The Free Consultants

Broken Windows and the zombie minimum culture

2010-08-24T10:09:00.000-04:00

I recently had an experience at an organization that had seen better days. The headquarters of the organization that were once magnificent and stately were now in desperate need of thorough cleaning, fresh paint, and light repairs. Although after using the “facilities” before my meeting, I would say those were in need of a MAJOR overhaul, but I digress. As I sat in the HR office waiting for my meeting, I noticed that the space was more organized chaos than anything else. Even the Receptionist, who was attentive, knowledgeable and polite, had a wrinkle problem with his clothes that made me think he either a) needs to do a wash, or b) like me, he absolutely abhors folding clean clothes. However, no matter how much I hate folding, I always run a warm iron, as needed, over my business clothes (for suits I use my professional steamer). Additionally the non-HR personnel I did meet had a slightly better than zombie look about them as they conducted their business. They seemed sucked lifeless by an organization that valued nothing and was the embodiment of a policy book that set a minimum “15 pieces of flair” without rewarding those who did more. As I sat there I thought two things. First, I thought how sad a state of disrepair this once prominent organization has fallen into. Second, I thought how gross the bathroom was; eye level exposed copper pipes, green and yellow tile and a trough sink. Seriously gross.

It wasn’t until about a week later as I drove through the town where the organization is located and right past the HQ itself that it dawned on me… Broken Windows! More so “broken windows theory” is what I was thinking about. I then thought if I were in charge of the HR area, I could whip that place back into shape in no time (okay in some time, but you get my point). Notice how I didn’t say “if I were in charge of the whole organization”, I said just in charge of the HR department. Why? You ask. Because in a situation such as this, a disorganized zombie culture cannot be effectively transformed from the top, but rather has to be manipulated from within. HR is the police department in the broken windows theory looking to stop the crime of murdering the souls and minds of the employees. Just like in the theory I would start by solving the petty crimes or rather, fixing the broken windows.

Step 1) Reorganize the HR office. Organized chaos is a shambolic front to have. Any potential or current employee who walks into that office should at least walk out impressed with how it looks. They should almost think, well the building itself is terrible, but HR is on top of their stuff. Clean the space up, change the feng shui

Step 2) Enforce the dress code, in the HR office at first, but then throughout the organization. Now “professionals” from around the world will argue with me on this one, but let’s face it how you dress reflects how serious people take you. My receptionist friend could have been the guy from the DOS EQUIS commercials, but with all those wrinkles I wouldn’t even ask him directions if I saw him on the street holding a map. In the HR office, people need to be reassured of the quality product we are providing. Ironing your completely acceptable clothing choices is one way to help assure them of that.

Step 3) After the HR office and staff is on the right path, I would start recruiting and hiring better for all jobs in the organization. Better is a sliding scale, for me talent is talent, but people who are going to fit the mold of professionals and organized are moving to the top of the “to hire” and therefore BETTER than those who don’t. In any event the goal would be to fight the zombies by bringing some life back to the organization.

Step 4) Lobby top management for the funding to have the bathrooms fixed. Now I know in this day and age financial capital can be put to better use than upgrading bathrooms, but as part of the plan to fix the broken windows this has to be the next step. The bathrooms are the only common thread of space between all employees and all visitors to the office, including potential new hires. As any college sports follower knows the better your facilities the more likely you are to have better recruits playing on your team!

Step 5) Zombie management interventions. What are these you ask? Most people know them as management training. Let’s face it, we all tend to manage those beneath us how we were managed or the complete opposite from how we were managed. That means for all the different classes of management in the text book, most people are only using the 2 they know about somebody else’s or the opposite of someone else’s. Neither of which may be a good fit for them as managers or the organization as a whole. By intervening and looking for ways to improve management, their might just be an opportunity to breathe life back into the existing employee base.

Those are just the basis for fixing the broken windows and changing the zombie culture at this particular organization. However, no matter the situation I believe that HR has to be the driver of organizational change. So let me ask you loyal readers… is it HR’s failure that leads to these types of organizations? Is HR the right place to start fixing the broken windows?

You are either growing or you're dying...

2010-07-08T16:33:00.000-04:00

As Big Tom Callahan says about business in the movie Tommy Boy "You are either growing or you're dying. There just ain't no third direction." The recession has made everyone in small business painfully aware of this new reality. Now I know that that recession is hard for small business owners, my wife is a small business owner and it is tough out there. Capital is all but gone, costs are increasing, and sales are harder to find than ever before, but that doesn't mean your business has to die. In fact if you are still in business your company was growing and you probably didn't even know it.

Most small business owners will probably think I am crazy for saying that, but the reality is what impedes growth is a lack of understanding as to what "real" growth is and how to find it. For most business owners, growth is a tangible result measured against some benchmark on the space time continuum, e.g. growth of sales over the previous quarter. However, what if "real" growth was intangible? What if "real" growth was measured as the ability to stay in business? Would you know how to recognize areas of "real" growth in your company? Probably not, but why?

The reason why is because the business world doesn't measure upticks in creativity and innovation, so most small business owners won't either. However, I challenge you to think about your business situation for a second... Over the past 18-months have you been able to do the impossible and keep the doors open? How? My bet is that you have done it through looking beyond the tangible and focusing on the perception of value derived from creativity and innovation, I know my wife has. She has changed the intangible things about her company. She changed the model, method, and overall strategy of the business she got into as the recession started.

Now, I know what you (and she) are thinking, you're thinking "I kept the doors open and lights on because I slashed payroll, cut costs, incurred additional debt and did it all because my sales were down... which are tangible" and it doesn't take a genius to recognize that is the opposite of growth in the traditional text book sense. However I ask how did you slash payroll? How did you cut costs? My wager is that you intuited or perceived value (an intangible) in people (cut him but not her) and costs (kept the water cooler, but lost the fresh flower delivery) in a way you had never done before. You recognized that to keep the company "growing" you needed to cut back and change things. You realized in order to survive your company has to be more responsive to customers. It has to be doing business with the right vendors. It has to be more creative. It has to embrace innovation and it has to do all these things to buy yourself another day in business. So to put it back into traditional growth terms, despite all the cutbacks your company is still growing one day at a time. It would have to be, or else you would already be dead, because in business there really isn't a third direction!

How did you grow to survive the recession? Where will you grow when it is over? Leave a comment and let me know!

Are you a good boss?

2010-05-24T14:16:00.001-04:00

Across every organization, in every industry, in every country the questions of what makes a good manager will be a hot button issue. Books on management and leadership are produced almost daily not to mention that annually academia produces volumes on the theory of leadership and management. I even threw my hat in the ring with a Master's Thesis titled "A Study of the Context in Strategic Leadership" however what set my thesis apart and sets my views on management apart from others is I don't believe that there is one "perfect" way to manage or lead people. In recent posts where I attempt to interpret Sun Tzu's five failings of a general and in my posts on why we as managers are bad at making decisions Part 1 and Part 2, I argue that we are all victims of our own limited cognitive capacities as human beings.

