I am putting the finishing touches on a manuscript for a book I am tentatively calling “The Territory Manager’s Field Guide.” This practical book will contain 30 chapters that contain helpful tips on how to run a successful territory. The information has been drawn from my own experience as a pace-setting territory manager as well as leading territory managers from around the country I have met in workshops over the years.

Dave learned a lot from me!

This will be a large work– the manuscript in Word 2007 is about 600 pages long! It will also come with a CD-ROM with PDF files, Excel spreadsheets, and other useful tools to help a territory manager be the best he or she can be.

I have already begun talks with my publisher and hope to be able to make a formal announcement and take pre-publishing orders by the end of the year.

Come back to my web page from time to time to get updates and release announcements.

So how do we pay sales people who are no longer rookies but not yet at that level of experience and skill that the truly great sales people attain?

Sam goes for a sale!

Clearly, a level of pay that is above that of a first-year rookie is appropriate, provided the sales person is producing at a rate that is better than a rookie. (For convenience, let’s call this sales person an apprentice. They have graduated from pure rookie-dom, but are not yet at the level of a journeyman.)

A rookie sales person should produce between $300,000 and $600,000 in sales the first year they are on the payroll. Some do even better than this. But these are decent lines in the sand to aim for and are based on contractor surveys.  There is a very high correlation between first year performance and good sales training, by the way, suggesting it is well worth the contractor’s money to send his rookie to a good sales school early in their career.

How much an apprentice should produce will depend on a number of factors, such as population density of the area, the median household income, and the dealer’s brand and pricing levels. Let’s set up a case that should be typical.

Let’s compare two cases: one where the apprentice lives in a fairly populated area of good median household income, and the other where she lives in a remote area with a lower MHI.

For the “rich” case, let’s suppose the apprentice works in Charles County, Maryland. This county has a population of 124,691 people and a MHI of $80,697 (well above the US average of $51,283).  My research shows that the residential and light commercial potential of Charles County, MD is $31,600,000 or so. Since most rookies don’t do much in the commercial arena, let’s say that our apprentice’s market is about $20 million retail. There are 66 HVAC shops in Charles County, MD. 18 of these are of a size large enough to warrant a full-time comfort consultant.

Those 18 shops probably comprise about 67% of the sales in that county (shocking, but true!), so the 18 shops that would probably have a comfort consultant account for maybe $13.5 million in sales. 1 of the 18 shops is much larger than the others (and thus probably does more commercial than residential) so 17 shops are making about $13 million in residential sales. Each shop is thus averaging about $765,000 in residential sales.

This would be the median point of the data, so I would expect to see perhaps one comfort consultant writing up $1.5 million in sales a year and the rest trailing off from that. An average of $765,000 in sales is a decent level for an apprentice in an area like Charles County, MD.

The “poor” case comes from Jackson County, Alabama— population of 53,134 and MHI of only $38,761. The residential potential here is  only about $7 million, and 6 contractors who might employ a comfort consultant. But these 6 probably account for $2.5 million in sales, or only about $410,000 per comfort consultant. Again, that would be the median value, with some apprentices selling perhaps as little as $200,000 and others up to $650,000.

Quite a difference from the denser and richer county in Maryland!

Now that we know the boundaries of the playing field, we can begin to construct a reasonable comp plan for each case.

For an apprentice, we need to start weaning them off a strong base and small commission towards a smaller base and larger commission (the ultimate goal being 100% commission).

I would also consider moving the total pay for an apprentice up from the bottom of the range we saw in the first blog in this series (see here).  If we started a rookie at about $42,000 total pay, we might consider $55,000 or so a good starting point for an apprentice (but again, we must be sure to base this on the local market using a tool like salary.com).

If we made the base only 60% of the total pay, the apprentice would draw about $33,000 a year as base pay (or draw against commissions) and $22,000 in commissions and bonuses. If sales are $500,000 a year, the commission rate would be about 4.4% of sales (when made off a company-supplied retail price book)— we had the rookie set at 1.6% of sales.

For a $750,000 producer, a pay around $64,000 would be reasonable— 60% as base ($38,400) and 40% as commission (based on 3.4% of sales).

