Sunday, January 28, 2007

Build Your Business With Your Strengths In Mind

Just the other day I was meeting with a client to discuss his frustrations. All of them had to do with obstacles. His competition had more money so could get better pricing on product. The manufacturers were creating too many new products making purchasing a crapshoot. It was the slow season. An employee wasn’t making the proper effort.

Individually they didn’t seem so bad, but in total they seemed insurmountable. One by one we worked through the litany of depressing obstacles, trying to figure out what we could do about each problem. Not much, it seemed.

Totally worn out, we changed our discussion to what he and his business were good at. Seems there were one or two things he had definite advantages in. The conversation lightened up. We agreed that if he worked on doing what he did well and improving it, and then leveraging everything else off that, things didn’t look so bad. In fact they looked pretty good again.

My next conversation with him will be to ask him what his business would look like in a few years after succeeding at the things he does well. This should help him keep his obstacles under control.

Wednesday, January 24, 2007

Discombobulation

An Inner Circle member brought it up at the meeting last week when she said she was feeling discombobulated. And why not? New granchild, a very close relative passing away, a key staff member leaving and moving away, with the holiday season on top of it all. I'm betting that all my members have felt discombobulated with the trials, both personal and professional, that face us regularly.

Come to think of it, I've been a bit discombulated the past three weeks or so, having taken the kids, without Meg, on a road trip to Michigan to visit my sister and then having the kids, with out Meg again, for five more nights so she could visit with her sisters at a wedding in Florida. Playing Mr. Mom is not for me. Took several days to get back into the rhythm of things.

There's that word again. Rhythm. For various assorted reasons we all get out of rhythm. Out of sync. Out of sorts. It just happens.

Getting back in-synk (excuse the pun, I couldn't resist) is a matter of getting back in rhythm. Getting back into a flow of things that make things feel more familar and comfortable. Finding that rhythm or structure or routine to your life that allows you the creativity you need to succeed. It sets you free.

How Wide Do You Open The Books?

There has been a lot of talk about this in my Circles this month. Just how much of your financials do you share with the people who work for you? And if you do, is it a help or a hindrance?

Here's my take on Open Book Management: As an entrepreneur, I'm pretty sure you use your financial statements to judge your company. It's not your only scoreboard, but it's an important one that helps you make good decisions. Why wouldn't you want your people working off the same scoreboard as you?

A foundational book on Open Book Management is The Great Game of Business by Jack Stack. Stack's basic premise is this: Your employees want to win, it's human nature to want to win. But in order for them to win you have to show them how to play the game and give them a way to keep score. And he advocates, from tangible experience, that your financials are great scoreboards and you can teach all of your staff members how to use these scoreboards to win the game you are trying to win with your company. Besides being practical, the book is
pretty darn inspirational. Jack's company, Springfield Remanufacturing Company remanufactures diesel engines; think of a company full of less-than-high-school-educated grease monkeys.

The risk, as I see it, is your people will come up with their own scoreboards to win a game they want to play, that may have little to do with the game you are playing. Don't you want alignment between their actions and your goals? Open Book Management is an effective way to do it. And an added benefit is that the burden of success is no longer just on your shoulders, it's spread out over the entire team.

Back to the original question: How wide do you open the books or how much to share? Wide enough that they can see the relationship between their actions and the results. That provides a lot a latitude. Crawl, walk, then run.

What are you comfortable sharing?

Tuesday, January 23, 2007

Get Them to Say No: A Contrarian Approach to Sales

Don’t take “no” for an answer! That’s the sales mantra that used to run through my head as I sat down to make my daily sales calls, bracing myself for the rejection and objections I would inevitably face.

After all, it’s been said that buyers will say no at least five times before they say yes. And it was the approach I’d observed and experienced with other sales folks I’d encountered. If everybody else is doing it, it must work. Right? It’s a seductive fallacy to believe that sheer persistence will bring you sales; it’s more likely to bring you frustration and burnout.

I’ve come to realize that a “contrarian” approach to selling is more effective and gives me a greater sense of control. It's draining to feel like you're at the prospects mercy, groveling for a sale. Selling is not about talking people into doing something they don’t want to do. In fact, sometimes “no” is the best thing you can hear from a prospect.

Have you ever pursued a customer for weeks, months or even years because they showed some interest without making a sale? And do you now look back with regret and wish you had invested that more wisely? Consider these thoughts on the sales process:

