“I run a commercial printing business with 10 employees.  Our business has suffered with the recession, and I desperately need to cut payroll, but I really don’t want to let anybody go.  We’ve become like family, and I know when the economy improves I will need every one of them.  I understand that in lieu of downsizing someone, you can reduce all of your employees’ salaries across the board, or ‘furlough’ them by reducing their working hours.  What are some of the legal things you need to think about before you do that?” 

Payroll, or “headcount,” is the first place many owners look when they’re looking to trim costs, but one of the most painful experiences any business owner will face is terminating a good, faithful, hard working employee due to “economic conditions”.  “Halfway” measures, such as reducing all of your employees’ salaries or working hours (called a “furlough”), are seen by many owners as a way to reduce costs while avoiding painful job cuts.

But just because “everyone’s doing it” doesn’t mean it’s the right thing for your business, says employment lawyer Roseann Padula of Sullivan Schoen Campane & Connon, LLC (www.sscc-law.com/ourattorneys-padula.php).

While acknowledging that it’s painful, “eliminating and restructuring jobs may be the best thing for your business in the long run,” says Padula, explaining that: “it’s a one shot deal – when it’s done, it’s over, and everyone understands where they stand.”  Even if spread across the entire company (including perhaps – ahem – yourself), furloughs and salary reductions are often seen as penalizing your successful performers who, after all, are the ones you most strongly wish to retain in a difficult economy.   

“It’s the ‘Death of a Thousand Cuts’ – long, painful and insecure,” says Padula.  “It’s likely going to be at least a one-year impact on your employees’ income, and there’s the risk your good employees will jump at the first chance to move to a better paying position.”   

If you do decide that furloughs and salary reductions are the best approach for your business, here are some of Padula’s tips for doing it the right way: 

First, look at your contracts and employment offer letters.  If you have written agreements with your employees saying they “will” receive a certain salary and benefits or are guaranteed a set number of hours per year during the life of the contract (including collective bargaining agreements if you have unionized employees), then you cannot unilaterally reduce their pay or hours without breaching their agreements and exposing your business to lawsuits.  “Promises you make during employment interviews, and the rosy, glowing forecasts you make during sales meetings, can be problems as well because in some states they have been construed as implied contracts,” says Padula. 

Next, make sure your hourly and salaried employees remain properly classified.  Padula cautions that employees who receive a fixed salary regardless of the number of hours worked (called “exempt” employees under federal and state wage and hour laws) may be reclassified as hourly (or “nonexempt”) employees if you improperly tie their salary reduction to a reduction in hours worked. 

Next, check your state unemployment compensation laws.  In some states, significant reductions in hours (especially for hourly employees) may trigger a right to unemployment benefits, which could increase the payments you make into your state unemployment compensation system. 

Next, watch out for unlawful discrimination.  If the only employees you furlough are those protected by employment discrimination laws, you may be opening your business up to a lawsuit.  “Make sure there is a connection between the workers who are impacted and your business needs,” cautions Padula, who adds that furloughing only your most highly paid senior employees is “a really, really bad idea” if they are also your oldest workers. 

Next, don’t violate your own rules.  If you tell employees to take Fridays off without pay, warns Padula, “don’t call them on Friday to ask them questions.  They are not to WORK AT ALL during the furlough time.”  Padula adds that if you send a nonexempt employee an e-mail on Thursday night and he replies on the Friday morning he is not paid, this could lead to an investigation by your state Department of Labor for wage and hour violations.  The problem is more difficult to manage, Padula says, if you cut back a number of hours each working day rather than cutting an entire day each week, because “it’s very difficult for conscientious workers to stop working precisely on time when the rest of the world is still open for business.” 

Finally, be careful how you communicate changes both inside and outside the company.  “You don’t want your salespeople whining to customers about their hours being cut, because your customers will start thinking you’re in trouble,” explains Padula. 

The bottom line, says Padula, is to review your furlough and salary reduction plans with a competent employment law attorney before you execute them.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2009 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

“I have been running a successful distribution business for several years.  I have two or three key employees that I would hate to lose.  Because of the economy my business has fallen off and I’m thinking about asking these people – actually all my employees – to take a reduction in pay or reduced work hours.  Because I don’t want to lose these key people, though, I’m thinking about giving them some stock in my corporation so that when the economy gets back on track they will be able to grow along with it.  What do you think about this, and what are some of the legal things I need to think about before I make them this offer?” 

Whenever you have key employees in any business, it’s always a good idea to make them part owners of the business so they are motivated to stay on board during difficult times. 

The problem here is that your business has been in operation for several years, so it has an actual value.  By “giving” stock to your key employees, you will be creating a tax headache for them, because the IRS sees this as part of their overall taxable compensation. 

The IRS rules here are really very simple.  If you mow my lawn and I pay you $20, that $20 is income to you.  You must report it on your annual tax return and pay taxes on it.  If you mow my lawn and I give you a share of stock that’s worth $20, the result is exactly the same.  You must report $20 on your annual tax return and pay taxes on it.  Now, the last time I looked, you can’t pay your tax bill with shares of stock, so you will have to come up with some cash to pay the taxes on that $20.  The $20 you have to report is called “phantom income,” because you never actually received cash money. 

When a company is first getting started, it’s okay to “give” stock (called “founders’ shares”) to the people who will make the business successful.  Because the company has no real value, neither does the stock, so there is no “phantom income”.  Because your company has an actual value, giving stock to your key employees will require them to report “phantom income” in an amount equal to the value of your company multiplied by the percentage they own.  For example, if your company is worth $100,000, and you give an employee stock equal to one percent of the outstanding shares, the employee will have $1,000 in “phantom income” and will have to pay taxes on it come tax time. You can’t really avoid “phantom income” in a situation like this, but here’s a way you can reduce its impact on the employee:

• first, have your company valued by your accountant or a local business valuation firm;
• then, figure out what percentage of the company you want each key employee to have;
• multiply the value of your company by that percentage, and make that the “purchase price” the key employee will pay for his or her stock;
• have each employee sign a “promissory note” agreeing to pay this purchase price three or four years down the road, plus interest; and
• then, keep the employee’s salary at the same level, but apply a portion each payroll period to pay off his “promissory note” – this effectively reduces the employee’s cash salary as you were planning to do anyway.

Because the employee is paying fair value for his stock, the purchase price would not be “phantom income” to the employee.  The payroll deductions reducing the note would be “phantom income” to the employee, but the tax liability would be spread out over three or four years rather than payable all at once.  The employee might also be able to deduct the interest portion of each payment on his note, reducing the “phantom income” even further (although the interest payments will be “phantom income” to your company).

The numbers get a little tricky in a transaction like this, so be sure a good accountant or tax lawyer helps you put it together.   Since you are currently the sole shareholder of your corporation, make sure your lawyer prepares a “shareholders’ agreement” between you, your company and all of the new employee-shareholders spelling out their rights and obligations as shareholders of your company.  I would strongly recommend that their shares be “non-voting”, so that you keep control over your company and how it conducts business. 

What if you put this deal together and one of your key employees quits anyway?  The transaction documents should provide that the ex-employee’s “promissory note” will terminate, and he will receive only the shares of stock he’s already paid for -- no more than that.  If the employee is terminated “for cause” (he steals money from your company, for example), he should receive no stock at all.

The latest fad in motivation is the Law of Attraction or more popularly The Secret after the motion picture and book by Rhonda Byrne.  The idea being that if you use the power of The Secret  you will attract health, wealth and friends to you in abundance. 

The Secret takes an old idea and repackages it for today’s society. The core idea is that your thoughts control the world around you.  If you have positive thoughts, good things come your way.  If you have negative thoughts then bad things come your way.  In other words, if you wish hard enough for the things you want -- you will get them.  Simple.  Or is it?  If it were simple, then countless people throughout history would have figured it out over and over, and it would not be much of a secret.  Perhaps it takes a little more effort than suggested  – or perhaps it is just a pipe dream.

We, as modern educated people, need more proof. In order to make it palatable to the skeptic in us, The Secret adds an element of science.  We are told that quantum physics has identified that all things at the sub-atomic level exist as both particles and as waves – constantly shifting between being solid matter and being pure energy.  It is then proposed that our thoughts create brain waves, which in turn influence the sub-atomic waves of the entire universe.  The Secret claims that the more intent you are in your wish the faster the universe will act upon it.  Is it real, or is it VooDoo.science? 

