Alone at the Top - TAB Denver West

Selling Isn't Debate: Confessions of an Engineer in Sales

2011-05-27T11:41:00.005-06:00

The following was written by my good friend Chip Doyle with the Sandler Sales Institute. I think you will enjoy it!

I'm guessing you've heard jokes about engineers in sales. Accountants, contractors, PhD's, and lawyers don't have stellar reputations in sales either. Yet these professions generally are an intelligent lot. They are quite skilled at what they do since our daily lives may depend on their specific calculations and recommendations. I transferred from engineering into sales in 1988...

Here's how I used to sell: 1) Research the prospect and prepare a powerful presentation that applied specifically to them. 2) Provide the prospect with detailed features about the product. 3) Explain how these features worked and the significant benefits they would create. 4) Show the prospect an applicable analysis of return-on-investment and estimate how much money would be saved over time. 5) Ask the prospect how many of my products they would like to purchase.

If the prospect suggested a problem with the analysis or why the features weren't so beneficial, I would use my debate and technical skills to refute their argument and reaffirm my claim. My product knowledge was impeccable and I let no prospect get away until I had supported my argument and convinced them I was correct.

In the spirit of successful engineering, I had created a repeatable and systematic approach to selling. There was only one problem: My prospects rarely bought anything. It was a great way to prove my product knowledge but it wasn't an effective method for closing new business.

Product Knowledge Used at the Wrong Time Can Be Intimidating

In a sales discussion, there is only one person who can "convince" the prospect and it isn't the engineer or salesperson... Prospects base their buying decisions on their own personal and intellectual reasons. Studies show that salespeople who suggest benefits that aren't perceived as valuable or applicable to the prospect are actually undermining the sale...

Debates are useful to convince a third party such as a judge or observer that welcomes all viewpoints. There, the relationship between the two opposing parties is usually adversarial. However, adversarial relationships don't support buying in two party interactions. Words and phrases containing "I disagree," "That's not true" and the infamous "But" can destroy the delicate relationship between buyer and seller in a matter of seconds. While this may be intuitively obvious to most readers, they may be surprised to hear themselves saying something similar on their next challenging sales call.

Successful salespeople spend more time on the "why" questions than a traditional salesperson. They bend over backwards to find ways to agree with their prospects and probe for deeper understanding instead of taking an opposing view. Start using insightful questions to help your prospects "discover" why they should buy and watch your closing ratio improve.

Let us know your thoughts on this!

Why Business Owners Shouldn't Cold Call

2011-05-05T06:59:00.002-06:00

by John Dini, President MPN Incorporated

The Owner as Salesperson

If your business employs salespeople, then you’ve probably had them bring an account challenge to you. “You need to talk to this customer, Boss. You can (fill in the blank) better than anyone else.”

The fill-in-the-blank part may be convincing, explaining your product, negotiating or being tough. Whatever is needed, it’s likely that your employees think you do it better than they do. In most small businesses, the owner is the best salesperson. Why is that?

In some companies it’s because the owner started out as a salesperson and built the business that way. But that isn’t true in all cases. Even in situations where the owner is the best technician, the best analyst, or the best designer, he or she is usually still the best salesperson.

That’s because owners have gravitas, the weight of ownership attached to their words. If they promise something, the customer freely (and correctly) assumes that such promises carry the reputation and resources of the company behind them. If the owner says something can’t or won’t be done, there is no court of appeal. The owner’s word is final.

The owner is usually better able to reach an understanding, because the party negotiating for the other side is more accepting of the owner’s positions. There are fewer things to negotiate, and more acceptance of the facts as presented.

So why do owners hate cold calling? I mean, everyone dislikes cold calling, but all the business owners I know hate it with a passion. Even those who grew their business with cold calls (and most did) steadfastly refuse to do it today. What makes it so loathsome?

The Owner’s Sales Identity

The issue lies with the owner’s ego. I don’t mean an ego that says “I’m too good to do this,” but rather the entire sense of self-worth that drives your personality.

When you started out, you didn’t expect new customers to take you at your word. After all, your business had no track record, so why should a stranger believe you when you promised something? You probably weren’t too certain that you could actually deliver everything you promised. But as the business grew, you established your reputation for quality, dependability, integrity, and any other feature you take pride in. You carry that reputation with you as an owner. It is part of you.

It comes along whenever an employee introduces you to a customer. There is always a little bit of pride in hearing “This is my Boss.” or “This is the Owner of our company.” or “This is the President of ABC Corp.” It’s a position you earned- no one bestowed it upon you. It is part of you, of your gravitas.

All of that disappears when you make a cold call. To begin with, you are probably trying to make an entry through a gatekeeper who doesn’t know your company, and doesn’t care what you have to offer. His or her job is to deal with people like you, so that the real decision maker doesn’t have to.

Further, your aura of ownership is left at the door. Your words carry no more weight than anyone else’s. For all they know, you’re just another lyin’ salesman. It’s hard not to respond to their skepticism with “Do you know who I am? Do you understand the commitment that stands behind what I say?” They don’t, and they won’t.

Negotiation Strategy- Matching Levels

The underlying problem with owners making cold calls isn’t that they are uncomfortable. No one likes making cold calls. It’s not that they result in rejection that bruises the owner’s inflated sense of self, either. It’s that they aren’t an appropriate use of an owner’s time.

A basic tactic of negotiation strategy is that you match levels of negotiators. If their final decision maker isn’t in the room, your final decision maker shouldn’t be there either. Negotiations (and all sales are negotiations) can only take place between equals.

So it is appropriate for someone else to make the cold call. Teach them that it is their job to only put you in front of your opposite number- someone with the same ability to commit as you have. Then the work you put in to earn your stripes brings value into the room with you.

What do you think? Do you still cold call? How do you set up your gravitas before a meeting? Let me know.

Four Capacities Every Great Leader Needs

2010-12-23T11:34:00.001-07:00

The following is a great article on leadership that was sent my way. It is written by Tony Schwartz.

Develop a work environment that compels employees to give the highest value to your company. by Tony Schwartz

WHEN I WAS a very young journalist, full of bravado and barely concealed insecurity, Ed Kosner, editor of Newsweek, hired me to do a job I wasn't sure I was capable of doing. Thrown into deep water, I had no choice but to swim. But I also knew he wouldn't let me drown. His confidence buoyed me.

Some years later, I was hired away by Arthur Gelb, the managing editor of The New York Times. This time, I was seduced by Gelb's contagious exuberance about being part of a noble fraternity committed to putting out the world's greatest newspaper.

Over the last dozen years, I've worked with scores of CEOs and senior executives to help them build more engaged, high-performance cultures by energizing their employees. Along the way, I've landed on four key capacities that show up, to one degree or another, in the most inspiring leaders I've met.

1. Great leaders recognize strengths in us that we don't always yet fully see in ourselves.

This is precisely what Kosner did with me. He provided belief where I didn't yet have it, and I trusted his judgment more than my own. It's the Pygmalion effect: expectations become self-fulfilling.

Both positive and negative emotions feed on themselves. In the absence of Kosner's confidence, I simply wouldn't have assumed I was ready to write at that level.

Because he seemed so sure I could - he saw better than I did how my ambition and relentlessness would eventually help me prevail - I wasted little energy in corrosive worry and doubt.

Instead, I simply invested myself in getting better, day by day, step by step. Because we can achieve excellence in almost anything we practice with sufficient focus and intention, I did get better, which fed my own confidence and satisfaction, and my willingness to keep pushing myself.

2. Rather than simply trying to get more out of us, great leaders seek to understand and meet our needs, above all a compelling mission beyond our immediate self-interest, or theirs.

Great leaders understand that how they make people feel, day in and day out, has a profound influence on how they perform.

We each have a range of core needs - physical, emotional, mental and spiritual. Great leaders focus on helping their employees meet each of these needs, recognizing that it helps them to perform better and more sustainably.

Arthur Gelb helped me meet not just my emotional need to be valued, but also my spiritual need to be engaged in a mission bigger than my own success. Far too few leaders take the time to figure out what they truly stand for, beyond the bottom line, and why we should feel excited to work for them.

3. Great leaders take the time to clearly define what success looks like, and then empower and trust us to figure out the best way to achieve it.

One of our core needs is for self-expression. One of the most demoralizing and infantilizing experiences at work is to feel micromanaged. The job of leaders is not to do the work of those they lead, but to serve as Chief Energy Officer - to free and fuel us to bring the best of ourselves to work everyday.

Part of that responsibility is defining, in the clearest possible way, what's expected of us - our concrete deliverables. This is a time-consuming and challenging process, and most leaders I've met do very little of it. When they do it effectively, the next step for leaders is to get out of the way.

That requires trusting that employees will figure out for themselves the best way to get their work done, and that even though they'll take wrong turns and make mistakes, they learn and grow stronger along the way.

4. The best of all leaders have the capacity to embrace their own opposites, most notably vulnerability alongside strength, and confidence balanced by humility.

This capacity is so powerful because all of us struggle, whether we're aware of it or not, with our self-worth. We're each vulnerable to believing, at any given moment, that we're not good enough.

Great leaders don't feel the need to be right, or to be perfect, because they've learned to value themselves in spite of shortcomings they freely acknowledge. In turn, they bring this generous spirit to those they lead.

The more leaders make us feel valued, in spite of our imperfections, the less energy we will spend asserting, defending and restoring our value, and the more energy we have available to create value.

All four capacities are grounded in one overarching insight. Great leaders recognize that the best way to get the highest value is to give the highest value.

Tony Schwartz is the president and CEO of The Energy Project and the author of The Way We're Working Isn't Working.

Let us know your thoughts on this article!

The Value of Email Marketing In A Social Media World

2010-12-15T20:13:00.002-07:00

Today's post is an article written by Go-to-Market Strategies. Trying to determine the right marketing mix is on most business owners minds today and the information below on email marketing and social media will help give you some guidance.

Despite the surging popularity of social media, experts agree that email marketing is here to stay. What remains mysterious for many marketers, however, is how to make room for both email and social media in their marketing strategy.

Many companies have a clear preference for social media; they believe email is too competitive and easy to overdo. Other companies are sticking with their email strategy, maintaining that social media doesn’t give them enough control over their message...and can't be easily measured.

They’re both right.

We have a few tips that are easy to implement to get you started on the important task of combining the strengths of these tactics to maximize your reach.

Create relevant and compelling (or “shareworthy”) content. The best way to ensure your email will be read and shared within the social media channel is to include valuable content in virtually every email promotion. Giving your email recipients information they can use will build credibility and interest. Nothing improves your email campaign results more than your trustworthiness. So make sure you earn it every time with great content.

Make it easy for your audience to share your content with their network. Your email subscriber wants their clients to read your latest enewsletter. You’ve won them over—your content is shareworthy! What now? Include SWYN (Share With Your Network) links on all the web pages your outbound emails link to (see our Share with Facebook and Tweet This links at the bottom of this article). Also, post a link to your newsletter content on your Facebook and Twitter pages. This is the best way to reach a subscriber too overwhelmed by the contents of their own inbox. Or, in case a prospect finds you on Facebook first, make sure you have an link on your Facebook page to your enewsletter sign-up form so they can subscribe from there.

Let your customers convince your prospects to buy. Social media conversation can inform your email content in a revolutionary way. By inviting customer participation in polls, surveys, and ratings within your social media channels, you can get immediate access to customer feedback. Then leverage what you have learned from this process in your email campaigns by including customer ratings and testimonials for the products or services you are promoting. There is nothing more powerful to a prospect than your customer’s own voice! (Tip: Consider testing this technique with subscribers who have opened your emails, but not yet purchased from you.)

