our Age of Anxiety is, in great part, the result of trying to do today's jobs with yesterday's tools.” ~Marshall McLuhan~

When new technology comes out, you have to make a very careful assessment of whether it is appropriate for your business or not. Additionally, you must ask yourself if this is a passing fad or will it change the way we use technology. Here is one of those new technologies that, I believe will change the way you are currently using this type of technology.

Quick Reference codes are a new trend in software technology that will have wide applications in business. Most commonly referred to as “QR codes,” they were developed in Japan more than 10 years ago and are widely used there, but are just now catching on here. While a normal one-dimensional barcode can only contain 20 characters, a QR code can handle thousands. Their value is that they can quickly and easily transmit information through a smart phone.

Though QR codes are just beginning to see widespread use, now is the time to start considering how you can implement this technology so you can be ahead of the curve rather than behind. So far, the most common use is directing a customer to your website, but QR codes can also be used to promote discounts and new products, and even as business cards. If you go to http://www.qrstuff.com/qr_code_examples.html you can see what QR codes look like and read about the many ways the technology can be applied, including temporary tattoos.

Creating a QR code is quick and painless and there is no learning time required. Even I was able to do it! Using sites such as ScanLife and Kaywa, all you have to do is enter your website information, and your QR code is generated in seconds. You can then copy and store the code for future use.

To read the QR code, you need a scanner app. iPhone, BlackBerry and Android all offer a number of options. The i-nigma and RedLaser apps for iPhone are both free and allow you to take a picture of the code with your phone. The photo is converted into the appropriate action (visit a website, for example).

Likify is a neat service that uses QR codes to help generate “Likes” for your Facebook page. Users who scan your Likify QR code are directed to a page where they can tap the “Like” button. Find more information at www.likify.net. QR codes are great, and they will be even greater with time. However, it will take a while before adoption is complete, so when considering using QR codes, you will want to make sure you have the right audience. Customers who are into sophisticated technology will be the ones most likely to accept and utilize QR codes right now. You may also find that a certain amount of education will be necessary to teach customers how to use them.

Now go out and find out if QR codes can benefit your business.

You can do this.

Criteria-the Heart of Decision-Making

2011-06-19T05:55:00.000-07:00

“Nothing is more difficult, and therefore more precious, than to be able to decide.” ~Napoleon Bonaparte

There is no question that the ability to make good decisions is at the heart of a successful business. For entrepreneurs, especially those with small businesses, the cost of making mistakes is extremely high.
In one case, a firm selected the wrong vendor to supply a critical part and nearly went out of business when the supplier could not deliver. A second firm paid a high price when their software vendor delivered the software over a year late.

In a third example, a firm’s board of directors was considering what benefits to provide the CEO. The board made a tragic error by selecting the wrong provider and watched the CEO’s morale nosedive as his benefits shrank.

In each of these cases and many more, the entrepreneurs did not take the time to develop criteria to guide their decisions.

When making decisions, it is easy to go with a gut feeling. However, gut feelings do not require analytical ability or consideration of any objective criteria. As such, they can quickly lead you astray.

A firm was considering hiring a bookkeeper, which is such a critical function for every business. As they sorted through the resumes that had been submitted, they also looked at the applicant’s picture. This is not bad if one of your criteria is that the candidate be good-looking. However, if it is not one of your job requirements, including that as part of the initial screening could end up leading you down the path toward a wrong decision at a very high cost.

In order to make great decisions, you must determine the criteria ahead of time and apply these requirements to your decision-making process. For example, if you are going to hire a bookkeeper, your criteria might be that applicants have five years of experience, availability to work overtime, and knowledge of your specific bookkeeping software.

However, just identifying your criteria is not enough. You must also weight them according to their importance. For example, experience could be weighted at 60 percent, availability to work overtime could be 10 percent and knowledge of the bookkeeping software could be 30 percent. Weighting the criteria can be really helpful when ranking the candidates or alternatives.

An entrepreneur was evaluating possible locations for his new restaurant. His initial criteria were the traffic count, parking area and neighborhood demographics. On the initial pass, prior to applying weights, the entrepreneur selected one location based on these criteria. Once the entrepreneur applied weights to the criteria, however, the first location was tossed in favor of a second location that better met the owner’s requirements.

I guarantee that if you take this approach, you will make much better decisions. Now go out and fine tune your decision-making process by identifying criteria and weighting them according to importance.

You can do this!

Your Beliefs

2011-06-12T04:18:00.000-07:00

“If you don't change your beliefs, your life will be like this forever. Is that good news?” ~Dr. Robert Anthony

All of us have a set of beliefs that guides us through this life we live. These beliefs might be something like “theft is bad” or “with hard work I can achieve anything.” There are, unfortunately, a bunch of beliefs that we do not even realize we have, and these unconscious beliefs tend to shape our behavior. If we are responding to events around us without recognizing the forces that are driving us, it is a recipe for disaster.

We were helping one woman who was struggling with her restaurant. Her husband had just lost his job, and she had to keep the restaurant going as it was now their only source of income to care for their ill son. There was just no other viable alternative.

After working with her for months, I could see that she was a business owner who really wanted to be successful, but she just could not put the pieces together no matter how hard I coached her. In my last conversation with her, I tried to get her to see that in order to make a decent income, she would have to go out and sell her catering services. While we both knew this was her best alternative, she just could not break free to put the plan into practice.

As I was talking to her about this paradox—wanting something to happen but being unable to make it happen—she finally admitted the reason she did not go out and sell more is because she was afraid her staff would think less of her if she was not in the restaurant cooking. I replied, “So you are letting the feelings of your staff determine whether you succeed or not?” A light seemed to go on as she came to the realization that this belief—a belief she had not even known she had—was destroying her business and her life.

As she left our meeting, I could tell she was walking lighter because the burden of that belief had been lifted by exposure. While it is too early to tell how successful she will be, at the very least, she has the opportunity to succeed now that she no longer has an unknown anchor dragging her under.

Another entrepreneur has been struggling for more than five years with flat sales and very little forward progress. When I got to talking with this entrepreneur, he discovered that he had an unknown belief that he did not deserve to be successful. On the outside, he has the appearance of someone who is very aggressive and successful, but his belief is keeping him from truly realizing his potential.

In most cases, beliefs form because they served us well at some point in our lives. However, as circumstances change, some beliefs become obsolete and no longer serve us at all. A great way to ascertain whether an unconscious belief is holding you back is to ask a family member or close friend—someone who can be very candid with you. Typically, once these beliefs are recognized, they dissipate and no longer affect behavior.

No go out and make sure that you and your business are not being held back by a belief that is no longer valid.

You can do this.

Knowing When to Change Your Business Model

2011-06-05T04:26:00.000-07:00

No matter how far you have gone on a wrong road, turn back.” ~Proverb

Being realistic about what is possible and, more importantly, what is impossible, is absolutely critical when running a business. There come times in most entrepreneurs’ lives when they will not be able to accomplish the task they have set their sights on. Recognizing this is not a sign of weakness, but a sign of strength. Being realistic about what is achievable is so important as it keeps you from wasting energy trying to move an immovable wall.

We were helping a very neat couple who was working so hard to make their business successful. After four years of laboring, the business had stalled at $1 million in sales. They were struggling since they had not been taking much money out for themselves in the hopes that the business would gradually improve and they could recoup some of the dollars they had invested. But no matter what they did, their sales remained flat. They came to us for help improving their sales efforts and a number of other areas of the business. They figured if we improved some of these other areas, sales would follow.

Trying to help them was so frustrating for me. These clients did everything I asked and had good results in every area except for sales. They were just working so hard without much to show for it. With clients that are both good people and hard workers, it is very frustrating to watch them give it their all and still fall short of the results we all are hoping for.

Finally, exasperated with the lack of results, we had one of those serious and life-altering conversations about whether the cause was something they were or were not doing or market conditions. We all agreed that the market was fully saturated and there was very little they could do now to improve sales.

Once they understood that it was impossible to gain market share effectively – there was just nowhere to go – we began discussions about other services they could potentially offer to differentiate themselves from their competitors. They determined they could add three or four additional products and services to their mix to revive their business. I really believe that with some time and energy, they will be able to grow their business by concentrating on these additional areas.

Another firm we were assisting was having a tough time staying competitive in the Tallahassee market. The State was spending less and less, which was significantly impacting the firm’s sales. I tried over and over to help this entrepreneur realize that he was swimming upstream and that no amount of hard work would ever change that. I am very concerned about this business as the entrepreneur has yet to recognize that in order to survive, he must change.

Now go out and make sure that you are competing in markets where your business can grow and increase profitability. If your sales – either overall or of a specific product or service – stall for longer than two years, you need to consider how you can expand into other markets. Working harder is not always the answer.

You can do this!

Your Physical Facilities Are Part of Your Business

2011-05-29T03:36:00.000-07:00

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.

Asking The Right Questions.

2011-05-22T10:37:00.000-07:00

““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!

Small Business and the Fair Standards Labor Act

2011-05-15T03:49:00.001-07:00

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.

Small Business and the Fair Standards Labor Act

2011-05-15T03:49:00.000-07:00

Employees Need to Understand Some Basics About Your Finances

2011-05-08T16:01:00.000-07:00

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.

Pricing and Inflation in today's economy

2011-05-01T05:40:00.000-07:00

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!

Daily Dealer Marketers on the Web

2011-04-24T03:23:00.000-07:00

“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.” ~Peter Dricker

One thing I know about marketing is that the vehicles for reaching potential clients are continually changing and evolving. Traditional methods are declining in importance as so many people are getting all of their news and information on the web.

While there are many things you can do with traditional advertising, it is so much better to use some of the new techniques that are currently on the rise. One such method is something called Daily Deal Marketing (DDM). This new vehicle is proving very effective and economical.

This is a brand new industry that will mature over time, but even still, there is so much opportunity out there. The two predominant Daily Deal Marketers are Groupon and LivingSocial. Both are designed to help drive new business to your door, and many companies are having some great success with them. A plant nursery we were working with was able to generate more than 500 new customers, and a spa grew its client base by more than 250.

Groupon is only three years old, but it already has over 50 million subscribers in more than 500 markets. The company raised close to a billion dollars in new capital after turning down a $6 billion-dollar buyout deal from Google.

The concept is pretty simple. The merchant offers a deal—typically 50 percent or less of retail value—that is made available to potential customers for a limited time. Generally, it takes a minimum number of purchases to activate the deal, and the merchant can put a limit on how many deals they are willing to give as well.

What the customer pays for the deal is split between the merchant and the DDM, so if you are offering a $4 cup of yogurt for $2, you will get $1 for each customer purchase. Payment by the DDM normally occurs within three weeks of the customer’s purchase.

Many entrepreneurs do not like these new marketing tactics as they generate so little income and they have to sell the product below cost. However, the real return is not the money that you receive for the product but the advertising. Not to mention the ability to bring in new customers. If you can bring a new customer to your door, it is worth the sacrifice on the initial sale because, now that they know about you, they are likely to come back.

Another return that you get from these deals is that you receive funds even if the customer never actually uses the coupon, which occurs around 20 percent of the time.

If you are a business that deals directly with customers, especially retailers, look into using DDMs. The concept is relatively simple, but the returns are very high. They are a very economical method for bringing new customers into your business.

You can do this.

Mindfulness Can Make You A Better Leader

2011-04-17T07:54:00.000-07:00

“Leaders all over the planet are beginning to understand the benefits of purposefully learning to be more attentive and focused, non-reactive, and clear.” ~Saki Santorelli, EdD, Center for Mindfulness executive director

It is so satisfying when your personal and professional lives intersect. The art of mindfulness is one that I have been working on for some time, and it is now in vogue in the business world.

To me, "mindfulness" is living in the present moment without being influenced by the past or the future. That may sound glib, but it is really tough because our minds naturally want to dash back and forth between the past and the future and everything in between.

To illustrate, watch the way young kids play and interact. They do not really consider the past and the future because all they know is the present. Over time, however, our minds become more busy, and it becomes tough to live in the present moment. If we are able to get our minds to focus on the present, though, life is so much clearer and simpler.

Most mindfulness training starts with some form of meditation. Find a place to sit either on a cushion or the floor, and close your eyes. With your eyes closed, observe your thoughts. The most effective way to do this is to focus on your breathing. As thoughts or feelings arise, let them pass and return to your breathing. It may sound easy, but in reality, it takes some practice to get the mind to slow down.

Practicing mindfulness through meditation relieves anxiety and stress. I can personally attest to this.

You may be thinking, "That is great, Jerry, but what does all this have to do with leadership?" It is about finding clarity and getting to a place where you can make better decisions. When living in the present, the baggage of the past will not affect current decisions. Mindful leaders also do not fight change. If you are living in the present, resistance to change is not an issue.

To see things more clearly, you must have an undistracted mind. If your mind is busy, even at a subconscious level, your ability to focus and analyze is diminished. Now, I am not saying that mindfulness can replace knowledge, skill and relevant data in business decisions. Instead, all these elements should be utilized to get maximum benefits.

The University of Massachusetts is home to the Center for Mindfulness, which offers courses to help leaders bring mindfulness into their organizations. For iPhone users, there are many additional resources in the App Store under "meditation." Consider taking some classes on mindfulness. I promise it will change the way you see the world and your business with very little effort.

You can do this!

Managing your Boss

2011-04-10T10:18:00.000-07:00

“For a manager to be perceived as a positive manager, they need a four to one positive to negative contact ratio” ~Ken Blanchard

In the 10+ years I have been writing this column, people have regularly sent me requests for topics they'd like me to cover. The No. 1 most requested topic is how to manage a boss.

It is a common complaint, and employees really only have two options: either they learn how to deal with a bad boss or they leave, which is not a palatable option for most.

If you are one of those with a bad boss, you must figure out a way to work with the person. Unfortunately, you cannot expect your boss to change. Dwelling on your boss' shortcomings is not productive and will only make you feel bad.

All bosses — even the good ones — make mistakes, and some do not have the best skills to make each employee feel valued. Even so, you still must make an effort to do the best job you can.

Try to understand what motivates your boss, his or her goals, and how he or she is being evaluated. If you know what your boss values, you can easily figure out what to do to help achieve those goals. Your boss will appreciate your efforts and value you as an employee that much more.

If, however, you just cannot figure out what your boss needs to be successful, you need to ask. Nothing will flatter your boss more than asking him or her what you can do to help the firm or department be more successful. If you do not receive an adequate answer, which might happen, ask your colleagues if they can help you in this process.

We know marketing is a vital element of a business. For employees, it plays an equally important role in their relationship with their bosses. Employees need to market themselves to their bosses by communicating with them on a regular basis; weekly is the best frequency.

Keeping an open line of communication with your boss is important to managing your workload. Often bosses do not really know what all is on their employees' plates. The more you can communicate with them about your work load, the less likely they are to overload you.

If you have a problem with your boss, go talk to him, but make sure you take a positive, productive approach. Whether it is true or not, telling your boss how wrong he is will seldom yield positive results. Focus on the specific issue without making it a personal attack. For example, if you are concerned about a specific policy, explain how the policy makes you feel and offer suggestions for how it might be improved. Most bosses value constructive input from staff.

While managing your boss is not easy, it is something that every employee has to do. The more you can align yourself with your boss' goals, the better your relationship will be. A critical piece of this is marketing yourself to your boss on a regular basis.

You can do this!

Incentives Can Motivate Your Staff

2011-04-03T03:57:00.000-07:00

“Life takes on meaning when you become motivated, set goals and charge after them in an unstoppable manner.” ~Les Brown

Motivating your workforce is tough. Out of the many strategies and solutions for keeping staff motivated, the most effective way is using incentives.

We were assisting a very progressive firm that had set up a great incentive system to reward its employees for their billable hours. The system had been in place for three years, and the staff loved it. However, the owner was now concerned that the incentive was no longer working.

When I asked what made him think so, he explained that although folks were working hard to earn their incentives, but it was all they were concerned with. When it came to helping another colleague, they were not motivated to do so because there was no direct benefit to them.

On the surface this incentive system appeared to be working, yet it had unintended consequences. We changed the system to take into account a combination of individual production, team production and company success. Individual production was weighted at 60 percent, and team production and company success were each worth 20 percent. There is no question in my mind that this new incentive system aligns the goals of the individual with those of the firm.

Since the staff liked the old system so much, the owner’s challenge is to get them to accept the new plan. His strategy is to show them how they can make more money on this new plan, while promoting a spirit of cooperation.

While monetary incentives are great, many employees may not be motivated by money, particularly Gen-Xers (staff born after 1980). This group is motivated more by time off rather than a direct monetary incentive. In response, some entrepreneurs are rewarding staff with an additional day off for every month they hit their goals. The key to a successful incentive system is finding the reward that will motivate your staff to be more productive.

While incentives vary depending upon the work force and the goals of the organization, there are several key elements to include. First, the more frequently you reward the incentive, the better. It is hard to wait a year before you know how successful you have been and whether you have earned your bonus.

Second, the incentive system should be continually monitored to ensure it is working effectively.

