Thursday, January 30, 2014

The Employee-centric vs. Client-centric Debate

The early days of any new business venture represent an enormous challenge and transitioning from business plan to profitability involves a number of important steps and a great deal of investment. Laying the proper foundation for your business is essential to securing the long-term future for your company so having an insight into where you are going to focus your early investment will help shape what eventually defines your business. There are two major schools of thought here: the employee-centric approach and the client-centric approach. Both have their merits and which works for your business will come down to an analysis of which approach is most likely to make your company stronger in the long run based on the resources and capital that you have available.

Employee-centric Approach

Greatest investment: Capital
Best Marketing Feature: Cutting Edge
Clientele: High End

The idea behind the employee-centric approach is to create an environment where the people you hire have the best tools at their disposal so that they enjoy coming to work. The concept is that if the employee is happy they will be better able to service clients who will be happy in turn. In order to provide your employees with such an environment usually requires investing a lot of capital up front. This is the one drawback to this approach as, by having a high startup cost, you have immediately positioned your company to operate at a certain price point depending on the market for your service or product. You have reduced your potential pool of clients down to those that can afford to pay for your service or product, and you are now trusting that you will be able to market your company in such a way that attracts a high end clientele.

You will benefit from being able to provide your clients with the very latest technology in whatever you are offering, and reminding them through advertising and marketing campaigns that your company is on the cutting edge of the industry is essential to making your company viable. Investing big in your company through an employee-centric approach means going big the whole way. The investment is bigger so operating costs will be higher and, in order to turn some kind of profit, you will likely be asking your clients to pay more for your product or service than some of your competitors. By making such a demand of your clients, it is imperative that you consistently deliver the goods because the moment a client realizes that they can get the same quality product or service for cheaper, it’s their right to jump ship.

Client-centric Approach

Greatest Investment: Time
Best Marketing Feature: Value
Clientele: Anyone

In contrast to the employee-centric approach there is the client-centric approach which places a greater emphasis on customer relations and attempting do a lot with very little. Ever heard of someone building their business from the ground up? Well, that’s the idea here. In the client-centric approach there is a minimal amount invested in capital and, instead, a great amount of time invested in an effort to provide the client with what they are looking for and keeping them happy. Every customer is precious as they represent the lifeblood of the company and one dissatisfied customer could be the ruin of your business. A poor night’s sleep is justifiable if it gets the project delivered on time and on budget.

Although expectations might have to be tempered with limited resources available, the advantage here is that because your costs are lower you are able to attract clients who might be looking for the best rate in the market. This, in turn, easily becomes the strategy behind how to market your company to prospective clients. By offering the most competitive rates you attract clients with smaller budgets, but you can in turn offer your service or product to a wealthier clientele by being able to offer them value, thereby effectively opening your business to a wider pool of prospective clients.

Wednesday, January 22, 2014

Got Tax and Financial Stress? Here's How to Avoid It

There is one time of year we all dread. No, it's not going over to the in-laws for Thanksgiving. It's tax day. Whether you pay your business taxes on the due date or in advance this can be a stressful time of the year.

Depending on the circumstances, you could find yourself writing out a huge check to the government that wipes out your cash reserves. It's no wonder your blood pressure spikes and the headaches come on.

The good news is that it doesn't have to be that way.

Yes, you'll still have to pay taxes but there is no reason why you should stress out about this part of your business. First thing to understand - everyone is in the same boat. Beyond that there are some tactics you can adopt to help manage your small business finances and avoid getting on the government's bad side.

Make a Plan

A business's success is built on the back of meeting deadlines. That comes with shipping products to customers and paying the bills. It's important to have a well thought out plan for your entire business. This is not something that should be "kept in your head."

You should be using a written calendar that covers all your responsibilities both to customers and to the government. If you know a payment is approaching you won't feel burdened or surprised when it comes time to write the check.

It comes down to a matter of making priorities. And yes, there is an app for that!

