Inc.com

Great Company Culture Isn't Pricey

Paul Spiegelman — Thu, 23 Feb 2012 18:45:00 -0500

Even the tightest budget allows for an investment in culture. Here's what I mean.

I'll admit it. I'm cuckoo for the fun stuff we do around here, at the Beryl Companies. Mainly because I know that when combined with training, education, and our core values, it gives our people the best chance to do a fantastic job for our clients. Plus, I see a lot of smiles whenever I'm in the office. Smiles are a currency that never devalues.

Now, I didn't always have the checkbook to make big expenditures on culture. And many of the things that I commit to spending on now started as bootstrapped and pocket change endeavors. But what we did have to spend on culture was creativity and hustle. To help you improve your culture without having to dig too far into corporate coffers, I asked Lara Morrow, our queen of fun and laughter (yes, that's her real title, and it's a name our employees gave her) and resident Bon Jovi addict, to share her favorite tricks for low-to-no cost culture.

Here's what Lara says:

1. Create a culture of the people, for the people, by the people

It's very important that company leadership doesn’t just decide strategic plans and let them rain down from on high. It costs $0 to ask your employees what kind of programs and work environment are best for them. Survey, analyze, enact, repeat. Let your employees build your culture and your employees will respond.

2. Give employees space to care

A family atmosphere is a big part of our culture at Beryl. Employees wanted to raise funds to help a coworker who was going through a difficult time. So they took up a collection and then used those funds to buy supplies to host a cookout to sell burgers and hot dogs to the whole company. This kind of initiative tripled the amount raised and went toward something that was important to our employees. Cost to the company? The space and support for employees to act.

3. Bridge the moat around the corner office with sandwiches

Our senior leadership team has a regular lunch called Chat n' Chews. We sit down informally with a small group of employees from across the company and talk about what's going on in the business. The casual setup makes employees feel comfortable to bring up concerns or new ideas. We make sure to take notes and follow-up. Follow-up is key for employees to know they are being listened to. Price to the company? Lunch.

4. Buy really cheap stuff

We've sourced culture items like balloons, gold and silver cardboard stars, Hawaiian grass skirts, and life size Angry Birds and Kung Fu pandas from various vendors and contacts. We talked with employees and worked their contacts to get the best deal on things we wanted to bring into the office. I think I keep Oriental Trading Company in business. Cost to the company for thousands of beads for Mardi Gras? Much less than you'd expect.

5. Free to be me

We threw out our corporate guidelines for office and cubicle displays and let our people create spaces they enjoyed. I (Lara) have at least 20 posters of Jon Bon Jovi in my office. Cost to let your people build the atmosphere they work best in? Nothing.

6. Pour energy into the office

We take care to make sure that our whole building is upbeat. From the music in the bathrooms to our redesigned break room, it's not hard or expensive to be surrounded by a good, positive environment. And our happy employees return that energy to us by treating people who call in with care and compassion. Sit down and critically evaluate what your space looks and feels like. The best decorations we have are pictures of our own employees simply having a good time being with each other. Price tag? Some frames and nails.

7. Take silliness seriously

Theme days, dress-up days, contests, and even coordinated teasing of executives keeps our culture loose, fast, and fun. Pay attention to popular shows and pop culture and coordinate an event that capitalizes on what's hot out in the world. We got media coverage from the employee-driven "pirates" vs. "ninjas" competition day in our offices. It wasn't a PR stunt. It was just something that made our employees happy. Cost to the company? Some boxes and poster paper.

Thanks, Lara. None of this is overly complicated. Choose any of the above, put it into action, and measure the results. You'll soon realize that while creating the foundation of a great culture can be inexpensive, the smiles and effort you'll get from your employees in return will most definitely be priceless.

How to Identify Your Next Business Opportunity

Tim Rice — Thu, 23 Feb 2012 17:25:00 -0500

As the co-founder of a Brooklyn gourmet food and wine shop, Jason Richelson knows first-hand the shortcomings of cash register software. So in August 2008 he invented a new one, ShopKeep Register, that runs on the iPad. He now has nearly 1,000 customers and last month raised $2.2 million in financing.

Why You Don't Need Venture Capital

Brian Hamilton — Thu, 23 Feb 2012 16:00:00 -0500

Young entrepreneurs often pursue funding first, product second. That's a dangerous path--and it won't do your company much good.

So often, young entrepreneurs think the viability of their fledgling company depends on their ability to intrigue investors and raise capital. But the truth is, raising capital is often a pipe dream.

Don't get discouraged, though: Raising capital should be the least of your concerns.

The reality is, no bank will give you a loan. Their cash flow has dropped in recent years; as a result, they deny more than 90 percent of small business loan applications. And pitching your company to venture capitalists is about as effective as chasing clouds. With an ever-expanding pool of entrepreneurs to invest in, VC firms have become increasingly choosy in deciding which companies are worth cultivating.

Better to Bootstrap

Simply put, it's not enough to be another guy with a great idea. What will separate your company from others is the quality of your product--not the money you have backing you. Bootstrapping your company is a must, not a choice.

Day one for your company should be about discovering how you can develop your great idea with the limited capital you currently have; you can build incrementally from there. A company’s true value--especially a young one’s--is measured by the quality of the product or service, not in terms of dollars.

Giving Up Equity

Self-funding a start-up may seem daunting and counter-intuitive, but the return on investing your own money into your venture is far higher than receiving third-party capital during your company’s infancy. Here's why: In the rare case that your idea seems so lucrative that you receive a substantial amount of capital up front, your equity will be dramatically diluted. And if your company does achieve the success, the money you earn will never equal the time and effort you put into building your company into the publicly traded powerhouse it will (hypothetically) become.

This is not to say that capital is not an integral part of expanding your company. Correctly timed angel and venture capital investments will at one point become vital.

But what many fail to realize is that your company will fail if raising money is your sole focus. Capital acquisition should be an incremental process. –As told to John McDermott

Sizing Up the Company on the Other End of the Deal

Erik Sherman — Thu, 23 Feb 2012 15:30:08 -0500

What if you were negotiating with Apple and didn't know it? Large companies can mask their identities. Here's how to uncover them.

Smart negotiations start with knowing who's on the other side of the discussions. Only then can you understand their real interests and how much value you could potentially deliver to them—and what they might be willing to pay in exchange.

Take Apple's recent trademark snafu.

A Chinese company called Proview claimed that it owned the iPad trademark in China. Fortunately for Apple, a Chinese court didn't agree, so the company can continue to sell iPads in Shanghai.

Apple claimed that it had bought the rights in 2009 and that Proview has gone back on a valid deal. The court has said that technicalities kept the purchase from being legal. But there's an interesting twist: Apple made the deal through a shell company it owned.

Now maybe Proview knew that Apple was behind the attempted trademark purchase. But it's conceivable that a behemoth would try to mask its identity to give the impression of a smaller firm with fewer resources.

Could you be caught in a similar situation? Here are some ways to check whether a company seems on the up and up, or if it might be a front for someone else.

Check out their domain name

Most companies today have some presence on the Internet—if not a website, then at least an email address. If company representatives can't send an email from their corporate site, it could be a sign that either the company is tiny or that it is trying to hide its true identity.

Get someone to email from the company's own domain (say that it helps you verify the corporate identity) and then do a whois search on the domain name (the part after the @ sign) at Internic.net. That will tell you when the domain was created and last updated. If the domain is fairly new while the company claims to be older, be wary.

Follow the Web trail

Any legitimate company should show some signs of existence. It might be a mention in a news story, a press release, or announcement of a deal. At the very least, using the company name and the address of its headquarters should return something from business listings or telephone directories.

Check patent and trademark listings

Companies doing business in the U.S. are likely to have trademarks or patents. The U.S. Patent and Trademark Office has a website where you can search for patent and trademark applications by company. (For a patent, set the assignee name to the company; for a trademark, use the owner name field.) Very small businesses might not have anything listed, but a company with the resources to make a significant deal is likely to have something on file.

Look at the incorporation listings

In the U.S., corporations have to be registered. Chances are they're either registered in the state of their headquarters or in Delaware. Go to the appropriate secretary of state's office and do a search. Again, you don't necessarily need a lot of the potential detail. But look for when the company was incorporated and name of the official contact. If the company is new, consider that it might have been created for a specific purpose of negotiation. And do a search on the person's name (maybe combined with the home state of the corporation) to see what affiliations might pop up.

No one of these methods is sure proof of anything. But if you find that a company seems to have appeared from nowhere, it might be a sign that someone is trying to create a front that will make you comfortable.

Layoffs: What to Say When Employees Ask

Jeff Haden — Thu, 23 Feb 2012 14:51:02 -0500

You want to tell them what you know--but can't. And you can't stay silent either. There's really only one thing you can say.

Dear Jeff,

I have a great rapport with most of my employees. The problem is they sometimes ask me to tell them things I can’t talk about. How do I handle those situations without pushing people away?—Satya Bhandari

When you're in a leadership position, you know things you can't share with employees. That's a given.

Here's a typical situation. Sales are down, financial results are poor, layoff rumors have been swirling for weeks. Your employees know you've had several meetings to discuss options, one as recently as yesterday. During that meeting you decided to lay off several employees the following week.

One employee says, "I know you have been talking about layoffs. I'm really worried. I can't afford to lose my job. Can you please tell me what's going to happen?"

Now you're in a terrible spot. You shouldn't say. You can't say. But you've built a solid rapport with your employees, always answering questions and giving honest feedback. How can you respond without breaking confidentiality yet also without breaking the sense of trust you've built?

Hard as it is to do, you can't say what you know. But you also can't just say, "I'm sorry, I can't tell you." That non-answer will go out on the floor as, "I asked her and she said she couldn't tell me. If there weren't going to be any layoffs she would have just said so. So I know people are going to get laid off."

Clearly the short answer doesn't work. You have to go a little deeper.

Here's what you could say:

"You know we've been struggling. We've had a lot of meetings to look at options. I wish I could, but I really can't tell you anything at this point. It's not fair to others if I tell you things I don't share with everyone.

"Here's what I can tell you: Whenever decisions are made, and I can share those decisions, I will tell you and everyone else immediately. You'll be the first to know, and you'll hear it directly from me. I promise. For now, just know that we're doing everything we can to make a bad situation as good as possible."

Will the employee go away happy? No. He might even get angry or feel betrayed, especially if you have shared things in the past you weren't allowed to share. (Admit it; we all spill a few secrets from time to time, especially with great employees we trust.)

But this is one situation you can't leak. Don't assume the employee will be able to keep the news to himself. After all, you didn't.

Another key point: Being asked questions you shouldn't answer is made more difficult when your lips were loose in the past.

It's always tempting to share sensitive information with certain employees. Not only is it nice to have someone to talk to, sharing also builds a stronger relationship and bond... and makes running a business a little less lonely.

But that "openness" also makes any "I really can't tell you" situation that much more difficult and leaves the employee feeling shut out.

The best practice? Keep all sensitive matters to yourself, and never share information with a few employees that you can't share with all employees. If nothing else, that makes the situation you asked about a lot easier to deal with.

Have a question? Email questions@blackbirdinc.com and it may appear in a future column. Please indicate if you would like your name and/or company name to appear.

Build Your Dream Board of Advisors

Maura McCarthy — Thu, 23 Feb 2012 14:51:00 -0500

When building our board, we cast a wide net. We ended up with a diverse group of people perfectly in tune with our company's ethos. Here's how you can too.

Sometimes it really does pay to play the field before settling down. To see what's out there, who you click with, and which relationships prove the most beneficial. And ditch the idea of a "type." When it comes to relations with advisors—just as in love—we've found you'll only limit your opportunities that way. It's far better to spread a wide net.

Look around the table at a Blu advisory board meeting and what you'll see is the result of our own "dating" process. It's comprised of died-in-the-wool environmentalists, technology experts, educators, and business people. Our board reflects a lot of the same qualities a college admissions officer seeks in an applicant: well rounded, passionate, and dedicated. Above all, we set out to create a diverse group made up of people who are in tune with our company's ethos. So we shopped around.

Faced with the question of how to set about identifying and wooing people who will make a real difference on our board, we worked to establish relationships first. We dated around before committing, inviting prospective members to get an inside look at what we do, to visit our factory, to meet our team. We thought carefully about benefits, formalizing the process of joining the advisory board, and emphasizing the deep involvement we were looking for from every member. And then it was time to make the first move—to ask some of these smart, energetic people to give us a try.

We did not ask all those with whom we built successful relationships to join us, however. We all know that not every partnership that has that "spark" can go the distance. Keeping in mind our mission to build a diverse and vibrant group, we extended invitations only to those we deemed a truly great fit.

But finding the right match is really only the beginning. You could select the perfect mix of advisors, but if the relationship isn't nurtured—in big and small ways—you're doing yourself, and your board, a disservice.

The key to long lasting board relationships? No surprise here. Communication.

Most people "get" the formal side of communicating with their board members. Board meetings, quarterly e-mails and the periodic snail mail communication, are of course invaluable. But the real key is consistency.

But like many young companies, we did not at first recognize a vital truth: that fostering a deep and continual feeling of involvement in the workings of the company is crucial to the success of the board (and, in turn, of the company). Once we started going beyond just sharing periodic, polished, “board-ready” materials with our advisors, and began including them in Blu's everyday successes we saw a more active and engaged group emerge.

It really can be the little things that matter. For example, now when we ring our office's "sale bell," signaling that a Blu Home has been sold, our advisors get a call, too. And thanks to the easy and genuine efforts of our CEO—for whom it is second nature to pick up the phone in a free moment to talk to one of our advisors about a possible sale, an upcoming event, or other goings-on around the company—our advisors are well aware that we care about and value them and their role.

Nurturing relationships this way creates a group of people who are not advisors in ceremonial name only, but who are trusted members of the company with a stake in its success. In other words, true partners.

Regardless of communication, some partners are naturally more active than others. At times we find our board operates on the 80/20 rule, with 20 percent of the members providing 80 percent of the relevant help for the company. But it is deeply gratifying to see the most active advisors take the company's mission on as their own, truly becoming champions for Blu.

The original hope was that innovation and collaboration would grow more easily from the diverse mix of passionate personalities and perspectives we had put together. But the payoffs have been farther-reaching than we ever could have anticipated. Eschewing a board comprised of 100 percent hardcore "business" people in favor of a more "liberal-arts" approach, has lead to juicy and unexpected benefits, including new market opportunities and connections to funding.

