Management Best-Practices Include Solid Operations Checklists
Are you concerned about profits? Would you like for your business to be in a class of its own?
Not to oversimplify, obstacles to profits result from two basic barriers: External and internal challenges, or a combination of both.
External difficulties include challenging, complex issues in competitive marketplace forces. True, the economy is a factor. Unfortunately, many companies don’t have competitive intelligence. Their inaccurate assessments lead to using the wrong marketing channels, budget, or branding.
And yes, internally, many organizations in businesses and the public sector mistakenly ignore shortcomings in how they operate. Instead, they believe that a magic wand – a better marketing focus – will solve all the problems.
Hopefully, such organizations eventually learn that even a world-class marketing approach can’t overcome the internal factors that impede the control of costs, performance and quality.
Candidly, as a business-performance consultant, here’s one of my first epiphanies – best-practices in marketing will not help a client who doesn’t operate a business well.
Here’s another awakening about management – most internal problems stem from poor stewardship and fear. Fear is apropos here as acronyms – FEAR – “frantic effort to avoid responsibility” or “false evidence appearing real.”
Fear also leads to arrogance. I like the famous Peter Drucker quote: “Arrogance is being proud of ignorance.” Remember, Avis made a ton of profits despite being a second to first-place Hertz. Not by slashing prices, but Avis maintained an image consistent with its 1960’s branding slogan – “We try harder.”
Consider these common symptoms that trigger internal challenges:
- A lack of self-esteem by the business owner. Cockiness is not confidence. Celebrating prematurely over ostensible successes only leads to disaster.
- Not listening to the right counsel.
- Engaging in self-doubt repeatedly, reversing course even before a qualified strategic plan is completely implemented. Marketing is not a 100 meter dash.
- Procrastination. Ignoring problems and hoping they’ll go away.
- Improperly inventorying products.
- Not working well with vendors.
- Hiring the wrong people, and poorly motivating or supervising workers.
- Using gauche business etiquette, such as a failure to send a handwritten thank you note to centers of influence and customers.
What’s the solution? Consider a famous statement by Louis Pasteur: “Chance favors the prepared mind.” Therefore, to be prepared, it’s vital to perform a strategic analysis – of your strengths, weaknesses, opportunities and threats.
Start by asking the five Ws:
- Who
- What
- When
- Where
- Why
A well-operated business learns the right answers to such question and develops an action plan. That must include an operations checklist for all salient functions in likely scenarios, and for special situations.
But you’re not done. It doesn’t end in operations-preparation.
For a thorough action plan for maximum profits, additionally here are three key questions to ask:
Do you mentor your employees? You and your managers must perform ongoing coaching; explain the why along with what needs to be done.
Do your customers love you? Your company must take all the steps to earn fans among your customers, so they remain loyal customers and will refer others to you. A case in point – there’s a grocery store near me that I patronize, but only when I’m in a hurry. I shop at competitors whenever I get the chance, particularly, the stores with employees who say “thank you.”
How would a journalist report on your business? Do what you have to do in order to provide value and earn respect.
Develop and implement systems in every facet of your business. You’ll save time and money, and, of course, you will increase profits. Fears about profits will be alleviated. Your business will be in a class of its own.
From the Coach’s Corner, here’s related reading:
Case Study: Mistakes Companies Make When Losing Profits
Hottest Tactics to Beat Your Competitors
Human Resources – Profit By Not Letting Your Stars Become Free Agents
Key Steps to Make Your Social Media Work
Businesspeople have discovered social media is a work in progress. It takes huge amounts of time — to plan, implement innovations and continuously fine-tune – to succeed.
Here’s a surprise in social media best-practices: To lay a solid foundation for success, save time and money for the long-term by making certain all phases of your operation are ready. That includes bricks and mortar.
Two basics to remember:
- First impressions are important. You won’t get a second chance. So make sure your employees, office or store, and Web site create a favorable impression. That means cleanliness and organization, and professional customer service.
- Practice an attitude of service and gratitude for the opportunity to serve customers. In every communication with prospects or customers, use “Thank you” instead of “Have a nice day.”
Prior to my consulting practice, in moving from broadcast journalism, one of my jobs was selling radio advertising for Gannett-owned KIIS-FM and KPRZ-AM in Los Angeles. But I quickly learned that a campaign on a great radio station did not guarantee success. I vividly recall an upscale store in Beverly Hills was unsuccessful because the displays, aisles and end caps were unkempt. The merchant thought a radio advertising campaign was enough to solve his cash flow issues. I couldn’t help a businessperson who didn’t help himself.
That also proved to be true for a struggling law firm in advertising. The firm’s partners expected a miracle by merely advertising. However, the receptionist’s greeting was unprofessional. The teamwork among staff was subpar, and it took the partners 90 days to approve initiatives because of indecision from self-doubt.
Later, when I bought a marketing firm and met my two biggest clients, they had major internal issues that negated their marketing investments. The businesspeople did not understand the value in having an attitude of service and gratitude. They were so close to their self-inflicted challenges, it took an outside participant to identify the problems and implement solutions. (So, as a marketing consultant, I quickly expanded my firm’s practice. My first new projects were included human resources, management and operations.)
In all such cases, none of the advertisers understood what they needed to do to enhance their customer experiences – to create a happy buying environment by eliminating their internal obstacles to success.
The moral: It’s vital to understand the emotional-buying motives of customers. Pay attention to how your customers are treated by your frontline people. Call your business as ala a mystery shopper to hear whether your customers are greeted with friendliness and professionalism. Check out your Web site. Is it truly customer friendly – attractive, convenient and logical?
Blogging
OK, so now you’re ready to move onto blogging, social media and related tools. Whether you have one already or anticipate blogging, a good blog is an opportunity for growth. It provides added value in content to provide useful information in a variety of channels, if marketed correctly. You’ll get stronger Internet prominence, recognition for your thought leadership, and new revenue. By the way, there are good reasons why B2B marketers like content marketing.