While I don't believe that one type of management is better, I do believe that there are good manager and bad managers, and as my thesis would argue it is all based on the context of the context... (If anyone wants a copy of this I can e-mail a bulky PDF upon request). So what do I mean when I say it is all based on context, well consider asking yourself, Which manager in the past did I enjoy working for the most? Why? What was happening in my personal life? What was happening at the organization? What level of work was I at? If you answer those questions honestly you can begin to see maybe it wasn't so much that they were good managers, but that the context in which they managed was positive. You can also replicate the questions in the negative sense, as in why did I hate my old boss?

However while I don't think one style or type is better, I do believe that there are some definite things every good manager should understand... in context of course.

1) Understanding that customer service flows through the organization, not just out of it. As Vineet Nayar puts it into action at HCL, employee's first, customers second. If a manager can understand where in process the work being done by his or her employee's comes from and flows to next, they will be better at addressing the professional needs of their employees.

2) Understanding that while it may rain down from above, a good manager is both an umbrella and a cumulonimbus cloud. A good boss should protect their employees from unnecessary rain and take the brunt of any STORMS that may be headed their way. How many of us can say we didn't like a boss because anytime he or she got into trouble he passed the blame down onto us? At the same time we all love a boss that "goes to bat for us". That said even if the boss goes to bat for you, they should be prepared to rain down thunder and lightning on under-performing employees. A better way to describe it would be that a good boss doesn't let anyone else punish their employees, but is always prepared to punish them if they are at fault.

3) Understanding that being predictable isn't always a bad thing. As any Psychologist can tell you, people are confused by people who have unpredictable reactions. And as any management text can tell you, if your employees are confused you are not doing so well as a manager. The implication for business is to simply try and have a consistent reaction, or at the very least a predictable reaction. If you lash out because a report is filed incorrectly on Monday, and then play it off as no big deal on Tuesday, then no one can tell if it is a big deal or not a big deal because you created ambiguity. For example at an early point in my life as a manager two of my employees didn't appreciate each others personalities. In fact both contacted me minutes apart and said I need to do something. I told them both the same thing, "This is a personal matter, it is not a business matter therefore as your manager I will listen to both your personal complaints, but only rule that you both are liable for not doing your work today. I will only get involved in matters of business, and the interest of business will decide all matters." By doing this I let them both know what they could expect an honest open door as a manager but I removed all ambiguity from the way I would deal with personal and professional matters.

4) Understanding that it isn't personal, it's only business. Just like in the Godfather, you can never react to employee issues personally. If you do, you are done. In the example above, I could have easily told one of my employees who was truly just stirring up trouble, that she was wrong, and she was the root of all the problems in the department. I wouldn't have been lying either. However if I had done that I wouldn't have been able to increase their individual work load with out being rebuffed, nor would I have been able to lighten another person's workload in the department without being accused of playing favorites. However by sticking to business, I maintained my ability as a manager to manage as I saw fit.

5) Understanding that just because you are the boss, you didn't instantly become a genius. This is probably one of the hardest concepts for managers to understand. For example as a result of the above mentioned personality conflict, I brought to my staff the idea of buddy lunches. In theory it sounded perfectly reasonable, one day a week you rotated and had to eat lunch one on one with another person from the department. It seemed like a good idea especially as I tried to break down the "cliques" and personality conflicts in the department. However when presented with the idea my employees kind of chuckled at my idea and told me in unison that this wasn't primary school and they didn't need a required lunch buddy program. Now to be sure I had already spent a lot of time on developing the rotating schedule and fitting it into their work schedules. I was also more than a bit embarrassed to be told that this wasn't "primary school," but instead of ramming my idea down their throats because I could. I simply said fair enough, but we have got to come up with a better way to break up the "cliques" and all work together. They came up with their own solution amongst themselves and it seemed to work.

A manger who understands these 5 things is more than likely going to be labeled a good manager by the majority of their employees. Wouldn't you agree?

The trouble with RISK...

2010-05-05T15:01:00.001-04:00

Unless you have been under a rock lately you have heard of the two biggest events in American (well technically BP is British) business since the recession began. First, Goldman Sachs and those lads there engage in some legal but unethical practices. Second, BP manages to sink a deep horizon oil rig in the Gulf of Mexico and recreate the Exxon Valdez incident only on a much grander scale (I swear if this accident is the result of a drunken individual all oil companies should require mandatory twice daily breathalyzer tests). However, while there are countless ways that these events are different. There is one major way in which they are similar. They are similar because of the risk.

Now we can all agree that drilling for oil, two miles below the surface of the ocean, or gulf as it is in this case, is decidedly risky. And we should all know by now that investing in anything is also inherently risky. However knowing something is risky and truly understanding the risk that goes along with it are two entirely different things. The difference between knowing and understanding risk should matter to anyone owning, managing, or operating any business. The reason being that assuming you reduced all the risks or assuming that an event won't happen leaves you no room to maneuver if it does.

As an example, I will use the NASA model of successful risk management... there is no absolute, there is only probability and possibility. For example, they launch people into space knowing that 1) They may never make it, 2) They make it but something goes wrong up there, 3) They make it, but then they can't bring them back (see Columbia Tragedy) 4) They make it, they make it back, but something goes wrong down here (see Fantastic Four) or 5)They make it and they make it back safely. Those are all the big picture risks that exist in manned Space exploration which by my simple math equates to a 80% chance of complete failure. Would your company take on any project that had only 20% chance of success? How then does NASA or anyone operate successfully within such a risky environment? I argue that are successful because they understand risk to be inevitable and they have a reaction plan for everything.

Therefore in order to move beyond knowing the risks towards understanding the risks there are three things to do, which apply to EVERY business decision:

1) Create a plan to mitigate the risk of everything imaginable. Really and truly think Independence Day alien invasion, think hurricanes in Iowa, blizzards in Egypt, and meteor impacts. Once you are done, think smaller, think tornadoes, think power outages, think floods like Nashville. Once that is done think even smaller, think CEO heart-attack, think computer viruses, think office fire. And so on and so on until you think you have covered it all. Then once you are done with that reduce the risks from the minutiae up to through alien invasion, the risks associated with a fire, flood, and meteor strike are likely to be similar (building location for example) but not the same so by starting small you should be building a base of mitigation for larger events. The most important thing to remember when doing this is that you will miss something. You might mitigate the risk of an office fire by installing a fire suppression system, but what if the system is down for maintenance. That should help you see the importance of step 2.

2) Create a plan for what happens after the Aliens invade, the fire burns down the building, and your CEO chokes on a peanut M&M. By doing this you allow for the possibility of something you didn't think of from happening and you have a plan of action in response. This is what is known in the biz as a business continuity plan, however that sounds like a one and done sort of thing, which isn't helpful. I like to consider it more like a base set of ideas of what to do should the CEO not die, but merely be incapacitated. Now this is where semantics takes over and a lot of people give up on risk analysis. If the CEO is incapacitated but not dead then we should do this, but if he is this, then we should do this etc. However when aspects of risk begin to delve into semantics, reconsider NASA, there is only life or death that defines success and failure for them, you should have a similar big picture definition of success and failure. This way you won't bog down in the infinite semantics of "what if."

**Update, in items 1 and 2, be sure to factor in the Human elements of risk as it plays on your greatest corporate capital, the employee. As this post points out, how you manage employees in a post calamity environment is extremely important. I mean nothing would be worse than a risk related event coming full circle by losing the employees best equipped with the knowledge and skill to improve upon whatever brought about the risk event in the first place.