The above ideas will help lay the foundation for your successful integration of email and social media marketing. As you get started, remember that content is king. Content that is relevant, timely, and valuable to your audience. The first step in any marketing strategy is to build quality content. Once you have quality content, do not restrict its use between your email and social media campaigns.

Savvy marketers must leverage the strengths of each approach to compensate for their weaknesses. Email and social media complement each other quite well, and if used effectively, will transform your marketing strategy.

Let us know what you are doing with email marketing and social media.

Small Biz Bill Becomes Law

2010-11-01T09:49:00.005-06:00

While we wait to see if the Bush-era tax cuts are allowed to expire here are a few points on the Small Business Job Act of 2010 which was signed into law on September 27, 2010. The legislation contains several provisions designed to ensure that small businesses have access to adequate credit. The Act also contains targeted short-term tax relief for small businesses.

A $30 billion credit facility for community banks, backed b y the Treasury, is designed to goose lending conditions, while teh muscle of the Small Business Administration is being augmented throught eh expansion of the SBA's loan limits. Investors were also targeted through the legislation, as a provision was put in place for the balance of 2010 that will eliminate all capital gains on "key small businesses" as long as the investments are held for five years or longer.

Regarding the SBA program, the caps on both 7(a) and 504 loans were permanently escalated to %5 million from $3 million, while manufacturing related loans were bumped uo to $5.5 million from $4 million. Moreover, SBA Express loans were temporarily boosted to $1 million from $350,000.

Other components of the bill included an initiative designed to augment state programs providing credit to small businesses, on top of multiple tax cuts, 16 in all, meant to spur investment.

Specific tax changes include:

Increased IRC Section 179 expense limits - effective for 2010 and 2011, the maximum amount that a business is able to expense under IRC Section 179 is increased to $500,000 (without the legislation, the expense limit would have been $250,000 for 2010 and $25,000 for 2011). The $500,000 limit is reduced if capital expenditures exceed $2 million. The Act also temporarily expands the application of Section 179 to up to $250,000 of certain real property (for example, qualified restaurant property).

First-year "bonus" depreciation extended - The Act extends the additional 50% first-year depreciation deduction that was in effect for 2008 and 2009 for one year, to qualified property acquired and placed in service during 2010.

Small business stock exclusion increased - The Act temporarily increases the exclusion percentage for qualified small business stock purchased by individuals to 100%, and does not treat the excluded gain as an alternative minimum tax preference item. Therefore, subject to certain limits, you'll pay no regular tax or alternative minimum tax on the sale of qualified small business stock acquired at original issue after September 27, 2010, and before January 1, 2011, provided you hold the stock for at least five years.

Small businesses get enhanced general business credit - Eligible small businesses (generally, non-publicly traded corporations, partnerships, or sole proprietorships with gross receipts averaging $50 million or less) will be able to carry back excess general business credits up to five years (instead of one) in 2010, and will be able to use the general business credit to offset both regular and alternative minimum tax liability.

Health insurance costs will reduce self-employment tax - If you're self-employed and pay health insurance premiums for you or your family, you get a break on your 2010 self-employment tax (the tax that you calculate on Form 1040, Schedule SE). That's because, for 2010 only, the deduction you get for the cost of health insurance for yourself and your family will apply in calculating your earnings for purposes of self-employment tax as well as in reducing your income for tax purposes.

Cell phones no longer listed property - Effective 2010, cell phones are not considered listed property, significantly reducing the substantiation rules and depreciation limits that apply when cell phones are used for business purposes.

New reporting requirements for rental property expenses - With some exceptions, starting in 2011, if you receive rental income from real property, you'll be required to file an information return (Form 1099) when you make payments totaling $600 or more to a service provider (such as a plumber, painter, or accountant) for rental property expenses.

Portion of nonqualified annuity can be annuitized - Beginning in 2011, if you have a nonqualified annuity (an annuity that is held outside of a qualified retirement plan or IRA), you can annuitize only a portion of the annuity, provided the annuitization period is for 10 years or more, or is for the lives of one or more individuals. The portion of the annuity or contract that is annuitized will be treated as a separate contract, and the investment in the annuity will be allocated n a pro-rate basis.

For more details check with your CPA or tax planner.

Failure to Launch: Reasons Company Strategies Don’t Succeed

2010-09-18T14:52:00.008-06:00

Today's post is written by David Mead of Mead Consulting. We couldn't agree more with what Dave has to say.

In 2008, I heard a presentation by Michael Canic of Bridgeway Leadership who discussed the reasons that strategies fail. He quoted statistics that over 65% of all strategies fail to reach expectations. Why do so many business strategies fail? Below are some key reasons. Knowing the barriers to successful planning and execution is the first step. Clients that follow our recommendations have been significantly outperformed the competition. We like to say, “A good plan, well executed, beats a great plan, poorly executed, every time.” Contact us if you would like more information.

1. No clear definition of success

Fuzzy goals lead to fuzzy outcomes. While it seems obvious, many organizations simply don’t articulate the specific goal of a business strategy. If the goal of your customer intimacy strategy is to form deeper customer relationships, that’s fuzzy. If the goal is to increase customer retention by 10 percent and increase annual revenue per customer by $10,000 and net profit by $1,000, that’s clear. Here, deeper customer relationships may be the mechanism to achieve the goal.

2. Too many goals

When everything is a priority, nothing gets accomplished. Many so-called strategic plans have too many goals, objectives, success drivers, strategies, initiatives and so on. Worse, it’s not clear how these various appendages are linked. Is it any surprise these plans sit on shelves and collect dust? Choose to do fewer things much better.

3. Metrics and Alignment - Either no metrics or vague metrics

Many plans are simply a brainstormed list of things to get done by unspecified people at indeterminate times. A plan with specifics outlines who will do what by when. It takes into account the sequencing and timing of tasks, activities and resources. Make certain that the goals of everyone in the organization are aligned to the few key objectives.

4. Visibility - Progress isn’t measured and managed

Ever notice how plans placed in the spotlight flourish while those left in the dark shrivel? Any plan worth executing is worth tracking. A monthly meeting with a tight agenda can quickly determine what actions have been taken; what progress has been made; what will be accomplished over the next month and by whom, and what, if any, challenges have emerged. This builds commitment, accountability and confidence in the process.

5. You lack the right people

Some of those nice people who work for you may not be the right people to get the job done. That statement makes you uncomfortable, doesn’t it? Many have been loyal, are committed to the culture, and may be friends and family. However, If you are truly committed to winning, or achieving success - however you define it - then at some point you have to take a long, hard, honest look at the capabilities of your people. Point them in the right direction, support them, develop them – give them a fair chance to succeed. But if they can’t get it done, then your responsibility is to get people who can.

6. Flexibility – Failure to update the plan to stay real

Reserve the right to do what makes sense. Plans are based on assumptions that can change over time. If they do change, then the plan may need to change. A quarterly “recalibration” meeting is a good forum to test your assumptions and determine which, if any, have changed. The meeting may result in either a revalidation or redesign of the plan. It ensures the plan stays real and relevant.

7. Reaction to Failure - Failure is met with indifference or an inquisition

Is your team serious about its definition of success? Your response to failure sends a clear message about your commitment to winning. Just as importantly, it sends a message about your credibility. Do you ignore a failed initiative and move on to the next big thing (which conveys that you really weren’t that committed and you shouldn’t be taken seriously)? Do you look for scapegoats (which communicates that you don’t take personal responsibility and can’t be trusted)? Or do you first look in the mirror, take responsibility, then publicly commit to getting it right, and effectively engage your people to make it happen? Your choice speaks volumes about who you are as a leader.

Let us know your thoughts.

It Does Not Have to be Lonely at the Top (in fact it shouldn't be!)

2010-08-29T13:47:00.002-06:00

Today's post is written by Bob Dodge, Sr. Partner at The Alternative Board - Denver West.

As a business owner, you have no doubt experienced how lonely it can be at the Top. It doesn’t have to be lonely, though. Even the Lone Ranger had Tonto to talk with. You don’t have to go it alone; in fact, there are several reasons you should involve (listen to) others.

Talk with your employees to find out:

if they understand why you expect them to complete critical tasks. If they are not motivated, no amount of training will help! The must have the desire to do so.
if they have the capabilities (time, tools, skills and resources) to accomplish what is needed for the organization. Telling your team to “just do it” if they lack these capabilities will only frustrate them, and eventually you. You and your entire team will benefit from discussing your vision and priorities; providing opportunities for employees to learn. Demonstrate to your employees through your actions that you are committed to these critical success factors.
if they know the consequences of their actions or lack thereof. If employees don’t understand what is in it “for them”, they’ll never perform. Be prepared to provide those (positive as well as negative) consequences to avoid problems down the road. In short, walk the talk.

As a result, you might hear some great ideas to improve the business! After all, they are the ones actually doing the work!

Talk with your customer to jointly consider how they experience your product or service:

Maybe there are additional services you might provide that customers would value (and pay for). These are opportunities to capture additional revenue.
You might discover that your company is currently spending time, money or other resources on activities and features that your customers don’t value.

At least they’ll appreciate the gesture to at least look at the business relationship from their perspective.

Talk with your peers:

You might be surprised that other leaders face similar challenges as you. Regular conversations with these executives provide a safe way to explore ideas and learn from one another.

Talk with your coach:

Consider getting a coach to help you explore and accomplish taking your business to a new level. A good coach will help you listen to yourself!

These examples of communicating are all actually acts of listening. Most business leaders can and do inform, motivate, sell, and convince. Effective leaders have also mastered listening! How could listening to your employees, customers, peers or coach affect your business? Would you feel like less of a Lone Ranger?

Strength in Numbers

2010-08-22T10:56:00.003-06:00

Wow, it has been a while since we have posted. Please accept my apologies. The key word though is "we"! For about a year now, I have been working on a plan that allows me to scale the business with people who are just as passionate and committed to helping the small business community as I am. I wanted another owner in the business. Someone with passion, skills, and skin in the game. Commitment and accountability. This effort has has taken place to help me achieve my Personal and Company Vision.

I am so excited to welcome and introduce you to Bob Dodge, Senior Partner in The Alternative Board - Denver West. Bob is experience with the opportunities and concerns that challenge top business owners and leaders. His professional career spans more than 25 yeas as an executive, consultant, facilitator, coach and trusted business advisor to leaders in a variety of industries.

In late September and early October we will be running a series of educational events where you can come meet Bob (and see me) and hear what he has to say. You'll definitely walk out with value.

Now that Bob is on board hopefully we can do a better job updating our blog more frequently!

Welcome Bob!

If Your are a Victim; You are Guilty

2010-07-11T14:19:00.003-06:00

This was written by my good friend and colleague John Dini, in San Antonio.

Let's say you own a small Italian Restaurant. Fifteen tables. Pasta, Pizza, beer and wine. Not really a white tablecloth place. More like plastic red and white check tablecloths with Chianti bottles and drippy candles. On a good Saturday night you might take in $2,500. You average about $400,000 a year in sales. You are closed Mondays, because everyone in the family needs a day off.

One Tuesday morning you come in early to start food prep for the week. The mail is piled on the floor where the mailman pushed it through the slot yesterday. You sit at one of the tables drinking a cup of coffee as you open the mail. Routine stuff. There is the produce vendor's statement.A postcard from a regular customer on vacation. An offer or two for new credit cards. There is a letter from a credit card processor; Visa or MasterCard. It informs you that a number of customer cards have been used fraudulently. They have traced the origin of the security breach to your restaurant, and you owe them $170,000 under your merchant agreement, plus penalties. Your issuing bank will be contacting you regarding the collection terms, and to inform you of the additional costs.

You are out of business.