Actually, for a well-written blog that takes time for research, development, editing and promotion, I prefer another term, e.g. analysis, insights or commentary. But for this discussion, let’s stay with the universal term, blogging.
If you’re not a good writer, you can outsource your blogging with a quality provider.
Make certain you take every precaution about security, and use a reputable outside Web hosting company to give you an added layer of security. You don’t want your blog or Web site to be compromised – hacked or invaded by viruses. The search engines will take action that will embarrass your blog with warning flags.
For most small to medium-size businesses in search-engine optimization (SEO), a blog should part of your Web site. Otherwise, you’ll dilute your site’s online prominence and Google page rank. Use effective SEO strategies for a No.1 rated blog.
If you’re unfamiliar or unsure about blogging, read the blogs of experts. Like you would for any other initiative or project, do a SWOT analysis. Determine your strengths, weaknesses, opportunities and threats. Ask questions of experts and customers.
Solicit ideas and help from your staff and close associates.
Find needs of your target customers and plan to fill them with topic ideas. Then, set goals and timelines (e.g. the goals for this business portal are to satiate my desire for writing, provide Proven Solutions for Maximum Profits, acquire clients for my business-performance firm, and to attract advertisers).
Successful blogs operate off a schedule. You’ll develop a more-loyal following by developing a schedule on which they can depend.
Pay close attention to your choice of key words and tags.
Publish well-written guest blogs of experts. But do not publish without permission.
Insert informative videos.
Pay attention to your goals. You’ll achieve them with an excellent editorial plan, and strategic use of key phrases and words.
Basics in Social Media
On your blogs and Web site pages, insert social networking widgets. This will make it easier for readers to share your content, and boost your traffic.
Develop permanent customer relationships by humanizing your social media. Good relationships start by listening. Take the time to do it right – focus on the needs of your customers with strategic headlines and messages.
Social media succeeds if it creates a dialogue, not a monologue. Show your interest by congratulating others and invite feedback. Encourage your employees to do the same. The top three are Twitter, Facebook and LinkedIn.
Lay the groundwork to turn your customers and associates into Centers of Influence – your brand evangelists.
Familiarity breeds friendships. Be consistent. Use the same picture over and over. That goes for your branding slogan and logo. Simplify your logo so it’s memorable enough to tell your story, but can be used as a 16×16-pixel favicon on the Internet. It is an image-builder on the search line of browsers.
For ongoing success in our dynamic digital age, use a mentor and fine-tune your social media. Harness the value of Internet press releases. Plus, you might get lucky. For example, it was my press release (Expert Warns About Starbucks WIFI Security, Provides Tips) not my business-coaching column that caught the eye of a Yahoo writer — three months after I wrote it. He included a link to my press release — 20,000 people read it – many of them were motivated to click on the link to my site’s column.
Don’t forget submissions to the news media. Even though most young people are increasingly using social media for information, authoritative news outlets are still relevant.
By using these basic suggestions, you’ll be creating luck because you’ll be better-prepared — you’ll be enabling your social media to work.
From the Coach’s Corner, this site’s Marketing/Sales and Tech sections have countless business-coaching tips, including:
How Small Businesses Can Capitalize on Cyber Strategies for Profit
Checklist: 14 Strategies to Rock on Google
Understanding Customers: Social Media Teaches Another Lesson
“Social Media is about sociology and psychology more than technology.”
-Brian Solis
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Columnist Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
How to Get Results from Your HR Training Investment
Profits suffer because human-resources training is perennially a victim in economic downturns. Along with marketing and layoffs, training is one important area where a lot of companies mistakenly cut back. Employees should be treated as assets.
One of the reasons given for training cutbacks, in my experience, is that prospective clients fear a poor return on their investment. CEOs object to the training because they want to profit from their investments. Ironically, a strong training program synergizes well with marketing to increase profits. So, a blog by a human resources expert caught my eye.
Although I’ve never met HR professional Stephen Meyer (www.rapidlearninginstitute.com), his writings are impressive. In “The HR Café,” he regularly blogs about relevant topics. True to form, he raises some valid points in his topic, “The managerial oversight that guarantees employee training won’t stick.”
He, too, believes something can be done to get results from training.
“Unfortunately, poor follow-up is the norm, not the exception,” he wrote in referring to an article in Training & Development magazine in January 2006. Mr. Meyer wrote that managers invest their time in three areas:
- Phase 1: Preparation — 10 percent
- Phase 2: The Training Event — 85 percent
- Phase 3: Follow Up — 5 percent
“Managers spend just 5 percent of their time revisiting training concepts,” he wrote. “The result: People forget most of what they learn. Learning doesn’t stick. Training dollars go straight down the drain. And performance suffers.”
I couldn’t agree more. A follow-up mechanism is important.
Further, depending on the subject, I’d suggest one-hour classes once or twice a week for four to six weeks. Employees need time to hear, digest and implement the information. And time needs to be allotted to check to see if the employees are absorbing and implementing the training material.
For the strongest-possible ROI, I start by training the managers so they’re in synch with their workers and they can later reinforce the training material with their employees. This helps the ROI.
In the second or third session, most courses include a module inviting students to conduct a confidential, personal self-assessment. That’s for any subject, such as training in time management, teamwork, management, or leadership skills.
The benefits are astounding. Employees gain more confidence because they learn about their own strengths and talents. For the majority, each person’s self esteem increases 30 percent. This also lessens the need for follow-up because employees are more self-motivated and productive.
When the organization’s employees have stronger self esteem, there is a direct correlation with the bottom line. An excellent training program will enhance the marketing investment.
Incidentally, a few employees – about 10 percent –resist conducting their self assessments – even when it’s confidential. Unfortunately, they ultimately need help from the organization’s employee assistance program. Commonly, alcoholism or drug addiction is a factor.
Another obstacle to training success: Tepid support from senior management.