In the third (and last) blog in this series, we’ll consider the journeyman sales professional, the seasoned veteran who knows how to sell in a variety of environments and brings in jobs that make the company very profitable!

In the LIBRARY section of this web page, you can download an article titled “Pricing For Commissions.” I explain in that article (click here to download a copy) how to set your pricing to recover commissions so your company nets out the profit you want. But I do not explain in that article how to pay sales professionals in the first place.

Let this first article of a series of 3 lay some groundwork.

Let’s begin with a first-year sales person (I won’t call him or her a professional yet—that honor has to be earned, and they have not earned it yet). We’ll call this person a Rookie.

Pay must be tuned as much as possible to two vectors (forces): performance and motivation. I’ll come back to performance later in this blog. But for the motivation vector, let’s consider some key issues.

Most sales Rookies today are going to be entering from a younger generation than those who will probably hire and oversee them. This is important because as it turns out, motivators vary with age groups.

In 2005, I wrote a white paper titled “Managing a Sales Force”, which contained several pages on compensation. (I will post that white paper in the Library soon.) Based on recent research on managing and compensating sales professionals, some of the findings revealed that for older sales professionals (“veterans”), these things are highly valued:

• Retirement contributions
• Exceptional pay for high performance
• Independence
• Job security
• Location
• Travel
• Vacation

Contrast this with younger sales professionals:

• Total compensation
• Base/incentive mix
• Promotion opportunity
• Skills development
• Flexible work environment
• Co-worker quality

These are totally different lists! It suggests to me that a pay plan that works well for seasoned veterans will not work well for Rookies!

Rookies as a rule (and this is only a generalization) distrust commission only plans (where most veterans prefer them because of their unlimited earning potential). They prefer heavy base pay with small incentive pay because they don’t yet trust their skills to make sales at a level where incentive pay becomes a heavy element of their pay. They lack skills so value an environment where they can obtain them, and don’t like lock-step working conditions, preferring flexibility over structure.

So for a Rookie, I would suggest the following setup: start with a compensation package that is heavy on base (80% or more) and light on incentives. Offer them ample opportunity for training and skills enhancement. And don’t require them to punch the proverbial 8-to-5 clock.  In fact, since many of their sales calls will be made in the evening when they can talk to both decision makers of a household, having them report to work at 8:00 AM or 9:00 AM is not reasonable.

As for pay levels, you have to set them carefully. I would suggest that for those who live in a major metropolitan market that they consult a web site—www.salary.com.  This amazing site lets you analyze pay scales for free in major markets (and you can purchase detailed and deeper reports as an option). The trick is to select the right job category to get comparison numbers.

For instance, if I search the Phoenix, Arizona database at salary.com, using the “Salary Wizard” on the Employee side of the home page, I get to a dialog where I can ask to see typical salaries for various job titles. If I type “Sales representatives” for the job title and select “Arizona-Phoenix”, a whole screen of job positions that are in sales appears. I then search for the one that is closest in description to a Rookie position at an HVAC shop—say, Sales Representative I. I then ask to see the Base Salary range. In this case, base pay runs from $38,748 on the low end to $71,889 on the high end. The “Bonuses” tab reveals that with bonuses, compensation ranges from $42,423 to $93,243. The median salary is $52,955 and the median bonus is $11,019. The total comp has a large range—over 100% from bottom to top.

I would rank a truly brand new Rookie (with no sales training yet, no experience) at the bottom of that range. I might start a really good Rookie (with some training and a little experience) closer to the middle of the range. But I don’t think a true Rookie in Phoenix would be able to command $93,000 a year—unless he or she produced like a veteran!

Since I advocate that at least 80% of the salary be base, this would mean giving a Rookie (in Phoenix) a starting salary of $34,000, with a chance to earn another $8,000 or so in bonuses. This would result in a bi-weekly pay check of $1,414 gross plus bonuses.

The $8,000 in bonuses would come through a number of possible reward systems. But for a Rookie, I suggest that the bonus be earned as a percentage of the sales he generates when the Rookie uses a company-generated retail price book. In other words, the company has a “cookbook” pricing system that the Rookie must sell jobs from, not create his own take-off and job price on the jobsite unsupervised.

So how should we set the bonus rate?