One of our board members, selected for both his environmental expertise and his deep commitment to our mission, brought with him connections to regional conservation groups, which are looking toward judicious green development. A market opportunity was born. This taught us that choosing unique advisors who care about your company can make your business aware of and well positioned for valuable new business opportunities.

Similarly, we have seen again and again that the people who want to invest with and help grow a company are not only the top venture capitalists you might imagine, but also those who are connected to the "soul" of the company. When you reach out for dedicated advisors who are not necessarily contacts for investment, links to huge funding possibilities can be a happy—if surprising—byproduct. Take the expert in environmental policy and business that we pursued for his innovative ideas, who serendipitously pointed us to an opportunity for investment from a source we'd not known anything about (a personal connection of his). When an advisory board member feels deeply attached to the mission and ideals of a company and in turn brings this enthusiasm to his or her own network, the rewards can be huge.

To us, an effective board of advisors is an eclectic one that is allowed to share in the excitement of the growing company. In organizations that are fast finding their niche and picking up steam, the milestones along the way are opportunities for connecting and celebrating with the people you've chosen to bring into the company's most trusted inner circle. And in return, they will pay you back with ideas and enthusiasm that might move your company forward in astonishing, unforeseen ways.

What's Really Holding Women Back

Geri Stengel — Thu, 23 Feb 2012 14:34:46 -0500

Research shows that women exaggerate the skills they need to succeed. For women entrepreneurs, that could be a problem.

I’ve come to the very speculative conclusion that women owners who hesitate to take the Next Big Step to grow their business may be hampered by misperceptions about how growth is accomplished.

As Jodi Glickman suggests in her recent HBR article, women focus on what they lack, not on what they have. And if women don’t have it all — everything that is required to do the job — they don’t apply for a job. By comparison, men with only half the qualifications asked for will present themselves as ideal candidates.

It’s a matter of perception: half full or half empty?

I think women may view their ability to grow their companies in the same way they view their qualifications for a job: all or nothing. They see the long list of tasks needed to grow a business and base their decision to forge ahead on whether they can do it all. The answer, not surprisingly, is “probably not,” making the undertaking seem too risky.

Looking at the same list of challenges, a man is more likely to think, “I can do half of this stuff and I’ll find someone else to do the rest.” Not so scary that way.

Be a coach, not a mom: Build a team instead of doing it all yourself.

Adopt the attitude of Talia Mashiach, CEO and founder of Eved, an online event planning service, who says that the most important lesson she’s learned as an entrepreneur is that “You can’t get to your end goal doing it all by yourself." Having mentors, investors and, most importantly, clients that are going to be there to support you and help you get there is the most important thing I’ve learned.”

If you see your job as being everything and doing everything, that’s overwhelming. You realize you don’t have — check all that apply — the time, money, expertise, childcare, bandwidth, range of skills needed to take your business to the next level. So the leap upwards is too high to try.

But you don’t need to be able to check all the boxes yourself in order to grow your business. You need to know how to identify what you don’t have and hire a team that fills the gaps.

Far too many women don’t ask for help, whether it’s a bowl of chicken soup when they’re sick or help estimating project cost. They expect to do it all and, just to make it a little more overwhelming, to take on any extra load when it arises, whether childcare or finding a larger office.

The women I’m interviewing who have made it to the $1-million, $2-million or $10-million revenue mark did ask for help. Yes, they are all the prime movers-and-shakers who worked excruciating hours and risked their financial futures to build their businesses. But every one of them mentioned other people who had made it all come out right in the end:

a supportive spouse who held up half the home front
a partner who bucked them up when they were down and vice versa, and who had the skills they lacked (and vice versa again)
a team of accountants, lawyers, and other business advisors
coaches
networks of other business owners with whom they could brainstorm about problems
creative employees who came up with ideas to move the business forward

No one mentioned all of the above but all of them mentioned some of the above, with heartfelt gratitude for the help given. Growing a business is a lot like raising a child: It takes a village. You can’t do it alone, whether you are a man or a woman.

Maybe the way to push women to take the upward leap is to remind them that there is a village out there that can and will help their baby grow.

How to Become an Amazon Bestselling Author

Scott Gerber — Thu, 23 Feb 2012 12:50:00 -0500

You should strategically market your book for Amazon. Tips from Scott Gerber, author of Never Get a "Real" Job, and Jack Covert, founder of 800-CEO-READ.

How To Spot Innovative Hires

Geil Browning — Thu, 23 Feb 2012 12:10:00 -0500

A brain researcher divulges six interview questions--and other clues--to help distinguish innovators from ordinary workers.

Many of the resumes that cross my desk are white pieces of paper that list education, experiences, and skills. Since they're typically from traditionally-minded people who prefer not to call attention to themselves, I don't expect anything else.

Some people who are more expressive also include links to websites, where they post videos or slide presentations. Some resumes cleverly include square QR bar codes to scan, leading to multimedia links. I've also seen resumes from designers that are so colorful and inventive they are like works of art. Some of these are visually stunning, but it can take me 20 minutes to decipher the creator’s job qualifications. I've seen a resume set up like a board game, with a spinner in the middle, and—my personal favorite—one you cut out and fold into a colorful little box with the job seeker’s information printed on all six sides. It’s a thinking-outside-the-box box!

In my last article, I noted that all people have natural strengths to be innovative, whether they are butchers or bakers or cabinet makers. But how can you identify them in the job application and interview process? Though it does give some cues, the resume—whether a white one-sheet or a creatively-designed interactive puzzle—is of course not enough.

Suppose you have evaluated your team and you realize that you do not have all brain types represented. Specifically, you need someone with a "conceptual" brain to foster innovation and ideas that are not bound by the kinds of restraints that often hinder others. (Other folks say, "It has never been done before," "It’s too expensive," or "You’ll never get it approved," for instance.)

These conceptual people naturally look at things differently. They usually excel at generating ideas and making the "quantum leaps" necessary to solve difficult problems. They need to engage with the big picture. They enjoy a challenge and immediately focus on solutions, but not the steps involved to get there. They are quickly bored by details and mundane matters.

So how do you weed out the innovators from the masses? And how can you distinguish the best ones at that? Naturally you want an intelligent, energetic employee with enthusiasm and integrity, one whose values are in line with those of your organization. Finding an innovative thinker also means looking for a creative resume, with writing that is metaphorical and playful, even inspirational. Look for phrases like, "I am an idea person," "I am visionary," or—better yet—"I enjoy developing solutions that are fresh and new." Don’t be suspicious of a career path that has jumped from one field to another.

The interview is where you can really get a sense of conceptual thinking. Be prepared for innovative thinkers to go off on tangents—in their minds they are not digressing, but connecting the dots. Listen for words or phrases like these: brainstorming, big picture, global, vision, hunch, oneness, synchronicity, and cutting edge.

Here are useful interview questions to ask to identify strong innovators:

1. If you were to assemble a piece of furniture from the directions, how would you go about it?

I love this question because each thinking type answers it so differently. Someone whose thinking is very innovative will often say, "I look at the picture on the box, dump the pieces in a pile on the floor, and then begin. When the project is complete, I use the directions to start a fire."

2. When a deadline is a month away, how do you finish a project—and when?

An innovative thinker will say something like, "First, I search the Internet for ideas. Then I'll take a walk or ponder until a solution makes itself known. This may happen immediately or it may happen three days before the deadline, but when the solution surfaces, it will come all at once—and it will come."

3. How do you make important life decisions?

Innovative minds will answer, "I base my decisions on intuition."

An applicant’s behaviors are also important to understanding how an innovator (if you've found one) would interact as part of your team. Look to uncover them with questions like these:

4. What would you do if you showed up ten minutes early for a meeting?

Does this individual talk about striking up a conversation with the nearest person, or quietly prepare for the meeting? Only you know which trait would offer an appropriate balance at your company.

5. How would you assert your ideas if you were in a meeting with a group of managers and a confrontational issue emerged?

This way you can get a sense of whether or not this applicant will wait for encouragement before speaking, or jump in with a point of view. Does your current team have outspoken leaders who would squelch innovations your candidate proposes, or would his voice be heard?

6. How would you respond if your manager suddenly changed your project?

Do you find this applicant describes immediately adapting to the new task, or holding his ground? Which would benefit your organization's processes more?

In addition, innovative job applicants will most likely ask you where you expect your company to be in ten years. They may ask how many products you have introduced, and whether or not you have awards for innovation. They also may ask if they can bring their dog to work.

If you want innovative ideas to surface in your company, it is your job to cultivate an atmosphere in which all types of creativity are valued. Before you hire your perfect candidate, make sure your organization is truly ready to hear new ideas.

One note of caution: look for competence, not just blue-sky thinking, because ultimately you need ideas that will benefit your bottom line. Experience with real world solutions is a bonus in any job candidate.

Poll: Small Business Owners Feeling Optimistic

KC Ifeanyi — Thu, 23 Feb 2012 11:20:58 -0500

When it comes to capital spending, hiring, and obtaining credit, small business owners are looking on the bright side.

Despite an economy that’s far from recovered, soaring gas prices, and the import-price index creeping upward, small businesses are showing a surprising amount of confidence as it pertains to capital spending, hiring, and obtaining credit.

In the recent Wells Fargo/Gallup Small Business Index, small business owners said they plan to increase capital spending by 28 percent, a notable four-year high. What’s more, small business owners have already increased capital spending by 24 percent in the past 12 months, the highest level seen since April 2008.

But the upward trends don’t stop there: small business owners are feeling more confident about hiring as well. Over the next year, a 22 percent increase in small business job creation is expected to occur, showing an optimistic outlook not seen in the past four years. It should be noted, however, that making good on such auspicious declarations of hiring hasn’t panned out: More small business owners reported decreasing jobs (22 percent) than adding them (13 percent).

Economic uncertainty, along with health care costs, seem to be the driving forces behind small business owners reticent to bring on new hires–the latter of which actually has feasible solution. In his 2013 budget, President Barack Obama outlined an expansion and simplification plan for the Small Business Health Care Tax Credit in the Affordable Care Act that would benefit close to 500,000 employers who provide insurance to four million workers–that is, if Congress approves the proposal.

Although it would provide an additional $14 billion in tax credits over the next 10 years, Obama’s proposal has predictably been met with opposition by some Republicans who believe such an expansion isn’t the answer. However, given the alluring details of the proposal, it just might be what small business owners need to regain confidence in hiring.

In addition to a slowdown of adding jobs, a discrepancy between 2012 predictions and 2011 results was also found where the topic of obtaining credit is concerned. Twenty-seven percent of small business owners polled said getting credit this year would be somewhat or very easy (up 22 percent from last year), while 33 percent admitted it was somewhat or very difficult to actually obtain credit over the past 12 months–a familiar sentiment during the last two quarters of 2011.

Aside from the actual results of hiring and available credit this past year–and whether or not 2012’s capital spending and job creation expectations come to fruition–it should be somewhat heartening to see such optimism from small business owners who would undoubtedly bear the mightiest blow should the precarious economic climate slip further in the red.

5 Ways To Make Your Company Worth More

Jason Trevisan — Thu, 23 Feb 2012 11:15:00 -0500

These five things can dramatically increase your company's valuation, says venture capitalist Jason Trevisan

When I was learning to drive I swerved. Left, right, left. My driving instructor told me that if I focused a hundred yards ahead, I’d swerve less. That made no sense to me – what about the yellow lines right here?!? – but sure enough, it worked.

Entrepreneurs with high-growth businesses can be similarly consumed by the day-to-day struggles, and forget to look out at the horizon. While the need for rapid daily execution never goes away, the strategic value of a company can often be found by looking ahead and ensuring you’re still driving in the right direction.

So what should you focus on when there is already too much to focus on? Here’s what the best entrepreneurs do. Coincidentally, these are all things that investors value highly.

Have an actual strategy. Not simply a plan, budget or mission statement. And not some boilerplate about how you’re going to make incremental improvement. A real strategy. Articulate what your market and customers will need in the next three years, how you will serve them better than anyone else, and what you need to be good at to successfully get there.

Differentiate. Unless you’re De Beers, you have competitors. While there are strong arguments for and against obsessing over the competition, one thing is certain: You need to differentiate from your competitors. Know how you can (or should) uniquely satisfy your customers’ needs and leverage that position.

Have a brand identity. As a small business you’re not likely allocating a brand budget and running television ads, but you can proactively coordinate your messaging, product, culture, logo, business cards, social strategy, etc. Everything should support a single, unified brand identity.

Bear hug your customers. Perhaps the most important metric I study at companies is customer retention and, more specifically, revenue retention. That reflects both customer retention and organic account growth. Obsess over this, and know your plans to always improve it.

Know your TAM (total available market). Simply knowing your opportunity is step one. Step two is ensuring there’s runway and figuring out how to expand it with products or distribution. Step three is having a strategy to capture share. Sounds like step one, right?

Thinking through these too often forgotten exercises is time well spent. You’ll find that your business will be more focused and you will swerve a whole lot less.

How to Make the Toughest Decision

Karl Stark and Bill Stewart — Thu, 23 Feb 2012 10:59:57 -0500

If your business model has run out of steam, you cant afford to wait. Here are six steps to help you make difficult strategic decisions more quickly.

Sometimes a product offering or business model runs out of steam. Maybe your customers no longer value your product or service as highly. Or your partners find other ways to create value and no longer need to partner with you. Or your cost structure is no longer competitive.

This is a natural part of capitalism’s “creative destruction”: that which created value yesterday may destroy value today and tomorrow. If you’re in this situation, you need to make tough decisions about how to evolve your business model:

Do you reorient your business toward new, risky, yet potentially greener pastures?

Do you lay off employees who can no longer create value?

Do you replace your management team with one that can better face the future?

Do you shut down operations that have served you well for years but are no longer economically viable?

These are all difficult decisions that many companies have faced in the recent downturn. Management teams tend to hesitate pulling the trigger on any of these moves, for several reasons:

Leaders have an emotional attachment that makes them reluctant to follow the facts.

The future may be uncertain, allowing a management team to invent scenarios whereby the old model works well, while ignoring more plausible scenarios that demand change.

Leaders are reluctant to flip flop on a strategic direction they previously put in place.

Leaders may be incentivized to avoid making tough decisions; why risk making a bad choice that can damage their careers?

Whatever the reason, delaying a tough decision only makes the challenge more difficult and riskier to address later. A company can burn through a lot of cash, customer goodwill and employee morale by postponing a necessary change of direction.