So remember, if you use these measures, your training programs will yield strong results.
From the Coach’s Corner, even though human resources is often neglected in the C-suite, there is some good news: Trends in Human Resources Management – Wharton Study
Are You Using Best-Practices in Human Resources for Growth?
With all the cost-cutting – mainly in layoffs and cutbacks in marketing budgets – it’s obvious many companies have struggled. “Duh,” you’re thinking. Unfortunately, many companies have focused on the wrong priorities.
Cutting costs is vital. But operating efficiently with best-practices in management and marketing should be the top goals.
Where to start? The best way to achieve optimum efficiency is a management-performance audit, development of solutions and implementation of best-practices in management.
So, I was delighted to spot the results of a study by RainmakerThinking, Inc. (www.rainmakerthinking.com). The study is entitled, “Increased supervision and management was the #1 most effective business strategy.”
To cope with the adverse effects from the recession, the study shows companies implemented one or more of three strategies in 2009. They included:
- Cost-cutting
- Other innovations, such as processes of production or delivery
- Improved management
As expected, the companies that implemented all three strategies performed the best. And if none was implemented, the financial performance was dismal.
Here’s what happened when businesses implemented just one of these strategies:
- Cost cutting – “…were the most likely to report that their bottom line financial results (at the level closest to the manager’s control) in 2009 were ‘bad,’ ‘very bad,’ ‘worse than expected,’ or ‘much worse than expected.’”
- Innovation “…other than cost cutting’ did better than those who pursued only cost-cutting, but less than half of these managers reported that results were ‘good,’ ‘very good,’ ‘better than expected, or ‘much better than expected.’”
- Improved management – “more than half reported that results were ‘good,’ ‘very good,’ ‘better than expected,’ or ‘much better than expected.’
Not to be sarcastic, but what really brought a smile for me was seeing the results for those companies that did not improve management.
By not upgrading management, here are the reported consequences:
- “too much time” solving “preventable problems”
- “too much time” solving “small problems that got out of control” “
- “too much time” on “salvaging wasted resources”
- Nearly 50 percent reported their employees appeared “demoralized and worried”
- An unspecified high percentage suffered from “increased turnover among high performers”
My comment: Amen. I’d also add some big-picture strategies for how to improve management.
Here’s a typical client case study:
A public agency was regularly pummeled by negative publicity in the newspapers because of a$250,000 embezzlement by a longtime employee. The agency was worried about its poor image from the embezzlement, not to mention many unhappy ratepayers who were alreadydissatisfied with the agency’s customer service.
Of course, the senior manager was apprehensive about hiring a consultant. But she knew her board of directors was restless. To persuade her to hire my firm, I stressed that she would receive full-service, confidential solutions. She agreed to hire me.
A public relations campaign was deemed insufficient. In just walking through the offices, I sensed an inefficient workplace culture. Fear and negativity were rampant. Embezzlements were likely to reoccur and customer complaints would continue.
Because the agency’s budget was problematic, I suggested focusing on the internal issues and the PR would take care of itself.
The agency adopted my recommendations:
- Assess the extent of issues in human resources.
- Solutions included interviewing each employee with open-ended questions.
- We issued a press release containing empathy toward ratepayers, and reassured the public that steps were being taken to prevent future embezzlements and to improve customer service.
- I designed a comprehensive training program for all workers. Many employees were apprehensive and hostile to management. I told them that my dialogues with them would confidential. However, I would provide senior management with a report on the general status of the training, and whether any employees were un-trainable.
- I trained managers in what the non-exempt staff would be learning. Managers were deficient in soft skills, too. Afterward, I taught them how to be good supervisors. In that way, the managers would be able to reinforce my principles as I trained their employees.
- Once managers were trained in the two modules, I trained the non-exempt staff. Because of the negative attitudes, many workers required mentoring.
- Management reports – I notified management of a popular employee who was not trainable.
Management ignored my warning, and a week later my client received a phone from a uniform vendor. My sheepish client then called me. I was told the vendor complained about the agency’s employee in-question – accusing him of sexually harassing a teenage employee.
While it served as a validation for my firm’s process, it was an urgent problem and we immediately developed a strategy. When informed of the accusation, the agency employee vehemently denied sexually harassing the the vendor’s employee. Instead, he blamed me for the problem. But two hours later, the accused employee abruptly resigned and left the state.
As for the training program, it worked and the agency became a model for efficiency and great customer service. But the No. 1 key is always strong management.
From the Coach’s Corner, you might consider other HR strategies.
Stunning News: Eliminate Sales Quotas to Make Profits
In every industry since the Great Recession began in December, 2007, it’s become twice as hard to make a dollar. But as a sales manager, you already know this, right?
All things being equal, there are four reasons for your sales demise:
- The economy – there are no more boom times – markets aren’t expanding. Competition is tough. You really have to hustle.
- There are simply too many products chasing too few dollars. Most of your sales come at the direct expense of your competition.
- Technology and social media. If your salespeople are not harnessing social media – for customer research and word-of-mouth sales – they, and by extension, you, are behind the times. Web sites, radio, TV, newspapers, direct mail and the telephone directory to a certain extent no longer suffice to create a buzz. The Digital Age has created a mega consumer and businessperson information-overload. Not only are companies expected to brand themselves, so are salespeople. Generally, that means getting on MySpace to create sales opportunities if you sell inexpensive products and Facebook for higher-end inventory. And don’t forget possibly using Twitter, LinkedIn, Digg, Flickr and YouTube.
- Not enough face time and customer appreciation. You need to ramp up the in-person exposure to customers. Too many salespeople do not see enough of their prospects and customers. And they commit a bigger sales-sin by showing too-little appreciation to customers. Seventy percent of customers buy elsewhere because they feel taken for granted.
For these reasons, sales have become a zero-sum game. In this downturn – more than in any other economic cycles – you can only gain when your competition loses.
So how do you motivate your sales team?
