Small Business Archives - Page 4 of 5

September 8, 2008May 25, 2013

Measure to Manage Performance in a Small Business

I think I am doing everything right, yet I am not successful…I wonder why?
If you have been bogged down by that query, you are not alone.

In the early 1900’s, Frank Bettger became the leading salesperson for the Fidelity Mutual Life Insurance Company. One of the ways Frank improved his performance was by measuring the results of his sales calls.
He discovered that 70% of his sales were closed on the first interview; while 7% got closed after the second interview. But do you know the most important discovery? He was spending nearly 70% of his time on calls after the second interview! That means he could cut down his tele-caller cost by 70% and still achieve same results! That resulted in enhancing the value of his calls by…. 725%! (from $2.30 to $19.00!) (Note the clear metrics he used to quantify his output).

Most business owners, including me, get so caught up in the flow, they don’t bother to track where they are going. Tell me how many times in the last few years have you stopped to analyze what is each customer worth to you in real monetary terms?
You’d be surprised at the discovery. At the end of this exercise you may learn that often the client you cherished as your best customer is, certainly not the best, but often, that customer turns out to be the worst. Measure it for yourself and check it out.

If you don’t have systems in place to identify the bad from others, you can’t understand who is good for your business and who is not. Similarly, if you have good traffic at your site, you must know what site features you can attribute this to, in order for you to build up on those strengths later and multiply your success quotient.

What you can measure you can manage

A machine shop started measuring waste by weighing a trailer where scrap was stored and relaying those figures to the team members. The scrap expense went down by $30,000. Later, when the owner decided to stop weighing the scrap, the scrap expense once again increased by $30,000!
If you don’t measure it, you can’t manage it. Get it?

Going beyond the bottomline

In my opinion, it’s a mistake to measure your success only in pure financial terms. There can be certain aspects of your business such as customer loyalty, intellectual capital, employee skills and reputation that also have real worth and value. Measuring these non-financials is also critical as they help you market your services more effectively to your customers.

In their book Measure Up (Disclosure: This is an affiliate link)), Richard Lynch and Kelvin Cross suggest that following measures of success: quality, delivery, cycle time, and waste. By measuring activities in these areas, an entrepreneur can think of alternative approaches to bringing more value to his customers.

Data is apolitical

If you have data to take decisions, then you can be less political because data is apolitical. Your employees will love your company for that!

In short, it’s important to measure success for the following reasons:
• To facilitate corrective actions if there are any performance gaps
• To support strategic decisions and goal setting
• To track your progress towards those goals; and
• To improve accountability

Measure important metrics

I am not here to say that you should measure everything, unless you are a large company. Measure the most important metrics – revenue per month, gross and net profit per month, number of customers, repeat business, number of visitors on your website etc. that are really important to your business. What are the top 10 metrics you should be measuring for your company?

About the author: Chaitanya Sagar is an expert in small businesses and is the CEO of www.p2w2.com,

an online marketplace for services like writing, business consulting, research, software, online-tutoring etc. You can find good service providers and collaborate with them on p2w2. Picture credits: HBuzacott & Guillermо

Measure to manage performance in a small business.

August 27, 2008May 26, 2013

Assess Your Small Business with Smart Start Assessment Tool

When you run a small business, you have myriad things to do. You could just be busy and doing things without knowing whether you covered the ground. You could, depending on your personality, focus on just a few areas (that you like) at the cost of others. And there are few, ok many things that never get done. Sometimes, you wonder if there is someone who can help you think through in a structured way what you have been doing and how you can improve.

That’s exactly what I came across. Smart Start Assessment tool (via) that helps you think through your business. This tool was made as a readiness assessment tool for those thinking of starting a business.
But even if you are running a small business, you could use this tool in a variety of ways. The tool asks you questions in four broad categories all of which are relevant, important and brief. The categories are:

1. Personality/social preparedness (the tool calls it Generic )
2. Marketing
3. Financial and Operational
4. Legal and Organizational

What I like about this tool is the quality and relevance of the questions. You can use the tool in the following ways:

1. Understand various questions you should be answering (e.g. Do you have a WRITTEN marketing plan?)
2. Understand the spectrum of answers possible so understand where you stand [e.g. How far along are you in your plans? (check all that

apply):

a. obtained a business license
b. registered for a tax id number
c. written a business plan
d. paid (or reported taxes)
e. opened a location
f. closed an actual sale
g. registered your business? (LLC, corporation, etc.)?
h. begun developing a marketing plan
i. researched my competition
j. hired workers]

3. Use it as check list so you can complete tasks (check out Marketing or Financial and Operational sections in the tool)
4. If you are about to start a small business, understand how your life will be after you start the business (e.g. are you prepared to lower your standard of living until your business is firmly established?)
5. Do a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of your business
6. Come up with an action plan (how to spend your time/money)

I hope this tool is useful to you. Enjoy it.

