Clear Your Vision; Focus Your Mission
Friday, May 15. 2009
When was the last time you looked at your company vision statement or thought creatively about your mission? As the country slowly comes out of a deep recession and technology continues its relentless attack on traditional ways of communicating, you need to make sure your vision and mission are tuned to the new reality ahead.
It is easy to get all twisted up in definitions of mission and vision, but for now think of mission as “what my business does to meet needs of my market,” and vision as “the way my business should look in order to fulfill my mission superbly.”
In The E-Myth Revisited, Michael Gerber says that a business must have an “Opportunity Worth Pursuing.” He asks you to determine if the business you have “alleviates a frustration experienced by a large enough group of consumers to make it worthwhile?” He makes the point that although a customer walks out of your business with a product or service, the real product you sell is how the customer feels about doing business with you.
Your mission needs to be thought of in terms of the customer. The story goes that Peter Drucker, the famous management consultant, asked a manufacturer of hand tools what his business was. The response: I sell drills, mostly quarter inch ones. Drucker immediately pointed out that he was not selling quarter inch drills; he was selling quarter inch holes.
Hold that thought! Think about your mission statement. What are you really selling? What frustration are you easing for your customers? Perhaps you should get your key team members together to re-brainstorm your mission in light of the shifting reality of the business world today and in the future.
I wonder if buggy whip manufacturers had thought outside the box more. Would they have concluded that their business was helping people move faster from point A to B by improving the performance of the horse? Would that have made them interested in making the newly developed internal combustion engine run faster or more efficiently? If they answered that question positively, would they then have had the courage to set off in that new direction? I don’t know. But the point is to really think about what you are helping your customer do, and how will you need to help him do it in the future.
Your mission statement is generally worded so it can be stated publicly. Sometimes it needs to be simplified so it becomes a “tag.”
Once you have reevaluated your mission, you need to revisit your vision as well. While a vision statement needs to be forward looking and expansive, it should have a reality check every few years. Especially now that we are struggling in a recession, the incremental steps you may have taken to sustain your cash flow to keep the business viable may have shifted your direction enough so that your vision is outdated. And if your vision statement fails to recognize the new realities of communication such as social networks, constant e-communication, personalized marketing, etc., it is time for an update.
Vision statements can be more expansive and should describe the structure of your business. This can include the resources you employ to deliver your product or service, the size and structure of your business over the next several years, and clarification of your markets and products or services. As a basic ground rule, if you have not integrated the latest generation of web design and functionality into your business you are behind the eight ball.
In structured planning, which is the way you should approach the project of clarifying your mission and vision, I am a strong advocate of the value of process over product. Thinking through everything with a group of key employees and working with flip charts to preserve even the most off-the-wall ideas is the process that ultimately produces the product: a clear, creative mission statement that helps customers understand why your business exists, and an expansive vision statement that helps all your employees understand where you want your business to go. But the process of coming to these statements is critical to getting the team buy-in that promises future success.
As the leader, your job is then to articulate the vision and the mission continually so that all your stakeholders have the “picture.” You need to sound like a broken record: stick to your guns, keep the priorities clear and lead the business ahead into the reality that will be the second decade of the 21st century.
It is easy to get all twisted up in definitions of mission and vision, but for now think of mission as “what my business does to meet needs of my market,” and vision as “the way my business should look in order to fulfill my mission superbly.”
In The E-Myth Revisited, Michael Gerber says that a business must have an “Opportunity Worth Pursuing.” He asks you to determine if the business you have “alleviates a frustration experienced by a large enough group of consumers to make it worthwhile?” He makes the point that although a customer walks out of your business with a product or service, the real product you sell is how the customer feels about doing business with you.
Your mission needs to be thought of in terms of the customer. The story goes that Peter Drucker, the famous management consultant, asked a manufacturer of hand tools what his business was. The response: I sell drills, mostly quarter inch ones. Drucker immediately pointed out that he was not selling quarter inch drills; he was selling quarter inch holes.
Hold that thought! Think about your mission statement. What are you really selling? What frustration are you easing for your customers? Perhaps you should get your key team members together to re-brainstorm your mission in light of the shifting reality of the business world today and in the future.
I wonder if buggy whip manufacturers had thought outside the box more. Would they have concluded that their business was helping people move faster from point A to B by improving the performance of the horse? Would that have made them interested in making the newly developed internal combustion engine run faster or more efficiently? If they answered that question positively, would they then have had the courage to set off in that new direction? I don’t know. But the point is to really think about what you are helping your customer do, and how will you need to help him do it in the future.
Your mission statement is generally worded so it can be stated publicly. Sometimes it needs to be simplified so it becomes a “tag.”
Once you have reevaluated your mission, you need to revisit your vision as well. While a vision statement needs to be forward looking and expansive, it should have a reality check every few years. Especially now that we are struggling in a recession, the incremental steps you may have taken to sustain your cash flow to keep the business viable may have shifted your direction enough so that your vision is outdated. And if your vision statement fails to recognize the new realities of communication such as social networks, constant e-communication, personalized marketing, etc., it is time for an update.
Vision statements can be more expansive and should describe the structure of your business. This can include the resources you employ to deliver your product or service, the size and structure of your business over the next several years, and clarification of your markets and products or services. As a basic ground rule, if you have not integrated the latest generation of web design and functionality into your business you are behind the eight ball.
In structured planning, which is the way you should approach the project of clarifying your mission and vision, I am a strong advocate of the value of process over product. Thinking through everything with a group of key employees and working with flip charts to preserve even the most off-the-wall ideas is the process that ultimately produces the product: a clear, creative mission statement that helps customers understand why your business exists, and an expansive vision statement that helps all your employees understand where you want your business to go. But the process of coming to these statements is critical to getting the team buy-in that promises future success.
As the leader, your job is then to articulate the vision and the mission continually so that all your stakeholders have the “picture.” You need to sound like a broken record: stick to your guns, keep the priorities clear and lead the business ahead into the reality that will be the second decade of the 21st century.
Burn What Boats??
Wednesday, April 15. 2009
The Boston University hockey team last week won the NCAA title with a performance their coach called “the greatest championship game ever played.” Extraordinary efforts evened the score from a 2 goal deficit in the last minute of regulation play, and scored the winning goal after eleven minutes of overtime.
Beneath their uniforms, the team wore t-shirts that said “Burn the Boats.” The curious quote is attributed to Cortez who, when he landed in Mexico in the 16th century, sought the full commitment of his men to the search for Aztec gold. He gave the order to burn the boats as they started inland. He explained that “If you want to get this treasure, you have to raise the level of commitment because nobody else can do this. If we’re going back, we’re going back in their boats.”
Lots of times business leaders invoke sports analogies to inspire their employees (team). The “Burn the Boats” concept set me to thinking whether this appeal would work in today’s environment. As a strong believer in the innate persistence-against-all-odds displayed by intrepid entrepreneurs, it has a place, I believe.
Today, businesses are facing very tough times that also portend a different future with slower growth and continuing high unemployment as well as unprecedented government involvement in markets. Making strategic growth plans is an important requirement now. Plans that realistically assess the environment, play to your strengths, and recognize the certainty of marketplace changes driven by new technology are the ones that will be most successful.
Consider the case of today’s major daily newspapers. Here’s an interesting example of what happened to one of them. During its startup, Monster.com offered The Boston Globe the opportunity to partner with it in exchange for funding, etc. The Globe refused, and Monster went out on its own and shortly thereafter generated half a million dollars in annual revenue. The Globe was concerned that in becoming a Monster owner, they would begin cannibalizing their own classified employment advertising. Today the Globe is in deep financial trouble with the threat of closing. It ignored reality. It neither saw nor understood the longer term implications of the Internet, and was unwilling to “burn the boats” and go for the gold that might exist in another part of their world of information dissemination.
As a business leader, you may need to take the risk of setting out in a new direction that leaves behind some favorite part of your business. Often it is impossible to have it both ways. The old goes out when the new comes in. When high quality short run color printing first hit the market few traditional printers saw the threat to their businesses. But these machines replaced short run traditional printing and increased the market for full color printing. Adopting the new technology required heavy investments and a “burn the boats” approach for those who offered the service. The expense and technical challenge sucked up time and resources but persistence and fear of failure drove the entrepreneurs forward; there was no turning back for most. And many late adopters were left in the dust.
Whether you use the term with your team or not, a “burn the boats” approach on your part can easily make the difference between success and failure. Overcoming adversity in a new business venture is a great learning experience. It often requires a “burn the boats” attitude to get past the bumps and craters on the way to success. But it can be worth the pain.
Selecting the “gold” you want to go after is the really important task. You need to pick the right target and move forward into the right “jungle” ahead of your competition. And that brings us back to the critical need to make a strategic plan that identifies the best opportunity for you.
There are always more opportunities than resources to exploit them. But when you determine a particular opportunity is the right fit for your business, then you need to enthusiastically go for it. As the leader it is your responsibility to not only point the way forward and explain the benefits to the company and the team, but also to convince them that there is no going back to the old way because the results would not be beneficial to the team or the business.
It may seem harsh and over the top, but I think a “burn the boats” approach works in business as well as in the jungles of Mexico or on the competitive ice of the NCAA Hockey finals.
Beneath their uniforms, the team wore t-shirts that said “Burn the Boats.” The curious quote is attributed to Cortez who, when he landed in Mexico in the 16th century, sought the full commitment of his men to the search for Aztec gold. He gave the order to burn the boats as they started inland. He explained that “If you want to get this treasure, you have to raise the level of commitment because nobody else can do this. If we’re going back, we’re going back in their boats.”
Lots of times business leaders invoke sports analogies to inspire their employees (team). The “Burn the Boats” concept set me to thinking whether this appeal would work in today’s environment. As a strong believer in the innate persistence-against-all-odds displayed by intrepid entrepreneurs, it has a place, I believe.
Today, businesses are facing very tough times that also portend a different future with slower growth and continuing high unemployment as well as unprecedented government involvement in markets. Making strategic growth plans is an important requirement now. Plans that realistically assess the environment, play to your strengths, and recognize the certainty of marketplace changes driven by new technology are the ones that will be most successful.
Consider the case of today’s major daily newspapers. Here’s an interesting example of what happened to one of them. During its startup, Monster.com offered The Boston Globe the opportunity to partner with it in exchange for funding, etc. The Globe refused, and Monster went out on its own and shortly thereafter generated half a million dollars in annual revenue. The Globe was concerned that in becoming a Monster owner, they would begin cannibalizing their own classified employment advertising. Today the Globe is in deep financial trouble with the threat of closing. It ignored reality. It neither saw nor understood the longer term implications of the Internet, and was unwilling to “burn the boats” and go for the gold that might exist in another part of their world of information dissemination.
As a business leader, you may need to take the risk of setting out in a new direction that leaves behind some favorite part of your business. Often it is impossible to have it both ways. The old goes out when the new comes in. When high quality short run color printing first hit the market few traditional printers saw the threat to their businesses. But these machines replaced short run traditional printing and increased the market for full color printing. Adopting the new technology required heavy investments and a “burn the boats” approach for those who offered the service. The expense and technical challenge sucked up time and resources but persistence and fear of failure drove the entrepreneurs forward; there was no turning back for most. And many late adopters were left in the dust.
Whether you use the term with your team or not, a “burn the boats” approach on your part can easily make the difference between success and failure. Overcoming adversity in a new business venture is a great learning experience. It often requires a “burn the boats” attitude to get past the bumps and craters on the way to success. But it can be worth the pain.
Selecting the “gold” you want to go after is the really important task. You need to pick the right target and move forward into the right “jungle” ahead of your competition. And that brings us back to the critical need to make a strategic plan that identifies the best opportunity for you.
There are always more opportunities than resources to exploit them. But when you determine a particular opportunity is the right fit for your business, then you need to enthusiastically go for it. As the leader it is your responsibility to not only point the way forward and explain the benefits to the company and the team, but also to convince them that there is no going back to the old way because the results would not be beneficial to the team or the business.
It may seem harsh and over the top, but I think a “burn the boats” approach works in business as well as in the jungles of Mexico or on the competitive ice of the NCAA Hockey finals.
It Is What It Is
Wednesday, March 11. 2009
Business people continually need to look forward, accept reality and strategize a growth future.
Admittedly, today it’s pretty hard to look forward with anything like eager anticipation, as we did for much of the last 10 years. I have never felt as uneasy about the future. But getting out of a self-analyzing, blue funk and into a positive, action-taking mode is really the only way to move ahead, isn’t it?
Let’s face it: It Is What It Is. So now what?
Well, what does, “It Is What It Is” mean in this economic situation. Regardless of your political leanings the die is cast for a significant shift in the way we will see our country run over the next four or eight years, or even more. So given the increasing role of government in the market economy, how do you plan to position your company, and more importantly your attitude?
It is interesting to note how a pragmatic outlook has influenced the positions taken by business-related organizations such as the National Association of Manufacturers, the United States Chamber of Commerce, and the National Federation of Independent Business. They are all, to one degree or another, on board with the Obama administration in its efforts to restore the economy. And why not? There seems to be no other source of repair. (Although sometimes a patient may recover almost as fast without excessive treatment if simply allowed to rest for a period of time.)