If you’re wary of making a tough strategic decision, here are six tips to help you move forward:

Gather the facts quickly. Don’t let “analysis paralysis” serve as an excuse for delay.

Make your best call. The facts are rarely conclusive, and your experience in the business likely puts you in the best position to decide, so make your best judgment.

Don’t second-guess yourself. Once you’ve decided on a plan, commit to seeing it through and accepting the consequences.

Rally your team. Make a compelling, focused case for your path forward and communicate, communicate, communicate. Make sure the key people on your team are fully on board and are adding their voices to yours.

Prepare yourself to take the hit. Change is stressful. Some will disagree with your decision and may be hurt or resentful. You cannot lose courage nor let confidence waver, because if you do you risk executing your new direction poorly, which may be the worst of possible outcomes.

See it through. To paraphrase Shakespeare, “If it is to be done, best to do it quickly.” Push hard to reorient your business to your new course as forcefully and quickly as possible.

At the end of the day, you should recognize that delaying tough decisions does you and your business no favors.

Stop Procrastinating Now. Here's How

Lauren Perkins — Thu, 23 Feb 2012 10:38:00 -0500

It's great that entrepreneurs are always looking for bright new ideas. But how do you stay focused on the projects you've already got going?

"Procrastination is opportunity's natural assassin." -Victor Kiam

Do you have a lot of great ideas, but find yourself constantly pulled in multiple directions by new opportunities? As entrepreneurs, it's in our very nature to be always looking for the next new thing -- before finishing what we’re already working on.

Leaving loose ends dangling can have huge negative impacts:

On the bottom line. Whether it’s following up on communication with prospective business relationships or finishing big projects, your business’s success depends on you and your people getting stuff done. Finishing things. Obvious, right? You’d be surprised.
On your morale. Knowing that you have a ton of things to do, without seeing forward momentum, is a recipe for feeling overwhelmed and stressed out. When the to-do list gets unbearably long, it can be paralyzing. Why even start that to-do list when there’s no hope of even making a dent in it?
On your productivity. When the to-do list gets long enough and you get stressed out, something will slip through the cracks. It’s unavoidable. This causes more stress and, of course, a longer to-do list.

Hopefully, I’ve taken a tiny step toward scaring you into a more focused frame of mind. So how do you make progress?

Vet your opportunities Set qualification benchmarks for new opportunities, ideas, and/or relationships. This will help keep you on track and help you assess what is worth your time.
Learn to triage Assess incoming requests against internal opportunities and ideas. What will make the biggest impact if you and your team complete it? What could have the biggest negative impact if it isn’t taken care of?
Keep it simple Choose one big idea or project at a time and focus on it. If you have a team, delegate vetting opportunities and initial tasks on other priorities to team members. This way, you stay focused.
Prioritize Tackle the big things first, then fill in the rest of your time with the mid-sized and smaller jobs you need to take care of on a regular basis.
Develop a strategy Set the objectives and intended outcome first. Then break those down into smaller tasks with goal-oriented timelines, and start assigning responsibilities.

Yes, it takes practice. But you’ll be much happier and more successful if you can use these tactics to help get things done, making it possible to move on to the next big thing on your list much sooner. Your business and your sanity will thank you!

6 Start-up Tips From Tech Giants

John Brandon — Thu, 23 Feb 2012 09:25:00 -0500

Google and Microsoft were once start-ups. So how'd they get that big? We asked company executives to share their growth tips.

Technology is all around us—mostly due to the efforts of companies like Google, HP, Cisco, and Microsoft. Yet, even the largest enterprises had to start somewhere (for more than a few, it was in a garage somewhere). These famous companies clung to core principals like focusing on long-term customer relationships and listening to feedback. I recently asked executives at some of these companies for their best tips for growing a company from scratch.

1. Use social media for listening, not just talking
Ed Abrams, an IBM vice president for midmarket businesses, advises companies to listen to customers on social media; don't just talk. In practice, this means not just posting about your latest news on Twitter and letting people know about a new hire on Facebook. It can often mean reading comments and browsing the posts from your best customers on feeds like Google+ and Path.

2. Start simple and go deep
Abrams also advises small companies to start small with technology. There’s a tendency to embrace many different tech platforms, from CRM to supply chain management. But he says it is better to start with one major platform and do it right—make the data accessible from every phone and tablet first. He says integration nightmares start when a small business dabbles in multiple platforms at once.

3. Pick a large customer
It may seem obvious, but one of the best strategies for any young company is to pick a large customer. David Trucker, the vice president and general manager of Cisco Small Business, says many companies focus on building their product first, then figure out which customers to target. He says, if you pick a customer, you can even include them in the building process to shape the product. “Demonstrating how your company’s product helped target and solve a specific customer need will help garner credibility within the industry and, as a result, help grow your business,” he says.

4. Get detailed feedback from users
Customers are a goldmine of information. Just ask Google. When Google releases a product, it is one of the best large companies at incorporating actual user feedback. Mary Himinkool, head of global entrepreneurship outreach at Google, says the trick is to roll out a new product to a small set of users and get detailed feedback from them, then iterate on their suggestions. She says to use this data as a driver for changes. “Give users clear, easy-to-use ways to submit feedback, and study it closely. Be creative and be bold in experimenting with new ideas, but let the data drive you,” she says.

5. Make social media a priority
Social media is an obvious game changer. But making it a priority can be a challenge for a start-up. Chris Ogburn, the director of small and medium businesses at HP, says small companies should focus on Google+, Facebook, Twitter, and other platforms in a concerted effort. He says two-thirds of customers use social media as a way to make a buying decision and send feedback. “With customers predominantly online, it’s important for entrepreneurs to be part of the online conversation,” he says.

6. Focus on the long term
Some entrepreneurs are hyper-focused on getting a mention in a tech blog or generating buzz. Matt Thompson, the General Manager for Developer and Platform Evangelism at Microsoft, says a better approach is to focus on building long-term customer relationships. He says this is a two-way street: Your customers are looking for product solutions but they can also provide great feedback. Thompson says, long term, every company has to address the needs of customers and understand them.

The Secret Lives of Independent Contractors

Susannah Breslin — Thu, 23 Feb 2012 09:06:00 -0500

What are they doing, anyway? A look inside the secret lives of hired guns.

You hire an independent contractor. She does great work. So you hire her again, and again, and again. This is how the gig economy works. Finally! You've found the perfect independent contractor who can do the job, on time, and on budget. And you've learned something along the way, about how to manage a hired gun, and it's made you a better boss.

Oh, but there's more. The secret lives of freelancers. What are we doing, anyway?

Here are 7 things we will never tell you:

1. We have no idea what we're doing.

Particularly if the work is creative—say, art or prose—we have no idea what we're doing. Not really, anyway. This is creative work, not writing code. There is no right way. There is no wrong way. This is guesswork. Sure hope you like it!

2. We use fuzzy math.

Most of us work at home. That means we may spend 45 minutes out of an hour focusing on your project and 15 minutes watching the end of "Bethenny Ever After." Or walking the dog, who had to go right then and would not wait. Or eating lunch and finishing up that project at the same time. Are we overbilling you? Are we underbilling you? It's hard to say.

3. We did it all wrong.

On occasion, we create work for you that's awful. Usually, this type of work is created over a long period of time with intense focus and great seriousness. Then we look back at what we've done and realize, this is terrible. That's when we scrap it all and whip out a new site design for you in half an hour. That's how we roll.

4. We don't like you.

Ideally, we like you. That's great! You trust us with your vision, you pay us on time, and you keep giving us more work. You are our dream boss. Unfortunately, we have a lot of different bosses in the freelance game, and they're not all as good as you. The other one is a harpy, a brow-beater, and insists on paying us on the last possible day according to our contract. The thing is: You'll never know the difference. We may make gagging motions when employers we don't like call, but we never let on how we really feel. We're just that good.

5. We needed you to pay us yesterday.

One of the hardest things about being a freelancer is juggling the financial end of things. Rarely do we pull a steady paycheck. Instead, we can spend days waiting for the mailman to come and hoping to God you bothered to put our check in the mail. We may seem cool about the fact that you forgot to get a check cut for us (again), but inside we are screaming.

6. You're not our priority.

How we prioritize our workload changes. During a slow week, we may take more time working on the projects we like the most. During a busy week, those who pay us the most may get top billing. Getting us to do a job for you at less than we'd like to be paid may get the job done, but it may also land you at the bottom of our to-do pile on a regular basis.

7. Referrals beget loyalty.

Want to charm the sweatpants off your independent contractor? Find us more work. When we're not working, we're hustling to find work, and those who hire us and recommend us are revered like freelance gods. Take the time to write a recommendation on our LinkedIn profile. Tell someone else looking for an independent contractor that they should hire us. We're our own boss, and making us happy makes us want to make you happy, too.

Arab Spring... for High-Tech Teens?

Christina DesMarais — Thu, 23 Feb 2012 08:40:00 -0500

A U.S. government-backed plan to spread the Silicon Valley vibe
east--25 Arabic-speaking girls at a time.

If you think there’s a shortage of women running tech start-ups in the U.S., imagine the dearth of women doing it in the Middle East and North Africa.

But the region is redefining itself—just consider the integral role technology played in the Arab Spring upheavals. As such, the U.S. Department of State wants to make inroads there and to do it, it's targeting tech-savvy teenage girls. The State Department is launching a program called TechGirls that will bring 25 Arabic-speaking girls ages 15-17 to Silicon Valley this summer for three to five weeks of intensive training and networking with their American peers.

The program will include a technology camp in which the teenagers will work collaboratively on designing new products and get in-depth lessons on things like cloud computing, Web design, mobile communications technology, programming, robotics, and social networking.

They also will spend time visiting big name Silicon Valley companies, meeting with technology experts, and doing at least one community service project.

TechGirls is a spin-off of TechWomen, a similar program for adult high-tech workers from the Middle East and North Africa who come here for mentoring and professional development each year. TechWomen is the darling of Secretary of State Hillary Clinton who touts “smart power diplomacy” that complements traditional foreign policy by empowering women with technology.

Indeed, by building relationships with female innovators—and their younger, talented counterparts likely one day to be key influencers back in their home countries—the U.S. hopes to lay the groundwork for future connections that can benefit American tech firms branching out to emerging markets such as the Middle East and the Northern Africa.

TechWomen alumni working with U.S. embassies will recruit, screen, and select the youth participants in Algeria, Egypt, Jordan, Lebanon, the Palestinian territories, Morocco, Tunisia, and Yemen for the TechGirls program.

While it hasn’t been announced which companies will be opening up their doors to the teenagers this summer, firms that supported the TechWomen program last year included Adobe, AT&T, Intel, Facebook, Google, and many others.

It won’t be all head-down work—the girls also will do so some sightseeing and attend cultural and sporting events. In fact, it’s what they learn about American culture that’s just as important as the hard-core tech takeaways.

So what should these TechGirls see while they're here? If they're going to be little ambassadors spreading the Silicon Valley vibe, they shouldn't miss:

The Googleplex, Mountain View
Google’s headquarters are proof that innovating is fun. Employees get free food, can bring their dogs to work, and use colorful Google bikes to get across campus. The company also offers gyms, a beach volleyball court, and two “endless” swimming pools. While Google doesn’t give public tours (here's a virtual one), anyone can stop in at the lobby where there’s a display that shows live search queries coming in from all over the world.

The HP Garage, Palo Alto
The roots of Silicon Valley can be traced to this Palo Alto garage where electrical engineers Bill Hewlett and Dave Packard decided to work together making electronic devices. Legend has it that they decided on HP (instead of PH) from a coin toss. The garage still stands, is now a museum, and has been added to the National Register of Historic Places.

500 Startups, Mountain View
There’s no shortage of accelerators and incubators in Silicon Valley so a field trip to check one out is mandatory. 500 Startups is an accelerator that offers its companies access to 160 mentors who will help them get a leg up. Its creative workspace is definitely worth checking out. And no wonder the name—check out its lengthy roster of tech start-ups.

Coupa Café in Palo Alto or Red Rock Coffee in Mountain View
Two hip hangouts where the hottest names in tech start-ups convene. They come in droves to demo their products and meet up with potential investors.

The Tech Museum, San Jose
This modern museum includes galleries that showcase another side of tech: genetics, space exploration, clean energy, and biotech.

The Computer History Museum, Mountain View
You could spend hours in this rich collection of exhibits because it covers everything from the history of mathematics to modern day computing, touching on the abacus through the mobile phone.

Stanford University, Stanford
It's one of the area's primary grooming grounds for budding entrepreneurs due to the integral role it played in the establishment of Silicon Valley as the world’s technology epicenter. A 70-minute walking tour includes visits to the Main Quad, Memorial Church, White Plaza, as well as the Science & Engineering Quad where a student guide talks about engineering history, sustainable building technology and the university’s famous engineering programs.

Thanks to Inc.com readers for offering up some suggestions! Have any others?

7 Ways to Bulletproof Your Business

Jessica Stillman — Thu, 23 Feb 2012 07:49:00 -0500

Legal matters may be daunting for the inexperienced, but that's no excuse for failing to make sure your venture is on the right side of the law, warns Rocket Lawyer founder Charley Moore.

Entrepreneurs may have to wear many hats, but there's one area that can be particularly daunting to the inexperienced—the law. Even those who feel comfortable playing the role of newbie manager and DIY PR person may feel more than a little overwhelmed when it comes time to enter the jargon-filled, formal, and outsider-unfriendly realm of legal matters.

But lawyer Charley Moore, founder of online legal services provider Rocket Lawyer, has a message for dithering legal newbs who are using their lack of knowledge or time as an excuse to put off getting their company's legal situation sorted—get over it! Moore explained in an interview that his company, which sorts out routine legal paperwork for business owners (and is beloved by VCs), was founded with entrepreneurs who have more interest in, say, their outstanding cupcake recipe than the fine print of their contracts. Moore offered a word of warning for this sort of legal knowledge-limited business owner:

The genius of our American system is the protections that we afford to people who start businesses, everything from limited liability if you incorporate to bankruptcy if you fail so you can dust yourself off and start over again. That is really core to what has driven growth in the American economy, and you're nuts as a person going into business to operate outside of that amazing legal system that, with a little bit of work, you can put on your side and make a competitive advantage.

Just sticking with the easy route of operating as a sole proprietor and relying on agreements you've rigged up with a bit of glue may sound tempting, especially when your business is small and your schedule is insane, but Moore feels this is one of entrepreneurs' most common mistakes.