Unless you hand them sales leads, you need top performers to prospect and convert leads into profitable business relationships, and continually develop solutions to solve customers’ business problems. That can only come when they find needs to fill, target the right prospects, and create a happy buying environment while showing enthusiasm for their customers.
There are two other important considerations: How do you compensate them? How do you set goals?
All of these factors make sales forecasting more challenging.
OK, you’re thinking, “Tell me something I don’t know.”
New Sales Research
Sure, let’s consider research by a pair of marketing professors: Harikesh Nair of Stanford University and Sanjog Misra at the University of Rochester. Their research concludes that profits come easier if you end sales quotas. What? That’s tantamount to blasphemy in sales management, right?
The professors’ 2009 research at an unidentified Fortune 500 company – a contact lens manufacturer – shows a compensation plan sans quotas “resulted in a 9% improvement in overall revenues, which translates to about $1 million of incremental revenues per month,” according to a press release from the Stanford Graduate School of Business.
“The fundamental problem is that managers never know exactly how much time and effort their salespeople are putting into their work,” says Stanford’s Dr. Nair. “In the absence of such knowledge, they can only base payment on agents’ output, not their input.”
The school says an aggregate $800 billion is paid each year in sales compensation – nearly 300 percent higher than companies spend on advertising. But is it a good investment? Perhaps not. The professors’ test-subject company enjoyed a $1 million a month increase after dropping sales quotas.
You have been paying commissions and possibly bonuses based sales-quota performance. The idea, of course, is that salespeople are incentified to work harder to achieve goals.
But let’s face it: Salespeople sandbag – they game the system, and often postpone sales to look good later. So do sales managers.
Sales Confession
Yes, I also sandbagged in the 1970s as a young field representative for a group insurance company in California. I recall being the company’s No.1 producer in the northern California sales territory for nine consecutive months. One month during that stretch, I sensed my sales would be slower the following month. So I held off in submitting some car and home insurance policy applications. I turned them after the first of the following month, and led again. Why? I felt pressure to meet sales quotas.
My sales track-record earned the attention of two other well-known insurance companies that recruited me, and I quit seeking to climb new sales mountains.
As a new insurance agent at a competing company and despite a sterner sales quota system, my enthusiasm helped me to sell a surprising large number of policies in my first month on the job. My two managers were beaming. Then, I was very pleased when my regional boss bought a $100,000 whole life insurance policy and gave me credit for the sale by naming me the agent-of-record. The commission would be huge. I naively thought he was rewarding me for my first month’s sales achievement. I was overjoyed and salivating over my anticipated commission.
But I soon plummeted toward earth. I forgot the company was in the middle of a life-insurance sales contest. When the contest was over and within the 30-day free-look window, the manager canceled the policy. Then it hit me: Even C-level executives sandbag. But this time, it disillusioned me because it hurt my pocketbook – one of my early lessons in “what goes around comes around.”
Also, I learned too late about the quota differences between the two companies, and the impact on my performance. With a lower morale and reduced respect for the company, my sales decreased.
In the Professor Nair and Misra approach, they developed models in relation to the behavior of the manufacturer’s salespeople. The mathematical models determined the design of the compensation plan to forecast sales while evaluating the costs of inefficiencies associated with sandbagging.
The net result was the 9 percent increase in revenue. Whoa!
Motivating Salespeople
A side-benefit: Salespeople loved the new compensation model. “Most salespeople do not like quotas,” says Dr. Nair.
Amen.
But he admits the elimination of sales quotas may not work for every business. “What managers need to do is evaluate more carefully how the system is functioning for their own organization,” says Dr. Nair.
He suggests companies research the salespersons’ responses to various facets of the compensation plan and that they determine the impact on sales. “That can give a company a good base by which to evaluate what can happen if they do change the compensation system,” he explains.
“Dynamic programming” is what they call their mathematical approach in increasing profits.
“Firms now operate in an increasingly complex and data-rich environment,” says Dr. Nair. “Those that understand how to harness the power of this data to cut through this complexity will enjoy a lasting competitive advantage.”
Agreed.
From the Coach’s Corner, ever wonder why your customers feel like a number?
Here are some Biz Coach strategies on compensation and motivation techniques:
- Keep your compensation plan simple.
- Make it easy for your salespeople to track.
- Keep an open mind – test, test, and fine-tune your sales program’s effectiveness as conditions warrant.
- Instead of a set quota for sales numbers, emphasize footwork. That’s right, emphasize footwork over quotas.
In requiring a certain number of sales calls each day along with a high-level of customer service, there has always been a noticeable difference whether I was in sales, management or as a consultant to clients. That’s been true in different economies – good or bad. Specifically, 15 sales calls a day – in-person as much as possible – have always improved morale and dramatically increased sales at the expense of competitors.
Related reading: The Seven Steps to Higher Sales, a link to the Biz Coach secrets for sales success.
This includes seven steps to higher sales, five value perceptions that motivate customers to buy, and the three-step process for overcoming sales objections.
18 Leadership Strategies to Profit from Employee Respect
Even though Wall Street is ecstatic over productivity growth, merely slashing costs and jobs to create profit is not sustainable for profits. I know investors mistakenly believe the earnings for such publicly held companies are good, but it will not last.
Workers are realizing they’re not sharing in the wealth. Poor morale will cause profits to plummet, and consumer demand will continue to plunge. What will investors and CEOs do when it gets much worse?
So try a new strategy with a vision for growth.
The key to long-term profits is organizational cohesion. Some businesses are profitable simply because employees trust and implement management’s vision. Let’s consider how to increase worker productivity and reduce labor costs.
If you want to increase worker productivity and reduce labor costs, here’s a question: Are your employees buying into your vision for growth?
Leadership style is important. Earning respect is paramount. Note: There are 10 key differences between leaders and managers.
In fact, mutual respect is the first step in getting employees to share your vision. That results from implementing strategies for healthy worker satisfaction, which might seem like an impossible dream for some employers in this economy.