3) Review steps 1 and 2 often. As Goldman Sachs found popular opinion changed. As BP found out, the technically impossible happened. If you review steps 1 and 2 at least bi-annually you won't prevent the risk of the epic fail, but you will reduce its probability and its effect.

5 simple rules for understanding millenials...

2010-04-16T14:32:00.000-04:00

I recently had a conversation the other day with an HR professional who had read my recent blog post on social networking and the benefits it can provide HR. While she agreed in principal that it can have an impact, she relayed a story of how misuse can damage personal and or professional reputations. She relayed the story we have all heard of a CEO who tried to "connect" with the employees by taking down the stodgy business suit "year book" photo that was his profile picture and replaced it with the picture of him camping in jeans and a t-shirt holding a PBR (I still don't understand the hipster resurgence of this swill, but I digress) in one hand and a fishing pole in the other. She then went on to say how this attempt to connect backfired and ended up hurting his personal and professional reputation in the company. She agreed that while HR should not be trolling the Internet for "gotcha" pictures of employees, it is a fact that people forget how conspicuous you really are on the Internet and how by default we make assumptions about people, companies and places as a result of what we see. The old "first impression" argument for controlling social networks from the HR perspective. Now I think many or most of us will all agree that this is a very valid argument. However her remarks got me thinking; What if this view doesn't apply to the "Millenials"? How then does a company make rules and govern people who have a fundamental disagreement with the rationalization of the rules?

My argument is that Millenials, which apparently I am one of according to the date range, have grown up with a level of connectivity which no other previous generation can imagine. As a result, the old norms for communication have been overrun by hundreds if not thousands of one off exceptions to the rules. For example, think about the old protocols such as the 8am-10pm phone call policy. You know, the protocol that says you should only call someone at home between those hours, and that any calls outside that time had better be the result of a life threatening emergency or death. Now imagine that a text comes in at 11pm from a friend, or an e-mail from a colleague in Europe comes in at 5am where you are but 10 or 11am where he is. All of a sudden the old rules don't apply because the phone never rang, and now an exception has been created. As Facebook, Twitter, and other social media and social networks progress we will reach a point where no practical rule exists, because there are hundreds of exceptions. Right now I will argue that the exceptions are the only rules Millenials know. How can that not be the case when nowadays parents and kids text each other to coordinate times, dates, events, pick-ups, drop-offs, etc?

However as an older Millenial, I know the old rules. I am used to literally being told stories of my parents party antics. Of having to call friends when I got home to tell them about what ridiculous thing happened while I was on vacation. In essence, I was told and would share the same stupid, job jeopardizing, PBR drinking stories, but the technology of the day provided an appropriate filter since I could only connect to people one at a time. Current technology provides no such limits and most younger Millenials don't expect it to nor do they care that it doesn't, because it never has. Thanks to standard technology I can now take a video of my friend/coworker doing something that isn't exactly legal, tag him in it, and post it to the wall of a friend who would laugh same as me if only they were there. All that can be done in the exact instant it is happening, aka real time. For the most part my friend/coworker won't care, nor will the mutual friend who received the post, and nor will I as the person who posted it. However if our corporate HR finds it or perhaps someone trying to hire me or either one of my friends sees the video then we are cooked. If, for arguments sake, we were employed then HR would call us in, explain to us that we were wrong, that we damaged our reputations, damaged the company and likely punish us for doing what is normal and natural for us to do. Going further this reaction from HR towards us results in animosity, a feeling of being disconnected, ostracized, a little embarrassed sure, but mostly we would get frustrated because we didn't do anything wrong. Or maybe we know we did "wrong" but we didn't do anything we haven't been allowed to do since we were old enough to be left on our own by our parents.

And that's just it... most of today's policy makers who I will argue mostly come from the Baby Boomer generation, didn't have the technological capability to instantly shatter their whole careers. Let face it the lord knows if they did have the ability they probably would have. So in an effort to find the middle ground I offer up some social networking advice for Millenials and those tasked with setting policy for them.

1) As a policy maker, don't assume Millenials know better. As I show above in many instances they know right from wrong in terms of legal and illegal, but not as it relates to damaging their personal and professional careers. The rules, filters and limits of even just a decade ago no longer apply.

2)As a Millenial, think about what or what you don't want people to know about you before you post anything. Most Millenials won't fall for a Phishing scam, where most non-Millenials will. Why? Because Millenials have been online since birth, they know better than to provide instant access to their bank accounts, social security number etc, but they don't always know that the funny photos of them playing "Edward 40-hands" over the weekend can be just as damaging.

3) As a policy maker, think about the possible exceptions to the rules before you make them. As I recently expressed to someone, most policy is made under the idea that what is good for the goose is good for the gander, but it forgets that ducks and swans inhabit the lake too.

4) As a Millenial, no matter if you are a goose, swan, or duck, when you first get into the water (job market) take a cue from nature and swim behind the mother (your boss), it is for your protection. Or in other words fall in line, at least at first, because you may not be fully aware of the dangers that exist.

5) Finally whether you are a policy maker or a work force Millenial try to understand where the other person is coming from. Generation gaps are no different than any other demographic marker, you should handle it like you would handle any other "diversity" issue... with respect.

Using social networks to improve HR

2010-04-10T18:44:00.000-04:00

Do you twitter? Do you have a Facebook page? a MySpace page? How about a linked in profile? If you are like a lot of people you answered yes to engaging in at least 2 or 3 of the above social networking activities. Now we have all read news articles online or in print that speak to how closely companies monitor employee's social networking involvement. As a matter of fact just today on Yahoo Finance I linked to an article titled "6 career killing Facebook mistakes." This got me thinking, I have never read or seen one article which doesn't have a similar death-knell headline for how HR seems to view social networking. Now I am sure there are articles and countless examples of companies which have embraced social networking, but for the most part the articles I read are about how participation in social networking can get you fired and in some cases if you do it the right way, get you hired. But what about the areas of HR between hiring and firing? Can social networks actually make an organization better? Below is a list of arguments as to why companies should be mining the social networks of their employee's not policing them.

1) It can promote communication within the organization. Often times company structures limit the interactions between employee's of different departments, however people from different departments may have social relationships which promote or facilitate corporate communication. In HR there is a lot of buzz about people known as boundary spanners who have social skills that allow them to bridge gaps in organizational knowledge, just by being social. These boundary spanners exist and are important... I propose that social networking sites are ready built boundary spanner's. In so much as interoffice communication between two departments may be limited, this "superoffice" (my term) communication is boundless.

2) Information can be passed around quickly. We all know that Twitter got its start as a way to pass information around in 140 characters. Does anybody remember when Twitter went mainstream in 2008 after the journalist/UC Berkley student in Egypt went missing the guy twittered that they had been black bagged (arrested) with his phone in his pocket. Within a few hours his family, friends, and local congressman back in the States knew and were diplomatically getting him released (here). The fact information moves that quickly is not new, people trying to harness the power of the information is not new. HR in your company using the power and speed of social networking to do something besides share news or policy... may not be new to some, but it doesn't seem like an optimized use of the power or speed of online social networks.

