Whether you sell products or services, you sell something. Documentation of the sale and the agreements that go along with these sales are critical. What happens if a customer comes after the sale stating, “I was supposed to….”  Do you have the proof and the information necessary to debate or confirm this information? Successful businesses do. Oftentimes, you will find printed on a receipt the stores policies, they have computer systems that track the purchases and they have contracts that require signing before a product or service is delivered.

This is a common topic in small claims court. Customer states they were supposed to receive something or a verbal contract was unfulfilled, business owner states it is not within their policies or that it was not agreed upon, and there is no proof. What about the vice versa situation? Customer does not pay the remaining balance of what is owed to the company and the owner takes the customer to court. Either way, no signed contract or documented policy information, it becomes a “he says” versus “she says” situation. Unless the customer is making an obviously outlandish request, the business owner is oftentimes held responsible, or does not receive money due in these situations. The worst part is that this court case now becomes part of the businesses Dun and Bradstreet reports.

Included in this subject are also accounts receivable and payable transactions. Documenting the money coming into and out of the business is crucial. This takes us back to using capital properly. You cannot use your capital properly if you do not know where it is. There are software programs that are available to help in this process if you do not have a book-keeper, but ramifications of not organizing and recording accounts receivable and payable transactions can lead to customers not paying bills if they are not invoiced in a timely manner and IRS audits if you are not able to prove the business income and deductions.

Business owners that do not have the time, experience, or strengths in this area need to make sure the first person they hire or retain is someone who does have these capabilities in order to ensure their business’ success.

So while you are reviewing this crucial step, we will be documenting and recording the next key to running a successful business.

Education, how much of it do you need? Does every person need an MBA? If you have an MBA, does it guarantee you success? The answer to both of these are no. First, the creator of Federal Express was in the process of completing his MBA program when he wrote his thesis business plan on DHL. He received a “C” and a comment from his instructor that it would never work. Guess what, it not only worked it gave us services we wouldn’t know how to live without. Both of these people had a degree (one was about to get his degree, but close enough), one was able to see a hole and fill it and the other was not able to. The degree does not necessarily dictate whether or not your will be successful.

What the education does do is prepare you for the norms of running a business. It teaches you how to write business plans, management techniques, systems and processes, and gives you the tools necessary to accomplish the day to day challenges of running a business.

Mike was an ambitious young man who did not have the patience for school. During the ninth grade he dropped out of school to work in his father’s business. Through these experiences, he learned the steps necessary to run a business. When he turned 18, he left his home state of Texas and moved to NYC to be the first to sell security gates in NYC and the boroughs. By the time he was 19, he made his first million. So experience without education can also lead to a successful business.

The point of commonality between these two men is they did not do it all alone! The creator of DHL had a team of people that helped him implement, structure, and grow DHL. Mike understood he had experience, but not the education so he surrounded himself with advisors to keep him on track and focused on the end results. Together, ideas are formulates, problems are diverted, and obstacles are overcome.

There are so many different aspects of running, developing, and growing a business that even if one person had all the education and experience, they don’t have the time. Of course, we are always learning through books, seminars, and our experiences. However, “The difference between a wise person and a smart person is that a smart person learns from their own mistakes, a wise person learns from others’ mistakes.” Successful business acknowledge they cannot possibly do it all on their own, they take the “wise person” path.

So stay tuned folks…while you are pondering this topic, we’ll be putting together the next one.

When a successful business starts, the owners do not use their home equity, credit cards, retirement investments, college investments, or cash unless they have intentionally designated a fund to investing in a business. Why is this so? When a business begins, it is rare for it to turn a profit or provide enough income for the business owner to support themselves for a period of approximately two years. Therefore, they keep their home equity, investments, and credit cards to be able to support themselves. Most successful business owners that do not have their personal designated fund may turn to several sources such as a bank, the Small Business Administration (SBA), an investor, or even continue working at their regular job until their business is at a point where it can sustain their business.