"The thing that folks mess up the most on is operating as a sole proprietorship," he says. "When you're a sole proprietor, in terms of your business, you're outside of the legal system, so you're not taking advantage of those wonderful rights and American corporate law." Instead, Moore urges owners of new ventures to take a careful look at their businesses and make a thoughtful legal plan, offering his company's free legal check up as a good place to get started.

"There's no set of things that's 'one size fits all' in the law," Moore says, "so it's really identifying what kind of business you are and then starting to put a legal plan together. For example, are you a services business? In that case, what sort of services are you going to perform and what are the risks? Am I selling products, in which case I may have product liability issues? Am I a reseller? What sort of resale agreements should I have?"

Breaking your inertia and getting started may be the most pressing challenge, but Moore stresses that tending to legal matters as your business grows and changes is also essential, offering seven rules to "bulletproof" your business:

Build on the Right Foundation
Comply with the Law
Protect What’s Yours
Be a Smart Employer
Maintain Enough Insurance
Record Everything in Writing
Keep Good Counsel

If you're unsure what these rules mean for you or would just like more info, free registration at SCORE will give you access to a one-hour webinar where Moore lays out in detail what he means by each.

Smart Talk for Busy People: 5 Rules

Tom Searcy — Thu, 23 Feb 2012 07:15:51 -0500

No one has time to listen to chit-chat. Use these tricks to get more out of less in conversations with busy executives.

Who has the time now for long conversations? I hope you make time for them with your family and friends–but in the workplace, we tend to avoid people with the reputation for being long-winded.

So when you get the ear of a senior executive, how do you make the most of the moment? Use these tips to be more effective when talking with a busy executive.

1. Think in 30-Second Increments

Half a minute is forever in a boring conversation. Studies indicate that on the phone, the listener is considering whether to exit or stick around every seven to 11 seconds. In face-to-face meetings, you get a little more grace–say, all the way to 30 seconds. If you are not constantly generating someone's interest, you are losing him.

Executives seem to have their own form of attention disorders. Executives are constantly trying to come to a decision about any interaction: “Do I delegate this, avoid this, deny this or run away from this?” You are fighting that internal dialogue in small battles. Keep it interesting.

2. Watch for Signs of Boredom

We know the signs, right? Checking the watch, looking over your shoulder, fidgeting, glassy eyes. On the phone, it’s the prolonged pause, the “email launch” sound in the background, the vague “uh-huh, uh-huh ...” That's your "uh-oh" moment.

Really effective sales people respond to those moments. They interrupt the conversation with an honest interjection. It might be, “The bottom line is ...” or “The thing we need to decide right now is ...” The pattern interruption brings the conversation back to point and gets engagement.

3. Ask Permission for Stories

Stories are very important in conversations, to set points and ideas in context. Without context, it is hard for your listener to integrate your issues into all of their circumstances. However, when a person launches into a story, the instant reaction is resistance: No one wants to be trapped for who-knows-how-long in a pointless story.

If you need to tell a story, get the permission for extended attention. Just ask, “Can I tell a quick story to illustrate what I mean?” This shows respect to the listener and it prepares them for a sustained attention period.

4. Know What Your Point Is

Do you have a point? This is especially critical when talking with executives, but the truth is that it should be a general rule for all business conversations. You are asking for action, input, a decision, or support. To honor someone's time and get to the next step, you need to know exactly what you want.

A compliment I hear from executives and clients about their best suppliers is: “I really appreciate that they don’t waste my time. Whenever they need something, they come to me–and we take care of it and move on.”

5. What's in It for Someone Else?

Sales people have joked for a long time that everyone has the same radio station playing in their head: WIIFM (What’s In It For Me). By no means do I believe that every interaction has to be a selling conversation, or that there has to be something for your listener in every conversation. However, if you want to hold their attention, it’s good to keep it in mind. What is in it for the listener to be having this conversation with you?

Get to the point and everyone will benefit. And let me know how it goes. If you find these tips helpful, post your experience in comments section.

Fix Your Elevator Pitch

Geoffrey James — Thu, 23 Feb 2012 06:33:35 -0500

What you think is an elevator pitch will actually alienate customers. Instead, have a conversation that creates a real sales opportunity.

If you're like most entrepreneurs, you think an "elevator pitch" is a one- to three-minute sales pitch that you could presumably give during a very long elevator ride. If that's what you think, I'm sorry: You've been completely misled.

Let's start with the basic fact: Nobody listens to sales pitches. (Do you listen to them? I don't. Especially if they are coming from some bozo I just met.)

To make matters worse, when most entrepreneurs give their "elevator pitch," they talk really, really fast so as to cram as much as information as possible into a short a time as possible.

In professional sales, this is known as the "spray and pray" method. It's not only ineffective, but it's irritating–especially if your listener didn't sign up for an information dump.

That being said, you're crazy if you don't have an elevator pitch, providing you realize that it's not a sales pitch, but a way to turn a casual conversation into a sales opportunity.

What It Should Really Be

The original idea behind the elevator pitch was to have something that you'd say to a potential customer whom you happen to meet by chance. While the "elevator" scenario is a bit absurd, there's no question that chance conversations can result in business opportunities.

Bob Carr, the CEO of Heartland Payment Systems–one of the largest credit card processors in the United States–once told me how he sold the idea for his new business to an investor whom he met at a wedding.

A real "elevator pitch" presents you and your offering in a casual, socially acceptable manner. That means no sales pitch. Period.

Instead, you introduce yourself and your firm in the natural context of a social conversation. Here's how to do it.

1. Position Your Firm

This is a carefully crafted sentence (that's just one sentence, folks) that describes who you are and what you do for your customers. It's what you say to somebody who asks: "So, what do you do for a living?" Here are some examples:

"Retail firms use our software and services to train their employees, resulting in an average 10 percent increase in sales."
"Within a year, our customers typically save 10 times more than they spent to install our employee tracking software."
"We help companies lower IT procurement costs—typically by 20 percent or more—by negotiating directly with major IT vendors."

Note that all of these responses to "What do you do for a living?" state a quantifiable benefit to your customers that would be relevant to a prospective customer. Also note that all the responses are pithy enough to be socially acceptable.

When you position your company in this way, the person you're talking with will express either disinterest or interest in what you just said. If it's disinterest, the person is not a potential customer–so let the matter drop.

If the other person shows interest–maybe by saying something like, "how do you do that?"–then you proceed to Step 2.

2. Differentiate Your Firm

The person you've just met has shown some interest in your firm, based upon your one-sentence position statement. Your job is now to show why you and your firm are unique and different from your competition. Do this by revealing one or two facts that prove your uniqueness. Examples:

"We have a unique methodology and supporting software based on some proprietary scientific research that we funded through MIT."
"We've been able to prove that some customers have gotten that ROI in less than six months."
"We've got extensive contacts that let us know the biggest discounts that the IT vendors have offered in the past, so we use those as the basis for negotiating your price."

Note that the examples match the positioning statements in Step 1.

3. Open a Conversation

Assuming there are still signs of interest, ask an open-ended question to find out whether or not the person you've just met actually is a potential customer or just being polite. Examples:

"Just out of curiosity, what priorities might you have in these areas?"
"You seem intrigued. Of what I just said, what might be of interest?"
"Hey, enough about me. How does your firm handle that kind of problem?"

No need to get fancy. Be sure the question is open-ended rather than something that can be answered with a simple yes-or-no answer.

4. Ask for a Meeting

If you're following the steps, you've now spent about somewhere around 40 seconds on the conversation–about half of which consisted of the other person speaking, and you listening. If it makes sense to have the conversation continue, it's now time to ask for a meeting to discuss the matter in more detail–so you can drop the business talk and go back to discussing, say, how lovely the bride looked.

There are two basic approaches.

If the prospect seems skeptical or hesitant, ask:

"If we really could do [insert something of value to the customer here], what would your thoughts be on having an initial conversation with us to hear more?"

If the prospect seems interested or enthusiastic, ask:

"I would love to have a conversation with you about [insert something of value to the customer here]. What's the best way to get on your calendar?"

It's that simple. No sales pitch, just regular conversation.

By the way, the real expert on the subject of elevator pitches is sales uber-guru Barry Rhein. He's the one who explained all of this to me while I was working on my recently published book (see the bio below for a link).

If you found this post helpful, click one of the "like" buttons or sign up for the free Sales Source "insider" newsletter.

Top Tax Move for 2012: Drop Dead

Mark Balasa — Thu, 23 Feb 2012 05:51:42 -0500

Business owners can save a ton of estate taxes by kicking the bucket this year rather than next. But there are less drastic solutions.

Gridlock in Washington has its upsides, but tax simplification is not one of them. This year, once again, a number of big tax breaks expire with no certainty about what comes next. That means there are a number of smart tax moves you may want to consider before 2012 ends. One of them is to die.

Congress, in its wisdom, gave each person a $5,120,000 exemption from estate and gift taxes this year, up from $5 million in 2011. That's good for business owners! Unfortunately, this generous break lasts only until January 1, 2013. Thereafter, if Congress does nothing, the exemption retreats to $1 million, a level last seen in 2003. That's bad for owners. A low exemption poses a problem to anyone transferring business interests to future generations.

Now, let’s take a closer look at the estate tax. It is a “second-layer tax” levied at death on the value of assets built up in life. Remember that you've paid income tax in order to create those assets. If your estate happens to be larger than the exemption, you then have the privilege of paying an additional tax at death.

Since the levy generates very little revenue for the US– around 1% of total tax receipts – it is immaterial to the United States’ financial well-being. Its real value appears to be as a political football to members of congress who wish to debate how the country’s tax burden should be spread.

Be that as it may, the estate tax exemption is here (it also applies to gifts you give while alive), and you might as well take advantage. One way, obviously, would be to die this year and qualify for the whole $5.1 million exemption before it reverts to a mere million in 2013. From a tax planning point of view, that would be a home run. The only problem is, you never come up to bat again.

A less drastic strategy would be to get shares of your business out of your name this year by making gifts or creating trusts. Here are some things to consider:

You can give gifts of voting or nonvoting stock to family members. Gifts you give this year above $13,000 ($26,000 if given jointly with your spouse) eat into your estate exemption. But better to eat into it when it's $5.1 million, than when it might be as little as $1 million. And if you reduce your ownership interest below 51%, that stake may be valued at a discount at death, which further lowers the estate tax.
You can set up a lifetime credit trust to reduce your taxable estate. Traditionally, this type of trust is formed when you die, but it doesn't have to be. It can be set up to provide benefits to your spouse and children, and why shouldn't they start to benefit while you're alive? As with the gifting strategy above, you'd have to use some of your estate-and-gift exemption to transfer shares to your trust. But you will use the exemption eventually anyway – right? Why not take advantage while there's $5.1 million to take?

In short, Congress's gridlock has provided both the opportunity and the motivation for aggressive planning this year. Some call such opportunities “loopholes;” I prefer to think of as them as prudent strategies supported by congressional policy. Whatever you call them, though, remember the famous words of Senator Russell B. Long: A tax loophole is "something that benefits the other guy. If it benefits you, it is tax reform."

Michael Foltz, JD, CPA, CFP contributed to this article

Uh-Oh: Are You Hiring a Bully?

John Baldoni — Wed, 22 Feb 2012 21:30:00 -0500

We all know senior-level employees who talk up to the boss, but down to staffers. Don't hire them.

Sometimes you know in an instant that you are definitely not welcome. It happened to me not too long ago.

Two employees to whom I was speaking stopped talking as soon as their boss entered the room. Judging by the looks on their faces they seemed like school kids caught playing hooky. The boss slipped into his chair at the head of the table and, aside from a weak perfunctory handshake with me, said little. It was clear he had other priorities and made no attempt to connect with me.

Needless to say our meeting was inconclusive, so I wondered: how did this guy ever get to be a senior executive? From my limited perspective I sensed that he perceived himself superior to me and even more superior to his direct reports. I can only surmise is that he presents well to superiors but when it comes to colleagues and subordinates he plays the heavy. He is, as they say in the military, the embodiment of the, "kiss up, kick down" boss.

The next day I had a phone conversation with a senior executive whom I had never met. Even though I could not see him I could sense his presence. His tone was warm and welcoming, and despite the fact that he likely had a stack of to-do's awaiting him he made me feel that what I was doing for his organization was important.

So the question is: whom would you rather work for?

That's a logical question I pose to people who are in hiring positions because I want to encourage them to find out what candidates are like from the perspective of superiors—as well as peers, and subordinates.

Don't underestimate the impact that a candidate will have on your organization. Certainly those in line for senior-level positions have demonstrated competence; they have a track record. You know what they are capable of doing because they have done it. But it's simply not enough to look at a resume, of course. You need to interview the individuals, not only one-on-one but also in group situations. Moreover, you need to do some due diligence to find out what previous employers thought of the candidate.

You may need to filter out disgruntlement from former colleagues. But remember you are not hiring a saint, or a best pal. You are seeking to hire someone who can do the job but do it with style and in ways that foster teamwork and collaboration.

Senior executives are the face of the organization. When selecting them you need to be careful that they radiate the values of your organization. Your brand image is at stake. One bad hire in a senior position can be harmful to a corporate reputation.

Maybe Benjamin Franklin put it best when he wrote: "To be humble to superiors is duty, to equals courtesy, to inferiors nobleness." Likewise, subordinates return the favor by doing their best.

Corporate Tax Overhaul: Will It Help Your Small Busimess?

Eric Markowitz — Wed, 22 Feb 2012 15:44:00 -0500

President Obama and the Treasury Department proposed a major overhaul to the corporate tax rate. Here's what it means for small business.

President Obama and the Treasury Department today introduced a 23-page outline that seeks to overhaul the corporate tax code, which, in its present iteration, is an unwieldy legal document that hasn't been modified since the Regan administration. The plan seeks to reduce the corporate tax rate from 35 percent to 28 percent, eliminate accounting loopholes, improve transparency, and simplify the document for small businesses.

"Our business tax system is not just outdated," noted Treasury Secretary Timothy Geithner in a statement. "It is unfair and inefficient."

Tax boon for manufacturers

The framework for the proposal puts American manufacturers in the spotlight. The plan calls to cut the top corporate tax rate on manufacturing income to 25 percent in an effort to succor American manufacturing. The framework also seeks expand the current domestic production activities deduction to 10.7 percent (from 3 percent).

