Happiness and Company Culture

Small businesses have many positive things going on for them.  The owners have total control of what’s going on in their business and take care of things personally and quickly.  Many of them do not look for ways to pass the blame onto others, they are the owners after all. The business succeeds or fails because of them.  If they plan carefully and consider the advantages of having a team around them, then the chances of success increases.

The beginning of any business is hard.  Lots of hard work, and maybe loss of income can become quite a strain for many small owners.  That is some of the reasons a third of the small businesses that start do not make it past the first two years according to the Small business administration.  And half of those businesses do not make it past the 5th. year.

A business plan before starting a business, and a financial plan to weather the first years should be a necessity for many small owners.  The difficulties that you will encounter the first years of the business are always unexpected. You know you will have difficulties but don’t know what they are.  Later on, the good and bad experiences you encounter will give you the experience and the forbearance to weather the storms.

There are millions of small businesses across the United States.  Some grow to become great, powerful companies, and a lot of them do not.  What is it then that makes some companies thrived while others go under?  For many people great companies show a handful of characteristics that makes them great, but as always great or good means something entirely different for people.

But for  companies to succeed, the first thing to remember is that employees play a crucial part in the success of any business.  Employees that understand that they are working for a company , and that they are supposed to be a team, not sole individuals with different purposes, make a better company.  They as a team, have a more happy, positive company culture, and research has shown time and again that employee’s happiness plays an important role in the success of the company.  Happy individuals that know the company’s philosophy, and are on board, will make the company a better place all around.

Productivity In The Workplace

Small and big businesses regardless of what industry they are in, try to boost productivity in the workplace to achieve their goals.  Whether they are offering financial incentives, recognition across the company, or extra vacation days, companies will go to extra lengths to reach or boost workplace productivity.

Every company has employees that are super stars and their productivity is unparalleled.  But, as every company have super stars, they have the super “duds” in it as well.  When looking into improving the productivity in your company, you have to take into account that all your employees have to be accountable for the work they do or are supposed to do.  The superstars can only take the team up to a point. Dragging the employees that are falling way below their potential is exhausting and mentally exhausting for everyone else.

Metrics that help you measure the productivity of your employees and yourself are widely available for businesses.  Every employee believes he is productive, but remember that productivity is a very subjective concept for many of us. We do not measure time or productivity equally.  Reading and answering all emails in your inbox may seem like you are productive, even if you do nothing else.  For other people answering all those emails is only the beginning of their day.

When measuring the productivity of your employees-and yourself-take into consideration that employees respond differently to what management or they owner tells them.  For many employees a job performance review and an unsatisfactory review at that, can be more harmful that no review at all.  You have to get to know your employees before handing out advice.  Sometimes a pat on the back, or a nice word at the beginning of the day are for many employees enough to continue working hard for you.  Recognition that they are doing a good job and that you are aware of it, can increase the productivity of many of your employees.

Most workers across the United States have a life outside work. Families, other jobs, elderly parents, financial problems and a myriad of other issues, are a constant reminder that we are humans and have a limited time of hours every day.  Expecting the employee to be a happy and responsive human being every single day is expecting too much.  When asking an employee for X, Y and Z, think before and ask yourself if it is too much.  I do not believe that you have to hire a slacker and let it be, just think that a happy employee will be a more productive employee for you and your company.

What Benchmarking is and How it Can Help You

Have you heard of benchmarking? Do you know what it is? Really know what it is, not have just a vague understanding?

Most small businesses owners have heard of benchmarking. They think they know what it is, and have decided it won’t help their company. But, any business can profit – literally increase its profits – from it. If don’t you think you can benefit from it, take another look at the concept by answering the following questions.

What is the standard margin for your industry? What have your margins been for the last 5 years? Have they increased, decreased or stayed the same? Why?

What are your industry’s best practices for productivity? How does your employees’ productivity track for the last 5 years? Has it increased, decreased or stayed the same? Why?

If you want to be successful you should be able to answer these simple questions with facts and figures – SWAGs (sophisticated wild a** guesses) don’t count. Most small business owners can’t. We get too caught up in the day to day operations to see the big picture, which limits our ability to go to the next level.

It’s hard to get there if we don’t have a way to identify and capitalize on our strengths and limit our weaknesses. Benchmarking is a process which looks at what’s working and what needs improving in the company.