This isn't a joke. It's not an Urban Legend. It is happening every day to scores of small businesses nationally, and the number is increasing rapidly. PCI (Payment Card Industry) compliance is a term that should strike terror into the heart of every small business person who accepts credit cards. If you've been ignoring the warning information from your bank or merchant processor, or if you think you have it taken care of, think again.

A restaurant here in San Antonio recently went to the newspaper to ask for a story warning every customer of theirs to get new credit cards. This restaurant was hit for over $500,000 in charges, plus penalties (more on those later.) The most bitter pill to swallow is that this restaurant did it right. They have the latest version of a POS (Point of Sale) register system. Their network was behind an up-to-date firewall. Their credit card data was encrypted. Nothing saved them from a sophisticated international fraud industry that remains one step ahead of security techniques.

Some fraud is low-tech. A waiter takes cell-phone photos of cards as he runs them, and mails them to an online fence who pays him a couple of dollars per number. A hotel is missing boxes of old credit card slips. (That happened last week in San Antonio- 17,000 customers affected.) The most pernicious, however, is the Internet hack. The threat encompasses every business; retail, service or B2B that accepts credit cards.
Organized thieves, many of them in Eastern Europe, spend all day "pinging" IP addresses in the US. When one hits a firewall, or more commonly, hits an electronic cash register, processing terminal, PC or a server that isn't behind a firewall, they blast a dictionary of keywords at it to identify whether there is any credit card information on the other end. If one of these words gets a hit, they begin the hack, inserting a program that duplicates any card number run through the system and transmitting it to their servers. It takes seconds for the whole process.

Typically they will collect for some time, months or in some cases years, before they put the cards into use. It gives them economies of scale. With faster fraud identification systems, many have started "real time" usage, duplicating cards in Europe or Asia and selling them the same day.

Illegal web sites post buyer requirements; how many cards, issuer type, credit limits sought and prices to be paid. ("Need 200 AMEX Gold or Platinum- pay $50 each") Other sites will tell you the current available limit on any card number. Still other sites sell stolen numbers in a daily auction, batched by type and credit limit availability.

Your data is encrypted? Law enforcement sources tell me that decryption programs to defeat the current levels of credit card security can be bought for $125 on the web and installed in 15 minutes.

When I tell small business owners this story, they usually say "But my credit card company says I'm not liable for fraudulent charges." That is true if you are a consumer. If you are a merchant, you have already accepted the liability. You agreed to comply with all PCI security protocols. Those protocols, however, are so loosely defined, and so complex, that if you are defrauded it essentially means you weren't in compliance. In other words, if you are a victim; you are guilty.

When cards are used fraudulently, here is what happens. The card processor begins an algorithm to cross reference the fraudulent cards with the places they were used. In minutes, twenty cards cross at one point- Anthony's Italian Trattoria in Peoria Illinois. (If there is really an Anthony's in Peoria, I apologize. I checked to see that there wasn't. It's supposed to be fictional.) You are proven guilty.

What happens next is a nightmare. First, every customer who charged something at your business (in a time frame of potential risk determined by the processor) must be notified that their card may have been compromised, and they should get a new one. The charge for that is $30 per customer. It is billed to your bank issuer, who can either pass it on to you or eat it. Guess which one they will choose?

(A quick aside here. If you are like almost all small business people, your accounts are concentrated at one bank. Your loan agreements usually allow the bank to deduct amounts owed them from ANY account you have there, business or personal.)

Then they have to do the forensic investigation, to determine how the cards were stolen and the potential losses. The cost of a forensic examination is currently set by PCI at $10,000 minimum. All this is in addition to any fraudulent usage, which is directly billed to you. The bank may choose to let you continue operating, if you can afford to let them withhold everything charged to credit cards in your business until repayment is made.

If you think I am being alarmist, check out the PCI video at TAB member Don Douglas' Comply Guard Networks website. (This isn't a plug. Few small business owners could afford Don's services, which are geared to corporate and institutional customers.) The other examples I cite here are from my own experience locally in the last month, and they are not the only ones I know.

What can you do? Checking a driver's license, which many people consider security, doesn't help with this problem. That only protects you from being back charged for a fraudulent usage. That is one transaction, not hundreds or thousands.

You could stop accepting credit card, but for many of us that isn't feasible.

Here is what you CAN do, in simple terms:

First- Spend the money to upgrade your system. I've talked to POS vendors at length about this. They tell me that the usual openings, lack of a firewall, shared hubs with wireless hot spots, and out of date software, cost between $1,000 and $3,000 to change. It still isn't fool proof, but it is like the burglar who was asked why he didn't hit houses when he knew there were only timers on the lights. "Because the house next door doesn't even have timers." The cost is minimal in comparison to the deterrent factor.

Second- DO NOT STORE CREDIT CARD NUMBERS ON TRANSACTIONS ANYWHERE, EVER! Many businesses don't even know that their systems are keeping numbers. With cheap data storage, some have no erasure process at all. One restaurant locally, with hundreds of seats and a booming business, recently found out that they had every credit card number for every transaction in the last ten years residing in their hard drive. One hack, and they could have been hit for millions in notification fees alone.

If you have a customer dispute or question, you can get the information from the credit card company. Yes, it may take forever on the phone to wade through the process, but how bad is that compared to losing your business?

There are some major things that the industry could do, but for now they've chosen to just shift the liability to small business owners who are generally unaware of what has been done to them. In this case, such ignorance can ruin you.

If this is news to you, it is probably news to your business owner friends. I have been passing this information on to every business owner I know. Most have been surprised by it. Do a friend a favor, and give them a heads up. Ask them "Are your computers PCI complaint?" If they look at you blankly, send them here.

Mid Year Sales Planning

2010-06-29T13:17:00.006-06:00

The following was written by my good friend Chip Doyle, a Sandler Sales Franchisee.
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He who fails to plan is planning to fail - Winston Churchill

Prospecting plans are more than a necessary part of a salesperson's tool kit. The planning process creates accountability and a sense of teamwork for salespeople. Good plans also improve the salesperson's outlook and motivation. By measuring the results of a plan, salespeople can identify what's working and what isn't and adjust accordingly. And last but not least, planning and accountability insures activities that fill the pipeline are not subordinated to client fulfillment work. This one drives me nuts. As an example, seller-doers (people like CPA's, consultants, architects, engineers, etc) pray for business but as soon as they get some, they complain that they don't have time for business development. This is just a sophisticated way of admitting they don't have a plan.

You can be a part of your own plan or part of someone else's - David Sandler

The year is almost half over and odds are you've made some progress towards your prospecting and sales plan. If you don't have a prospecting plan yet, stop reading here and start planning!

Planning has Pitfalls

Unfortunately there are predictable traps that I see clients fall into related to planning. Occasionally they will use the planning process to procrastinate action. I also see salespeople that fail to adjust plans over time based on new information or tracked results. Planning is not a one-time activity. It's a recurring process. Not every week, but certainly every six months.

More frequently I see plans with no priorities or activity sequences specified. John Argenti, author and founder of the Strategic Planning Society said "A plan is a list of actions arranged in whatever sequence is thought likely to achieve an objective." Make sure you assign priorities or some sequence in your planning process.

"It is almost always the decision maker that makes the decision work, not the choice which makes the decision work." - David Sandler

I also see companies attempt to build consensus around an ideal plan. It never happens. There's no need to try to build the perfect plan. The key is to get your salespeople on the right course so they can realize the benefits of the planning process.

________________________________________________________________

We are halfway through the year. How are your sales? How are they compared to plan? What are you going to do to modify or create your plan?

What is Motivation?

2010-06-04T14:14:00.002-06:00

The art of motivating people starts with learning how to influence individuals' behavior. Once you understand this, you are more likely to gain the results that both the organization and its employees want.

Motivation is the will to act. It was once assumed that motivation had to be injected from outside, but it is now understood that everyone is motivated by several differing forces. Int he workplace, see to influence your staff to align their own motivation with the needs of the organization.

To release the full potential of employees, organization are rapidly moving away from "command and control" and towards "advise and consent" as ways of motivating. This change of attitude began when employers recognized that regarding good work is more effective than threatening punitive measures for bad work.

Self-motivation is long lasting. Inspire self-motivated staff further by trusting them to work on their own initiatives and encouraging them to take responsibility for entire tasks. For demotivated staff members, find out what would motivate them, and implement whatever help you can. Highly motivated individuals are vital to supply organizations with the new initiatives that are necessary in the competitive business world.

Who do you need to motivate? Yourself, managers, colleagues, and subordinates. Each are motivated in their own way. If you want a detailed assessment of what motivates your people click here or send an email to blair@tabdenverwest.com.

Your persuasion and influence can be used to motivate yourself and others. Just remember, true motivation has to come from within.

Ready...Set...Wait? Leading Indicators and Small Business

2010-05-05T08:41:00.000-06:00

The following was written by my good friend John Dini in San Antonio. I couldn't resist re-posting.

In the last few weeks I've talked to a score of small business owners who say that things are improving for their companies. Several have been involved in trade shows that had record attendance. A few manufacturers are seeing a strong uptick in orders. Retailers are experiencing increased traffic.

We all know that the businesses who are positioned to move early in a growing market get the jump on those who aren't, but how do you know whether this is the time to move? Most entrepreneurs behave like "retail" or individual investors in the stock market. They are too late into a bull market to capture most of the profitability, and too slow to get out in a down slide to avoid most of the losses.

The stock market professionals say that when huge volumes of retail money (from IRAs, 401Ks and other self-directed sources) begin pouring in, the rally is probably over. What worries me is that in the last 60 days I've met 5 people who told me they "didn't need the income" from their job or business, because trading their personal portfolio was making them enough money to live on. They have apparently forgotten 2000. I know several successful individuals who would have retired years ago if they hadn't been suckered into the tech bubble right at the end.

So do you start looking at expansion of your small business now, or wait until you are completely certain, and probably miss the bulk of the opportunity? How do you know when it is the right time to bet on the economy?

The first rule is to stop reading the newspaper, and turn off the financial news stations. For the vast majority of small business owners, what happens in "the economy" means nothing compared to what happens in your local market.

I have a client who owns a machine shop. Nationwide there is clearly a surplus of manufacturing employees. In our local market, a new plant by a big publicly traded corporation has begun recruiting. It doesn't matter to my client whether manufacturing unemployment nationally is 10% or 13% or 20%. Locally, there aren't any skilled employees available. Would this be a smart time for him to cut wages or benefits? Of course not. Regardless of the national situation, he is in a dog fight for good workers.

Business owners need local measurements of what is happening in their industry. These are typically not published anywhere. You need to develop and track your own. Establish relationships with other business owners who are "upstream" of you in the food chain. They may not be a precise predictor, but they can give you a better idea of whether an uptick in business is an anomaly or a trend.

For example, a subcontractor to residential subdivision builders maintains a relationship with a civil engineering firm that serves the same market. While his contracts for home construction vary according to monthly sales, when the civil engineer starts platting whole new subdivisions the trend is longer term. The civil engineer talks to the real estate agents who represent large parcels. He wants to know when the residential developers are negotiating for new tracts of land. It doesn't matter much to either of them what the national numbers are. They don't do business nationally.

A fast-service restaurateur of light (frankly- hip) food follows approval of financing for new apartment complexes. An office furniture dealer tracks leasing rates. A pest control company tracks the backlog in residential sales. A cash register dealer tracks announcements of new retail centers.

Most small businesses thrive according to the skills of the owner. If you have 1% market share, you can grow to 2% market share and do well even in a shrinking market. Leading indicators can tell you when it is time to focus on taking existing business from competitors, and when it is time to put your efforts towards chasing new business.

Inspiring a Shared Vision

2010-05-02T19:05:00.004-06:00

Regardless of the economic times, leaders need to inspire a shared vision - for their key stakeholders - employees, customers, partners and potentially the communities where you live and work.