Businesses that deal in the production of renewable energy should also take note: The framework would make the tax credit for the production of renewable electricity permanent, "in order to provide a strong, consistent incentive to encourage investments in renewable energy technologies like wind and solar."

Special perks for small business and entrepreneurs

Secretary Geithner and President Obama hope the proposed framework will ease the burden of taxes on American small businesses.

"We want to cut taxes on investment in and by small businesses, and we want to simplify the tax system for small businesses so that they can devote more of their earnings to investment and job creation and less to tax compliance," Geithner said.

So far, experts seem optimistic about what the plan could mean to small businesses in America.

"The president's tax reform plan announced today is exactly what small business owners have been asking for," says John Arensmeyer, founder and CEO of Small Business Majority, a small-business advocacy nonprofit. "It will create a more level financial playing field for small and large firms, promoting healthy competition that stimulates the economy."

Specifically, here's what the plan proposes:

"Allow small businesses to expense up to $1 million in investments." Right now, small businesses can expense company-related investments of up to $500,000. But under the proposed framework, small businesses would be allowed to expense up to $1,000,000.

"Allow cash accounting on businesses with up to $10 million in gross receipts." Under current tax code, small businesses that make less than $5 million in gross receipts are allowed to use a cash accounting system, as opposed to an accrual accounting system, which is notoriously complex. The president suggests raising the threshold for cash accounting to $10 million.

"Double the deduction for start-up costs." Currently, entrepreneurs can deduct $5,000 from their start-up expenses. The president proposes doubling that deduction to $10,000.

"Reform and expand the health insurance tax credit for small businesses." Initially, businesses could qualify for the Affordable Care Act credit if it had less than 25 employees. Many saw that as a job-killing rule. The new proposal raises the number to 50 employees.

Making the tax code simpler

For many small businesses, the cost of tax compliance is extremely expensive. In 2004, for example, nearly one out of ten small businesses spent over $5,000 in tax compliance and more than 11 percent devoted upwards of 500 hours to compliance. A recent National Federation of Independent Business (NFIB) study that found that four of the top 10 small-business problems were tax-related.

The framework seeks to simplify the tax process. "Tax reform should make tax filing simpler for small businesses and entrepreneurs so that they can focus on growing their businesses rather than filling out tax returns," the proposal said.

Rep. Sam Graves, chairman of the House Committee on Small Business, has been a vocal critic of the impact tax complexity has on small business. In a recent speech, Graves noted that the more time and resources that spent on tax compliance issues, the less an entrepreneur has to hire employees and grow.

"During a time when job creation is a top priority, it is discouraging that our burgeoning tax code constrains small-business growth," he said. "Complexity weighs heavily on small employers, because they often lack the resources to hire expensive accountants or legal assistance."

Does it matter for your business?

Still, plenty of entrepreneurs are skeptical, and with good cause.

First, the obvious question is whether Congress could even pass such a proposal in an election year. Republican candidates have already suggested their own plans (Mitt Romney wants to reduce the corporate tax rate to 25 percent; Rick Santorum wants to cut the rate to 17.5 percent and cut taxes for manufacturers; Newt Gingrich wants to cut the rate to 12.5 percent).

For particularly fast-growing companies, a tax overhaul like this does little to address what really matters: access to capital.

Zalmi Duchman, owner and CEO of The Fresh Diet, a Miami-based company the delivers healthy foods to customers, says: "Cutting tax rates or changing that tax code is only important if you're making money and if your company is profitable, but if your company is a growing company, you don't really care. You care about saving things like payroll tax. This doesn't help fast-growing companies; it doesn't help us on the Inc. 5000. We just need capital. For me, that's the most important thing."

In the coming weeks, Geithner will meet with Senator Orin Hatch and Senator Carl Levin in the hopes of building a bipartisan consensus.

"In order to make us more competitive and create jobs here at home, we must reform our corporate tax code," Geithner. said. "The president's framework would boost growth and provide American companies with incentives to invest in the U.S. while simplifying and cutting taxes for our small businesses."

Outsmart Your Competitors Every Time

Karl Stark and Bill Stewart — Wed, 22 Feb 2012 14:37:34 -0500

How to leveraged a low-cost structure into a strategic growth plan focused on low-risk, low-cost acquisitions.

If you could get the jump on your competition, would you? Of course you would. By simply understanding your cost structure and comparing it to your competitors, you may be able to excel when others begin to fail. We recently worked with a client in global mining that was able to use this strategy to gain market share.

Our work in helping the client evaluate profitable growth options involved an analysis of the company’s cost structure, which included four main steps:

Understand the client’s own cost structure in detail. We carried out a very detailed cost analysis for each of the company’s individual mining operations.

Gather industry data on competitors’ cost structures. In the mining industry there is a lot of publicly available information on cost structures, so we had a ready supply of information to use for our analysis.

Talk to internal experts. We drew on the decades of experience of mining experts within the company. They helped us interpret the industry data and refine our estimates of relative cost structures.

Use proxies where appropriate. In this case, we could look at regional differences in labor costs, energy prices, exchange rates, and a host of other cost structure drivers to refine our estimates.

We have used this same approach with several clients and have consistently been able to reveal surprising insights about key competitors’ cost structures and profitability. For our mining client, we were able to show that the company was in the lowest-cost quartile of mining companies. This resulted in two key benefits:

Their operations were likely to generate a profit at any realistic price level. In fact, prices would need to be so low that more than 50 percent of competitive capacity would need to be shut off before our client would see cash losses from their best mines (a highly unlikely scenario). In other words, our client was all but certain to generate positive cash flow, regardless of prices or demand levels. An enviable position, indeed, but such is the power of a low position on the cost curve.

For the same reason, it was virtually impossible for prices to decline to the point that the client would be forced to shut down any mines. In fact, they could safely expand operations at their current mines with little risk.

Not surprisingly, the CEO was gratified to see his company in such a favorable position on the cost curve. In fact, the company aligned around an explicit strategy to pursue only lowest-cost-quartile mining acquisitions. Although they paid rich prices for such “in the money” acquisitions, they concluded that the resulting lower risk profile of their operations more than offset the lower rewards from paying higher acquisition prices.

By contrast, some of their competitors pursued a very different but equally legitimate strategy of pursuing high-cost, “out of the money” mining acquisitions. Essentially they were placing a bet on growing prices, and stood to achieve much higher rewards from high-price market scenarios, while incurring much greater risk of shutdown and cash flow losses from low-price outcomes. As it turns out, mineral prices have held up very well in recent years, so both strategies have paid off handsomely. Our client has earned very high ROIs from their mining operations, and some plucky independent entrepreneurs made investments in very “out of the money” mines, and have become very wealthy as a result.

As you think about this case, here are three key questions to ask:

How important is your position on the industry cost curve? Do you see low-cost rivals earning attractive profits and/or gaining share at your expense? Or do you see competition on other factors than price and cost, suggesting cost position is not so important?

How does your cost structure compare to your competitors? Are you a low-cost producer? Or are your costs above the industry average?

What impact does your cost curve position have on your growth strategy? Should you “fix” your current operations and lower your position on the cost curve before accelerating growth?

Are You Making Yourself Clear?

Garry Tan — Wed, 22 Feb 2012 14:13:00 -0500

So, you're smart. But stop it already with the inflated vocabulary. To make the biggest impact, take a cue from the simplicity of Apple's branding and ditch the big words.

"I'm Bill Gates. Takes a genius to understand me."
—Rapper Flo Rida in Good Feeling

I hear that song on the radio and cringe. Flo Rida's lyrics suggest it's a good thing that it takes a genius to understand him—that complexity makes him, in fact, a genius. In reality, the opposite is true: It takes a genius to be able to communicate in a way that is understood by absolutely everyone and anyone. This inversion is one of the most important things for a creator to understand.

This was the core finding of a 2006 study by Princeton professor Daniel M. Oppenheimer, wittily entitled "Consequences of Erudite Vernacular Utilized Irrespective of Necessity: Problems with Using Long Words Needlessly." Of the study's Stanford undergraduate participants, 86 percent admitted to puffing up their language at some point in an academic or professional context.

It's an easy mistake to make. Those with higher IQs typically have large vocabularies. Thus we assume the converse must be true: if one uses a lot of big words, clearly one must have a higher IQ. There is a catch in this logic, however: readers, and users of software, are self-centered and also very lazy. In practice, we users care a lot more about our own experience of trying to understand something than recognizing the subtle genius of others.

In a recent earnings call, Apple CEO Tim Cook explained one of the company's most core values: "We believe in the simple, not the complex." You can see this philosophy borne out in every aspect of Apple's customer experience: hardware, software, the retail experience, packaging, even down to words it chooses to describe products.

In Adam Lashinsky's recent book Inside Apple, Apple exec Bob Borchers recounts that Apple boiled down the iPhone to three simple things: 1. It was a revolutionary phone; 2. It was the Internet in your pocket; 3. It was the best iPod ever created. Apple's consistent success is defined by its ability to describe a complex and powerful product in the simplest terms possible.

Microsoft has served as a foil to Apple's simplicity for decades. Flo Rida's allusion to Bill Gates might be somewhat appropriate given the unusual amount of complex corporate speak found in Microsoft's product naming and marketing. For instance, products featured on the website of Microsoft Expression (a brand ironically aimed towards designers) include Expression Encoder Service Pack 2, Expression Blend Preview for Silverlight 5, and Expression Web *SuperPreview* Trial. It makes you wonder what exactly all of those products do, since it's not immediately obvious from their names alone. I'm a little afraid of finding out what "SuperPreview" means, as it will occupy neurons in my brain better suited towards more productive goals. Luckily, it's easy to avoid finding out because the product description is expertly hidden in a giant block of text.

Flo Rida might be able to get by on a catchy beat and a memorable hook. Microsoft's engineering capabilities may make its naming gaffes forgivable. The rest of us will have to try create things that can be understood by geniuses and non-geniuses alike, and that very feat requires a bit of genius of our own.

It’s Time to Shutter Your Facebook Shop

Erik Sherman — Wed, 22 Feb 2012 13:57:09 -0500

So much for so-called f-commerce. Four reasons why Facebook users aren't buying.

You'd think that Facebook would be a natural place for companies to sell their products and services. After all, the company claims far more than 800 million active users. But such big companies as Gamestop, J.C. Penney, Gap, and Nordstrom have all shut down their Facebook stores, according to Bloomberg.

Gamestop says that customers had no reason to shop via Facebook rather than go to the company's own website. Gap's explanation was similar, while Nordstrom decided on a broader social media strategy. Wade Gerten, CEO of social media development firm 8thBridge, which opened a number of Facebook stores for its clients, said that companies are bailing out and that so-called F-commerce deserves a grade of F.

Charles Nicholls, founder of e-commerce consultancy SeeWhy, recently wrote that, except for a few exceptions such as music and games, which can be inherently social, direct selling on Facebook is a bad idea for most companies for four reasons:

People don't go to Facebook to shop

Companies sell their goods through retailer chains, e-tailers, and their own e-commerce websites because, to paraphrase bank robber Willie Horton, that's where the consumers are. Getting sales rests significantly on catching people when they're in a buying mood. That's why shopping malls can be so successful. Someone goes into a mall ready to buy and then sees other opportunities.

But social networks are different. People go to them to socialize and have fun. Although there is a large group of people on Facebook, providing opportunities to shop may not work because that's not why they logged in.

The results aren't incremental

There are various reasons why you might want multiple retail outlets, but they generally boil down to more opportunities for additional sales. However, according to Nicholls, there is no evidence yet that Facebook creates those additional opportunities. Instead, they seem to cannibalize sales that a company could have made by using promotions to drive people to its own site.

There might be ways to make the purchasing process inherently more social, but that would mean a different approach than setting up a storefront on Facebook and directing customers there instead of your own site. And if there aren't incremental sales, then a company ends up spending more resources on its entire retailing strategy, lowering margins as a result.

T-R-U-S-T

Many people distrust Facebook. That might seem unfair, given that other companies collect the same types of data to better target advertisements and marketing. But this is a case where perception trumps reason. According to Nicholls, some studies (he didn't name them) suggest that people are reluctant to shop on social network sites because of concerns about security and privacy.

Small horizons

A company has latitude to do what it wants on its own website and to use information from viewing and purchasing habits to improve consumer experience and financial results. But you're more limited on Facebook. There is less space to display products and the Facebook stores typically have far less merchandise than on e-commerce sites. Throw in the further limitations of mobile interfaces to Facebook, which are very popular, and you now have a big merchandising challenge.

There might be ways to make a Facebook store work, but most companies would be better off redirecting the efforts into improving the effectiveness of their own e-commerce sites and in creating promotions to drive traffic.

How I Did It Event Recap: How I Turned My Product Into a Service (and vice versa)

Lewis Schiff — Wed, 22 Feb 2012 12:59:00 -0500

Bruce Eckfeldt of Cyrus Innovation and David Harouche of Multimedia Plus share their internal strategy

Two Inc. 5000 CEOs, David Harouche of Multimedia Plus and Bruce Eckfeldt of Cyrus Innovation, shared their strategies for transforming their business models with an audience of Greater New York area business owners and executives. Held at Inc. Magazine's headquarters in downtown Manhattan, David and Bruce both have a common goal: to improve their respective businesses through radical business model evolution.That's where their similarities end, however.

David's company provides training programs for the retail industry (for example, teaching a Gap sales associate how to sell this season's new sweaters). Based on a purely transaction model, David creates training packages whenever his A-List clients require them. Seeking a more integrated relationship with his clients, he's evolved that "product" model into a "service" model where he provides cloud-based training programs which allow the client to track the training progress of each employee and correlate that to their sales output. By transitioning to a "per user" model and away from a "per training program" model, David has been able to create a recurring revenue stream that will increase the valuation of his company by nearly 8 times!

Bruce's company provides programmers to large companies undertaking mega-scale software development projects. His company is paid by the hour for the services his programmers provide. He and his partners have been experimenting with a "product development" model so he can get beyond the "tyranny of the hourly wage." By redirecting internal resources to collaborate with other businesses who have specific market vertical expertise (for example a travel industry company), Bruce envisions moving into product development using his developers as a form of "sweat equity" in a series of start-up ventures. A home run would be a product that scales up and monetizes quickly, creating revenue in the short run and a big payoff down the road.

Both David and Bruce are facing the kinds of developmental stages of growth that's common for Inc. 5000 companies: they've developed successful client relationships, built a team, created cash flow and produced a lifestyle business, but scalability is a choke point to further growth. By evolving their business model, they seek to use their expertise and existing resources in a new fashion to produce a more scalable result.