Don't Do it Alone

Feelings of stress go hand in hand with feelings of being overwhelmed. When was the last time you asked for help? As a small business owner there are a lot of new aspects of your business you thought you wouldn't have to contend with. Sure, you knew you'd be paying the bills but keeping up with your company's Facebook page and generating original content for your website? Did you budget time for that? More importantly, do you know what you're doing when it comes to optimizing search engines and social media?

You don't have to become an expert because there are plenty of experts out there in cyber land willing to lend a hand. Even your kids could probably be a big help posting notices or even cleaning up around the office. Start asking for help and watch the stress melt away.

Take Time for Yourself

All work and no play? We've heard it before and it has meaning for the small business owner. The first few weeks or months of your start up will be grueling. No doubt about that. However, that doesn't mean running yourself into the ground. You certainly can't pay your tax bills that way. Leave some relaxation time for yourself and/or with your family every week. Schedule it like a business meeting and hold it with the same level of importance. You'll find that approaching your business after taking a "time out" won't be a struggle. 

Wednesday, January 15, 2014

A Tale of Two Independents – What’s in a Name?

Jerry and Steve each operate their own web services company. Strictly speaking they are each a company of just one and the bulk of their work involves coding, formatting, updating and maintaining the functionality of various websites. They are about the same age, have a similar education and work experience, and provide essentially the same services regarding each of their clients as completely separate contracts. The only real difference is that Jerry calls himself a freelance web developer whereas Steve has given himself the title of “Consultant” for his firm Omni-Global Web.

Candice, Rachel, and Tamara are the support staff for a new surgical clinic operating in a ritzy part of town and, with a particular budget, they’ve been asked to set up the website that will represent the clinic on the web. Since none of them have the requisite skillset to do the job themselves, they sit down and hash out what they are looking for and promptly place an ad seeking a Webmaster which outlines what the job entails and what demonstrable skills the applicants should have. Both Jerry and Steve apply with a concise and well thought out email along with links to various samples of their work. Jerry applies as himself, but Steve applies as Omni-Global Web and offers his own personal information merely as a point of contact. Both quote the same price.

When reviewing the various applicants, Candice, Rachel and Tamara describe their feelings about Jerry and Steve:

Candice (about Jerry): “I like his work, I’m just concerned that as a freelancer he may not be able to give our project the time and care that it requires. These Guys that work as agents for hire, I just find they’re grabbing at every job out there and don’t put their full effort into their contracts the way real professionals do.”

Rachel and Tamara feel that Candice makes a very compelling argument.

Tamara (about Steve and Omni-Global Web): “I’m really impressed. There’s something neat and tidy about this company’s work. I think they should be our first call and hopefully they’ll be willing to take us on.”

Rachel nods her head in agreement, and Candice assumes control grabbing the phone.

“Omni-Global Web! Steve speaking.”

“Hello Steve, my name is Candice and your company got in touch with us recently about providing us with services for our website and we were wondering if Omni-Global Web might still be able to help us out?”

“I imagine that will be possible, how about we set up a time to talk about what you need?”

Steve eventually got the job without any referral or previous business with anyone involved with the clinic, and Jerry never received so much as a phone call back. Even Steve will tell you that it wasn’t his finest work, but the clients were happy and they paid well and on time.

The Moral of the Story

The reason why Steve got the job (and subsequently paid) and Jerry didn’t is pretty simple, but says a lot about the people that hire contract workers and how they think.

First, Candice had a negative impression about what it means to be a freelancer, and her bias, no matter how unfounded, still earned merit with her peers as being valid. Second, the fact that it was a company, and not just an individual, planted the expectation in Tamara’s mind that there was a larger degree of legitimacy to the work coming from Steve. It didn’t matter who’s work was actually better, as both were capable of doing the job that was asked, but Steve and his title of consultant created a more acceptable framework in the minds of Candice, Rachel and Tamara. Lastly, the way Candice, Rachel and Tamara viewed how both Jerry and Steve might accept being offered the work was completely different. Candice had an image of Jerry attempting to gather up any work he could get as though, working for himself, he was just happy to have something to work on to pay the next few bills. When she finally called and spoke to Steve it was almost as though she hoped Steve would accept them as clients. To Candice, Rachel, and Tamara it would have been a privilege for Jerry to work for them, but with the way they viewed Steve it was a privilege for them to have him work on their website.