When a company underperforms, do employees blame managers? In all probability, the answer is yes. At a lot of businesses, the workforces are unhappy with management. And the majority of employees want their bosses to invest in them.
Is your business suffering from poor morale? If so, take steps to increase your profits by communicating better with your employees. Generally speaking, employees who are satisfied with their jobs perform at higher levels, which is really a result of their satisfaction with their employers.
A study from a 2006 Biz Coach column confirmed this supposition. That’s when I reported Deloitte Consulting concluded that the 56 public companies included in Fortune’s list of “Best Companies to work for” had a 78-percent higher stock performance than the S&P 500. And I’m betting a similar study about profitability would have the same result today – in either big or small companies.
So what do workers want monetarily? They want what is probably impossible for cash-poor firms.
The top worker preferences:
- Competitive wages
- 100 percent paid health-care
- 100 percent company-funded 401(k) plans
- A compressed work week
- Flexible schedules
- Bonuses
Great profits or not, you can tap into other worker emotions that satiate them. Do your workers respect you? Do they feel treated with respect? Companies failing to take the necessary employee-motivation measures can expect employee turnover – whether or not the economy improves.
Here’s a leadership checklist for success with employees:
- If you’re new to the job, earn your stripes and demonstrate humility. Unless it’s a crisis turnaround situation, take several months before implementing changes. New bosses inherently intimidate workers – give them a chance to like you or least feel they know you.
- New or not, be accessible. Walk the floor twice a day. Spend five minutes a week with each employee whenever feasible. Show interest in them. Ask open-ended questions to get them to talk with you. If you do, they’ll conclude you’re a brilliant conversationalist.
- Actively listen to your employees. When you’re approached put down the pen or turn away from your computer. Employees rave about bosses who give their full attention.
- Encourage workers to suggest ideas for business success. If an employee makes a suggestion – even if you’re not in full agreement – look for reasons to be accepting of the idea. The worker will give 1000% to make an idea work, and the person’s morale will skyrocket. If it doesn’t work, the employee will endeavor extra hard to fix it in order to save face.
- If you’re not the top person in the company, use your influence to help employees to achieve their career goals. If you are the top manager, do whatever you can.
- Recognize top performance publicly. Praise immediately.
- If you must criticize an employee, try to use the layered-sandwich approach – two positives, the negative and a positive.
- Avoid criticizing an employee publicly.
- Ask questions before you start reprimanding. Sometimes there are good reasons for negative surprises. So avoid unnecessary embarrassment for your employee and you.
- Consider the Pareto principle when you honor workers – the top 20 percent deliver 80 percent of top performance.
- Maintain a steady disposition. Otherwise, when you’re under duress about a business matter, many employees will take it personally and mistakenly think you’re unhappy with them.
- Try to get key employees to buy-in to your new initiatives before implementation.
- Use good technique when implementing instructions. That means being direct, low-key but firm and maintaining strong eye contact. Explain the reasons whenever possible, but don’t be tentative or apologetic.
- For complex projects, be careful in how you give instructions. Take adequate time to list and document your wishes and deadlines. Recap in memos or emails. Like good meetings, everyone should know who will do what and when they’ll do it.
- Follow up and inspect your employees’ work or deliverables. Show your interest.
- Be courageous, especially in unpopular positions, but be cool under fire.
- Give your employees freedom – don’t micromanage. Make certain your subordinate supervisors do the same.
- Assess your strengths and weaknesses as a leader. Take appropriate steps to alleviate weaknesses and hone your strengths.
If you execute these ideas, you will profit from good labor relations and you will be in a position to leverage the perspective of your company’s human capital.
From the Coach’s Corner, here’s a question from a reader about proper etiquette:
Q: Lately, I’ve attended several business meetings where I have already met the other attendees, but my bosses have not. When introducing the vice-president or president of our company, (I am a manager), should I use his title, “John Doe, President of ABC Company,” or simply say “John Doe, also with ABC Company?”
A: That’s an excellent question. It’s refreshing that your company employs such a conscientious person as you. It’s proper protocol to introduce guests to your boss first, such as: “This is John Doe, president of ABC Company.” Then, introduce your boss to the other person.
“It is a terrible thing to look over your shoulder when you are trying to lead – and find no one there.”
-Franklin D. Roosevelt
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
30 Time Management, Stress Reducing Skills
You might not be convinced the U.S. is embarking on an economic recovery. Many economists have called it a jobless recovery, but with respect for their opinions, the phrase is actually an oxymoron. How can it be characterized as a true recovery with so many people out of work?
Further, despite the unemployment rate decreasing, there are many indicators that show the unemployment is inaccurate. Record numbers of baby boomers have been forced to accept early Social Security payments at age 62 because they can’t get a family wage job. Forty-six million Americans are food stamps — a record high. Millions of workers don’t show up in the data because they can’t get work and their unemployment payments have expired.
The economy will continue to be difficult with many economic stress factors.
They include:
- Tight credit
- Layoffs
- Rapacious behavior by many credit card companies
- Natural disasters
- Home foreclosures
- Bankruptcies
- Healthcare costs
- Declining profit
- College tuition costs
And such factors make businesses reluctant to take bold measures to invest in their future with needed equipment, marketing and training their workers. It’s time for performance solutions.
Start by reducing stress and saving time. Why?
Executives and workers, alike, feel powerless over most of stress factors. Indeed, the 2007 American Psychological Association study, “Stress in America,” had some startling conclusions. The study is relevant years later.
For example, 74 percent cited work stress, 73 percent had money worries and 66 percent complained about their workloads.
Pressure turns into stress for many.
Trauma in your personal life can affect your business and career. Short of psychotherapy or meditation, time-management skills are a solution.
