Promoting from Within.

“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

“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

"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

"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

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

"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

"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!