August 21, 2008May 26, 2013

The changing rules of the game in a small business

When you play Basketball, which game’s rules do you follow?

Sounds like a silly question. But do you know that in your small business, you could be playing by the rules that are no longer relevant? You know it when your revenue is stagnant; you feel stagnant.
If you are a small business, you have to morph as per the new rules or die. When you play by the old rules, you become irrelevant; customers and employees leave you; profits lag; people don’t scale. The rules of the game

change fast. Are you aware of the changing rules or are you busy in the routine of the day?

What do I mean by the ‘rules’? They could be:
1. Extent and the nature of marketing you do
2. Extent of work you delegate
3. Cash reserves and working capital required
4. Number of employees on bench

And when do these rules change? Some events happen that trigger off the change. E.g.

1. When you win a large contract
2. When your product goes beta
3. When you hire an employee; when you hire substantially large number of employees
4. When you get investment from someone otherthan yourself or immediate family

Obviously, these rules and the changes are not exhaustive.

Have you experienced the changing rules yourself? After you realized, what activities in your small business did you change?

Picture credit: Linnybinnypix

August 11, 2008May 26, 2013

Employee Retention Is Easier if You Know How to

Not all attrition is bad. Planned attrition is desirable for the growth of your business.

Excited Employee

I know of a small scale businessman, who after losing a few trained hands

did the most desperate thing. He limited his employees’ access to training and product information to make them unattractive to poachers.

He effectively stalled the growth of his own, flourishing company.

Planned attrition could in fact be desirable for the growth of your business. That is why smart organizations don’t act in haste when they begin to lose trained employees to rivals. They respond by devising innovative retention solutions, unique to their business needs. This post is about these unique, retention strategies.

According to Manpower Inc., a leading, HR Services firm, the global best practice is to measure retention, the cost and causes of unplanned attrition. A small business owner should ask herself: “Why are people leaving me?” And, more importantly, “What can I achieve in terms of customer satisfaction and profits with a 10 percent improvement in retention”?

The analysis can be very revealing. By a conservative estimate however, the cost of replacing a trained employee can be roughly 0.41 times his/her salary. (Source: Conference Board, a Washington, DC-based workplace think-tank.) This does not include the opportunity lost, so imagine the colossal waste when a talented worker decides to make an unplanned exit!

Talent is the fuel that drives a small business

When Nobel Prize-winning economist Gary S. Becker coined the term “human capital” things were vastly different. Today, people drive business. They are the assets and market capitalization of a company. And when they leave your company in the evening, the value of your business is zero. Attracting and retaining talent is one of the most vital functions of an organization today.

Share information; be open

Employees need information to perform. Very often, the difference between a star performer and the not-so-star is just information. This additional information could be could be your plans, vision, minor and incremental updates, and it could be of no consequence in the immediate term but could prepare the employee for a greater role in the organization. An unfettered access to knowledge tools ensures that everyone can claim an equal share in the success of your business.

Salary is just a hygiene factor – not a motivator

If you ask what motivates employees, it’s not what comes to their bank account at the end of the month. It’s about what they do every moment and their view of what their work life will be going forward. For most people, it’s not about salary. Unless, salary is lower than their expectations.

Often, good working environment, work culture, learning and development, is rated as a top retention tool. People are also attracted to freedom to choose projects they want to work on, job rotation etc.

Refine your hiring process

Try to fix the problem where it starts. You have to get in the right people in order to keep them there. Identify the gaps in your recruitment process and begin to plug them systematically. If you bring in a misfit, the person will leave eventually. If you bring in the right person (role-wise, aspirations-wise, compensation-wise, culture-wise) the person stays and wants to excel. If not, it’s just a matter of time.

Let candidates experience your workplace

A good strategy, could be to let prospects “experience the role” by visiting your workplace and interacting with current employees, before they are asked to make a decision about accepting the offer. In my experience

this can sometimes stem attrition by almost 50%!

Assess your manpower needs clearly, so you don’t hire in a hurry, or oversell the job to someone who is unable to eventually meet your skill needs.