Other than the dangerous Employee Free Choice Act, which is patently unfair to business, most of the actions built into the stimulus package are not anti-business, and thus can yield some benefits. Of course a lot of the money will go into peculiar activities that seem to have little to do with fostering economic recovery.
It is depressing to think about how much of the stimulus money will be skimmed off as it flows down the pipeline. Bureaucrats will specify all kinds of administrative requirements requiring more government employees and while this actually can add or save jobs, it also contributes towards reaching the tipping point, e.g. that time when a majority of people receive government largesse and they then can control the vote, and will extract more and more entitlement payments from the minority who are the ones creating the Gross National Product. But fortunately that time is a ways off, and may never happen.
So what about your attitude? Griping and yearning for the good old days is over. Your teenagers will grow up more frugal; they will never have it as good as you did when you were in your early earning years. And you will need to remain frugal, too, for an extended time. In fact, the standard of living may well shift down a notch or two in the USA. It can hurt and it can be humbling. But in the end we need to learn how to save for purchases, and not to buy things on credit betting that future earnings will cover the debt payments. We have seen where that attitude towards consumption has gotten the country.
Your attitude needs to be pragmatic. You cannot snipe at the Obama administration. You cannot join the party of “no” because it is not an effective way to influence government. You can, however, take the steps you believe in as a citizen of this, the greatest country and still the most successful free market in the world. Send reasoned opinions to your state and federal legislators. Too few people take time to contact their elected officials. That means that a personal message, not a form letter, will carry weight with your senator or representative. They know that if you took time to write, there are a large number of people with the same opinion who did not write.
You can pay close attention to the flow of the money and find the ways to get your share of the economic boost. Probably most businesses will see the effect of the stimulus second or third hand. You may, for instance, supply services or products to some other business that is supplying services or products to some entity that actually benefits from the stimulus money directly. You probably need to follow the business news closely to see what companies win government contracts and then figure out how your business can help that winning company succeed.
You can maintain a sense of humor and balance in your dealings with employees and customers. Regrettably, the President does not display much of a sense of humor or optimism. His approach publicly has been extremely serious, probably befitting the situation. But this has made many feel like there is nothing but gloom and doom about the land. Then that attitude feeds on itself to create more gloom and doom. The press seems to play this game well, too. This economic malaise will eventually pass. Soon there will be a light at the end of the tunnel. Except that when we come out of the tunnel the landscape will be different from what we were looking at when we went into the tunnel. It Is What It Is. Sorry.
You can educate your employees by both talking and by example. You need to make sure your business is wisely using cash and when borrowing is doing so with due care for how the money will be used to generate a return that pays the debt back promptly. For employees you can make sure they understand your cautious attitude towards debt and particularly credit cards. To the greatest extent possible, credit cards should be paid off ASAP, hopefully monthly. Encourage your employees to do this; you do this, too. And everyone should be living on a budget that they monitor regularly.
It Is What It Is. Like it or not, the world is different. It is probably not possible to stop this fast moving train leading to more government interference in the free market. While you may grimace at the thought, perhaps it is better to hop on for a while, and see where it will take you. After a time, the train will slow and you can hop off. In the meantime we might as well enjoy the scenery along the way!
Admittedly, today it’s pretty hard to look forward with anything like eager anticipation, as we did for much of the last 10 years. I have never felt as uneasy about the future. But getting out of a self-analyzing, blue funk and into a positive, action-taking mode is really the only way to move ahead, isn’t it?
Let’s face it: It Is What It Is. So now what?
Well, what does, “It Is What It Is” mean in this economic situation. Regardless of your political leanings the die is cast for a significant shift in the way we will see our country run over the next four or eight years, or even more. So given the increasing role of government in the market economy, how do you plan to position your company, and more importantly your attitude?
It is interesting to note how a pragmatic outlook has influenced the positions taken by business-related organizations such as the National Association of Manufacturers, the United States Chamber of Commerce, and the National Federation of Independent Business. They are all, to one degree or another, on board with the Obama administration in its efforts to restore the economy. And why not? There seems to be no other source of repair. (Although sometimes a patient may recover almost as fast without excessive treatment if simply allowed to rest for a period of time.)
Other than the dangerous Employee Free Choice Act, which is patently unfair to business, most of the actions built into the stimulus package are not anti-business, and thus can yield some benefits. Of course a lot of the money will go into peculiar activities that seem to have little to do with fostering economic recovery.
It is depressing to think about how much of the stimulus money will be skimmed off as it flows down the pipeline. Bureaucrats will specify all kinds of administrative requirements requiring more government employees and while this actually can add or save jobs, it also contributes towards reaching the tipping point, e.g. that time when a majority of people receive government largesse and they then can control the vote, and will extract more and more entitlement payments from the minority who are the ones creating the Gross National Product. But fortunately that time is a ways off, and may never happen.
So what about your attitude? Griping and yearning for the good old days is over. Your teenagers will grow up more frugal; they will never have it as good as you did when you were in your early earning years. And you will need to remain frugal, too, for an extended time. In fact, the standard of living may well shift down a notch or two in the USA. It can hurt and it can be humbling. But in the end we need to learn how to save for purchases, and not to buy things on credit betting that future earnings will cover the debt payments. We have seen where that attitude towards consumption has gotten the country.
Your attitude needs to be pragmatic. You cannot snipe at the Obama administration. You cannot join the party of “no” because it is not an effective way to influence government. You can, however, take the steps you believe in as a citizen of this, the greatest country and still the most successful free market in the world. Send reasoned opinions to your state and federal legislators. Too few people take time to contact their elected officials. That means that a personal message, not a form letter, will carry weight with your senator or representative. They know that if you took time to write, there are a large number of people with the same opinion who did not write.
You can pay close attention to the flow of the money and find the ways to get your share of the economic boost. Probably most businesses will see the effect of the stimulus second or third hand. You may, for instance, supply services or products to some other business that is supplying services or products to some entity that actually benefits from the stimulus money directly. You probably need to follow the business news closely to see what companies win government contracts and then figure out how your business can help that winning company succeed.
You can maintain a sense of humor and balance in your dealings with employees and customers. Regrettably, the President does not display much of a sense of humor or optimism. His approach publicly has been extremely serious, probably befitting the situation. But this has made many feel like there is nothing but gloom and doom about the land. Then that attitude feeds on itself to create more gloom and doom. The press seems to play this game well, too. This economic malaise will eventually pass. Soon there will be a light at the end of the tunnel. Except that when we come out of the tunnel the landscape will be different from what we were looking at when we went into the tunnel. It Is What It Is. Sorry.
You can educate your employees by both talking and by example. You need to make sure your business is wisely using cash and when borrowing is doing so with due care for how the money will be used to generate a return that pays the debt back promptly. For employees you can make sure they understand your cautious attitude towards debt and particularly credit cards. To the greatest extent possible, credit cards should be paid off ASAP, hopefully monthly. Encourage your employees to do this; you do this, too. And everyone should be living on a budget that they monitor regularly.
It Is What It Is. Like it or not, the world is different. It is probably not possible to stop this fast moving train leading to more government interference in the free market. While you may grimace at the thought, perhaps it is better to hop on for a while, and see where it will take you. After a time, the train will slow and you can hop off. In the meantime we might as well enjoy the scenery along the way!
Transparency and Honesty
Monday, February 16. 2009
The buzzword in the White House these days is “transparency.” Should it be a buzzword in business, too? Is it preferable to be transparent as a business leader? Can a small business owner be transparent to employees? Is transparency the same as honesty?
I’ve been mulling these questions over in my mind and recalling the times in business when I was too transparent and the times when I failed to be as open as I should have been. Have you been on both sides of the fence on this matter, too?
Being transparent is characterized by visibility or accessibility of information especially concerning business practices says the Merriam-Webster dictionary. The word “frank” is listed as a synonym and defined as talk that is marked by free, forthright, and sincere expression. The dictionary also defines honesty as fairness and straightforwardness of conduct and implies a refusal to lie, steal, or deceive in any way.
Whew! As a business owner I admit that it was hard to live up to those definitions, even though I considered myself to be trustworthy and respected ahead of the need to be liked. Are we in a new environment where absolute transparency is going to be expected by our employees? Is total honesty at all times a requirement? I hope not!
Let’s face it. Not everybody in a business needs to know everything about the business, nor can everyone “handle” being aware of “everything.” Of course I’m excluding from this “mulling over” anything that could be considered private information about individuals. That aside, how much do you share with employees about revenue goals, other employees, profitability, pay increase plans, year-to-date performance, etc.?
Recognize that the rumor mill exists in any business, and it’s pretty hard to hide troublesome issues or deliberations for too long. At some point employees need to be kept informed. There are, however, ways to be a bit circumspect without being misleading. And this often is necessary, especially with situations that are fluid or unsettled.
You may need to update your employees to prevent misinformation from impacting business operations. In such circumstances, it’s important accurately to convey the situation without embellishing it with unnecessary facts or aspects that are not settled. In such instances use of the words: currently, at present, at this time, etc. will fairly “hedge” your comments. Unfortunately, people often don’t hear these words and jump to premature conclusions. It’s then a “damned if you do; damned if you don’t’ situation.
Departure of a key employee can often create the need for some form of transparent, honest communication to employees and some customers. Try to deal with facts and not be insincere, especially if the employee was involuntarily separated from the business. First, you can remind the others that you have a responsibility to respect the privacy of the employee and therefore cannot say more than the fact that the employee is no longer with the business. Perhaps you will feel comfortable in saying that you appreciated the employee’s contributions to the business in the past. But don’t be hypocritical about this. Employees will know if you let someone go because of poor performance, so you cannot then say much else without getting into deep water. If the situation is touchy, it is best to contact a labor law attorney and get advice on how to handle the situation both with the departing individual and afterwards with the other employees.
Another area of transparency that can help or hurt is sharing financial goals and performance information. Goals are good to share if they can be seen as reasonable and if you can explain what everyone needs to do to make them happen. Expense goals can also be shared carefully. There is little benefit in sharing expense goals over which employees have no control; but costs they can help manage should be shared. Profitability is another matter all together. Most uninformed employees think businesses make huge amounts of money. They fail to understand all the expenses of running a business. I think it is safe to “sanitize” the expenses by lumping them together perhaps in lines that total general and administrative expenses and operating expenses.
The objective here is to present cost numbers the employees can affect and avoid exposing details that can lead to questions you would have trouble answering in a way they would accept. An example of such a question might be “Why do we have those car lease expenses?” Of course you, as the owner, may use the car yourself and the “perk” is part of your overall compensation, where your compensation is adjusted downward because of the “perk.” There are lots of other individual expense lines not relevant to most employees that are better left lumped together with a generic line item description.
With all your presentations remember that what you are telling them, even though you remind them it is confidential, may well find its way out of your business. Certainly you can remind employees of the harm that can come to their company if such information is relayed to competitors. But it may still get out. That’s a tradeoff you need to consider.
Business is a teamwork activity in 2009. There is no room for non-performers in the current economic environment. You need to treat the team members with respect and this means being transparent and, of course, honest, to the greatest extent possible. Because this can mean walking a tightrope in what you say and don’t say, the best advice is to avoid off the cuff comments and winging it. Before communicating with employees or customers about any difficult issue jot down your remarks and let them “mature” for a day. Revisit your notes with an objective view and see how they might be misunderstood. Correct any ambiguities, and then be sure you are being truthful, frank, and complete.
That’s the best you can do. Your most experienced, reliable team members will appreciate your position and support you and the others will take their cue from these “floor leaders.”
I’ve been mulling these questions over in my mind and recalling the times in business when I was too transparent and the times when I failed to be as open as I should have been. Have you been on both sides of the fence on this matter, too?
Being transparent is characterized by visibility or accessibility of information especially concerning business practices says the Merriam-Webster dictionary. The word “frank” is listed as a synonym and defined as talk that is marked by free, forthright, and sincere expression. The dictionary also defines honesty as fairness and straightforwardness of conduct and implies a refusal to lie, steal, or deceive in any way.
Whew! As a business owner I admit that it was hard to live up to those definitions, even though I considered myself to be trustworthy and respected ahead of the need to be liked. Are we in a new environment where absolute transparency is going to be expected by our employees? Is total honesty at all times a requirement? I hope not!
Let’s face it. Not everybody in a business needs to know everything about the business, nor can everyone “handle” being aware of “everything.” Of course I’m excluding from this “mulling over” anything that could be considered private information about individuals. That aside, how much do you share with employees about revenue goals, other employees, profitability, pay increase plans, year-to-date performance, etc.?
Recognize that the rumor mill exists in any business, and it’s pretty hard to hide troublesome issues or deliberations for too long. At some point employees need to be kept informed. There are, however, ways to be a bit circumspect without being misleading. And this often is necessary, especially with situations that are fluid or unsettled.