That depends on a number of factors. The easiest approach is to assume the number of jobs a Rookie could sell in a year, using a retail price book. If he sells two jobs a week, that would be about 100 jobs a year. $8,000 divided by 100 jobs is $80 per job. If the average job is $5,000, that would amount to 1.6% of sales. Or, the owner could just set the first year bonus at $80 per job. (But the problem with that approach is that as the Rookie sells a big job, he gets the same $80 bogey that he would have made for a smaller sale.)

I would also set up an aggressive training program for this Rookie. (Personally, I would send him to The ACT Group’s No-Pressure Selling school for starters.) I would then explain to the Rookie that as he gains education and starts having better and better sales results, he will move towards a more incentive-based plan with higher earning potential. (That’s the performance vector.)

In the next post in this series, I will address how to pay newer sales reps who are no longer Rookies, but not yet seasoned veterans either.

But I am a proponent of a written business plan for any small business.  It’s just that it needs to be short (no more than 10 pages) and as wordless as possible.  Which is why I have become a fan of Michael D. Ames, a professor of business at California State University (Fullerton). He wrote a paper titled “Rethinking The Business Plan Paradigm” (you can download a PDF copy here.

In a nutshell, Ames advocates a practical approach to business plans, not the stuffy MBA format so popular with bankers and professors. He states that plan must focus on just three elements:

1) Processes.

2) Revenue generation (“throughput”).

3) People.

Let me elaborate on these three points as they touch upon an HVAC business.

1. The plan must focus on your processes. Often in a workshop, I will have a contractor come up to me during a break and show me his P&L and ask, “What’s wrong with this?” I usually reply, “The gross margin is weak and the net profit is pitiful.” He then usually asks, “How do I fix it?” I reply, “I don’t know!”

He usually looks at me like I just slapped him with a cold large-mouth bass. I go on to explain that their numbers are the results of what they do day in and day out—their processes. I cannot tell them how to fix their P&L until I know how their processes work (and don’t work).

So how are your processes?  Lean and efficient, or wasteful?  Address broken or lame processes in your business plan.

2) The plan must improve your revenue generation (“throughput”). Throughput is how much in sales you do per employee. The national average right now is around $163,250 (but this varies a lot from state to state and even county to county).  Take your total sales (either last fiscal year’s or where this year will probably end up) and divide that by your total employee count. That’s your throughput.  If it is above $163,000, you are already doing well. If below that line, find ways (through process improvement) to raise it.

3) The plan must have people at its heart. Whatever your plan spells out, you must remember that if it is going to happen, it has to happen with the help and involvement of your people.  This is often where the traditional business plan breaks down.  The best-laid plans of mice and men will crash if there are no people pulling at the oars.

So let’s combine this into a single driving statement to help an HVAC business owner create a simple but powerful business plan:

Write a plan that focuses on process improvement by using your people more effectively to raise your throughput.

Get with your top managers off-site for a day or so and ask yourself The Big Question: Why do we have the problems we do?  Hint: the first answer you get won’t be the right one.  You need to learn how to drill down to the true answer. Use the Toyota Five-Why method—ask “Why?” over and over until uncover the real cause. (You’ll be there in five cycles or less.) Focus on fixing that real cause, not the smoke screens that hide it.

As you identify the real causes of process paralysis, focus on cures that (a) your people have the talent to achieve, and (b) make it possible to sell more with the same (or fewer) people, thereby raising your throughput. Then write simple statements that identify the cause, how it will be fixed, and who will be responsible for it. Attach measurable milestones to each element of the plan so you can track progress.

Such a plan would address perhaps 3 or 4 real causes (maybe up to 7, but don’t go beyond that—you’ll get so confused with all the changes that you’ll lose your way) and take maybe 10 pages to write.

Write it, print off copies, give them to every employee with an assignment in the plan, review it with everyone involved, and then go do it—and measure the numbers month by month to see if you are making progress.  If not, revise the plan. If you are, enjoy it—and get ready for a big tax bill at year-end!

I use a rule of thumb to bring home its horrible cost.  I call it the UT RULE (which stands for the unbillable time rule) and it goes like this:

If you have typical unbillable time in your company, it could be costing you 2,000 times the net hourly pay (with benefits) of your field people!