Visions don't hvae to be grand designs in order to motivate and inspire people. A vision pulls people forward. It projects a clear image of a possible future. It generates the enthusiasm and energy to strive toward that goal.

Martin Luther King, Jr.'s vision had the power to better the lives of us all and to change the course of our nation.
Winston Churchill's vision had the power to pull the British people through the darkest days of World War II when they fought Hitler alone.

All inspiring visions offer the following attributes:

Ideal - a high standard to aspire to
Unique - pride in being different, an identity
Image - a concept or mental picture made real or tangible through descriptive language
Future Oriented - a map of the journey and statement of the goal ahead
Common Purpose - a way people can join together

In order to inspire and motivate, a vision must be communicated in a clear and lively form. It myst be expressed in a simple and direct way that moves and touches people. Leaders breathe life into their visions and values by using things such as metaphors, examples, quotations, analogies, slogans and anecdotes.

When leaders effectively communicate avision, it has very powerful results. When visions are effectively communicated you will see -

Job satisfaction
Commitment and loyalty
Clarity about organizational values
Pride in hte organization
Organizational productivity

Is your vision inspiring your team?

On Growth: Be a River

2010-04-21T08:24:00.000-06:00

I read the following by Mark Sanborn and instantly wanted to share it with everyone. Enjoy!

I've been listening to a CD of a panel presentation from a conference I recently attended. The participants were all long-time friends and colleagues in the speaking business. They are all highly successful in their respective fields and I've seen great growth in them and their careers over the years.

The insights and perspectives they shared were very valuable and I have benefited from their collective wisdom.

In listening, I was reminded of something very important about highly successful people.

First, they invest regularly and significantly in their own growth.

I know each of these individuals and they have spent serious time and money in seeking out the best resources, whether professional associations, coaches or educational experiences.

Second, they become conduits of what they've learned.

Each freely shares what they've learned with colleagues and clients. Their exceptional expertise has created great demand for their services. Not only have they profited from their skills and abilities, but they have been willing to help others who desire to do the same.

They have become rivers.

Highly successful people are more concerned with their growth than their comfort; they are more committed to learning than leisure. That means they invest in learning and development.

But they don't stop there. Not only do they share; they increase their expertise and abilities in the sharing. A wonderful synergy takes place when they help others. People learn from the successful, but the successful learn not just from the people they teach but from the teaching process itself.

The lesson, if you aspire to become and stay successful: be a river.

Are Things Really as Bad as They Say?

2010-04-18T17:54:00.002-06:00

In a recent Board meeting (consisting of small business owners) we had a conversation about the state of the economy. The question on the table was “are things really as bad as “they” say”? While the news out of Washington and most everything else in the press is negative the Board found reasons to be optimistic!

In spite of everything, small business owners find ways to grow their businesses and become financially successful. This economic swing is no different. Yes, business is run differently and won’t go back to the “old ways” but there are people out there making money in a down economy (including these Business Owners).

The economy will come back! What it will look like remains a question but it will come back. While unemployment is “high (9.7%)” compared with what we have seen in the past, the fact is we still have a lot of people working – 90% of the population!

At the end of the day, it is about remaining optimistic and looking for opportunities. While you need to keep on top of the economic news, there is no need to blame the economy. Find new and innovative ways to run your business. Small business owners (and Americans as a whole) have always persevered during difficult times.

Here is the message from one group of very successful business owners – focus, focus, focus!

Share your thoughts.

Help Great People Do Great Things

2010-04-12T10:15:00.005-06:00

Last week at the Association for Corporate Growth (ACG) Denver luncheon, the keynote speaker was Jerre Stead, President and CEO of IHS. IHS is closing in on $1 Billion in revenue. Since 2005 the company has made 33 acquisitions. Since completing its IPO in 2005, the company revenues have more than doubled and EBITDA has grown about fourfold. SUffice to say, their performance over the past few years is worth noting.

Jerre Stead's message to the audience was straightforward - The Role of the CEO is to "Help Great People do Great Things." He then described five principles that he uses to operate IHS.

People are the only sustainable competitive advantage
Treat them all with equal dignity and respect. There are no "perks" for anyone at IHS.
100% trust of every person in the company
At one point, Stead ordered the detailed IHS policy manuals (with hundreds and hundreds of policies) be shredded. "Do we need guidelines? Absolutely! But, if you let people use their best judgment, you never know how great they can be."
Invest in training and development
"If I had an extra dollar, I'd spend it on training and development." It's the best investment you can make and its the surest way to reduce involuntary turnover.
Facts are our friends
- Not masses of information, but "actionable facts".
- "Give me three important facts that will help me make a decision."
- One of Steads comments was that all proposed decisions at IHS require the generation of a "one-pager." On the one-pager is the summary of the proposal, what decision you are looking for and "three facts that will help me make the decision."
- You can always ask for more detail, but get the key facts and help me make the decision.
- You never have enough facts, but if you wait to make the decision until you have all the facts, it typically is too late.
Have an intense internal and external intellectual curiosity about customers
All senior meetings start with some interaction about customers.
Reward ... Reward ... Reward ...
HE said there were five principles, but he added a sixth very important one. Remember to reward employees continually for company success.

Share your thoughts on Jerre Stead's key principles.

The Leadership Journey

2010-03-24T15:00:00.001-06:00

Leadership is not easy. Anyone who thinks it is has most likely not been a “true” leader. What defines a true leader? Leadership is about inspiration. Real leaders will inspire people from within to take a journey – whatever the journey may be. If you are forcing people down a given road then you are not leading or inspiring, you are in fact ramming people in a specific direction. It doesn’t matter what your direction is, if you don’t inspire people and enable them to understand why the journey needs to be take and the value of the journey then you will most likely receive resistance, will not have company loyalty and probably won’t achieve your goals and vision.

Leadership starts at the top – with you! You have to walk the talk. If you change your company dress code from casual to business casual and you continue to show up in jeans while expecting your employees to show-up in slacks and jacket, well you see where I am going here. To inspire others you must be inspired yourself. What does it take to inspire someone? When we go down a path, take a journey, typically they are challenging. They should be. To inspire someone they need to realize and believe that where you are going, something that potentially seemed impossible is in fact very possible. If people believe in you and where you are going, they will follow. They will be great mentees and you a great mentor – which is how it should be.

All of us should think about our leadership skills and consider what we can do to improve them (as there is always room for improvement). Yes, leadership is hard but it is really fun too, especially when you have great team behind you believing in you and the journey that you are taking them on. Get yourself inspired and then inspire others.

Here are a few fun questions you can answer for yourself about leadership.

What gives you the greatest joy in being a leader?
What is your biggest pet peeve as a leader?
Who made the biggest influence in your life as a leader?
What books have changed your life?
What's your biggest challenge as a leader?
What goals do you have as a leader?
Where do you see yourself in ten years?

Managing Your Way to More Effective Meetings

2010-03-07T17:48:00.003-07:00

Meetings are integral to business. Whether you are running a meeting or participating in a meeting, there are things that all of us can do to improve the overall success of every meeting. So, today’s post is some simple tips and tricks to make your meetings more effective.

First and foremost, do you need to hold a meeting? Meetings cost time and money, both of which are valuable. Hold meetings only when necessary, and ensure that they are concise and constructive. Here are some questions to ask yourself:

Is the purpose of the meeting clear to everyone?
Does everyone need to attend the entire meeting?
Is there a better way of addressing the issues than having a meeting?
Are there other people who do not usually attend your meetings who might make a useful contribution this time?
Will the meeting benefit from the use of any visual aids?

Once you’ve answered the above questions then you can decide what kind of meeting you need. Is it an informal meeting, more formal, a 1-1 meeting, etc.? And of course, don’t forget the logistics. In this day and age it is not uncommon to have people conference in or even have a video link of some form. Don’t forget to make sure you remote attendees feel like they are part of the meeting.

The next two tips are near and dear to my heart. Have an agenda and set the time and stick to it. There is nothing worse than having meeting times not honored. Here is a format you might want to use for setting your meeting agenda‘s –

Purpose: describe the purpose of the meeting. Be as specific as you can.

Agenda: describe the agenda. Again, be specific. Sometimes it makes sense to put time blocks by each agenda item, as well as the presenter, if appropriate.

Logistics: this defines where the meeting will be held, what time, conference call-in and video link information as well as reminders to turn off cell phones, etc.

Outcome: this describes what you want to have occur by the end of the meeting. It might be a decision, a set of steps to move something forward, etc. Again, you want people to leave the meeting with a sense of accomplishment. This will also keep people focused on the agenda at hand as it should be all about obtaining the outcome.

As for meeting times, well, set them and honor them. If you have an hour meeting then your agenda needs to be realistic as to what you can cover in an hour.

And last but not least, here are two other quick tips if you are running the meeting.

If you are running the meeting, then you need to actively listen to others, facilitate the meeting and not talk throughout the entire meeting. You should be taking notes during the meeting which can be disseminated, if appropriate, after the meeting. Most people don’t enjoy meetings where the organizer dominates the conversation.
When action items are assigned, they need to be S.M.A.R.T –

Specific
Measurable
Attainable
Resourced
Time-bound

For every action/activity that the meeting attendees feel need to happen, you need to make sure that there the action is clearly defined and measurable, has an owner responsible for it and has a due date. If your actions aren’t S.M.A.R.T they likely won’t get done on time.

There are many books written on effective meetings but these few simple tips will go a long way to improving the overall effectiveness of meetings within you r organization. In short, prepare for the meeting, hold the meeting, and then follow-up by sending out the minutes and making sure people are clear on their actions. If another meeting is required, you may want to think about scheduling it while everyone is there in the room with their calendars in front of them!

Let me know how this helps you save meeting time and money.

Taking Care of the Customer During Business Growth

2010-03-01T09:00:00.002-07:00

I just had a great customer service experience. A company that I have been doing business with for a few years made a mistake in an order they sent me. What they sent and what I ordered were not only different but I ended up on the short end of the stick from a dollar perspective. So I called the company to find out what could be done.

What did the company do? Well, here is what they did:

They apologized for the error.

They acknowledged that I was on the short end financially and that I didn’t receive what I ordered.

They credited my account for the different in price AND they sent out what I actually ordered at no charge.

Then they apologized again and confessed to having some problems in the packing area due to having added an additional employee.

Now, do I care why they are having the problem? Not really but ... On one hand, I just want my order shipped properly and on time. I really don’t care much about the internal workings of the company. With that said, I can also tell you that having the company tell me that they have been experiencing growing pains and that they were committed to maintaining quality and keeping their customers happy as they grow was good to hear.

Often as companies grow they lose many of the qualities and traits that make them special in the first place. Should the company have taken all of the steps they did to make me “whole”? Yes, of course! Actually, I would have been happy with having them make up the financial difference. So, I was even more satisfied and committed to the company when they said to keep what was sent and that they would ship out what I actually ordered.

What do you do to maintain customer satisfaction and loyalty, particularly when there is an issue? Sometimes all it takes is one mistake and you have lost a customer for life. The cost to make them “happy” is typically much less then the lifelong income generated from that customer, plus the referrals. Sometimes saying “I’m sorry” isn’t enough. Whatever you do, make it easy for the customer and make sure that at the end of the conversation the customer feels good about what you have done to take care of them.

So what are you going to do to improve your customer service, particularly as you grow your business?

Small Business Leadership and the Olympic Athlete

2010-02-21T16:40:00.004-07:00

I confess – I am a big fan of the Winter Olympics. This must be due to my background as a competitive figure skater. My dream was to go to the Olympics (I didn’t even come close to this but I tried …). I spent my summers training in locations where the Olympic rings hung everywhere and they inspired me. They motivated me. They challenged me. And to this day, there is something very special about those rings for me.