If real, it sounds wonderful!  Now, if I understand correctly, if I wish real hard I can become a concert pianist and play to a sold out audience in Carnegie Hall?  I only see one hitch: I’ve never had a piano lesson in my life.

The Secret also presents the Law of Attraction as if it had been intentionally ket hidden for centuries. That it was suppressed and held by a few conspirators so that they could control all the wealth of the world.  Unfortunately, that notion is nothing other than a marketing ploy to generate interest in the book.  It also contradicts the concept of Law of Attraction.  The idea that a select group of people has kept it away from the masses intentionally preys on the destructively negative emotion of envy. 

To the contrary, people who have understood the Law of Attraction have made numerous attempts at sharing it with the world at large.  The best example is Andrew Carnegie, who was one of the most successful so-called “Robber Barons” of the Industrial Age.  Carnegie hired Napoleon Hill to research the most successful people in the world, how they got that way, and then record his findings in a book.  The book is Think and Grow Rich and was published in 1937. 

The best thing about Think and Grow Rich is that it takes the mysticism out of the Law of Attraction.  So, for those of you who find wishing on a star a bit difficult to swallow as a method for acquiring wealth, here is the real secret: 

Identify your goal.  Make a written plan to acquire that goal.  Work your plan persistently.  Give it your time, attention and energy.  The more time and effort you give, the quicker you will achieve it.  Visualize it coming to fruition.  Draw it, illustrate it, photograph it, then keep it in front of you. Revise your plan as your knowledge grows.  Be open-minded to opportunities that arise that may deviate from your plan, but still move you toward your goal.  

The world’s most successful people were extremely focused on achieving one goal.  They focused to the exclusion of everything else including family, friends, lovers, recreation, entertainment, vacations and hobbies. 

Next, tell everyone you know about your goal. Spread the word, so that people who can assist you are aware of your intentions.  I truly believe that positive minded people attract more opportunities to themselves because they are so pleasant to deal with. 

The formula is simple, but most of us compromise our goals because we want to enjoy a full balanced life.  A life filled with friends, family and good times.  We focus on our goals when time allows, and in turn, our goals take much longer to achieve.  The true secret is staying focused on your goal. 

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

“I’m starting a small business with a good friend of mine, and we’ve just formed a limited liability company (LLC) that we own 50/50.  Your column last week on putting money into a company was terrific, but we want to know how to take money out of the company in the most tax-advantaged way possible, and without changing our 50/50 ownership of the business.”

Generally, there are three ways (and only three ways) that you can take money out of a business if you are one of the owners.  Either:

• the company pays you compensation for your labor;
• if you have loaned money to the company, the company repays your loan; or
• the company makes a distribution of profit to you (this is called a “dividend” for a corporation, or a “distribution” for a partnership or LLC).

• we had $10,000 in gross sales; and
• we had $2,000 in operating expenses, leaving $8,000 in the LLC checking account.

• you will report $3,000 as income (your $2,000 compensation plus your $1,000 distribution); and
• I will report $2,200 as income (my $1,000 distribution plus the $1,200 portion of the loan repayment that is treated as “interest” for tax purposes – the other $800 is not taxable because it is a return of my principal)

“I’m starting a small business with a good friend of mine, and we’ve just formed a limited liability company (LLC).  We’re dividing everything up 50/50 between us, but our accountant is telling us to put all our money into the LLC in the form of loans.  Why is she telling us to do that?”

Generally, there are two ways (and only two ways) that you can put money into a business if you are one of the owners.  Either:

• you make a loan to the business; or
• you make an “equity investment” in the business.

Loans.  When you make a loan to a corporation or LLC:

• the corporation or LLC is legally obligated to pay it back to you on a certain date, or in installments over time, with interest on the outstanding balance of the loan;
• the corporation or LLC can deduct payments of interest (but not principal) on your loan;
• loans to a corporation or LLC need not be made “pro rata” – if you lend money to the company but your partner does not, you remain 50/50 owners of the business;
• unless you are also a director, officer or manager of the corporation or LLC, as a lender you have no right to make business decisions or judgments as long as you are receiving your principal and interest payments on time; and
• if the company fails, people who have made loans to the company get their money back before anyone else does.

That’s the basic tradeoff with loans:  you have at least some protection if the business should fail (there’s no guarantee that the company will have enough assets to pay your debt, but you will have “first call” on whatever assets the company owns when it fails), but you don’t get a say in running the business.

Equity Investments.  Whenever you put money into a company in exchange for a percentage of the business profits and losses (a partnership interest in a partnership, shares of stock in a corporation, or a “membership interests” in an LLC), you are making an “equity investment” or “capital contribution”.  When you make an equity investment in a corporation or LLC:

• you get to call the shots -- equity owners get to elect the managers who run things, or appoint themselves to act as managers;
• the corporation or LLC is not obligated to repay your investment at any time – any payments the company may make to you as an investor (called “dividends” for a corporation, “distributions” for a partnership or LLC), are entirely at the discretion of the company’s management;
• the corporation or LLC cannot deduct any distributions or dividends it pays to you;
• capital contributions to a corporation or LLC must be made “pro rata” – if you contribute capital to the company but your partner does not (or, since you are 50/50, you make a greater investment than he does), you are no longer 50/50 owners of the business – your partner’s ownership percentage is reduced, or “diluted”, by the amount of your “excess” investment divided by the fair market value of the business;
• if the company should fail, you and your partner will have to wait until all of the company’s creditors are paid in full before you split up whatever’s left over. 

That’s the basic tradeoff with investments:  unlike a lender, you have no assurance you will ever get your money back (much less a return on your investment), but to compensate for that you are given the right to run the company so you can do everything possible to protect your investment.

• As a lender, your return is limited to the interest the company is obligated to pay you (although you can build in an “equity kicker” allowing you to collect a percentage of the company’s monthly or quarterly profits as “additional interest” over the stated interest rate);
• If you load up your company with too much debt, there’s a risk the IRS will reclassify your debt as “equity” and disallow your company’s interest deductions; and
• If your company files for bankruptcy protection, the court may “subordinate” your loan, meaning you will have to wait until those creditors who are not also owners of the business are paid in full.

Half a century ago marketing consultant, James Vicary, pulled a hoax on the American people as a way to promote his advertising agency.  He reported that he flashed the words “Drink Coca-Cola” and “Eat popcorn” on the screen for a millisecond during a movie in a theater, and caused large numbers of people to visit the concession stand. He called the effect Subliminal Advertising.  Subliminal means that the effect functions below the threshold of consciousness. Years later, when others failed to duplicate his results, he admitted that he made the whole thing up. Never-the-less, the myth continues.

So, is there any advertising that does work below the threshold of consciousness?  Yes.  Much of advertising is clearly designed to speak to you on a subconscious level. Ads are created to get you to relate to the setting; the background music; the age, race and gender of the actors; their clothing; and the activities in which they are involved.  The idea is that you will recognize yourself in these people and, in turn, make the connection, “Ah, this is my kind of product.”  You don’t think it... you feel it.  And, feelings move us to act. 

A few years ago I was involved in non-profit fund-raising for a Christian Mission in Africa.  In order to learn what type of appeal would bring in the most money, we conducted a series of focus groups.  We asked, “Which would you be more likely to do: A. Give money to feed starving babies; or B. Give money to teach people how to grow drought resistant crops that would end starvation in their community.” The answer they gave was almost universally: B.  The comments we heard frequently included the proverb: “Give a man a fish and you feed him for a day; Teach a man to fish and you feed him for life.” 

We then tested both appeals. Oops, the focus groups were wrong.  The appeal for feeding starving babies won by a landslide.  The lesson we learned was that the emotional appeal to save the life of a child is much more powerful than a logical appeal for teaching a village survival skills that would eliminate starvation.  From that point forward, the heart-tugging stories of babies dying headlined every ad we ran. 

Emotion trumps logic every time.  Take for example, Nick Ut's 1972 photograph of a 9-year-old Vietnamese girl who was naked, shrieking and running away from her village that had just been bombed with napalm. Fear, despair and suffering were written all over her face.  More than anything it was her complete vulnerability that captured our attention.  One snapshot revealed the gut-wrenching horror of war, and millions of people, whose hearts were touched, turned their attention toward ending the Vietnam War. 