It creates specific data which help you make reachable goals, streamline operations, have more control, increase profits and improve your quality of life. Internal and external benchmarking can give you the concrete answers you need to achieve sustainable, long term success.

64002400Internal benchmarks are set by figuring out how your company is currently doing (i.e. rework, amount of receivables, margins, profit and loss, productivity, overruns, billing, inventory). They give you a factual baseline to set future goals for improvement. Also, they can give you ideas about what systems you need to meet those goals, and how to monitor your progress to stay on track.

External benchmarks operate in the same way as internal ones, except they look at how your company compares to others in your industry. They measure your facts and figures against the standards and best practices of others who’re doing better and worse than you. They give you a real world way to evaluate yourself.

It’s impossible for a small business owner to know everything he needs to know to stay competitive. Internal and external benchmarking can give you the edge you need to stay ahead of your competition, especially since most of them aren’t taking advantage of it.

Just one more question – Why wouldn’t you take advantage of something that will make your life easier, happier and more productive?

It’s Time to Get Serious About Your Brand (Part 2)

business (7)Last month I talked about what a brand is and how it’s past time for small business owners to get serious about theirs.  It’s a concept that’s here to stay.  How you create and manage your brand can often be directly linked to increased or decreased sales.

Knowledgeable customers are increasingly expecting (demanding) an overall positive buying experience.  If they don’t get it from you they’ll go elsewhere.  You can produce the experience people are coming to expect by thoughtfully managing your brand.

The idea of creating a brand can seem overwhelming and confusing to a lot of owners.  But, it doesn’t have to be.  If you start with 2 basics and do them consistently well, that might be all you’ll ever need to do to establish and support your brand.  You’ll certainly be far ahead of your competition. 

One of the first things owners lose sight of is their company’s visual image.  They get caught up in the day to day duties of running the business (the inside) and forget to look at how the world (the outside) sees them.  You ignore the outside at your own risk — that’s where your clients are. 

As your company gets more successful its image should change accordingly.  Are you using the same materials (cards, web site, letterhead, logos, taglines, graphics, customer paperwork, signage, etc) you’ve had since you were a start-up?  Does it look cheap, out-of-date and homemade?  Don’t trust your own judgment; ask a lot of other people how they see it.

Also, what do your service people and vehicles look like?  How about the outside of your building?  Do you want this to be a potential customer’s comment, “What do I know about Acme Electrical (fictional)?  The building needs painted, the yard has trash in it and their service people look unkempt.  They must be going out of business.” 

What people see is powerful, and what they see first forms their lasting opinions.  Your brand should represent your business now and where you’d like to be in 5 years.  You want it to convey success, professionalism and trustworthiness.  You may not care how things look, but potential and current customers do and it’s their viewpoint that matters.


Understanding that their viewpoints matter is the second basic strategy you need to create a successful brand.  It’s commonly called excellent customer service.  The biggest complaint consumers have about most buying experiences is poor customer service.  This includes business to business transactions.

This is not a new or revolutionary idea, but it’s still one many companies get wrong.  That’s good news for you if you’re serious about taking your company to the next level through positive brand awareness.  As your competitors’ customer service gets worse, it makes it easier for yours to surpass it.

The simpler you make it for people to do business with you the better chance you have of selling more.  When was the last time you used your web site?  Do you require your salespeople to have ideas about improving service?  How long has it been since you’ve asked a client for feedback on their buying experience with your company? 

For most small businesses developing an effective brand doesn’t have to be complicated if you focus on these 2 basics first.  It does, however, take commitment, effort and time to implement them successfully.  But, the effort will pay off in the long run. 

As Peter Drucker said, “Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands.”

It’s Time to Get Serious About Your Brand (Part 1)

business (2)It used to be small business owners could avoid all the talk about brands and branding.  No one knew if the concept was just hype that would eventually fade – like many business ideas – or if it was going to be around for a while.  Well, it’s here to stay and you can’t ignore it any longer.

In fact, if you’re like most owners, you’ve ignored it for too long all ready.  It’s time to get serious about developing your brand.  The more mainstream the concept is the more your customers expect it.  More and more often how you create and manage your brand will be directly linked with your sales.

The idea of creating a brand for their business is confusing to a lot of owners, mainly because they think of branding as an “it”.  They believe a thing (i.e. website, logo, catch phrase, product, service) is the brand.  But, it isn’t a thing.  Your brand is how the customer perceives and experiences your company.