So what does this have to do with small business? Everything. To successfully run a small business, you need leadership and courage. Olympic athletes display tremendous amounts of leadership and courage. Leadership is much more than being at the top of the organization chart and making big money (okay, not all of us are making the big bucks yet).

The athletes who compete at the Olympics are there because they love their sport. They choose to train 6-8 hours a day, six days a week in pursuit of their dream, an Olympic medal. The injuries, pain and successes that an elite athlete goes through, well, let’s just say there is a reason why most of us aren’t Olympic athletes.

As leaders, we encounter disappointments, challenges, personnel issues, issues out of our control and of course, our share of victories. In this respect, we are not that different from the Olympic athletes. Yet, the best of the athletes have a joy, a passion, a drive for what they do - even when they don’t perform as well as they could or should.

It is not uncommon to get frustrated and burned out when it comes to running our small business. This is when courage and leadership is needed most. Our employees look up to us, as do our customers, partners and suppliers. Yes, there will be hard days but great leaders find a way to step up.

What does it take – well, find your passion. Remember why you started your business in the first place! Your business should not be a job but rather a calling. Leading your business needs to be something that you look forward to doing every day, even if you know it is going to be a tough day. Parallel this to the athlete lifting weights, racing down mountains, falling, running, making their legs and lungs burn – you get the idea – to be the best they make their bodies (and sometimes minds) hurt! It is the challenge for excellence. It is looking for new outside of the box thinking; creativity, innovation.

When you talk to your team – inspire them, show them your passion for what you are doing and where you are trying to take the company. To put yourself out there - your commitment, your joy and love for what you are doing and want to do – takes courage because it most likely isn’t an easy road to get there but then again most athletes don’t win Olympic medals either.

To this day the Olympic rings are a form of motivation, passion and inspiration for me. What are your "Olympic Rings"?

Social Media: Finding the Right Person

2010-02-16T09:15:00.000-07:00

With social media absolutely booming, many business owners are trying to keep up with the times and get their company name out in the cyber world. For most small business owners, however, finding the time to keep up with their social media efforts can be very challenging. Finding the right person who understands your industry and can portray your business well over the web may not be the easiest task. The right person needs to be able to position your company in a way that will help you meet your company goals and help make your business a success.

David Armano with Harvard Business Review gives six ways to help business owners find the right person for their social media efforts.

“As organizations move their social media strategies from theory to practice, they discover a difficult truth they must confront: Finding the "perfect" social media talent is practically impossible.

To start, the field is flooded with thousands of self proclaimed "experts" who have reinvented themselves to take advantage what looks like a growing business opportunity. Maybe they do know social media, but many don't. They need to be vetted.”

Read more…

Technology Isn't Everything

2010-02-08T10:36:00.002-07:00

We all love our technology – email, social media, our websites and our PDAs. Technology is a great productivity tool and most of us have a hard time imaging life without electronic communications. However, there was a time, not too long ago, when we didn’t have email, laptops, smart phones, etc. As business leaders, we need to be able to leverage technology but maintain relationships.

Business owners will often say that people are their greatest assets. But in fact, their people are PEOPLE. And no amount of technology can replace human interaction. I am seeing too many business leaders using electronic communications as their primary way of communicating, in some cases it is their only form of communication. When is the last time that you dealt with an employee or vendor issue by issuing a tense email rather than having a meeting or picking up the phone and have a conversation?

Yes, it is easy to hit the send key at any hour of any day from anywhere. But there are times when in-person human interaction where you can see body language or at least hear voice tones. All too often, the tone we mean to send in an electronic communication is interpreted very differently by the receiving party.

I know of a business owner’s employee who received a very terse email from the owner. The employee was upset; the owner wasn’t clear in their communication and didn’t bother to talk to the employee before sending the email. The employee, who previously had been a high producing employee, suddenly went to “average” according to the owner. After having conversations with them, the employee felt that it wasn’t worth the extra effort to go above and beyond if the owner was just going to hide behind email and send messages without getting all of the facts because they wanted to deal with an issue quickly and easily.

We are a social species and thrive on interaction with others. The work environment is no different, our employees, vendors/suppliers, partners, etc. are great assets but more importantly they are human. To be a great leader you need to develop relationships, not just electronic communications. Technology should be used to enhance and improve the relationship, not take the place of 1-1 communications. I love my Blackberry and other forms of electronic media but email, tweets, Facebook messages and the like are not a replacement for in-person meetings or an old fashioned phone call!

Factoring on the Rise

2010-02-05T17:04:00.004-07:00

The following is a reprint of sorts from Inc. Magazine. So many small business owners are looking for creative ways to raise capital, this is certainly timely. Just make sure you know what you are getting into if you use factoring.

Both the Wall Street Journal and the New York Times have had stories in the past few days about small companies finding cash from sources other than banks and credit cards, which have restricted capital to entrepreneurs since the recession began in 2008. The Times piece covers purchase order financing, which it describes as a twist on traditional factoring. Purchase-order financing, says the Times, involves written guarantees from a buyer who commits to purchasing a product.The Journal's story focuses on asset-based lending, a collateral-based form of financing where borrowers put up equipment, inventory, accounts receivable, or other liquid assets. We told you about the rise of this kind of financing, in some cases known as merchant cash advances, which can have annual interest rates as high as 100 percent, back in 2008. Check out our profile of On Deck Capital, one of the asset-based lenders included in the Journal piece, which has doled out around $50 million to 2,000 businesses.

Please share your factoring experiences with us.

Leadership

2010-01-27T09:43:00.001-07:00

The following post was written by my good friend John Dini in San Antonio, TX.

There was an interesting report on National Public Radio earlier this week about Haiti. I tried to link it here, but I couldn't find it in the hundreds of archived earthquake stories. If someone locates it, please let me know so I can post the link.

The story was about the neighborhoods that had not seen any aid workers days after the quake, but were functioning without outside help. They weren't fine by any means, but they had managed to marshal resources, care for the injured and distribute food and water. There were no roving gangs or crime, even though they were in the middle of Port O' Prince.

The neighborhood the story focused on had been organized by a small business owner. (Are you surprised?) This shopkeeper, shortly after the temblor, has gathered the stunned people and started directing them to move the injured. He organized stretcher bearer teams. He consolidated the water and food and had it guarded and distributed fairly. He commandeered a place for the wounded, where they were stabilized within the locals' limited means. He sent out people to search for the nearest functioning medical facility, and began transporting the worst cases to it.

I'm extrapolating a bit. The story didn't describe the step by step process of organizing the neighborhood, they just talked about the result. Any of us who direct people for a living know how it happened. One person stood up and took responsibility for impacting his environment. When others were saying "Why me?" or "Who will help us?" he said "What can I do?" and "How should we deal with this?"

The third and fourth questions are ones that small business owners ask every day. The first two are the ones asked by people who can't or won't take control of their lives. I highly recommend John Miller's "QBQ- The Question Before the Question." I've met John, and he leads a crusade for personal accountability. He points out that "Why?" and "Who" questions are usually about avoiding accountability, and "What?" or "How?" questions are about taking on the responsibility for a solution.

Leadership begins with accountability. The story of neighborhoods in Haiti is a great example of how one man (or woman, in many cases) can simply decide to change things, and others will follow. In my next blog I'll talk about my friend Sam, who has changed the lives of hundreds of people forever, without publicity, notice, or giving up his active life.style.

In the meantime, remember the words of Henry Ford. "Asking why a man should be the boss is like asking why he should sing Tenor in the choir."

Creating Your First Small Business Budget

2010-01-25T09:24:00.003-07:00

As you start and build your business, it seems that there are a million things to take care of. Having a budget and knowing how to keep a budget are key elements for business success. If you don’t know how to budget or how to manage a budget, your business may not survive. Being able to cover your expenses, make payroll and still be able to give yourself a paycheck can be a very challenging task. Having good budgeting skills can help ensure you’ll be able to do these things. It will take some business strategy and planning, but it will be well worth it in the end.

Trent Hamm with OpenForum.com talks about creating your budget and provides tips on how to do it with success.

I'm going to make a prediction about your small business.

You didn't get into that business because you were excited and enthralled by the idea of managing your finances and setting up a budget.

I certainly didn't, and I've yet to run across a small businessperson who got started with their business out of a great excitement for budgeting and financial management.

Small businesses - the ones that succeed - are borne out of passion for something, whether it be a particular topic area, a particular methodology, or something else. Businesses succeed when people love what they're doing so much that they pour their heart and soul into it and the business grows in new and unexpected and powerful ways.

Suddenly - quite often, in fact - small businesspeople find themselves in a whole new world in which their lovely pet business has suddenly grown into a giant bull, surging forward into new directions with them holding on for dear life as things charge into new areas and experiences they never anticipated.

For almost all of us, one of these areas is budgeting. Quite often, the nucleus of a small business comes from a shoestring. A person figures out a passion and they seek ways to continue following that passion. They find others that share that passion (ideally) and they conceive of a way to make money from that passion. A book lover opens an independent bookstore. A gear head opens an automotive shop. Their dreams are filled with days chock full of their passion - and then the realities of billing, money management, and so forth burst in.

It's time to make a budget to get some sort of control over this new flood of money moving both into and out of the business. Here are five key pointers for people who find themselves in this brave new world.

First, the purpose of a budget is to simply consider carefully how you're spending your money. There are many, many formal ways to organize a small business budget, but they all have that same central goal in mind. A budget works if it reveals to you the ways in which you're overspending and the ways in which you're under-spending. Keep that in mind throughout the process.

Second, a budget plots your financial path to where you want to be. It's not merely a replication of how you spent money over the past year, even if that year was successful. If you just finished a year in which you went from 200 loyal customers to 1,000, you don't just multiply last year's budget by five. Some areas won't grow at all, while others will grow rapidly. Ask yourself what areas you felt were truly vital for the growth of your business - and, more importantly, will be vital going forward as you gain more customers and strive to maintain your level of quality.

Third, don't get bogged down in formality. The most important element of any budget is that the people who actually have to use it understand it. If the budget you're planning is getting so complicated and specific that you no longer find it useful to you, then it's not a worthwhile exercise. By all means, dig deeply into budgeting for specific areas that you want to streamline. Just avoid reaching a level of detail and complexity that takes the usefulness out of the document.

Fourth, remember that this is a living document. If you're budgeting for the next year, you're merely coming up with guidelines for where you want your business to go in the next year. Of course, we all know that quite often businesses zig when you expect them to zag. Don't just discard your budget and start shooting from the hip. Evaluate those changes, adjust your budget, and stick to the new guidelines you've developed.

Finally, seek some help if you're feeling overwhelmed by all of this. You can turn to an accountant, to a trusted (and wise) family member or friend, or even to your spouse. The more eyeballs you get on your goals and plans for future spending along with your records of how you currently spend, the better off you are.

A budget is not something to be feared. A budget is merely a document you develop for your own needs to help you keep your spending on a reasonable track to help your business to go where you want it to go. If it's not serving that need for you, it needs rethought from the ground up.

Egyptian Pyramids and Small Business

2010-01-11T08:29:00.002-07:00

I was having dinner with friends over the weekend and were started talking about upcoming travel or tripe we wanted to take. One friend had just returned from India, another couple was just in Thailand and I had been in Mexico. Africa came up and while I have already been to Africa twice, I was sharing that I had to go to Africa at least twice more – once to see the mountain gorillas and the other to see the great pyramids in Egypt. The more we got into the conversation, the more I started mapping the pyramids to small businesses.