Third, the incentive must have meaning for the people receiving it. Giving staff money, when doing so is not particularly motivating, is not good business.

A fourth element essential to a successful incentive system is a plan for support employees, whose efforts do not directly affect production numbers. Incentives for these workers should be based on the team’s production and the firm’s success.

Finally, you will need to have employee buy-in for the plan. When introducing a new incentive or changing the existing system, it is important that you sell it to your staff by showing them what they will gain.

Now go out and make sure that you have an incentive system in place to motivate your staff to help achieve the firm’s goals.

You can do this.

Try part-time ventures to test your idea.

2011-03-27T05:20:00.000-07:00

"Natural abilities are like natural plants; they need pruning by study." ~Francis Bacon

When starting a new business, there is no question in my mind that the best method is to start small and grow it little by little.

I recommend that entrepreneurs keep their existing jobs and work on their new business part time. This approach allows potential business owners to test the waters before diving in.

Many people who start their own business find out that it is not for them. Owning a small business is most definitely not for everyone. Not everybody is cut out for it, and many lack the requisite skills and financial assets to be successful.

One of the best ways to find out if you have what it takes is to test your entrepreneurial skills on a part-time basis. This approach is much better than quitting your job and going all in with nothing to fall back on.

Frequently, I see small businesses fail not because the owners lack the skills and capital, but because their business concept was not viable. In cases where these entrepreneurs started part time, they were able to greatly reduce their capital loss and preserve their full-time jobs.

For all its benefits, starting a small business part time is by no means easy. It will be tough on you and your family. Starting your business while keeping your existing job is going to take much more time than your full-time job ever did, and your family will see much less of you because getting a new business up and running will require constant attention.

There are several ways to balance the needs of your new business and that of your family. One is to designate some time every day to spend with your family. The key to this is ensuring your daily family time — however long or short — is quality time. You must make sure you are not preoccupied.

Consider having an agreement with your family that you'll work on this business venture for a finite period of time. Once the designated period expires, you will either quit pursuing the venture or you'll take your new business full time by giving up your regular job.

Whichever method you choose, it's critical that your family understands the effort this venture will require, and that you commit to making absolutely sure your family does not feel abandoned.

Now go out and consider whether becoming an entrepreneur is for you. If you think it is, consider starting your own business part time. Not only does this approach reduce your risk, but it also provides a real-world opportunity to test the viability of your business concept.

You can do this!

Great Managers are Great Listeners.

2011-03-20T16:38:00.001-07:00

"No one is as deaf as the man who will not listen." ~Yiddish Proverb

Whether it is with an employee, customer, vendor, spouse or child, listening is such an important asset. For a manager, I do not think there is a more vital skill.

I gave seminars on becoming a great manager to the staff of a business we were helping. Listening with empathy was among the key points I covered. Following the seminar, I received several e-mails from participants telling me how bad a listener the entrepreneur was. This one attribute significantly effected how they felt about the company.

When I asked the entrepreneur about the problem, he vehemently denied it, claiming that he was a great listener. However, in the process of talking to him about this, he interrupted me six times.

There have been countless studies about what it takes to be a great communicator, and every one of them agrees that it should be 75 percent listening and 25 percent talking. Listening is absolutely critical. Unfortunately, it is not an easy skill to master.
I was a counselor at 211 Big Bend, our local crisis hotline, for six years. They spent more than 150 hours training us how to be great listeners. I can still remember one exercise where we sat back-to-back with a fellow trainee. One person talked for two minutes about a topic of their choice while the other person listened without saying a word. The hardest part of this exercise was not being able to interrupt to ask a question or clarify a point.

This exercise and so many others were teaching us active listening — paying close attention to what the other person is saying without interrupting or trying to fix the problem.

To this day, I can still remember all of the calls that I took from mothers with an out-of-control teenager. Obviously, I could not fix the problem, but what I could do was listen in a non-judgmental fashion. After 30 minutes, many of these callers said how much better they felt, and all I had done was listen.

A favorite saying of mine is, "What do you learn when you are talking?" Obviously, you only learn when you listen, so you must be a great listener.

The best way to improve your listening skills is to bring in someone you trust from outside your organization and have him or her observe your interactions. After a day or two, the person will then evaluate how effective a listener you are. This can be a very humbling experience, but it is a great way to start the process of becoming a better listener.

Now go out and become the best listener you can be.

You can do this!

Know Your Limits On Investing In Your Business

2011-03-13T12:10:00.000-07:00

"If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time." ~Chinese Proverb

Good investment decisions take into account how much you can afford to lose. I have seen friends continue to gamble after losing all their money in the hope that they will recover their past losses. Instead, they just end up further in the hole. The same analogy can and should be applied to investing in your business.

Lately, at the Jim Moran Institute, we have run across many entrepreneurs who keep sinking money into their failing businesses in the hope they will somehow recover their investments. In one case, a retail store with a 20-year history of success had been devastated by economic conditions. In the past three years, their sales had plummeted and cash flow was nonexistent.

The owners had already sunk every cent they had into the business, including all of their retirement. Now they were looking for a family member to co-sign a very large bank loan. They thought that if they kept feeding the business, it would eventually turn itself around.

After lengthy discussions with the clients, I quickly realized there was very little hope that the business would survive. In fact, it really should have closed down years ago. Instead, the owners kept on throwing good money at the business in a desperate attempt to save it.

Had the owners limited their exposure, or the dollars they committed to the failing business, they could have preserved their retirement and some of the assets. Instead, they lost everything and had no choice but to go through the tough process of bankruptcy.

When investing in the stock market, a stop loss order can help limit an investor’s exposure to loss. If a stock starts to fall in price, it will automatically be sold when it hits the value specified on the order. Stop loss orders take all emotion out of the sell decision.

The concept of a stop loss order can be applied to business decisions. When acquiring any asset, you must determine how much loss you are willing to take before you liquidate the investment. By setting limits on how much you are willing to lose, you can protect the remainder of your assets.

Another entrepreneur we assisted set a cap on the amount of personal funds she invested in her web application venture. She agreed that once she had put in $100,000, she would stop, no matter what happened. She was supposed to break even at a $50,000 investment. Once she had set these limits, she felt much more confident because she knew her losses would be capped.

Now go out and make sure that you take emotion out of the equation and reduce your risk of exposure by assigning a limit to all your new investments.

You can do this!

Building Staff Morale Can Be A Simple Process

2011-03-06T03:20:00.001-08:00

"Really great people make you feel that you, too, can become great." ~Mark Twain

In order for your staff to be motivated, they need to have a relationship with their leader. It is easy to forget just how important this detail is, but your staff needs to see you occasionally if they are going to feel good about working at your company.

Capelouto Pest Control is one of the best managed firms in Tallahassee, and I have written many columns about their excellent approach to business. About three weeks ago, I had breakfast with the firm’s co-owner, Grant Capelouto, and his brother, Raymond. While we were eating and discussing the business, Grant mentioned Honeybun Monday. I did a double take because I had no clue what he was talking about.

After explaining that on Honeybun Monday the owners serve honeybuns, juice and energy bars to all the service technicians as they are leaving to start their rounds, Grant asked me if I would like to come see how it worked. I jumped at the opportunity even though I had to be there at 7 a.m. We agreed that the next Monday I would come and experience Honeybun Monday.

When I arrived at Capelouto Pest Control the next Monday morning, both Grant and Raymond were out setting up the food table. As the technicians left the yard in their trucks, either Grant or Raymond walked up to each vehicle and asked the driver what they would like. As they walked back to the table, they engaged each technician in small talk about their family or some other non-business topic.

It was clear to see how much the technicians enjoyed being served by the owners of the business. They all left with a giant smile on their faces.

It takes Grant and Raymond Capelouto less than 20 minutes to commit to Honeybun Monday every week, and it costs less than $25 to implement. The benefits they receive in terms of morale and motivation far outweigh these costs.

When I was doing a lot of traveling for work, I made it a point to call and speak with each of my direct reports at least once a week. I just knew they needed to hear from me.

It is vital that entrepreneurs and managers get out of their offices and interact with their staff on a regular basis. Being too busy is not a valid excuse. Taking a few minutes to talk and joke with your staff is important because it reinforces why they are working for you.

Now go out and make sure you have a plan in place to stay connected with your staff.

You can do this!

Building Staff Morale Can Be A Simple Process

2011-03-06T03:20:00.000-08:00

Many Firms Lack Infrastructure Necessaary to Support Their Growth

2011-02-27T04:12:00.001-08:00

"Do you know what amazes me more than anything else? The impotence of force to organize anything." ~Napoleon Bonaparte

Infrastructure — the people, things and money that support a business — is a vital consideration for every entrepreneur. Determining what is adequate for your business requires careful planning and a balance between the infrastructure needed to support growth and available funds.

Adding infrastructure is a significant investment. Many entrepreneurs are tempted to "make do" with what they have instead of putting up the cash to support their growth. However, it is absolutely necessary to have the infrastructure or support system in place before attempting to grow.

Nothing makes me angrier than calling a customer service representative and being put on hold for 30 minutes because "call waiting times are longer than ordinary due to unanticipated call volume." When I hear this same message week after week (I have many technology challenges), I know the firm has not made the requisite investment in infrastructure.

Too often I see firms trying to grow before they have hired the staff they will need to handle the increased business. Sales can only grow as fast as the infrastructure allows, and trying to grow without the necessary support always yields traumatic results.

We assisted an entrepreneur whose business was helping disabled workers find employment. He had hired more than 600 of these individuals as independent contractors, but he only had three full-time employees. He had more than 2,700 e-mails in his in-box that he had been unable to answer for weeks. The firm was also suffering from other significant problems, each arising from that lack of infrastructure.

When I asked this entrepreneur why he had not answered the e-mails, he said, "I just do not have the time, and if there is an issue, they can always call me." I asked why he did not have more people to help him through this morass, and he responded that he did not have the money since he had to invest any idle cash into growing his business.

I tried to get him to slow the growth until he could bring his infrastructure up to speed, but he continues to plow ahead. If he continues on this course, his stress will become overwhelming and the quality of service will decline beyond repair.

When considering adding infrastructure, first decide what level of sales is attainable and then determine the resources necessary to support it. The best way to do this is to forecast your sales, then estimate how much infrastructure in dollars you need for this growth. Ask yourself whether you have the funds necessary to support this sales level. If you do not, you will need to slow the growth rate until you have the funds needed.

Now go out and make sure that you have adequate infrastructure in place to support your current and future growth.

You can do this!

Understanding Your Business Financials

2011-02-20T04:05:00.000-08:00

“Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.” ~John Quincy Adams

Running a business requires many skills, such as marketing, management and purchasing, to name a few. All of these are important, but in my opinion, the most critical of all is finance.

Finance is the information machine that allows you to see much about your business very quickly. Truthfully, entrepreneurs who do not delve very deeply into their finances really inhibit their business’ growth and risk its financial health as well.

I can get a quick handle on an entrepreneur’s knowledge when I ask them what their total assets and total liabilities are. It never ceases to shock me how many do not know these two numbers, which are so critical.

So why is finance so important? Just about every decision you make has a financial consequence. If you are buying a product, you have to consider your cash flow both in terms of how you will pay for the item and what price you can charge for it. Additionally, if you need to obtain financing, you will have to understand how the interest rate will affect the income statement and how the principal repayment will impact both the balance sheet and cash flow.

Your finances also help you determine how much the services you provide are costing you. If you are providing a service, you must know whether you are making money on each job (job costing). If you are not, then you need to either increase prices or reduce costs. Even if you’re indeed making money on each job, you will need to continue monitoring future jobs to ensure necessary adjustments are made down the road.

Many entrepreneurs say they do not need to understand finance or financial statements because they have an accountant. Unfortunately, most accountants are not going to take the time to guide you through day-to-day or month-to-month financial decisions. There is no escaping it — you must know and understand your financial statements.

I think many entrepreneurs are intimidated by the numbers the same way they would be by a foreign language because it really is like a foreign language to them. However, there is help available.

When I typed “understanding finance” into Google, I got more than seven million hits. Obviously, there is a ton of information out there. Still, if it were that easy to go on the web and glean the information you need, everyone would be experts. Understanding financial statements really requires more than that.

Entrepreneurs can attend a seminar or have someone review their statements with them more than once and explain how each item relates to their business. When I give these seminars, entrepreneurs always come up to me afterward and say they never knew financial statements contained that much information.

Now go out and make a commitment to learning your financial statements. It is vital that you understand both their meaning and their impact on your business.

You can do this!

Problems Arise When Employees are Friends

2011-02-13T06:15:00.000-08:00

“You can close more business in two months by becoming interested in other people than you can in two years by trying to get people interested in you”. ~Dale Carnegie

You work so closely with your staff and it is very easy for them to become your very close friends. However, this can cost you much, even your marriage.

We are helping a couple that runs a motorcycle shop in northeastern Florida. They have been in business for over 10 years. Four years ago they hired an employee named Sandy to be in charge of the accessory department. She was great at selling these products and after awhile took over the purchasing of all the merchandise for this department.

For the last three years this department of the company was doing great and sales climbed steadily under the wife's leadership. Then for a variety of reasons, the husband took over her department last year.

The wife and Sandy played a lot together and socialized as well. They had become great friends. As long as the wife was in charge, the husband did not say anything about Sandy. However, now he is in charge. Because the business is now losing money, he had to tighten up the operation to make it profitable again.

The past two years, Sandy was responsible for buying the merchandise and the wife trusted her to make great decisions. She would frequently go out and spend money for new goods for the store on the store's credit card without any authorization. However, this had to stop. Sandy was spending money on inventory without any concern of whether there was adequate cash to cover the bills. In all fairness, this behavior was tolerated and rewarded as long as the wife was running things and the business was making money.

The husband, who's the new CEO replacing his wife, gave Sandy numerous suggestions, which went unheeded. His direct orders are ignored because Sandy's friendship with his wife is so strong.

When I asked the wife why she keeps Sandy working, she said Sandy is "loyal and faithful" to the business. She really believes that Sandy does not have any bad intentions, but her bad habits are affecting the business. Still, the wife is unwilling to let her go.

The problem between this husband and wife started small and now has escalated to become a threat to the business and their marriage. They frequently stop talking to one another and take time away from the business just to get away from the arguing about Sandy.

When they asked me what to do, I said they needed to let her go because it was affecting so much their business and marriage. I explained that their marriage was teetering on the edge of a breakup, and they agreed. Sandy was driving a wedge into their business and marriage, and loyalty just was not worth it. While it was tough getting the wife to see the problem, once she understood all of the ramifications it was easier to agree to a dismissal.

Now go out and make sure that you prevent your staff from becoming your good friends.

You can do this!

Web Scraping

2011-01-30T16:35:00.000-08:00

“Once a new technology rolls over you, if you're not part of the steamroller, you're part of the road.” ~Stewart Brand

A recent survey showed that the average person spends 12 to 15 hours each week on the web. During this time, they will visit more than 25 websites and spend a chunk of it on Facebook.

So much of what drives a purchasing decision on the web is what people read about a product or service from other consumers. If I read a bad review about a hotel that I was considering, clearly, I will not stay there. On the other hand, if I see great reviews about a new tech gadget, I will seriously consider purchasing it.

The more you know about what your customers are reading and what is influencing their decisions, the greater your success. This was not possible in the past. Now, however, new web-scraping software mines data on the web, automatically extracting valuable information for analysis.

One of the leaders in this field is Mozenda, which offers a neat web-scraping product at very reasonable prices. Rates start at $99 to scrape 5,000 pages or images of websites a month. There are also free web scraping programs at www.freedownloadmanager.org/downloads/web_scraping_software/.

Businesses can use this software to monitor blogs, chat rooms and social networking sites to keep tabs on what people are saying about their products. With this technology, so much more information can be learned before a problem develops, enabling a more timely response.

If Apple had been monitoring blogs, it would have known the extent of the iPhone 4's problems (dropped calls) and seen how dissatisfaction was escalating. The company could have responded more quickly to the growing negative remarks.

There is an overabundance of information available online. With astronomical amounts of data swirling around out there, shoppers rely more and more on the information provided by other consumers to make decisions. Knowing this, many firms let customers comment on their products and services right there on their websites.

Take QVC and HSN, for example. On their sites, consumers can comment on each item sold. When a product does incredibly well in consumer input, they frequently mention this on the air.

Web scraping analysis should be part of each firm's marketing budget because it will become an even more dominant marketing tool. Now go out and see if you can apply web-scraping software to your business in a cost-effective way.

You can do this!

Start Your Business on a Sound Footing

2011-01-23T04:44:00.000-08:00

“Growth for the sake of growth is the ideology of the cancer cell.” ~Edward Abbey

The normal way to expand your business, especially in retail, is to expand the number of physical locations. If you are making money at one location, then adding another location normally increases the total profits of the company. However, this is not always the case.

We've been assisting a small auto repair business that had been in business for about 3 years. However, for this entire time period, the business has never been profitable for numerous reasons, including an absentee owner, not marketing very well, and not having any real processes in place to manage the company.

Additionally, with these losses the cash-flow of the business was very sparse, forcing the owner to watch every cent, to defer paying many creditors, and put all of his savings into the business.