Listen to your employees; don’t underestimate the value of an exit interview

When an employee comes back to you with a problem, listen patiently. They could be wrong. You could be right. But listen to them. And listen to them often. Take feedback often. Ask them if they are enjoying their work, if something is hindering their performance, what else you could do to help them perform better.

Never commit the mistake of not asking feedback. If you don’t they think you don’t bother about them. If you ask, it tells them that you value them and their opinion.

If the employee does leave, take an exit interview. The feedback gathered, in a relaxed, non-judgmental climate can be extremely helpful in addressing core attrition issues.

About: p2w2 is an online marketplace for services like writing, accounting, software, graphic design, virtual assistance, research etc that can be fully delivered online. Small businesses in the US and Canada can use p2w2 to outsource their service requirements for faster execution and time to market.

Picture credits: “Excited Employee”(top) Photo Mojo; Peacock in full plumage with its extravagant tail (middle) Arindam’s PhotoWorld; Employees only emdot

August 1, 2008May 26, 2013

Use LinkedIn to Generate Revenue and Grow Your Small Business

LinkedIn is a good tool. But it’s boring. When was the last time you found something funny in LinkedIn? Yeah. There are articles talking how to use LinkedIn. But most of them are equally boring laundry lists of all LinkedIn can do. Not something that will be useful to you. Some just waste your time. “Talk to [people] on phone” lists LinkedIn’s own blog as one of the things you can do using LinkedIn. That list has no meaning for a small business. As a small business owner, my priorities are simple. Generating revenue is one of the highest priorities I have. Can LinkedIn contribute to that? How?

Using LinkedIn is about how you get in touch with people, and do business with them in various contexts. Below are some practical ways to help you in your small business.

Account opening and lead generation

If you have list of target customers (individuals), titles or companies, search them. You can search by industry, current or previous titles, current or previous companies, within a postal code etc. Get your target list of individuals in this search. Then figure out the most trusted route to those individuals. The most trusted route is the connection

to the target through a first degree connection. You could preferably ask for a referral and you have a leg-in the company.

Finding the decision makers and influencers

When you sell to large corporations, understanding who you are talking to and who the decision maker/influencer will help you strategize your sale. There’s no use selling to someone who can’t do much. Using LinkedIn, you can find out who the decision maker is and could have alternative ways to reach them. You can do it by looking at job titles in an organization. But very often, that gives you partial and incorrect information. You can get more accurate and ‘tacit’ information by gathering information from others in the company.

Accumulate reputation and make referrals long lasting

Recommendations feature in LinkedIn has an eBay or p2w2 effect on your reputation. All your contacts can see it and are on for a long time. It’s an accumulation of your online reputation. When you delight a client, ask them for a LinkedIn recommendation. Those who visit your profile can see your reputation. In the offline world, a referral you get can only fetch you a few contracts. But here, you can make the recommendation long lasting and touch many more than just a few referrals.

Follow your customers and de-risk from personnel changes

With LinkedIn, when your clients shift from one company to another, they move with you because you connect with the person – not the company. That’s good for you. With your contact’s move, there’s a known person in the new company that gets your leg into the company (that’s assuming you have good terms with the client. If you have bad reputation, it moves across companies too.)

Using the same strategy to know the ‘influencers,’ i.e. making your connection wide within the company so that when your key contact leaves the company, you have others to fallback on. You de-risk your account from personnel changes.

The above are the ways you can generate revenue. If you are keen on exploring more about this, I suggest you read this eBook (Can LinkedIn increase your sales) published by Jill Konrath. Pages 5-8 have the crux of what this eBook has to offer. It’s worth the read.

Tap into push button expertise; position yourself as a subject matter expert

LinkedIn Answers has been reasonably successful. We wrote about it in our previous post (5 good marketing and HR websites for a small business). If you ask a question related to your business, you can be reasonably certain that you get multiple good answers. As a small business, you have many questions and few answers. You can use LinkedIn Answers to tap into expertise of many people. Just ask.

Alternately, you can position yourself as a subject matter expert in the subject you want to be viewed as an expert and answer questions posed by others. The more ‘best answers’ you accumulate, the better you will be treated an expert in your subject.

In my opinion, the above covers the ‘high impact items’ of how LinkedIn can help small businesses. That gives you 80% of the value understanding 20% of the items. If you are really interested looking for a laundry list (other other 80%) of all you can do on LinkedIn, here are a few links that will help you do just that.

20 Ways to Use LinkedIn Productively

Ten Ways to Use LinkedIn

The Right Way to Use LinkedIn

Category: Small Business