Thanks David Harouche of Multimedia Plus and Bruce Eckfeldt of Cyrus Innovation for sharing your own evolutionary progress with our regional business community!

The Customer Is Not Always Right

Janine Popick — Wed, 22 Feb 2012 11:55:42 -0500

In some rare cases it may become necessary to fire a customer that disrespects your team. In those cases, show your team that you have their backs.

I know some of you who just read this headline are clutching your proverbial pearls, especially if you’re in the business of serving customers. And really, we’re all in the business of serving our customers, so I don’t really believe this headline, either … for the most part. Let me explain.

I love listening to everything our customers say about our self-service online marketing tools, including new features they want and changes they want to see. It only helps my business. I try to instill in everyone that works here at VerticalResponse that going above and beyond with our customers is important.

Since a big part of what we do is helping small businesses create and send e-mail marketing campaigns, there are a few essential things we must deliver on in order to have happy customers: 1) Ensure that our website and online tools are up and running fast for the thousands of people who use them everyday; 2) Ensure that our customers know how to use our features; and 3) Most importantly, ensure their e-mail campaigns are delivered to their subscribers’ inboxes. We work day and night so that all this is running smoothly during a customer’s experience with VerticalResponse.

But every now and then, someone’s experience isn’t perfect, through no fault of ours. We once had a customer who we worked diligently with to make sure he was going about his e-mail marketing campaigns in the proper way. We cleaned his lists, made sure he was sending e-mail only to those who requested it, and kept a close eye on people who were complaining that they were getting e-mails when they didn’t request them. Repeatedly, this customer disrespected our requests and kept attempting to send questionable e-mail to questionable recipients. (I’m sure you’ve all gotten e-mails in your inbox like this.) So inevitably, we had to ask him to leave our services.

That’s right, we “fired” a customer.

Here’s a note from this customer, “Gloomsale” (name changed to protect the guilty), to our very hard-working e-mail delivery group:

As CEO, I have a $7-fig salary and well connected … You don't. My time is valuable, yours, less so. Different levels. … Should I blog and rant about this all over the web and stamp my CEO on everything? Would that get VR more customers or less?? Be smart, don't F w/ my time.

Some of you might think it’s never appropriate to call a customer out. But in this case, I did, and I don’t think he was prepared for it since I haven’t heard from him or seen anything published about us as he promised. I politely e-mailed him back and told him that we didn’t agree with his e-mail practices and that our team went above and beyond to help him, but he didn’t reciprocate our goodwill. And I reiterated that we just wouldn’t be able to make it work with his business.

Why did I do it?

This customer was abusing our service after we tried to work with him for months
My team works hard and they don’t need to be belittled by someone who touts that he has a seven-figure salary
My employees need to know that I've got their backs

I think that our team did the right thing by continuing to be polite to this customer and kill him with kindness. But they gave me the opportunity to decide, as the business owner, if I wanted to have a say in this exchange. I can guarantee you that my team was pretty excited that I took the opportunity to stick up for them and the company. No business needs to be abused by the customer. They’re not always right.

Do you have an experience where your customer wasn’t right? Did you call them out? If not, why?

So You Want Your Own Coffee Shop ...

Tom Searcy — Wed, 22 Feb 2012 11:30:28 -0500

If you're thinking about pursuing an entrepreneurial dream, do this mental exercise to make sure you've got the passion to make it work.

A friend of mine bought a coffee shop. It was his dream. Now he owns a dream–but alas, a dream is not always a business. Nor is it even, for him, a passion.

And as you might imagine, the dream of owning a coffee shop and the business of running one are very different.

What’s the difference between a dream and a passion? A dream often is a snapshot moment of idyllic perfection. A passion is an ongoing burning that compels you. I believe in having both. If you are going to have a business for a long time, it will take passion to make it succeed.

I had a dream once: I wanted to be a lawyer. (Cue sappy player-piano music.)

I didn’t know much about law or the practice of it. I liked the trappings of it–the respect, (this was 35 years ago), the suits and briefcases, the importance of it all. I went to work as a high-school junior in a very big company’s law department as a summer intern. By the end of the summer, however, a number of the lawyers had taken me aside and said, “Kid, don’t go into law.”

They had no passion for the law–they just liked the money and trappings. I would ask about the job and their eyes would go dead. In a moment, the topic would shift to the car they were working on or the beagles they were training or the trip they were taking...and the lights went on inside of them again.

Quick Balance Check

Do you have a dream, or a passion? Use this mental exercise to figure it out.

1. Envision your business in its opening-day dream state: size, customers, employees, finances.

2. Envision your business at its 3 year-anniversary dream state.

3. Now write out the list of the things you will personally be doing every day to get the business from day one to the 3-year anniversary. Be detailed and make an estimate of the amount of time per week you’ll be spending per task.

4. Separate out the tasks between “passion” and “things I have to do.”

5. Double the time estimates for “things I have to do” and cut the time estimate on the “passion” list in half.

6. Ask yourself: Can you live with your life like that for 3 years?

Know Your Passions

I encourage you to understand your passions. What makes you passionate about the business you have or are starting? I'm not talking about the events–the grand opening or the perfect moment of an incredible customer interaction. What is it about the day in, day out operations that will keep you excited? What will get you in early, cause you to stay late and go home bone-weary with a smile on your face?

I have friends who dream of owning bed and breakfasts, others who want to open T-shirt shops on the beach, and still others who want to make their fortune in social media services. I encourage every one of them to take the next step–to discover whether they have the passion for the owning-running-and-sacrificing part of being an entrepreneur.

Dreams can become drudgery if there is not enough passion to sustain the day-to-day, unglamorous parts of running that business.

6 Ways to Find A Technical Co-Founder

Matthew Bellows — Wed, 22 Feb 2012 11:20:00 -0500

Don't just sit there while the clock is ticking on your business idea. Go where the nerds are.

Almost everywhere you look, the barriers to starting a company are falling. Seed funding is easier to come by, startup costs are lower than ever, markets have never been more open. However, the technical skills required to execute the next groundbreaking idea are more in demand than ever before. If you are an entrepreneurial engineer, the world is yours for the taking. But what if you don't know how to code? What if you can't lead an engineering team? How do you find that code ninja, that "Ruby on Rails" rock star that you need to turn your brilliant insight into a billion dollar exit?

There is no shortage of networking events for start-up people, but they are the last place to look for a technical co-founder. Those meetings are crawling with non-technical people like you, or engineers with ideas they want to pursue. You need to go where the nerds are, where they feel comfortable, and you can't go just as a tourist—you need to go to places like this:

Meetups There are hundreds of Meetups organized around technical topics. Engineers get together to discuss programming challenges and then drink beer and eat pizza. Stay silent and take notes during the first part. When the beer starts flowing, start asking beginner-level questions, and try to understand the answers. Bonus points: Bring the conversation up a level to broader design decisions.

Nerd Hobbies If you can work up some enthusiasm for orienteering, dowsing, telemark skiing, Ultimate Frisbee, historical re-enactments, chess, Dungeons and Dragons, LARPing, war gaming, or board games, you'll meet a lot of great engineers. Massachusetts Institute of Technology has an annual 48 hour-long scavenger hunt called The MIT Mystery Hunt. Volunteer to bring food, sleeping bags, and caffeine to a team and then get out of the way. Bonus points: Actually help solve a puzzle.

Concerts and Local Jams There's a huge overlap between musicians and engineers, but it does you no good to hang around Justin Bieber shows. You've got to go far off the pop or frat rock scene and into "smart music" shows like Kraftwerk, Ministry, Skinny Puppy, They Might Be Giants, Rush tribute bands and the like. If you can play an instrument, tune up, and drop into a Sunday afternoon open jam session. Bonus points: Bust out an a cappella version of "Meet the Elements."

Engineering Schools It sounds obvious, and you'll run into competition from the major Internet companies that recruit there, but an exceedingly large percentage of the people at engineering schools are actually engineers. Your local school has speakers, films, discussions, and panels every week that attract possible co-founders for your startup. Pick out talks that are relevant to your project and hang out after the event ends. Bonus points: Audit or actually take a night-school class. It's a great way to appreciate how hard programming is.

Anything Tolkien or Lucas You've missed your chance to capitalize on the Lord of the Rings midnight openings, but fear not. Consider camping out for the re-reissue of Star Wars: Episode 1, this time in 3D. Gatherings that pay tribute to these mythmakers are easier places to have a conversation, but there's no distraction from the fact that you'll never know as much about Gimli as these folks will. Bonus points: Recount Boba Fett's origin without a crib sheet.

Hackathons Real computer engineers are so into computer programming that they do it after work too. Companies large and small organize Hackathons so they can find great programmers. Just walk in the door like you know what you are doing, pick a spot against the wall, and find someone to cheer for. Bonus points: Don't spill beer on someone's keyboard.

There are other options, of course, including forming genuine, non-mercenary friendships with school or work friends. That's how I found my technical co-founder, and we've been together for five companies. But you've got to start somewhere, and the clock is ticking on your idea. So don't wait. Get out there where the nerds are.

Report: Black Women's Secret Asset

KC Ifeanyi — Wed, 22 Feb 2012 10:45:17 -0500

A new study finds assertive black women leaders are viewed positively while just as assertive white women in the same roles are viewed negatively. Why?

When comparing leadership styles, it’s often been proven that men who are more assertive are viewed positively, while women who exhibit dominant behavior are viewed negatively. But what happens when you add race to the equation? Does the perception of leadership styles between men and women remain the same? According to study released earlier this month, an interesting phenomenon takes place that turns that commonplace perception on its head–that is, at least for black women.

The collaborative research effort from Duke University’s Fuqua School of Business and the Kellogg School of Management at Northwestern University found that black women in leadership roles who show dominant behavior see less of a backlash than their white female or black male counterparts—ergo, putting black women on par, in this respect, with white men.

In an online survey of 84 non-black participants, subjects were asked a series of questions based on eight different scenarios of fictitious executives either communicating dominant or communal behaviors. A forceful and direct leadership style reflected negatively on white females and black males but positively for white men and, surprisingly, black women.

“There’s this idea that acting dominantly is explicitly proscribed for white women and explicitly proscribed for black men,” says Ashleigh Shelby Rosette, co-author of the study and an associate professor at Duke. “However, for black women there is this stereotype out there of the ‘angry black woman.’ Some of these behaviors we often think of as extremely negative but actually, if you think about it, that angry black woman stereotype is also congruent with things like being aggressive, dominant, assertive, and self-assured—and those are our typical leader characteristics."

Rosette attributes the study's results to the theory of prototypical social perceptions. When most people think of “race,” they think of a black male. When most people think of “women,” they think a white female. Because black women essentially fly under both of those radars, they’re examined differently with the notion that they’re practically impervious to negative evaluations. “Black women aren’t just a mirror image of white women—they occupy a new and unique space,” says Rosette.

So the question remains: How can black women work these findings to their advantage? The answer, unfortunately, isn’t so simple. “When a black woman occupies a leadership position, she may have more behavioral freedom than we previously thought to communicate more forthrightly and recognize that she won’t necessarily be penalized because of that,” says Rosette. “But the presumption in our research is that she currently occupies the position. It’s completely counterintuitive to what we thought would happen when black women occupy these top positions, but the next aspect is how do we get them into these positions.”

4 Lin-sane Leadership Lessons

René Shimada Siegel — Wed, 22 Feb 2012 10:18:00 -0500

In business terms, Jeremy Lin is the underdog that took on the 800 pound gorilla and won. Here's what entrepreneurs can learn from him.

Lin-sanity, they call it.

On Sunday, February 20, the Knicks played the defending-champion Dallas Mavericks. Jeremy Lin was again on fire, scoring 28 points with 14 assists and five steals, and leading the Knicks to a 104 to 97 win. In business terms, we could think of Lin as the start-up that has the determination, drive, and ingenuity to take on the 800 pound gorillas in its market -- and win.

After all, as recently as January 4, Lin had posted this to his Facebook page: “Everytime i try to get into Madison Square Garden, the security guards ask me if I’m a trainer LOL”

Every once in a while somebody like Lin comes along and defies all the stereotypes. They deliver in such a spectacular and graceful way that you can’t help but admire them. How has this young man inspired so many in such a short time? And as business leaders, what can we learn from him?

Passion and drive trump genetics and environment. What’s the NBA-sized goal for your business -- and do you have the drive to get there? Nobody ever expected Jeremy Lin to become a world-famous basketball player. Yet he was determined,and patient, against remarkable odds. His parents are of Taiwanese and Chinese descent, both 5 feet 6 inches tall. Lin managed to graduate from high school without being offered any athletic scholarships, and didn’t make the All-Ivy League First Team until his senior year at Harvard. Against all odds, he worked hard and never gave up on his dream of playing in the NBA.

Maintain focus. Despite all the Lin-sanity, Jeremy has not been distracted by the hype and attention, at least so far. He remains humble and spiritual. After a loss to the Hornets, Jeremy posted, “gotta learn from my mistakes and move on to the next one.” He’s always focused on improving his game, working with special coaches to hone the style of shooting that lets him drop a three-pointer over Mavericks star Dirk Nowitzki—who towers over Lin by nine inches.

At Harvard and even now, Lin has heard bigoted jeers about his Asian heritage. Believe it or not, ESPN used the headline “Chink in the Armor” on its mobile site after Lin had nine turnovers in New York’s loss to the Hornets. “I don’t think it was on purpose or whatever, but they have apologized and so from my end I don’t care anymore,” Lin said in a TV interview. For entrepreneurs, the lesson is clear: Never let ignorant non-believers get in your way.

Share the glory. Jeremy is not only humble, he’s very smart. Despite all his talent he’s the first to recognize the importance of a team. As an entrepreneur, you may be fortunate enough to be singled out for your success. It’s critical to recognize the people who enable your success and keep it on track every day.

Lin’s a generous player who makes his teammates better, sharing the ball and the glory. “This team is so unselfish and has so much heart,” he posted on Facebook. “Love playing with them!” Does your team know how much you love playing and working with them, too?

Avoid personal fouls. In business it’s tempting to charge ahead recklessly. Many professional athletes disrespect their opponents, bad-mouthing them and throwing their weight around. But Jeremy plays with focused determination, a team approach, and a humble and passionate nature -- the same characteristics that inspire customers and employees.