The experience is composted of and produced by several different components, which make up the whole.  These parts, when put all together, create an image or idea about the business in general and its products specifically.  Let’s look at an example of how the parts of a brand contribute to how it’s perceived by its target audience. 

What do you think when you see the word Nike – the Wimbledon short dresses controversy, funny/inspiring/stupid commercials, football, shoes, a surprise announcement to discontinue its golf equipment, swopes, Olympics, Iron Nun, how hard it is to navigate the web site on your phone?  Each piece contributes to Nike’s general brand, both the good and bad.

The need to create a brand can seem overwhelming.  If you’re like most owners, you’re probably having trouble keeping up with all the other things a business needs (production, regulation, finances, quality, personal).  But, it doesn’t have to be difficult or mystifying.

It’s nothing more than a comprehensive, “whole package” way of selling.  The way to create a brand is to break the process down into small manageable pieces that you, your employees or other professionals can do over time.  Part 2 of this series will look at the specific components you’ll need to put this package together.

Don’t Let Passive-Aggressive Employees Harm Your Business

64735957Passive-aggressive is a word you hear people use a lot.  But, many of them use it to describe someone’s actions when it doesn’t actually apply.  They don’t seem to understand what it really means; it’s just a buzz word.

Small business owners are some of the people who don’t understand it.  Overall, they rarely recognize the behavior and don’t see how it’s negatively affecting their company.  That’s a problem, because odds are they’ve had in the past, currently have or will in the future have passive-aggressive employees.

The smart owner will learn what passive-aggressive behavior is, be able to recognize it and know how to manage it.  If it’s not managed it can and will: undermine authority, damage morale, lower productivity and quality, harm customer/vendor relationships, create a hostile work environment and increase staff turnover. 

It has turned functional operations into nonfunctional ones, without the owner knowing how it happened.  The behavior is hard to identify if you don’t know what you’re looking for.  It’s a sneaky, deliberate, sabotaging, underground way for an employee to express anger at his boss, managers, co-workers and the company, without getting caught doing it.

He wants to avoid direct, face-to face communication (passive), while still being able to act on his anger (aggressive).  He thinks his anger is justified, but won’t state his concerns or dissatisfaction directly.  Passive-aggressive people believe others “must pay” for their unhappiness, and they “get back” at them in indirect ways. 

Some of these ways include:

  • Always having excuses (“good reasons”) for not doing tasks they’ve agreed to do, have been assigned to do or are their regular job duties.
  • Regularly missing clear deadlines, with excuses for why they couldn’t meet them.
  • Withholding information, sometimes critical, from others while feigning ignorance — “All they needed to do was ask me for it.”
  • “Stirring things up,” then standing in the background to watch the fireworks.
  • Going over someone’s head or behind their back to make them appear incompetent.
  • Using innuendo and rumor to sabotage others and their work. 
  • Not taking responsibility for their actions/words, while repeatedly blaming others.
  • Giving others vague, incomplete instructions and blaming them when the job goes wrong.
  • Claiming information has been sent when it hasn’t — “The text, email, fax, phone message must have gotten lost.”
  • Appearing busy (texting, emailing, walking around) without doing any identifiable work.
  • Taking credit for others’ work.

Doing some of these things doesn’t make a person passive-aggressive, it makes them human.  Instead, look for someone who has a pattern of consistently deflecting fault by having an excuse — which includes blaming someone or something else — for doing poor or incomplete work.  He believes he’s a victim, but it’s really the business that’s a victim of his behavior.

Are You Really Delegating?

64510516A lot of successful small business owners think they’re good at delegating work to others.  However, their employees, sub-contractors, partners, customers and family would disagree with this thinking.  In actuality, most owners aren’t good at delegating responsibility and tasks to others.

The average owner’s way of delegating is some combination of: writing a memo or email, yelling, begging, assuming employees “will figure it out,” threatening, bribing and making promises he won’t keep.  And it’s true — these techniques do work in the short term, but they eventually fail in the long term. 

There’s a better way of assigning responsibility to others, and it’s a method which can be learned.  However, the steps must be practiced to become skilled at them.  But, once they’re mastered they can be used in work, home and social situations. 