3) Evaluation of corporate culture. If your company is like most, it has a mix of seasoned veterans and new energetic new hires. However the ways of old and beliefs of youth often clash within a company's culture. If you continually see disparaging posts against the experienced veterans by the young hires in your company, there is a high likelihood that your company culture could be changing or that your culture is resistant to change. Reciprocally if the old veterans are tweeting and posting against their frustrations with the new hires, there may be cultural conflicts, or maybe problems in the hiring process. In any event HR departments should read the posts, follow the tweets, and consider them to be the barometer of corporate culture.

4) Identifying weaknesses in HR programs, policy and effects. If you are able to read the posts and the tweets and see the pictures of your employees you are getting unprecedented access to true corporate capital. If the tweets are negative about the organization or about how people are dreading the upcoming training or how pointless the performance review process is, you have more valuable information than you are ever going to receive from a formalized 360-Feedback program. Based on the information you can respond to the comments by changing the way you do things. If training is universally panned, you should update the training. If performance reviews seem meaningless, determine a way to change them and give them meaning. If your employees are posting and tweeting about how awful the company is to work for, well then there is a bigger and more serious problem going on and HR should be prepared to address that.

5) Recruiting, headhunting and hiring. Obviously corporate recruiters have found linked in. I am pretty sure the high priced consultant/recruiters have figured out a secret though, disgruntled employees looking to ship to another company may be posting away "anonymously" in blogs. Just because he or she may hate their current job, it doesn't mean they won't love their next one, especially if they tell you exactly how to make the next job better for them...

For better or worse social networking is here to stay. Companies should embrace the benefits beyond the showroom floor and begin to use the unprecedented look into the lives of employees to improve operations. I provided 5 ways that it can be done, how many more exist?

Know the limits of your management skills (Part 1)

2010-03-16T16:01:00.000-04:00

Many small business owners are familiar with Sun Tzu’s The Art of War and its implications about business. On the whole as a management text it has fallen out of favor with most people in business for its aggressive comparisons to war and the not so easy to apply when not engaged in an actual war tactics. However while both points may be true, many aspects of the text have real relevance for managers at all levels of an organization today. For the purposes of this blog I will focus on the ones related to being a strategic leader.

In the text, Sun Tzu states “there are 5 dangerous traits of a general” that will always lead to their downfall and the downfall of their army. More important than this however is the fact that Sun Tzu doesn’t mention redeeming traits of generals, he doesn’t offer solutions or recommendations to overcome these traits. Instead of Sun Tzu offering ways to become a better general, he offers the best advice about strategic leadership that I have ever come across when he simply says “they must be examined.” The reason that it is such great advice is that these traits are personal and inherent and cannot be overcome completely. The best you can do as leader is identify which trait you are the most prone to and try your best to check yourself against them. However since the traits are personal how you check them will be up to you, but in part 2 of this blog on the topic I will provide some techniques to try to check them.

In an effort to examine the traits like Sun Tzu said I will offer you his words, my interpretation of them for business leaders, and then offer a couple of personal questions to help you determine your most likely “dangerous trait”

“He who is reckless can be killed” – In other words think before taking action. Do you charge head first into difficult tasks? Has anyone ever complimented your “bulldog” style of management? Have you ever been assigned to clean up a department or business?
“He who is cowardly can be captured”- If you don’t act like a leader, no one will support you. Do you have a hard time making tough decisions? Are your subordinates walking all over you? Have you ever had to carry out a decision made for you?
“He who is quick-tempered can be insulted”- Getting mad and getting even are only distractions. Have you ever used an axe to swat a fly? Do people at work really know how to press your buttons? Do you burn bridges?
“He who is moral can be shamed”- Taking the moral high road is great, but you are not always the authority. Do you publicly criticize other people’s management decisions? Do you often say the best way to lead is by your actions? Does the balance of right and wrong guide your every decision?
“He who is fond of the people can be worried”- Lead your people, don’t let your people lead you. Do you worry if your subordinates like you? Have you worked harder to cover for an employee? Is popular approval more important to you than the tough decision?

My dangerous trait is morality. I think I make the best decisions in the world, I criticize others and I base my decisions on what is more morally right than wrong. What is your dangerous trait? How would you attempt to overcome them? Remember to come back for part 2 of this topic and I will put forth some potential techniques for checking yourself against these traits.

Innovation... That's not a bad idea!

2010-01-17T10:39:00.000-05:00

Only 47% of senior executives see their companies as more innovative than the competition, and 17% concede that they're even less innovative than peers, according to an Ernst & Young survey of C-suite executives at firms with revenues of $50 million to $5 billion. Among the most frequently cited innovation challenges are lack of appropriate personnel (48%) and "lack of a big idea" (41%).

Source: Ernst & Young

We all want to build an innovative business, but we don't think we have what it takes within our organizations to do. Add to that at the same time we don't follow through with what we need to do to actually innovate. If you feel this way, the following are all the ways you can promote instead of stifle innovation in 2010.

1) Help others innovate- Too often we find ourselves as business leaders telling those in our organizations to come up with innovation and as soon as they do we ready our rifles and shoot them down.

2) View innovation as a core business product- You would never stop making your product better, why would you stop making your company better?

3) Innovation isn't just a way to improve sales- Innovation can come from anywhere, a new quality control procedure, a new more efficient way to file important information, a better system of procurement; if these things make your company better, they are all forms of positive innovations!

4) Support innovation- After you have broken the habit of shooting down innovative ideas (see #1), they still have to grow. Think of innovation like a seed. You can simply plant it and hope it grows, or you can water it, give it nutrients, make sure light shines on it and make sure it grows.

5) Don't handcuff innovation- Really #4 and #5 could be combined, however sometimes we support innovation, giving it time and space to grow, but then handcuff the growth by giving it unrealistic time lines or require it to meet impossible metrics. This isn't to say you should fund all innovation to the hilt, but be realistic with your expectation for innovative ideas.

6) Reward innovation- Innovation makes the company better. If someone attempts to innovate and it doesn't earn or save $1, don't punish the innovator as a failure. Creating a culture which rewards innovation will make it easier for employee's to bring better ideas to the table.

7) If at first you don't succeed, keep trying- No innovation is perfect right out of the box. More than this, not every attempt to innovate will be successful. However simple law of averages says the more innovations you support, the more likely one or more will be a success.

2010 and The Partnership Revival?

2010-01-10T10:33:00.001-05:00

This year all of us are looking for ways to grow our businesses to recover some of what we lost in 2009. One way to grow a business that often gets overlooked is a partnership. Many small business owners avoid partnership like a plague because of past experience. We have all had a business deal, class project, or personal relationship that has soured our view of partnerships. Whatever the reason for your partnership-phobia, '09 put a lot of us in the same boat trying to generate business with little resources, and joining a partnership will allow you to do just that.

For those who may be unfamiliar with the concept an effective partnership offers many benefits to a small business owner, but the 4 biggest are listed below.

1) Partnerships don't result in the loss of decision making control- In a partnership both companies agree to help each other, but no one has to give up control of their own company. If company X and Y partner with each other, partner Y can't influence the decisions of company X and vice versa.