Now I’m no basketball player -- and a few inches shy of 6 foot 3 -- but I do know smart business owners can achieve amazing feats of success when they play heads-up ball.

9 Things You Should Never Ask Employees to Do

Jeff Haden — Wed, 22 Feb 2012 09:31:00 -0500

Kill the post-work social events -- among other things -- that might be rubbing your staff the wrong way.

You’re the boss. You have the power.

Awesome. Just don’t use your power to do things like this:

Pressure employees to attend “social” events. Any time your employees are with people they work with, it’s like they’re at work. Worst case, whatever happens there doesn’t stay there; it comes back to work.

Embarrassing behavior aside, some people just don’t want to socialize outside work. And that’s their choice… unless you do something that can make them feel like they should attend. Then it no longer feels like they have a choice, and what you intended as a positive get-together is anything but.

And keep in mind that “pressure” can be as simple as saying, “Hey, Mark, I hope you can come to the Christmas party… I hope we see you there…” While you may simply be letting Mark know how much you enjoy his company, if he doesn’t want to go he hears, “Mark, you better be at the party or I will be very disappointed in you.”

If you really want to hold outside social events, pick themes that work for your employees. Have Santa attend a kids’ Christmas party. Have a picnic at a theme park. Take anyone who wants to go to a ballgame. Pick one or two themes that cover the majority of your employees’ interests, and let that be that. Never try to force togetherness or camaraderie. It doesn’t work.

Ask an employee to do something you already asked another employee to do. You assign Joe a project. The day you needed it completed you realize Joe hasn't finished... and probably won't. You're frustrated with Joe, and you really need it done, so you plop it on Mary's desk. You know she'll get it done.

Maybe so, but she'll resent it.

Leave Mary alone. Deal with Joe.

Pressure employees to donate to a charity. The United Way was the charity of choice at a previous employer. Participation was measured; the stated company goal was 100 percent participation.

Pressure enough? It got worse; every supervisor reported results from their direct reports to the head of the fundraising effort… who happened to be the plant manager.

I’m sure the United Way is a great charity, one worthy of our support.

But don’t, even implicitly, pressure employees to donate to a charity. Sure, make it easy. Match their contributions if you like. But make donating voluntary, and never leave the impression that results are monitored on an individual basis.

And don't do the "support my kid's fundraiser" thing either. That's tacky.

What employees do with their money is their business, not yours. Make sure they feel that way.

Make employees go without food at mealtime hours. Say you go to a wedding that starts at 5 p.m. If there's a reception you expect a meal to be served instead of just hors d' oeuvres, right?

So don't invite employees out for after-work drinks at 6 p.m. That's a company dinner, not company drinks.

The same is true of lunchtime meetings. If you plan a working lunch, provide food. Some employees go out to eat; if so, they're stuck. Plus others might bring food you would, um, prefer not to smell the rest of the afternoon.

Always err on the side of caution. If you order pizza for a group and you run out, some employees won't remember they had two great slices; they'll only remember that they wanted a third... and you were too "cheap" to provide it.

Ask employees to evaluate themselves. Employees who do a great job always question why they need to evaluate themselves. Shouldn’t you already know they do a great job? Employees who do a poor job rarely rate themselves as poor, turning what could have been a constructive feedback session into an argument.

Self-evaluations may sound empowering or inclusive but are almost always a waste of time. If you want feedback from the employee, ask them what more you can do to help them further develop their skills or their career.

Ask employees to evaluate their peers. I’ve done peer evaluations. It sucks. “Peer” means “work together.” Who wants to criticize someone they have to work with afterwards? Claim evaluations are confidential all you want; people figure out who said what about whom.

You should know their performance inside-out. If you don’t, don’t use the employee’s peers as a crutch. Dig in, pay attention, and truly know the people you claim to lead.

Reveal personal information in the interest of “teambuilding.” I once took part in a transformational leadership offsite. We were asked to make small boxes out of cardboard. (Why do offsites always seem to involve arts and crafts?) Then we were asked to cut pictures out of magazines that represented the “outer” us, the part we show to the world.

Then we were asked to write down things no one knew about us on slips of paper, put them inside our box (get it?), and reveal our slips to the group when it was our turn.

I was okay with putting pictures on the outside of my poorly constructed box, even though my lack of scissor skills was a tad embarrassing. I didn’t want to create “reveal” strips, though, and said so.

“But why not?” the facilitator asked.

“Because it’s private,” I said.

“That’s the point!” he cried. “The goal is to reveal things people don’t know about you.”

“They don’t know those things about me because I don’t want them to know those things about me,” I said.

“But think about how much better you will be able to work together when you truly know each other as individuals,” he said.

“Sometimes I think it’s possible to know too much,” I said. “If Joe likes to dress up as a Star Wars character in his spare time, that’s cool, but I’d really rather not know.”

I didn’t end up participating, a potentially career-limiting move that turned out fine when upper management's focus soon shifted from “transformational leadership” to “Back to Basics.” And with that, I was back in vogue.

You don’t need to know your employees’ innermost thoughts and feelings. Even if you did, you have no right to their thoughts and feelings. You do have a right to expect acceptable performance.

Talk about performance, and leave all the deep dark secrets where they belong.

Ask employees to alert you when you “veer off course.” One of my bosses was really long-winded. He knew it, and he asked me to signal him when I thought he was monopolizing a meeting. I did it a couple times; each time he waved me off, probably because what he was saying was just too darned important.

Never ask employees to monitor your performance. To the employee, it’s a no-win situation.

Ask employees to do something you don’t do. Not something you “wouldn’t” do, but that you don’t do. Would is irrelevant. Actions are everything.

Lead by example. Help out on the crappiest jobs. Stay later. Come in earlier. Not every time, but definitely some of the time. Employees will never care as much as you do—and, really, they shouldn’t—but they will care a lot more when they know you do whatever it takes.

Inside Chicago's Start-up High School

Christina DesMarais — Wed, 22 Feb 2012 09:15:00 -0500

How an unusual inner-city charter school plans to groom the next generation of tech entrepreneurs.

If you think the next generation of start-up founders will hail from Stanford, Harvard, or some other university cranking out MBAs, you might want to expand your thinking. There’s a 3-year-old inner-city high school in Chicago—filled mostly with poor African American youth—grooming students who know how to think, act, and speak like entrepreneurs.

Some of them spend as much as three hours and several bus transfers getting to and from school. Once there, they’ve got double periods of math and English to look forward to and a longer school day than any of their Chicago public school peers.

Yet enrollment in the Chicago Tech Academy is highly coveted. In fact, CTA’s fourth annual lottery takes place Feb. 23 during which 2,000 freshman students and their families will be crossing their fingers they get in for next year. Only 150 will.

“It’s a heart-wrenching experience,” says serial entrepreneur and school chairman Terry Howerton, who co-founded CTA with executive director Matt Hancock. He says the school is a beacon of hope within the Chicago public school system, which has a 52 percent drop out rate.

That’s a figure Howerton couldn’t swallow.

“I’ve been stunned at the level of societal failure that exists in some of these big cities. The fact is we have an unsustainable community if one out of every two kids doesn’t finish high school. And they’re kids who are going into our community unemployable with no network of friends and family and support.”

The birth of a start-up school

His solution? To run a high school as if it’s a start-up and its students are products and mini start-ups in their own right.

He says it really doesn’t matter where the students come from, or the fact that some of them are reading at a grade level several notches below where they should be.

“We’re going to work our hardest to influence where [they’re] going. And the way that we can do that best is not just through normal academics, it’s through teaching skills of entrepreneurship,” he says.

“Entrepreneurs have to think analytically. They have to be able to speak articulately and passionately and influence other people. Entrepreneurs have to be able to be creative and identify problems and solutions. These are soft skills that you don’t normally think about being taught at a high school but that we try our best to teach across the curriculum,” he says.

A day in the life

What exactly does this unusual focus look like in the classroom?

In addition to super-sized portions of English and Math, students spend two hours a day in a technology class during which they learn skills like programming in Java, Objective-C or C++.

Creative writing in English class is based on a real world example. For instance, next year copywriters from Groupon—clever wordsmiths who certainly have a handle on the subject—will be working with kids in the classroom.

In an entrepreneurship class students craft a business plan for their unique businesses. Once complete, they enter them into citywide competitions sponsored by organizations such as Future Founders, another Chicago-based program that encourages kids to get involved in business.

Links to the tech industry

Once a month a group of about 25 students takes off after lunch for a four-hour brainstorming session at TechNexus, a business incubator Howerton founded and where CTA was planned and birthed.

During their time there the students must come up with an idea for a viable tech start-up that fits within certain parameters. At the end of the session they present the idea to the real start-up the assignment was modeled after. Howerton says not only is this an excellent learning opportunity for the kids, but companies who’ve heard these presentations, such as online floral marketplace FlowerPetal and parking spot finder SpotHero, have been surprised at the ideas the students came up with—ones they hadn’t thought of themselves.

Students also benefit because of strong support from organizations like CompTIA, the international trade association for the IT industry that happens to be based in Chicago. Comptia facilitates connections between local tech companies and the school so that CTA students are regularly able to take field trips to companies such as Microsoft and Navteq to experience what it’s like to work in a high-tech business environment.

Speaking of Microsoft, CEO Steve Ballmer even stopped by CTA in 2010 to meet with staff and students after hearing from a Microsoft employee what the school was doing.

Preparing for after graduation

And because successful start-ups need good advisors, Howerton is working on making sure each and every student is paired up with a successful business person from the Chicago tech community—currently 125 kids have mentors, but Howerton hopes someday to pair up all 450 of them.

“When we leave high school we take for granted this network of people we know—friends, family, and people our friends and family know who can help us when it comes time to looking for a job or trying to decide what our career ought to be or starting a company and trying to find an investor,” Howerton says.

That’s why he believes possibly the most valuable thing CTA students garner while studying at the school for four years is a network of dozens of local mentors who are successful entrepreneurs and technology workers.

“When [these students] graduate, whether they go off to college or start a company or just look for a job in the [technology] industry, they’re doing so with a network of people that they would not have had if they had gone through a normal school,” Howerton says. “I think that’s pretty significant.”

Join a Gym, Be a Better Boss?

Jessica Stillman — Wed, 22 Feb 2012 08:41:00 -0500

A new study offers another reason to break a sweat that's specifically relevant to entrepreneurs: You're less likely to be a jerk to your employees.

There is no shortage of reasons to exercise. From the ability to keep squeezing into your favorite pants to wide ranging health benefits and even claims that breaking a sweat helps keep your brain in shape, the less active among us are routinely urged to laced up our sneakers and hit the gym. But if you haven't been persuaded by the standard reasons to exercise, perhaps a new study can provide you with some entrepreneur-appropriate motivation.

The research out of Northern Illinois University found that bosses who exercise less are more likely to be nasty and abusive to their employees, venting their stress on their team members rather than on the treadmill or in the weight room. Why is it that fitter managers are less likely to put down and stress out their employees? Eric Casaburi, a certified personal trainer and CEO of RetroFitness, explains:

It's not exactly that bad behavior and a lack of exercise are linked; it's built-up stress and a lack of an outlet for it that creates the bad behavior. A lot of managers get caught up in small and big stresses at their office and get the kick-the-dog syndrome. They end up looking for an outlet for that stress and often it's one of their employees. Where as, if they would have had a good work out or a two- or three-mile run, that becomes their outlet, instead of the employee. That negative energy dissipates with exercise because that exercise is serving as stress relief.

You're busy, we know, so how much gym time is required to channel your frustration in a less destructive way? Surprisingly little, according to the researchers. "Only moderate levels of exercise were necessary to minimize abusive supervision, such as one to two days of exercise per week, and the type of exercise seemed to make little difference," read the release announcing the study.

If you've been meaning to start an exercise program but your insane business-owner's schedule has been getting in the way, Casaburi has some advice. First, don't beat yourself up about when or what type of exercise you do. "Anytime is a good time for exercise when stress relief is the result," he says. Second, start thinking of your exercise goals in the same strategic way you view other business priorities, as essential for the long-term, smooth functioning of your business.

"Treat your health like your business. If you treat yourself and your health like you do the business, you’ll give it the respect it needs," concludes Casaburi.

What do you do to blow off steam at our outside of work?

Learning from Placebos, Mexican Coke & Acupuncture

Paul Barsch — Wed, 22 Feb 2012 08:39:00 -0500

Our expectations have everything to do with how much we like a new product or experience. Your marketing needs to reflect this.

Want to launch a new product or service? Your packaging and branding need to align closely with customer expectations. Sure, you can break the mold and get super-creative, but be sure to bring your multi-million dollar marketing budget with you. That’s what it will take to significantly alter customer expectations.

Placebo research, Mexican coke, and acupuncture offices all illustrate the power of expectations. If we believe a medicine will work, a product will taste a certain way, or that we’re in an environment where others get well, we’re likely to have similar experiences –if only because we expect to.

Medical professionals have long known about the power of placebos. Expectations that a pill or injection will improve a particular condition are often as powerful as taking the drug itself. What a customer or a patient “expects” has a lot to do with whether they’ll be satisfied with the eventual outcome. If you want your product or service to exceed the customer’s expectations, then it’s worth learning a bit of neuroscience and marketing to try to understand exactly what the customer expects.

Let’s suppose that you and a friend just finished watching a full day of football, drank too much, and definitely ate too much. With a raging case of heartburn, you ask your friend if he has any remedies. He pulls out three pills--one red, one green and one purple--all of which he swears are dedicated to relieving heartburn. Are you likely to take the red pill for your heartburn? Probably not, because innately you understand that a red pill doesn’t quite seem right for heartburn relief. As you watch your friend down a purple pill, and see how he instantly feels better, you ask if he has another.

What we’ve witnessed in this fictitious example is the power of expectations. A New Yorker article titled “The Power of Nothing” confirms that our expectations of how a product or service will work have a lot to do with how satisfied we are with the results. The article mentions that patients expect an aspirin to be of a certain shape or color, and that even tasting the bitterness of an aspirin on the tongue can decrease pain instantly.

A friend of mine prefers “Mexican Coke,” or Coca-Cola made in Mexico with sugar cane, instead of Coca-Cola made with corn syrup (as it is in the United States). My friend says she can taste the difference between the two colas, although she’s never done a blind taste test. I suspect the packaging of the soda and the fact that she buys it “contraband” from a large retailer (Coca-Cola from Mexico is only supposed to be sold in Hispanic groceries and markets) all influenced how the cola tasted even before it touched her lips. While Coca-Cola claims there are “no perceptible differences” between corn syrup and sugar cane cola, they acknowledge that for some Hispanics, “the familiarity of Coca-Cola with cane sugar and in a tall glass bottle…is a reassuring 'piece of home.’” In this case, the labeling and the glass bottle may have more to do with how the product tastes than the actual ingredients.