  • It’s Not a Closing Problem: Many business owners get hung up on the closing ratio of their sales staff, when that is seldom the real issue. Don’t confuse a closing problem for a qualifying problem. Are you selling to anyone who can fog a mirror, or have you put a specific set of criteria in place to systematically and diligently weed out less than ideal candidates? The right prospects close themselves. They gladly buy when there is a match between cost, value and need.
  • Drive to No: Not only is “no” an acceptable answer, it’s actually better than a reticent “yes”. Make it easy for the prospect to say no instead of ignoring and overcoming every objection. Remember, each rejection you get past frees you up to search for the prospect this is the perfect fit for what you’re selling. At a minimum, get prospects to quantify early on how serious they are.
  • Shift the Ownership: A prospect takes your card and agrees to call you and meet you for lunch next week. What do you do when they fail to call? Make a follow-up call yourself — maybe even two or three? Do you send more information and call again to see if they got it? While a certain amount of follow-up makes sense, you’re better off to move more quickly to a forthright approach like this: “I don’t want to pester you if this isn’t for you, so this will be my last call. If you decide later that this is something you want to act on, you have my number.” Once you’ve educated them about what you have to offer, let the prospect drive the sale.
  • Retain a Sense of Exclusivity: Your product or service isn’t for everyone. Let your prospects know that you’re picky about who you take on as a client—that you want to screen out prospects that aren’t ready for what you have to offer—and suddenly what you have to offer is more desirable. Every business owner wants to be a step ahead of the competition. Separate yourself from the mainstream and you’ll create a brand that resonates with many consumers who want to stand out from the crowds themselves.

How many of the of prospects you've been chasing after should have been abandoned long ago?There's a time and a place for pursing someone with dogged determination, but, more often than not, a contrarian approach is a better choice for you and the target of your sales pitch.

Tuesday, January 16, 2007

Reluctant debutante? Probably a misnomer…

Every business owner faces rejection on a regular basis. The way you face that rejection will both sap your energy and whittle away at your confidence … or it will place you in a position that remains powerful and protected.

I’ve often been credited with (or is it accused of) playing the role of the reluctant debutante when I recruit new clients or discuss renewal with existing clients, who make an annual decision about whether they want to continue enlisting my services. The essence of a reluctant debutante is to realize, and truly feel, that the client needs what you have more than you need them to buy it.

It’s based on the assumption that if I don’t care what their decision is, then I don’t suffer any loss. The attitude can come across as arrogant, so I have been forced to be very clear in my exit interviews with non-renewing clients. For example, when one of my female clients took a hiatus (which is often a euphemism for inadequate cash flow), I said, “while I respect your choice, I don’t like it, and all of us … you, I and the group will suffer from your absence. So, there will always be a spot waiting for you”.

Actually, the state of mind that I create within myself is one of “indifference” regarding the outcome, which allows my focus to be on the process alone. It relieves me of emotional attachment, which enhances my negotiating ability. Furthermore, in the prior example, I wasn’t getting paid anyway, so the loss was mitigated.

A helpful reminder is the little-used second verse of… “You can lead a horse to water, but you cannot make him drink. After all, while it’s your water, it’s his thirst.”

In other words, a client’s choice about whether to buy my service is almost always a function of his current situation, usually cash flow, and hardly ever about my service. Again, in the prior example, the client returned within 18 months, and all is well.

So, why get all wigged out when she decides to wait until it’s comfortable?

Monday, January 15, 2007

When Business Takes Your Family Hostage

Steve Craney, president and founder of RiverSide Electronics in Lewiston, MN. With decades of experience under his belt and the wisdom that comes with those years, he said this about gaining balance in his life and placing his family in a position of honor:

“The start-up phase of a business is intense. You can’t be half pregnant. When you start a business it’s a full-time plus commitment. You better be doing something you’re really passionate about, because it’s going to take everything you’ve got to get it going. But the minute that business becomes even a bit successful, you better be able to turn that passion for the business off for at least a few hours each day and focus on the other things that are important in life.”

The fact is that, as Barry J. Moltz, author of You Need to be a Little Crazy: The Truth about Starting and Growing Your Own Business, says, “Starting and running a business is a family event. Your business takes your family hostage.”

Entrepreneurs who don’t acknowledge and deal with the reality of the strain a business puts on a spouse and on a family early on are likely to have the wake-up call forced upon them down the road in the form of divorce papers and a broken family. Here are two concrete actions that can help:

Provide formal, regular updates. Your spouse is along for the ride, emotionally and financially. You might be tempted to take a protective stance provide shelter from some of the “low points” in the business. Your spouse will feel a greater sense of control and peace understanding the reality (even if it’s bad news) than they will by being kept in the dark. To some degree, you must treat your spouse as a stockholder.

One of my clients recently held a dinner meeting, with an agenda and a full review of the financials, which included his business partner and both of their wives. They had a frank discussion about how, while revenue was up, cash flow was tight because of reinvestments into the business and because of natural delays in the collection process. At the end of the night they were a unified and reenergized team of four, not because the news was all great, but because the vision for the business had been revisited and the veil that had been covering up the details of how they would get to that end had been lifted, from the spouse’s perspective.

Establish rules. The start-up phase of a business is all consuming. And it may seem like a “let-up” is right around the corner: next quarter will slow down, this new manager I’ve hired is going to take some of the pressure off of me, once I close this big client I’ll have some breathing room. Hog wash. One time demand will always be replaced by a new one. The white space you need in your life to maintain a balance with your family will only exist if you plan for it and create it. Establish hard and fast rules for when you will turn off your cell phone, how you will spend your weekends and which night you will be designated as date night.