How could I make a leap like this? Well, in order to construct the pyramids, the teamwork required b y the labor force (which was anywhere from 20,000-30,000 people at a time) was, well nothing short of amazing. The architecture is extremely sophisticated. In this case, the architecture is equivalent to the business plan. The Egyptians knew their strengths and weaknesses – no doubt about that.

When it came to the actual construction, well the Egyptians were specific in what they had to do, when and how. Think about it – they figured out how to move very large, heavy blocks of stone, and not just move them but move them to the required height. While there is dispute as to how they did it, they figured out how to build ramps on an incline so they could move the blocks of stone. I always admire innovation.

If you understand your strengths and weaknesses (not to mention opportunities and threats – SWOT) then you can create your architecture or plan. Many business owners let the challenges of achieving their plan get in the way of planning so they either don’t plan at all or the plan isn’t as aggressive as it should be. Just think – if the Egyptians had let the challenges of building pyramids get in the way of their elaborate design, then we wouldn’t have them to appreciate and wonder in amazement. Once you know what you want the final outcome to be (your company vision), you don’t have to figure out how to get there right away. In fact, you won’t! But you can start by breaking down the first steps into bite size baby pieces and then build from there. The Egyptians figured out how to build their pyramids so you can build your company. You just need to update your SWOT, create your company vision and then focus on breaking things down into bite size baby steps that most likely will take you years to achieve. Just think – you are building your own pyramid/monument.

I haven’t schedule my trip to Egypt for anytime soon but I do have the architecture or business plan in place that lets me know when I will be able to go!

Keep Your 2010 Resolutions Simple

2010-01-04T08:20:00.001-07:00

As we start the New Year there is usually excitement, optimism and renewal in the air. Some people set very loft resolutions and goals, others don’t do any goal setting, some aren’t goal setters, period and then there are those like myself who are continually setting goals thus setting “New Year’s Resolutions” is relatively meaningless.

I want you to be successful in the goals that you set. The trick is to set goals that are achievable and then keep building or adding on to those goals. In short – take lots of baby steps that will allow you to achieve your bigger picture goal. Way too many business owners don’t do any planning or goal setting because it then becomes this heavy weight that they are unable to execute on (or don’t know how to execute).

The secret is K.I.S. – Keep It Simple. Try breaking your goal down into small weekly bite size pieces. Just focus on one part of your goal each week. An example many can relate to – if your goal is to lose a certain amount of weight, during one week just focus on cutting out soda drinks. Add water and tea to your diet. That is it. In the following week you can add or change something else in your diet that will help you achieve your goal.

From a business perspective you might have a goal that says you want to implement and execute a marketing plan. Great, break it down – one week focus on defining the elements of the marketing plan, the following week focus on completing certain sections of the marketing plan and so on until the plan is complete. From an execution perspective, again start simple. If your marketing plan includes social media – start simple. For a week or maybe a month, focus on making Twitter part of your regular marketing activities. Then add another component of your social media plan. Start slowly adding in various components of your marketing plan until performing marketing activities becomes part of your company behavior/culture. When the year comes to an end you will have achieved your goal!

Make sure that you include others in helping you achieve your goals. Having people there to help and support you will make it that much easier to accomplish your 2010 resolutions. And don’t forget to celebrate your victories along the way! There is no need to wait until the end of the year to acknowledge that you got things done! For every baby step you complete, do some sort of celebration. This can be a little personal thing you do for yourself or something bigger that you share with team members.

I wish you well on your journey in 2010. You have the potential for greatness in you! Go for it! Start small. Make a promise and keep it.

The Frustrations of Hiring

2009-12-14T15:20:00.001-07:00

My Executive Assistant moved on to help run the business she and her husband bought so now I am back-filling the position. While, I have said that there are many opportunities to hire great talent right now, you also have to be careful in this process.

First, smart business owners are keeping their top talent, regardless of their business situation. Good talent is hard to find and harder to replace. There comes a point where if you let go of too many employees you do more harm to your business than good. So with that said, regardless of the position you are hiring for, keep in mind that there are a lot of people out there who were the bottom 20% in their previous organizations.

Second, some people are so desperate for a job that they are responding to almost any job posting and not even reading about the position. I have received people’s resumes with standard a standard introduction and/or cover letter that talks about things that are not relevant at all to the position. If they had read the job posting, they would have known this.

Third, the devil is in the details. Call me picky but when someone is trying to get hired, I expect them to send something where the grammar, spelling, etc. is correct. Since they should be doing everything possible to impress the hiring manager, well you get the point. The number of responses that I received with typos, grammatical errors, etc. was astounding, even for me.

So what does this mean? Well, patience is a virtue. I confess that on more than one occasion as I was slogging through the resumes I just wanted to forget the whole thing. There were certainly other things that I would rather be spending my time on (like getting some work done). There are still gems out in the rough. You just have to invest the time to find them. And of course, for the most part, you can find quality talent at reasonable rates which is a good thing.

If you have an opportunity to hire – go for it! Just make sure you write your job description and key accountabilities BEFORE you post the position. Also, make sure you ask your employees for referrals as they are usually a great source for quality hires. Your job posting should be as clear as possible in terms of what you are looking for. If people don’t read the post you will know it immediately and can easily reject that resume. I would say, have fun, but I know better. To motivate yourself, think about all the great value your new hire will bring to your organization and how they will allow you to go focus on the strategic items necessary to move your business forward. Happy hunting.

Year-end Tax Reminders

2009-12-06T20:36:00.003-07:00

I am not a CPA but here are a few year-end tax reminders. The clock is ticking. Here are a fw tips I have picked up that may be of interest to business owners. Please review and talk to your CPA regarding your tax planning.

If you don't itemize your decuctions, you may still deduct 2009 proprty taxes and pay, upt o a $500 limit for singles and $1,000 for couples.
If your small business doesn't have a pension plan, consider establishing one to get a tax credit up to $500 in each of the plan's first three years.
Max out contributions to retirement plans. You can put away $16, 500 in a 401(k) plan ($22,000 if you're 50 or older), $11,500 in a SIMPLE ($14,000 for 50 and older), or $5,000 in an IRA ($6,000 for 50 and older).
Need a new vehicle? Buy before year-end to take a deduction for sales taxes on up to $49,500 of the purchase price. Income limits apply.
Consider buying equipment for your business to utilize the $250,000 first-year expensing option and 50% bonus depreciation.
Get your investment records in order so you can make wise year-end sell decisions, either to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
Complete annual gifts before December 31 to utilize the 2009 tax-free gifting allowance of $13,000 per recipient.

As I said, I am not a CPA but as business owners smart tax planning is essential for success. It is doubtful that future tax laws will favor the small business owner so do what you can now. Contact your CPA now, maybe you can find some tax-cutting options.

Are You Challenging the Process?

2009-11-30T07:52:00.000-07:00

As leaders we seek challenges and accept opportunities to test our abilities, to exceed our limits. At least we should. Challenge is the opportunity for greatness. Many people are at their best when there is a chance to change the way things are done. Maintaining the status quo breeds boredom and mediocrity for individuals and organizations.

We need to encourage innovation. We should be looking for ways to improve our work and our organization. We must be open to listening to the ideas of others.

Challenging the process means experimenting and taking risks. Mistakes will happen and that is okay, as long as we learn from them. When we try something new, there will be added stress and uncertainty. Help yourself and others through these challenging times. Reward people for taking on stressful and important tasks. Stay upbeat and acknowledge your successes--not just the liabilities. And ensure your people are empowered to make change by demonstrating you’ll work with them rather than going around them or over their heads.

“There ain’t no rules around here! We’re trying to accomplish something!” Thomas Edison

Where Do New Ideas Come From?
Most of us can identify when things are working well, however, figuring out how to change something isn’t always simple. Or is it? Most of us are convinced that our problems are unique to our business, our industry, etc. Truth be told, the probability that someone else has experienced the same or similar problem in your industry, or in an entirely different industry, is extremely high. So where can you find those new ideas and solutions?

Look beyond your office. Get out and talk to customers, employees, and suppliers, attend networking events that are industry specific, or speak to a group of your peers.

Step outside of the boundaries. It is easy to let the daily routines get in the way of seeing a great idea. A fresh perspective from a different view can often turn on the light bulb.

What Can You Do To Challenge the Process?
Here are a few ideas to help you get started.

Choose one routine task, and do it as if for the first time. Ask yourself: Why am I doing this? Does it have to be done this way?

Find something that is broken and fix it.

Encourage everyone to set up little experiments in improving their work. Start a “wacky idea of the week” award and give it to someone who made an interesting experiment (even if it failed) and who learned something.

Collect new ideas from everyone. Start an idea club. Ask everyone on the team to come with one new idea to improve the teams’ performance.

Reward risk takers. Praise them. Give them silly prizes. Have them share their experiences and lessons.

If you don’t understand a policy or process, ask why. “Just because …” is not an acceptable answer. If there isn’t a good explanation, change it!

Tell everyone about the worst mistake you ever made and what you learned.

It Can’t Be Done!
Challenging the process means initiating change and often means taking on some things that others believe are not worth the time or energy. A few examples include

This “telephone” has too many shortcomings to be seriously considered as a means of communication. Western Union internal memo, 1876.

A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make. Response to Debbi Fields’ idea of starting Mrs. Fields’ Cookies.

The wireless music box has no imaginable value. David Sarnoff’s associates in response to his urging them for investments in the radio.

Now this may sound difficult but the rewards are significant. Clients of mine that have "challenged the process" have found great rewards, particularly during the current economic climate. They have found new and complimentary markets, found ways to improve productivity, find cost savings, and get the right people in the right roles within the organization. I'm not saying that this is easy, most change isn't, but challenge yourself and your company. You'll be glad you did. Let me know about your changes!

Job Losses Demystified

2009-11-16T09:57:00.005-07:00

The following post is written by Peter Schiff of Euro Pacific Capita l.

Every business owner and executive should understand why our job losses are continuing to increase and Peter's article does an excellent job explaining our country's current job situation.
_________________________________________________________________

As the unemployment rate crossed the double digit barrier for the first time since Michael Jackson learned to moonwalk, President Obama announced that he will convene a “jobs summit” to finally bring the problem under control. Using all the analytic skill that his administration can muster, the President is determined to figure out why so many people are losing their jobs and then formulate a solution. That's a relief; for a while there, I thought we were in real trouble! In fact, the absolute last thing our economy needs is more federal government interference. If Obama really wants to know what's behind entrenched joblessness, he should start by looking at the man in the mirror.

Obama is pursuing, with unprecedented vigor, the same policies that have for decades undermined our industrial base and yoked us to an unsustainable consumer/credit driven economy. This doubling down on Washington's past failures is destroying jobs at an alarming rate. Today we learned that the September trade deficit surged by 18.2%, the largest gain in ten years. Much of the deficit resulted from Americans spending Cash-for-Clunkers stimulus money on imported cars – or “American” cars loaded to the sunroof with imported parts. In exchange for more domestic debt, we have succeeded only in creating foreign jobs.

An article in this week's New York Times by veteran writer Louis Uchitelle confirmed a fact that I have been alleging for years. Uchitelle pointed out that foreign outsourcing of component manufacturing has led to consistent overstatement of U.S. GDP and productivity. The connection goes a long way to explain why we keep losing jobs even as GDP is apparently expanding.

As our economy becomes less competitive due to higher taxes, burdensome and uncertain regulations, and capital flight, more manufacturing and services will be outsourced to foreign firms. However, the flaw in GDP calculation allows the output of those foreign workers to be included in our domestic tally. Since we count the output but not the worker responsible for it, government statisticians attribute the gains to rising labor productivity. To them, it looks like companies are producing more goods with fewer workers.

The reality is that we are producing less with fewer workers. The added “productivity” comes from higher unemployment and larger trade deficits. This is a toxic formula that will have lethal economic consequences.