The first step is to define the task.  This includes identifying what materials, time, money and people are needed.  The owner sets realistic, measurable targets and decides when progress reports will be due.  The desired goal of the project should be defined.  Employees aren’t mind readers — they should clearly know what’s needed, when it ought to happen and what the expected outcome is.   

Assigning the task to the right employee is the second step.  Now that the task has been defined, matching the right person to the job is important to it being successfully completed.  The right person should have the training, knowledge and ability to do it correctly.   Anything else is a set up for the employee and the owner.

The final step is discussing the task with the assigned employee.  Let the person know why they’ve been chosen for the project; focusing on their value to the company and qualifications.  Go over the job’s requirements, budgets, timelines and goals with them.  Make sure they completely understand what the task requires and what’s expected of them. 

Most owners haven’t learned these steps and struggle with believing they need to do them.  Some say, “I should just be able to tell someone to do something and they should do it.  I shouldn’t have to do anything else.”  While others say, “If I want something done right I have to do it myself.”  Neither way of thinking is productive, especially for long term success.

No matter how intelligent or energetic an owner is his reluctance to learn how to successfully delegate will eventually take its toll.  There’s a tipping point where a too controlling or a too detached management style deters expansion.  Also, over time, these styles affect the bottom line; profitable companies lose ground.  It’s too bad, because once learned it isn’t hard to do.

Busy and Productive Aren’t the Same Thing

business (11)It’s confusing.  There’s a big difference between being busy and being productive, but many people think they’re the same thing – especially small business owners.  They often mistake a busy employee for a productive one, usually to the business’s disadvantage.  Thousands of businesses have closed because, while they may have been busy, they weren’t productive.

This isn’t just playing with words; there’s a marked distinction between the concepts, and the actions which go with them.  A difference that’s important for owners to understand.  Many don’t have a good working knowledge of the process of or requirements for genuine productivity.

Usually, because they don’t “get it” they don’t make it a priority.  They aren’t good at managing it.  They don’t track it or, worse yet, even expect it out of their employees (or themselves, but that’s another article).  Therefore, let’s look at what it is and why it matters.

Simply put – productivity is the amount of value (money) produced divided by the amount of costs (i.e. time, supplies, personal) required to do so.  It’s calculated by dividing the output created during a specific time by the total cost used to produce it.  This formula can be used to measure the yield of many things: shifts, individuals, products, machines, crews, etc.

But, how does it actually work?  Let’s look at a composite example.

Sam had a successful machine shop with a 1st and 2nd shift.  He wanted to increase his volume, but didn’t know how to get to the next level.  He believed his employees were as productive as they could be, because when he was on the shop floor they always seemed busy.   

He was skeptical when Tim, an outside professional, challenged his beliefs.  Tim was able to document, using the formula for productivity, that the 2nd shift was more productive, therefore more profitable, than the 1st shift.  He was also able to determine the reasons why. 

Even though they worked the same total hours the 2nd shift had higher output, used fewer materials, took less time to do a job and had a smaller amount of rework.  In addition, they had lower employee turnover, fewer call offs and not as much tardiness or early clock outs. 

However, neither shift had a productivity rating over 70%.  Sam admitted that both shift foremen had talked to him about making some changes to increase the efficiency of their crews, but he hadn’t listened.  He’d thought the employee’s busyness was equal to their effectiveness.

An owner should be able to recognize which work creates value.  Typically, this means thinking and behaving differently than he has in the past.  Replacing busy work with productive work can take time and diligence, but it usually results in happier employees, higher profit and increased happiness for the owner. 

Non-traditional Small Business Loan Lenders – Be Very Careful

59948705Not too long ago there were only a few options when a small business (SMB) owner needed a loan.  There were banks, savings and loans or credit unions.  If you didn’t qualify for a traditional loan there was always your brother-in-law who knew a guy, who knew a guy.  But, as gangster movies have taught us, that never goes well.

But, now with internet banking the choices have grown.  There are hundreds, possibly thousands, of non-traditional lenders.  They operate entirely online and are offering loans to SMBs who are considered too risky by traditional banks.  They can be just what you need or ruin your company.  Remember the lessons of the Great Recession? 

It was fueled, in part, by the housing loan industry: greed, aggressive lending practices, bad underwriting, poor regulation, dishonesty and matching customers with unsuitable products.  They put people into houses they couldn’t possibly afford with loans they didn’t understand.