For this rule, typical means that 15% of the installer’s day is unbillable, while 30% of a service tech’s day is unbillable. (These figures come from ACCA and other trade groups who annually survey their memberships.)  The complete proof of this rule is not complex, but it takes up more space than I want to devote to it here.

Let me take a holly stake and drive this point home to your heart. Suppose you have 6 installers (making, on average, $25 each) and 3 service techs (who average $30 each).  Benefits normally run about 1/3 of the wages, so you are looking at $32 per hour for installers and $40 for service techs.  If your shop runs the typical unbillable time rates, your total costs could be $32 x 2000 x 6 people or $384,000, plus $40 x 2000 x 3 people or $240,000, for a combined hit of $624,000 a year.  Do I have your attention yet?

So how do you trim away some of the unbillable time?

Here’s a laundry list to get you started:

• cleaning the shop— charge to janitorial account or to the job which created the mess
• cleaning the truck— charge to vehicle maintenance
• running errands— charge to the job errand is for; charge to office supplies account or other special function accounts; if personal, do it on your own time
• helping unload equipment/supplies/materials— charge to the job shipment is for; for general inventory, charge to warehouse account or unapplied time
• labor for robbing parts from another unit— charge job the part was for; charge to the parts labor account (if you have a parts department)
• labor for chasing down out of stock parts— improve inventory; otherwise, charge to the job part was for; have parts delivered by delivery service
• “customer not at home” service trip— review dispatching procedures; bill customer a minimum charge; get credit card numbers up front and bill card
• callback caused by technician not fixing it first time— this is a legitimate cause, especially with less-experienced techs; bill such time to the training account and log the problem so training can be done on that issue; send the original tech on the 2nd call; if a 3rd call is needed, service manager goes with the tech as a tutor; and NEVER send another tech to do the callback for the original tech
• shop time when there are no calls to run— market service so you stay busy; sell and do service agreements; send men home when there are no calls
• have service techs wear tool belts or carry a small tools briefcase—then when they go to the equipment, most of what they will need will already be there
• have installer trucks loaded the night before or pre-dawn hours by a part-time worker—this can save ½ hour or more per installation crew (that’s one man-hour a day) in wasted time
• have service techs run their first call from their homes—lots of time is wasted when they come to the shop in the morning to fill out paperwork, replenish parts, and chat

Finally, use daily time cards that have codes for the type of work being done, one of those codes being “U” for unapplied.  Explain that the tracking of “U” time is not to discipline the men but to wake management up to wasteful practices.  If the shop does better economically, all the people who work in it do too!

First, a superb sales rep (I’ll use the acronym SSR from here on out to save my fingers some wear and tear on my keyboard) knows that you create the pool of profits from which everyone in this business drinks. You, of course, derive your livelihood from what you do, but so does that sales rep and the company he works for.  The factory that supplies that distributor with equipment depends on the profits YOU generate.  The suppliers to the factory (metals, refrigerants, motors, etc.) depend on those profits too.

Because of that, an SSR will focus all of his or her efforts on you and your business. Like a waiter in a five-star restaurant, an SSR will be so devoted to you and your success that his employer may sometimes wonder who he works for—you or the distributor!  An SSR will go more than the extra mile to help you and your business succeed.  Because of that, an SSR will learn this trade so he or she may help you in EVERY area of your business.

An SSR will possess strong business skills, helping you develop and write a marketing plan that will help you generate leads, and then help you learn how to convert those leads to appointments and then to sales at high margins, keeping your installers busy almost all year and attracting the kind of business you are looking for.

An SSR will help you write a business plan that will help you grow safely and strongly for years to come.

An SSR will help you find, hire and keep excellent installation and service talent so you have the people to do the jobs you need to do quickly and right the first time.

An SSR will call upon you often enough to be a key partner in your business, but not so often as to become irritating, and will always be just a phone call away, 24/7.

An SSR will know his or her product line inside and out, frontwards and backwards, and will know how to help you apply that product line to any job you encounter.

An SSR will be a good communication conduit between the factory and distributor and you, passing vital information up and down the line as needed to keep all parties in sync and productive.