Don't expect the brain trust at the President's job summit to fret much about these details. That public relations stunt will likely ignore the root cause of the economic imbalances and instead stress the need for government spending on training and education, i.e. more public debt. The unemployed do not need government theatrics, they need actual jobs. But as long as the government props up failed companies, soaks up all available investment capital, discourages savings, punishes employers, and chases capital out of the country, jobs will continue to be lost.

To really fix the unemployment problem, the President must look past his peers in government and academia to understand how jobs are actually created. In the private sector, all individuals have a choice to either work for themselves or someone else. Since labor is far more productive when combined with capital (office equipment, machinery, business models, and intellectual capital), those who lack these assets themselves often choose to work for others who have sacrificed to accumulate them. This increased productivity is shared between the worker and the owner of capital, and both are better off.

However, for one person or company to choose to offer a job to another, there must be an incentive to do so, and they must have the necessary capital. In the first place, employers must commit to paying wages and benefits, comply with government mandates and regulations, and subject themselves to potential lawsuits from disgruntled employees. All of these costs must be measured against the extra profits an employer hopes to earn by hiring an additional worker.

If profit opportunities exist, jobs will be created. Otherwise, they will not. Of course, anything the government does to raise the cost of employment, such as a higher minimum wage, mandated health care, or greater regulatory burdens, not only prevents new jobs from being created but also causes many that already exist to be destroyed. Anything that diminishes the profit potential of extra hiring will diminish the number of job opportunities that are created. Also, since it is after-tax profits against which employers measure risk, the higher the marginal rate of income tax, the less likely employers will be able to hire.

Finally, in order to hire workers, employers must have access to capital to expand operations. Anything the government does to discourage capital formation automatically diminishes job creation. By running the largest federal deficits in history, Barack Obama is diverting all available capital to the Treasury, and is in effect waging a war against private capital formation.

If the President's summit truly intends to find the root cause of unemployment, his advisers don't need Bureau of Labor statistics or complex modeling software, just the courage to drop their dogmatic belief in central planning and embrace the laws of economics.

Get Planning, Get Buzzing

2009-11-11T20:56:00.002-07:00

Most small business owners typically dread business planning, not just annual planning but the ongoing planning meetings and activities that it takes to make sure that you actually execute on your plan. This is a personal challenge for me.

As a small business owner myself, I know that when I plan, execute to the plan and update the plan great things happen. I have several clients, small business owners, who are deeply entrenched in planning; so much so that if it isn’t currently part of their culture, it is quickly becoming part of the culture. These business owners and their employees are seeing the results of planning in all areas of the organization.

Their offices are “buzzing”. People are on the same page, all moving in the same direction, toward the same goals. They are, dare I say it, motivated and excited! They face the same economic challenges as the rest of us but everyone from the business owner down is focused on what needs to be done to move the business forward.

I won’t hesitate to tell you that these are also the businesses that are seeing the greatest successes! These organizations have taken the leap of faith and committed to crystallizing where they want to go, by when and how they will get there. Are there bumps along the way? Of course, but because they have well thought out plans they can make adjustments as needed.

They don’t have all of the answers (and they don’t need all of the answers) but they have a solid game plan, are executing, and continually reviewing where they are compared to where they are supposed to be.

Seeing the tremendous results being achieved by these small businesses is a great thrill for me. My goal is to get Main Street healthy and these companies are wonderful examples. As we are nearing the end of 2009, invest the time and at least get your strategic planning process started. It will be worth it!

Wanted: Overqualified Professionals

2009-11-09T17:18:00.001-07:00

How to manage expectations and integrate advantageous hires.

By: David Lewis

Is it over yet? Are we finally on the road to recovery? When will business be back to normal? In today’s business world we’re all asking these questions. The harsh reality is that what we considered “normal” is probably a long way from returning, if it ever returns completely. However, there are many opportunities for business owners, especially in the area of staffing.

What makes hiring different today is the deep pool of talent that exists due to the recession. What is even more remarkable is the fact that these potential new employees come to the table with skills that far exceed what would fall into the salary range for the position they are interviewing for. So what’s the problem? There are several.

The recession has delivered a huge challenge in the area of workforce management: how to hire top available talent who will work for less than your current staff without creating total havoc among your employees. How, for example, do you bring in Bob, a 15-year marketing veteran who happily will take the marketing coordinator position, yet has more experience than the person to whom he reports?

On the one hand, you may want to avoid creating such a conflict; but on the other hand, you want to hire the best available talent in order to best benefit your business. If you handle this correctly, it can be one of those “good problems.” If you don’t, you are going to regret the decision. There are ways to ease into this type of situation tactfully and strategically.

Ask the Right Questions

Before you conduct the interview, determine how satisfied the candidates will be in a lesser role. You can do so by looking through their resume for signs they have successfully transitioned into roles with lower stature or lesser levels of responsibility. In the interview itself, your line of questioning needs to focus on their past behavior when it has come to handling the work of those below them. For example, have they stepped in regularly to assist their staff when the workload required? Can they show they have remained very much a “player/coach,” serving as a leader and a doer?

Many candidates will tell you—as tactfully as they can—that they really have no other choice, and therefore are willing to accept what the market will bear. In the past, we may have eliminated candidates who were “overqualified” in part because we thought that they would leave the company as soon as they found a more suitable position.

However, because so many companies have consolidated or disappeared, professionals in all areas of business are oversupplied and under-demanded. That means that bringing on board overqualified new hires does not present anywhere close to the flight risk we have reasonably been concerned about in the past.

If you are still concerned that they might not be around for the long term – consider asking them about the other positions they have interviewed for, paying close attention to the level of those roles. If they are similar to the position you are hiring for, that could validate their claim.

Integrating New Staff

Once the new staff member is on board, it’s important to pay close attention to the dynamic between old and new. Your current staff could easily see the new hire as a threat. It’s therefore critical that you take a proactive approach with all parties. For the new hire, be sure they have a realistic set of expectations when it comes to their role, as well as current and future compensation.

Tell them what you expect in terms of their performance and interactions with coworkers, providing direction and guidance on how you want them to “manage up” to those that hold more senior roles, yet have less experience. You want to tell your tenured staff that you continue to value them and their contributions. That being said, you also want to encourage them to solicit ideas and input from the new staff member, and to not view what they offer as threatening, but rather hugely valuable.

By taking these steps, you can create a level of constructive competition that raises the level of performance of junior employees who have more tenure than the more experienced new hire. Look for ways to tap ideas and contributions in group settings, while reinforcing the hierarchy that exists in your organization.

Future with Your Company

Over time, these new hires will most likely expect growth within your company. Just because they are willing to get started at a lower level doesn’t mean they will be satisfied to stay there. Before taking on experienced people, you should decide if you can handle feeding the success of your business at the expense of losing the resources that got you to this point, or if you see enough growth on the horizon to allow parallel career trajectories. If your loyalties are to those that have been with you the longest, then it may mean that your future success could suffer.

When the environment you create by hiring today’s available talent is not managed and monitored carefully, morale and loyalty across the board can decline. Keeping a close watch and injecting yourself as needed should allow for growing your capabilities to new unexpected levels, while getting even more out of those that have been with you to this point.

Anticipate the Best, Prepare for the Worst

2009-11-01T19:26:00.004-07:00

Editor-in-Chief Robert Levin discusses business planning during uncertain times.

By: Robert S. Levin

Fall is an interesting time of the year. We’ve got one eye on finishing the current year strong, and the other on planning for the next year. When it comes to planning for next year, there is good reason to start early, but the reality is that most of us will want to procrastinate planning more than we have in years past.

This is totally understandable, because while the marketplace has settled down a bit, the state of the economy has caused us to say, “I have no idea what is going to happen next year.” But that doesn’t mean that we should not plan. In fact, it means that a plan for 2010 is even more important than it has been over the past few years.

Without a well-thought-out plan, we will not be in a position to react if business picks up or slows down considerably. So, how do you plan in time of uncertainty? Here are a few of the things that we are doing at NY Report, as well as what other business owners have told me they are trying:

Create projections for the worst-case, expected, and best-case scenarios. In the past, I just created one set of projections; however, this year I will create three, because the degree of uncertainty is much higher. The projections include plans for cutting back on certain expenses if we get into the worst case, and increasing investment in the best case.

Plan to utilize freelancers for new projects. You pay a premium for freelancers, but if things aren’t going well, freelancers are easier to cut than employees.

Examine cash flow (not just profits) when considering new products and services. Two reasons for this: 1) customers are paying slower, and 2) access to credit might not be there when you need it.

Remember that in every market there is opportunity. So this year, I am paying even more attention to how my industry is changing and how we need to evolve in order to capitalize on these changes.

If, after reading this, you are still thinking “Everything is really up in the air and planning is just a crapshoot,” you might have a point. But by giving careful consideration to these ideas, you will increase your odds of success significantly. We cannot let uncertainty prevent us from taking advantage of opportunities, nor can we be oblivious to threats.

Top 5 Job Description Mistakes

2009-10-28T16:26:00.005-06:00

Today’s blog post is courtesy of HR BLR.

Job descriptions—just the thought brings tears to your eyes. Yet job descriptions are central to hiring, compensation, and appraisal (not to mention avoiding lawsuits). Today, BLR editors reveal the top 5 mistakes managers make with job descriptions.

One key to getting them done right is to give someone responsibility—and put it in his or her job description!

BLR's editors have observed the following five commonly made mistakes in job descriptions:

Mistake #1: Mismanaging the Job Description Program

Often, job description programs suffer from a lack of attention. Answering these questions will help you to give your job description program a firm footing:

Why do we need new job descriptions?

What events or conditions indicate that this is the time to get involved in a job description program?

What are the shortcomings of our existing job descriptions?

To what specific uses will job descriptions be put?

What are the projected costs?

Who will be involved?

Is top management committed?

Most organizations perform a regular review of job descriptions. Also consider revising job descriptions when:

The job content changes (perhaps due to a new technology, for example) or there is a change in essential functions

There is an organizational structure change

The employee or his or her supervisor requests a review

The only incumbent leaves the job

There are continuous problems in a department or division

Mistake #2: Omitting Critical Elements of a Job Description

If key elements are missing from the job description, its effectiveness suffers. Most job descriptions contain the following elements:

Job identification—Describes the job in a word or two

Job summary or purpose—A brief narrative of the job that highlights its general characteristics

Essential functions and additional responsibilities—Those duties that must be performed in the job

Accountabilities—Not only the end results achieved when job duties are performed satisfactorily but also specific standards for measuring performance

Job specifications—The specific job requirements in terms of "compensable factors" (During job evaluation, a point score is assigned and a wage rate or salary level is set accordingly.)

Mistake #3: Failing to Accurately Describe the Job

The typical job description is deficient in at least one of the following ways:

It exaggerates or downplays the importance of the job.

It fails to pinpoint the critical elements that differentiate between successful and unsuccessful job performance.

It ignores the decision-making aspects of the job.

It either fails to focus on the job incumbent's actual behavior or it defines required behavior in ambiguous terms.

It describes worker requirements or characteristics that are not really needed to succeed in the job.

Mistake #4: Failing to Use Job Descriptions Correctly (or at All!)

Some employers think of job descriptions only in terms of wage and salary administration, or as a necessary evil when it comes to complying with certain employment laws. But these are only two of the many practical uses for job descriptions. Consider:
Wage and Salary Administration
Any compensation system requires that jobs be classified and evaluated in terms that make comparisons possible.

Legal Compliance

Job descriptions can be key evidence of legal compliance (or noncompliance) under a number of federal employment laws.