There’s limited regulation of online SMB lending companies and many are following in the housing loan industry’s footsteps.  The unscrupulous ones are giving money to owners who don’t understand the loan’s terms and will never be able to service the debt.  It’s up to you, the borrower, to protect yourself by knowing what you’re getting into.

Look for companies who are transparent.  The pricing and terms (i.e. one time charges, upfront costs, administrative and origination fees) should be easy to find and understand.  The annual percentage rate (APR), which shows the loan’s true and total cost, should be prominent. 

They should be willing to answer clearly (no jargon) and completely (go over it as many times as you need) any questions you have.  They’ll provide, in writing on the website, full disclosure of all their products and services, and won’t try to steer you to ones that aren’t in your best interest.  There should be no hard up-sell or dismissal of your concerns.

Many lenders use brokers and salespeople who earn commissions from making loans.  There’s a growing problem with unscrupulous people giving SMB owners loans they have no hope of paying back – which usually results bankruptcy or re-borrowing.   An honest, ethical salesperson will reveal their commission structure and the borrower’s cost. 

Good business people take out bad loans.  Most get one with the full intention of paying it back, but then are unable to do so.  Ethical alternative lenders know the consequences of doing business with riskier customers and they work with responsible third-party debt collectors.  Their disclosures should plainly spell out your rights to fair collection practices. 

Nontraditional business loans are complex and hard to understand.  It’s easy for someone to get confused and make a bad decision.  It’s the responsibility of the SMB owner to make sure he has a fair lending experience.  Don’t put yourself in a no-win situation because you didn’t take the time to do your due diligence.

Financial Cyber Attacks – A Growing Management Problem (Part 2)

Customer Relationship Management business chart on a digital tabAs we discussed last month, criminals are increasingly targeting small businesses for financial cyber attacks.  These attacks have included: stealing customer and company data to sell, high-jacking and holding the information system for ransom, and taking money.  Small companies are under fire because they’re low hanging fruit.

Owners who would never leave the doors unlocked on their building or office are leaving their cyber doors wide open.  They have installed locks, security systems and gates against the local “physical” criminals, yet all but put out a Welcome mat for the cyber ones anywhere else in the world.

But, it doesn’t have to be that way – with a little discipline and some common sense procedures you can prevent or minimize the possibility of a successful attack.  Here are some suggestions.

Scrutinize emails

Create an awareness program about phony emails, which you and your employees follow.  Fake emails are used to plant malware and spyware, which allows thieves access to the system (i.e. account numbers and amounts, passwords, transaction history, credit card numbers). Don’t open links or attachments unless you’re very sure you know who they’re from. 

Another popular ruse is to use realistic emails to initiate money transfers to outside accounts.  The thief, via email, poses as a manager and asks an employee to transfer money from a company account to an outside one.  An employee, properly trained, will make sure the request is legitimate before sending the money.

Avoid Wi-Fi

Smartphones and tablets have made it easy to do work anywhere.  But, it’s also made it easy for hackers to easily access your information.  Wi-Fi connections are notorious for having weak security – no matter what the sign on the door says. 

Would you trust a stranger to lock up your office every night?  Then why would you trust the owner (or a major corporation) of the local coffee shop to protect your important data, especially when the chances are very good that they aren’t protecting their own.

Use your bank as a partner

Your bank wants you to succeed – it’s good for you, it’s good for them and it’s good for the community.  Sit down with someone and find out what options they have for safeguarding your accounts.  They probably have some you don’t know about.

Do they have two-factor authentication?  It requires unfamiliar account users/devices to supply additional information.  Do they have software that flags attempted logins from unfamiliar sources?  If the bank doesn’t recognize a login they will send a one-time access code to a separate device of your choosing.  Can they provide text messages for each withdrawal?

Many small business owners don’t know that companies don’t have the same fraud protection consumers have.  Depending on the bank’s policies and the agreement you signed with them they may not be liable for stolen money.  Some banks provide fraud protection only when specific security measures are in place. 

Financial cyber attacks aren’t going to decrease, nor will they ever be “fixed”.  They’ll increase in frequency and sophistication, while having moving target solutions.  The cost of doing business in the internet age is realizing the problem isn’t going away, and it’s time to start dealing with it now, rather than later when all your money has disappeared.