Here are 30 ways to reduce stress:
- Identify your stress factors and take steps to eliminate them. Whether it is nasty surprise letter from the IRS, credit-card company predatory behavior, or a complaint from your best customer, do what you can to solve the problem quickly so you can move forward. Paraphrasing a philosophy of former President Gerald Ford, clear the table and move forward.
- Know your capabilities and limitations. Don’t take on too much.
- Find a trustworthy person with whom you can vent and give you empathetic feedback when asked.
- Understand when you need to say “no.”
- Get refreshed by taking regular breaks, vacations, recreation and exercise. And when you can, a simple walk will work wonders.
- Set time limits and goals for meetings.
- Review your long range goals. Frequently during your work day, ask yourself: “Is this helping me to reach my goals?”
- Record and analyze how you spend your time.
- Make sure the first hour of every day is the most productive. Tackle the hardest task first. The rest of the day will seem like a walk in the park.
- Practice excellence in every responsibility. Do the very best you can and you will prevent regrets.
- Do everything gently. As famed entertainer Hoagy Carmichael once said, “Slower motion gets you there faster.”
- Remember: If you don’t take the time to do it right, when will you have time to do it over?
- Instead of “post-it notes”, put all the necessary folders away in the appropriate file drawers. Once the clutter is off your desk, the “to do” list serves as the master organizer.
- Look for progress – not perfection.
- Plan your time. Make your “to do” list by Friday for the following week. If you’re in sales, have your list ready by Thursday.
- Review the next day’s schedule before going home each night.
- Prioritize your work: A, B, or C. Your A duties get done first – immediately.
- Learn how to structure your e-mail system for maximum efficiency.
- Eat the right foods for sustained energy.
- Get enough sleep. If you feel tired by mid-day, ask your doctor for a sleep study. Insomnia and sleep apnea routinely lead to high blood pressure and even strokes.
- Make your work fun.
- Learn from baseball player Ichiro and do stretching exercises.
- Listen to the right music. For many successful people that means classical music.
- Look around to help someone who is less fortunate. Volunteerism is gratifying.
- Learn breathing techniques.
- If you commute to work, consider mass transit and take a good book to read.
- Review inspiring thoughts, such as “No matter what, there are no big deals.” Taking the emotional sting out of your reactions to events will help. Learn to respond, not react.
- Develop positive affirmations about yourself, keep your notes handy, frequently review them and rehearse them in front of the mirror.
- Remember, the remedy for depression is action.
- Become more active socially. Yes, that’s a time management skill. If you are not alone, you are not lonely. Loneliness contributes to stress.
Get busy and you’ll soon feel ready to take on the world and head toward to profits. Start investing in your future with needed equipment, marketing and training of workers. And talk with your public officials about policies that will improve the nation’s economic health and create jobs.
From the Coach’s Corner, for related career tips, here is another Biz Column: 10 Strategies to Overcome Stress and Energize Your Career
“Take rest; a field that has rested gives a bountiful crop.”
-Ovid
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
How to Attract an Angel Investor
Now that a University of New Hampshire study indicates early stage financing by angel investors is more advantageous than venture capital money, what now? How do you get the angel funds?
Noted angel investor John B. Dimmer offers seven tips.
The 2009 study – “Initial Public Offerings and Pre-IPO Shareholders: Angels Versus Venture Capitalists” – shows evidence of under-pricing by venture-supported IPO groups in initial public offerings vis-à-vis angel investors. The study was conducted by Professors William C. Johnson and Jeffrey E. Sohl.
So what does it take to land an angel investment? Noted angel investor John B. Dimmer offers seven tips.
Acknowledging the difficulties of entrepreneurship, the successful angel investor in Tacoma, WA, who likes technology, says he looks for tenacity: “I want people with the moral integrity and intestinal fortitude to make the difficult journey through the Valley of the Shadow of Death and come out the other side,” says Mr. Dimmer. “It’s fun to greet them on the other side, hand them a margarita, and toast the success of their achievements.”
In the third installment of my profile of Mr. Dimmer’s insights, he graciously explains his comprehensive approach in how he selects investments:
Q: What mistakes do new companies make in applying for funding?
A: As I indicated, people are the single most important element in making an investment. As such, I generally don’t see business plans unless I know the people who are involved, or I know someone who knows the people involved. I think that to a large extent, most venture investors share this philosophy.
The business plan always comes first. I want to see a compelling market opportunity, and I want to know how the company intends to capture a meaningful share of that market. Mistakes I often see in this segment of the presentation almost always center around unrealistic sales assumptions. Overly aggressive projections relative to the percentage of market share the company will capture is one common mistake. Another mistake is a fundamental lack of understanding of the sales cycle, and the organizational structure required to produce the target revenues.
Q: Preference on projections?
A: Three years worth of financial projections is adequate, but five years is preferred. I would like to see the first year broken down into some detail, but future years can be prepared on a condensed basis. Having been involved with a myriad of start-up companies, I know that the financial projections will not be accurate; however, the forecasts provide valuable insight into the thought process of the people involved.
The most common mistake companies make in this area is a failure to understand and exhibit the financial metrics of their particular business. For example, software companies should normally generate 90 percent gross margins. If you are coming to me with a software investment, and your forecasts show a 55 percent gross margin, unless you have a very good answer as to why you deviate from the norm and how you are going to make money, I will assume that your business will fail because you don’t understand the financial metrics. Likewise, if you present me with an opportunity in the professional services space, which normally generates 50 percent gross margins, and you tell me that you are going to generate an 85 percent gross margin, I will assume you don’t know your financial metrics and pass on the opportunity.
Q: Structuring the deal?
A: Angel investing is risky business, with many of the portfolio companies ultimately failing. Accordingly, angel investors need to see an opportunity for substantial returns in order to offset the losses on bad deals and generate a reasonable return on the entire portfolio. What kind of a return is required? Well, a lot of that depends upon the timeline between the initial investment and exit, but traditional metrics suggest angels are targeting five to ten times their money back from a successful deal. It should be a given that any company approaching me for funding will have established the asking price for my initial investment.
