Posts Tagged ‘Startup’


Are You Keeping Score?

Stocksy_txp79d51f4dtW4000_Small_126195Some business people want to prevent losing by not keeping score, by ignoring the results, or by constantly moving the targets.

When my sons were introduced to baseball as small boys, the league prohibited officials from keeping score because they did not want the children to become too competitive at such an early age. League leaders wanted to emphasize the spirit of playing the game and having fun over winning or losing.

This did not work out the way the league planned. All the children on the team who knew how to count were keeping their own score. They knew who was winning! More importantly, they understood that a key part of the game is knowing how to win and to lose.

In winning, you can celebrate with your team members. You are elated because your hard work achieved the goal. In losing, you console yourself along with the team. The next steps are to learn what to do better, shake it off, and vow to return the next time to try again.

It’s important to know the score and declare winners and losers. A recent Ohio High School Hockey championship game was halted after seven overtimes and a 1-1 tie. State officials declared co-champions which angered a lot of players and fans. There was no postgame trophy ceremony because there was only one set of championship hardware. The players took turns posing for pictures with the lone trophy. In ended in a totally unsatisfying experience for both teams.

Many small business owners move their stated targets and goals so they don’t have to admit defeat. This happens during the budgeting process. The company will set a financial goal for the year, but when they start to miss this target, they change the budget. They hate to be wrong so they move the goal to a place they can make it. Similar, objectives are established for employee bonus pay, but when the target is missed, some companies award them anyways because of effort.

Both these examples defeat the purpose of setting a budget or establishing a bonus. Business people learn quickly that winning is a lot more fun and profitable. Learning what it feels like to lose is critical because that will incent everyone involved not to repeat it.

If your company never loses, how can they really appreciate winning?


Work Your Biz Wednesday: 4 Ways to Kickstart Your Marketing Efforts

Marketing your small business doesn't have to be difficult! Here are 4 ways to jump start your marketing plan and boost your revenue from the Small Biz Lady, Melinda Emerson.


The Small Business Advantage to Snagging the Best Employees

One of my contacts worked for a young, growing company that paid top dollar for software engineers in preparation for the day that they would be needed to meet client demand.  When she expressed concern about the overspending, one partner told her that if she was in charge, the company would be defunct in a year.  Six months later, their doors closed forever.

That partner was not wrong in recognizing the need for exceptionally-skilled workers.  The error was in seeing spending as the only way to attract and keep the best talent.  Large corporations may have ready cash to pay top wages and benefits, but small business owners can attract and keep the finest employees through their entrepreneurial spirit.  Here are some great ways to get your workers involved in your business vision and develop a relationship that few big businesses can match.

Offer Creative Compensation

Economic downturns may create a buyer’s market for hiring, but that doesn’t mean that the most skilled applicants will agree to take a position that offers substandard incentives.  You may not have the funds to pay a top salary when making an offer — or even when it’s time for an annual review.  But as a small business, your company can offer achievement-based bonuses that can really motivate your employees while increasing your revenues.  So, when certain sales reps are responsible for accelerated sales or when engineers enhance a product to make it more attractive to the marketplace, make sure that they receive their fair share of the profits.

Encourage Active Involvement in the Company

Choosing to work for a small company carries certain inherent risks, but it also offers benefits that cannot be matched by working for a huge organization.  When you welcome and act on employee ideas and suggestions, your employees become partners who recognize their unique value to the company as they work alongside you to realize shared goals.

Make sure to listen to their feedback and acknowledge them too- the value of these soft incentives is highly underrated—not to mention easy for small business owners to embrace.

Give Employees the Power to Spread Their Wings

I know a writer who worked for many small software businesses, enlisting her full creativity to develop low-cost, but award-winning manuals.  When she moved to a large company, she vehemently complained that she no longer wrote documentation, so much as manufactured it in accordance with strict, detailed procedures.  She didn’t last long in this position.

Big businesses need to put their employees in specific boxes and keep them there to get their allotted portion of the job done.  As a business owner, you know that one of the greatest rewards comes with seeing a project through from beginning to final results.  Employees can feel that same sense of satisfaction and accomplishment — if you empower them to take on this type of challenge.  As they stretch their abilities, be available to provide upfront and ongoing guidance as needed, but give them latitude to do it their way.  As their abilities grow from new experiences, their investment in the company’s interests will grow as well.