Perhaps you recall hearing these potent words in a speech by Jesse Jackson back in 1984: “These hands...  these black hands...  these hands that once picked cotton will now pick presidents.”  Thrilling words.  Exciting words.  I remember them well.  And, even though I wasn’t his target audience, they created a powerful image in my mind, and when he finished, all I could say was, “Wow!”  Meanwhile, for millions of African Americans, it was the motivation needed to put apathy aside and go to the ballot box. 

We are charged and moved by many emotions.  Here are just a few: acceptance, amusement, anger, angst, annoyance, anticipation, arrogance, awe, anxiety, bitterness, calmness, caution, confidence, courage, determination, disappointment, discontent, disgust, desire, delight, elation, embarrassment, envy, excitement, fear, friendship, frustration, gratitude, grief, guilt, hate, happiness, impatience, inadequacy, irritability, inspiration, joy, jealousy, kindness, loneliness, love, lust, modesty, negativity, nostalgia, paranoia, patience, pity, pride, regret, resentment, sadness, self-pity, serenity, shame, surprise, timidity, torment, worry, yearning, and zeal. 

Which ones move you? 

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

Until last Friday (January 30), the short answer to this reader’s question was “yes”.

In August 2008, Congress passed the Consumer Product Safety Improvement Act (CPSIA) which, among other things, prohibits the sale of certain items intended for consumption by children 12 years of age or younger.  Specifically, beginning February 10, 2009, children’s products cannot be sold if they contain more than 600 parts per million (ppm) of lead.  Also, certain children’s products manufactured on or after February 10, 2009 cannot be sold if they contain more than 0.1% of certain specific phthalates (chemicals that are added to plastics to give them more flexibility).

But the people who drafted CPSIA forgot one thing.  One of the few laws that will never be repealed, amended or superseded is the “law of unintended consequences.”  Perhaps the best expression of this law is the old saying “the road to Hell is paved with good intentions”, attributed to the medieval cleric Bernard of Clairvaux (1091-1153).  Sometimes, when trying to do good for some people, legislators and lawmakers effect harm on other people.  Most of the time, this is unintentional – laws and regulations are often passed quickly, under deadline pressure and heat from the media, to respond to an immediate need or public concern.  But when it happens, it still hurts.

Last month, the U.S. Consumer Product Safety Commission (CPSC), the federal government agency responsible for implementing and enforcing CPSIA, began to get the idea that the “testing and certification” requirement wasn’t going to work for a lot of people.  It issued a policy statement clarifying that “sellers of used children’s products, such as thrift stores and consignment stores, are not required to certify that those products meet the new lead limits, phthalates standard or new toy standards.”

Good news for people selling doll clothes and teddy bear outfits on eBay, but only if they didn’t actually make the stuff themselves. Even then, there could be trouble.  The CPSC added the following cryptic warning:  “resellers cannot sell children’s products that exceed the lead limit and therefore should avoid products that are likely to have lead content, unless they have testing or other information to indicate the products being sold have less than the new limit. Those resellers that do sell products in violation of the new limits could face civil and/or criminal penalties.”

So, are resellers off the hook as long as they stay away from certain toys -- such as metal soldiers -- that are likely to contain some lead, or must they educate themselves to recognize the CPSIA’s banned chemicals?  How many questions must they ask their vendors or consignors, who probably don’t know the answers themselves?  No answers, at least not yet.

Even assuming resellers are off the hook, what about the home handicrafters, who could still be considered “manufacturers” under CPSIA?  Since Congress did not give any guidance when they passed the law, the CPSC did the only thing they could do under the circumstances:

They deferred the “testing and certification” requirement for one year, until February 10, 2010, in order to “give the [CPSC] staff more time to finalize four proposed rules which could relieve certain materials and products from lead testing and to issue more guidance on when testing is required and how it is to be conducted.”

Whew!  So is it safe to start sewing teddy bear outfits again?  Probably.  But if you’re making children’s jewelry items, make sure there’s absolutely no lead in them – that specific ban is not subject to the one-year stay.

For more information on CPSIA, go to www.cpsc.gov/about/cpsia/cpsia.html.  But don’t expect answers, or clarity.

“Three friends and I are going off on our own to set up an information technology consulting business.  We want to form a limited liability company for this business, but we want it to be flexible enough that we can grow and attract venture capital investors.  What are some of the things we should be thinking about legally?”

 Limited liability companies (LLCs) are very easy to set up when there are only one or two people involved in the business, or the business is not likely to grow rapidly (for example, a family owned retail or service business).  When people who aren’t related and don’t know each other very well go into business together, things get a bit more complicated.

Here are some of the things you and your friends should discuss before committing to this venture:

Who Will Own This Business?  Right off the bat I see a problem -- there are four of you.  If you divvy up the LLC ownership equally, you’re setting up a situation where if two of you want to “zig” and the other two want to “zag”, the LLC cannot function.  We lawyers call that “deadlock”.  Try to divide up the equity so that one or two of you own 51% or more of the LLC ownership shares (called “membership interests”).

Who Will Run This Business?  You should consider forming a “board of managers” to run the LLC business, similar to a corporation’s board of directors. 

Three of you should serve as the “managers” of the business to avoid “deadlock” situations.  So the fourth person won’t feel left out, you can add a “supermajority voting” clause to your LLC Operating Agreement (similar to a partnership agreement) requiring that the four LLC owners unanimously approve major decisions affecting the LLC business (such as the admission of a new member, a merger or acquisition, or investments over a certain dollar amount).  Your lawyer can provide you with a list of common matters that are covered in a “supermajority voting” clause.

Capital Contributions.  At some point, your LLC will need additional infusions of cash.  If you do not make these “pro rata” (in proportion to your respective LLC ownership percentages), then your percentage ownership of the LLC will change depending on the amount actually contributed by each member.  To keep this from happening, consider a clause in your LLC Operating Agreement requiring that any additional infusions of cash be made in the form of “loans” – that way if one or more members cannot pay their fair share, the others can make up for it without changing the ownership of the LLC.

Compensation.  Since all of you will be working in the business, you will want to make withdrawals from the LLC checking account from time to time to pay your living expenses (called “draws”).  Work out a formula now as to how each of you will take “draws,” or put a provision in your LLC Operating Agreement requiring the members to vote unanimously on “draws” each month.

Voluntary Withdrawal.  If one of you has trouble meeting his obligations to the LLC, or comes under family pressure to “get a day job” if the LLC business isn’t providing him with a decent living, you will have to figure out a way for him to “withdraw” from the LLC.  You should agree to pay him fair compensation for his LLC ownership interest if he withdraws, but make sure (1) the LLC pays him over a period of five to 10 years so as not to burden the LLC’s cash flow, and (2) he or she is bound by a noncompete clause not to steal business from the LLC or otherwise compete unfairly with the remaining members.

Involuntary Withdrawal.  If one of you dies, becomes disabled, is divorced from his or her spouse, or files for bankruptcy, there’s a chance a “stranger” will end up owning a piece of the LLC.  Have your attorney draw up a “buy-sell” agreement requiring the LLC to purchase the ownership interest of any member who dies or becomes disabled, or any person who acquires a piece of the LLC in a divorce or bankruptcy proceeding.

As soon as possible after you form the LLC, the LLC should purchase “key person” life insurance and “disability buyout insurance” on each of the four owners (or those owners without whom the business couldn’t function).  That way, if one of you dies or becomes disabled, the proceeds of the insurance policy can be used to purchase his or her ownership interest without impairing the LLC’s cash flow. 

Watch Out for Noncompetes.  Since it appears some or all of you are leaving “day jobs” to start this new business, make sure you haven’t signed any “noncompete” or similar agreements with your current employer.  Even if you haven’t, try to avoid contacting your employer’s customers, suppliers or employees for at least a year after you start the new business.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2009 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

• “my 401(k) has lost a ton of value, there aren’t any safe investments out there right now, so why not use at least some of what’s left in my 401(k) to provide an income stream and a future for myself?”;
• “franchises are generally safer than standalone small businesses – you get lots of hand-holding and support from the franchise, and there’s a ‘structure’ to running a franchise that’s similar to what you have in a corporate environment”;
• “franchises aren’t forever – the typical franchise term is between 10 and 20 years – but that’s okay in my case since all I’m looking for is a ‘bridge’ until I can retire at age 65 or 70 – at that point I’ll sell the franchise to someone else and have some fun before I die.”