Separate yourself from the business. Owning a business is very personal. At some point, for every business owner, the business threatens to become who you are, but you are not, and never will be, your business. As Steve Craney says,

“A friend helped me look at my business with a broader perspective. He helped me see that I’m not married to my business. It’s not one of my kids. They help me remain a little bit detached from the business — if someone were to come along and offer me enough money for the business, they can have it. That change in mindset was really refreshing.”

“As an outcome of that conversation, I decided that I wasn’t spending enough time with my two kids and I was going to set a personal standard for what that looked like in my life. In addition to the normal time I spent with them, I decided that I would make it a point to spend one week out of every year with each child. They would get to decide where. For a dozen years now I’ve had that privilege, one that I may be losing soon with my daughter who is at that age where she will be starting her own family soon. And it feels good to look back without regret and to have the memories of the time we went to Sweden together or our camping trips. My son and went to golf school together and soon we’ll be heading off to Costa Rica to see if we can’t catch a tarpon on a fly rod."

"When you do the math, that’s only 2% of my time that I’m setting aside to have that kind of experience with each of my kids, but if you don’t make it a priority it doesn’t happen."

Sunday, January 7, 2007

Horoscope Wisdom: Going with the Flow or Being Passive

Sometimes you find wisdom in unexpected places. Today’s “a-ha” moment came when I was reading the horoscope page. One horoscope in particular — not even for my astrological sign — struck a cord: “The difference between going with the flow and being passive is something only you know in your heart. One has to do with timing, and the other has to do with fear.”

All of a sudden there’s a spotlight shining on that tough conversation I’ve been putting off, that project that keeps getting shuffled to the bottom of the pile, and that staffing decision I know I need to make. Not one of those actions benefits from the passage of time. I do know it in my heart.

What are you putting off? And for what reason?

Thursday, January 4, 2007

Raw Seal Meat and the Entrepreneur’s Quandary

I recently caught an episode of Survivorman on The Science Channel. In this show Les "Survivorman" Stroud was abandoned in a remote location 400 miles north of the Arctic Circle and challenged to find his way back to civilization within seven days.

His only supplies are a broken-down snowmobile, a hunk of uncooked seal liver, a chunk of blubber for heat, a seal hook, three matches, a knife, a multi-tool, a rifle (to be used only to protect himself from polar bear attacks), 50 pounds of camera equipment and a harmonica.

Everything about the show is engrossing and, even with the fireplace on and a nice glass of Merlot poured, it’s hard not to feel his misery. A bit.

By day five, he has eaten his supply of seal meat and is chewing on the blubber that was intended to be burned as a heat source. At one point they calculate that Les has burned 35,000 calories and consumed only 1,000.

In my mind I’m assuming his biggest threat is outright starvation. Not so. A more imminent threat apparently comes from eating only lean meat without consuming any fat — it can quickly cause protein poisoning which manifests itself in the form of nausea, diarrhea, ketosis, severe debilitation and possibly death.

He had a lot of obvious things to be worried about, but I never would have thought he needed to be worried about that!

It’s the entrepreneur’s perpetual quandary — you battle fiercely against all of the elements you know, but it’s the one’s you didn’t even know where there that get you in the end.

The lessons? You don’t know what you don’t know. Eat a well balance diet, even if that means washing down your seal meat with a pinch of blubber. And figure out who your Les Stroud’s are, keep them on speed dial and check in with them even when you think you’ve got your bases covered.

Tuesday, January 2, 2007

Gerald Ford’s Legacy: Having Critics Who were Not Enemies

As the nation prepares to lay former President Gerald Ford to rest, his friends, family and peers pause to answer the question, “What is the legacy Gerald Ford leaves behind?”

Several have honored him for a unique leadership trait -- seems Ford was renown for surrounding himself with people smarter than himself and for being willing, on a regular basis, to lay himself bare in front of them and ask them for their brutal honesty.

This man, who at one point in history held the ultimate position of power, was ready at any time to be told that he was wrong, that there was a detail he was overlooking or a nuance he had not considered. He had learned one of the entrepreneur's toughest lessons: you might be responsible for FINDING all of the answers, but you'll never HAVE all of the answers.

He kept those willing to tell him the truth close to him. Better to hear "tough news" from somebody on your team and face the facts while there might still be a chance make it right. As he described it, “I am a man who likes having critics who are not enemies.”

He understood the danger that leaders face when direct reports sanitize information, filter feedback and and under-report screw-ups in an effort to coddle the boss's ego. Ford created an environment in which a wart was called a wart without coyness or delay, making it easier to get quickly to the task of applying a remedy instead of wasting time and energy camouflaging it with makeup and hoping it would go away.

His cabinet members focused their energy on doing their jobs, not protecting his ego. And EVERYBODY was more effective because of it. As Jim Collins says, “The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse.”

It’s an admirable trait, an admirable legacy, and an admirable man.

Will leaving room for critics, allowing the truth to surface quickly, be part of your legacy?