What we expect to happen often actually does. And that’s why it’s so important that your marketing identifies customer expectations and then delivers on a plan to exceed them.

Consumers probably expect your product or service to be delivered and consumed in a certain way. Give them what they want. You can use market research, behavioral studies, or analysis of behavioral data to figure out what consumers’ expectations are, and to create an experience that hews to them.

Note that I mentioned “experience.” Context matters, probably even more than the product or service itself. That’s why practitioners of acupuncture often take great pains to create an environment of tranquility and harmony even though, according to the aforementioned NewYorker article, clinical studies fail to demonstrate its effectiveness. Patients believe they’re in a place of healing, and they expect to get well.

Some marketing purists might argue that such an approach lacks creativity. They might also say that consumers don’t know what they want, so a company must deliver the unexpected. Perhaps this is true in some cases, as when Salesforce.com debuted the software-as-a-service model back in 1999. But companies that attempt this need to have a whole lot of money in their marketing budget, because that’s what it’s going to take to change decades of pre-conceived customer expectations. You can sell cola in a green-labeled can if you like, but I can tell you right now that this is a recipe for a lot of wasted marketing dollars.

Like it or not, this is the human brain at work. For marketers, there’s little use fighting it. Best to go with the flow, and give the people what they want – and expect.

10 Dumbest Sales Mistakes to Avoid

Geoffrey James — Wed, 22 Feb 2012 06:55:38 -0500

If you blow it at a face-to-face meeting, you'll have wasted both your time & your client's. Avoid these goofs to turn more prospects into paying customers.

Customer visits are expensive–and if you don't make a sale, your time and travel expense has been wasted. So you need to make sure you're at your best during face-to-face meetings.

Here are the 10 most common blunders that sellers make during meetings with potential customers. Some may seem obvious--but you'd be surprised how easy it is to stumble into them.

1. Being late to the meeting. If you don’t arrive on time, it tell the customer clearly that you don’t give a hoot about them or their time. Always arrive 15 minutes ahead of time. If you drive to calls, get a GPS device to make sure you won't get lost en route.

2. Failing to check your appearance. Don’t show up with something amiss–spinach in the teeth, lipstick smeared–that could have been headed off by a quick stop in the client’s bathroom. Make a quick pit stop before the call, and give yourself a once-over.

3. Acting way too friendly. You'll just seem phony and "salesy" if you pretend that a prospect is like a long-lost friend. Approach each prospect with respect and courtesy–not with a glad-hand and a back slap.

4. Talking rather than listening. Sales calls are about relationship building and gathering information. You can’t do either of those if your mouth is moving all the time. Get curious about the customer. Ask questions.

5. Arguing with the customer. If the customer doesn’t agree with an important point, arguing is only going to set that opinion in concrete. Instead, ask the customer why he holds that opinion; then listen. You might learn something.

6. Giving a traditional sales pitch. Sure you’ve got something to sell–but nobody wants to hear a sales pitch. Have a discussion about the customer's needs; then, if appropriate, discuss what you've got to sell.

7. Falling short on product knowledge. The prospect doesn’t want to hear, “I need to get back to you about that” ... over and over. Make sure you’re trained on your current products and policies before the call.

8. Getting distracted by your smartphone. Ouch! What were you thinking? No call, email, or message is going to be more important than the real live person in front of you. When you're talking with a prospect, turn off your phone. I mean it.

9. Letting the meeting meander. The customer's time is valuable. Don't have wandering conversation that slowly gets to the point. Instead, provide a brief agenda of what you're there to discuss, and be sure you stick to that agenda.

10. Overstaying your welcome. Your prospect has hundreds of other things that he or she could be doing, rather than spending time with you. Set a time limit for the meeting and stick to it.

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Hiring Tips for New Entrepreneurs

Keith Cline — Tue, 21 Feb 2012 18:50:00 -0500

Now that you've raised money, how do you build a solid team?

You're a first-time entrepreneur. You have an idea that will change the world and you have been fortunate to find an investor to fund it. Now you're faced with your biggest challenge yet. How are you going to recruit people to join you on this mission?

Here are some hiring tips to help you get started. I also included insights from two entrepreneurs who have been very successful at hiring top performers: Jason Jacobs, the co-founder and CEO of RunKeeper, and Boris Revsin, co-founder & CEO of CampusLIVE, whom I've helped recruit a senior director of product and analytics.

1. Make a plan.

Hiring the best people is critical to your success so you need a strategy or roadmap to do it well (like any other aspect of your business).

Start off by prioritizing which positions need to be hired first by determining the importance they will have to your business today. Then write a detailed profile of the ideal candidates. Jacobs adds, "They say when fundraising, if you ask for money you get advice and if you ask for advice, you get money. Hiring is the same way. Reach out to people you think would be perfect for the role and get their advice on how you are thinking about the position."

Of course, the recruiting pipeline doesn't just fill up with top candidates automatically. It takes a lot of work. You should outline a project plan with specific tasks that will help you build your list of prospective candidates. Here are some ideas and tasks you should follow to help you set goals and measure your success.

2. Work your network.

Working your network is a crucial piece of any successful recruiting effort. You should already be diligent about connecting with people on LinkedIn, which helps. And this point cannot be emphasized enough: A-plus players know other A-plus players. "You want the people you trust to recommend other top performers," says Revsin.

Another great suggestion from Revsin: make your advisors and investors an extension of your recruiting efforts. They have extensive networks that should open up introductions to key people in the industry. Ask them to help make introductions for you. After all, they too are invested in your success.

3. Get out there.

You are your company's chief evangelist! People need to see the passion in your vision and believe that the climb is worthwhile. So you need to be out there and visible in the community. Every major city has networking events going on within your industry. Attend big events like NY Tech Meetup in New York or WebInno in Boston, but also find out about smaller groups where people are talking about topics relevant to your business.

While networking is central to recruiting, it also helps build your brand and creates buzz. Once people are talking about your company, you might actually get requests from candidates actively seeking to work for you.

4. Recruit all the time.

You never know when you are going to be meeting someone who could be your next hire. Have your recruiting hat on at all times.

And if you already have a co-founder or a few early employees, make sure they are all out there helping out with the recruiting efforts too. Everyone should be involved, especially in the early stages. Make sure your story is consistent from everyone. Getting a mixed message about the position or the vision of the company is a red flag for most candidates.

5. Aim high.

If you are going to build a successful company, you need to find the best of the best employees. If you truly believe that your company offers amazing opportunities, be fearless and go after the top performers out there. Yes, people do leave Google.

You will want to move quickly, but don't just hire for the sake of having a warm body in the seat. Take your time and do the proper amount of due diligence to help ensure you are making the right hires.

Jacobs validates this point. "If you aren't over the moon about the hire you are about to make, don't hire [him or her]. Every single hire in an early stage company is critically important to get right."

How To Recruit Top Employees

Scott Gerber — Tue, 21 Feb 2012 16:01:00 -0500

How can you find the best candidates? Here's recommendations from Scott Gerber, founder the Young Entrepreneur Council and Jeremy Johnson, co-founder of 2tor.

5 Lessons From the Campaign Trail

Steve Cody — Tue, 21 Feb 2012 15:47:00 -0500

It's not all Super PACs and mudslinging. In fact, every business executive can learn valuable lessons from inside the Beltway and on the campaign trail.

Just because every American seems to be fed up with politics and politicians doesn't mean every business executive can't learn valuable lessons from the Beltway.

I've been following some of the most successful campaigns of the past four years and have embraced five public relations strategies in particular that have worked like a charm. See how many make sense for your business:

Go on a listening tour.

While it didn't exactly work for Hillary Clinton in 2008, it makes a world of sense for any senior executive charged with increasing awareness and enhancing credibility. Too many C-suite executives are content to hunker down in their corner offices and rely on the latest market research reports to determine their positioning and messaging.

Don't be a lemming. Grasp what the Beltway strategists already know: What worked last year won't necessarily succeed this time around. That's because your target audiences are better informed, more skeptical and less loyal than ever.

That dictates a listening tour. By that I mean monitoring online and offline audiences each and every day. Find out the individual wants and needs of every constituent. When appropriate, engage in conversations with them. And, remember that, if you don't keep listening and framing your positioning with the findings, you'll end up unemployed, declaring bankruptcy, or both.

If Mohammad won't come to the mountain...

Beltway strategists go far beyond listening tours. They insist their candidate hit the bricks and press the flesh. Senior business executives need to do the same thing. In fact, it's critical that a CEO and her marketing communications team routinely meet key customers and prospects. Far too many of my peers rely on second-hand information from sales forces to formulate their programs. Don't fall into the Ivory Tower trap.

Ask to be a fly on the wall as your sales executive wines and dines a key prospect. Attend trade shows and conferences where leading industry issues and trends are discussed and relationships formed. Again, don't rely on the sales team to be the sole point of contact. The candidate (in this case, the CEO) needs to be in the trenches (and so, too, does his or her communications team). The same holds true for employee meetings. Don't rely on a human resources executive to tell you the health of the organization. Don a lab coat, wrap a stethoscope around your neck, and examine the patient yourself.

Anticipate the negative.

While most people think politicians are only good at slinging mud, they're actually incredibly adept at responding to negative news. That's because Beltway strategists anticipate potential crises by simulating them. They actually stage a mock crisis and evaluate, in real time, how each member of the campaign staff should (or shouldn't) respond. You should do the same.

Examine your business. Identify the vulnerabilities. Could your business be interrupted by a cyber attack? What about product recalls? Workplace violence? Whatever your particular Achilles Heel may be, simulate the actual event and decide who, on the management team, is responsible for what. It's so much better to figure out a crisis response strategy before the crisis ever occurs.

Don't forget third-party endorsements.

While it may have been temporary, do you remember the huge bump New Jersey Governor Chris Christie's endorsement gave to Mitt Romney's campaign? The same occurred in 2008 when John Kerry endorsed Barack Obama. Third party endorsements should be part of every organization's business communications strategy. You should routinely reach out to strategic partners such as the presidents of industry trade associations, leading academics, heads of NGOs and others to create co-bylined articles, co-sponsored speaking engagements and other win-win strategies.

Better yet, form an "official advisory board" consisting of external advocates, create a microsite linked to your home page and provide a new bully pulpit for them to wax poetic on their views. You'll be providing free publicity and, God forbid, when the proverbial sh*t does hit the fan and your CEO is led away in handcuffs, the advocates can be called upon to provide critical (and highly credible) third-party endorsements about the fundamental soundness of your business.

Keep your friends close...and your enemies closer.

Beltway strategists live in a 24/7 war-room-populated world. They are ever vigilant to trends and issues as well as what their opponents are saying and doing. You should do the same. With new and affordable tracking software such as Radian6 available, there's no excuse for you to not have the latest news and announcements of your entire competitive set pushed to your desktop, laptop or PDA each and every morning.

When you do, you'll be able to formulate a rapid response that, in some instances, might even outflank your competitor's big, new product announcement. Beltway strategists earn their stripes by turning an opponent's apparent victory into a smoldering ruin. And, you can do the same.

8 Qualities of Remarkable Employees

Jeff Haden — Tue, 21 Feb 2012 14:05:12 -0500

Forget good to great. Here's what makes a great employee remarkable.

Great employees are reliable, dependable, proactive, diligent, great leaders and great followers... they possess a wide range of easily-defined—but hard to find—qualities.

A few hit the next level. Some employees are remarkable, possessing qualities that may not appear on performance appraisals but nonetheless make a major impact on performance.

Here are eight qualities of remarkable employees:

1. They ignore job descriptions. The smaller the company, the more important it is that employees can think on their feet, adapt quickly to shifting priorities, and do whatever it takes, regardless of role or position, to get things done.

When a key customer's project is in jeopardy, remarkable employees know without being told there's a problem and jump in without being asked—even if it's not their job.

2. They’re eccentric... The best employees are often a little different: quirky, sometimes irreverent, even delighted to be unusual. They seem slightly odd, but in a really good way. Unusual personalities shake things up, make work more fun, and transform a plain-vanilla group into a team with flair and flavor.

People who aren't afraid to be different naturally stretch boundaries and challenge the status quo, and they often come up with the best ideas.

3. But they know when to dial it back. An unusual personality is a lot of fun... until it isn't. When a major challenge pops up or a situation gets stressful, the best employees stop expressing their individuality and fit seamlessly into the team.

Remarkable employees know when to play and when to be serious; when to be irreverent and when to conform; and when to challenge and when to back off. It’s a tough balance to strike, but a rare few can walk that fine line with ease.

4. They publicly praise... Praise from a boss feels good. Praise from a peer feels awesome, especially when you look up to that person.

Remarkable employees recognize the contributions of others, especially in group settings where the impact of their words is even greater.

5. And they privately complain. We all want employees to bring issues forward, but some problems are better handled in private. Great employees often get more latitude to bring up controversial subjects in a group setting because their performance allows greater freedom.

Remarkable employees come to you before or after a meeting to discuss a sensitive issue, knowing that bringing it up in a group setting could set off a firestorm.

6. They speak when others won’t. Some employees are hesitant to speak up in meetings. Some are even hesitant to speak up privately.

An employee once asked me a question about potential layoffs. After the meeting I said to him, “Why did you ask about that? You already know what's going on.” He said, “I do, but a lot of other people don't, and they're afraid to ask. I thought it would help if they heard the answer from you.”

Remarkable employees have an innate feel for the issues and concerns of those around them, and step up to ask questions or raise important issues when others hesitate.

7. They like to prove others wrong. Self-motivation often springs from a desire to show that doubters are wrong. The kid without a college degree or the woman who was told she didn't have leadership potential often possess a burning desire to prove other people wrong.

Education, intelligence, talent, and skill are important, but drive is critical. Remarkable employees are driven by something deeper and more personal than just the desire to do a good job.

8. They’re always fiddling. Some people are rarely satisfied (I mean that in a good way) and are constantly tinkering with something: Reworking a timeline, adjusting a process, tweaking a workflow.

Great employees follow processes. Remarkable employees find ways to make those processes even better, not only because they are expected to… but because they just can't help it.

Inc.com

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