2) Partnerships focus on your core- In an effective partnership both partners should be focusing on their core business methods. As a result neither company has to dedicate "additional" core resources to the partnership to receive benefit.

3) Partners can come from anywhere in your channel- Good partners are not always companies in your specific industry. Partners can be your suppliers, your competitors, or other companies who share your customers, but don't provide the same products or services.

4) Partnerships have no upfront costs- An effective partnership provides benefits to both companies as a result of the collaboration. If one company has to pay upfront to enter into a partnership there is a fundamental flaw with it. Now this is not to say that a company can't receive compensation as a result of the partnership, my company provides financial incentives to our partners when their effort results in a sale for our company.

Ultimately every partnership is unique and can be structured to take advantage of all kinds of business needs. Cost cutting, revenue boosting, entering new markets, are all reasons to enter a partnership and are all problems we are trying to solve in 2010. So as a small business owner don't just assume you have to spend more or work harder to see results. Take the time to find a suitable partner and you might be surprised to see that you are working harder because you are back to being busy!

Incentive pay... Are you rewarding the right behaviors?

2009-12-13T21:01:00.000-05:00

A few years ago the bank I worked for handed me our incentive plan and asked me to find out why we paid out more than ever, but our revenue and profit did not justify that level of payout. In the review I conducted I discovered that the plan could be and was being leveraged to maximize incentive pay without actually doing much work. The reason this could happen was that the plan did not reward the right behaviors. So as you get set to pay your 2009 incentive plan, ask yourself does my plan reward the right behaviors??

The quickest way to tell if your plan is rewarding the right behaviors is to look at how much you paid out in 2008 and how much you are paying out in 2009? For most of us the incentive payout should be lower this year than last year, because well, this year was terrible for most of us. However if you did manage to have a better 2009 than 2008 here are a few more questions you should ask about your incentive plan.

1) Is your plan too simple? This question could better be phrased "Are you paying people to simply do their job?" The key to an effective incentive plan is that it should reward effort above and beyond the normal job description. If you have a sales goal, it is fine to reward an employee who meets the sales goal, but you should be rewarding the employee who exceeds their sales goal by 100%, 200%, etc. more.

2) Do all the behaviors you are trying to incentivize work together? It sounds silly, but if you are incentivizing more than just sales you should make sure that everything else you provide an incentive for works together to maximize the benefit to the organization. For example if you incentivize sales volume and sales margin, make sure the bigger incentive payout is on the sales margin. This prevents your sales team giving away the business just to make a sale. In this way the behaviors work together because making more from each sale is more important to the success of the organization than sales volume

3) Are sales and service being rewarded equally? If sales and service are equally important to your organization than you should be incentivizing both behaviors equally. All to often an organization provides incentives only for increasing sales but has a slogan or mission statement that touts excellent service. If service is your mission, it should be part of your incentive plan in some way.

4) Lastly, is your plan too complex? A successful and effective incentive plan should be easy for your employees to understand. An effective plan allows your employees to know and predict what their bonus is at any given point during the year. If a plan is too complex or too confusing for an employee they are less likely to put in an effort worth incentivizing.

As you answer these questions about your incentive plan you should get a view into where it may be improved. If you make the improvements, you may find that you get more effort from your employees and are spending less to maximize that effort. If that happens than you are rewarding the right behaviors and giving your organization a better chance for success in 2010.

Customers... Do you really know who they are? Part 2

2009-12-09T23:16:00.000-05:00

Knowing who your customers are will only get you so far. Once you know them, you have to keep up with them, or rather stay one step ahead of them so that they stay your customers for a lifetime. You can accomplish this in 3, easy (okay not so easy, but totally doable) steps!

The first thing any small business owner should do once they get to know their customers on a personal level is continue to build and gain their trust. As mentioned in part 1, the more customers trust you the more they will reveal about themselves personally (as it pertains to your products). One way to do this is through the use of a "loss leader" or a "freebie". This helps solidify to your customer that your interactions are more than transactions, they are a collaboration of "friends." In my industry, I do not want the Chief Marketing Officer of a Fortune 100 company to consider our relationship a transaction. I can't afford for that to happen so I always make sure to invite them to other conferences for free as my guest, not as a speaker or panelist. In this way I can demonstrate my personal relationship with them by offering them a chance to come to an event on a topic that they expressed interest in during our casual conversations. Most times they accept and even when they don't they appreciate me focusing on them, going beyond "good service" and closer to "good friend." This way I can continue to tap them as a resource to continue to gain personal insights about them as customers. As a small business owner you can use yourself as an example of how important trust is. The next time one of your "suppliers" comes by for a sales visit, see how you feel about opening up personally. If you feel like you are willing to open up to them, you can provide first hand validation of my point, and you can also see just how effective some salesman really are.
After you build trust with customers and have gained a personal relationship with them, you need to use that information to reach new customers. The most effective way to reach new customers is through the creation of a single global marketing message based on similar personal factors. By this I mean using the personal information you mined from your customers to create one consistent message that never changes at its core. For example, in my organization, putting on high-level corporate events is what we do, but we market that only high-level corporate people will be in the audience, which makes our events more peer-to-peer than our competitors. Therefore we focus our marketing message on this peer-to-peer aspect based on the idea of like minded people wanting to interact with other like minded people. Despite the fact that we put on events that span all aspects of business and every inch of the country our message is that it will always be peer-to-peer. While this may seem like a simple task because our target group is so focused, it is no different than what McDonald's does with its "I'm loving it" campaign or Nike did/does with "Just do it".
By now you may be noticing that a key to effective marketing is understanding that customers are similar. This "key" is both true and false because while human sensibilities are diverse, but what consumers want is not. A global theme like "I'm loving it" or "peer-to-peer" plays to the similarities, while how we convey that message plays to the diversity. In this way you can bring back in the dynamics of personal customer information and continue to break it down into smaller and smaller units. For example Nike manages to market shoes to older people by focusing on the quality of their product and how durable it is so that you can always "Just do it." While at the same time they can market to younger people by focusing on individuality and allowing them to "Just do it" their own way. In this way they market to two completely dissimilar customer segments with the same single message. However in order to reach these groups they have to know that young people are personally motivated by uniqueness, while older people are more likely to be focused on quality.

As a small business owner you may never be able to market as effectively as Nike or McDonald's, but getting to know why your customers come to you, may get you closer to "over a billion sold!"

Customers... Do you really know who they are?

2009-12-06T22:04:00.000-05:00

With all the things small and medium sized businesses must focus on, it is easy for things to get overlooked. One of these is knowing exactly who you are selling to. If you ask most small and medium sized business owners, they would likely give you a target group, demographic or market segment. However, if you asked them to describe in detail a target customer by combining more unique or personal factors of specific customers, they would be hard pressed to do so. This lack of pinpoint focus on who an organization’s customers will sure to limit their ability to market even the most life altering, must have product, effectively.