You may need to update your employees to prevent misinformation from impacting business operations. In such circumstances, it’s important accurately to convey the situation without embellishing it with unnecessary facts or aspects that are not settled. In such instances use of the words: currently, at present, at this time, etc. will fairly “hedge” your comments. Unfortunately, people often don’t hear these words and jump to premature conclusions. It’s then a “damned if you do; damned if you don’t’ situation.
Departure of a key employee can often create the need for some form of transparent, honest communication to employees and some customers. Try to deal with facts and not be insincere, especially if the employee was involuntarily separated from the business. First, you can remind the others that you have a responsibility to respect the privacy of the employee and therefore cannot say more than the fact that the employee is no longer with the business. Perhaps you will feel comfortable in saying that you appreciated the employee’s contributions to the business in the past. But don’t be hypocritical about this. Employees will know if you let someone go because of poor performance, so you cannot then say much else without getting into deep water. If the situation is touchy, it is best to contact a labor law attorney and get advice on how to handle the situation both with the departing individual and afterwards with the other employees.
Another area of transparency that can help or hurt is sharing financial goals and performance information. Goals are good to share if they can be seen as reasonable and if you can explain what everyone needs to do to make them happen. Expense goals can also be shared carefully. There is little benefit in sharing expense goals over which employees have no control; but costs they can help manage should be shared. Profitability is another matter all together. Most uninformed employees think businesses make huge amounts of money. They fail to understand all the expenses of running a business. I think it is safe to “sanitize” the expenses by lumping them together perhaps in lines that total general and administrative expenses and operating expenses.
The objective here is to present cost numbers the employees can affect and avoid exposing details that can lead to questions you would have trouble answering in a way they would accept. An example of such a question might be “Why do we have those car lease expenses?” Of course you, as the owner, may use the car yourself and the “perk” is part of your overall compensation, where your compensation is adjusted downward because of the “perk.” There are lots of other individual expense lines not relevant to most employees that are better left lumped together with a generic line item description.
With all your presentations remember that what you are telling them, even though you remind them it is confidential, may well find its way out of your business. Certainly you can remind employees of the harm that can come to their company if such information is relayed to competitors. But it may still get out. That’s a tradeoff you need to consider.
Business is a teamwork activity in 2009. There is no room for non-performers in the current economic environment. You need to treat the team members with respect and this means being transparent and, of course, honest, to the greatest extent possible. Because this can mean walking a tightrope in what you say and don’t say, the best advice is to avoid off the cuff comments and winging it. Before communicating with employees or customers about any difficult issue jot down your remarks and let them “mature” for a day. Revisit your notes with an objective view and see how they might be misunderstood. Correct any ambiguities, and then be sure you are being truthful, frank, and complete.
That’s the best you can do. Your most experienced, reliable team members will appreciate your position and support you and the others will take their cue from these “floor leaders.”
Decisions, Decisions...
Thursday, January 15. 2009
It’s one thing to make decisions that affect others more than yourself; it’s another thing altogether to make a decision that has a profound effect on your own life. That’s the kind of decision my wife and I made in November 2006.
That fall we became the only members of our family remaining in the Philadelphia suburbs. We were living in the home we had occupied 27 years. For the first time since 1979 we had no family nearby—after always having live-in kids, parents in life care communities, or an adult child close. Our son and his family had recently moved from near us to Sudbury, Massachusetts, and our daughter lived with her family in Broomfield, Colorado. Both our parents had died and we found ourselves “home alone.”
We decided that it was time to move closer to our kids. But which one? Which of the two is least likely to move in the future? That’s a key question. The “winner” was our son and his family: our daughter-in-law, a 10 year-old granddaughter and a 5 year-old grandson in Sudbury.
Thus began a two-year process during which we projected a winter 2008-09 move-in date to a newly built home in a 55+ community in Sudbury. But it didn’t work out quite as planned.
In September 2007 while we were on vacation, a water pipe burst in our home ruining much of the first floor hardwood and causing extensive water damage to 28 years of “bits and pieces” stored in the basement where it had literally rained for 24 hours. The move decision time had arrived more dramatically and much sooner than I could have imagined! The flood precipitated (no pun intended) the Herculean task of cleaning out and dumping a lot of our accumulated stuff. Suddenly a year had been removed from our previously sedate schedule for downsizing.
The professionally done cleanup produced a home that, with a little more work and staging, would be ready to sell in the spring of 2008. So we moved our relocation schedule up, and in October 2007 picked a different home in the Sudbury 55+ community, one that was scheduled for March 2008 occupancy.
March 2008 proved to be only a guesstimate, however. With a horrendous 2007-08 winter in Sudbury, the closing date was slipped and slipped, but never more than for a few weeks at a time. And never with a true “date certain.” But we decided to put our house on the market in March 2008 and hope to sell it before we were forced to close in Sudbury.
Another decision was to price our house competitively, because the housing market was already softening. We were given excellent “intelligence” from our realtor, and set an attractive, but not a distress level price. We had about 20 showings in the first 8 days, received three offers, and ended up accepting an excellent one from very responsible buyers. We closed on the sale June 27. This seemed a positive omen regarding the decision to move to Sudbury.
But now we were homeless! The Sudbury closing date was vague—sometime in July. So we decided to store the furniture and live in a residence hotel in the Sudbury area. This gave us time to watch the progress on our home, plead for an earlier closing date, and finally occupy it July 23, 2008.
None of these many decisions really affected our lives as much as the actuality of leaving a familiar place after 29 years and making a fresh start in a lovely old New England town about 25 miles west of Boston.
My wife always has been more comfortable adapting to a new community than I have. We had moved 6 times before and I acquired a built-in set of relationships, since each time the move had been to take a different IBM job. I walked right into relationships at work. But I took a while to develop other relationships within the new community. My wife had to develop a new set of relationships in an unfamiliar community after each move and she learned how to do that.
This move has been different for me. No built-in relationships. Even though retired, I had been working part time as a group facilitator and executive coach in the Philadelphia area and had a string of connections a mile long. This kept me active and out of the house a good deal. But none of those relationships offered a built-in set of connections in Sudbury.
Of course one of the relationships we cherish most has now been restored: our grandchildren are 15 minutes away. Our grandson, now 7 and growing taller every day, had spent the first three years of his life literally in our arms several times a week. Then he moved with his parents and older sister to Sudbury. Only 3 years old at the time, he could not understand why he could not see Grammy and Granddad each week. He never got past that and so our move here has been a good thing for him and for the others as well. Tommy visits a couple of times a week after school and stays for dinner. I’m not sure who likes it more: Tommy or his grandparents. We have a lot of fun together.
Fortunately my hobbies and interests have helped me meet folks in the Sudbury area. Contrary to what you might expect in a traditional New England town, the people are warm and welcoming, and happy to include us in their community activities. As an experienced choral singer blessed with a first tenor range, my voice is appreciated in a 90-member chorus and in a small church choir. As a photographer, I enjoy the opportunity to have my work judged in one camera club, and show my work in another. Field trips with photographers also have proved enjoyable and educational. I also have continued as a Crown Financial Ministries Money Map Coach helping financially stressed families develop spending plans and pay down debt so they can become financially free. The calls for help come from people almost daily.
I am still looking, though, for something more that will take me out of the home during the day. While I maintain a telephone coaching role I greatly enjoy with company owners, I would also like to find a reason to be out of the house more in the daytime.
The question now is just how serious am I about that? Joining a chamber of commerce is a possibility, but that assumes a commitment to build a coaching/consulting business here, and I’m not sure I want to make that “investment.” A volunteer role that can use me effectively is another possibility and I need to explore that more seriously.
I must admit, however, that I enjoy the luxury of consuming two cups of coffee, the Boston Globe and the Wall Street Journal each morning. And I am shooting some interesting outdoor images around New England. But that is not the same as developing something self-challenging outside the house.
A string of decisions have led us here to a great home where I no longer concern myself with snow removal, leaf raking, lawn mowing, etc. I could accept this new status quo and enjoy a low pressure life—that’s one decision. But those who know me understand it would not suit me for long.
Decisions, decisions. I still need to make more of them. It’s certainly a do-over time for me after 29 years in one place. And it’s a significant change. But change seems to be in the wind in 2009. And I like change. Stay tuned!
PS: Any suggestions?
That fall we became the only members of our family remaining in the Philadelphia suburbs. We were living in the home we had occupied 27 years. For the first time since 1979 we had no family nearby—after always having live-in kids, parents in life care communities, or an adult child close. Our son and his family had recently moved from near us to Sudbury, Massachusetts, and our daughter lived with her family in Broomfield, Colorado. Both our parents had died and we found ourselves “home alone.”
We decided that it was time to move closer to our kids. But which one? Which of the two is least likely to move in the future? That’s a key question. The “winner” was our son and his family: our daughter-in-law, a 10 year-old granddaughter and a 5 year-old grandson in Sudbury.
Thus began a two-year process during which we projected a winter 2008-09 move-in date to a newly built home in a 55+ community in Sudbury. But it didn’t work out quite as planned.
In September 2007 while we were on vacation, a water pipe burst in our home ruining much of the first floor hardwood and causing extensive water damage to 28 years of “bits and pieces” stored in the basement where it had literally rained for 24 hours. The move decision time had arrived more dramatically and much sooner than I could have imagined! The flood precipitated (no pun intended) the Herculean task of cleaning out and dumping a lot of our accumulated stuff. Suddenly a year had been removed from our previously sedate schedule for downsizing.
The professionally done cleanup produced a home that, with a little more work and staging, would be ready to sell in the spring of 2008. So we moved our relocation schedule up, and in October 2007 picked a different home in the Sudbury 55+ community, one that was scheduled for March 2008 occupancy.
March 2008 proved to be only a guesstimate, however. With a horrendous 2007-08 winter in Sudbury, the closing date was slipped and slipped, but never more than for a few weeks at a time. And never with a true “date certain.” But we decided to put our house on the market in March 2008 and hope to sell it before we were forced to close in Sudbury.
Another decision was to price our house competitively, because the housing market was already softening. We were given excellent “intelligence” from our realtor, and set an attractive, but not a distress level price. We had about 20 showings in the first 8 days, received three offers, and ended up accepting an excellent one from very responsible buyers. We closed on the sale June 27. This seemed a positive omen regarding the decision to move to Sudbury.
But now we were homeless! The Sudbury closing date was vague—sometime in July. So we decided to store the furniture and live in a residence hotel in the Sudbury area. This gave us time to watch the progress on our home, plead for an earlier closing date, and finally occupy it July 23, 2008.
None of these many decisions really affected our lives as much as the actuality of leaving a familiar place after 29 years and making a fresh start in a lovely old New England town about 25 miles west of Boston.
My wife always has been more comfortable adapting to a new community than I have. We had moved 6 times before and I acquired a built-in set of relationships, since each time the move had been to take a different IBM job. I walked right into relationships at work. But I took a while to develop other relationships within the new community. My wife had to develop a new set of relationships in an unfamiliar community after each move and she learned how to do that.
This move has been different for me. No built-in relationships. Even though retired, I had been working part time as a group facilitator and executive coach in the Philadelphia area and had a string of connections a mile long. This kept me active and out of the house a good deal. But none of those relationships offered a built-in set of connections in Sudbury.
Of course one of the relationships we cherish most has now been restored: our grandchildren are 15 minutes away. Our grandson, now 7 and growing taller every day, had spent the first three years of his life literally in our arms several times a week. Then he moved with his parents and older sister to Sudbury. Only 3 years old at the time, he could not understand why he could not see Grammy and Granddad each week. He never got past that and so our move here has been a good thing for him and for the others as well. Tommy visits a couple of times a week after school and stays for dinner. I’m not sure who likes it more: Tommy or his grandparents. We have a lot of fun together.
Fortunately my hobbies and interests have helped me meet folks in the Sudbury area. Contrary to what you might expect in a traditional New England town, the people are warm and welcoming, and happy to include us in their community activities. As an experienced choral singer blessed with a first tenor range, my voice is appreciated in a 90-member chorus and in a small church choir. As a photographer, I enjoy the opportunity to have my work judged in one camera club, and show my work in another. Field trips with photographers also have proved enjoyable and educational. I also have continued as a Crown Financial Ministries Money Map Coach helping financially stressed families develop spending plans and pay down debt so they can become financially free. The calls for help come from people almost daily.
I am still looking, though, for something more that will take me out of the home during the day. While I maintain a telephone coaching role I greatly enjoy with company owners, I would also like to find a reason to be out of the house more in the daytime.
The question now is just how serious am I about that? Joining a chamber of commerce is a possibility, but that assumes a commitment to build a coaching/consulting business here, and I’m not sure I want to make that “investment.” A volunteer role that can use me effectively is another possibility and I need to explore that more seriously.
I must admit, however, that I enjoy the luxury of consuming two cups of coffee, the Boston Globe and the Wall Street Journal each morning. And I am shooting some interesting outdoor images around New England. But that is not the same as developing something self-challenging outside the house.