Praise in Public

??????????????????????????????????????A job well done deserves praise and your employees never mind being called to your office to receive your personal kudos.  But when employees receive your commendations at a company meeting or in front of a customer who benefitted from their hard work, they clearly see their true value.  Naturally, public praise helps inspire all employees, but it also lets your customers recognize how the depth of your products and services helps them get the attention and consideration they deserve.

Promote from Within

When a key position opens up in your company, always look first to the members of the team that work hard for you every day.  Granted, some positions require very specific educational requirements not available in your organization, such as a degree in accounting.  But remember that your staff members already have a solid foundation and a deeper understanding of your company culture and how things work.  You probably have to spend time and effort training employees in new concepts and procedures.  Or, they may need to take a class or two to obtain additional knowledge.  But you can’t teach loyalty and dedication, and these traits grow even more when you reward them with advancement.

No large company can match the excitement employees experience going in to a job where they know that they make a vital difference every day.  As their efforts help grow your business, make sure you help them continue to grow as well.  


Nextiva Tuesday Tip: Should You Hire Your Spouse to Work in Your Business?

Stocksy_txpb6090cd68s3000_Small_17056If you have trouble finding workers with the dedication and loyalty you need, there’s a solution that can offer the best of both worlds: hiring your spouse. You get an employee who you know truly cares about your business, and the money you pay your spouse stays “all in the family.”

But before you broach the idea to your spouse, there are some important factors to consider.

How will working together affect your relationship? Some spouses can work together all day long and enjoy a happy marriage after hours, while others find business stresses spilling over into their personal lives. Clearly define roles within the business so each of you knows what he or she is responsible for. Also set boundaries outside the business, such as not discussing business over dinner or taking regular weekends off.

What does your spouse expect from the job? Perhaps your spouse expects to work closely together and spend lots of time with you, while you expect to scarcely see each other because you’ll both be so busy handling your separate duties. Clarify your expectations from the beginning and make sure you are both on the same page. Is this a short-term arrangement or a permanent move? Will your spouse need to work for free if money is tight?

How will a spouse working in the business affect your company’s dynamic? When you bring a family member into the business, nonfamily employees may assume your spouse will get favored treatment, that they will be passed over for promotions or that they can’t be honest with you about problems with your spouse. Discuss these issues openly to ease their worries.

What are the legal and tax implications? The way that you report and pay taxes for a spouse in the business will vary depending on whether your spouse is considered an employee or partner/co-owner. If the spouse is an employee, you need to withhold appropriate taxes from his or her pay just as with any employee. If your spouse has an equal say in the business and/or contributes capital, he or she is considered a partner, which affects your business’s tax reporting and payments. (See this IRS article for more information.) To avoid unpleasant surprises, consult your attorney and accountant regarding the tax and legal implications of bringing a spouse on board. 


3 Ways to Sink the Sale of Your Company

??????????????????????????????????????Many small business owners dream of selling their company for a huge profit. After many years of hard work, they finally found the right buyer to acquire their company. After negotiating business terms, they signed the letter of intent (LOI). Now comes the tough part: collecting all the due diligence information and having the lawyers on both sides negotiate a final purchase agreement.

Here are the three ways that sink the sale of any company:

1. Pressure from external parties. This can be from overly aggressive lawyers arguing over largely irrelevant legal terms on the purchase agreement. One lawyer in a deal I was involved wanted to know what the seller’s responsibility would be if “the sun exploded”. Remember, in the sale of most small businesses, the only terms that really matter are the upfront sale price, sale payment schedule, representations and warranties. Many times, the seller’s accountant insists on charging added fees to give financial statements to the perspective buyer. One accountant even wanted a lump sum “research fee” for the client to collect all their historical records. It is common for the landlord to approve the transfer of any leases. They sometimes charge a steep “transfer fee” for their approval. Regulatory agencies with licensing requirements can also mean a delay of months. The remedy: Make sure that to have a lawyer that is familiar with small sale transactions. Collect all the information from the accountant up front for due diligence. Seek outside regulatory agency approval far in advance of the completion of any transaction.

2. Inconsistent financial numbers or other changing “facts”. All financial statements tell the company’s story. If during due diligence, this story changes, and then it will raise questions from the buyer.  Weaker numbers (specifically profitability) that differ from those provided in the LOI will always result in a price reduction. Additionally, changing “facts” may get the buyer nervous. This can be in the form of profiles of customer concentrations, revenue trends or employee status. The remedy: The small business owner always needs to know what story they are telling with every fact disclosed and explain any difference in the narrative.