In my position of coordinating conferences, I interact with some of the most influential Chief Marketing Officers in the country on a daily basis. Knowing who their current and potential consumers are is one of the key points that we always end up discussing. This involves a very complex process that most small and medium business owners cannot afford to do at the level it needs to be done at; however, it does not mean it should be ignored. Reaching out to your customers and building relationships with them, so they are open to sharing personal information process will allow you to gain an insight in to their behavioral trends and psychographics in the same manner Fortune 500 companies do on a mass scale. While this sounds like a daunting process that most small and medium sized businesses don't have the skills, resources, and human capital to delve that deeply into (congratulations if you do though), getting to know your customers can be done by every business.

Furthermore it must also be remembered that getting to know your customers is an ongoing process. Throughout your organizations life span, the product or products you sell, along with the needs, wants and interests of your consumers will change. However a successful company will maintain enough flexibility in its marketing so that it can grow and accommodate the changing demands of their consumers. This can only be accomplished by reaching out to them and by building relationships with them. By considering the interaction between your business and you customers as more than just a sales transaction, you will afford yourself the chance to learn your customers. It is pivotal to develop a relationship with them so that you are able to ask customers honest questions about their spending habits, current interests and what they are noticing about your business as an outsider looking in. Obtaining this type of personal information will allow you to gain an insight in to their behavioral trends and psychographics in the same manner Fortune 500 companies are able to do on a mass scale, but for a lot less.

Brian Dershowitz Background

2009-12-06T21:22:00.000-05:00

This week we have the first guest contributor, Brian Dershowitz. In keeping with the theme, I am posting his background and qualifications as a contributor to a Small Business consulting blog.

Brian Dershowitz is in the unique position of working as a senior content associate for a small conference company through which he interacts with the senior management of Fortune 500 companies. In this capacity, Brian coordinates the editorial and sponsored content of high-end business conferences, in every major metropolitan center, geared towards Chief Marketing Officers, Chief Legal Officers and Chief Human Resources Officers. This experience has allowed him to gain a keen insight in to the inner workings of the largest companies in the country while dealing with the challenges of working for a start-up. Brian holds two Master of Science degrees in Sport Psychology from Purdue University and Sports Management from New York University. Currently residing in New York City, Brian is also the co-founder and Associate Editor of an internationally distributed urban lifestyle and graffiti magazine which also includes a clothing line and sneaker brand.

Decisions, decisions... why we are bad at making them and what we can do to make better ones for our businesses. (Part 2)

2009-12-02T00:42:00.000-05:00

Have you ever made a decision that you felt in your gut was right? Has that decision ever ended up being wrong? Have you ever made a decision that went against the evidence? How about that time you made a decision because all the alternative decisions someone else put together just weren’t good enough? If you answered yes to any (and all) of these, you have fallen victim to your own cognitive shortcomings. In a more scholarly sense, the things that made you be you tend to all come together to give you biases in your decision making process. The ability to perceive options, choose between two scenarios and even sifting between good and bad information are all a part of the cognitive process in the larger process of decision making. Unfortunately these same abilities are tainted by past experiences and are enhanced when a “bad” decision ends up being a “good” one.

More than this, the cognitive process gets even more complex than could ever be truly imagined. The whole field of psychology is dedicated to understanding it. To simplify it for this blog, suffice it to say that your cognitive skills are impacted upon by things from your mood to your ethics and all points in between. Essentially all the things that have anecdotally but not empirically been proven to impair or cloud your judgment really do have an impact on decision making. As a result the strategic decisions we make are rarely ever made to the highest effectiveness possible. The idea of fully evaluating information, comparing alternatives, and selecting the best option is nothing we can truly achieve.

That said there are a few tips which can help you make the best of your personal cognitive shortcomings:

•The first thing that can be done is to know that these biases exist. Realizing the strategic decision you are making is more about controlling your cognitive process than it is about accurately evaluating pertinent information is half the battle.

•Secondly, simple cognitive mapping, making a linear sketch of how you arrived at your decision, can mitigate the risk of your biases. It should, when done effectively, be a road map to the decision which anyone could pick up and lead them to the same conclusion given the same information. If the cognitive map is done less than effectively there will be points along the map which you will still be justifying to yourself. If that is the case than somewhere in that gray area is where your biases have taken root. If possible revisit the information later to fix the map and make the best decision. If that isn’t possible and I will concede it often isn’t, know that your strategic decision will hinge on your evaluations in the gray area.

•Finally, make your decision. While cognitive mapping of the decision may take time, it is not meant to lead to paralysis by analysis. If you can eliminate all your biases that is great, but even if you eliminate 25% of your cognitive biases in the decision making process you will increase the chances of achieving a positive result on your strategic decision.

Decisions, decisions... why we are bad at making them and what we can do to make better ones for our businesses. (Part 1)

2009-11-22T17:30:00.000-05:00

One of the most important aspects about being a leader in business is making decisions. In the hierarchy of decision types the pinnacle is a strategic decision. These are the decisions that make or break the business. These are the ones that impact the future immediately and often bind substantial resources of the company. The importance of the decision is often palpable and as a result strategic decisions are often the hardest ones for even the most seasoned business people to make.

Considering that no one can 100% accurately predict the future every strategic decision starts out as a 50/50 coin flip. However, there are numerous tomes and pages of research dedicated to the topic of making better strategic decisions. Interestingly, none of the things I have read or any of the research I have seen works in all instances. The main reason for this is that most research is based on case studies and hindsight that prove the researchers point, or on experiments that limit “real world” variables. I don’t know about you, but I have never been able to go back and make a decision, nor have I been able to change the variables surrounding my strategic decisions. So is there anything we can do to make better strategic decisions? Yes there certainly is.

Research shows that the only constant in strategic decision making is the human element. However, as you may figure, it is hard to ever really consider the human element a constant. We all have different experiences, moods, emotions, etc. which research shows impacts our ability to make strategic decisions. Moreover since we are not machines the human condition actually causes us to make bad strategic decisions. Therefore the key to making better strategic decisions is not finding a formula for making strategic decisions but understanding what about us is going to cause us to make a poor decision. In part 2 I will discuss the causes and give the tips you need to make better strategic decisions.

Marketing Dollars and Sense: Spending effectively today to market for the future (Part 2)

2009-11-17T23:57:00.000-05:00

As can be seen in part 1, neither type of marketer really instills confidence about the future. On the one hand, the all marketer spends a lot of money on marketing and gets no ROI, but is always at the top of the stack when a customer needs something. Conversely the nothing marketer spends no money so there is no ROI to be concerned with, but must spend core business time on direct marketing to replace any lost customers. In both scenarios the lesson learned is that effective marketing should be a balance of current costs and growth.

For the companies that find themselves in the all category of marketers, effective management of marketing dollars will come from instituting metrics to evaluate the success of a particular marketing method. A lot of times what you will find in an all marketer is free spending and no evaluation of the effectiveness of the spending. Even using ROI, which I don’t recommend because marketing costs are rather abstract and revenues from marketing are theoretically untraceable, would be a good start. However considering the abstract and theoretical complications of ROI, other simple metrics are available to gauge marketing effectiveness. One of the most rudimentary but effective metrics is asking the question “how did you hear about us?” to your customers. For my all company this simple procedure of asking our customers “How did you hear about us?” when they called in to place an order generated a ton of useful information for our company. Our procedure had our one inside sales person mark off how customers heard about us in an excel sheet. This helped our company to lock into which methods of marketing were most effective to reach our customers and generate sales. Promotional fliers that were sent out weekly generated almost no sales interest, while small 20-page glossy catalogues sent out quarterly or left by a salesman at a cold call generated the most sales interest. More than this we found that internet marketing on our website and via e-mail generates some interest, but not as much as I.T. experts would lead us to believe it does. Based on the results we were able to save money by cutting the least effective methods. In this way we are now controlling our costs AND staying in front of our customers.