Q: Exit strategy in proposals?
A: This should include the type of exit transaction, which may be a merger, an IPO, or something else, the timing associated with the exit, and the valuation metrics at exit. The mistakes I see here fall into one of two categories, those being an initial valuation that is set too high, or an unrealistic assumption about the exit timing and valuations. As the exit strategy is simply a forecast of a future event, my solution to either of these problems would be to try and negotiate a lower initial valuation.
As an example, I recently looked at a company that had their financing pulled out from under them. They had a big business opportunity ready to go, and needed capital to execute. While I liked their business plan, I felt their valuation was exceptionally high. I compared their valuation metrics with those of similar publicly-traded companies, and found that I could own these public companies for about 20 percent of the price they were asking. I ultimately went back to them with a proposal, but slashed their valuations. They weren’t too happy and so went looking for money elsewhere, presumably under different deal terms.
Q: Legal controls?
A: I believe that items such as voting rights or preference provisions should be allocated and enjoyed equally between all the parties involved with a company. Periodically I see instances where the founders have preferential rights to voting or liquidation. I’d like to think that we are all on the same team, which means if one person wins, we all win. Preferences then make it possible for one party to win, and another to lose, cause the creation of multiple agendas and ultimately lead to failure.
Q: What are the components of a successful presentation?
A: It’s pretty simple: brevity, clarity, honesty. A quality opportunity should be somewhat self-evident. I might need a little help starting down the path, but if I don’t pick up on it pretty quickly, I’m never going to buy into the deal. So, don’t be too long, don’t get overly complicated, and don’t try to pull a fast one on me.
The other thing I am going to look for in a presentation is the ability of the entrepreneur to think on their feet. If you really know your stuff, this shouldn’t be too hard. I periodically like to ask questions where I already know the answer just to see if the entrepreneur knows what they are talking about. Likewise, I sometimes like to ask questions that are outside the box just to see how the entrepreneur handles obtuse ideas. If you know your stuff, you can digest the inquiry and quickly formulate a meaningful response. If you stumble, you don’t know your stuff, and if you don’t know your stuff, I don’t want to give you any of my money.
Q: What trends would you care to predict?
A: I do not consider myself a visionary, but I’ve certainly worked with visionaries. My strengths come in the form of listening and then determining if there is a realistic opportunity for the vision to be commercially implemented within a reasonable time period. The only prediction I will make is that as our world advances, each advancement creates more opportunities…More opportunities for services, products, and technologies to be developed and delivered to consumers. The world of the entrepreneur is expanding at an ever-increasing rate, and I don’t see this changing any time soon.
The other columns featuring Mr. Dimmer:
Investor: Tips for Increasing Cash Flow, Profits
How Investor Has Fun in Business and Technology
From the Coach’s Corner, see the University of New Hampshire study here.
“If a business does well, the stock eventually follows.”
-Warren Buffett
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Angel Investor: Tips for Increasing Cash Flow, Profits
For a growing business, cash flow is crucial for profitability. That’s also true for the biggest companies and sectors traded on Wall Street – airlines, cars, financial services, oil or technology.
Every company is concerned about cash flow; but in 2008, 128 of the Fortune 500 companies in the nation had red ink. They include General Motors, Citigroup, Motorola, AIG, Merrill Lynch, ConocoPhillips, and Time Warner.
Cash flow enables you to make productive decisions to navigate and grow in the competitive marketplace.
No one knows that better than angel investor John B. Dimmer, the managing member in FIRS Management LLC, a private investment firm based in Tacoma, WA. He is also a director at three companies and has extensive management experience.
Here is a sample of his cash-flow solutions:
Q: How do you recommend predicting a cash-flow crunch in time to do something about it?
A: You need monthly income and expense forecasts that are established at the beginning of the business year. These must be realistic numbers that all of the management staff has agreed are reasonable. The second things you need are timely and accurate financial statements.
It is very much like planning a road trip in the car. You are trying to get from point A to point B, so you plot a route. You know that there are landmarks along the way. Every now and then you need to stop and check for these landmarks. If they show up where you expect them, you know you are on the right track. If not, you need to evaluate how far off course you are, and take corrective action.
Q: What strategic process do you recommend to evaluate the causes of cash deficits? What are the most promising solutions?
A: Getting back to our roadmap analogy, if you don’t see a landmark that should be there, or you find a new landmark that wasn’t on the original plan, you need a process for getting back on track. You need to take the time to evaluate where you are, where you should be, and what went wrong.
When you are off plan, there are some fundamental questions that need to be asked: Was the original plan flawed? Has there been a fundamental shift in the business such that the original plan is no longer applicable? Did we make an execution error? When, where, and what was it? Can it be corrected? What are the critical variables with respect to getting back on plan?
Usually this involves one primary variable, which is money. Whatever solution you take, you need to make sure you have enough money to fund it through implementation.
Q: How do you recommend finding creative ways to keep the business alive until sales pick up?
A: One of the mistakes I often see are entrepreneurs who staff their organizations under the assumption of optimum activity. The truth is that there are cycles to business. While not all business can use contract help, I like to try and have my companies staffed to a smoothed-average that is just above the troughs and just below the peaks. In this fashion, you can quickly and effectively reduce your labor costs in times of a slowdown without causing a morale-crisis with your permanent employees. I would also use slower times to beef up on training in preparation for when the good times return.
Finally, encourage your staff to make things happen. When we hit a slowdown in the car business, we ask our sales staff to get on the phone and start calling people. This usually starts with former customers and takes the form of a friendly call simply to inquire how everything is going with their car. Often times, you discover that they love their car, and they have a friend who is interested in buying a new car. Sometimes you find that they love their car and they want to buy another. And sometimes you find that there is a problem. Problems, however, create opportunities. If you invite them to come in, and then solve their problem, they will remember that you were proactive. They will tell their friends about their experience, and their friend will come and see you for their car needs.