An SSR will be a leader among leaders, calling out and developing the best in you and your management team.

An SSR will be a team player, throwing the ball when asked, blocking when required, even carrying the water, all to help you score big.

In short, an SSR can be one of the most important elements in your successful business and will only fully enjoy his or her success when you enjoy yours.

If that is the kind of sales representative you have calling on you, thank your lucky stars.  If it is not, maybe it’s time to look around and try to find one. Feel free to drop me a note to discuss it.

It really does take two to be Number One!

Ally, Mickey and my Wife

Last week, the wife and I accompanied our daughter and son-in-law and our two grandchildren (Luke, 16 months, Alexis, 8 years) to Walt Disney World in Orlando, Florida for a vacation and birthday celebration (Alexis turned 8 while we were there).

Several observations about WDW:

1.  Florida is humid. Very humid. For me, one who is used to the dry desert heat, Florida was worse than a clam bake, with me as the clam. After walking only 50 yards, my shirt was soaked.  I wish Mr. D had decided to build his park near Phoenix—but then, it would have been only 5 hours away from Disney Land in the Los Angeles area, and that would have been a poor move from a business sense.

2. While much of the Disney magic is still evident, these hard economic times have hit Disney too. There were signs of delayed or cut-corner maintenance in our hotel and many of the waiting line areas did not have ventilation fans to cool off the patrons. (In Arizona, we use misters and fans to cool off people outdoors, but in the Florida humidity, misters would do no good whatsoever.)

3.  Certain parts of the older parks (Magic Kingdom, EPCOT) showed signs of wear, such as flaking paint, rust, cracks and the like.  On my last visit, in 2003, the park was pristine in every way.

Despite these small signs of economic stress, the staff— Disney calls them “cast members”— were true to form and exceptional in their friendliness and helpfulness, always exhibiting a cheerful attitude to all who came to them with questions or problems.  They are truly the best in the world at what they do.

And the Disney Magic is still there in huge quantities! For example, in the Magic Kingdom, the evening “Electric Parade” has now become the “SpectroMagic Parade”, but it still features Disney characters in LED-lit costumes and floats and my grandchildren were spellbound by it, as I was!

For Ally’s birthday, we ate at Chef Mickey’s (in the Contemporary Resort) and we were a little late due to bus transfers. As we were seated, our waiter came by and said, “Alexis, I have been expecting you! Happy birthday and welcome to Chef Mickey’s!” She was  stunned! Then, as we were nearing the end of dinner, we were visited by none other than Pluto, Donald Duck, Minnie Mouse, and, of course, the most powerful mouse in the world, Master Mickey himself! Alexis was in shock to meet them, as was my wife (a huge Mickey fan). Minnie Mouse even kissed me on the cheek. I have not washed it since.

One night, we took Ally to Cinderella’s Castle for dinner. Part of the package included a picture of her with Cinderella, with which she was awesomely impressed, but she did not know that we had dinner reservations. She had said all day that she wished she could eat there. Well, the photos are taken in a large anteroom before you ascend the stairs to the dining hall, and every few minutes, a royal page would enter the room with an official strut and utter in a loud voice, “Lords and Ladies of the castle, Cinderella requests the [NAME] party to be her guests at dinner. Princess [NAME] / Prince [NAME], will you accept?” We told Ally that we had to be invited by Cinderella to her dining table and she got a sad look. But a few minutes later, when the royal page announced our invitation to dinner, she could not believe her ears and her eyes grew as large as saucers!  She ran over to Cinderella and asked, “Could you eat at our table tonight?” Cinderella, carefully coached on how to handle all possible interactions, smiled with the grace of a true princess and said in fairy-tale voice, “I’d love to, my dear, but tonight I am dining with Prince Charming.” It worked.

I stopped by one of the caricature artists at the Animal Kingdom one day and thumbed through his book of backgrounds, looking for a telescope, but found none.  I said, “Can you do a sketch with a telescope in it?” He replied that he could, and he produced the sketch you see here. I have already scanned it and put it into my personal business card and have asked my astronomy club newsletter editor to use it instead of the “Uncle Sam” graphic we have used for the last few years for the President’s Corner section.