The Americans with Disabilities Act (essential functions)

Fair Labor Standards Act (who is "exempt" and "nonexempt")

Equal Pay Act (fighting discrimination lawsuits based on pay)

Title VII of the Civil Rights Act of 1964 (fighting discrimination lawsuits based on performance)

Collective Bargaining

Job descriptions have also been used by employers to defend themselves against what they feel are unjustified union demands for uniform rates.

Mistake #5: Forgetting Format, Organization, and Grammar
To achieve the two primary goals of job description writing—accuracy and brevity—you must check and double-check the words you have chosen to describe each job activity. Here are 15 guidelines regarding the use of words in a job description:

Use a terse, direct style throughout the description.
Keep sentence structure as simple as possible; omit all words that don't contribute necessary information.
Be clear and use nontechnical language whenever possible. A good job description explains the objectives, duties, and responsibilities of a job so that they are understandable even to a layperson.
Avoid imprecise words such as "situation," "facilitate," "interface," etc. Ask yourself if the word you have used might be interpreted differently by two different people.
Begin each sentence with an active verb, third person singular. Always use the present tense.
Wherever possible, describe the desired outcome of the work, rather than the method for accomplishing that outcome. For example, instead of "writes down phones messages"—a task-oriented approach—you might say "accurately records phone messages."
Focus on essential activities. However, remember that a task that is performed frequently throughout the day may not be as essential to the job as something done only once or twice a week.
Avoid the narrative form. You are writing a job description, not a story.
Be consistent when using terms like "may" and "occasionally." Their meanings should be spelled out to avoid confusion. For example, make sure that if the word "occasionally" is used in the essential functions section of the description, the occasional work performed truly is essential to the job.
Avoid words that don't tell specifically what the employee does, such as "handles." Others you may want to avoid: "checks," "prepares," "examines," "sends." If these words are the most accurate and specific ones available, it may be acceptable to use them. But if a more specific term would describe the task more clearly, use it.
Refer to job titles rather than people. For example, "Reports to Human Resources Director" instead of "Reports to Estrella Simpson."
Be precise in defining responsibility. The degree of responsibility given indicates the importance of the job and is a vital factor in evaluating it.
Qualify whenever possible. Don't just say that a file clerk "files" materials; say that the clerk "files alphabetically."
Stick to a logical sequence in describing duties and responsibilities whenever possible.
Remember that the length of a job description does not indicate the importance of the job. The job description for the president of a firm can be put into one sentence: "Responsible for the successful operation of the company."

New FTC Rules for Social Media

2009-10-19T08:39:00.001-06:00

The new FTC rules on social media content go into effect 12/1/2009. And, for the most part the new rules are aimed at protecting the consumer from reading a blog about a product that presents itself as an editorial, when the "blogger" has been paid to promote the product and/or has been given the product
for free.

That's a good thing, right? Yup...we think so too. BUT, it does create a few things every marketer must consider--whether they run a blog and/or promote their products on blogs or other social media sites (such as Twitter).

The main crux behind the new rule is this...when endorsing a product or service (in a blog, tweet, etc.), you must:

Disclose when you are being compensated--whether you are being paid for the endorsement and/or have been give free sample of the product (traditionally known as "not-for-resale" copies).
Be truthful in your statements...and make sure they can be substantiated.
Speak from actual experience--meaning you can't just regurgitate the sponsor's marketing speak if it isn't an actual experience, opinion, or belief of your own.

And the fine for not doing so? $11,000 big ones.

Really, most legitimate marketers already follow #2 and #3, but they should now be much more diligent in making sure nothing slips through. The biggest change is the disclosure requirement--so make sure your social media efforts now have these new rules on the operations checklist (whether you are the blogger or the product company promoting through 3rd party blogs)...it's the law!

An Exercise

2009-10-15T08:08:00.004-06:00

Nothing fancy. Just presume, for a second, that the post on Oct. 4 - The Triple Threat Phase 2 was substantially right. We will have a technical recovery from an economic perspective, but it won't feel anything like prosperity. Ask yourself two questions: 1. What will my business look like two years from today if the economy stays exactly as it is this moment? 2. What did I do to make my company that way?

Why Money Isn't Flowing From the Banks

2009-10-11T18:29:00.003-06:00

Depending on who you are talking to the recession is over, will soon be over or isn’t going to be over anytime soon. Many small business owners are looking for financing. Many for growth and some because they just need a bridge to help get them through the current economic times. Funny though, regardless of how strong your financials are very few seem to be getting financing.

The SBA ARC Loan Program, a guaranteed $35,000 short-term relief loan for small businesses facing immediate financial hardship to help them ride out the current uncertain economic times and return to profitability, is rarely being received. Very few companies in Colorado, and throughout the country for that matter, have been granted the loan. Why, well amongst other things there is so much paperwork required that the banks don’t make any money. In fact, in many cases, they actually lose money.

Yes, banks should be helping us get out of this bad economy. But they aren’t. They don’t have to lend out money to be profitable. Here are just a few reasons:

Banks have received TARP (Troubled Asset Relief Program) money to clean up their books.

They are still making money on their credit cards.

They borrow money from the Fed for nearly nothing and buy 30-year Treasuries at 5 percent. A nice profit for the banks considering they are using our (taxpayers) money.

They still have their “toxic” assets that have been written down, and they will eventually provide a profit.

So where else can you find money? Well, that leaves private financing - anything from family and friends to Angels and Venture Capitalists and everything in between. There is private money out there but it is harder to get, more expensive and there is less of it. Since there are a lot of people looking for money our friends with money are pickier than ever in terms of whom they give their money too. And of course, generally speaking, deals take longer to put together.

So what can you do? Well, for education you can go to the Angel Capital Summit Nov. 17^th. You can also work on your business – make sure you have a solid business plan and supporting financial model. To learn more about how to do that attend Planning, Focus & Discipline… 3 Keys to Leading Your Company Out of the Recession on Oct. 21^st or 27^th. Investors want to know where you want to go and how you plan to get there. Having a compelling story with a solid plan to back it up will only help you. And last, but not least, talk to your local politicians. Until the Feds change the rules for the banks money will be slow in coming, which means jobs will be slow to come which will prolong the economic recovery.

Are You Negotiating Away Margins?

2009-10-07T08:05:00.000-06:00

I recently met with a business owner who wanted to know how I trained salespeople in “negotiation.” After a little questioning, I was really struck by his misconception that their salespeople SHOULD be negotiating, which in layman’s terms is lowering price or offering some concession in exchange for a promise to buy.

Trusted advisors and top salespeople do everything they can to AVOID negotiating. Their job is to uncover the costs of the prospect’s problem and then to determine what budget is available to solve it BEFORE they propose a solution. The predominant problem many sales people have is that they simply aren’t comfortable talking about budget and cost impacts until the end of the sale. So they are forced to negotiate at the end, attempting to close the sale in spite of inadequate financial information.

Salespeople who rely on negotiation at the end of the sale usually exhibit these symptoms:

Think that buying is primarily an intellectual process, not an emotional process

Don’t understand the costs associated with the problem or what’s at stake financially early in the sales process

Feel the product or service they sell is extremely expensive

Are uncomfortable talking about other people’s finances

If you have salespeople that regularly require permission for a reduced price to get the sale or blame the competition’s price after losing the deal, look to the symptoms above to gain insight into the attitudes that drive these behaviors and outcomes. Please understand that I’m not saying that top salespeople NEVER need to negotiate. The point is to differentiate the strong salespeople who rarely need to negotiate from the weak ones that must negotiate every time to close a sale.

Examine the beliefs and behaviors of your salespeople when dealing with money issues, so they can minimize the need to negotiate at the end and sell more, more often!

Why Projects Fail and What You Can Do About It

2009-10-06T08:31:00.002-06:00

I recently met with a young start-up company with a terrific idea and as I was listening to their story it reminded me that most companies have failed projects or at least late projects and usually don't know what has happened until it is too late.

What’s the first thing you think of when you hear a company has announced a product release date? How about when one of your competitors releases news that their sales numbers or revenues are off this quarter? If you’ve been around for a while, you might wonder when the real product release date is, and feel pretty confident, maybe even smug, that your own company is on target for its release date(s), sales numbers and revenues.

Or is it? How do you know? While no company gets products to market on time every time and has quarters where sales and revenue don’t meet targets, winning companies track these important project milestones, and continually try to answer the question “why?”:

Why are we late to market?

Why are sales not happening?

Why are revenue projections not being met?

A variety of causes can create these business roadblocks to successful projects. Let’s take a look at some of the issues and questions that, if answered honestly, can help you make your programs be wildly successful.

Getting Products Developed and Launched on Time

Time-to-market is critical for most projects, and rarely will you find a business owner, product manager or product marketing manager that will say otherwise. So why are projects late, and what can you do to help bring them in on time? First, it is important to look at the big picture from an operational perspective.

Program Goals

Have the goals, there are usually many, of the program been clearly defined and communicated to the team?
What are the specific launch objectives? What is the timing?

Processes

Have you outgrown your product development model?

How effective are your development processes?

Who manages your programs – program managers, product managers or engineering? How effective are they?

Once you have program goals and objectives and appropriate processes in place, you have three variables that can be adjusted in product development and launch - time, resources and functionality.

Time Issues

Is your project scoped and clearly defined based on time to market?

Can time be added to a program (usually not)?

Resources Issues

Are appropriate stakeholders participating and adding value to the team?

Do you have enough development resources?

What benefit, if any, is gained by adding resources?

Are marketing resources allocated for a successful product launch?

Functionality

Are your features and benefits clearly defined?

Have you prioritized your features by importance?

Is there too much functionality relative to time and resources?

If/when you have to cut features, do you know (based on market requirements) which features can go and what must stay?

Achieving Your Sales Numbers

Generally speaking, there is no single reason as to why sales numbers are not achieved. It is usually a combination of sales execution, product and/or company issues and lack of competitive intelligence, assuming that realistic yet aggressive sales numbers have been created based on current market conditions.

Sales execution

How effective are your direct and indirect sales channels?

Do you have partners that aren’t contributing?

Are your direct sales teams focused on the right markets?

Do you have a sales system that is used by the entire sales team?

Is there a subsequent sales process that everyone follows?

Product/Company Issues

Do you have the right product packaging, pricing, and service options available for prospects?

Have you assessed your product mix and analyzed your product distribution strategy?

Are the right products and services being sold by the right partners?

How are your messages resonating?

How high is the quality of leads generated by your marketing programs? Is your sales collateral useful in the selling process?

Do you know why you win and lose deals? Do you analyze win/loss factors and evaluate and realign processes and potentially products?

How are your manufacturing processes working?

Lack of competitive intelligence

What is your competition saying about you?

What competitive traps are you setting and what traps are your sales teams walking into?

Has the competition positioned you as a follower?

Hitting Revenue Targets

Often sales and revenues goals are not achieved due to ineffective attitudes and behaviors exhibited by your sales team.

Outside of your sales team, there are other factors that may result in lost revenues: operational inefficiencies are one of the biggest culprits that can eat into your revenue stream. Review your internal processes – in EVERY organization – and measure your operational effectiveness. Things to look for include

Quality issues (rework, waste, etc.)

Inefficient use of resources

Time – does it take too long to achieve the desired outcome? Why?

Communications – how effective are your internal and external communications?

We will not go into other revenue impacting items such as travel, expenses, headcount, etc. We leave that for the CFOs.

So why is this really important? Let's face it, times are tough. Successful companies are positioning themselves NOW for the economic recovery. While we aren't expecting a rapid increase anytime soon, the bottom line is that new products and services will help increase your business. New products can get you into new markets or expand existing markets by offering new features and functionality. So take a look at your projects and make sure you set yourself up for success!

We’d love to hear your what you have done in order to make your projects successful. Leave us a comment.