Also during the start-up phase, successful business owners are careful to balance aesthetics of their business with the guarantee of deliverability. What does this mean? The aesthetics of a business are important. Consumers, employees, and vendors all formulate their opinion based upon their first impression or first view of the business. However, a successful business will invest less money and be more creative in creating an acceptable first impression so as not to risk their ability to perform.  In other words, instead of renting the big, glass building, they may choose a location with lower overhead and compensate through cleanliness, decorations, and character.

When a successful business expands their operations there are many more resources available to them. By this time, they may have put aside funds designated for growth which will allow them to utilize their own resources. Depending on the business’ structure, they may be able to sell stock in the company taking on investors. There are also bridge loans that are designed to help a business develop through these times. Another format of providing money for growth is through the business’ established line of credit. Some businesses sell franchises that require the purchasing business owner to find their own investment capital. Many successful business owners do not use their personal capital at this time in case the plan does not work and they are required to take less of a salary or no salary from the company. No business owner ever wants to contemplate this thought, but a successful business owner will be emotionally unattached enough to may sure that the employees, customers, and their own family are prepared and taken care of.

Planning a salary and not taking money out of the business for personal purposes is the area where successful businesses excel. There are temptations and pressures when one owns a business. The pressure may come from friends, family, and yourself to spend more money and have more financial freedom because the business makes money. The temptation is to give into the pressure of these sources and take additional, unbudgeted money. Successful business owners treat themselves as an employee of the business. This includes providing salary, benefits, bonuses that are in-line with the company’s structure and budget. This also includes pay raises and cuts when necessary as well.

Capital is a dangerous area for some business owners. What looks like a successful business that does not have capital going back into it may quickly become an unsuccessful business. If you find your business is in some of these “capital danger zones,” rest-assured there may be ways to reverse or recover. Being that each situation is different, there are too many situations and solutions to discuss in a blog post, so please feel free to contact me for a free consultation at jdesmarteau@perspectivebusinessresources.com .

So while you are pondering your capital for your business, we’ll be working on the next tip to running a successful business.

Location, why location? It is crucial to know the local news and events around your location. The area where your retail shop is located has become a higher crime area; will you get as much foot traffic? You run a restaurant and a new manufacturing plant that will employee 300 people is opening up two blocks away. How will this affect your business? Imagine opening that restaurant one morning and all of a sudden there is a rush of business that you are unable to handle? Even worse, imagine not opening for lunch that day and missing the traffic? Staying involved in the Chambers of Commerce business development group and the City Council may be a good idea to be able to help influence the changes in your location that may be good and/or bad for your business.

Each business is unique in its own way offering different twists and different strengths and weaknesses to the market. If you are in the same industry, you need to know what your competition is doing on a regular basis. How are they marketing, what are their prices, what is their business philosophy? Have they hired a new person to help strengthen a weakness? Please, do not get me wrong, this information should not be used in a negative manner or to ever bash the competition. This will most likely drive consumers straight to your competition. This information should be used to help you forecast how you will market, how you will price your products and services, and how you will grow your business. One good way to stay abreast of competition is to join a state or national chapter of your industry or associations created for people in your industry. The information is provided to make you aware of how your industry changes and operates. The conversations and relationships with other business owners in the same industry will provide you with valuable information about how things may be done differently within your business.

What about supply and demand? Understanding the market’s demands will help you keep in control of your business. It gives you the foresight as to whether or not to introduce new products or services, discontinue products or services, raise or lower prices, and what type of inventory to have on hand. Some of the ways a business owner keeps up with supply and demand are through customer communications, vendor relationships, industry associations, Chamber of Commerce, and general communications with other business owners within your area.

The reason so many successful businesses keep a constant pulse in these areas is so they are not scrambling to catch up, slowly losing their business, or dealing with disgruntled employees and customers.  They reduce the chances of missing the traffic in their restaurant, losing a majority of the market, and having a huge surplus of inventory that has been sitting in the stock room for 6 months.

So while you are doing your research, we’ll be preparing for the next key to running a successful business!