The owner thought that the only way that he could make it financially was by finding a new location and working at it full time. He figured it would subsidize the older shop that was losing so much money. He was able to get the new location without any down payment and was able to finance the small inventory he needed to keep on hand.

For about six months, he worked hard to get the new shop up and running while the old location hemorrhaged more and more cash. He tried to reduce prices to bring in new business at both locations, but this didn't work, nor did just about anything else he tried.

Where before he was losing money from just one location, now he was hemorrhaging even more cash from two.

When we started to work with him, he just could not get any focus at all because he felt totally out of control. It was hard for him to concentrate and he was becoming very irritable towards his employees as well. We tried to encourage him to close one business but he couldn't because he had signed long-term leases for both locations.

In addition, he felt like he would be a failure if he closed the business that he had been dreaming about owning for so long.

Finally, he had no other choice but to file bankruptcy to get out of the mess he had created. When I asked him what he had learned from this experience, he said that he should have never opened the second location, and that he should have concentrated on the first one to make sure it was both profitable and running smoothly before he expanded.

Expanding - while feeling good - is fraught with difficulties. Now go out and make sure that before you expand your business, that you are running a very efficient and profitable enterprise.

You can do this!

Having Tim Management Goals

2011-01-16T03:02:00.000-08:00

“All time management begins with planning.” ~Tom Greening

If there is a single complaint that I hear more often than any other from entrepreneurs, it is that they lack the time to do the work required to keep the business successful.

Time is the most critical resource each of us has, and we will never get another chance to live this moment, this hour or this day. As I have gotten older, I have come to realize that using time effectively is the key to success, both as a leader and as a human being.

There is no denying that running a business or managing a department is tough, but using effective time management techniques can free up so much of your time.

If you are concerned about how well you are managing your time, record a time log for three days. For every 15-minute increment, write down what you accomplished, whether or not the time was well spent, how it could have been more effectively utilized and how you felt during this time. A time log is an important place to start since it is impossible to change how you manage your time if you do not know where you have been. Throughout this process, try not to judge yourself. Instead, think of your time log as a basis for improvement.

As with most habits, changing how you manage your time takes practice, and setting goals is critical to this process. Too often, people say they want to improve their time management but try to do so without any goals to guide them. One such goal might be to have two hours of uninterrupted time each day to focus on tasks that are both important and urgent. Another goal might be to delegate specific tasks to a subordinate by a certain date. A third might be to work no more than 10 hours a day.

Where improving time management is concerned, it works best if you first understand where the problem areas are. Next, you will need to set some goals to improve those areas and make a plan with monthly benchmarks to guide you as you work toward achieving each goal. A goal without a plan just is not going to work.

Since adhering to plans by yourself is tough, work with a fellow colleague, family member or friend who can help you monitor your accomplishments on a monthly basis. This provides the system of checks and balances that most people really need to stay on track. Being held accountable is so important to achieving your time management goals.

Now go out, make a time log, and take a moment to evaluate where you are in terms of current skills and overall effectiveness. Set some goals and find someone who can hold you accountable to these goals. More effective time management will make you a better leader and a more complete person.

You can do this!

Mistakes in Running a Business

2011-01-09T12:56:00.000-08:00

"There are no mistakes, no coincidences. All events are blessings given to us to learn from." ~Elizabeth Kubler-Ross

As I go around and talk to entrepreneurs, one of the most common statements that I hear is, "It was a mistake when I did--- ." Somehow, we all feel as if we should have been wise enough to avoid making mistakes. I am here to say that this is a false notion. Mistakes are part of life and perfection is just not achievable. I have never met a perfect entrepreneur nor will there ever be one.

Mistakes are just going to happen, period! If you go back and think about how you define mistakes it is with hindsight that you wish you had made another decision. However, at the time you made your original decision, you really made the best decision you could have with the knowledge and facts that you had on hand at that moment.

While mistakes are going to happen, I encourage you not to beat yourself up about these. So many folks just keep whipping themselves over and over for the "poor" decisions they have made. Has this whipping ever made you feel better? It has never helped me! Rather than beating yourself up, use the quote above by Elizabeth Kubler-Ross to find out what you can learn from this experience. For example, if you find that you believe that workers have been taking advantage of you because you have been too nice or too giving, ask yourself what you can learn from this experience. Some things of value that may be learned here include:

It is okay to say "no" to associates,
I do not need my associates to like me,
or I need to be firmer.

Mistakes are a way to grow. As we learn what works and what does not work, we learn how to adapt and prosper. Now I am not advocating for you to go out and deliberately make mistakes, rather I am suggesting that mistakes aid you in becoming a better entrepreneur. If you ask the most prosperous entrepreneurs where they learned the most, without hesitation, they will always respond: "from their mistakes."

Obviously, if you are at a critical juncture with your business, then you need to insure that, if a bad decision is made, it will have the smallest impact possible. Reducing the risk or cost of making a mistake, really helps you to make better decisions for your business. One great way to help in this process is to talk to as many people as possible about this decision. These people should be knowledgeable in the area of your concern.

The type of mistakes that you really do need to examine very carefully are the ones that you repeat over and over. If you find that you are making the same mistake, then you are not learning what you need to learn from this experience. I think a great concept is that "we want to make new mistakes and not repeat old mistakes."

Mistakes are a fact of life and are inescapable. We must carefully examine our mistakes and learn something from each of them if we are going to prosper from the learning experiences presented to us.

Be Careful When Starting A New Business!

2011-01-02T05:08:00.000-08:00

"You don't know until you know how much you don't know.” ~Anonymous

Starting a business is hard, but many people believe that if you have the passion and energy, you can be successful. This however, is just not the case. Before you step up to run a business, you must have experience and knowledge.

A wonderful lady was referred to us for help with her new restaurant venture. She had worked as a nurse for over 20 years and was just worn out. Her hardworking son, who was a good cook and currently unemployed, would join her in the business. She really felt that this restaurant would provide the income she and her son needed.

After months of searching, she found a location she could afford. Though the rent was a perfect fit, there was no parking, the location was poor, the equipment was in need of repair and three other restaurants had already failed in that very same location. The owner of the property was aware of its shortcomings, which probably explains why he was willing to offer a year lease. A one-year lease is completely unheard of in the restaurant business.

My colleague, Barbara Lay, and I met with the hopeful restaurateur one morning over coffee. She was three days away from signing the lease on the property, and she was so excited about what she had convinced herself was the perfect location. You could just feel it as she told us about the building.

This woman was completely convinced that starting her own restaurant would solve so many of her problems. However, as we talked, we discovered that she had absolutely no experience with accounting, marketing or even setting up a menu.

She did not consider her lack of experience a problem. She thought she would pick things up quickly once she put in the requisite effort. She also said that, like her son, she loved to cook, and she had waited tables in college.

Though her can-do attitude was admirable, we had to caution her against moving forward without experience. Being inexperienced in the business you are trying to start will frequently result in very expensive mistakes.

In response to these warnings, she kept insisting that she would learn as she went along. To prove my point, I asked her if she would let an untrained person perform nursing procedures. Of course the answer was no. This example seemed to resonate, and she understood my point.

Many of this woman’s friends had encouraged her to move forward with the venture. However, we advised her not to completely trust her friends’ opinions. Because they are her friends and they want to see her succeed, it would be very difficult for them to be completely honest with her. They were acting out of their desire to be supportive.

As we continued to gently prod her about her concept, some tears were shed, and we knew she felt that we were destroying her dream. However, we continually reassured her that we were not suggesting she abandon the restaurant idea altogether, merely that she postpone it long enough to acquire the necessary experience and knowledge. Once she had the tools she needed to succeed, she could move forward. We suggested that she take QuickBooks classes, a marketing course and start working in the industry.

This potential start-up turned out fine, but many other start-ups fail because the owner lacks the tools to successfully manage their new business.

Now go out and make sure you have the training you need to be successful before you start or buy a business.

You can do this!

Resolutions for 2011

2011-01-02T04:59:00.000-08:00

“It is change, continuing change, inevitable change, that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be. This, in turn, means that our statesmen, our businessmen, our every man must take on a science fictional way of thinking.” ~Isaac Asimov

As we move into a New Year, it is so important to take some time and think of what you can do to run your business better in this year as compared to last year. Maintaining the status quo is just not acceptable and setting reasonable goals for year 2011 are so, so important.

Obviously, in 2011, the economy is going to continue to improve and really hit its stride in the last quarter of the year or the beginning of 2012. With that, we should see a pick-up of both inflation and interest rates. Additionally, unemployment will continue to be a significant problem as the economy can only absorb so many jobs every month and it is going to take over 3 years to get this unemployment rate down.

Given those environmental factors, here are some goals or resolutions for you to consider and adopt for your business. First, a very important goal for this year has got to be increasing both gross profit margins and net profit margins. If your net profit margin last was 5% then set a reasonable goal this year of hitting 7%. You can easily reach a higher net profit margin my reducing costs by just 2% which is pretty easy to do. The net profit margin (NPM) is so influenced by the gross profit margin (GPM). In a like manner, if your gross profit margin has been 38% then shoot to increase this to 40%. The way you hit these higher margins is making sure that with every decision you make, you consider the impact of profitability. Over the last couple of years with our economy, most businesses just tried to survive but now you must focus hard on profits and profit improvement.

Another goal is to fire yourself on January 1st and evaluate what new skills and knowledge that you must have for 2011. Most entrepreneurs are constantly evaluating their staff and business but just do not take time to evaluate themselves as the leader. If you should feel that you are weak in finance, then take some courses and read some books in this area. However, the real point here is that you must take time at the beginning of this year and assess how effective you are. Sometimes the best way to do this is to hire an outside consultant to come in and do a formal evaluation of your skills. No one should ever think that they are good as they can be as this normally generates an attitude of complacency.

The final critical resolution and goal is to map out some personal goals for yourself apart from your business. For example it is so important that you take time to make sure that you are physically fit. Time spent on this allows you to be so much more effective in leading your business. Additionally, figure out what additional things that you need to do support your family with your time.

Now go out and set some goals to deal with increasing your profit margins, ascertain the additional training that you need and develop some personal goals for you and your family.

You can do this!!

Friends as Employees

2010-12-19T15:49:00.000-08:00

“Who ceases to be a friend never was one.” ~Greek Proverb

Every entrepreneur wants to get the best help he or she can. However, hiring friends or befriending employees is a recipe for disaster and should be avoided if possible. Do not mistake being “friendly” and being “friends” as one in the same. You want to be friendly with your staff, but you do not want to be friends with them. There is a vast difference between the two.

Five years ago, a wonderful entrepreneur hired an office manager. This employee’s birthday happened to fall three days after she was hired, and she mentioned to her employer that her parents never really gave her much of a birthday. Hearing this, the entrepreneur went out and bought balloons, flowers and a very nice gift, and even took her out to a very nice lunch. This became a tradition that continued year after year.

The entrepreneur treated this employee as a member of the family and frequently asked her to come along on family get-togethers. Additionally, the entrepreneur kept giving this employee raises as she just could not say no to her friend. Consequently, the employee was being grossly overpaid for the work she was doing.
Over time, as the line between “employee” and “friend” became increasingly blurred, the entrepreneur began to see issues with the employee’s performance. She frequently found work that the employee had not done, but she never brought it up because she feared hurting the employee’s feelings.

The obvious solution was to let this employee go – these issues were more than sufficient to justify termination of a normal employee. But this entrepreneur had not treated this worker as a normal employee. She was a friend, and the entrepreneur was reluctant to take any action knowing the friendship would be lost.

In addition, the employee and entrepreneur shared a strong bond reinforced daily by their close working relationship. Their desks were adjacent to one another, and the entrepreneur just could not see herself running the business without this employee. She felt she was invaluable to the firm.

If not for the economic downturn, this cozy relationship would have continued indefinitely. However, as cash became tight, the entrepreneur was forced to look at all possibilities for cutting costs. As it turned out, the only element she could really control was this employee’s salary.

This was a very difficult decision for this entrepreneur, and I spent a lot of time working with her. Once I was able to articulate that all of the problems they were experiencing with the business revolved around this one employee, the entrepreneur understood what was necessary.

Did I say anything that the entrepreneur had not already considered? No. All I did was reinforce what she knew to be true. That is why advice from an outside consultant is so useful.

The entrepreneur is now in the process now of finding a replacement at a much lower salary. She has promised me that she will not make the same mistake again by befriending the new employee.

Now go out and see if a friendship you have with an employee is negatively affecting your company’s morale or the employee’s performance. If it is, you must either step back into a more professional relationship or consider letting this employee go. This will not be easy, but these issues must be addressed for the well being of your business.

You can do this!

Employee Input Or In The Catfish Line

2010-12-12T04:48:00.000-08:00

“It takes a great man to be a good listener.” ~ Calvin Coolidge

There is no question in my mind that listening to your employees is almost as important as listening to your customers. Time and again, I see entrepreneurs underestimate the value of their employees’ opinions. Many times, entrepreneurs think they are the only ones who know how to improve their business, and it never even occurs to them to ask their staff how they might make it better.

Ignoring your staff is equivalent to a physician ignoring a patient’s concerns. In both cases, valuable information is lost and major damage can be done.

There is a neat company called King Arthur’s Tools. The company is run by Arthur and Pamela Aveling, who in the interests of fair disclosure, are also my good friends and clients of the Jim Moran Institute for more than 12 years.

King Arthur’s sells woodworking tools to both distributors and hobbyists. They either buy or manufacture to their specifications the various components of these tools. When an order is received, a packing slip is generated and sent to the warehouse, where most of the packing is handled by Warehouse Manager Henry Williams. A very loyal and hardworking employee, Henry has been with King Arthur’s for more than three years.

At one of King Arthur’s retreats, the staff was working on the company’s core values. After much discussion, Arthur asked Henry if he could think of anything that could improve his operation. Without hesitation, Henry said that he would like to have cards made identifying him as the one who packed the goods. He thought doing so would reduce the rate of error.

Everyone agreed that this would be a neat idea, and Henry and the staff got to work making the cards the very next day. They came up with three versions. Each version had a different message on it, but all of them included Henry’s picture and the phrase, “Packed with care by Henry.” The three alternate messages were as follows:
1. It was my pleasure assembling your order, and I hope you enjoy using your King Arthur’s tools on your project.
2. Your order was packed with care by Henry. Thank you.
3. King Arthur’s Tools loves to see what customers make with their tools. Post your photos on Facebook.

The response to these cards has been overwhelming. So many customers have commented on how much they liked them and what a neat concept it was. Many customers even called to thank Henry personally for their order.

The cost of implementing this idea was minimal, but the value was considerable. It improved the company’s relationship with their customers and made Henry feel good about what he is doing. It all came about because Arthur and Pamela Aveling were willing to listen to their staff.

Now go out and make sure that you are listening to both your customers and your employees. The best way to get input from your employees is simply to ask for it. Ask your staff if there is anything they think the company can do better. Even if some do not have something to contribute, they’ll know you welcome their input, which is invaluable.

You can do this!

In the catfish line.

2010-12-05T18:16:00.000-08:00

I
"Trust is the lubrication that makes it possible for organizations to work." ~Warren Bennis

Business is about relationships. These relationships can be with employees, customers or potential customers, and a host of others. Most people would rather deal with someone they know and trust than with a stranger. Just like the old cliché says, it is not what you know, but who you know that determines success.

So many times I have seen struggling entrepreneurs happen to mention their business problems to an acquaintance, who gets them connected with large potential customers. All this comes about because of a relationship between two people.

For this and so many other reasons, relationships are vital to each and every business, and you just never know when or where a relationship will be formed. You must constantly be on the lookout for opportunities to make connections.

About a year ago, I attended the Broward Urban League Gala as my new job with JMI has me helping minority entrepreneurs at Broward College. At the gala, they had multiple serving lines, one of which was for fresh fried catfish.

While standing in the catfish line, I started talking with the very nice couple ahead of me. The man’s name was Ed Key, and he was employed as an administrator at Broward College. We hit it off, so I suggested that we have lunch in a couple of days.

During this lunch, I mentioned that we were coaching minority entrepreneurs and organizing a minority business conference. Without me asking, Ed put me in contact with Norm Seavers, the head of their Entrepreneurship Institute. When I met with Norm, he stepped in and agreed to allow us to hold our minority business conference at their venue and to provide so much other assistance that we needed.

I began mentoring Ed, meeting with him every month during my visits to South Florida. During one of our meetings, he brought a friend of his, Marcell Haywood, with him. Marcell is a very successful entrepreneur, the owner of a company called Dirt Pros EVS. Starting only five years ago with a $300 investment, he has grown this business to over $5 million in sales.

I was so impressed with Marcell. Though he holds a master’s degree, he does not have a formal education in business, yet he has been so successful. During lunch, I asked Marcell if he would be the keynote speaker at our conference, and he agreed.

Our conference was a great success, and Marcell’s talk was the hit of the day. This outcome can be attributed, in large part, to a conversation I had with a stranger in the fried catfish line.

Now go out and work on improving as many relationships as you can. You never know how they will pay off.