• it was your fault – you weren’t a sufficient “fit” for the franchise, or didn’t give it the old college try; and
• you should sell your franchise to someone who can do a better job with the franchise territory than you did.

That’s okay if we’re talking about an established franchise like McDonald’s® or Burger King® -- hey, if you own one of these and are having trouble making money, you must be on Mars somewhere.

But the franchises most people are looking at nowadays are “early stage” franchises – with fewer than 100 franchisees, and sometimes less than 50 – that are still testing their business models.  If a franchise like THAT doesn’t work out, there’s just as good a chance it’s the franchise’s fault as it is yours, and the franchise should let you out of the deal.

That’s easier said than done, though.  Not only do most early stage franchises not give you an opportunity to get out of the franchise if things don’t work out, they actually impose penalties – sometimes LARGE penalties -- if you ask to be released early.  For example, if the franchise imposes a “minimum monthly royalty” requirement on their franchisees, the franchise will require you to prepay all monthly minimum royalties for the balance of the franchise term, sometimes in a single lump sum installment.

Crunch the numbers:  if you have a 10-year franchise term, your minimum monthly royalty is $500, and you elect to terminate the franchise at the end of Year Three, that leaves seven years remaining on the franchise term, or 84 months.  Multiply that by $500, and it will cost you $42,000 just to get out of the franchise and get on with your life (the franchise will discount this amount to “present value,” of course, but the reduction won’t be more than a couple thousand dollars).

I recently reviewed a franchise program – a very early stage program with fewer than 30 franchisees nationwide – where the franchise got this right.  Here’s how this program works.

When a franchisee signs up, she commits to a monthly royalty of 8% of her gross sales, and signs a “promissory note” agreeing to pay the franchisor a total of $200,000 in royalties (without interest) during the 10-year franchise term.  As the franchisee pays royalties each month, the amount paid is applied to reduce the note so that once her total royalty payments reach $200,000, the “promissory note” ceases to exist.

If the franchisee wants to quit the franchise before the $200,000 “promissory note” is fully paid, she has two choices.  She can either (1) agree not to compete with the franchise for a three-year period, or (2) refuse to sign the noncompete agreement.  If she chooses to sign the “noncompete”, the $200,000 “promissory note” is forgiven.  If she elects to compete with the franchise, however, the balance due on the $200,000 “promissory note” becomes payable in monthly installments at 6% interest per annum over a five-year period.

If the franchisee elects to quit the franchise after the $200,000 “promissory note” is paid in full, the noncompete period is reduced to one year and the franchisee doesn’t owe anything to the franchise.

An approach like this one not only gives franchisees a choice of “exit strategies” if the franchise doesn’t work out, but it also demonstrates a little humility on the franchise’s part – an acknowledgment that nobody really knows whether the franchise model will work in all locations, in all economic climates, and under all circumstances. 

Sadly, most franchises are not as enlightened as this one.  If you are planning to buy a franchise anytime soon, be sure you understand clearly what your “exit strategy” will be if things don’t work out.  And don’t buy a franchise if there’s even the slightest doubt you can last out the full franchise term.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2009 CLIFFORD R. ENNICO. ALL RIGHTS RESERVED.  DISTRIBUTED BY CREATORS SYNDICATE, INC. 

Almost every company has a web site these days. 

But, are you using the internet to market more effectively? 

The internet has allowed marketers to promote their value propositions and talk directly to customers in ways never before possible. And, we constantly hear that this way of one-to-one marketing has fostered more customer centric strategies.

However, from what I see not every CEO has adopted a completely  proactive approach to dealing with customers using the internet. Many have just taken their literature and posted it on their web sites with some forms for interested customers to fill out and e mail to the company. Others have gone one step further and have set up other forms to allow for ordering off of the their web sites.

The internet offers many more wonderful ways to promote your business more effectively than traditional methods of the past. It certainly allows you to cast a much wider global net and directly motivate more customers, if you use it properly.

Some of the more obvious benefits of marketing via the internet are:

Professionally done product presentations

One of the best things the internet provides is the ability to create professionally done product presentations and demonstrations. One of the things that used to bug me as a CEO was the way in which salesmen would present our products to prospective customers. After some sales calls I would ask “whose product were you selling”?

Depending upon the experience, education and personality of the salesman each would make a different presentation. If we were selling a product that required technical knowledge and experience, it was even worse.

Now with the internet you may not even need a sales force any more because everything that any customer needs to know should be available in a standard professional format with graphically sophisticated demonstrations of how to use the product, as well as highlighting its benefits and advantages. This can be supplemented with online availability of a company expert to talk to or FAQ's.

Selling today can be conducted via phone with access to the internet. You can show customers where anything that they need to know can be found on your web site and you can take them through demonstrations over the phone referring to your site on their screen.

Webinars further enhance this process of continuous customer education about your value proposition.

Broadcast product updates and promotions

Another beautiful aspect of online marketing is that you can broadcast updates to your product offerings to your e list of customers. In addition you can broadcast promotions, sales and other incentives. This ability to motivate customers and keep them directly aware of new product developments instantly is a powerful tool.

Historically, you would hope that customers would see your advertisements, or react to a snail mail promotion, or see something new in your store. This was a haphazard, catch as catch can approach, at best. Now you can be assured that every customer on your e customer file receives information about new developments.

Share success/application story's

Customer success story's sell product – it's a know fact. Now you have the ability to share these success story's over the internet with the confidence that all of your good customers will see it! Business is about solving problems for customers.

Customer profiling/market research

Every time you have a transaction with a customer it is a great opportunity to capture another piece of their DNA as a consumer. Over time the bits and pieces of these transactions create a mosaic of individual customer types and their preferences and requirements.

In addition, now that you can establish a one-to-one relationship with customers you have another wonderful opportunity to ask them how you can continue to help them with their individual requirements or solve problems that they have. These solutions for individual customers usually become very saleable enhancements for other customers.

This is about customer relationship marketing – CRM. The goal should be to use all of the tools now available to you via the internet to collect invaluable information about customers so that as I have said in other articles – you can delight them.

I hope these few practical examples motivate you to explore how you can take advantage of the internet to market your value proposition more effectively, if you are not already doing so.

If you would like to start a dialogue on internet marketing – let me know. 

Just think about how you have been motivated via internet promotions.

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  Email Bob at: rmdonnelly@chiefexecutive.net

By Robert Evans Wilson, Jr.

I know an advertising agency owner who never fully takes a vacation.  He takes his family to fairly exotic locations, but never so alien that they are outside the reach of modern communication.  In other words, he is never further than a cell phone call or email away.  He checks in with the office several times a day – much to the chagrin of his family who want him to be fully engaged in the holiday at hand.  So, he ends up sneaking off under the guise of visiting the restroom, or going to the bar for a cocktail, in order to connect with his staff, a client or a prospect.  His wife and kids aren’t fooled; they just sigh and accept the inevitable.  I used to think he was a control freak – someone who couldn’t let go and let someone else take over – until I came to understand the concept of Momentum.

In science, Momentum is equal to Mass times Velocity.  Or just think of Indiana Jones in Raiders of the Lost Ark running as fast as he can out of the tunnel while that huge stone ball rolls faster and faster after him.  In business, Momentum is the point at which success begins to come easily.  Business veterans jokingly refer to it as having, “paid my dues.” In short, Momentum is an accumulation of acquired knowledge, skill, experience and connections.  And, those who understand it... also know it can be fragile and easily lost.

Sales professionals who have achieved Momentum will tell you that you must pursue a number of activities to generate sales leads: phone calls, emails, sales letters, networking events, etc. You keep it up building dozens, then hundreds of leads at a time.  Then to convert those leads to sales you keep following up on each of them in a timely fashion.  Meanwhile, you are still maintaining all the activities that continue to generate leads.  So between generating leads, following up on leads, then turning leads into sales, you begin to feel like the guy in the circus who spins plates on top of poles – rushing from one plate to the next to keep them spinning.

No wonder these folks hate to take vacations – it breaks the Momentum they’ve spent months or years creating and they know it takes time to get it going again.