For the companies that fall into the nothing category of marketers, effective management is more about letting marketing do some of the customer contact work. The nothing marketers will have a hard time seeing the correlation between sales and marketing. Even simple firsthand metrics like the “how did you hear about us” questions don’t provide ample evidence to justify spending the money on marketing. Recently I sat down with the owner of my nothing marketing company and talked about the current customer base. We noticed that year on year there is a large level of attrition among our existing customers for various reasons. Fortunately the owner always finds a new customer to replace the lost ones. Typically however, he is only usually able to line up business to replace what he had lost and does not bring additional business to the company. This obviously isn’t a real recipe for growth. I tossed him a little “did you know” that believe it or not the time and effort he puts in pursuing replacement customers IS marketing. I told him however, that if the company was doing more traditional marketing to potential customers with similar interests as existing customers he wouldn’t have to be in two places at once. He wouldn’t have to invest as much of his time and effort looking for new revenues to replace lost ones. Considering that he is the chief new business generator, and his own HR department, and his own legal department, etc., he was better able to appreciate what marketing could do to make his job much easier. As a result we incorporated some marketing dollars in the operating budget for next year. Obviously, we made sure to install metrics to gauge the effectiveness of the new marketing expenses. This way he will be able to see if our marketing is driving new business to the company or not.

Overall, no matter what type of marketer you are or you work for, marketing should be a priority for 2010. For the all marketers in the group, finding a metric that works for you to help control costs and get more bang for your buck is crucial. If you are a nothing marketer, a cost-benefit analysis of your time spent on personal marketing efforts and compare it to what other things you need to be doing with that time may help you see the light. If 2009 was about cutting costs to stay in the game, then 2010 needs to be about getting greater efficiency from your costs. So spend the money on marketing, but remember that if it doesn't make dollars, it will never make sense!

Marketing Dollars and Sense: Spending effectively today to market for the future (Part 1)

2009-11-16T00:05:00.000-05:00

In 2009 most companies scaled back on marketing expenses in an effort to control costs. For most companies the decision to cut marketing was a bang-for-the-buck decision, or more formally a return on investment (ROI) decision. When a company goes to cut costs, anything that doesn’t make dollars doesn’t make sense and for most companies without appropriate controls and measurements marketing is a hard, and often high, cost to justify. While cutting marketing expenses is certainly not a bad decision it should not be a permanent decision. Every company should spend some money on marketing, but the key is to find ways that help them spend effectively.

In the world of small businesses marketing as a practice usually falls into two categories: all or nothing. As we all have seen there are those small businesses out there that bombard the marketplace with marketing. These companies are run by owners who feel marketing is a salesman they don’t have to pay commission to. They send out fliers and e-mails and maybe do a radio or TV ad and they maybe buy a billboard or two or ten. This group typically is aiming for mass appeal and follows the adage that it takes 7 pieces of marketing before you can make a sale or generate business. I work for one of these companies. I do not insinuate that this is a bad strategy in any way. Our sales guys tell me all the time that this type of marketing is actually effective in our industry. The main reason is that there are so many competitors in our market that it is important to keep our name on top of the junk mail pile. Repetition leads to familiarity which leads to direct association which leads to picking up the phone and calling our company when their convection oven breaks. Without that constant stream of mail and e-mail and what have you our company name gets forgotten as easily as the name of your waitress at dinner (I mean really how many of us can honestly say you remember the waitresses name from the last time you ate out?) However as the VP of Finance for the company I am only concerned with ROI and when sales are off by… let’s just say they are off, it is hard for me to see how this strategy is truly effective for the long term survival of the company.

On the other side of the spectrum you can find the nothing group. These are the organizations run by owners who think marketing is a waste of money and who feel a stack of business cards and a good reputation in the industry is all you need to succeed in business. In this category marketing is no more likely to bring business into the office than would a casual conversation between a satisfied customer and a friend or colleague looking for the same service. This group typically is aiming to satisfy existing customers and create total loyalty. I also work for one of these companies. I definitely cannot insinuate that this is a bad strategy either. I know that for the particular nothing marketer I work for, marketing expense this year was a whopping $300 (primarily for business cards). In fact even if you add in the holiday gifts being sent to clients (which is but isn’t marketing), the total marketing costs for the year are less than $2500, or less than 0.5% of total costs. Yet despite sales revenues being only off slightly, the operations side of my job makes me wonder how long this strategy can be truly effective.

Seeing both sides of the spectrum leads me to ask the question: “How does an all marketer or a nothing marketer become more effective at managing its marketing habits?”

Cash Rules Everything Around Me... Make plans for the upcoming year!

2009-11-08T15:48:00.000-05:00

At present many of you are getting ready to close the books on what was a horrific year in business. If yours is like the majority of business out there your revenues were off by a double digit percentage, you cut back spending and may have even cut down your workforce, and you certainly lost money this year. If your business is in the minority of businesses, you had to cut back on spending including some work force expenses, your business was off but by single digits or not at all, and you broke even or managed to turn a profit. No matter which group you belong to though, you should congratulate yourself. You survived, you made it, you pass-go and get to keep playing the game. Now bring on the challenges of 2010.

How many of you feel that things are going to turn around in 2010? How many of you actually mean by turn around that you are hoping to see more manageable declines in revenues and a smaller loss than you took in 2009 without having to make any more cuts? With all due respects to the economists who forecast GDP growth and recovery in 2010 I think those of you who answered “I do” to the second question have got it right. But what does getting it right really mean? What can you do in 2010 as a small business owner to protect what you struggled so hard to keep in 2009? The answer is financial planning.

Financial planning on some level is what got you through 2009, I am sure of it. It is what made you cut back on spending, decrease marketing dollars or switch to a 4 day work week, but if you were like most businesses in 2009, you made or adjusted your financial plans in May or June. I know that is what we did in at least one of my organizations and that is fine. 2009 was the kind of year that reduced everyone’s expectations and couldn’t be predicted by anyone. However the results of this year allow you to be proactive as opposed to reactive in your financial planning for 2010.

Many of you typically sit down with your finance officer, accountant, or maybe just by yourself around this time of year and create pro-forma financial statements for the next year as a matter of practice. That is good practice for your organizations success so if you don’t do this, please start. In the past though I imagine for many of you this was a going through the motions exercise where predictions about expense growth and revenue growth were picked out of thin air or with sort of an ad-hoc guesstimation technique. I think as the results of 2009 bear out, this cannot be the case going into next year. Organization and detail should be the order of the day for any financial planning in 2010.