3. Sellers or Buyers changing their mind. This happens very often. The seller decides that they don’t want to sell their company. The reason they give now is the sale is not enough money. More than likely, they are afraid what they will do with their time a day after the sale. The buyer sometimes has a change of heart on how the new business will fit into their company or “what they thought was true now isn’t”. The remedy: As a seller, the small business owner must determine what they will do the day after the sale of the company before they decide to sell it.

Barry Moltz helps small businesses get unstuck. His new book, “How to Get Unstuck: 25 Ways to Get Your Business Growing Again” is available in March. Barry can be found at www.barrymoltz.com


Mondays with Mike: The Sure-Fire Plan For Killing Your Business

2014-02-27_1405I’m sure you’re wondering if I’ve lost my mind.  Why on earth would you want to read an article telling you exactly how to kill the business that you’ve worked so hard to build, nurture, and grow?  The answer is that it’s useful to take a step back from all the hard work we do to make sure we’re not inadvertently doing things that damage our companies.  Here’s a look at what not to do:

  1. Turn your hobby into a business.  Just because your friends tell you that your spicy barbecue sauce is the best they’ve ever tasted, that doesn’t mean you have to find a way to profit from it.  There’s a difference between a hobby – something you do to relax and release energy – and a passion – something you do to create energy.  While successful businesses thrive on passion, they can also destroy the pleasure that we take in our hobbies.  Not everything you enjoy needs a business plan.
  2. Get rich quick.  You may be thinking, “Isn’t that the point?”  The fact of the matter is that the best way to get rich is by investing your time and energy in your passion and organically growing your business, rather than chasing what you think is the next trend in an attempt to cash in and get out.  Isolate your passion and nurture it, rather than trying to work in a field just because you think it’s the next big thing.
  3. If things are going south, work harder.  By the time most businesses fail, the entrepreneurs who started them are absolutely exhausted.  Instead of trying to add hours to the day or taking time away from family and friends, spend you time finding ways to work more efficiently.  If you can automate aspects of your business, you’ll be working smarter, rather than harder, leaving you time to enjoy the fruits of your labor. 
  4. Nurture the weak.  I’m constantly amazed by how many companies cater to the least lucrative (and most difficult) clients, at the expense of building business with the big customers – you know, the ones who keep the lights on.  Rather than trying to squeeze an extra few bucks from the reluctant spenders, commit to cultivating your heavy hitters and providing them with excellent service.  You can’t please everyone.  Why not please the ones who are the most valuable?
  5. Measure revenue from the top line.  Yes, it’s essential to bring money into your business, but that’s only part of the equation.  You could land a million dollar contract tomorrow, but if your expenses eat up $990,000 of it, your bottom line is only $10K.  Focus on what’s left after you’ve paid your staff, covered your other expenses, and paid yourself.  That’s what you’re really earning.
  6. Focus on your wallet.  When you realize that every single business decision you’re making is based on money, it’s time to take a step back.  Successful businesses make money, but they do it by working with passion and ensuring that their customers are satisfied.  Steve Jobs didn’t build innovative products just to make money (though he certainly did profit.)  He wanted to introduce elegant, functional solutions for everyday problems.  Remember why you started your business and work to leave a positive impression on your community.

There will never be a shortage of businesses in trouble, and savvy entrepreneurs will learn from the mistakes of others.  Make sure you’re not sabotaging your own success.   


Why to Question Assumptions When You Are Successful

It’s easy for small business owners to question themselves and their assumptions when they are failing. But at that point, it may be too late to fundamentally make changes that can turn their company around. The success rates goes up if the owner questions assumptions when things are going well. However, most entrepreneurs will have a hard time doing this because they will not want to “mess with success” or “if it’s not broken, don’t try to fix it”. Many times, they do not even know what the success formula really is. They make cause-and-effect connections where it truly does not exist.

Stocksy_txp5226ac4eb53000_Small_135613For example, the phenomenon of success actually not bringing more success has been statistically documented in basketball. A  study called “The Hot Hand in Basketball: On the Misperception of Random Sequences” states, “ The chances of success on the next shot are not correlated with the success of the last shot. In other words, the ‘hot hand’ idea is a fallacy.”

To increase success in the future, look to see what conditions exist in the market that will make the company profitable now. Evaluate past results, but do not base future actions solely on them. Don’t say, “Well, it worked in the past, so it should work in the future!” Keep thinking like a start-up entrepreneur as long as possible. This worked for IBM in the early ‘80s when the company moved the work on their new personal computer to a separate business unit so the effort would not be “weighed down” by IBM’s past success in unrelated areas.