A string of decisions have led us here to a great home where I no longer concern myself with snow removal, leaf raking, lawn mowing, etc. I could accept this new status quo and enjoy a low pressure life—that’s one decision. But those who know me understand it would not suit me for long.
Decisions, decisions. I still need to make more of them. It’s certainly a do-over time for me after 29 years in one place. And it’s a significant change. But change seems to be in the wind in 2009. And I like change. Stay tuned!
PS: Any suggestions?
Introduction to Reflections
Thursday, January 15. 2009
Some readers have asked me to write a more personal blog—to write more about my activities, etc. So these blogs fit that genre. Perhaps these entries, which are about my life and activities, may be of use to readers. If not, please don't waste your time reading them!
Try Some Low Cost Marketing and Sales Activities
Friday, December 12. 2008
After you have identified your target market niches for 2009 (concentrating on revenue retention from current customers and seeking new revenue in all the right places) it is time to decide what steps to take to bring in the revenue.
Marketing and sales differ, of course. Marketing activities are to generate qualified leads, and sales activities are to take the leads to a successful, prompt conclusion (i.e. get an order from good leads, and quickly drop leads that have limited potential to close.)
Here are some areas to consider in developing 2009 sales and marketing activities that do not cost a fortune to implement.
More B2B sales are made through referrals than any other way these days. Prospects are more willing to give you a chance if they know someone who has used your product or service. The problem is most of us are afraid to ask for a referral. It’s awkward, isn’t it? Well, if someone is really happy with what you do for them, they are probably comfortable giving you the name of someone they think might want to use your product or service too. Asking is the only way this will happen. And what’s the worst response you will get? Probably nothing more than a polite “can’t think of anyone right now.” Here’s a website with a useful article “7 Sure Fire Ways to Build Your Referral Business.” Check it out at http://sbinformation.about.com/cs/advertising/a/aa020203a.htm
A close second in using customer help in building business is getting testimonials. These endorsements for your business can be used on your website, in marketing collateral material, and in your sales presentation portfolio.
I’ve asked customers to provide testimonials and it usually has been a difficult process to complete. They took forever and when it showed up, it was not as good as I would have liked. But then it's awkward to go back to get an improved one.
A better way to go about it is to tell the customer that you know he has found your product/service valuable. Tell the person your understanding of the specific value you believe he has experienced. Explain that your company likes to use testimonials. Next ask him if you could send him a draft of a testimonial for his review and approval. Follow through promptly with a draft and be sure to include his name and company at the bottom as part of the testimonial. Unsigned testimonials are not too effective. If there is a confidentiality problem with this, suggest his title and a generic industry description be used at the bottom, e.g. Chief Financial Officer, Large Eastern Manufacturer. If someone later questions this, you can, with the CFO’s permission, identify the company specifically. You can find a useful article on testimonials at http://www.sitepoint.com/article/testimonials-increase-sales/
There is another way to find prospects/suspects. Consider using an online lead provider, like Salesgenie. You can slice and dice the lead search a number of ways and to give it a try, you can get 200 leaders free. Check it out at http://www.salesgenie.com.
Improve your sales productivity by using contact management software. Google the term and you will get a good list to consider. Most popular is ACT by Sage. Good contact management software gives you a complete, integrated view of your contact relationships. It promotes the follow-up that can make a difference between winning and losing a sale.
The Internet is more important than ever in generating leads. Everyone turns first to a search engine to find a supplier. So if your website needs freshening, this is the time to do it. Look at your website with an objective, critical eye. (Or get someone else whose judgment you trust to look at it with you.) Does it have a look that matches your collateral material? Is there a call to action on each page links to an email form? Can a visitor sign up for your newsletter?
But even more important is the need to be sure your website address comes up on the first page of a relevant search. Search Engine Optimization (SEO) is now an arcane science that should be outsourced. Costs can range from a couple of thousand dollars for a six month program to four or five times that. Selecting an SEO provider can also be tricky. Perhaps a referral is the best way to go. But you could also use a search engine to find one. If an SEO provider can come up at the top of the page maybe the company can do the same for you. But certainly ask for references and check them out before committing. SEO needs to be redone periodically. Google offers some helpful guidance at http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=35291
Have you thought about using Webinars to educate prospects and customers about your product or service offering? It can beat the cost of in-person sales calls by a lot. Yes, it takes some preparation and not everyone is a skilled presenter, but once the Webinar presentation is developed, it is easily reusable. I’ve known some small companies that service the whole country and use Webinars to make individual sales calls. It’s an easy way to present a complex product or service.
Webinars services come in various “flavors” and you need to do a little online research before signing up with any particular provider. Here’s one article on running a successful Webinar: http://www.buyerzone.com/telecom_services/web_conferencing/webinar.html. I’m not endorsing this provider because I know nothing about him. The article is a quick overview of the process, however. There is also a white paper from Citrix Online “How to Present Effectively Online” at http://www.webbuyersguide.com/resource/white-paper/8803/How-to-Present-Effectively-Online. However, you do need to register to download the paper.
Stories in the trade press have always appealed to me as a way to promote a business. While they are not easy to get placed, they provide an implied third party endorsement of your product or service, and they are excellent reprints to use as a “leave behind.” The stories usually are about applications of your product or service, and involve interviews with users, as well as a description of the product or service and perhaps a few paragraphs about your business plus contact information. If you advertise in a trade publication, ask your ad rep for the editorial calendar. Or else go to the publication’s website and look for the calendar there. Check three months and more out from the current month and note what subjects are featured in future issues. When your product or service application fits into one of the featured subjects you have the potential for a story.
Finally, you need to contact the editor to see if there is interest in your story, and if so would the editor assign a writer to work with you on it. Or you can offer to hire your own writer to do the story for the editor, if that is acceptable. Remember that editors need to find material to fill every issue, and they need to have stories that would be of interest to readers. So think like a reader when you are pitching your story idea to the editor. In the trade press, by the way, the traditional wall between the advertising and editorial departments is a lot lower than in regular publications. So if you advertise, you may have a built in favorable bias.
This blog has gone on too long! Sorry, but I kept thinking of ideas and adding them. I have still more, e.g. writing press releases that get printed, low cost postcard direct mail lead generation, and using email newsletters. But I’ll cover these in a later blog.
Marketing and sales differ, of course. Marketing activities are to generate qualified leads, and sales activities are to take the leads to a successful, prompt conclusion (i.e. get an order from good leads, and quickly drop leads that have limited potential to close.)
Here are some areas to consider in developing 2009 sales and marketing activities that do not cost a fortune to implement.
More B2B sales are made through referrals than any other way these days. Prospects are more willing to give you a chance if they know someone who has used your product or service. The problem is most of us are afraid to ask for a referral. It’s awkward, isn’t it? Well, if someone is really happy with what you do for them, they are probably comfortable giving you the name of someone they think might want to use your product or service too. Asking is the only way this will happen. And what’s the worst response you will get? Probably nothing more than a polite “can’t think of anyone right now.” Here’s a website with a useful article “7 Sure Fire Ways to Build Your Referral Business.” Check it out at http://sbinformation.about.com/cs/advertising/a/aa020203a.htm
A close second in using customer help in building business is getting testimonials. These endorsements for your business can be used on your website, in marketing collateral material, and in your sales presentation portfolio.
I’ve asked customers to provide testimonials and it usually has been a difficult process to complete. They took forever and when it showed up, it was not as good as I would have liked. But then it's awkward to go back to get an improved one.
A better way to go about it is to tell the customer that you know he has found your product/service valuable. Tell the person your understanding of the specific value you believe he has experienced. Explain that your company likes to use testimonials. Next ask him if you could send him a draft of a testimonial for his review and approval. Follow through promptly with a draft and be sure to include his name and company at the bottom as part of the testimonial. Unsigned testimonials are not too effective. If there is a confidentiality problem with this, suggest his title and a generic industry description be used at the bottom, e.g. Chief Financial Officer, Large Eastern Manufacturer. If someone later questions this, you can, with the CFO’s permission, identify the company specifically. You can find a useful article on testimonials at http://www.sitepoint.com/article/testimonials-increase-sales/
There is another way to find prospects/suspects. Consider using an online lead provider, like Salesgenie. You can slice and dice the lead search a number of ways and to give it a try, you can get 200 leaders free. Check it out at http://www.salesgenie.com.
Improve your sales productivity by using contact management software. Google the term and you will get a good list to consider. Most popular is ACT by Sage. Good contact management software gives you a complete, integrated view of your contact relationships. It promotes the follow-up that can make a difference between winning and losing a sale.
The Internet is more important than ever in generating leads. Everyone turns first to a search engine to find a supplier. So if your website needs freshening, this is the time to do it. Look at your website with an objective, critical eye. (Or get someone else whose judgment you trust to look at it with you.) Does it have a look that matches your collateral material? Is there a call to action on each page links to an email form? Can a visitor sign up for your newsletter?
But even more important is the need to be sure your website address comes up on the first page of a relevant search. Search Engine Optimization (SEO) is now an arcane science that should be outsourced. Costs can range from a couple of thousand dollars for a six month program to four or five times that. Selecting an SEO provider can also be tricky. Perhaps a referral is the best way to go. But you could also use a search engine to find one. If an SEO provider can come up at the top of the page maybe the company can do the same for you. But certainly ask for references and check them out before committing. SEO needs to be redone periodically. Google offers some helpful guidance at http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=35291
Have you thought about using Webinars to educate prospects and customers about your product or service offering? It can beat the cost of in-person sales calls by a lot. Yes, it takes some preparation and not everyone is a skilled presenter, but once the Webinar presentation is developed, it is easily reusable. I’ve known some small companies that service the whole country and use Webinars to make individual sales calls. It’s an easy way to present a complex product or service.
Webinars services come in various “flavors” and you need to do a little online research before signing up with any particular provider. Here’s one article on running a successful Webinar: http://www.buyerzone.com/telecom_services/web_conferencing/webinar.html. I’m not endorsing this provider because I know nothing about him. The article is a quick overview of the process, however. There is also a white paper from Citrix Online “How to Present Effectively Online” at http://www.webbuyersguide.com/resource/white-paper/8803/How-to-Present-Effectively-Online. However, you do need to register to download the paper.
Stories in the trade press have always appealed to me as a way to promote a business. While they are not easy to get placed, they provide an implied third party endorsement of your product or service, and they are excellent reprints to use as a “leave behind.” The stories usually are about applications of your product or service, and involve interviews with users, as well as a description of the product or service and perhaps a few paragraphs about your business plus contact information. If you advertise in a trade publication, ask your ad rep for the editorial calendar. Or else go to the publication’s website and look for the calendar there. Check three months and more out from the current month and note what subjects are featured in future issues. When your product or service application fits into one of the featured subjects you have the potential for a story.
Finally, you need to contact the editor to see if there is interest in your story, and if so would the editor assign a writer to work with you on it. Or you can offer to hire your own writer to do the story for the editor, if that is acceptable. Remember that editors need to find material to fill every issue, and they need to have stories that would be of interest to readers. So think like a reader when you are pitching your story idea to the editor. In the trade press, by the way, the traditional wall between the advertising and editorial departments is a lot lower than in regular publications. So if you advertise, you may have a built in favorable bias.
This blog has gone on too long! Sorry, but I kept thinking of ideas and adding them. I have still more, e.g. writing press releases that get printed, low cost postcard direct mail lead generation, and using email newsletters. But I’ll cover these in a later blog.
Pragmatic Leadership Will Save The Day in 2009!
Friday, November 14. 2008
Is pragmatic a word you use to describe your leadership style? President Elect Obama may not use the term about himself, but he will be a pragmatic leader and probably not as progressive as many of his proponents would want. The situation he inherits in 2009 will not allow it. And for most business leaders, pragmatism is essential to weathering the recessionary situation we all face next year, too.
What are the characteristics of a pragmatic leader? What can you do now to be more pragmatic about next year?
First, let’s get the definition clear. Here’s what Merriam-Webster’s Online Dictionary says: “prag•mat•ic: relating to matters of fact or practical affairs often to the exclusion of intellectual or artistic matters: practical as opposed to idealistic”
OK let’s dispose of the artistic and intellectual side first. For most pragmatic people intellectualism, at least from the standpoint of knowledge for the sake of knowledge, is not a primary driver. Also they hold their artistic temperaments in check as they make decisions. They also may come up short on supporting the role of social responsibility for business.
A pragmatic leader deals with facts and practicality. “Well, haven’t I been doing that all along?” you ask. Perhaps, but in a recessionary period it requires something more. Where must pragmatic leadership focus this year?
1. Set objectives. Now more than ever it is vitally important to set specific business goals that you are comfortable with. Two required objectives are revenue and profit.
Setting revenue objectives this year can best be done by coming at the final number from bottom up and top down. A top down approach is simply building on your 2008 performance by picking a percentage change (hopefully upwards, and surely after due thought). The bottom up method is to evaluate the potential of each of your product segments or market niches and select goals for each. Add these up and see how close they come to your top down number. Settle on a realistic goal for the total and for each of the product segments/niches. It’s good to stretch a bit.