Q: What about negotiating with investors or other financial supporters until cash flows increase?
A: Investors hate bad surprises, especially when the surprise is accompanied by an emergency need for funds. Assuming you created the roadmap, and are tracking your progress, you should be able to see the bump in the road well before you actually hit the bump. Most investors are business people who have been down the road before and know that everything is not smooth sailing. They will appreciate the fact that you have a plan, that you are tracking your results against the plan, and that you have foreseen a problem before it hits.
Generally cash flow problems mean you need to borrow more money or raise more equity. If such is the case, have your presentation for raising new money ready to go so that you can transition from the communication stage to the pitch. Be humble, because the last thing I really want to hear as an investor is how smart you are and how great everything is going when, in fact, you are off plan and running out of money.
Part of the negotiation is an acknowledgement of the problem, a rational analysis and a well-crafted solution. You, as the owner, may need to take a bit of a hit in order to implement a solution. This might come in the form of a down round of fundraising where you are force to make up the dilution to the other shareholders out of your own holdings. Know what you are and are not willing to do. If you are forced to give up something to keep the company alive, figure out how to get it back, perhaps via options, if your revised plan was the proper call and the company comes roaring back.
Q: How do you know when it’s time to close or sell the business?
A: I always want to stay in the game, even when it is two outs in the bottom of the ninth inning, you are down by five runs, and the count is full, there is still a chance you can pull off a win. Nonetheless, I try to keep entrepreneurs from getting in so deep that if their company fails, they are wiped out. I’ve been involved with two companies where I had to tell the entrepreneur that they shouldn’t put any more money into the operation.
In one of those instances, we were able to locate a buyer for the company. The purchaser was a publicly traded entity that, since the purchase, has taken a bit of a down-turn, so the jury is still out as to whether the entrepreneur will come out whole. Nonetheless, it was a better option than closing the doors. With the other company, we have what we feel is great technology; we just can’t seem to get a revenue stream developed. We are in the process of procuring a patent, and think that it will have good commercial value once the patent is issued. Accordingly, we have put the operational aspect of the company in suspense, and are pursuing acquisition opportunities. The biggest risk on this strategy is a failure to cut a deal followed by an impotent patent.
I never advocate simply closing the doors. If you are doing proper planning, you should see the problem coming down the road. There should always be something saleable about your company, even if it is less than a full recovery.
From the Coach’s Corner, for more on Mr. Dimmer:
How to Attract an Angel Investor
How Investor Has Fun in Business and Technology
“I buy expensive suits. They just look cheap on me.”
-Warren Buffett
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Cause-Related Marketing Can Increase Sales by Double Digits
Marketing success largely depends on brand trust.
If you’re unsure how to increase sales and about what approach you need to create brand trust, consider cause-related marketing. Cause-related marketing is one of the 10 best marketing tips for growth even on a tight budget.
I’ve long advocated cause-related marketing, and a study showed it tremendously drives sales, according to a communications firm, Cone, and Duke University. It was a 2008 study, but it’s applicable today.
The study’s respondents participated in a simulated shopping spree at a pseudo-convenience store. In the first of two phases, the shoppers used money provided in the study and bought products in four consumer-good classifications associated with-and-without a charitable cause.
The cause-related products resulted in strong sales:
- 74 percent increase for a shampoo
- 28 percent increase for a toothpaste
The second phase included adults shopping online for shampoo and toothpaste. It resulted in the respondents spending about twice as much time reading cause-related ads as they did in viewing the generic ads.
Plus, the cause-related ads generated a 19 percent sales increase for the toothpaste brand, and a five percent increase for the shampoo among the male and female participants. Among women shoppers, the shampoo resulted in 14 percent higher sales.
“It’s much easier to make a purchase by clicking a button than it is to pick up and experience a brand in the richer store environment; the results of our study likely lie between the impulsive online shopper and the deliberate in-store shopper,” said a Duke researcher, Gavan Fitzsimons. “One thing we know for sure consumers are paying more attention to cause messages, and as a result, are more likely to purchase.”
Despite obstacles in a recession, the study also suggested 52 percent of consumers expect companies to continue their support of charitable causes. Twenty-six percent expect companies to increase their charitable support. Eighty-five percent look more favorably at a socially responsible company.
The top two consumer preferences for cause-related marketing: Economic development and education.
The study also showed these consumer attitudes:
- 89 percent want business, government and charities to partner on causes
- 91 percent feel businesses should communicate their support of charities
- 58 percent said companies fail to explain their good deeds
Here’s an example of how to implement cause-related marketing: If education is a hot button for you, and it is for me, consider setting up a foundation to award scholarships. Contribute a portion of every sale to deserving students to further their education or training.
Cause-related marketing should not be overlooked, particularly, at year-end in approaching the Q4 holidays. Consumers will love you. Plus, it will help you to get top results from your marketing plan.
From the Coach’s Corner, two additional points:
Firstly, implement marketing plan essentials for best results.
Secondly, avoid being myopic, especially in the fourth quarter. Q4 is stewardship season and for budgeting. Many businesses find they need to cut budgets, and they’re often laying off workers, and slashing marketing and human resources training programs. That’s a short-term need, but what about the long-term?
If you’ve been using the right approaches in marketing and human resources, your employees, training and brand equity are all assets. The companies that announce layoffs, especially between October and January, find they lose brand trust. Customers are far from impressed. They’d rather do business with a company known as a good employer.
More than ever, you need to maintain top-of-the-mind awareness in the marketplace with great marketing and customer service – whether you’re a B2B marketer or if you target consumers.
So it’s important to find a happy balance between your assets and liabilities for short-term and long-term growth. Avoid cutting muscle in your business and when the economy recovers, you’ll be well-positioned to increase your market share. That’s a promise.
“Half the money I spend on advertising is wasted, and the problem is I do not know which half.”
-Lord Leverhulme
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