For me operating budgets are a great rudimentary planning tool. As a matter of fact an operating budget is what has consumed all my work time over the last few weeks and I am happy about that. It shows me that my employers care about the financial health of the company and it allows me to take control of any expenses I might have missed while putting out the bigger fires during the year. It allows me to strip out the accounting and technical elements of the things on our income statement and reorganize them based on related expense groupings. Payroll is more than just salaries, its salaries and insurance contributions, its car allowances, its federal taxes and processing fees for using an outside company. I don’t have to guess at what happens if we add back an employee or we bring back 5 day weeks, I could see all of the real costs increasing on the paper. All of our expenses being reorganized allowed me to see we spent almost $10,000 in computer and technology related expenses, and $5,000 in office supplies. I went back and pulled contracts and invoices to understand what we did to generate our costs. Were they necessary? Will the money need to be spent again next year? Will the costs be going up next year? I laid the operating expenses out monthly. I know that one of my organizations needs to make around $50,000 a month in net profit just to break even with its current spending habits.

Then once I was done with the operating budget, I sat down and went the extra mile as they say. I took a look at our work-in-process expectations to end 2009. I looked at the business we have pre-booked for 2010 and what we will have to pay our vendors based on what is pre-booked. I even went so far as to look at not only how much we will have to pay our vendors but when we will have to pay them. Based on that investigation I found out that we can expect to get paid by our customers in March at the earliest. I know now, halfway through November of 2009 that I need at least $450,000 in real cash to survive the first 2 months of 2010 and keep all of our payables under 30 days. I know today that due to rebate dollars at stake I can only afford to “float” about one-third of the $450,000 dollars. I know now what my contingencies are to obtain the cash my organization needs to survive and keep its reputation as a timely payment customer. I also know now that the repercussions of not paying on time will be delays in production, which in turn will postpone our jobs being done, which will postpone us receiving payment for satisfactory work, which will extend our cash shortage another 30 days… and so on and so on until we have no business left and all my problems are solved because we don’t have a business and so I have no cash to manage. I know that sounds like a silly scenario, but that is probably closer to a reality that we would all face if just one thing goes wrong with our cash flows and is a real example of what could happen if I did not do financial planning.

Now that the lesson is over so to speak I would like to point out that nowhere in the above description of financial planning did I do anything extraordinary that only a Finance MBA would have the skills to do. I simply took the time to organize the finances into understandable expense groups and utilize the information at my disposal to make our financial plans and predict our cash needs for the coming year. You don’t need advanced degrees to organize data and you certainly don’t need advanced degrees to form an opinion about the future.

In summary, if you haven’t done your 2010 planning yet, you should certainly start. If you don’t have this kind of information at your disposal, you should try to obtain it. If you don’t have the luxury of knowing you have pre-booked business for the coming year, simply do a best-worst-and base case scenario plan of your organizations financial needs based on your expectations. If you can’t do that because you don’t know how, ask someone, use the internet (I have an MBA and I use Google to clarify things for me all the time) or e-mail me your question and I can try and help.

In any event, as a result of my planning I know what I need to know about the future of my organization today, while I still have time do something about it. I understand that 2010 is not 2009 and the worst should be over but the best won’t soon be here. I also know that because I took the time to do proper financial planning my company should still be here when the good times do come back around. If you take the time, I am sure yours will be as well!

Introduction and Background

2009-11-08T13:20:00.000-05:00

As far as business goes consultants are often brought in to fulfill a valuable role in an organization. They help make decisions when there is a lack of expertise. They simplify and identify critical problems which might have gone unnoticed and thus saved the company. They may even provide implementation guidance to technologies or processes which a business owner just doesn’t have the time to deal with. Whatever the reason for the consultant entering your organization a “good” consultant will never leave you feeling like you wasted your money. Unfortunately not all consultants are “good” and while that doesn’t mean they are “bad” consultants, it just means that the expectations of their skills or your results were not well aligned. However at the end of the day, for the price consultants get paid, you never want to feel that the money spent was a waste.

The purpose of this blog is to bring consulting to the small and medium sized business owner who lacks the resources to risk the money on a consultant. The blog will contain posts about all aspects of business from HR and Finance to Marketing and Sales. The posts will not come from “industry experts” who work in a 5,000 employee, multi-billion dollar conglomerate, but from business area specialists who work for small family owned businesses and medium sized companies. The contributors will draw on their own workplace experiences and point out lessons to be learned or problems to be aware of that they had to solve. This is no different than what a high priced consultant would do, but instead of paying for the service, it is free.

I understand that some people will be skeptical of the quality and value of free consulting, especially considering how much money is paid to the "big 5" consulting companies for an hour of their time. However in an effort to demonstrate the value of this blog I will provide an academic and employment background for all contributing consultants starting with myself. These bios should demonstrate that leaders and experts don't always work for the big guys, sometimes they work for you.

My name is Asaad and I am 28 years old. I have a B.S. in Finance from Florida State University in Tallahassee, Florida. I have an MBA in Finance, core concentration of corporate finance, from Temple University, in Philadelphia, Pennsylvania. I also have an MBS in Human Resource Management from the University of Limerick in Limerick, Ireland. I know I seem like a career academic however after attaining my MBA I served for 2.5 years as an internal operations and managerial consultant for a billion dollar asset thrift (bank) in Florida. The job entailed a wide assortment of tasks including reorganizing non-performing business units, compliance operations, and my favorite task of all (and the inspiration for the blog) verifying the results/practicality of outside consultant recommendations which were often wrong or impracticable for the organization.

I left my position at the bank as a result of a merger in 2007 and spent six months working as a trainee inspector for an engineering firm that specialized in road construction and maintenance. It was quite a career change going from the suit-and-tie bank environment to the jeans-and-boot environment of road construction and I learned a lot about the challenges of running a medium sized, multi-location business. Ultimately the job had me attending board meetings when my supervisors couldn’t make them, coordinating efforts of the inspectors, being a sounding board for the supervisors who were aware of my white collar experience, and inter-office driver/courier. My favorite part of the job was working with the various contractors on the job site and learning that a lot of what doesn’t really seem like a business actually is. I held the blue-collar position for six months but left to take advantage of a scholarship opportunity in Ireland.

Upon returning to the U.S. amidst the new depression I was fortunate enough to take a job within a small family business and currently I am the Vice President of Finance for two conjoined commercial food equipment dealers in the North Shore suburbs of Boston. The companies I work for have a combined workforce of 8 not including the 3 owners. One company has been in business for over a decade and the other has been operating less than three years. The companies currently have combined revenues of around $5 Million. On a day-to-day basis I oversee accounting and bookkeeping operations as well as maintain controls over cash management. Included in the cash management function is maintaining accounts payable and accounts receivables as well as utilizing a $250,000 Line of Credit to make sure the company doesn’t forfeit its manufacturer's rebates. Ultimately I am responsible for the overall financial health of the organizations by guiding a seasoned small business owner to find innovations and helping a new small business owner to achieve organizational goals.

My blog contributions will cover both practical and theoretical elements of business which draw upon my varied experiences and education. As one of the owners I work for always asks, “what’s the opinion in the classroom?” during meetings due to my propensity to analyze both the theoretical and practical applications of our operations. I think that theory is the history of practice and to get ahead you have to understand the history, or be doomed to repeat it. He thinks theory is nothing more than people who couldn’t cut it trying to influence those who can. Despite our philosophical differences he values my input and I hope you will too.