Years ago when I first started giving speeches, a seasoned professional speaker advised me, “It took me ten years to quit sweating cash flow, but even so, it is still all about non-stop marketing.” In other words: maintaining Momentum.

For a growing company, Momentum is the point where you have done enough advertising, marketing, public relations, networking, customer service, and so forth that business begins to flow.  It is the point where you are garnering the precious and often elusive word-of-mouth referrals.  Momentum is about building a reputation.  Acquiring it, however, doesn’t mean you can taper off on your efforts... but it does mean that your efforts will become easier.

The best thing about Momentum is that once you get it, motivation becomes self-perpetuating.  Momentum is energizing.  It keeps you on your toes.  And, the rewards come quickly and regularly.

I have found this to true in all pursuits.  Even when I am writing fiction there is always a certain point in a novel that it takes on a life of its own and demands my daily attention, energy and focus until it is complete.  Unfortunately, nothing quite puts the brakes on Momentum like finishing a book, or completing any other major task.  The trick to avoid losing that Momentum is to begin another book or another task before you complete the first one.  Then you just shift your energy over to the next project that is already under way.

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

I had the privilege of speaking this week to the local chapter of SCORE (the Service Corps of Retired Executives), a volunteer organization of senior and retired business people who devote a portion of their time to providing free advice and counseling to struggling small businesses (contact www.score.org to find the chapter nearest you).After all of the usual questions about legal and tax issues, a woman in the back of the room raised her hand and asked:  “Cliff, we appreciate your advice, but we need some inspiration too.  Everything we read in the media and see with our customers is scaring the heck out of us.  Can you tell us anything that will give us some comfort and help us through these extremely difficult times?”

I admit I was a little thrown by the question.  Franklin Delano Roosevelt famously answered this question 76 years ago by saying “we have nothing to fear but fear itself,” but heck, I’m no Franklin Delano Roosevelt.

Still, the question had to be answered.  I did it by talking about two words – two simple words – that you should write down on a Post-it Note®, put it on your computer, your bathroom mirror or anywhere else you will see them several times a day.  Make them your daily mantra, for these are the words that will help you get through whatever economic troubles we have to live through the next few years.

Humility.  Let’s face it, the past 50 years have been a wonderful party.  Three successive living generations – Baby Boomers, Gen Xers and Millennials – have known nothing but good times.  There have been stressful times, of course – several recessions, the Vietnam War – but these things never really impacted most of us personally.  War, famine, epidemics, and suffering were things that happened to other people far, far away – we watched them on television, and the better-minded of us tried to muster support to stop them, but we never actually experienced them ourselves.  And a lot of us were arrogant and deluded enough that we thought this would never change.

The idea of real hardship – not knowing where your next meal is coming from, losing your house or being evicted from an apartment, not having enough money to do what you want to do in life, accepting less out of life than we want because we simply can’t have it – is totally alien to us, and as a result we are not as emotionally prepared for it as our parents and grandparents were.  To them, hardship and suffering were an accepted part of the cycle of life; to us, they are an aberration.

Add to that the Baby Boomers’ outlook on personal sacrifice and self-restraint, best expressed in the Grass Roots’ classic 1969 pop hit “Live for Today” (“Sha la la la la la live for today . . . there’s no worries, ‘bout tomorrow, heeeyyyyyy . . . .  ), and it’s no wonder a lot of people in America have been feeling invulnerable.  If it did nothing else, the past year has brought all of us back down to Planet Earth.  A lot of people – including some with wonderful track records – have shown themselves to have feet of clay, and even some very good, intelligent people have done some very bad, silly and downright stupid things. And KNEW they were doing them at the time.     

If after 2008 you still think you know what you are doing, think again.  Entrepreneurs are particularly prone to believe their own marketing shtick, but now is not the time for arrogance or self-delusion.  It’s time to take a sober assessment of your business and yourself, find out who you really are, what you really can and cannot do, and avoid selling yourself as something better unless you can back it up with action.

Discipline.  The current living generations of Americans have, as a rule, not been very disciplined about a lot of things.  We are a rather soft, easygoing, self-indulgent and forgiving lot, inclined to “get along by going along” and accept that anything anyone wants to do is “okay” as long as it doesn’t hurt anyone.  The idea that you shouldn’t do something even though no one will throw you in jail for doing it (what our ancestors referred to as “sin”) is alien to us.  The idea of personal discipline strikes us as being vaguely authoritarian and manipulative, imposed as it was in days past by religious institutions to keep people in line -- something to be resisted, ridiculed and ignored.

Make no mistake – surviving in these times will require TONS of discipline, self-restraint, and personal sacrifice.  Aside from being morally wrong, your “sins” these days can kill your business.   It’s time to take a close look at your company and ask yourself:  are we running tight enough?  Do we let things slide?  Are we too forgiving of people’s mistakes or ambivalent about our values as a company?  Do we not insist hard enough on work, performance and results?  Are we demanding enough with our people?  And are we willing to punish those who don’t live up to our expectations?While you’re at it, ask these questions of yourself as well . . .

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2009 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

“I am looking to market a consulting business, and am very interested in the various ‘social networking’ websites such as Facebook and MySpace as potential marketing vehicles.  I confess, though, that I’m a bit confused by the sheer multiplicity of sites that are available now – there are at least 10 social networking sites that might be a marketing venue for my business.  How do I choose between them, or do I simply sign up for all of them in an effort to reach the maximum number of people?”

If you are serious about marketing your business on the Web, there are three New Year’s resolutions you need to make right now:

(1) set up a “profile” page on at least one of the major Web 2.0 social networking websites;

(2) mention your “profile” page everywhere else you have a presence online (such as your Website and “blogs”) and offline (such as your business card, office stationery and telephone answering message); and

(3) resist the temptation to be “everywhere, all at once” by spreading yourself too thin.

At first glance, resolution # 3 seems to contradict the first two resolutions, but it really doesn’t.  There are four things you need to know about social networking websites:

(1) certain sites attract certain types of people – while many people have multiple “profile” pages, certain sites develop stronger followings with some people than others, and you want to focus your marketing efforts where the people you want to reach “hang out”;

(2)  social networking sites can be “time vampires” – you will be creating profiles, taking part in discussions and responding to messages virtually every day; and

(3) social networking sites are interactive – you are not in control of your marketing message on any of them – people will comment on your products and services, and some people are more interested in expressing their own opinions than in helping you build your business.

(4) social networking sites overlap a lot -- hardly a day goes by in my office without receiving an e-mail from a Facebook “friend” who wants me to join his profile page on LinkedIn, and vice versa.  A lot of the people you are reaching on Website A are the same people you are already reaching on Website B.

So how you do decide where to “plant your flag” in the Web 2.0 universe?  I’ve looked at most of the major sites, and here is my totally unscientific, personal, opinionated view of the major ones:

MySpace – this is where the kids are hanging out.  Great for rock bands and others who are targeting the “tween and teen” markets, and for celebrities, authors, sports stars and others who are looking to build a mass fan base (good book: “MySpace Marketing” by Sean Percival).  This is where I want to be if I want to build readership for this column.

Facebook – great for personal networking with family and friends.  If you have an extended family and want to keep them all up to date on your latest adventures, this is the place to be.  Several friends of mine used their Facebook profiles to send out holiday messages this year (bad news for Hallmark) (good book: “Facebook Marketing” by  Steven Holzner).

LinkedIn.com – great for businesspeople and professionals who are interested in “serious” networking.  This is where I want a profile tied to my law and business development consulting practice (a new e-book from marketing expert Jan Wallen, “LinkedIn in Seven Days or Less”, available at http://janwallen.com/works.htm). 

Plaxo.com – originally an online address book and calendar manager for people who use Microsoft Outlook (and still probably the strongest product in that area), Plaxo has developed a Web 2.0 site (called “Plaxo Pulse”) with a look and feel very similar to Facebook but with a little stronger focus on business networking (no books yet on Plaxo, sorry).

Squidoo.com – great for subject matter “experts” who want to create interactive wikis (called “lenses”) on specific topics of interest to build “niche interest” communities (good e-book: “Do You Squidoo?” by Joel Comm).

Twitter.com – a “microblogging” site where you can post short announcements (called “tweets”) of things you are doing elsewhere on the Web (good book:  “Twitter Means Business” by Julio Ojeda-Zapata).