You can do this.

Tips to be a great manager

2010-11-28T18:02:00.000-08:00

"Motivation is everything. You can do the work of two people, but you can't be two people. Instead, you have to inspire the next guy down the line and get him to inspire his people." -Lee Iacocca

All of us want to be the best managers we can be. After all, our employees are our company. The more we can motivate our staff to feel good about what they do, the better our organizations will operate. Managing employees takes work and a commitment to help them succeed!

One great thing you can do is to find out what each employee’s goals are and then help them achieve those goals. Finding out what each person really wants out of life does two things. First, it tells the employee that you really care enough about them to ask. Sometimes staff just will not know their goals, which is okay, but just asking translates to caring. Second, once you know what their goals are, you can help them achieve them. It is so surprising to me how many managers just have no idea of what the career goals are of their staff. It is so important to think of yourself as a coach. Like an athletic coach, your job is guide the team members to be the best they can be.

Another thing, you really want to become a full time mentor with each of your employees because this really keeps your staff humming. That doesn't mean you are mentoring employees 12-hours a day, but that you have their success on your mind at all times. Evaluating your employees once a year is a one of those ideas that you really, really have to question. Normally an annual evaluation turns out to be the evaluation of only the last two weeks of an employee's work history. All employees, if they are human beings, need feedback to make sure they are living up their boss’s expectations. With only a yearly evaluation, frustration sets in quickly. I take each staff member out for a meal once a month. During that time, I try to find out how they are doing and to identify their needs. I also communicate how I feel they are doing in a clear and concise manner. Taking them out of the office really tells them that I want to be there to mentor them to be more and more successful. If you find the time to spend a few moments with each employee, you will be surprised what you might find out about your employees and how this individual time with them motivates them to succeed and promotes loyalty within the workplace.

Positive reinforcement is critical to being a great manager. So many times you hear staff members say that the manager only notices when I screw up and never notices when they do great things! Pay attention to great behavior and always recognize it whenever you see it. On a recent tour of a business I observed the owner who spotted one employee doing some great things. The entrepreneur stopped the tour to tell the employee what a great job he was doing. Recognizing great employee behaviors is a sure way to communicate to your staff how pleased you are with their performance.

Managing employees takes so much work and effort. However, it is so worthwhile because it makes your staff feel so much better about their work. Now go out and improve the ways you manage your staff.

You can do this!

Alternative Marketing Approaches

2010-11-21T14:26:00.000-08:00

“ORIGINALITY is unexplored territory. You get there by carrying a canoe – you can't take a taxi.” ~Alan Alda

So many marketing consultants believe there is only one way to advertise. Some feel that face-to-face interactions are the only way to make sales, building trust first then convincing the client to buy the product. Other experts swear by advertising on social networking sites. However, there are so many other approaches deserving consideration that are simple and just as effective.

We were helping a renowned sculptor, Nilda Comas, whose sales appeared to have stalled because of the shape of the economy. However, she had a database full of over 4,000 former customers and serious inquiries. These contacts were her low-hanging fruit. We suggested that she call these clients and tell them she had some time free if they would like to take advantage of it.

Artists are notorious for not wanting to push their own products, so she was a bit skeptical about this approach at first. But she gave it a try and had tremendous success. On the first call alone, she was able to sell three high-end sculptures.

A small plumbing contractor was having serious difficulty in the current economic climate. She was hemorrhaging cash at a rate of $10,000 a month. Because of her cash flow trouble, traditional advertising was not an option, and even repeat business from existing customers would not have been sufficient to turn the problem around. We had to think creatively about how we could drum up business.

We suggested that she use door hangar advertisements to offer a special price reduction on the first service call. She hired some very inexpensive workers, and for two weeks, they hung 2,500 hangars a day. After just the first month of this promotion, she watched her cash flow go from negative $10,000 a month to positive $16,000.

My co-author, Tim O’Brien, and I have just published a new book entitled, “If You Have Employees, You Really Need This Book.” A very meticulous entrepreneur, Tim spent days and days researching the best ways to market our book. He knew that if we were going to be successful, the book had to be an Amazon.com Bestseller. We would need that stamp of success.

Tim discovered that in order to be an Amazon.com Bestseller, it had to be the top-selling book during a one-hour period on any given day. Tim quickly figured out that we could make this happen by encouraging all our friends and acquaintances to buy the book at a designated date and time. We sent out an e-mail blast to all of our supporters, asking them to buy the book on Wednesday at 11 a.m. If they did, they could go to our website at www.osteryoungobrien.com and get three bonus items. One of these items was a video of me talking about customer service, and a second was an e-book that Tim had written.

This was an innovative marketing effort that brought us great success. At the end of the day, we did become number one in our category at Amazon.com, and we did not have to spend very much to get it.

These are just three examples where alternative approaches to marketing products and services were customized to the entrepreneur’s circumstances and worked brilliantly. This is just the tip of the iceberg. There are so many other ways that can work for your unique set of products or services.

Now go out and make sure that you are considering alternative marketing techniques and not getting stuck in a rut with traditional methods.

You can do this.

Business and Marriage

2010-11-14T06:42:00.000-08:00

“It's all about quality of life and finding a happy balance between work and friends and family.” ~Philip Green

So many businesses are run by husband-and-wife teams. While working alongside your spouse may sound ideal, I can tell you that it is one of the most difficult partnership arrangements out there. Running a family business is like running a normal business but on steroids. Not only do you have to be concerned with all the usual entrepreneurial issues, but you must also deal with all of the family issues that are often so deeply engrained in the business.

For husband-and-wife teams and family-run businesses, one question always seems to arise. What comes first, the family or the business? For some, the answer is that the family always comes first, but for others, the business always takes the front seat. Where this is concerned, it is not so important which school of thought you subscribe to. The critical issue is that the priority is clearly articulated and understood by all of the partners.

We were helping a great couple that had been through so much. The wife started the business but had partnered with an individual that stole money and made her life miserable. It took them more than a year to dissolve this terrible partnership. Much like a very bad divorce, there were many legal and emotional challenges, and the path to the end just seemed interminable.

In order to finally end the long and nasty legal battle, the wife had to sell all of the assets and start a new company. She had to close the business for two months to make the much-needed renovations, and because of legal reasons, they had to form a whole new corporation with the husband at the helm. The wife could not be engaged at all.

While the husband was a great guy, he really had very little experience running a business, and he was equally inexperienced at managing the company’s all-women staff. As his lack of managerial skills began to affect the business, they hit a cash crisis.

Reacting out of fear that he would run out of money and the business would fail, the husband became very dogmatic in managing the staff. His lack of management skills became more and more pervasive, and both the business and the marriage began taking a thrashing. Adding an extra layer of complication to an already grim situation, the wife did not understand her husband’s reasons for adopting such a rigid management style. Soon enough, both business and marriage was floundering.

One day, I got calls from both of them, each saying how frustrated they were with the other. They had reached the breaking point. Their marriage was in serious trouble, giving out under the pressure as the husband struggled more and more with managing the business and the wife became more and more frustrated with her husband.

The following evening, I had dinner with the couple to see if I could help them deal with some of these difficult issues. To begin, I asked them whether they felt the marriage or the business was more important. In unison, they both answered that the marriage was. Once that was established, it was easy to show them what the real issues were and how they could resolve them.

One of their most destructive issues was their lack of communication. As they took turns discussing what they felt were the real issues, the other just sat there in awe. Neither had any clue how the other person felt. Up to this point, they had not been communicating effectively, and as a result, they were completely in the dark about the other’s motivating factors.

The couple came away from our meeting with a newfound understanding of the importance of really listening to what the other was saying. The husband agreed to back away from running the business, and the wife agreed to step up and run the day-to-day operations. They each would have a say in expenditures over $500, and to resolve the communication gap, they would have weekly meetings.

This husband and wife started the evening as two separate people operating in different universes, but emerged as a unified team. As we left the dinner, both husband and wife felt so much better because they now truly understood where the other was coming from, and they were prepared to work together and support one another.

Now go out and make sure that the communication channels are open in your family business, and that each partner’s needs are being met. Additionally, make sure that you all clearly understand what will come first, the family or the business.

You can do this!

Reward Programs Are So Important To Retaining Customers

2010-10-31T05:46:00.000-07:00

Rewarding your loyal customers is so important. That is to say, it is critical that you make a special effort to ensure your frequent customers feel good about your business.

After all, it is the repeat customers who provide a large share of a firm's sales. They are the low-hanging fruit for every business, both easier to attract and keep. Best practices of businesses suggest that 90 percent of sales should come from existing customers and loyalty programs really do help in retaining your existing customer base.

My new job at the Jim Moran Institute requires frequent travel, and I spend a significant amount of time flying Delta. Because I flew so much last year, Delta upgraded me to the "Silver Medallion" level, which entitles me to a number of perks. There is no charge for my checked baggage, I am allowed to board early, I'm fast-tracked through TSA, and I may choose seats in better locations on the plane.

You will notice that all four of these benefits have zero incremental cost to Delta, but they all have substantial value to me — and to all frequent travelers. What Delta has successfully done is set up a loyalty program that makes their customers feel good about their frequent purchases.

Some friends and I bought a gift for another friend who was in the hospital and we all wanted to split the cost. The decision on which credit card to use for this transaction was a function of who would get the most points from the credit card company by the purchase.

Once we determined the extent of the points this one credit card vendor provided, we all were looking into getting one those cards. In this case, the loyalty program not only retained the customer, but brought in new business as well.

Winn-Dixie and PetSmart are two other companies that get it. They print the savings right there on the bottom of the receipt so customers can see it every time they use their loyalty cards.

Where most loyalty programs fall down is it takes too long to get benefits. Such is the case with both my Best Buy and my Office Depot loyalty cards. I have no idea if I have ever spent enough to get any value from them.

Now go out and make sure that you have a program in place to reward your loyal customers. And remember to build your loyalty program in such a way that customers can see the returns every time they interact with your business.

You can do this!

Spirituality in Business

2010-10-24T13:19:00.000-07:00

I was recently called to assist a firm in Miami named Sonshine Communications. The communications and public relations firm is run by a very special entrepreneur, Bernadette Morris, who has held the reigns for more than 20 years. It is a very successful business, and it is also very unique in that it thoroughly incorporates spirituality into the workplace.

As Bernadette was showing me around her office, the first room we came across, right off the main entrance, was a spiritual/devotional room. When I asked about this room, Bernadette said she thought it was so important to have a quiet room for her staff to pray or meditate. I asked her staff about the room, and they said that even if they did not use the room often, it meant a lot just knowing it was there.

On the web, Sonshine Communications is described as “A Christian-based, minority-owned and operated, private corporation providing an array of value-added services in the realm of public relations, marketing, advertising and graphic design.” Additionally, when referring to its code of ethics it says, “The firm upholds a professional code of ethics in all of its creative endeavors and operates under principles of Godly living and Christian character.”

Obviously, spirituality plays a major role in this firm. It is present in every element of the business, and there is no question in my mind that much of its success can be attributed to this commitment to spirituality.

In 2003, a study published in USA Today showed that six out of 10 workers would like to see more spirituality in their workplaces. This is especially true today with Generation Y (born after 1980). This age group takes a much more holistic approach to their work life, and spirituality or religion is an integral element.

A number of empirical studies have shown that embracing spirituality will improve the bottom line of a business. A study by a University of Chicago professor found firms that make a commitment to ethics are more successful than companies that do not. A study in Business Week showed firms in Australia that adopted spirituality in their workplaces had greater productivity and less turnover. A study from MIT reported that employees want to practice their spirituality in the workplace without offending their co-workers.

Jeffrey Swartz, CEO of Timberland Shoes, uses his prayer book and his religious beliefs when formulating company policy, and often consults with his rabbi. The American Stock Exchange has a Torah study group, and Boeing offers Christian, Jewish and Muslim prayer groups to their employees.

Like Sonshine, Apple’s offices in California have a meditation room where employees are given a half hour of company time to meditate or pray. They know that doing so will improve the productivity of their staff.

I believe one of the main reasons that spirituality is now playing a bigger role in business is the presence of more women in the workplace. Women typically focus much more on spiritual values then men do. Additionally, the aging of our workforce also contributes to this trend. Baby Boomers are no longer satisfied by materialism and are looking for a deeper meaning in both their work and personal lives.

Now go out and consider how adding a spiritual dimension to your business might fit with your views and those of your staff. I promise your staff will appreciate the effort.

You can do this!

Managing the Average Employee

2010-10-17T10:16:00.000-07:00

"Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way and they'll knock your socks off." ~Mary Ann Allison

So much has been written about rewarding great employees and rehabilitating poor employees. However, the vast majority of the workforce does not fall into either of these categories. Most fall somewhere in the middle. I call them “c-employees.”

C-employees make up more than 80 percent of the average entrepreneur’s workforce. This group is responsible for the majority of output, yet they are all but ignored by most managers. Because they are doing ok, performing at an adequate level and not causing any problems, it is easy to overlook c-employees. But this is a dangerous path. C-employees must be managed – and managed well – in order for the organization to flourish.

A firm we were helping had a policy of rewarding great employees with cash incentives and a tough policy against staff that was performing poorly. C-employees were completely ignored, producing results that you would expect: morale had suffered dramatically. It never occurred to management that these c-employees would feel left out. They thought that since this group was not upset or complaining, everything must be okay.

It is natural for managers to want to work with their better employees since they typically share a similar work ethic, but they have to resist the temptation to devote all their time and attention to top performers. This is not to say that it is not worthwhile or productive to spend time with your better employees. Managers just must make sure that all employees are receiving a minimum level of attention. You simply can not neglect a staff member without paying a price.

Teamwork is not possible unless each worker feels like they are an important part of the team. It is every manager’s job to ensure that each member of their staff feels good about what they are doing, and that they are valued and appreciated.

To ensure my staff felt like an important part of the team, I always made it a point to greet them whenever I saw them and engage them in conversation about something they valued. Whether this topic was their family or a personal hobby, the point was spending quality time with each member of my staff and connecting on a personal level. I tried to go out of my way as often as I could so that every employee – top performer or otherwise – knew that I thought they were important.

Now go out and make sure that all your employees feel appreciated regardless of their performance level. Of course, you want to see them improve, but you can not expect your staff to up their efforts unless they know their current contributions are recognized and valued.

You can do this.

Focus Your Emphasis on Your Successes

2010-10-10T03:05:00.000-07:00

“Don't wait until everything is just right. It will never be perfect. There will always be challenges, obstacles and less than perfect conditions. So what. Get started now. With each step you take, you will grow stronger and stronger, more and more skilled, more and more successful.” ~Victor Hansen

As part of my job, I have talked to and counseled thousands of entrepreneurs. Once I have established a relationship with the entrepreneur, I walk them through the process of listing their successes and challenges to identify what we need to do to fix the business problem. Most often, they want to focus exclusively on their challenges and how they can overcome them.

For some reason, our challenges carry more weight in our lives than our successes. But if improvement is our goal, focusing solely on the challenges that stand in our way is not really the best method of getting there.

In the spiritual world there is a theory known as the Law of Attraction. The premise is that what you choose to focus on determines the things that come into your life. Honing in on the negative will produce negative effects, while reflecting on the positive will bring positive results.

Many probably remember “The Secret,” a very good DVD that came out a couple of years ago. This DVD covered the Law of Attraction and provided tons of examples and testimonials. Story after story was presented as proof of the Law’s primary assertion: focusing on the negative – your weakness – will only manifest as greater weakness.

I am a frequent speaker, and over the last 15 years, I have probably given more than 500 speeches. Additionally, as a professor, I have given lectures three times a week for the last 38 years. Clearly, public speaking is a critical element of my career, and you might be surprised to learn of a very large weakness of mine.

I have stuttered since I was three years old when my mother first took me to speech instruction to get help. I can remember times in high school when my stuttering was so bad that I could not even say the word “water.” I had to say “H2O” instead. To this day, my stuttering comes and goes depending on my stress level – stress dramatically affects my vocal cords.

From medication to speech therapy, I have tried a number of methods for controlling my stuttering. Only one thing has ever worked. The approach that produces the best results is focusing on times that I have been successful.

In years past, when I concentrated on trying not to stutter, it was worse than ever. I have adopted a different approach. Instead of focusing on my weakness, I think about how many speeches I have successfully given, or I visualize how great this speech is going to be. When I focus on my successes in this way, my speeches are normally great.

Many of the entrepreneurs we work with focus on their challenges, and of course, they generate more and more challenges as a result. One entrepreneur just wanted to talk about how poorly he understood financial statements. He was great at marketing and sales, but he did not acknowledge his strengths. He just went on and on about how he could not comprehend this element of his business.

The first thing we did was change his primary focus. Instead of honing in on the things he lacked, we focused on his strengths. This is not to say however, that we ignored his weakness. We got him set up with some great accounting help, but he came at it from a different angle, one where he focused on the things he did well.

Another entrepreneur we worked with was extremely skilled in systems implementation, but weak in the area of communications. When we focused on his strengths, his business improved dramatically, and we were able to solve the communication issue by hiring a communications director to handle the task he was not as good at.