Rest assured it is not natural for business owners to be able to delegate immediately. This skill is developed and enhanced over time for many people. In the process of successfully delegating authorities and responsibilities there are three steps. First we instruct, then we coach, and finally we delegate. When an employee is taking on a new task or being groomed for additional responsibilities, they need to have confidence which comes in the form of doing the work well. Remember that your employees are not mind readers and during this time they need learn the most efficient approaches so providing them systems and processes are important. Also during this time period you need to provide short instructions on what and how to do their tasks.

Once the employee has been successful and is feeling confident, you need to move to the coaching phase. This phase includes providing more explanation of why the steps are taken. Sharing the outcomes based on these steps as well as other methods of completing these steps Describing the systems and processes affect the business, the customer and the bottom line. Delivering the aspect of understanding the business is the key deliverable during this phase.

Once the employee has both the steps and the understanding in place, we start delegating. In the being process of delegating, we are not just giving a task and hoping it will be completed. Delegation includes asking questions and being available to discuss their concerns. Instead of doing most of the speaking, you are doing most of the listening. Assign a task and ask how they feel the best method to accomplish it would be. Inquire as to what the effects of the method will be. If you find a mistake in the thought process, correct it with questions, not with an explanation or how you would go about it. The end goal is to be able to let the leadership skills develop in a way that the employee not only feels confident with their decisions, but you feel confident with their decisions as well.

Believe it or not, by the time you are to this point, delegating responsibilities and tasks will allow you to further distance yourself from the day to day activities. So what do you do with the remaining time on your hands? This is your opportunity to be able to sit in the position all successful leaders desire to be, the planner and leader. You can focus on strengthening the weaknesses of your business and developing the strengths of your business. It gives you the opportunity to continually grow the business without being disassociated from it. This is the time you can focus on funding sources for the next growth spurt, market research, employee development, or some even take this opportunity to systematically duplicate their businesses in other locations. The opportunities are endless.

During any of this process, if you feel you need or may be interested in someone who has experienced each of these phases successfully in their lives to assist, guide, or coach you through the process, please feel free to reach out to me directly at jdesmarteau@perspectivebusinessresources.com .

In the meanwhile, stay tuned for our next series, Keys to Business Success.

As business owners, we have a tendency to want to jump into every situation, help, and solve the problem. Unfortunately, our good intentions of wanting to help results in missed learning opportunities for our staff members. This is why you have the employees in positions with systems and processes, so you do not have to. It is easy to succumb to this desire, so rest assured you are not alone. You do not need to be involved in every situation because you have competent employees, strong potential leaders, and processes and systems in place now let them show you what they can do. Short term, you need to be tolerant of inefficiencies, mistakes, and struggles in order to achieve the long term successes.

As a business owner when you get involved in putting the daily fires out, you let yourself become distracted from your goals and role. So what is your role then? Your role is to make sure systems and processes are implemented, employees are competent in their roles, the business is growing appropriately, vendor relations are strong and customers are happy. When your employees and customers know you are focused on these things, it develops and maintains their trust.

So resist that temptation and only get involved when absolutely necessary. We’ll be working on the final tip to help you grow your business.

At this point you have a few different options. Option one is to let another employee train the person on the job. Many companies opt to do this because they do not spend a great deal of time contemplating the training process. Here are the big questions – the employee who provides the field training, are they proficient at their job? Are they articulate and able to convey these processes thoroughly? Will they be a positive influence and role model? Are they patient enough to be able handle a new person’s trials and errors and most important, do they have the time to provide clear accurate training to a new employee? Sometimes the answers to all of these questions are yes and this type of training works well. Remember one last question…will it be too overwhelming to a new employee to be trained in this method?

The answers to the above questions are sometimes going to be no. In these cases, you need to consider two options. Whether you will keep your trainer in house or you will outsource resources.  There are benefits to both and there are different situations in which one would need both. If you have many positions within the company that require training and ongoing learning, or you hire a large group of people simultaneously this would be a great idea. Having a person versed to be able to communicate and teach the principles, processes, and systems that your company uses fluently and proficiently can be a wonderful and valuable resource.