Specialty sites – “special interest” Web 2.0 sites are exploding right now – such as feng.com for financial services executives – and may help you build followings within tightly targeted niches.

If you must – absolutely MUST – be on multiple social networking platforms, be sure to use a “social networking automation” product – such as friendfeed.com or secondbrain.com -- to automatically update all your profiles without having to log into each platform.  Also, use “Google Alert” or a similar product to notify you of new postings on your profiles, so you can respond promptly to someone who’s broadcasting to all your “friends” what an idiot he/she thinks you are.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

As we evaluate the high costs of the current financial crisis it is important that we don’t overlook an existing issue that is only being exacerbated by the situation- the cost of presenteeism. Presenteeism is where I “show up” for work, but I am unwilling or unable to fully engage because of an underlying illness or distraction. This could be directly from my own situation or the situation of a family member.

A recent study by Cigna Healthcare provided some pretty startling statistics-

• U.S. workers reported that they spend two to five hours per week resolving personal issues at work, a productivity loss of 5 to 12%
• 61% of U.S. workers have reported to work while they were ill or dealing with personal matters
• Of that group, 62% felt that they were noticeably less productive or attentive to their duties
• 46% missed at least one day of work in the preceding six months, with 22% of those absences related to family matters

A different study by the National Mental Health Association estimated that the costs of this productivity loss are over $200 billion annually. Let’s put that in perspective that means in three and a half years we have reached the point where these losses are equal to the Federal bailout!

Now I want to make another point, these losses were calculated before we entered our current financial crisis! I would venture to say that the scores have not improved over the last few months.

I have been a practicing human resources manager, executive, and consultant for almost 30 years. I went through the time when our philosophy was that employee’s needed to “leave their problems at home”, well, obviously those days are over.

For the purposes of balance, I want to provide you with the snapshot of the alternative- a workplace where people are engaged.

Organizations whose employees are fully engaged enjoy the inverse of the statistics I just shared with you-

• Moving an employee’s level of engagement from low to high results in an average 21% increase in productivity
• Organizations with high levels of employee engagement typically enjoy a 20% per capita higher performance level than their peers
• Organizations with high total engagement (employee and customer engagement) typically outperform their peers on key financial metrics by 100%!

So what is my point? You have an investment in participating in addressing these issues, and there are cost effective tools available for you to do so. One of the tools available to employers is the Employee Assistance Plan. While these plans have been around for years, current estimates say that only between 2 and 8% of employees are utilizing them.

Effective employee assistance plans offer much more comprehensive solutions than their predecessors did- they aren’t just about substance abuse and anger management anymore. A good EAP will offer access to wellness training, debt counseling, financial management, credit counseling, and potentially even legal advice. Very sophisticated EAPs even have supervisory training and mediation services available to help employers deal with root cause and systemic issues rather than just putting a “patch” on a situation.

I don’t mean to imply that providing EAP services to your employees is going to create engagement, but I do want to go on record as saying you employ and manage whole people. Ignoring the issues and concerns your employees are experiencing in other parts of their life, or worse yet because of issues in the work setting, are costing you money directly and indirectly.

I can assure you from personal experience that the costs of offering EAP services to your employees and their dependents are much cheaper than expensive mental health services or employee litigation.

Engaged workforces are a competitive advantage, period! Recognizing and protecting your investment in your employee’s health and mindset is an important step in creating that environment of engagement, and at a fairly reasonable cost. Can you afford to “give up” 5 to 12% of your worker’s productivity every year?

Mark F. Herbert is a consultant, author, and speaker with over thirty years of experience building and managing engaged workforces in organizations ranging from Fortune 100 to small entrepreneurial businesses. He has been a speaker on leadership and human resources topics on a regional and national basis and has recently published the book Managing Whole People- One Man’s Journey. You can reach Mark at Mark@newparadigmsllc.com or visit his website at www.newparadigmsllc.com.

When GM introduced Saturn with great fanfare back in 1990 I wondered to myself “will this new GM brand ever be what it can be, or will it just become another tarnished brand added to the heap along with all the others”?

Remember the “little” Cadillac brand – the Cimarron? Or, the Chevy - Vega? How about the Pontiac – Aztec, so ugly it appealed to no one? Most recently, Oldsmobile – “your fathers Oldsmobile”.

When introduced as a stand-alone company with great promises as GM’s answer to foreign competition, the Saturn brand was embraced by customers looking for a no frills, no haggling, utilitarian offering that “fit” their unique requirements at the time. Even some Toyota and Honda owners traded into the first Saturn models.

Loyal Saturn customers even had “love-in’s” at the Saturn plant in Spring Hill, Tennessee, much like Harley Owners Group (HOG) get togethers.

GM projected annual sales of 500,000 Saturns!

Needless to say that volume never materialized primarily because there just were not enough customers looking for that value proposition. This highlights the first marketing lesson to be learned from the Saturn experience.

Lesson One: There are only so many customers for every value proposition, not an infinite number.

GM has never been good at marketing and branding, and they certainly have never been very customer conscious.

My question is: “where did the 500,000 come from”? In the best year for Saturn (1994) only 286,000 were sold. That’s 43% less than forecast? Saturn sales have hobbled along at about 200,000 a year, plus or minus some since then. This year the Saturn share of the car market here will only be about 1.4%.

The first branding mistake was to reduce spending when it was needed most during the late embryonic and early growth years of the brand. Brand equity results from the continuous investment in promoting the brand, as I have illustrated in earlier columns.

It’s about share of mind. Not only do you have to invest to get a share of mind, you also have to continue to invest to keep it!

Shifting management, the pursuit of other car style trends, and financial stresses doomed the Saturn brand. After having its best year in 1994, Saturn was abruptly relegated from the initial concept of a separate entity with its own identity, to become part of the parent company’s “small-car operations”.

Worse yet, after being relegated to “one of many,” no new Saturn models were developed for the next five years! Guess what happened? All the original Saturn owners and those that they convinced to buy a Saturn, and who were anxiously awaiting the next generation of Saturn models, tired of waiting and bought another foreign brand.

Lesson Two: To sustain and grow brand equity there has to be a next generation of models after the initial model introduction, much like Honda, Toyota and Nissan have mastered so effectively. Without this and a continuing investment in maintaining share of mind, any brand will quickly fade from memory. Aztec?

For the last years, Saturn models have morphed into another nondescript series of cars offered by GM until recently when several new models were introduced like the Aura, the Vue and the Saturn Sky sports car, designed to reincarnate the brand. But, without sufficient promotions to rebuild the brand, or even stem the continuing decline in sales.

Lesson Three: If you are going to invest what it takes to create a new car model, you must also invest at least an equal amount, or more, to regain share of mind. Have you seen many, or any, promotions for these new Saturn models? Or, even the “rethink” slogan that was developed for them?

The real question now is “what is the unique selling proposition for Saturn”? I don’t know – do you?

Unfortunately, one of these new models the mid-size Saturn Aura is probably one of the best unknown brands on the market today. Given market conditions this good American built car may disappear before it has a chance to grow up.

Another amazing fact highlighted by Advertising Age is that in 2007 $4.6 Billion was spent by the U.S. auto makers on advertising their car brands. According to Advertising Age that’s 3.3% of total U.S. advertising spending and 5.9% of total U.S. network TV spending.

In a recent study done by Interbrand of the top 100 of the most valuable brands in the world 52 are from American companies.

However, only one U.S. car brand made the list – Ford. Ten foreign car brands made the list, but none from GM!

What has GM been promoting with all their advertising? Apparently - not their brands. And, certainly not the Saturn brand.

Alex Taylor in his excellent piece on the history of GM in FORTUNE captured the marketing ineptitude at one of the largest firms in the world in his summary: “the story of General Motors since the 1960’s is a tale of accelerating irrelevance”!

The Saturn example is just one of many branding faux pas, but hopefully one that is easy to see and relate to. As I have said before success at branding and creating brand equity is a long term marketing strategy that has to be carefully planned and executed.

If you are struggling with how to build a brand effectively let’s start a dialogue.

Don’t let what happened to Saturn happen to your good brand(s).

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  Email Bob at: rmdonnelly@chiefexecutive.net

No doubt about it – it’s getting pretty scary out there.  People are cutting back on expenses, doing more things themselves that they used to “outsource” to small businesses like yours, and slowing down their payments for your products and services.