Focusing on your strengths seems like such a simple concept, but it is one that we all tend to forget about. Most often, we dwell on our weaknesses, a practice that serves neither us nor our business.

Now go out and make sure that you are focusing on your strengths.

You can do this!

Make sure you include overhead in your pricing!

2010-10-03T05:56:00.000-07:00

“Profit and morality are a hard combination to beat.” ~Hubert Humphrey

So many of the business owners we help have difficulty dealing with pricing. The question of where to set their prices is a critical one for every company. If set too high, the firm will not pick up much business. If set too low, they will have sales volume but no profits.

Just because a business is maximizing sales does not necessarily mean they are making money. Having revenue coming in is not the same as making a profit, but many business owners confuse the two, especially in a tight economy.

We were helping a very neat company, the owners of which really care about the community. It is important to them to do all they can to make their community a better place to live. They are constantly volunteering for so many activities, and as a result, they have added a great deal of value to the local community. In the process, they have also earned quite a bit of notoriety for their company.

While these entrepreneurs have done an enormous amount of good for the community, their business was not doing so well. They were not taking much of a salary even though the company has been in business for more than five years and is well-established. Although a tad flat, their revenues were okay, but they were not generating sufficient profits. Their net profit margin continuously hovered around one percent after paying themselves their miniscule salary

Being a service business, they were charging by the hour. They were taking just about every piece of business that walked through the door so long as they were able to cover their direct labor expenses and generate a 10 percent profit.

What they forgot to account for in their pricing model is their overhead. Fixed expenses such as rent, office salaries and utilities, to name just a few, have to be paid regardless of the amount of revenue. In the end, they were having to divert about 50 percent of their revenue to cover overhead costs.

By failing to account for overhead in their pricing model, they seriously underestimated the true cost of their services. If each customer is not assigned a fair and equal share of the overhead, one must shoulder the entire burden – or the owner loses a lot of money.

We were able to get this point across to the owners, but they still had reservations about adjusting their pricing model to include the overhead. They feared many of their customers would think their rates were too high. We suggested that the way to overcome this was to price by the job instead of by the hour. This would allow them to charge the fees they need to cover the overhead and still be competitive.

The jury is still out on this business, but the owners now have a plan for profitability that will allow them to grow and be successful. Even more importantly, they can now start taking a salary that fairly compensates them for their efforts.

Now go out and make sure the pricing model you set for your products and services is sufficient to cover all of your costs, including the overhead. If you cannot charge a high enough price to cover your direct costs, overhead and profits, you need to find another way to ensure those expenses are covered.

You can do this!

Promote Your Business

2010-09-26T03:40:00.000-07:00

“For every sale you miss because you're too enthusiastic, you will miss a hundred because you're not enthusiastic enough.” ~Zig Ziglar

Repeat customers are invaluable. Whatever your business, you must do everything you can to encourage your customers to come back after each visit, whether online or in person.

I recently took my grandson to Five Guys, a very successful franchise that has more than 625 restaurants. Though I had never tried the restaurant before, I thought my grandson might like it. Turns out, he had been to one before, and I was right, he loved it!

When you walk in, lining each wall are large signs with quotes from newspapers all across the country. Though the words differ from one sign to the next, each quote boils down to one basic message: Five Guys is a great restaurant.

Obviously, the purpose of these wall quotes is not to bring in new customers but to encourage their existing customers to return. By posting these testimonials, I believe Five Guys is sending their patrons the following message: we are a great restaurant, and you need to come back if you want to be part of the experience.

Whether the food is good or not is immaterial to this message. They are simply making the point that eating at Five Guys is a great experience. For my part, I left wanting to come back with my grandson just to feel like I was part of this group of people who loved their food.

Another form of self-promotion is the on-hold telephone message. A study showed that 70 percent of business callers are put on hold sometime during their call. To take advantage of this time with their customers, many firms use these recording to softly sell their products or services. Since the customer has to listen, it is a great opportunity to pitch your products, but again, it must be a soft sell.

Many vendors provide this service, and you can locate them simply by Googling “on-hold advertising.” Costs range from $50 to $200 or more per month. Included in this cost are periodic updates and many of the front-end production expenses. It may seem pricey, but users of on-hold advertising say that they recovered the cost almost immediately and continue to see a return on investment over time.

Both of these methods allow you to promote yourself to your existing customers in a very inexpensive way. Of course, there are many other approaches, and you just need to find the vehicle that works best for your company. The critical issue is that you must make a continuous effort to transform current customers into return customers.

Now go out and find ways to promote your businesses to your existing customers!

You can do this!

Hiring Consultans

2010-09-19T03:18:00.001-07:00

"I am a little concerned that some of the measures that are proposed may simply increase the number of consultants who are telling businesses what they already know." ~Alasdair Morgan

At one time or another, every business will need assistance from a consultant to grow, merge, improve profitability or address some other area of concern. Small businesses just cannot afford to have an IT or HR expert on staff. Consultants provide a very effective alternative, enabling small business owners to access the expertise they need without having a full-time employee dedicated to the specific area in question.

Before hiring a consultant, you must first determine what the real issue is. In many cases, this is much more difficult than it sounds. We are frequently called in to help an entrepreneur with a marketing problem only to discover that the critical issue is actually cash flow. The entrepreneur did not realize cash flow was the problem until we asked some critical questions and examined relevant data.

Some issues such as producing an employee manual are easy to match with the appropriate consultant, but most issues are not nearly as clear. Through careful evaluation, you must identify the correct problem and hire the correct consultant.

As with any expense, you should exercise due diligence when selecting a consultant. Just because one comes highly recommended by a friend or fellow entrepreneur does not mean that they are the best option for you. So much about selecting a consultant involves personal chemistry. To be successful, the consultant must have a good rapport with you and your staff. If chemistry and trust are absent, neither you nor your staff will accept the consultant’s advice.

Price or hourly rate is not the most important factor to consider when hiring a consultant. Frequently you will find that the quality of the consultant correlates with the fee they charge. That is to say, the consultant who charges the lowest fee is often the worst one you can find.

Rather than focusing on the cost, you should consider the value of their results. It is so much better to pay more and get more value than to go for the bargain basement consultant just to save a few bucks.

Another vital consideration when hiring a consultant is your willingness to accept the results. After meeting with an entrepreneur and making suggestions for improvement, we frequently find that they have received the exact same recommendations from a former consultant. When we ask why they did not follow through with the suggestions, they typically say they were too busy.

Bottom line here is if you are going to hire an expert, you must make a commitment to try the recommendations. If they do not work, jettison them, but not even trying is neither effective nor constructive.

When you find yourself in need of an expert’s services, hire a consultant that will add value to your company. Before you make a selection, however, make sure that you have identified and defined the problem that you would like them to address with some degree of specificity. Additionally, make a commitment to follow through and give their recommendations a try.

You can do this!

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Email: A Blessing or a Curse?

2010-09-12T06:20:00.000-07:00

“Take advantage of every opportunity to practice your communication skills so that when important occasions arise, you will have the gift, the style, the sharpness, the clarity, and the emotions to affect other people.” ~Jim Rohn

Of all the technologies that have emerged for communications in the last couple of decades, email is among the most revolutionary. It has completely changed the way we communicate, making it so much easier than any other method that has been available in the last 20 years.

At one time, typewriters were a critical element for communicating via U.S. Mail. It was such a slow and cumbersome process. I still remember struggling to align the paper, and making a correction was very, very difficult.

However, despite all the improvements and efficiencies email brought with it, there are a number of issues that users should be aware of. By far, the most important of these is that once you hit send, it is nearly impossible to recover or amend the message.

In light of this, proofreading is absolutely critical. And more than just checking for grammatical errors, you should be verifying that you have said exactly what you mean and are aware of how your message might be interpreted.

Additionally, email and emotion are a dangerous combination. If you are having strong feelings of any kind – positive or negative – it is best to wait until your emotions settle before hitting send. The fallout from an inappropriate email can be devastating.

I have seen managers send out an angry email to a staff member who messed up, only to realize later that they acted before they had all the facts. The damage from this kind of email can never be repaired.

Another shortcoming of email is that it is a flat form of communication. Consisting of nothing more than words, it is impossible to communicate emotion via email. People often forget this fact and send email messages that really should be delivered in person.

Sending an email to congratulate a team member on some accomplishment, for example, may fall short of the mark since you can not really express your feelings of joy. You would really want to deliver a message like this in a face-to-face meeting or in front of his or her entire team.

Most people, including me, get way too many emails, and one thing that absolutely drives me crazy is receiving a message that covers three or four different items. Sending a message like this significantly impairs the receiver’s ability to respond quickly.

When I receive emails that cover more than one topic, it automatically drops down on my priority list because I have to save the message until I have more time to respond. For this reason, it is so important to cover only one point in each message. You will find that people will respond much more quickly to one-topic emails.

Another of my email pet peeves is long narratives. Most decision makers want just the facts. Email is not a good place to practice elegant writing 101. I want an email that is no longer than one paragraph so I can quickly respond with a short answer. Most people are so limited on time that brevity must be the rule and not the exception with this medium.

The subject line is another critical element. In order to get your message read, the subject line must be both precise and accurate. One entrepreneur wrote “important” in the subject line of every single email she sent. Eventually, her staff began ignoring her messages. The more precise your subject line, the more successful the communication will be.

Lastly, email should not be used to communicate anything that is really important or personal. If you want to tell a staff member about a problem you are having with their work, email is just not appropriate.

For instance, if I have an employee that has not been meeting their sales goals, sending them an email about improving their numbers is going to do more to irritate them than accomplish anything of value. It really is best to address an issue like this in a face-to-face meeting that allows you to discuss how you can work with them to improve their sales.

Overall, email is a very effective communication tool, but it should not be your default. It is just not always going to be the appropriate choice. Now go out and make sure that you are using emails effectively in your organization.

You can do this!

Customer Service Facts

2010-09-05T04:45:00.000-07:00

"The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer." ~Peter Drucker

Because customer service errors are so glaring and so easy to fix, I focus heavily on this topic in my articles. Recently however, a reader wrote to me (I respond to every email) saying that while she was a believer in the power of great customer service, her boss needed some convincing. She wanted to know what facts I could provide to persuade her boss that improving customer service would increase the company’s ROI.

Right then and there, it occurred to me that for all the time I spend writing about this topic, I have failed to give enough empirical data to support the merits of improving customer service.

A very impressive company named TARP (completely unrelated to the government bailout of banks) has been providing a great service since 1971. This company works with the most renowned firms in our country collecting data on customer service. Their website, http://tarp.com/home.html, offers an ROI calculator that computes the ROI you can anticipate when improving customer service.

TARP reports that 68 percent of customer defection results when customers feel they have been poorly treated. In a similar situation, a friend of mine walked into a store to buy some new running shoes. His feet tend to overpronate, which means he needs shoes that have special support features built in or else he will wind up running on his ankles.

The two salesmen (the term is used very loosely here) were both 16 years old and utterly devoid of any knowledge about the shoes or my friend’s condition. They were clueless about how to help. My friend would love to shop locally, but if he can not get the customer service he needs, he will simply do his research and order his shoes online.

Lee Resources reports that for every single customer complaint you receive, there are 26 others that remain silent. From this statistic, we gather that we must investigate each and every complaint in order to ensure the problem is not more widespread. Think of a customer complaint less as a “problem” and more as a “blessing.” It gives you the chance to correct a situation before it gets out of hand.

NOP Worldwide reported that a one percent reduction in customer service issues could generate an extra $40 million in profit for a medium-sized company over five years’ time. This solitary fact was earthshaking for me because it so vividly illustrates the considerable impact customer service has on the bottom line. Customer service is not an expense. It is a profit center in its own right.

Another interesting fact reported by Lee Resources is that 70 percent of complaining customers will continue to do business with you if you resolve their complaint. Ninety-five percent will continue to do business with you if you resolve the problem immediately. Too often I see businesses ignore customer complaints rather than dealing with them. Customers really want to stay with you even if there is a problem. If you want to keep these customers, it is crucial that you to make sure you rectify the problem quickly.

Now go out and make sure your customer service experience is great, and that you recognize its true value to your business.

You can do this!

Passion is so important in running your business!

2010-08-29T15:09:00.001-07:00

“Follow your bliss and the universe will open doors where there were only walls.” ~Joseph Campbell

I feel that passion is so vital both in life and in business. Far too often we see business owners who either lack or have lost their passion. Without passion, you become complacent, and complacency is a death sentence for any business.

It is so easy to get off track. Without passion, work becomes a job rather than an exciting new adventure to tackle each day. When complacency sets in, an entrepreneur loses the desire to make necessary improvements. When a business stops improving and growing, failure is not far behind.

I was working with a very successful entrepreneur who came in to our meeting saying, “I feel so good that everything is going well, and I do not want to change anything with my business.” Upon hearing this statement, I wanted to jump out of my chair and force him to see just how complacent he had become. Though he thought that everything was great, the reality was that his complacency was taking his business the wrong way.

This entrepreneur heeded my warning – “Jerry’s kick in the butt” as he calls it – and turned his business around. It is now growing like weeds. Our talk might have been the catalyst that led to this great change, but it was his acknowledgment that his attitude was holding his company back that made the real difference. Rediscovering his passion made him a new man and reinvigorated his business.

In another case, an entrepreneur’s complacency and lack of passion combined with the current state of the economy put his business in danger of closing its doors. I have talked to this entrepreneur tirelessly over the years, but I have been unable to resurrect his passion. Now, rather than running and managing a business, he just goes to work.

These are both very interesting cases, but the truly intriguing part is how differently the two turned out. In the first case, the entrepreneur listened and acknowledged that his lack of passion was having a negative effect on his business. Though the second entrepreneur also listened, he just had nothing left – no drive to run his business. I finally had to recommend that he sell it. If you have no passion for your business, you either need to figure out how to get it back or get out.

Here are some questions to help you evaluate if your passion is where it should be. First, ask yourself if you could start over, would you still choose the same industry and business. Secondly, do you get up every morning excited about going to work? Finally, are you so excited about your business that you want to tell the world how great it is? If you answered “No” to any of these questions, your passion might be waning.

Colleagues and other entrepreneurs are another great resource. Ask them if they think you are getting complacent. Also, let your workforce be your mirror. They will frequently reflect the passion they see in the owner or manager.

Now go out and make sure that you have the passion necessary to be successful.

You can do this!

Making Customer Service a Priority

2010-08-22T03:21:00.000-07:00

“Look through your customer's eyes. Are you the solution provider or part of the problem?” ~Marlene Blaszcyk

One of my favorite topics to speak on and write about is customer service. I am so fond of this subject because I can see the issues from the perspectives of both the business and the customer.

Advertising is set up to bring in new customers. But once advertising has done its job, the focus should shift to keeping those new customers. When it comes to retention, customer service is the key.

Businesses spend large sums of money on bringing new customers in – just look at the size of many marketing departments. Though best practices suggest that 90 percent of sales should be from existing customers, many businesses spend very little on customer service.

Many business owners lose their customer service focus, and this apathy tends to trickle down to the staff. In order to ensure each and every customer feels good about their experience with your company, business owners must make customer service a priority.

Recently, I went to a doctor’s office as a new patient. I had scheduled the appointment for 10:30 a.m., but when the office called the day before to confirm, they had the time down as 12:30 p.m. When I nicely reminded them that the time was 10:30, not 12:30, they replied, “Whoops. Can you change your schedule to come in at 12:30?” When I said that I could not, they said they would work me in at 10:30. This conversation should have been a warning to me of the service I would receive the next day.

As I was getting out of my car at 10:15 to go into the doctor’s office, I immediately noticed that the paint was starting to peel off the building. As I approached the front door, I noticed that it was covered with nicks and cracks and looked like it had been through a war.

As I walked into the waiting room, I felt as though I had traveled back to the 1950s. Everything looked like it had never been updated or repaired.

The offenses continued as I approached the counter to sign in. The person who greeted me was wearing the biggest frown I had ever seen. As if that was not enough, she also threw me a look that said, “What the heck do you want?” Next, when I told her I was a new patient, she practically threw me the clipboard with the paperwork to fill out.

When I returned with the completed paperwork, she was talking with a colleague, and she completely ignored me for three minutes even though she could see I was waiting. Somehow, I managed to remain relatively calm.

At 11:30, they called me back to see the doctor, and at noon, the doctor finally came in. He never acknowledged that he was late or that I might have been inconvenienced by his tardiness.

While the doctor was very good at treating my medical issue, the bad taste left by the extremely poor customer service trumped that fact altogether. I will not be returning to this doctor’s office.

Every business can expect to have some sort of customer service issue, but in this case, the problems were systemic.

So why was the customer service in this office so badly managed? I believe the answer lies with the doctors who own the practice. They only see their job as providing medical treatment to their patients. Everything else is unimportant.

Whether dealing with medical practices or businesses, our focus must be constantly tuned in to customer service. To ensure that every customer has the best possible experience with your business, providing great service has to become a ritual or a habit.

Now go out and make sure that you make customer service a high priority for your business.

You can do this!