Now take each of the numbers and “quarterize” them. Figure out your revenue goals for each quarter. Perform a pragmatic realism check on these numbers. Can you hit them each quarter? If you fall short, can you make it up in the next quarter?
Setting a profit objective is OK, but the better method in a tight year is to set quarterly operating expense objectives based on supporting the quarterly revenue goals. Subtracting the two numbers will give you operating profit objectives by quarter.
2. Apply resources. Decide what marketing and sales actions and budget will be needed to hit the quarterly revenue objectives. Can these expenses be met within the quarterly expense budget goals you have set? If not, what is going to give? Do you need to dip into a line of credit to invest in generating revenue? Are you willing to do that? If not, then can you accept potentially missing a revenue number? What can you do in the marketplace inexpensively to set your business apart from competition?
Look at your expenses with fresh eyes. How can they be managed down? Have a task force of employees look at expense areas and invite suggestions on cutting them down. Certainly check your payroll; can positions be cut back or eliminated? Can you eliminate overtime? What about other costs, can they be reduced through changes in your operating methods? Would it make sense to go to a four day workweek with ten hour days? Employees might actually like that.
3. Track and act. Developing business objectives is only step one in pragmatic leadership. Once they are on paper, then tracking becomes essential. However, waiting until month end to check performance may be too late. Make sure you have your own list of key metrics that tell you at a glance how well you are doing. Some people track total backlog and others may look at daily sales comparisons to previous years. Maybe you can get a good feel for the level of business just by walking around.
Some leaders have a dashboard on their computer to track the key numbers. Others simply check them daily from several sources. You could also have your office manager provide you with a set of figures at 9:00 every morning. Whatever way you do it, as Nike says, “Just do it!!”
Pragmatism in 2009 means setting objectives thoughtfully, applying resources creatively, and monitoring performance repeatedly. Sharing objectives and performance (insofar as it can be done) with employees is important. If employees know the objectives then they need to know how well they are doing in achieving them. When they know what is important to you, it will be important to them.
The worst thing you can do as a leader in 2009 is become an ostrich. Sticking your head in the sand and avoiding the need to address issues quickly and decisively will doom your chances of hitting your goals. And it may even lead to something worse. In my work with business leaders almost every time they set specific objectives based on realistic thinking they achieved or exceeded them. But even when they missed by a bit, they knew exactly why it happened and were able to take steps to correct problems.
Be a pragmatic leader every day, but especially now!
What are the characteristics of a pragmatic leader? What can you do now to be more pragmatic about next year?
First, let’s get the definition clear. Here’s what Merriam-Webster’s Online Dictionary says: “prag•mat•ic: relating to matters of fact or practical affairs often to the exclusion of intellectual or artistic matters: practical as opposed to idealistic
OK let’s dispose of the artistic and intellectual side first. For most pragmatic people intellectualism, at least from the standpoint of knowledge for the sake of knowledge, is not a primary driver. Also they hold their artistic temperaments in check as they make decisions. They also may come up short on supporting the role of social responsibility for business.
A pragmatic leader deals with facts and practicality. “Well, haven’t I been doing that all along?” you ask. Perhaps, but in a recessionary period it requires something more. Where must pragmatic leadership focus this year?
1. Set objectives. Now more than ever it is vitally important to set specific business goals that you are comfortable with. Two required objectives are revenue and profit.
Setting revenue objectives this year can best be done by coming at the final number from bottom up and top down. A top down approach is simply building on your 2008 performance by picking a percentage change (hopefully upwards, and surely after due thought). The bottom up method is to evaluate the potential of each of your product segments or market niches and select goals for each. Add these up and see how close they come to your top down number. Settle on a realistic goal for the total and for each of the product segments/niches. It’s good to stretch a bit.
Now take each of the numbers and “quarterize” them. Figure out your revenue goals for each quarter. Perform a pragmatic realism check on these numbers. Can you hit them each quarter? If you fall short, can you make it up in the next quarter?
Setting a profit objective is OK, but the better method in a tight year is to set quarterly operating expense objectives based on supporting the quarterly revenue goals. Subtracting the two numbers will give you operating profit objectives by quarter.
2. Apply resources. Decide what marketing and sales actions and budget will be needed to hit the quarterly revenue objectives. Can these expenses be met within the quarterly expense budget goals you have set? If not, what is going to give? Do you need to dip into a line of credit to invest in generating revenue? Are you willing to do that? If not, then can you accept potentially missing a revenue number? What can you do in the marketplace inexpensively to set your business apart from competition?
Look at your expenses with fresh eyes. How can they be managed down? Have a task force of employees look at expense areas and invite suggestions on cutting them down. Certainly check your payroll; can positions be cut back or eliminated? Can you eliminate overtime? What about other costs, can they be reduced through changes in your operating methods? Would it make sense to go to a four day workweek with ten hour days? Employees might actually like that.
3. Track and act. Developing business objectives is only step one in pragmatic leadership. Once they are on paper, then tracking becomes essential. However, waiting until month end to check performance may be too late. Make sure you have your own list of key metrics that tell you at a glance how well you are doing. Some people track total backlog and others may look at daily sales comparisons to previous years. Maybe you can get a good feel for the level of business just by walking around.
Some leaders have a dashboard on their computer to track the key numbers. Others simply check them daily from several sources. You could also have your office manager provide you with a set of figures at 9:00 every morning. Whatever way you do it, as Nike says, “Just do it!!”
Pragmatism in 2009 means setting objectives thoughtfully, applying resources creatively, and monitoring performance repeatedly. Sharing objectives and performance (insofar as it can be done) with employees is important. If employees know the objectives then they need to know how well they are doing in achieving them. When they know what is important to you, it will be important to them.
The worst thing you can do as a leader in 2009 is become an ostrich. Sticking your head in the sand and avoiding the need to address issues quickly and decisively will doom your chances of hitting your goals. And it may even lead to something worse. In my work with business leaders almost every time they set specific objectives based on realistic thinking they achieved or exceeded them. But even when they missed by a bit, they knew exactly why it happened and were able to take steps to correct problems.
Be a pragmatic leader every day, but especially now!
It It For...What?
Tuesday, October 14. 2008
If you’re like me, you’ve asked yourself more than once, “Why am I in this business?” On a fine spring day the lawn care business looked a lot more appealing that my printing and design business. And in a snowstorm when struggling to the office seemed more than it was worth, being an author working at home sounded like a great idea.
An article by Megan Woolhouse in the Boston Globe entitled “Losses drive titans of finance to therapy” led with this: “For years, brokers and hedge fund managers suffered from a condition known among therapists as ‘sudden wealth syndrome.’ Some even called it ‘affluenza.’” Robert Frank, author of the book “Richistan” a bestseller about how, until recently, the number of rich people in the United States has been exploding says that for investment managers their “value system [has been] all about making more [money].” And he goes on to ask: “Now what’s [their] value system?”
This started me thinking about the value systems I’ve observed in the owners of privately held businesses. Why are these people in the business they are in? Here are some of my observations.
Some actually are in it for making more money. I have seen some whose good fortune, no doubt achieved through skill, industry, and good timing, has led them to make acquiring money and possessions a value system. But more frequently this value system is transitory, and when good fortune turns to something less, they begin to search deeper to answer the question. This leads them to different conclusions.
Many business leaders have “High D” behavior styles. They are dominant and decisive, preferring to be in charge. They want control. These owners may be successful financially, but that is somewhat secondary to having the power to direct an organization to successfully achieve the objectives he or she has put in place. They are seriously goal oriented and driven to succeed.
Many people leave big business for a leadership role in small business because they value flexibility and lifestyle more than money. They trade a large income for the opportunity to be with their kids at afternoon sports events. They want to participate in activities with their families and not be away on business. A flexible lifestyle can be a powerful incentive to strike out on your own.
Other owners may find it thrilling to create a business. They like to conceive of a new business, bring it into being, and get it to a level of success then move on to the next one. However, sometimes this leadership style masks their primary goal which is to make more money. This has seemed to me more prevalent in high tech where the goal is to build a business, take it public, and cash in founder’s stock ASAP. It was mostly about making money, and these leaders could be found moving around in their industry. Sometimes their actions left a lot of “broken glass” in companies they built and then left.
Creating businesses can become addictive leading to a reputation as a serial entrepreneur. Once the entrepreneur has created the company and taken it beyond the first few years, it’s time to move on. That’s not a bad idea actually. Other leaders may be more skilled at running and growing an infant company into adulthood. The serial entrepreneur needs to understand his or her behavior style and train a good replacement. Never leave the company in the lurch.
In looking back on my 40+ years in business I can see that even within larger companies I was easily bored with my work. As a result I rarely held the same job for more than a handful of years, even within the same company. (A closet serial entrepreneur perhaps or at least a Renaissance man as some called me.) It took an unfriendly takeover battle for the last company I worked in to lead me to my own small business and away from the pressures and politics of an executive role in the high tech field. And this happened when I was 50 years old. Why did it take so long?
I think it’s because my father was a small businessman. He was a dentist in a very small town and starting out in the Depression, he never had it easy with money. He was often paid “in kind” by patients in our farming community on Long Island. As a boy hearing his challenges with cash flow I resolved to stay away from owning my own business. Too bad for me! I didn’t realize that money was only the method of score keeping in small business, and not the primary reason most owners are in it. Certainly this was true of my Dad. He could have moved us to a bigger city, joined a successful practice and we would have lived in different circumstances. But he relished the flexibility and relationships within the small community that his role as the town dentist afforded him.
Now, I would never say money isn’t an important part of working. But greedily seeking the most out of every transaction can be a terrible habit to develop. It should be the other way around. Make every transaction work well for the other party as well as yourself and the financial results will work out fine. It seems to me that much of the damage to our financial infrastructure has been caused by outright greed. One therapist mentioned in the Globe article says he helps his patients focus on their relationship with money, often a relationship with lots of money. Perhaps they are reeling from the shock that a relationship they took for granted is now lost.
People in small business understand their relationship with money very clearly. It was one of the first lessons learned. Money is critical. Money is the oil that lubricates the engine of growth. But just as when my lawnmower smoked and complained when I overfilled the oil reservoir, too much money sloshing around in a business can result in smoke and complaints, too. (AIG Conferences anyone?) A proper relationship with money is no different than any other relationship: it works best when it’s properly cared for, sincerely respected, and genuinely appreciated.
Let’s face it. We’re not in business for the money; we’re in business for the satisfaction.
An article by Megan Woolhouse in the Boston Globe entitled “Losses drive titans of finance to therapy” led with this: “For years, brokers and hedge fund managers suffered from a condition known among therapists as ‘sudden wealth syndrome.’ Some even called it ‘affluenza.’” Robert Frank, author of the book “Richistan” a bestseller about how, until recently, the number of rich people in the United States has been exploding says that for investment managers their “value system [has been] all about making more [money].” And he goes on to ask: “Now what’s [their] value system?”
This started me thinking about the value systems I’ve observed in the owners of privately held businesses. Why are these people in the business they are in? Here are some of my observations.
Some actually are in it for making more money. I have seen some whose good fortune, no doubt achieved through skill, industry, and good timing, has led them to make acquiring money and possessions a value system. But more frequently this value system is transitory, and when good fortune turns to something less, they begin to search deeper to answer the question. This leads them to different conclusions.
Many business leaders have “High D” behavior styles. They are dominant and decisive, preferring to be in charge. They want control. These owners may be successful financially, but that is somewhat secondary to having the power to direct an organization to successfully achieve the objectives he or she has put in place. They are seriously goal oriented and driven to succeed.
Many people leave big business for a leadership role in small business because they value flexibility and lifestyle more than money. They trade a large income for the opportunity to be with their kids at afternoon sports events. They want to participate in activities with their families and not be away on business. A flexible lifestyle can be a powerful incentive to strike out on your own.
Other owners may find it thrilling to create a business. They like to conceive of a new business, bring it into being, and get it to a level of success then move on to the next one. However, sometimes this leadership style masks their primary goal which is to make more money. This has seemed to me more prevalent in high tech where the goal is to build a business, take it public, and cash in founder’s stock ASAP. It was mostly about making money, and these leaders could be found moving around in their industry. Sometimes their actions left a lot of “broken glass” in companies they built and then left.
Creating businesses can become addictive leading to a reputation as a serial entrepreneur. Once the entrepreneur has created the company and taken it beyond the first few years, it’s time to move on. That’s not a bad idea actually. Other leaders may be more skilled at running and growing an infant company into adulthood. The serial entrepreneur needs to understand his or her behavior style and train a good replacement. Never leave the company in the lurch.
In looking back on my 40+ years in business I can see that even within larger companies I was easily bored with my work. As a result I rarely held the same job for more than a handful of years, even within the same company. (A closet serial entrepreneur perhaps or at least a Renaissance man as some called me.) It took an unfriendly takeover battle for the last company I worked in to lead me to my own small business and away from the pressures and politics of an executive role in the high tech field. And this happened when I was 50 years old. Why did it take so long?