In an economy like this one, survival is all about cash flow.  Keep a positive cash flow at all times, and you will make it through the tough years to come.  While cutting costs will help you maintain a positive cash flow, at least for a while, sooner or later you run out of things to cut.  The tougher, but longer term, way to maintain your cash flow is to do everything you can (short of selling below cost) to keep business flowing in the door. 

I recently conducted a very informal (and very unscientific) poll of some local small businesses to find out what they were doing to cope with the current economy.  Here are some of the survival strategies they’ve come up with – not only do they seem to be working, but some of these businesses are actually growing!

Strategy # 1:  Don’t Be Too Picky About the Work You Take On.
A couple of weeks ago I had a plumber over to my house to fix a leaking faucet in one of our bathtubs, and I asked him how his business was doing.  “Well, it’s tough, but we’re managing,” he said.  “There’s no construction work being done right now, so we’re not doing any big jobs.  But there are lots of little, ‘emergency type’ jobs out there, and we’re doing okay with those – you are my fifth call today.”

You can make money doing a few big jobs.  You can also make money doing lots of little ones.  Since the little jobs require less money, people are more likely to pay to have them done, especially if they’re “emergencies”.

Strategy # 2:  Find the “Dirty Jobs” People Are Still Willing to Pay For.
I’ve always said that succeeding in a service business is a two-step process:  (1) find a dirty job that no one likes to do but has to get done; and (2) charge lots of money for doing it.  The same process applies in difficult times, except that if the job isn’t really all that dirty (mowing the lawn, for example), people will start doing it themselves.  You’ve got to find the really filthy jobs people will still pay others to do for them.

Here are some local businesses that are not only surviving but growing right now, to give you some ideas:

• “pooper scooper” services that come to your home and clean up after your large, vicious dog;
• “water damage” services that clean up your basement after you’ve had a flood;
• tax return preparation services;
• home health care aides for elderly people; and
• automobile service stations that specialize in one or two popular makes or models (so as to compete more effectively with the auto dealerships’ service departments).

Strategy # 3:  Turn Your Customers Into a “Family”.
Lois Mirabella of Mirabella Miniatures in Fairfield, Connecticut (www.miniaturecorner.com/retailers/ct.htm) sells dollhouses, dollhouse furniture, and miniature reproductions of household objects.  In an economy like this one, you would think her store is failing, especially since she doesn’t have a Website or a presence on eBay.  But you would be wrong.  Her store is always packed with customers who come from all over New England to check out her merchandise.

What’s the key to her success?  “I treat each of my customers as if they were family,” Mirabella explains.  “With this economy, people want hobbies they can do as a family, and dollhouses are perfect for that.”  But it’s not just a question of increased demand:  Mirabella keeps detailed track of each item her customers purchase, calls them on the telephone (no e-mail, because “it’s too cold”) when she receives new items she knows they will be interested in, introduces her customers to other customers with similar interests, and hosts “events” at her store where customers can meet the craftspeople who make their favorite miniatures. 

Create a “community” where none currently exists – it’s easy to say “no” to a vendor, but it’s a lot tougher to say “no” to a friend.

Strategy # 4:  Convert Your “Luxury” Products Into Affordable “Splurges”.
A French gourmet restaurant saw a sudden downturn in business earlier this year.  Rather than shut down, they downscaled their entire menu, losing their $50 entrees and offering “bistro fare” at $15 to $20, along with an expanded wine-by-the-glass selection and “appetizer size” portions of their traditional gourmet fare.  Most of the lost business came back, and they are picking up new customers that wouldn’t have considered eating there under their old business model.

One of the greatest ways to keep your customers in tough times is to convince them they do not have to give up entirely the luxuries they love as long as they (ahem) “control their portions,” and that your business will help them do just that.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO. ALL RIGHTS RESERVED.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

“Last year, we sold our small-sized, family business corporation to two individuals.  The deal was that they both pay us half of the purchase price for the business and get equally 50% ownership.  While the first person paid his share all in cash, the second person chose to pay his share in 10 monthly installments.  The year passed by and he (the second person) did not pay a penny.  Now, the new owners aren’t talking to each other – they can’t agree on even basic business transactions.  Unfortunately, the first person can’t get out because he personally guaranteed the retail lease for the business.  The second person has a poor credit score, due to a prior bankruptcy, so the second person can’t put the lease in his own name.  It feels like we are stuck.  What are the available options to solve these disputes?”

Let’s take this one step at a time.  First, if I understand your e-mail correctly, you sold your business to the two individuals, not to a corporation or a limited liability company (LLC).  This means that they purchased the business as a partnership, which means that they have “joint and several liability” for the purchase price and all other partnership debts.  In plain English, each partner is liable for the whole purchase price (not just the amount he paid you at the closing), and you can pursue either or both of them if payment is not made. 

Clearly, the second person is at fault for not paying his share of the purchase price.  But you have every legal right to collect the entire balance of the purchase price due from the first person, or from both partners, unless you promised the first person in writing you wouldn’t do that.  The first person can then bring a legal action against his partner seeking reimbursement for his share of the purchase price – lawyers call that a “contribution and indemnity suit”.  Given the second person’s poor financial condition, the suit probably won’t be successful, but as the teenagers say nowadays, “that is SOOOOOO not your problem!”. 

Why did you wait for the second person to miss all 10 of his installment payments before bringing the subject up with him and his partner?  If I were in your shoes, I would have been yelling at the top of my lungs and demanding payment the minute the first installment date was missed.  It appears to me that you have become a little too friendly with the first person:  you have been listening with a little too much sympathy to his “tale of woe”, and are reluctant to hold him accountable for his partner’s default.  Nevertheless, you sold your business in good faith and have every right to collect the full purchase price due to you.  What happens between the two partners has nothing to do with the debt owed you, and you have a duty to yourself and your family to collect that debt from whoever has a pocket deep enough to pay.

Assuming that neither partner has the resources to pay you at this point, you have to look at the possibility of taking control of the business back from them.  Hopefully, when you sold the business, you insisted that the partners put up some collateral – their stock in the corporation or the assets of the business – for the second person’s loan.  If the loan transaction was properly drafted, you can “foreclose” on that collateral, take back the business, and satisfy your debt out of the business’ future income.

Of course, this will mean you will have to reassume the lease of the retail space where the business is being conducted.  If the two partners owe any back rent or other amounts to the landlord, you probably will have to pay these current in order to stay at that location.  You also need to look at the paperwork you and the two partners signed at the closing – if they “subleased” the retail space from you for the duration of the lease term, you may still be on the hook as a “guarantor” of their lease obligations until the lease expires – that’s the way the law works in most states. 

My strong suspicion is that this was a “handshake deal” with no lawyers on either side, and you probably are “stuck”.  Aren’t you glad now you saved a few bucks in legal fees?

• never sell or buy a business without competent legal help;
• whenever you agree to “loan” money to someone, get it in writing and be sure to take collateral in case there’s a default;
• when assigning or transferring a lease, make sure the landlord releases you in writing from any future lease obligations;
• never buy a business as a partnership – form a corporation or LLC to act as the purchaser; and
• never go into business with someone who has a prior history of cheating his creditors.

As I sit here writing this column against the deadline, I’m reminded of my days as a young advertising copywriter when I occasionally needed a deadline as motivation to finish a boring project.  The deadline did more than motivate me to finish -- more often than not, it was what finally stimulated enough creative thinking to move me forward -- in other words, it motivated me to think outside of the box.

“Thinking outside of the box.” Boy, has that phrase become overused.  People are so often telling us that we need to think outside of the box that it has fallen into the realm of cliche.  Never-the-less it is still true.  Sometimes, however, we need to be put into a box first before we can think outside of it.  A deadline is just such a box.

I used to believe that the more freedom I had, the more creative I could be.  But it doesn’t necessarily work that way.  Ingenuity needs to be motivated by something, and if the desire to achieve isn’t there, then an uncomfortable boundary may work.

Have you ever watched a man or a woman with one leg running a marathon or competing in downhill snow skiing?  I have, and every time I’m deeply impressed because I have both of my legs and I can’t do either one.  I used to wonder why they were able to do so much more than me when I was the one born with the greater advantage.  Now I can see that the difference is that they were challenged by a boundary and I wasn’t.  Some of them might even argue that they were the ones born with the greater advantage.  Being unable to walk made them uncomfortable, and conquering their disability became a powerful motivating factor.  They had to get out of that box!