Getting the most from your business signage

2010-08-15T05:26:00.000-07:00

"The right name is an advertisement in itself." ~ Claude Hopkins

Over the years, we have helped so many companies that just do not realize the importance of signage. One such business – a dance studio – just did not see any real value to having a sign. However, once we explained the importance of signage and she decided to put one out, the owner had people coming up to her all the time saying, “I had no idea that there was a dance studio here!” As a result of this small and inexpensive sign, this business owner’s revenue increased dramatically.

In another example, a semi-pro football team was having trouble attracting the attendance they needed. Because they played at a high school field, they could not put up a physical sign. As an alternative, a couple of days before each game, they had someone stand in front of the high school and wave a sign at the cars that passed by. Just this small change made a major difference in the attendance for each home game.

Simply having a sign is important, but what the sign says and how it says it is equally critical. In the case of one art studio that we were assisting, the sign focused on the owner’s name and not on the business’ purpose. We suggested that the sign emphasize the fact that it is an art studio instead of spotlighting the name of the owner. This simple change is expected to make a significant difference in their sales.

A sign’s purpose should be twofold. First, in order to attract customers, a sign should include the name of the business as well as what it does. A sign that simply says, “Joe’s,” does not tell potential customers anything about what you really do.

Secondly, a sign raises awareness about your business. It is a constant reminder to anyone who passes the location that it is there. For this reason, your sign should be located where it is visible to the greatest number of customers. If your sign is not visible from many directions, it will not do your business very much good. For example, a bookstore was struggling with sales since they were never able to place their signs where a sufficient number of potential customers could see what they offered.

I think the biggest mistake business owners make is trying to include too much narrative on a sign. A sign must be simple, communicating the name and purpose of the business. If, however, there is something unique about the business, it is vital that this information be included on the sign. For example, if a store is open 24 hours a day, this should appear on the sign since it is an important detail about the business.

Signage, however, is not as critical if you are a destination location, meaning that people find you in order to be your customer. If you manufacture a tool that you sell nationally, for example, signage can be minimal, particularly if you are not located on a highly traveled road.

Now go out and evaluate your current signage. Does it include both the name of your company, as well as what your business does in an attractive, motivating way? Both elements are essential if you truly want to make the most of your signage.

You can do this!

Business Presentations are so Important

2010-08-08T09:24:00.000-07:00

‘It is not so much the content of what one says as the way in which one says it. However important the thing you say, what's the good of it if not heard or, being heard, not felt.’ ~Sylvia Ashton-Warner

One of the most important elements in an entrepreneur’s arsenal is the business presentation. Used to either inform staff of changes or sell a product or service to a potential client, these presentations are critical, and without exception, business presentations must effectively communicate information in a meaningful and understandable way.

I have seen so many business presentations fall flat for a myriad of reasons. When it comes to making a business presentation, adequate is not acceptable. They must be the best you can make them, and in order to be effective, several key elements must be present.

First impressions are crucial. People make judgments about others within five seconds of meeting. Therefore dress, posture and handshake are just as important to delivering a successful business presentation as the information you communicate.

I was at a presentation, recently, which was very good but the presenter looked like he had slept in his suit. He was not considered at all for the work because his first impression was so bad.

Determining the purpose of the presentation is essential because the purpose affects the presentation delivery. For example, if the purpose of your presentation is to inform staff about an upcoming change, it will be very different from a sales presentation.

Along similar lines, you must also determine what you want to accomplish as a result of your presentation. Making a presentation without having clearly defined the results you want to achieve is like driving on a road without a destination.

To illustrate, imagine you are giving a sales presentation. Your purpose is to provide a client an overview of your services. Your desired outcome might be that the client recognizes a product or service that could be beneficial to their operation. In another example, if you are making a presentation to your staff to introduce a new organization chart, your desired outcome would be that the staff accepts and welcomes the new structure.

Understanding your audience is another critical element of the business presentation. When I am teaching classes to my college students, I have to spend a fair amount of time going over the basics as they all come from different backgrounds. However, when I do presentations to business audiences, I get right down to the point I am trying to make and then show how that point stands to benefit them.

While PowerPoint is a great tool for making business presentations, beware of the pitfalls. Avoid too many slides. I can not count the times I have wanted to go to sleep during a presentation that had too many slides. If you put me in a room, dim the lights and lose my attention, you have completely defeated the point of making the presentation because I am obviously not going to comprehend or remember the material. A good rule of thumb is that you should be able to cover one slide every three minutes. It is so much better to cover less and allow participants the opportunity to ask questions that will delve deeper into the subject matter.

When using PowerPoint, you should also pay special attention to the appearance of the slides. They should look professional and not like they were prepared the night before. With any business presentation, every step must be meticulously planned out and well executed.

The final essential element of a business presentation is the call to action. If you do not ask your audience to take some sort of action, the presentation really does not have much value. For example, in a sales presentation, you might want to be asked to come back to make a more in depth presentation to the top brass. In a staff presentation, the desired action might be improved coordination among departments.

Some of the best business presentations that I have ever seen are those that Steve Jobs gives to introduce a new product. They are impeccably orchestrated, and the blend between the speaker and the slides is seamless. You can view the recent iPhone 4 introduction on Apple’s website, http://www.apple.com/apple-events/wwdc-2010/.

Every entrepreneur, manager and salesperson must make business presentations. They are the vehicles by which you communicate information, and they need to be great.

Now go out and make sure that your business presentations are structured properly and are getting you the maximum results possible.

You can do this!

You need profit centers for your business.

2010-08-01T11:24:00.000-07:00

“Profits are like breathing. You have to have them. But who would stay alive just to breathe?” ~Maurice Mascaranhas

One of the most basic tools available to entrepreneurs is a profit center. A concept originated in the 1940s by the great management guru, Peter Druker, profit centers divide a company into smaller entities allowing entrepreneurs to measure results more easily. These results can be used to hold each unit accountable for desired profit levels or simply to ensure that they are generating sufficient profits.

Though not prudent for organizations with sales of less than 10 percent, businesses that sell more than one product should use the profit center model. Without profit centers, managers have a very difficult time figuring out their goals and objectives.

Profit centers are simple to set up. Accounting software such as QuickBooks allows entrepreneurs to easily evaluate unique profit centers by assigning different categories of accounts for both revenues and expenses.

When using profit centers, costs and revenues should be allocated to each center. While revenues are easy to allocate, costs are a tad bit harder. It is important to realize that the bottom line profit for the center may not be 100 percent accurate due to the process of allocating fixed costs. However, as long as the reporting process is identical each month, the measurement will be valid.

Most businesses have no problem allocating variable costs to a profit center. For example, we were working with a lawyer whose practice covered many areas, but he was unsure of where to spend his time. Profit centers allowed this lawyer to clearly measure and manage how much time he and his staff spent with each client every month. For a retail operation, the direct costs would be the cost of products sold, which again, is easily measured.

The process gets more difficult when it comes to allocating fixed costs. Each center must cover its fair share of the company’s overhead. For example, each profit center should be charged a pro rata share of the CEO’s salary.

The allocation of fixed costs can be handled a number of ways. One option is to apply the overhead as a function of sales for each profit center. A second alternative is to allocate the costs as a function of how much floor space they utilize. And the list goes on. Whatever the chosen allocation method, as long as it is consistently applied, the measurement will be fine.

Now go out and make sure you have a profit center set up for each element of your business. If you are having difficulty setting up profit centers, your accountant can provide assistance.

You can do this!

You must define the purpose of your business!!

2010-07-25T04:29:00.001-07:00

“The first principle of ethical power is Purpose. By purpose, I don't mean your objective or intention-something toward which you are always striving. Purpose is something bigger. It is the picture you have of yourself – the kind of person you want to be or the kind of life you want to lead”. ~Ken Banchard

Most businesses have a mission and vision statement, normally developed during a strategic planning session. However, these statements very rarely address the real purpose of your business, and I feel that purpose trumps mission and vision statements every time.

I am not saying that vision and mission statements are unimportant. I am only saying that a business must first have a clearly defined purpose. Otherwise, it is too easy to get off track when developing mission and vision statements.

A statement of purpose should be very short – no more than one sentence – and should provide a foundation on which mission and vision statements build. Take for example the Jim Moran Institute’s Outreach Program. The purpose is, “To help entrepreneurs be more successful and profitable without ever a charge.”

When our kids were around five years old, they had a favorite question. They must have asked this question at least 25 times every day, driving us absolutely nuts! You guessed it. That question was, “Why?”

As crazy as it made us to hear it over and over again, asking “why?” was their way of trying to understand this very complicated life we live. Now, my daughter has to listen to her very special son ask, “Why, mama?”

So what does this little anecdote have to do with purpose statements? “Why?” is one of the two questions that entrepreneurs must ask themselves when generating their purpose statement. “Why are we in this business?” And the second question: “What do we really want to get out of it?”

In addition, while mission and vision statements are typically crafted without any emotional hooks, a purpose statement should generate some emotional feeling in order to really be accepted by the staff. Staff may not know or understand your mission and vision statement, but they need to understand and be able to express the purpose of your business.

A financial institution’s purpose statement might be something like, “To provide exceptional financial services to our customers while ensuring a reasonable rate of return.” The purpose of a men’s clothing store might be, “To be a family business that strives to make each customer look and feel good about their clothes.” An awards/trophy store might say their purpose is, “To sell products that make people feel good about their accomplishments.”

Conceived by founder, James Dyson, Dyson’s purpose is as follows: “To make things that work properly.” Not only is it very clear, it is easy to get behind because it makes most people feel good to have this as their purpose.

Now go out and make sure that you identify the real purpose of your business and develop a statement that encompasses it. This must be done in order to ensure your staff is on the same page.

You can do this!

Do Not Get Involved in the Minutia of Running a Business

2010-07-19T13:37:00.000-07:00

There are two levers for moving men – interest and fear. ~Napoleon Bonaparte

From employees to finances to marketing, there are so many issues for entrepreneurs to deal with when running their businesses. These concerns are always going to exist, but it is critical that you do not let the minutia overwhelm you.

We were dealing with a very successful entrepreneur whose business was having some sales issues. He had recently moved the person in charge of sales to another position, and now there was no one to run the sales operation. He was the ideal candidate to step in, but he just could not seem to do so.

After much discussion, he finally admitted that he just did not feel that he could step away from running the business to tackle these sales issues. When asked why, he said he felt he had to stay involved in the business or it would implode.

Upon closer analysis, it became apparent that he was involved in every detail of running the business. He felt that it was his responsibility to ensure every mundane task was accomplished.

The true irony of the situation was that he thought he had to deal with every little thing in order to keep his business from falling apart, but he was so caught up in the minutia that he was letting his business slip. Even though he knew what the real issues were, he felt that he could not step away from the tasks that he considered so vital.

No matter how much I tried to convince him to jump in, handle the sales and let go of the day-to-day details, he just could not do it. He was so wedded to what he had done in the past, and he just did not see how his behavior was causing the firm to hemorrhage.

Although we do not know what became of this entrepreneur, there is so much to be learned from his example. Entrepreneurs must continually remind themselves that their time is worth at least $100 an hour. Consider whether the business is getting value from what you are doing. It is so easy to get involved in tasks that are urgent but not important. Reminding yourself that your time has high and measurable value to your business will help you remain focused on those tasks that are in its best interest.

I have found that one of the best tools for time-starved entrepreneurs is a time log. Record what you do every 15 minutes for three days. For most people, this is a very illuminating exercise as it allows them to look back and see how much time they are wasting on interruptions. If you can free two or three hours a week, then you can work on the important elements rather than the urgent ones.

Now go out and make sure that you are doing what is necessary to keep your company viable without getting caught up in the minutia.

You can do this!

Select Your Business Lawyer Very Carefully

2010-07-12T06:17:00.000-07:00

“If you come to a fork in the road, take it.”~Yogi Berra

Most business owners wind up needing a lawyer at some point. This can be for a whole variety of reasons, but often, businesses need a labor attorney to defend them against aggressive attorneys who are representing ex-employees.

We were helping a partner in a business who wanted to buy the other partner out. The partners could not come to an agreement on the price, so they ended up going to court.

After months of dealing with the complex legal system, a hearing was finally scheduled. The judge would determine the value of the business and how to divide the assets.

Because of the intricacy of the case, the partner we were helping had to hire a personal lawyer, a corporate attorney and a forensic accountant. Both the personal attorney and the corporate attorney were selected based on recommendations. The personal attorney was suggested by a very good friend, and the corporate attorney was referred by the forensic accountant.

Relying solely on recommendations when selecting attorneys can be dangerous. In this case, the personal attorney turned out to be a criminal defense attorney, and the corporate attorney was a labor attorney. Neither lawyer had in-depth experience in business litigation, nor were they certified in business litigation by The Florida Bar.

Clearly, I am not an attorney, but I have had to deal with them on a continual basis. Over time I have learned that all lawyers are not the same. Just because someone has a law degree and passes the Bar does not mean they are competent in the area that you need assistance. You need to find an attorney that specializes in the issue you are having.

When shopping for an attorney, I suggest you start by asking friends and relatives. Take those recommendations then do some research. Consider how many similar cases the attorney has taken through trial. Narrow your list to several possibilities and meet with each. It is important that you talk to more than one so you have a comparison on which to base your selection.

Another great way to find an attorney is via referral from your local Bar Association. Again, you must select one that specializes in your type of case.

The Florida Bar defines a certification as follows: “Board certification recognizes attorneys’ special knowledge, skills and proficiency in various areas of law and professionalism and ethics in practice.
Certification is the highest level of evaluation by The Florida Bar of the competency and experience of attorneys in the areas of law approved for certification by the Supreme Court of Florida.”

The Florida Bar’s website, www.flabar.org, is a helpful resource. The site shows if an attorney has had any problems with The Florida Bar and how their peers have evaluated them. It also lists any certifications the attorney holds, and allows you to search by certification and location.

In addition to the lawyer’s experience and certification, you will also need to consider whether you want to go with a large or a small firm. Large firms charge for any and all individuals that help in the case. These fees can add up in a hurry.

On the other hand, small firms charge lower rates, and you will receive much more attention. However, smaller firms will not have the network of associates that larger firms have to pitch in and help with your case.

Hourly fees are important, but when shopping for a lawyer, there are other factors that could mitigate a higher fee. For example, one attorney might charge more than another, but the individual’s experience level could result in lower total fees.

Finally, you must have a written document that lays out how any retainer (advance) funds will be used and when more funds will be needed.

The bottom line here is that if you need an attorney, you need to put in the time and do your due diligence to determine whether or not the attorney will be an asset in your case. The selection process boils down to one critical factor: whether or not the candidate is experienced with the specific issue that you are having.

You can do this!

Reward Staff When You See Them Doing Great

2010-07-04T04:45:00.001-07:00

"Men do not value a good deed unless it brings a reward." ~Ovid

We were helping one entrepreneur who said he never recognizes and rewards good behavior because he is afraid that for every good thing he sees, there could be several bad things that he does not. When asked about it, he said, “If I say anything about good behavior, I may not have the opportunity to reprimand the employee when they do something wrong.”

When I heard this statement, I honestly almost fell out of my chair. I was shocked to hear this from him because I had thought he was a great manager! The sad thing about it is that he thought he was a great manager too.

If you are really going to be a great manager, I believe that you must recognize good behavior whenever you see it. After all, one of the objectives of a manager is to make sure their employees feel good about what they do. Good behavior must be recognized on the spot in as public a manner as possible.

So many managers tend to hoard these complements, not realizing that there is no limit on the amount of rewarding they can do. When our children were small, we repeatedly read them a story about “warm fuzzies” and “cold pricklies.”

The story said that we have the capacity to dole out endless amounts of either of these. The ultimate message was that we should give out “warm fuzzies” at every opportunity as they make other folks feel good. “Cold pricklies,” on the other hand, make folks feels bad. Managers should apply this same theory to recognizing good behavior among their employees.

Many managers refuse to give out “warm fuzzies” because they rarely got anything from the people around them. However, they must learn to give rewards, or their staff will not respond very well to them.

There is a school of thought among some managers that an employee should get their reward from simply doing their job. However, as human beings, we need to be told that we are doing well and are appreciated. Remember, your staff spends more time with you than they do with their families. Sure, they are paid, but every employee needs to be rewarded as frequently as possible.

Just recognizing good behavior is great, but you must do so with true sincerity, otherwise the message will not be heard. To illustrate, take this for an example. How many times have you had a restaurant manager stop by your table and ask how your meal was, all the while demonstrating about as much concern as a golf club would? The point is that with any type of reward, it must be done with sincerity and honesty.

As I go around helping businesses, I often can tell which ones make their staff feel good just by watching their employees interact with customers. If you start being conscious of your employees’ good behaviors and rewarding them accordingly, I promise that the morale of your business will improve dramatically.

Now go out and make sure your management team has made it a high priority to reward good behavior when they see it.

You can do this!