I think it’s because my father was a small businessman. He was a dentist in a very small town and starting out in the Depression, he never had it easy with money. He was often paid “in kind” by patients in our farming community on Long Island. As a boy hearing his challenges with cash flow I resolved to stay away from owning my own business. Too bad for me! I didn’t realize that money was only the method of score keeping in small business, and not the primary reason most owners are in it. Certainly this was true of my Dad. He could have moved us to a bigger city, joined a successful practice and we would have lived in different circumstances. But he relished the flexibility and relationships within the small community that his role as the town dentist afforded him.
Now, I would never say money isn’t an important part of working. But greedily seeking the most out of every transaction can be a terrible habit to develop. It should be the other way around. Make every transaction work well for the other party as well as yourself and the financial results will work out fine. It seems to me that much of the damage to our financial infrastructure has been caused by outright greed. One therapist mentioned in the Globe article says he helps his patients focus on their relationship with money, often a relationship with lots of money. Perhaps they are reeling from the shock that a relationship they took for granted is now lost.
People in small business understand their relationship with money very clearly. It was one of the first lessons learned. Money is critical. Money is the oil that lubricates the engine of growth. But just as when my lawnmower smoked and complained when I overfilled the oil reservoir, too much money sloshing around in a business can result in smoke and complaints, too. (AIG Conferences anyone?) A proper relationship with money is no different than any other relationship: it works best when it’s properly cared for, sincerely respected, and genuinely appreciated.
Let’s face it. We’re not in business for the money; we’re in business for the satisfaction.
When (Not If) You Sell Your Business
Monday, September 1. 2008
Every business comes to an end. It may be in less than five years (90% of the startups fall in this group), or it may be after decades. When it comes about either by choice or by chance, you need to be sure you are representing the best value picture you can. This does not mean doing anything that is not credible, but it does mean making sure the buyer considers everything that represents value to him.
Proper packaging of your business is critical to getting the most value. The IRS says “Valuation of securities [your business] is, in essence, a prophecy as to the future and must be based on facts available and the prospective economic conditions as of the valuation date.” –IRS Revenue Ruling 80-123.
A buyer’s perception of value begins with an analysis of your market. What are the demographics and how do you stack up against your competitors? Then the buyer will perform an internal analysis of your business to see what value enhancers he can find, and to determine the risk considerations necessary in the deal.
Next, the buyer will consider your restated financial statements. These are statements that supplement your audited, three-year historical statements. They recast your past three years to adjust for items that the buyer might not expect to incur. They include an assessment of profitability and cash flow and include both a P&L and a balance sheet. Each adjustment you make in recasting needs to be detailed.
Based on the past, you also need to prepare projected statements that demonstrate the potential you see for the business. What you are trying to do is give the buyer a credible picture through documents of what your business was, what it is today, and what it can be. Geneva Companies (an M&A firm) determined that a selling price (on average—with an admittedly wide variation) was determined based on 25% of book value and 75% of future earnings. So the pro forma statements, supported by a credible vision and a balanced perspective, are critical to building the value in your business.
The ROI to the buyer is made up of more than numbers on the pro forma, however. An astute seller will supplement the numbers with some professional, high quality research that shows where value will lie. Add to this a strategic plan and identify value enhancers. There are often aspects of a business that do not explicitly show on the statements. These can include such things as trade secrets, customer lists, patents, existing strategic relationships, research and development projects, trademarks, etc.
As a seller, your task is to explain the past and sell the future. Buyers respond to a documented, believable future. The current market may be more of a buyer’s market than we have seen in the last 10 years. Regardless of the reason you are selling your business, you may be doing so in a buyer’s market. To get the greatest value for your business you need to know what the business is worth, you must provide good documentation, and you need to seek the services of an intermediary. The goal of the intermediary will be to help you sell your business at the best price possible. Bringing multiple buyers into an auction is the best way to achieve this.
And always remember what Dr. Peter Drucker said: “The buyer rarely buys what the seller thinks he’s selling.” That’s not an excuse to "wing it." Instead, it is the reason to do the complete job when you prepare your business for sale.
Proper packaging of your business is critical to getting the most value. The IRS says “Valuation of securities [your business] is, in essence, a prophecy as to the future and must be based on facts available and the prospective economic conditions as of the valuation date.” –IRS Revenue Ruling 80-123.
A buyer’s perception of value begins with an analysis of your market. What are the demographics and how do you stack up against your competitors? Then the buyer will perform an internal analysis of your business to see what value enhancers he can find, and to determine the risk considerations necessary in the deal.
Next, the buyer will consider your restated financial statements. These are statements that supplement your audited, three-year historical statements. They recast your past three years to adjust for items that the buyer might not expect to incur. They include an assessment of profitability and cash flow and include both a P&L and a balance sheet. Each adjustment you make in recasting needs to be detailed.
Based on the past, you also need to prepare projected statements that demonstrate the potential you see for the business. What you are trying to do is give the buyer a credible picture through documents of what your business was, what it is today, and what it can be. Geneva Companies (an M&A firm) determined that a selling price (on average—with an admittedly wide variation) was determined based on 25% of book value and 75% of future earnings. So the pro forma statements, supported by a credible vision and a balanced perspective, are critical to building the value in your business.
The ROI to the buyer is made up of more than numbers on the pro forma, however. An astute seller will supplement the numbers with some professional, high quality research that shows where value will lie. Add to this a strategic plan and identify value enhancers. There are often aspects of a business that do not explicitly show on the statements. These can include such things as trade secrets, customer lists, patents, existing strategic relationships, research and development projects, trademarks, etc.
As a seller, your task is to explain the past and sell the future. Buyers respond to a documented, believable future. The current market may be more of a buyer’s market than we have seen in the last 10 years. Regardless of the reason you are selling your business, you may be doing so in a buyer’s market. To get the greatest value for your business you need to know what the business is worth, you must provide good documentation, and you need to seek the services of an intermediary. The goal of the intermediary will be to help you sell your business at the best price possible. Bringing multiple buyers into an auction is the best way to achieve this.
And always remember what Dr. Peter Drucker said: “The buyer rarely buys what the seller thinks he’s selling.” That’s not an excuse to "wing it." Instead, it is the reason to do the complete job when you prepare your business for sale.
Customer Service -- Really??
Wednesday, August 13. 2008
Responding to advertising and some word of mouth, I installed FiOS in our new home, foregoing Comcast after many years. The installation consists of a complex DVR/set top box, three simple set top boxes, Internet service, email service, and telephone. While all started off auspiciously, the experience turned into an ordeal. Yet throughout the period of 19 days of attempts to get everything functioning correctly, I was impressed with the courtesy and friendliness of Verizon’s telephone customer service people during the eight times I called them about problems.
But you know what? Most times they did not solve the problem on my first call, and this left me frustrated and feeling helpless. And I never talked with the same person twice! Before I could talk to a human, a female voice response system tried to help me. When I cooperated with her, she failed to help, and then prevented me from getting to tech support. On three occasions I was forced to hang up, redial, and carefully bypass her well meaning efforts to help.
Is that the way customer service should be? No! Customer Service is more than maintaining a sympathetic ear on the telephone. It’s more than promising that the job will be done in 24 hours and then not following through.
Customer Service means real service with real results. So how’s your CS working in your business? Does it make people feel glad they called, or does it leave them frustrated and angry?
You probably have CS as a collateral duty of someone (or everyone) in your company. But have you set guidelines for employees who handle customer service contacts? Most of us don’t bother to do that. If you are not paying attention to your customer service you may be creating an unflattering image of your company in customers who will then pass that along to others. This can cause you to lose business.
In my business we had several customer service ground rules that seemed to work pretty well. First was “Answer the phone in three rings or less.” People calling a business where the phone rings 5 or 6 times and then finally is answered can easily get the impression that the business is tiny, perhaps a one man show. Not good, especially if it is not true!
The second customer service ground rule was: “Answer with the company name, your first name, and ask how you can help the caller.” To its credit, Verizon CS people always state their name. But in my experience that does not happen as often with smaller businesses. How do you feel when you call a business and the person answers without stating his or her name? I don’t like the impression that leaves. And I usually then state my name and ask the name of the other person.
The third ground rule we had was: “When you answer the phone and it is a customer service matter, you own the problem until it’s solved.” That does not mean the person answering the phone has to solve the problem; maybe it needs to be handled by someone else. But you remain responsible for following up on the matter and calling the customer back with the solution.
That is the major problem in dealing with a large customer service organization like Verizon. Problems are recorded in the online database and any CS representative can then view the problem when you call in another time. But that is frustrating for the customer because there always is a need for additional explanations before the CS on a subsequent call can really help you.
It does not need to be that way. USAA has been my insurance company for over 50 years. They have absolutely the best customer service I have ever experienced, and it is all the more special because the company is huge. Depending upon the circumstance, a claim for example, the customer is assigned a single contact and given that person’s extension. Yes, it may be necessary to leave a message if you call in and the contact person is busy, but it really improves overall efficiency of solving each problem along the way.
My efforts to conquer the multiple problems of installing the FiOS system has so far involved making seven different phone calls for the same or a newly discovered problem. Each call involved going through the front end of an automated system to finally get through to a person. Might it make sense for Verizon’s Customer Service computerized system to recognize that I am calling repeatedly and frequently within the span of several days, and assign me a personal contact to work through the problems? It sure makes sense to me.
So, how’s your customer service? Why not audit it once in a while? Perhaps someone can do some “test marketing” for you to check your CS out. Or maybe you should call five customers to ask them how they perceive your CS.
For first time callers to your company, the person answering the phone leaves the most lasting first impression. Make sure it is positive. For callers with a problem there are two goals: fix the problem promptly, and make sure the caller is happy. Verizon is very good at making me feel happy when I hang up; but their approach falls apart when the problem is not solved, or is solved only after repeated calls and many days pass. And that creates an unhappy customer.
How’s your customer service? Check it out, pump it up, and keep your customers. Peter Drucker wrote that the only function of a business is to get and keep customers. Top notch Customer Service is surely the key to making that happen.
But you know what? Most times they did not solve the problem on my first call, and this left me frustrated and feeling helpless. And I never talked with the same person twice! Before I could talk to a human, a female voice response system tried to help me. When I cooperated with her, she failed to help, and then prevented me from getting to tech support. On three occasions I was forced to hang up, redial, and carefully bypass her well meaning efforts to help.
Is that the way customer service should be? No! Customer Service is more than maintaining a sympathetic ear on the telephone. It’s more than promising that the job will be done in 24 hours and then not following through.
Customer Service means real service with real results. So how’s your CS working in your business? Does it make people feel glad they called, or does it leave them frustrated and angry?
You probably have CS as a collateral duty of someone (or everyone) in your company. But have you set guidelines for employees who handle customer service contacts? Most of us don’t bother to do that. If you are not paying attention to your customer service you may be creating an unflattering image of your company in customers who will then pass that along to others. This can cause you to lose business.
In my business we had several customer service ground rules that seemed to work pretty well. First was “Answer the phone in three rings or less.” People calling a business where the phone rings 5 or 6 times and then finally is answered can easily get the impression that the business is tiny, perhaps a one man show. Not good, especially if it is not true!
The second customer service ground rule was: “Answer with the company name, your first name, and ask how you can help the caller.” To its credit, Verizon CS people always state their name. But in my experience that does not happen as often with smaller businesses. How do you feel when you call a business and the person answers without stating his or her name? I don’t like the impression that leaves. And I usually then state my name and ask the name of the other person.
The third ground rule we had was: “When you answer the phone and it is a customer service matter, you own the problem until it’s solved.” That does not mean the person answering the phone has to solve the problem; maybe it needs to be handled by someone else. But you remain responsible for following up on the matter and calling the customer back with the solution.
That is the major problem in dealing with a large customer service organization like Verizon. Problems are recorded in the online database and any CS representative can then view the problem when you call in another time. But that is frustrating for the customer because there always is a need for additional explanations before the CS on a subsequent call can really help you.
It does not need to be that way. USAA has been my insurance company for over 50 years. They have absolutely the best customer service I have ever experienced, and it is all the more special because the company is huge. Depending upon the circumstance, a claim for example, the customer is assigned a single contact and given that person’s extension. Yes, it may be necessary to leave a message if you call in and the contact person is busy, but it really improves overall efficiency of solving each problem along the way.
My efforts to conquer the multiple problems of installing the FiOS system has so far involved making seven different phone calls for the same or a newly discovered problem. Each call involved going through the front end of an automated system to finally get through to a person. Might it make sense for Verizon’s Customer Service computerized system to recognize that I am calling repeatedly and frequently within the span of several days, and assign me a personal contact to work through the problems? It sure makes sense to me.
So, how’s your customer service? Why not audit it once in a while? Perhaps someone can do some “test marketing” for you to check your CS out. Or maybe you should call five customers to ask them how they perceive your CS.
For first time callers to your company, the person answering the phone leaves the most lasting first impression. Make sure it is positive. For callers with a problem there are two goals: fix the problem promptly, and make sure the caller is happy. Verizon is very good at making me feel happy when I hang up; but their approach falls apart when the problem is not solved, or is solved only after repeated calls and many days pass. And that creates an unhappy customer.