What happens when you are not hiring a large number of people and on-going training is not necessary? What happens when your employees are off-site or at a remote location? The good news is you have multiple solutions that are available. You have the option to send employees to a training seminar, subcontract a trainer, set up webinar training, or even create your own on-line training program. How feasible are these solutions? It depends on the situation.

As an easy example, someone in the real estate or insurance industry would not hire an individual trainer to teach all the basics of the industries. The industry itself sets up courses for initial learning and the requirements to pass exams in order to enter the industry at all. Once someone has received their certifications, they are required to periodically take continuing education courses.

A tax preparer may hire employees based on the season and how busy they are during the season. In this instance they may subcontract a trainer to work with the new employees and refresh the seasoned employees updating them on the current tax changes for the year. During the season if you see certain employees have certain issues, the trainer is available to help re-train and modify the actions of these current employees.

What if your employees are in a satellite office, work from home, or you hire sporadically? In this instance you may want to look at putting together your own course. There are many companies that offer either webinars or on-line training sessions. Many of these programs offer testing to ensure the employee is fluent in the material, but also allows the employee to go at their own pace. Once the employee is able to grasp the product training, the policies, and the existing processes within the office, then field training become easier.

So once again, while you are figuring out what type of training program is most feasible for your situation, we’ll be working on tip nine for next week!

You may be thinking, “That’s easy, we’ll just pop an ad into the paper!” True, this is one method of finding potential candidates, but is it the best way now-a-days? Let’s think about it…with the internet, how many people actually subscribe to the daily newspaper of your area? What days are the best days to advertise? Will this avenue give you a return on your investment?

If you are looking for temporary to hire people, take the time first to search the internet. Find the different agencies’ websites and make sure you are comfortable with them. Then search through search engines for reviews or comments on this company. Check the Better Business Bureau on-line for any unresolved issues or to see how quickly they may resolve issues they have.  If you check through sites such as Kudzu.com and Manta.com, make sure you read ALL the comments, oftentimes a company may see a bad review and have employees or special customers place comments to balance off anything that is not great. Although, take into consideration if there is only one bad comment out of a few that the customer may have been a bit over-demanding too.

As for hire and subcontract employees, there are a great deal of resources on the internet that will bring you a more qualified lead. Facebook, Twitter, and Linked-In are three wonderful resources alone. They are places that people are constantly networking. When you place a comment into the news feed of any of these social media outlets, so many people have the opportunity to see it. Think about this. I place a comment that I am looking to hire a new salesperson, my 600 friends see that message.  Now, my colleague sees the message and comments that he will keep his eye out or simply hits the “like” button, now all of his friends and family are seeing my post because it goes into his news feed.  In 60 seconds, I got my information in front of about 1,000 people. Isn’t that amazing and it didn’t cost me a dime.

Craigslist, Simply Hired, and Indeed are just a few other places one can go to list jobs for little to no cost. Oftentimes, there are job boards for local communities. Here in the Northeastern Pennsylvania area, we have a few that are targeted just for local businesses. We have a resource guide for job seekers in NEPA on our Facebook page for example that pools many of the quality resources available in our area. We then sponsor an employer of the week. Chances are high that there are resources available similar to these in your area if you look around and do the research.

Another avenue of looking for potential hires and subcontractors are through trade publications. An ad in a trade publication will bring you someone already experienced in your industry which may help to reduce some of the training time. Vendors may also be able to recommend people they know who are in another company and looking too.

Regardless of which combination of methods you use to find your potential candidates, you need to make sure you qualify these people.  A number of years ago, the larger companies started setting up interview processes that were four and five interviews all with different personnel. Many of us do not have the time and money to go through this sort of process. These larger companies then found the ability to scientifically assess the skills of the potential employee. This assessment gave management an opportunity to see if the potential hires have the skills and the inner characteristics to match the position and the company. This process has been almost perfected over the years and where many of us think that is not financially reasonable, it is not only cost effective, it will reduce your overall hiring expenses. If you would like to speak to us more regarding assessments, please contact me directly at jdesmarteau@perspectivemarketingresources.com or leave a comment below and we will get in touch with you.