A $75M company I know had been in business for 50 years. Historically, they were only able to deliver five percent net profit to the bottom line. Sales had grown slowly over the years, so there was never a need to make any changes since they could predict what they could contribute to the parent company. A new CEO got worried about what would happened to the company’s profits if sales dipped during a recession.  She realized that even a small drop in sales was going to mean disaster for their overall profit contribution. The CEO needed to find ways to cut their expenses or increase their gross profit while not cutting revenue. She was able to do this by throwing out established distribution channel assumptions, cutting discounts for many vendors and raising prices for newer products to their customers. When sales eventually shrank during the Great Recession, the company was able to deliver the same dollar profit to the parent corporation. Now that times are better, and sales have grown again, they have become even more profitable.

What assumptions are you not questioning?


Why Your Business Is Asking All The Wrong Questions

Stocksy_txp6e171103c53000_Small_17064Many entrepreneurs start a business because they have an overwhelming passion around a certain interest. They want to help people accomplish a stated goal. A problem develops in growing their business because they continually ask the wrong question:

“I wonder if my exciting idea can help other people?”

This question is entrepreneur-centric and does not revolve around what the customer wants. Just because a person is passionate about an idea and its solution does not mean that people will pay for it. This is the biggest mistake entrepreneurs make when they try to convert a hobby to a business. They have a dream that they want to earn a living doing what they love. This is a result of a misinterpretation about the feel-good directive that an entrepreneur needs to be passionate about their work. While this is true, a better view is that an entrepreneur needs to be passionate about what the customer wants them to do. Therefore, the better question to ask is:

“I wonder if the customer has the money to solve a pain which I am excited about?”

This question focuses on what the customer wants, not what the entrepreneur needs. The customer cares only about solving their problem, not the passion of the entrepreneur. The answer to this question is the core of what any business needs to focus on. Customers always buy painkillers before they buy vitamins.

Other wrong questions to ask:

  1. Would this product help your company? Again, most prospect will say yes as not to confront or embarrass anyone. Unfortunately, this may not reflect the action they would truly take. Instead ask: What would it be worth to your company if I could fill this need (resolve this pain)? With this question, the entrepreneur establishes what the customer wants and the monetary value of solving their need.
  2. Are you interested in buying the product? Most prospects will simply say yes because they want to be agreeable and not seem negative. What prospects say and what they do are two different things. Instead ask: Where can I send your order? This is an assumptive close and pushes the action to now. It will also immediately raise any hidden objections.
  3. When should I contact you again? Most prospects will give a date in the future and then never respond again. Instead ask: Should I contact you in the future? If so, what will different then as opposed to now? This gives the prospect an ability to say no so time is not wasted in the future. This also self qualifies them for another call and gives insight into what is holding their purchase back now.

What questions are you asking? Are you really listening to the answers?


Why It Was Good That Shaun White Lost

Shaun+White+Portrait+Session+ElxITyhEXx9lLike small business, the Olympics don’t always work out the way they are planned. One of the poster athlete’s for Sochi Games is Shaun White who basically put half-pipe snowboarding on the map. He won the gold medal at the last two Olympics. He was supposed to be a repeat winner this year. After he arrived in Sochi, he pulled out of the slope style event because he thought the course was too dangerous. With all the pressure now on winning the half-pipe event, he lost and came in fourth.

While I cheer Shaun White’s decade of success, it’s good that he lost in front of millions of people. Here is why and what you can learn from it:

Things don’t always go as planned. Even with endless hard work and preparation, sometimes you just lose. Similar to White, the course may be rough (the market) or the other athletes (competitors) may be better that day. No athlete or company can control all the conditions. Every small business owner needs to get used to not knowing what will happen. There are no sure things in sports or business and this pushes everyone to work harder.

Even the favorites lose. No matter how dominant your business may be in the market place, you won’t always win. You have to earn a victory each time you compete and not mail it in. While White’s competitors were well qualified, no one would have predicted 15 year old, Ayumu Hirano from Japan would win the silver. The favorite has to work just as hard and the rivals always have an opportunity to win.

How you lose counts. White did not let this one loss define him. He said, "I don't think it makes or breaks my career, one night;" he never blamed the course or the other competitors. After his failed run, he agreed to celebrate with Swiss Gold Medalist Iouri Podladtchikov (IPOD).

The best push the rest. The top dog gets everyone to improve until they get beat. This is good for any competitive market because in the end, the customer (or viewer) gets a better product or service. The best business always gets pushed by other companies that want to be them.

What will White do next? Looks like he is going to dust himself off and compete in 2018.




 
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