If you are a small business owner and you work for yourself it’s important to make these nuanced considerations to have any chance of competing in a market place where contractors are consistently bringing more and more diversified skills to the table. Never forget that how to market and promote one’s self is itself a skill, and the difference between freelancer and consultant, however slight in practice, can be profound in light of the expectation it creates in the minds of potential clients.

Wednesday, January 8, 2014

Slow Hire, Quick Fire

Anyone in charge of his or her own business who is not familiar with the term ‘slow hire, quick fire’ needs to let it sink in right away. On the surface it seems rather self-explanatory and just good common sense, but internalizing the mechanisms behind why this practice is so fundamentally important can often be overlooked. Below are a few key points to focus on when you may be forced to pull the trigger on any major personnel decision as well as a brief examination behind the rationale for each practice.

The Slow Hire

Every hiring decision is an investment. The idea needs to be that the return from their productivity exceeds the outlay to keep them on board – there is no point hiring someone who doesn’t make your company more valuable than it already is. Like a poker player sitting at the table, there is the old adage that you cannot lose what you don’t put in the middle. Hiring someone should feel like putting chips in the middle knowing that you can take down the hand. If you’re bluffing and praying for your card to land on the river you’ll find yourself short-stacked in no time.

Here are some points to consider before hiring:

1) Don’t let yourself feel pressured by time – A savvy manager will see the need coming down the road long before there is any urgency to actually hire someone. If you’re hiring someone just because you need someone right away there’s a strong possibility you’re not hiring the right fit for the position, but someone who is comfortable being the company silver medal.

2) If it doesn’t feel right, it probably isn’t – It can sometimes feel like the only option available is hiring the least bad candidate. There is nothing wrong with holding out for something better. The right person is out there, and sometimes it’s just a matter of possessing enough resolve to wait it out until they come along.

3) Can someone become the right candidate? – Sometimes you might find yourself with candidates that don’t immediately possess the needed expertise or experience required to fill a position, but may possess certain intangibles, such as the right drive and motivation that can make them an asset to your company. Always keep in mind that it’s easier to train someone how to complete a particular task than it is to train him or her to care about what they’re doing.

The Quick Fire

If someone is dead weight, they’ve got to go. It’s fine to be patient with someone who is still developing the requisite competencies to do their job, but if someone doesn’t have the right attitude, or fails to demonstrate the proper level of motivation that you demand from your employees, don’t wait around hoping they will change. There are plenty of eager people who don’t need to constantly have carrots dangled in front of them who would probably do a great job if given the chance.

Here are some points to consider before firing:

1) Is it even a job that still needs doing? – It’s not uncommon for employees, brought on to complete a particular task, to hang around long after they’ve become redundant. It’s never easy, but explaining that their services are no longer required can sometimes make long-term sense and might be in the best interest of your company.

2) Are they spinning their wheels? – The guy who comes to work every day, does nothing, and collects his pay just the same as the guy who works his butt off, is an all too common occurrence in many work environments. It’s one thing to streamline one’s workflow to optimize productivity allowing for more free time, it’s another to create free time at the expense of productivity. And as great as it is to come to work feeling relaxed, it’s a wholly other thing to show up at work in order to relax.

3) Are they a vampire? – Sometimes what can hurt a company has little to do with the specific competencies of its respective employees and can come down to a single employee’s bad attitude. Nothing can be more damaging to team morale than one person putting his or herself ahead of everyone else. There is no place for someone who sucks the life out of your company.