So while, you fill your pipeline, we’ll be off working on next week’s tip!!!

There are pros and cons to each of these situations. Many of us think first and foremost of hiring. The questions that may come up are whether or not we have enough work for a new full-time hire? If we hire part-time will that person have the capability to go full-time when necessary? You need to consider when you want to hire people before the expansion or during expansion or after the work load has reached a higher demand. During the expansion process you may find that in order to grow you need to hire that person before expansion takes place. For example a sales manager who has a proven track record of growing sales departments may be brought on with the intentions of helping ignite the expansion. Other employees such as human resource assistants may need to wait until the expansion is in the process. In this case, you need to contemplate whether you will have the time and resources to interview, hire, and train someone during an expansion period.

If you feel that you do not have the time to hire and train during the expansion period, then you may want to consider hiring a temporary to hire employee. Employment Agencies help provide services to place a person in a temporary position. Their business is to constantly interview and assess the skills of people that are in the job market with a dual-goal in mind. The first goal is to be able to provide someone who fits the skill set that an employer needs immediately and secondly to help find work for hard-working, skilled potential employees. Many of the people brought in through these situations can be released at any time or brought on within the company as a full-time permanent employment after 90 or 120 days depending on your contract with the employment agency. The goal here is to acquire the necessary skill set to support your growth. However, maintain the flexibility to adjust if demand changes.

Another area of consideration is subcontracting. The most common areas people hear of subcontracting are for sales people and technicians. These people are paid for the work that is completed. For a salesperson, they make a sale, the sale is completed, and they are paid. What many business owners do not realize is there are a variety of subcontractors in the market waiting to help their business grow. Some of the positions that are available on a subcontract basis include Project Managers, Marketing Professionals, Trainers, and Human Resource Professionals. Please remember though, there is a big difference between subcontracting and outsourcing. When you subcontract, you still have more control over the work done.

So while you are compiling your list of necessary employees for and during growth, think about HOW you want to go about hiring these people.  While you are making your lists and contemplating your moves, we’ll be working on next week’s article.

Depending on what type of business you run, you want to make sure you have the capacity for the expansion, retail establishments are the easiest of course. Is there enough floor space to introduce new products or are you replacing old products? In regards to service orientated businesses, such as the home improvement industry for example, do you have enough warehouse space to house necessary supplies? Do you have enough office space to handle new staff members? Doctor’s offices, do you have enough room in the waiting area and the examining rooms?

You may find that you do not currently have the capacity to house an expansion and need more. What will your game plan be? Do you purchase more space now and relocate the facility or do you move in the midst of growth?  How does this affect your customer expectations, vendor relations, potential leaders, and processes? Remember that as you answer these questions and implement your plans, there is a longer term impact to the fixed cost side of your business. Most leases or capital projects become a multi-year expense that remains with you 3-5 years!

How much money will extra capacity cost? Do you currently have the cash flow to be able to do this? While on this subject, do you have the cash flow to add new employees if necessary? Will you make payroll if you make additional investments? If purchasing before growing, do you have the additional cash resources to hire additional people needed to move or grow the space?

Cash flow is a major issue. There are plenty of places to be able to add additional cash flow to your business. The first and utmost rule of thumb is to operate off “other peoples’ money” if possible. SBA loans, business lines of credit, and bridge loans are a few resources that are available to businesses as they grow. Each of these sources will require you to provide a business plan to show how the investment will be returned. A forecasted growth of the business based on current income and expenses and projected growth. Whether you borrow or you have the current cash flow to support the business growth, this is still a great idea to put together. With a business plan, you have articulated/detailed your vision on paper. This will allow you to engage the key employees of your business. They can offer suggestions and support the implementation.

So you review your capacity and make sure you have the cash flow available for growth while we prepare for the next step! See you next week!