On the last night at Disney, Ally lost a tooth! Imagine her joy and surprise when she awoke the next morning to find a certificate signed by Tinkerbell herself at the foot of her bed, with fairy dust (glitter) running on the floor all the way to the door!

It never ceases to amaze me that a company has built a $100 billion dollar-plus empire out of a vermin-carrying rodent! But that is the Disney Magic.

I was privileged in 2003 to sit in on a seminar where the Disney HR department trainers taught us how they prepare the cast members for their jobs. Each cast member, be it a lowly janitor (the most trained cast member they have, by the way, since that is the one position most folks turn to for directions or help!) or the girl who dons the Minnie Mouse costume is given at least two weeks of training and orientation using what they call the Disney Compass.

The Disney Compass is a concept every business could use. Imagine a compass, like you use for finding directions. It has four main points—N (north), W (west), S (south) and E (east). In the Disney training system, these four points stand for cardinal virtues of what the Walt Disney Company stands for.

N is Needs. Everyone, they are taught, has needs. You have needs.  I have needs.  All God’s children got needs.  I need food, and water, and air, and shelter, and transportation, and so on. So do you.

W is Wants. Everyone also has wants. You have wants, I have wants, all God’s children got wants. I need food. I may have to settle for hamburger, but I might want prime rib. I need clothing. I may settle for a suit from J. C. Penney, but I might really want a $5,000 Armani original. I need a car. I may settle for a Honda Civic, but want a BMW. The list goes on.

What separates a need from a want, asks the Disney trainer? Money. We turn our wants into reality by trading enough money to satisfy them.

For the average Disney visitor (family of four) that means about $3,500 on a typical visit (counting transportation, hotel on the Park, meals, and extras). Disney also knows that their average patron comes back every 3.7 years (or so— the numbers may have changed a little since 2003).

So how does Disney get people to come back every 3.7 years and drop $3,500 every time they do?

By going to the S and E compass points.

S is Stereotypes. Disney does a superb job of inspiring their cast members that Disney Parks are not the stereotypical theme park. They are in a league all their own. I have to agree. I have been to many theme parks over the years, and none of them hold a candle to Disney. Disney is cleaner, Disney is more attuned to detail (witness the  hundreds of “hidden Mickey’s” in every Disney park, for example), Disney people are more pleasant to deal with (even in unpleasant situations) than any other park I have ever been to. I was told by the Disney trainer that led our seminar that Walt Disney World proudly has 17,000 janitors on the payroll. We all gasped, and then he told us that EVERY cast member is expected to pick up any loose trash he or she sees as they walk about their daily duties, and that even included the Disney CEO at that time, Michael Eisner. Disney tells their cast members that they cannot build repeat business at $3,500 a pop on a “me-too” park experience, and they really succeed at that!

Finally, E is the most important part of the compass. It stands for Emotions. Disney teaches their cast members that if they don’t touch the emotions of every guest that enters the park every day, they will not build the bond that brings them back every 3 or 4 years.

How good are they at touching the emotions of their guests? Let me give you an example.

We took our daughters (Sara, the one who went with us this trip, and her younger sister Julia) to Disney World in 1987 when Sara was 11. (At that time, Disney only had two parks: The Magic Kingdom, and EPCOT. Now they have five!) At that time, the Magic Kingdom had the Electric Parade at night with its cute (if not eventually annoying) little parade theme music. About halfway through the parade, as Pete’s Dragon was passing us, I felt a tug on my arm. It was Sara and she looked up at me and said, “Daddy, when we go home tonight, can we stop at the gift shop and get the tape with this music on it?” I said, “Sure, sweetheart,” and we did—at $19.95 for a cassette tape, at a time when you could get a Michael Jackson tape for $9.95! (We listened to that tape all the way home from Orlando to central Missouri…)

Now fast forward the film to 2002 and Sara’s wedding. When she had the wedding party enter the reception hall for the reception, she had the DJ play— well, would you believe she had the DJ play that Electric Parade theme song?

Think about it!  Disney had so ingrained itself into my little girl’s emotions at age 11 that on the happiest day of her life as a young adult woman, she played their music to celebrate her wedding. Wow!!!

What if every business did a stunning job of touching every customer’s emotions that way?