How’s your customer service? Check it out, pump it up, and keep your customers. Peter Drucker wrote that the only function of a business is to get and keep customers. Top notch Customer Service is surely the key to making that happen.
Is Your Sales Process Decades Old?
Tuesday, July 8. 2008
Ram Charan, one of my favorite business gurus, has published a book “What the Customer Wants You to Know.” The subtitle is “How everybody needs to think differently about sales.”
As I scanned the review from Business Book Review (www.businessbookreviewcom) I expected to see some revelation that would open new insights into selling in today’s marketplace.
The review says that the sales process used by most companies today has changed little through the decades. These processes had their roots in a seller’s market where supplies were tight, deliveries long, prices non-negotiable, and sales people were order takers.
Well, that may be true for the huge companies Ram Charan works with, but it reflects neither my understanding of the sales world confronting the owners of small businesses over the last 20 years, nor my training and experience as a salesman for IBM.
Ram says customers are looking for suppliers who can help them develop their business, improve their earnings, and keep the cash flowing. Duh! Of course they are. What’s new?
But wait, maybe that approach is not as second nature for most salespeople as I think it is. How have you trained your “feet on the street?” Or perhaps more importantly, is your sales incentive plan in synch with the way you train your sales people?
Certainly you tell your customer contact people to ask good, open-ended questions to develop an understanding of what the customer needs. And while you probably tell them it’s best to “sell off the wagon,” do you also tell your sales team to bring back the needs of customers that you might be able to meet with some product or service modifications? Few businesses can actually direct the market; most must be market directed and the feedback from customers and prospects can play a big part in helping you lead in the marketplace with products and services customers want.
Getting your sales compensation plan in synch with the need to be responsive to customers may entail taking a fresh look at what you are “saying” in your plan. If the plan is 100% commission, it means your sales people will need to sell products and services that they have available and can close quickly. On the other hand, if the sales person receives a salary plus commission, it can be argued that the salary is to pay the rep for the time spent developing customer relationships and discovering unmet needs.
One thing about sales compensation plans is that they need to be simple and flexible. Smart sales people will be “sales plan driven.” They will learn where the gold is hidden in the plan, and that’s what they will sell. Sometimes it can be good to add the gold only as a short-term product bonus that will expire in a month or two. Keep the primary incentive compensation based on overall performance against a quota or total revenue, and calculated on a year-to-date basis paid monthly with charge backs and credits figured in.
Another important way to keep a sales team focused on the customer’s needs is to have regular key account reviews. These can be for prospects and customers. The review ought to include a discussion of the customer’s current business situation, the results of contacts made by the sales rep, review of an annually created plan for sales to the customer, and a discussion of strategic actions the rep plans to take. Then you should be sure to inject some accountability procedures to track progress.
It’s always been my philosophy that sales people will say what you expect, but will do what you inspect. And the best thing about managing sales people is that it is abundantly clear how well they are doing. The annual review for a sales person is pretty straightforward: Did the rep make the numbers?
The toughest thing about managing a sales person is deciding if you’ve made a hiring mistake. How long do you give the newly hired rep to prove his/her ability to sell for you? I’ve made mistakes in hiring sales people throughout my 40 years in business, but in each case it was very difficult to let a new hire go. Sometimes it happened in only three months; other times it was over a year.
I think the most important thing in developing a good sales person is to pay attention to what Ram Charan says. Be sure your sales rep is truly knowledgeable about the customer and recognize the good performers with lots of praise and encouragement. Your best sales people are gems worth keeping in the company vault. The best sales people already think differently about sales. And if you have one or two like that, just “be lucky.”
As I scanned the review from Business Book Review (www.businessbookreviewcom) I expected to see some revelation that would open new insights into selling in today’s marketplace.
The review says that the sales process used by most companies today has changed little through the decades. These processes had their roots in a seller’s market where supplies were tight, deliveries long, prices non-negotiable, and sales people were order takers.
Well, that may be true for the huge companies Ram Charan works with, but it reflects neither my understanding of the sales world confronting the owners of small businesses over the last 20 years, nor my training and experience as a salesman for IBM.
Ram says customers are looking for suppliers who can help them develop their business, improve their earnings, and keep the cash flowing. Duh! Of course they are. What’s new?
But wait, maybe that approach is not as second nature for most salespeople as I think it is. How have you trained your “feet on the street?” Or perhaps more importantly, is your sales incentive plan in synch with the way you train your sales people?
Certainly you tell your customer contact people to ask good, open-ended questions to develop an understanding of what the customer needs. And while you probably tell them it’s best to “sell off the wagon,” do you also tell your sales team to bring back the needs of customers that you might be able to meet with some product or service modifications? Few businesses can actually direct the market; most must be market directed and the feedback from customers and prospects can play a big part in helping you lead in the marketplace with products and services customers want.
Getting your sales compensation plan in synch with the need to be responsive to customers may entail taking a fresh look at what you are “saying” in your plan. If the plan is 100% commission, it means your sales people will need to sell products and services that they have available and can close quickly. On the other hand, if the sales person receives a salary plus commission, it can be argued that the salary is to pay the rep for the time spent developing customer relationships and discovering unmet needs.
One thing about sales compensation plans is that they need to be simple and flexible. Smart sales people will be “sales plan driven.” They will learn where the gold is hidden in the plan, and that’s what they will sell. Sometimes it can be good to add the gold only as a short-term product bonus that will expire in a month or two. Keep the primary incentive compensation based on overall performance against a quota or total revenue, and calculated on a year-to-date basis paid monthly with charge backs and credits figured in.
Another important way to keep a sales team focused on the customer’s needs is to have regular key account reviews. These can be for prospects and customers. The review ought to include a discussion of the customer’s current business situation, the results of contacts made by the sales rep, review of an annually created plan for sales to the customer, and a discussion of strategic actions the rep plans to take. Then you should be sure to inject some accountability procedures to track progress.
It’s always been my philosophy that sales people will say what you expect, but will do what you inspect. And the best thing about managing sales people is that it is abundantly clear how well they are doing. The annual review for a sales person is pretty straightforward: Did the rep make the numbers?
The toughest thing about managing a sales person is deciding if you’ve made a hiring mistake. How long do you give the newly hired rep to prove his/her ability to sell for you? I’ve made mistakes in hiring sales people throughout my 40 years in business, but in each case it was very difficult to let a new hire go. Sometimes it happened in only three months; other times it was over a year.
I think the most important thing in developing a good sales person is to pay attention to what Ram Charan says. Be sure your sales rep is truly knowledgeable about the customer and recognize the good performers with lots of praise and encouragement. Your best sales people are gems worth keeping in the company vault. The best sales people already think differently about sales. And if you have one or two like that, just “be lucky.”
Strategy or Tragedy
Thursday, June 19. 2008
Do you operate in planning mode? Or do you let events dictate your actions? Without plans that have clear objectives and strategies, you may end up with a tragedy instead of a strategy.
Planning isn’t just for long-term. In fact it’s equally effective for short or intermediate term objectives. So operating in planning mode means that you think in an organized way about key goals of your job and then you document a plan for each. Flowing from the plans you create are a series of actions which find their way into your daily to-do list.
Keeping it simple is an important element of planning. The process of planning is more important than the documented product. The process is where you become creative. It’s where you think things through and where you think outside the box. The product is the written result of your creative thinking and can be brief, but must be clear. Use complete sentences!
People commonly make mistakes in the planning process. For example, they mix a solution in with the objective. Say the objective is to find more space. The objective might be stated as: “Lease space 25% larger than the current facility by September 30, 2008.” Do you see the word that has automatically limited the range of solutions? Right, the word is “Lease.”
So when setting an objective you must be careful with the wording. You should examine each word in the objective before nailing it down. A better way to state this objective is “Contract for 25% more space by September 30, 2008.”
The next common mistake in planning is to let resource constraints foreclose a solution. Continuing with this example, in the original objective purchase is not an option. But maybe it should be. Hence the second wording opens that door. The assumption that purchase of space is not feasible because resources are lacking should not be made until that strategy has been evaluated.
Once the objective is set, then it is time to become creative by identifying the individual strategies to be evaluated. Strategies state in general terms how the objective might be satisfied or the areas to work on in achieving the objective.
Some strategies in this example might include evaluating surrounding real estate markets, estimating space needs over the long term, considering all possible ways to use current space more efficiently, looking at options for purchase or lease/purchase, considering adding the 25% in a separate facility, and you can probably identify a few more.
For each strategy you now need to state the actions that satisfy each strategy. This may include identification of obstacles to executing that strategy, and the actions to overcome the obstacles. Actions must be written as a complete sentence and include the responsible party and the completion date for the action.
Once you learn to operate in planning mode, it becomes a part of your leadership tool bag. Stating the objective in the most appropriate way is the first step to success in planning. If you write an objective that inherently knocks out one or more solutions, you may make a serious mistake that can limit your future success.
Operate in planning mode all the time and you will develop good strategies and eliminate serious tragedies. It’s the smart way to success.
Planning isn’t just for long-term. In fact it’s equally effective for short or intermediate term objectives. So operating in planning mode means that you think in an organized way about key goals of your job and then you document a plan for each. Flowing from the plans you create are a series of actions which find their way into your daily to-do list.
Keeping it simple is an important element of planning. The process of planning is more important than the documented product. The process is where you become creative. It’s where you think things through and where you think outside the box. The product is the written result of your creative thinking and can be brief, but must be clear. Use complete sentences!
People commonly make mistakes in the planning process. For example, they mix a solution in with the objective. Say the objective is to find more space. The objective might be stated as: “Lease space 25% larger than the current facility by September 30, 2008.” Do you see the word that has automatically limited the range of solutions? Right, the word is “Lease.”
So when setting an objective you must be careful with the wording. You should examine each word in the objective before nailing it down. A better way to state this objective is “Contract for 25% more space by September 30, 2008.”
The next common mistake in planning is to let resource constraints foreclose a solution. Continuing with this example, in the original objective purchase is not an option. But maybe it should be. Hence the second wording opens that door. The assumption that purchase of space is not feasible because resources are lacking should not be made until that strategy has been evaluated.
Once the objective is set, then it is time to become creative by identifying the individual strategies to be evaluated. Strategies state in general terms how the objective might be satisfied or the areas to work on in achieving the objective.
Some strategies in this example might include evaluating surrounding real estate markets, estimating space needs over the long term, considering all possible ways to use current space more efficiently, looking at options for purchase or lease/purchase, considering adding the 25% in a separate facility, and you can probably identify a few more.
For each strategy you now need to state the actions that satisfy each strategy. This may include identification of obstacles to executing that strategy, and the actions to overcome the obstacles. Actions must be written as a complete sentence and include the responsible party and the completion date for the action.
Once you learn to operate in planning mode, it becomes a part of your leadership tool bag. Stating the objective in the most appropriate way is the first step to success in planning. If you write an objective that inherently knocks out one or more solutions, you may make a serious mistake that can limit your future success.
Operate in planning mode all the time and you will develop good strategies and eliminate serious tragedies. It’s the smart way to success.
It's the Interruptions, Stupid!
Wednesday, May 14. 2008
I hate being interrupted at work. When I sit down at the desk I’ve got a string of “to-dos” in my head or on paper, a specific amount of time in which to complete them, and I’m focused. Then in a matter of minutes I’m off course because someone steps in to ask a question or get help.
And most times the problems the team members raise are easily solved. In fact I’ve got the answer before the person completes stating the problem. Just do this and let me get back to my work.
Wait a minute! The problem gets solved, but does the person learn anything? Not often.
What is the real job of a leader? I think it is handling interruptions well. Your skill in this makes a big difference in company culture, team satisfaction, and ultimately in business success. Help people solve problems. Take care of problem customers. Relish the interruptions as opportunities to help people grow.
An interruption from a member of your team is an opportunity for a mentoring moment! That means you don’t simply bark out a series of “orders,” turn back to your “to-do” and let the person slink out of the office. Probably none of us actually do it that way, but people may perceive us in that manner.
A little time spent now to bring someone’s skills up a notch can mean fewer interruptions in the future.
When the person interrupts you, stop what you are doing, push your papers aside, put on your “listening ears” as Judge Judy says, and discern which of these six levels of problem solving you are facing.
The individual--
• Doesn’t know there is a problem
• States a problem
• States a problem and identifies several alternatives
• States a problem, identifies several alternatives, and recommends one for your approval
• Reports a problem he/she has already solved
• Takes care of the matter with bothering you
Figure out which level the person is at for this particular problem and through judicious questioning show him/her how to move up one or two levels. Clarify the assumptions and get the individual to repeat back to you what he/she is now going to do. Confirm that the person understands how to handle this situation the next time it arises. (If it requires more time than you have at the moment, first make an appointment to get back together and go over the situation when you can devote time to teaching, and then give the person some specific steps to take to solve the problem right now.)
Mentoring moments help you get your “to do” time back and reduce interruptions by empowering team members to move to the fifth or sixth option.