Growth is Not Always a Good Thing

2010-06-27T07:12:00.000-07:00

“Slow buds the pink dawn like a rose from out night’s gray and cloudy sheath; softly and still it grows and grows, petal by petal, leaf by leaf…”

~Susan Coolidge, “The Morning Comes Before the Sun”

We were helping a young entrepreneur who started a business four years ago with $10,000. Through hard work and smart decisions, she has grown the business to $8 million.

Her goal each year has been to grow sales by at least 30 percent, and even in a difficult economy, she has been able to meet or exceed this goal every year. Now she wants to continue this growth path.

She financed her business and growth with internal or retained earnings, and doing so has left her with very low equity. Now, she has financed 99 percent of her assets, and debt financing is her only means of obtaining the capital necessary to continue growing.

She came to us for help because, with her debt ratio so far out of whack, banks would no longer lend to her. She was at a loss as to how she was going to finance this year’s growth. She knew something was not right, but she just could not articulate or diagnose the problem.

This entrepreneur suffered from what I call “Growth At Any Cost Syndrome.” She thought that if she did not grow, her business would fail.

The problem with growth is that even though sales are up, cash flow needs can easily reach double the sales amount. To support increased sales, you must be able to finance additional receivables and larger inventories on top of a multitude of other costs.

If a firm has too much debt and is trying to grow, they have only two options. First, they can try to raise additional equity capital. The problem here is that so many small businesses cannot attract minority shareholders. This is because there is no control with minority equity interest in a small business. In addition, minority shareholders will not have any liquidity. The bottom line is that acquiring new equity capital from outsiders is very difficult – if not impossible – for most small businesses.

With option one ruled nearly impossible for a small business, only one alternative remains: to slow the growth down – even stop it altogether – and allow equity to build up through retained earnings. This is a very slow process, but it is the only dependable way of setting the stage for future financing. Growth sucks up cash, and slowing its progression is the only way to allow your cash stores to replenish.

Our advice for this entrepreneur was to slow her growth rate. While resistant at first, she quickly realized that this was the only way she could get where she wanted to be.

Increasing sales is not always the best strategy because it normally does not allow you to build up the infrastructure you need to grow your company. If you find yourself in a position like this entrepreneur, slowing your growth to allow cash and profits to build up is a very viable alternative.

Now go out and make sure that you have a growth plan in place, and that the plan ensures you are not taxing your resources.

You can do this!

You can deal with problem employees

2010-06-20T08:27:00.000-07:00

“The tougher the job, the greater the reward.” ~George Allen

Problem employees are the bane of every manager’s existence. By “problem employee” I mean an individual whose behavior negatively affects the morale and operations of the entire business in a significant way. For some reason, every organization seems to have at least one of these. Examples of some problem behaviors I commonly see are as follows:

1. An employee just does not do what he or she is asked even after repeated requests.
2. An employee’s temper causes everyone to tip-toe around them in fear of inciting their anger.
3. An employee is habitually late.
4. An employee’s extreme negativity detracts from the business’ mission.

Whatever the problem behavior, there are two ways of dealing with it. One is to do nothing, and the other is to take action. However, in about 99 percent of cases, ignoring the problem only makes it worse. Why does this happen? In my opinion, it is because doing nothing and pretending the problem will go away on its own is tantamount to encouraging – even rewarding – the undesirable behavior.

You must also consider that allowing one employee’s bad behavior to persist destroys your credibility as a manager. Whether you acknowledge it or not, your entire staff knows that there is a problem, and when you do nothing, your staff wonders why you do not act. In the end, your inaction dilutes your effectiveness as a manager.

One firm that I was assisting had an employee that was habitually 15 to 30 minutes late. Sometimes the manager took corrective action, and sometimes he ignored the problem. When dealing with these less severe kinds of behavioral issues, consistency is critical. If employees perceive you or your policies to be inconsistent, your credibility will be non-existent, and problem behaviors will escalate.

Where more serious problems are concerned, you must address the issue no matter how important or valuable the employee is. No employee should become so valuable that you cannot do without him or her. The minute an employee becomes invaluable, you allow that employee to take you hostage. The goals and mission of the department must be given a higher priority than the welfare of one problem employee.

One effective way to approach a problem employee is to ascertain the real issue, then address it in a meeting. The sooner this meeting takes place, the more quickly the problem can be resolved.

Without exception, when a problem employee is removed, the morale of the entire business improves dramatically. While terminating employees is not a pleasant experience, the price is much higher when you allow a problem behavior to continue. Additionally, in so many cases, termination was exactly what that employee really wanted. They just did not have the courage to quit.

Problem employees affect every single staff member, and I guarantee you that your staff would rather work harder and longer than put up with bad behavior. They will all be willing to pitch in if it means their working environment will be improved.

Problem employees can have devastating affects on the morale of your entire department. By dealing quickly and fairly with these employees, you ensure that your business remains a wonderful place to work.

You can do this!

Getting a Loan: The Rules Have Changed

2010-06-14T14:49:00.000-07:00

“If you don’t like something, change it. If you can’t change it, change your attitude.” ~Maya Angelou

So many of the entrepreneurs we help at the Jim Moran Institute are expressing frustration with financial institutions and their new lending processes. In the past, entrepreneurs could get bank loans without too much hassle. However, because of the recent credit crunch, these financial institutions have adopted much stricter loan requirements.

Financial institutions have a gross margin of less than five percent. That is, the differential between the rates they lend and the rates they pay depositors is very low. Under normal circumstances, financial institutions have to make 20 good loans to make up for one bad loan.

Because of the collapse of the real estate and construction industries, many financial institutions have experienced large losses. As a result, their ability to take on risk has been significantly diminished. In general, bad loans reduce income, which in turn, reduces a bank’s equity. Once the bank’s equity goes down, their ability to lend decreases dramatically.

While financial institutions would like to give more loans, they are simply unable to do so. If banks or credit unions are making commercial loans at all right now, they are requiring so much more in an effort to minimize their risk. For example, they now want great business plans backed up by documented facts, not projections.

Many entrepreneurs are taking these heightened requirements personally. However, things have changed, and entrepreneurs just need to understand the new rules.

First, if you are going in for a loan, you just need to expect it to be a much more exhaustive process than previously. Just about all financial institutions are now requiring some form of collateral to cover the loan. While this might seem onerous, it is just a precaution these financial institutions are taking to ensure they do not lose any more money. The more collateral you offer, the higher your likelihood of getting a loan.

Additionally, financial institutions are carefully evaluating a borrower’s ability to repay the loan. We are working with a business that is looking to secure a loan for the property they are using. In this case, the financial institutions are requiring personal guarantees (which is normal), but they also want documentation showing the business’ past financial performance. They want to ensure the business is going to be able to make rent payments back to the owners, thereby minimizing their probability of loss.

If you are currently in the market for a loan, you just have to realize that the rules have changed drastically. Getting a loan is much tougher, but understanding the new rules and being able to anticipate what financial institutions are now looking for will make the process far less frustrating.

You can do this!

Economics of Green Alternatives

2010-06-07T02:48:00.000-07:00

"Civilization and profits go hand in hand." ~Calvin Coolidge

Lately, I have seen more and more businesses adopting new technologies to save energy and garner applicable tax incentives. While saving energy and other natural resources is critical to our earth, these decisions must be made within an economic framework.

Before my inbox is flooded with emails from environmentalists, let me just tell you that I have been driving a Prius for the last four years, and I am a staunch believer in the responsible stewardship of our natural resources. However, in business, green technologies must always be evaluated within the economics of reality. The question entrepreneurs must ask is not how many natural resources will be saved, but whether or not saving these resources is economically viable.

From geo-thermal to solar, new green technologies are very expensive right now, and the amount a business can end up spending on them is unlimited. The technology is also changing rapidly, which normally means falling prices. Additionally, over time, existing technology will need repairs, and those repairs could become very expensive as new technologies emerge.

As with any investment, you must look at the rate of return. I frequently hear people talking about a 10-year or longer payback, which refers to the number of years required to recover the initial project cost out of the annual savings. For example, if a new technology costs $100,000, and the additional annual savings are $10,000, the payback is 10 years.

The problem with payback is that it ignores the time value or opportunity cost of money. A better way to evaluate these green investments is by the project’s real rate of return.

Going back to the example of the $100,000 investment, we see that they recover enough through savings to pay back the cost of the project in 10 years. While this sounds okay, it does not consider rate of return, which most businesses should be using. In this case, when we take the time value of money into account, we see that the annual return on this investment is only eight percent.

After establishing the ROI, every entrepreneur should determine their opportunity cost. That is, if a firm could earn a higher rate of return by investing elsewhere, from an economic point of view, this would not be a sound decision. However, if a higher rate of return was not available, the firm should feel confident in this investment.

While investing in new environmental technologies feels great, this is not an adequate basis for making prudent business decisions.

Now go out and make sure you have processes and procedures in place to help you make rational decisions when evaluating green – or any other – technologies.

You can do this!

Ethics in Business is so Important

2010-05-30T03:31:00.000-07:00

"Live with integrity, respect the rights of other people, and follow your own bliss." ~Nathaniel Branden

One of my favorite shows on TV is the reality series, “Survivor.” Since it has been on the air, the show has sent people to 20 of the world’s most remote locations to survive, compete and gradually vote one another off. It is a very interesting game that teaches you quickly that honesty and integrity are easily traded off when a million dollars or winning is at stake.

In the last two seasons, there was a player by the name of Russell Hantz, an entrepreneur in the Texas oil tanking business. He competed viciously with no regard for the feelings of his fellow players, and absolutely no concern for his integrity and honesty. Basically, he would lie constantly to advance his position by way of the elimination of one of the other players, with no regrets at all. Throughout these two seasons, all he said over and over was that everything was “strategic” – in essence, that the ends justified the means.

While no one player was completely truthful, Hantz took his deception to such an extreme that it amazed me. He would swear on the lives of his children and say absolutely anything to promote himself and his agenda.

In both seasons, Hantz lasted long enough to become one of the top three finalists. The winner is selected from among the top three by a jury consisting of the last 10 contestants to be voted out. In neither season did he win the million dollars, and in the last season, he did not even receive a single vote. Obviously, he was a master at manipulating people to promote himself, but all this amounted to nothing in the end since the jury did not care for his style of playing the game.

What I took away from this show – which, incidentally, I think I am addicted to – was that on “Survivor” and in life there is a cost for bad behavior. While the ends are important, the means by which you achieve those ends are infinitely more critical.

Some might be thinking, “Clearly, ‘Survivor’ is a great show, but what does it have to do with business?” I think the lesson for every entrepreneur is that while success is fantastic and worthwhile, the measures you take to achieve success are really what count. The old cliché, “What goes around, comes around,” springs to mind. If you abuse or take advantage of people on the way up, they are going to do everything in their power to make sure that you fail.

Most entrepreneurs have the opportunity to be less than honest in so many ways. However, every entrepreneur that I have ever known, realizes that the outcome is not nearly as important as acting with integrity in the pursuit of it. Being strategic is important to the success of every business, but doing it without integrity and honesty is a road to disaster. The entrepreneurs that I have seen follow this path just about always fail.

Now go out and make sure that you operate your business with integrity and honesty in the pursuit of your strategic goals.

You can do this!

Establishing priorities for Customer Service

2010-05-23T06:59:00.000-07:00

“Look through your customer’s eyes. Are you the solution provider or part of the problem?” ~Marlene Blaszczyk

During my recent trip to South Florida, a colleague of mine was checking out of the hotel that we were staying in. The morning that we were due to check out, the hotel somehow neglected to put a bill under her door, and she had to go up to the front desk to request a copy.

Just as she began speaking to the front desk attendant, his phone rang. He answered the phone, leaving my friend standing there while he dealt with the problem – a guest needed directions to a restaurant. As soon as he hung up, another call came in. This time it was directions to the airport, and my friend was basically ignored while the attendant helped the caller. Believe it or not, this happened a third time with a guest who wanted to leave a wake-up call! Each minute that passed, my friend got angrier and angrier, but she managed to maintain her composure in spite of the incredibly bad customer service.

I have no idea why so many staff members believe that they have to deal with the telephone first rather than the client who is looking them in the face. I cannot tell you the number of times this has happened to me in doctors’ offices, and I have found this to be one of the rudest things possible. I have made an actual trip into the office, and then the priority is given to someone who calls in, regardless of the purpose of the call. This is just bad business.

I believe the best policy is to always give the priority to the customer who is physically present in the business. However, this is not to say that staff should ignore the telephone if they are with a customer. If an employee is dealing with a live customer and the phone rings, the employee should ask the customer if he or she could answer the phone quickly. They can then answer and say something along the lines of, “Thanks for calling XYZ Company. I am currently assisting another customer. Would you mind if I put you on hold for X minutes (however many they think the delay will be)?” This way the staff member acknowledges the customer on the phone but gives priority to the person in front of them.

While this sounds like such a simple concept, it really needs to be said over and over again with some sort of monitoring.

We have gotten this point across very successfully by using role-playing scenarios, after which we observe staff to ensure that the training worked.

Now go out and make sure your staff has been trained on how to assign priority when serving customers.

You can do this!

Never trust your staff too much!

2010-05-18T09:35:00.000-07:00

"Trust everyone, but cut the cards." ~Finley Peter Dunne

There is an ongoing story in our local paper about a bookkeeper who allegedly stole over $500 thousand from an organization. When the authorities began investigating the matter, they found that this bookkeeper had been convicted of stealing funds from her former employer. In fact, when she was hired, she was serving her jail time at night while she worked during the day.

Obviously, this organization failed to do any due diligence to verify her background. And while this oversight was bad in and of itself, the real problem here was management's complete trust in this employee.

This employee was able to write checks and make the park's books look great since she was the one who reconciled the bank statements. In our consulting work we run into this often, and I warn every entrepreneur against it. I tell owners that the checks need to be returned to them, and they need to look over them to verify that there has been no impropriety.

Why did all this happen? I believe that as people, we want to trust others and see them in the best light possible. If we looked at every person we know with a suspicious eye, life would not be any fun. Our fundamental belief is that people are basically good, which is a philosophy that I certainly subscribe to.

But while we need to see the good in everyone, particularly employees, we need rules and procedures in place to ensure that dishonesty is caught and punished. Just making staff aware that you are checking on their honesty is frequently enough to prevent theft.

So often, businesses that install video cameras near their cash registers and back doors are surprised to see the incidence of theft decrease. After all, most theft in a business occurs internally. Removing the temptation to steal is the best means of eliminating theft.

While you need to trust your staff, never trust blindly. Have procedures in place to guarantee their honesty. As bad as it may sound, this is the most effective way to deter theft.

Now go out and make sure you have policies and procedures that eliminate the temptation to steal. And never completely trust any staff member, no matter how long they have worked for you.

You can do this!

Should the government intervene in how businesses price their goods?

2010-05-11T04:14:00.000-07:00

"Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."
~Adam Smith

For the last 10 years, I have been aware of the additional regulations and restrictions that our government has put on small businesses. It has troubled me both because of the cost as well as because of the way it limits a business’ ability to compete effectively.

In 1776, Adam Smith, who is considered the father of economics, wrote the classic book entitled The Wealth of Nations. In this book, Adam Smith argues that if left unfettered, businesses will compete to provide the maximum value at the minimum cost to consumers. He called this the “invisible hand of competition.”

The “invisible hand” is the force of competition that ensures goods are delivered at a fair and reasonable price. After all, if one firm charges $10 for a product, and another firm charges $8, it is only logical that customers will go to the $8 vendor until the more expensive firm lowers its price.

When I had to read this classic text in graduate school, I had no idea that it was written the same year that our country earned its independence. Obviously, Adam Smith understood the role of competition, as did our founding fathers.

With only certain exceptions (e.g. regulated utilities), when the government tries to influence the price of products delivered to consumers, it tends to destroy the way our free markets operate. And free markets, of course, are the basis of capitalism.

What really caused me to blow my gasket was Spirit Airline’s announcement that they would begin assessing a $45 charge for carry-on luggage. I was actually not upset that Spirit wanted to do this. In fact, being a frequent traveler who has been hit in the head with flying luggage too many times to count, I would like to see a decrease carry-on luggage. Additionally, I have seen how often the TSA line slows significantly – or even stops completely – because someone with carry-on luggage did not know the rules about liquids or some such issue.

I, myself, always check my bags so that I do not have to deal with the hassle of TSA or force-fitting the luggage into the overhead bin. Of course, what I like or do not like is really immaterial. I just had to vent a bit here as this is one of my pet peeves.

What does trouble me about the luggage charge is that the government is saying that Spirit should not implement this fee and is looking for ways to legislatively stop them from doing so. In my opinion, the government should stop meddling in this issue as well as in so many others. Unless there is collusion or price-fixing, Adam Smith’s invisible hand of competition will control how successful Spirit will be with this carry-on luggage charge.

Ordinarily, one of two things can be expected to occur as a result of this new pricing strategy. The first possible outcome is that customers will stop flying Spirit, making it necessary to repeal the charge. The second is that customers will be willing to pay this price for a whole variety of reasons – lower total prices, for instance. The bottom line is that businesses operate best when that invisible hand of competition is permitted to function as it forces them to operate in a manner that ensures customers are receiving the highest value.