Better yet, what if your business strove to live by the Disney Compass? What could that do for your sales and success?

The Idiot Son (Heir Apparent-- NOT)

The first thing you need to determine before bringing a son or daughter into the business is, Does the child really want to be in the family business?  Ask this question of the child some time when you have thicker skin than normal.  I think that many parents foist their family businesses off on their children the same way they force their kids to be involved in soccer, Tae Kwan Do, scouting, equestrian arts, debate clubs, and the like. (A lot of kids in those “mom’s taxi” situations really don’t want to be doing all that stuff.)  If they don’t, have the courage to open your hand and let that little bird fly to some other tree.

If they do, you next need to ask, Do they have the smarts and guts to do it? If not, don’t make them the president some day.  Give them a job, yes, but don’t give them more responsibility than they can successfully handle or grow into.  If you overstep their reach, you will only hurt them in the long haul and probably destroy what you worked so hard to build.

Third, treat your kids in the business no different than you would any other employee. This sounds easy (or hard, depending on how you see it), but you cannot be easy on them because they are the heir apparent, nor can you be extra hard on them to make them tough to run the show when it is their time.

Nepotism can have a devastating effect on company morale when the other employees are not family members!

Having said all that, my advice is to click here to download a PDF file titled “Family Members in the Business.”  It is yours to use as you see fit.

Bottom line: If the kid(s) can do it, bring them in and prepare them for the Big Job.  If they can’t, bring them in as employees, but find someone else to turn it over to.  And if they don’t wanna, don’t make ‘em.  You’ll probably damage your family as much as your business if you do!

The latest issue (September 2009) ran a short article on pages 15 and 16 titled “Selling to the Debt-Averse Consumer.” Here is how the article started:

The successful consumer-oriented companies in the coming years will be those that can figure out how to make do without the former life of the economic party: the monthly payer. In his heyday, this kind of consumer asked himself not whether he could come up with the whole cost of a vacation or landscaping or a car but whether he could afford the resulting increase in his monthly bills.

The article goes on to suggest that to succeed in our new economic reality, sellers will need to promote value and utility over luxury and brand.  They say, “Consumers won’t be able to buy as many goods as before” but will be favorably disposed towards a vendor who helps them see their decision as a lifestyle choice rather than an option forced on them by the sour economy. They suggest sellers focus on messages around family, life simplification and getting back to the basics.

In his crystal ball, author Eric Janszen says, “Will the monthly payment consumer ever come back? The Federal Reserve wants to reinflate the credit bubble and engineer a return to the old days. But that isn’t possible”  because the cash flows just won’t be there.

I pondered this recently on a plane flight to Georgia and wondered if this was being felt in the HVAC business yet.  So when I got to my client in Georgia, I asked his assembled TMs if their dealers were finding it harder to sell people on retail financing. They replied that it was, due (they felt ) to a higher turn-down rate from the financing companies (a good point). When I asked them what they thought of the HBR’s premise, they said that it sounded reasonable— and that it scared the bejeebers out of them!

So I wonder, and ask you— as contractors or territory managers (or as consumers), are you finding fewer and people going with financing on their jobs? And if they are, how does that change our sales approach?

Let me know your thoughts. I’ll post any and all replies that are well-thought and printable!

We married for better or worse. I got the better part, she got the worse. But we still love each other and cannot imagine life without each other, especially now as the grand kids start growing up.

So for our anniversary, we spent a quiet day in Jerome, Arizona, a

My Bride of 37 Years at Jerome, Arizona

remarkable little town built on the side of a steep mountain.  Jerome is sometimes called “the vertical city” and when you visit you can see why!

It was started in the 1880’s as a copper mining town and did quite well until after World War II, when the mine shut down. In its first year of operation, it gave its investors $55 million in earnings– at a time when a dollar then would buy about $30 or more in today’s currency.

The town is rich in history, but to my displeasure, it is now mostly a collection of artist shops (selling everything from very good works to trinkets disguised as art), wine shops and touristy klatsches.

There are some good restaurants in town, and some world class ice cream! Also, the small museum in the heart of town was worth the $2 admission price.

All in all, a nice way to spend a lazy August day, a mile high and 20 degrees cooler than the Valley of the Sun!