Customer interruptions that reach your desk are golden opportunities to build relationships and learn how your business appears to outsiders. For many small businesses, the CEO is personally responsible for 30% or more of the revenue. These clients are the CEO’s responsibility. Contacts from these clients are not interruptions, they are sales calls.
What about the clients covered by others in the business? What do you do when they contact you? This interruption can be a fire alarm! Something has gone wrong, perhaps. The challenge in handling this is to make the customer happy while not taking over as the primary contact for the customer.
When this happened in my business, I took care of the situation promptly, kept my sales person in the loop, and then dropped out of the picture. If the client contacted me subsequently for another matter, I developed an immediate case of amnesia about the details and got the sales person into the situation without going further with the client. It is important to maintain the relationship between the client and the sales person, even if the client would prefer to deal with the CEO.
If it weren’t for interruptions maybe we could simply program a computer to handle day-to-day operations. Then leaders would be out of a job. But interruptions ARE the job of the leader. Sure it can seem like you are working IN the business, not ON it. But if you use interruptions as a mentoring moment, aren’t you working ON the business, making it better by helping your team members perform better? Sure you are.
And if you must have uninterrupted time to accomplish your “to dos” schedule it into your daily calendar, tell your team when you don’t want to be bothered, and stick to your guns. Remember, though, that if someone solves a problem while you’re incommunicado you need to support his/her decision. Even if it’s not the one you would have chosen.
And most times the problems the team members raise are easily solved. In fact I’ve got the answer before the person completes stating the problem. Just do this and let me get back to my work.
Wait a minute! The problem gets solved, but does the person learn anything? Not often.
What is the real job of a leader? I think it is handling interruptions well. Your skill in this makes a big difference in company culture, team satisfaction, and ultimately in business success. Help people solve problems. Take care of problem customers. Relish the interruptions as opportunities to help people grow.
An interruption from a member of your team is an opportunity for a mentoring moment! That means you don’t simply bark out a series of “orders,” turn back to your “to-do” and let the person slink out of the office. Probably none of us actually do it that way, but people may perceive us in that manner.
A little time spent now to bring someone’s skills up a notch can mean fewer interruptions in the future.
When the person interrupts you, stop what you are doing, push your papers aside, put on your “listening ears” as Judge Judy says, and discern which of these six levels of problem solving you are facing.
The individual--
• Doesn’t know there is a problem
• States a problem
• States a problem and identifies several alternatives
• States a problem, identifies several alternatives, and recommends one for your approval
• Reports a problem he/she has already solved
• Takes care of the matter with bothering you
Figure out which level the person is at for this particular problem and through judicious questioning show him/her how to move up one or two levels. Clarify the assumptions and get the individual to repeat back to you what he/she is now going to do. Confirm that the person understands how to handle this situation the next time it arises. (If it requires more time than you have at the moment, first make an appointment to get back together and go over the situation when you can devote time to teaching, and then give the person some specific steps to take to solve the problem right now.)
Mentoring moments help you get your “to do” time back and reduce interruptions by empowering team members to move to the fifth or sixth option.
Customer interruptions that reach your desk are golden opportunities to build relationships and learn how your business appears to outsiders. For many small businesses, the CEO is personally responsible for 30% or more of the revenue. These clients are the CEO’s responsibility. Contacts from these clients are not interruptions, they are sales calls.
What about the clients covered by others in the business? What do you do when they contact you? This interruption can be a fire alarm! Something has gone wrong, perhaps. The challenge in handling this is to make the customer happy while not taking over as the primary contact for the customer.
When this happened in my business, I took care of the situation promptly, kept my sales person in the loop, and then dropped out of the picture. If the client contacted me subsequently for another matter, I developed an immediate case of amnesia about the details and got the sales person into the situation without going further with the client. It is important to maintain the relationship between the client and the sales person, even if the client would prefer to deal with the CEO.
If it weren’t for interruptions maybe we could simply program a computer to handle day-to-day operations. Then leaders would be out of a job. But interruptions ARE the job of the leader. Sure it can seem like you are working IN the business, not ON it. But if you use interruptions as a mentoring moment, aren’t you working ON the business, making it better by helping your team members perform better? Sure you are.
And if you must have uninterrupted time to accomplish your “to dos” schedule it into your daily calendar, tell your team when you don’t want to be bothered, and stick to your guns. Remember, though, that if someone solves a problem while you’re incommunicado you need to support his/her decision. Even if it’s not the one you would have chosen.
Banks...Bah!
Wednesday, April 30. 2008
Banks…you’d rather not deal with ‘em…but your business can’t live without ‘em, right? Problems with bank relationships are a common complaint I hear from owners. Nothing is more frustrating than fighting through a bureaucracy that seems to care less about your needs than about blindly following its own rules. So what can you do about it? A lot…
Someone told me years ago that banks spend money on furniture and carpets for loan officers but not on the payroll. The impression a borrower gets when entering a “fancy” office automatically gives the power to the lender. But come on…borrowing for a valid business purpose is a matter of reaching a win-win business relationship with the banker. And you are the owner of a business; the banker isn’t. The banker has probably never signed a payroll check on the front. In fact, the banker is a sales person. You’re a CEO! His pushcart is full of money and the smart sales-oriented banker wants to find a way to sell you some. But he makes you think it has to be on his terms, or else.
I remember years ago I was applying for a home mortgage and the banker said that I needed to pay him for the year’s worth of homeowners insurance up front. I was the manager of an IBM office at the time, this was a rather small regional bank, and I was in its local branch. I had never escrowed insurance for the homes I insured before and told the banker that I would not do it now, and that his demand was a show-stopper. During the conversation I asked him how his rule would apply if my father paid the insurance company directly himself as a gift to me. He couldn’t respond to that one. And I asked him if he were paying my premiums how I would know he had paid them. Again not a very cogent response. Then I asked him if he would be satisfied with proof of insurance coverage from my insurance company. After a phone call about the whole matter…he backed down, and I paid the insurance company myself.
The moral of this story--the person who makes the rules can change them. The problem with most banks is that you cannot get to the one who makes the rules unless (and here’s the key) you are dealing with a community bank.
There are three broad classifications of banks: 1) Money center banks, which are large banks in a major financial center that borrow from and lend to corporations and other banks rather than consumers. 2) Regional banks that operate in a region of the country, probably lending to both corporations and consumers, and 3) Community banks that focus attention on the needs of local families and businesses rather than placing a priority on serving large corporations.
I like community banks for small business banking needs. These banks are also small businesses, led by executives you can talk with and probably meet at a service club or country club. They channel most of their loans to the areas in which their depositors live and work helping to keep a community vibrant and growing. Community bank CEOs are accessible to you and they are deeply involved in local community affairs. You will find that many community banks consider character and business experience when making a loan decision. Megabanks, on the other hand, apply impersonal qualification criteria to all loan decisions without regard to individual situations.
Community banks are nimble decision-makers on business loans because the decisions are made locally. Your loan is not one of dozens reviewed each week by a big-bank loan committee convened in some mahogany paneled room in another state. And community banks understand the needs of small businesses because they themselves are small businesses. But the core concern of a megabank is corporate America.
Some Internet research I did found that 40% of banks in the United States have assets under $100 million. Community banks’ boards of directors are made up of local citizens motivated to advance the interests of their area. Average rates for checking account and other depository services are, on average, 15% lower at small banks than at large. Today most community banks offer all the same electronic and ATM services offered by the big banks. So what are you doing with your business accounts in some huge, impersonal banking behemoth? Why are you dealing with loan officers so far down the decision-making chain they can do little more than key in your loan details to a computerized evaluation program? Get a relationship!
Find a local banker you like from a local bank you like and begin to develop a relationship. Get some business references; ask around. Invite a couple of community bank loan executives in to talk with you about your needs. Find out where they are in the bank’s pecking order. Find out if they can be the point person for all your banking needs. Meet the tellers. Community bank tellers want to know their customers. They’ll learn to call you by name. Make friends at your bank.
OK, so you’ve got a lot of business entanglements with a regional or money center bank. And yet you’re frustrated because you have had a different “relationship manager” every six months for the last three years. Sure, you can’t yank all your accounts out at once. But what you can do is move a small account (say a payroll account) to a community bank. Then tell your new friend, the loan exec there, that this is a first step depending on how well things work out.
And once you’ve moved the accounts to your new community bank, don’t rest on your laurels. Banking consolidation can change your community bank into a mega bank overnight. So keep another bank on the back burner with some other account, say a mortgage account for the office facility you own through a separate LLC. There’s nothing like a little ongoing competition to keep the banks on their toes. It’s a rare bank that can claim to be the only candy store in town.
If you’ve got to have a bank as your “partner” in your business, at least you can keep your contact there aware that you can easily move your banking relationship. Every bank sells a commodity (money). Let your banker know that you’re looking for added value in the relationship. That sounds a lot like what small business owners hear from a lot of their customers, too. Right?
Someone told me years ago that banks spend money on furniture and carpets for loan officers but not on the payroll. The impression a borrower gets when entering a “fancy” office automatically gives the power to the lender. But come on…borrowing for a valid business purpose is a matter of reaching a win-win business relationship with the banker. And you are the owner of a business; the banker isn’t. The banker has probably never signed a payroll check on the front. In fact, the banker is a sales person. You’re a CEO! His pushcart is full of money and the smart sales-oriented banker wants to find a way to sell you some. But he makes you think it has to be on his terms, or else.
I remember years ago I was applying for a home mortgage and the banker said that I needed to pay him for the year’s worth of homeowners insurance up front. I was the manager of an IBM office at the time, this was a rather small regional bank, and I was in its local branch. I had never escrowed insurance for the homes I insured before and told the banker that I would not do it now, and that his demand was a show-stopper. During the conversation I asked him how his rule would apply if my father paid the insurance company directly himself as a gift to me. He couldn’t respond to that one. And I asked him if he were paying my premiums how I would know he had paid them. Again not a very cogent response. Then I asked him if he would be satisfied with proof of insurance coverage from my insurance company. After a phone call about the whole matter…he backed down, and I paid the insurance company myself.
The moral of this story--the person who makes the rules can change them. The problem with most banks is that you cannot get to the one who makes the rules unless (and here’s the key) you are dealing with a community bank.
There are three broad classifications of banks: 1) Money center banks, which are large banks in a major financial center that borrow from and lend to corporations and other banks rather than consumers. 2) Regional banks that operate in a region of the country, probably lending to both corporations and consumers, and 3) Community banks that focus attention on the needs of local families and businesses rather than placing a priority on serving large corporations.
I like community banks for small business banking needs. These banks are also small businesses, led by executives you can talk with and probably meet at a service club or country club. They channel most of their loans to the areas in which their depositors live and work helping to keep a community vibrant and growing. Community bank CEOs are accessible to you and they are deeply involved in local community affairs. You will find that many community banks consider character and business experience when making a loan decision. Megabanks, on the other hand, apply impersonal qualification criteria to all loan decisions without regard to individual situations.
Community banks are nimble decision-makers on business loans because the decisions are made locally. Your loan is not one of dozens reviewed each week by a big-bank loan committee convened in some mahogany paneled room in another state. And community banks understand the needs of small businesses because they themselves are small businesses. But the core concern of a megabank is corporate America.
Some Internet research I did found that 40% of banks in the United States have assets under $100 million. Community banks’ boards of directors are made up of local citizens motivated to advance the interests of their area. Average rates for checking account and other depository services are, on average, 15% lower at small banks than at large. Today most community banks offer all the same electronic and ATM services offered by the big banks. So what are you doing with your business accounts in some huge, impersonal banking behemoth? Why are you dealing with loan officers so far down the decision-making chain they can do little more than key in your loan details to a computerized evaluation program? Get a relationship!
Find a local banker you like from a local bank you like and begin to develop a relationship. Get some business references; ask around. Invite a couple of community bank loan executives in to talk with you about your needs. Find out where they are in the bank’s pecking order. Find out if they can be the point person for all your banking needs. Meet the tellers. Community bank tellers want to know their customers. They’ll learn to call you by name. Make friends at your bank.
OK, so you’ve got a lot of business entanglements with a regional or money center bank. And yet you’re frustrated because you have had a different “relationship manager” every six months for the last three years. Sure, you can’t yank all your accounts out at once. But what you can do is move a small account (say a payroll account) to a community bank. Then tell your new friend, the loan exec there, that this is a first step depending on how well things work out.
And once you’ve moved the accounts to your new community bank, don’t rest on your laurels. Banking consolidation can change your community bank into a mega bank overnight. So keep another bank on the back burner with some other account, say a mortgage account for the office facility you own through a separate LLC. There’s nothing like a little ongoing competition to keep the banks on their toes. It’s a rare bank that can claim to be the only candy store in town.
If you’ve got to have a bank as your “partner” in your business, at least you can keep your contact there aware that you can easily move your banking relationship. Every bank sells a commodity (money). Let your banker know that you’re looking for added value in the relationship. That sounds a lot like what small business owners hear from a lot of their customers, too. Right?
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