Too often, entrepreneurs tend to sit back and let governmental regulations hamper their operations. However, there are many ways to become active in limiting the number of these regulations. Chambers of commerce and lobbying organizations for each individual industry are just a couple options. Additionally, running for office is a great but difficult way to influence the government’s ability to impact businesses.

You can do this!

Managing Generation Y

2010-05-03T13:26:00.001-07:00

Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way, and they''ll knock your socks off. ~Mary Ann Allison

In so many businesses, the preponderance of staff now comes from Generation Y. Also known as the Millennials, Generation Y consists of those staff members that were born after 1980 and were the children of the Baby Boomers.

Over the next seven years, 50 percent of our workforce will retire, and the largest number of college grads will enter the labor force. What this means is that more and more members of Generation Y will be entering the workplace, and every manager must understand how to motivate and manage this group.

In order to understand this generation you have to first understand how they were brought up. They were raised in an environment where parents did all they could to give their children almost everything they ever wanted. Their parents went out of their way to make sure that their ego and self worth never took a battering. Most of their emotional and material needs were met unquestionably.

I have talked to so many managers and entrepreneurs that just do not know how to manage this generation as they are so vastly different from the Baby Boomers. These managers just do not get what motivates and retains Gen Y’s. Obviously, if you want to be a great manager and leader, then you must understand what makes this generation tick.

First, this generation wants to feel as if they are doing something that is worthwhile and of value. They will not just follow orders blindly, but must be shown how what is being asked of them fits into the larger picture. If you ask them to get new training, it is imperative that you explain how this training will be of value to them as well as to the company.

When asking this generation to work on a project, you cannot just tell them how to do it. If you tell them step by step how to do something, they will rebel and leave your employ. Instead, it is best to just let them know what outcome you want. For example, you would not tell one of your Generation Y staff how to modify part of your website. Rather, you would tell them what you want the final product to look like and let them make it happen. Micro-managing this generation will not work. You just have to let them figure out a way to get the job done.

Making the workplace fun is so important to this generation. They fully understand that they spend more time at work than they do at home, and as a result, they almost demand that their workplace is a fun one.

The best types of fun are things that are not planned, such as taking a break and having ice cream brought in. One entrepreneur that we work with holds a Nerf basketball shot competition and gives away cash. Another manager comes to each staff meeting dressed in a different costume.

When I had an office (I now am semi-retired), I had a marshmallow gun that I had acquired from a company we were assisting. I used to go out of my office and shoot staff just to break up work, and I can promise you that they loved it when I started shooting. I was just worried about what was going to happen when they found out where they could buy these guns!

Loyalty is not one of Gen Y’s greatest attributes as they are much more concerned with their work life experiences and will move without much motivation. After receiving his MBA, my son went to work with Hewett Associates in Atlanta. He stayed there four months before he went to work with Home Depot. He did not see any problem with changing jobs that quickly, nor did Home Depot have a problem hiring him knowing that he only stayed four months on his last job. The real reason he left was bad management. He just did not feel challenged.

You really have to challenge this generation as they have such a low tolerance for doing repetitive work. Their attention span is very short, and I would imagine that this is from all of the multi-tasking that they have done all of their lives. As a great manager, you must find work that will constantly challenge this generation, or they will leave.

Throughout their early lives, Gen Y’s were constantly coached in everything from sports to music. As a result, they just expect to be mentored. While they are very independent, they are still looking for a great coach. It is so important to have coaches for these Gen Y’s.

Managing Generation Y is different, but if you really understand what motivates them, it is easy to draw so much value from them.

Now make sure that you have a plan and strategy for managing Generation Y, and that this plan and strategy are shared throughout the organization.

You can do this!

Common Problems in Small Business

2010-04-25T16:23:00.000-07:00

It is not by muscle, speed, or physical dexterity that great things are achieved, but by reflection, force of character, and judgment.
~Marcus Tullius Cicero

Every once in a while you need to sit back and reflect on life to see if there are any trends or experiences that you or others can learn from. The Jim Moran Institute recently celebrated its 15th anniversary, and I was reflecting on the common problems that entrepreneurial clients (over 3,000) have had over the years. By far, the number one problem that entrepreneurs have dealt with is the selection of accountants.

Too often, entrepreneurs continue to use the same accountant, not realizing that the services offered can vary so tremendously from one accountant to another. In addition, so many entrepreneurs feel intimated by accountants, and they are just not comfortable asking cogent questions. However, you must have an accountant on hand to spot trends and advise you on ways to improve your profits.
Having an accountant that only does your taxes at the end of the year is just not adequate. Entrepreneurs must hire an accountant that will look at their financial statements each month and give them advice on how to perform better.

The second common problem is that entrepreneurs do not have a coach or mentor. Empirical studies have repeatedly shown that entrepreneurs who have mentors are so much more successful in terms of their business’ performance than entrepreneurs who do not have coaches.

So many entrepreneurs do not ask for help from a mentor or coach because they think that to do so would be a sign of weakness. However, in reality, asking for help is a sign of strength and courage. There is no way any entrepreneur could ever know everything about their business, and having a coach or mentor can help them navigate the rough waters without slipping out of the boat.

The third area where almost every business struggles is staffing, both in terms of hiring the wrong employees and holding back when it comes to letting questionable staff go. In order to have a great organization, you must have great people working for you – people with character, people skills and motivation. Where these qualities are concerned, you just cannot make exceptions as they are not skills you can teach.

In terms of letting people go, it is always tough. I like to say that the day you have to let someone go is both the worst day and the best day of your life. Having a bad employee is like cancer in that it just keeps growing if left unchecked, and letting these problem employees go frees you and your organization up so much. If you have a bad employee, the sooner you let them go, the better, both for your organization as well as for your ability to manage it.

Now go out and make sure that you have addressed your accounting issues, have a mentor and have a great staff.

You can do this!

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A Driving Process for Success: The Governor’s Sterling Award

2010-04-19T11:55:00.001-07:00

When we are motivated by goals that have deep meaning, by dreams that need completion, by pure love that needs expressing, then we truly live life.
~Greg Anderson

Two years ago, I was lucky enough to be invited by Fringe Benefits Management Company’s President and Florida Sterling Council Board Member Lorraine Strickland to attend the ceremony for the Governor’s Sterling Award in Orlando. Prior to that time, I had heard about the Sterling Award, but I did not know exactly what it did or how it operated. What I remember most about the ceremony was the absolute glee that was apparent on the faces of the staff of the winning companies. That more than made up for having to wear a tux, which is not my favorite thing to do, at all.

The Governor’s Sterling Award is presented to both governmental agencies and private businesses, and for each winner, it seemed as if the entire staff was on the stage to receive the award. I have never seen a happier group than the recipients of this very prestigious honor.

The Sterling Award is to the state of Florida what the Malcolm Baldridge National Quality Award is to the entire nation. Both programs seek to improve the overall performance and bottom line of each organization (whether for profit or not-for-profit) through process improvement.

The Sterling process evaluates each applicant’s effectiveness in seven areas: leadership, strategic planning, customer focus, measurement and analysis, employee focus, process management, and of course, results. Clearly, this award understands how important processes and process improvement are to making organizations successful. They have a very well-thought-out but demanding path for achieving this award, and outside examiners are brought in to evaluate each firm.

To me, whether an organization wins or not, merely going through this very effective application process is the real value as it brings about some very significant changes. I sit on the boards of two organizations that are going up for the Sterling Award, and I have seen first-hand how simply starting the application process has triggered changes in both staff motivation and process improvement.
Leading up to the Sterling Award ceremony, they hold their annual conference, which helps to educate and train staff on how they can achieve this prestigious award. But more importantly, it demonstrates how to become a more efficient and effective organization. Their 2010 conference will be held June 2-4 in Orlando, and they will cover topics such as “How to Avoid the Four Human Ailments: Pitfalls that Hold Us Back” and “Leadership…Let’s Keep it Real.” It is an extremely informative conference, and I will be attending.

I was so impressed with the entire process that I, along with several others, finally nagged John Pieno, the executive director of the Florida Sterling Council, into developing a Sterling process for small businesses. Called the Small Business Blueprint, this is a series of workshops that brings the guts of the Sterling Award to small firms, and many small business owners have shared with me how valuable this training has been for them.

Whether you are a large business, small business, government entity or a non-profit, Sterling has something for your organization. You can get so much more information about this organization at their web site, floridasterling.com.

You can do this!

Make sure there is demand for your new product or service

2010-04-11T06:35:00.000-07:00

Nobody ever lost money taking a profit.
~Bernard Baruch

Marketing 101 demands that before you introduce a new product or start a business selling a new product, you need to make sure that there is a solid demand for the product. While this sounds so elementary, we continually work with entrepreneurs and inventors that have just forgotten about this basic tenet of good marketing.

We were called in recently to assist an inventor that had developed a new type of dog toy. The toy was fun for dogs but very expensive to produce. They gave me one to try, and I can personally attest that my dogs (3) loved the toy.

This toy was the brainchild of an inventor who really needed a product like this for his dogs. This idea came to fruition after the inventor invested over $100,000 in initial production and development expenses. His teams called JMI because they wanted help with some partner issues. However, as it frequently turns out when people call us for help, the issue they cited was not the critical issue at all.

After much discussion, we were able to ferret out the real problem. Their partner issues paled in comparison to the fact that they were uncertain if the product even had a viable market. They spent all of this money without knowing if there was any real demand for the product. Of course, they asked their friends and relatives what they thought about the product, and of course, they got rave reviews. What they did not do was ask potential customers if they would be willing to buy the product and for what price.

In order to cover the cost of getting these dog toys produced, they would have to charge a very high price, and because they assumed there would be a landslide of demand, they thought they could do that. We very kindly told them that they first needed to find out if there was a real demand for the product. Furthermore, even if the demand was there, we thought that it was way overpriced.
We suggested that they try to sell their current inventory on the Web as well as at various dog events. They could set up a small table and try to sell the blankets at these events before they invested too much more money.

While ensuring that there is a demand for your product seems like such a simple concept, this inventor just got caught up. He fell in love with his first idea, not his best idea. Additionally, he saw this as a way to achieve financial success, and he failed to think carefully through all of the ramifications of ensuring that there was a demand for his product.

Now go out and make sure that there is a viable demand for your new product or business. You can do this through the use of surveys, selling your product to a small market, or asking your existing customers what they think about a new product or service.

You can do this!

Why Partnerships are to be Avoided!

2010-04-04T09:41:00.000-07:00

Concentration is my motto -- first honesty, then industry, then concentration.

~Andrew Carnegie

One of the hardest problems that we have to deal with is when a partnership turns sour. It really is not a pleasant thing to see as it takes so much time and effort to extricate the partners. Normally, this separation takes 12 to 16 months, and because many lawyers and experts are involved, it is also very expensive.

The number one cause of failed partnerships is that they are formed for the wrong reason. Typically, these alliances are formed when one partner feels that he or she is missing some critical element for running a business. Generally, I find this missing element is either marketing or finance. For example, we had one partnership where the originating partner was a great marketer, but she needed someone to take care of everything else.

Another predominant reason why partnerships fail is theft. I really do not know why this happens so frequently, but my guess would be that one partner feels as if there is an imbalance in the partnership. This perceived imbalance could be, for example, disproportionate hours worked or different competency levels. Or perhaps it happens simply because no one is watching them, and they think they can get away with it.

Whatever the motive, theft destroys partnerships. Trust between partners is critical to keeping the business running, and once that trust is breached, the partnership implodes.

We were helping a business in the healthcare industry. This business was thriving, but the founding owner felt that he did not have the necessary financial skills. He was great at running and marketing the business, but he lacked both the skills and knowledge to effectively manage the entire operation.

As a result, he went into business with a partner that he thought had the skills to handle the finances. Additionally, he thought this new partner would be able to bring in the funds needed to finance a necessary expansion.
After six months, the new partner would never allow the originating partner to see the financials or manage any of the money. Then, while I was meeting one morning with the partners, it came out that none of the credit cards that the new partner was using to finance the business were being pulled down as the firm was very, very profitable.

Something was wrong, and I must have had a very strange look on my face because the originating partner says that moment was his turning point. He realized then and there that theft was probably going on.

It has been so painful for the originating partner to prosecute the partner that he thought would save his business. From hindsight however, he realized that if he had done some due diligence, he would have discovered that his former partner had a history of problems.

After having gone through this mess, the originating partner now realizes that he has the skills and the confidence to run his business that he never had before. While this was clearly a painful experience, there were also some very tangible benefits, and the business is now moving towards a sound financial future.

You are wise to avoid partnerships, but if you must have one, make sure there is a very clear partnership agreement that protects both parties should a problem ever arise.

You can do this!

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What a horse trial taught me about risk and return!

2010-03-28T13:09:00.000-07:00

If a man is alive, there is always danger that he may die, though the danger must be allowed to be less in proportion as he is dead-and-alive to begin with. A man sits as many risks as he runs.

~Henry David Thoreau

I was lucky to be able to be a jump judge recently at the Red Hills Horse Trials in Tallahassee. The horse trials consist of many difficult jumps that horse and rider have to make over without any errors like refusing to jump or stopping before jumping.

My job in the afternoon was to sit on the far side of the jump way out of way of the horse and rider to insure that the horse did not fall after the jump and then radio into control that either the horse and rider made it over the jump or there was some problem.

I was sitting off to one side of the jump to insure that I had good visibility of the jump. I was not anywhere near where the horses were going to land as I just did not want to interfere with the rider and horse, plus I wanted to be safe. Having a horse fall on you just is not a good idea.

All of the horses came from one direction and everything was going well. The horses were doing great over the jump that I was involved with. However, all of a sudden one horse and rider came from another direction as they thought it was a quicker trip to the jump. As they jumped from a way different angle than any other horse, I found myself staring at a horse and rider heading right to where I was sitting as they cleared the jump. As it happened very fast, I had no time to move and saw my life pass in front of me. The rider was able to steer the horse around me and keep going without effecting his time or the safety of the horse.

While this is a great horse story, I walked away with a new appreciation of risk and return. When I thought about the event, the thought of risk just was not in my mind. I thought that it was going to be just a fun afternoon without any risk. Basically, I completely misestimated the risk/ return tradeoff. However, that being said, I plan on going back and being a jump judge again, but this time sitting in a place that no matter what direction the horse comes from I will be safe and exposing myself to a whole lot less risk.

Every entrepreneur needs to make sure that they evaluate clearly what the risks and returns are in any new venture. If this is not evaluated thoroughly, then the entire business can implode.

The recent bank crisis was simply caused by so many bankers not estimating the correct risk/return ratio. This failure was caused by both the failure to assess the risk of property values falling and credit default swaps.

Now go out and make sure that when you take on a new venture, you do a correct assessment of risk/return.

You can do this!!

Finding out what your staff is doing-Undercover Boss

2010-03-14T07:47:00.000-07:00

To linger in the observation of things other than the self implies a profound conviction of their worth.
~Charles-Damian Boulogne

I do not watch TV very much, but the show “Undercover Boss” has so impressed me with the message it sends to all entrepreneurs and managers. The premise of this valuable show is that the CEO of a business goes undercover and works in various entry-level jobs.

I have only seen two episodes of the series – one featuring the CEO of White Castle and another featuring the CEO of Hooters – however, in both of these cases, the experience changed the way the CEO saw the entire business. For example, at Hooters, the CEO saw a manager abuse the serving staff, and at White Castle, the CEO observed the lack of teamwork that existed at many of the restaurants. Additionally, White Castle CEO David Rite saw vividly how difficult many of the jobs were, and more importantly, he saw how policies and procedures imposed by his top staff just did not work in practice.

To me, the message of this show is so important for each and every entrepreneur. That is, from the standpoint of the CEO, your perception of the business is vastly different from that of your employees. Additionally, the problems that you think staff is having are a whole lot different than their actual problems. In one case, a manager at Hooters thought he was doing a great job as he was making his numbers, but his staff despised him and there was an associated decline in morale.

It is so amazing to me to see entrepreneurs who conduct their regular visits to various parts of their operation, see everything looking great and staff appearing so happy, and leave thinking everything is going well. However, management knew the entrepreneur was going to visit, so of course the place was cleaned up and everyone was on their best behavior.

Sure, you need to have scheduled visits to communicate critical news about your operation, but you also must visit unannounced. Visiting without advanced notice and without the escort of the department manager is the only way you are ever going to see what is really going on.

Now you might not be able to go undercover as your company is just too small to make that a feasible option. However, there is no reason why you cannot spend time wandering the various parts of your organization unannounced and talking to the staff about some of their issues. I really believe that more information can be acquired from lower staff levels as they are closer to the customers and have to live with the many rules and procedures that top management has instituted.

If you are to be an effective manager and leader, you must find ways to observe how your organization is really operating and how effective they are. Clearly, the purpose of doing so is not to punish anyone, but merely to find out how the organization really works. While going undercover is an extreme measure, there are so many other ways to extract this valuable information. Suggestion boxes and unannounced visits are just a couple of these options.

Now go out and make sure you have a system in place that allows you to observe and evaluate your organization at the lowest levels of operation.

You can do this!