Think of creativity as a prisoner trying to bust out of jail.  When your resources and opportunities are limited you must become innovative.  A good illustration of this is the World War II movie The Great Escape.  It is an amazing tale of ingenuity.  Men with little to work with escape from a German POW camp. In addition to digging three tunnels without shovels, they made hand drawn traveling documents and identification papers that looked authentic enough to pass for ones made on a printing press. Now that was a box to get out of!

I have enjoyed working for myself most of my adult life.  People frequently tell me they wish they could be self-employed like I am. They say things like, “If I could just get one client then I could quit my job.”  My response is always the same, “Until you quit your job, you are never going to find that first client. There is nothing like the deadline of a rent or mortgage payment staring you down at the end of the month to motivate you to get out and look for clients.”

Everyone works under some kind of deadline.  They force us to prioritize our responsibilities; they limit procrastination; and they help us achieve our work related goals.  But, we often lack them in our private lives.  We are not given deadlines to accomplish our most important personal goals and without those boundaries procrastination can creep in and destroy our best intentions. The trick is to impose a deadline on yourself.  But it has to have some teeth to work.

Here’s how to do it:  Write down your goal.  Then set a reasonable date in which you can achieve it.  Next, go to your bank or attorney and set up an escrow account.  Now add the teeth --  put into the account an amount of money that will hurt to lose: $1,000...  $10,000... $100,000...  you decide!  Set it up so that if you haven’t achieved your goal by the deadline then the funds go to a favorite charity...  or make it even more motivating: let the funds go to your worst enemy!

Not ready to try that?  Then try the buddy system.  Pair up with a friend and each of you take responsibility to follow up on the other one.  You can get together once a week and check on each other’s progress.   If goals aren’t being met, then nag each other into the UnComfort Zone!

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

Positioning won over prattle in the current election. Obama isn't a household word, but change is. 

The entrepreneurial CEO won out over his more mature competitors. 

As I have said in many of my columns marketing is the battle for the customers mind. This election was the epitome of that marketing maxim. 

The goal of positioning anything a brand or a concept, in this case the value proposition – change, is to get the message to “stick” in the voters mind. To occupy a position in a voters mental value grid. To own a share of their mind. To get through the word filter in the mind. To connect with an existing value threshold, and resonate. 

Whether marketing a product or a presidential candidate it's about “differentiation”. Reis and Trout in their seminal tome on positioning said the “whoever gets into the mind first – wins”. Obviously, in this case Obama did just that. 

If you are successful and can maintain that position you prempt your competition from owning it. We see that time and time again with many familiar brands like: Polo, BMW, Coke, Apple, Nike and many others. 

Obama coined change and stuck to it throughout the campaign. While his competitors referred to change and used many other words to reflect their positions, Obama was first to own the word change. And each time one of his competitors used the word they only reinforced the position already established by Obama. 

His primary competitors Clinton and McCain had many slogans with varying value propositions, Clinton started with “experience”, then shifted to “countdown to change”, and ended up with “solutions for America”. None of which resonated like “change” from Obama. 

McCain had so many slogans like the “straight talk express”, “hero”, “maverick”, and others, that his message became blurred and incomprehensible. While Obama stuck with and reinforced change, in his advertising and promotional strategy funded by the chest full of money he raised during the campaign. 

Shifting promotional messages has never worked as well as consistency. Think about how many different slogans Burger King has had, or Pepsi for that matter. McDonald's and Coke are still the market leaders with the same consistent value proposition year-in and year-out. 

To win and create a position takes repetitive promoting of the value proposition. Brand equity is built on the repetitive broadcasting of a brand's unique selling proposition. Look at how much Mercedes spends to remind us the they are promoting the “best engineered car” and BMW advising that they have the “ultimate driving experience”.  

In every market successful marketers win the battle for the customers mind by promoting their solution as either: the best, something unique, or the cheapest. If your value proposition doesn't “fit” one of those primary criteria that customers are looking for then you have a “fuzzy” image. 

In an economic and political climate looking for something different, or a new way forward – change was the word that worked. Whoever owned change and could reinforce that value proposition won! 

It's about perception and common sense. Perception is reality in marketing. The voter is looking for something to believe in like the consumer is looking for value in the products they buy. Your marketing message has to be clear, consistent and resonate with customers. 

The political rhetoric of candidates in an election has to meet the same criteria. Every word is dissected by the press and the population. Stumbling over not knowing how many homes you own or talking about “soccer Mom's”, and using phrases like “you betcha” does not instill confidence in voters when compared to the calm deliberate and clear presentation of your competitor. 

This election campaign was marketing at its best and many lessons can be learned from the way the battle for the voters mind was waged by our new Chief CEO. 

If you have questions about how to position your company or brands let me know and let's start a dialogue. Contact  me at  rmdonnelly@chiefexecutive.net.

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

By Robert M. Donnelly

Innovation is becoming the lens through which leaders are directing a laser-like focus on business transformation. It’s easy to see why. Margins and product life cycles are shrinking, competitive pressure is growing, and the need for customer responsiveness has never been more important. Every company needs an edge. Enterprise innovation is not the sole domain of the entrepreneur. It can be practiced by CEOs of large firms, too.

Two CEOs in very different industries have applied the same basic innovation template with dramatic results. Doug Conant, 56, president and CEO of Campbell’s Soup, and Fred Hassan, 62, chairman and CEO of Schering-Plough, changed the culture of their firms by engaging their management teams in a focused concentration on customer sensitive innovations. Their similar leadership styles and focused emphasis on driving their business unit managers to come up with new solutions for customers’ problems not only improved returns to shareholders, but also won recognition for each CEO (Hassan in 2006 and Conant in 2007) by Fairleigh Dickinson’s Rothman Institute as “Leaders in Innovation.”

Before Conant and Hassan assumed control in 2001 and 2003 respectively, both companies had allowed their brands to lose luster and were in a downward spiral in their respective markets. Campbell’s declined to the point where the Torrance Family, owners of the majority of the 140-year-old company, decided on a complete reorganization. Schering-Plough was losing patent protection for its leading product, Claritin, as well as experiencing a sharp decline in its $1 billion hepatitis C business. Both CEOs approached their similar situations with determination and a belief that the right team and the right focus on innovative customer solutions could reverse these trends.

Building a Team
While using different acronyms and employing different tactics, both CEOs saw team building as the cornerstone for their transformation strategy.

Based in Camden, N.J., and employing 23,000, Campbell’s is an $8 billion maker of simple meals, including soup, baked snacks and beverages. Its products, representing 20 brands, are sold in 120 countries around the world. Doug Conant, who brought 25 years’ experience from General Mills, Kraft and Nabisco, used a concept perfected by the Gallup Group called the Engagement Ratio. The theory is that to have a team dedicated to the company vision and mission of total customer satisfaction, the majority of the employees must be fully engaged in their respective jobs.

Gallup’s premise is that to reach world-class levels of productivity you need to have 12 engaged people for every one actively disengaged. Conant reckons Campbell’s engagement ratio in 2003 was no better than 2 to 1. By 2007, this was changed to 9 to 1.

Fred Hassan, on the other hand, began by developing a document on Leadership Behavior that he shared with all employees. It was a motivational explanation of how to approach individual day-to-day responsibilities so that Schering-Plough would be delivering the best customer experience possible. This document captured his philosophy on a variety of critical management issues like teamwork, customer focus, quality, engagement, leadership, culture, competitiveness and communications.

Hassan prepared his treatise because, when he took over in 2003, he found the behavior of the team he inherited, compared to industry standards in terms of quality, engagement, leadership, working climate, competitiveness and communications developed by Towers Perrin, was negative on almost all points. As a result of implementing his team-building strategy, by 2006 all of the critical management factors were positive and growing.

In terms of the management team, Conant replaced 300 of the top 350 leaders in the first three years. But of this group, 150 were promoted from within. His initial observation of the team he inherited upon taking over was that the only reason they were still there is because they could not find jobs anywhere else. This was also evident in Gallup’s initial survey of engagement ratios.

Hassan replaced the entire top management team he inherited in his first 18 months. After carefully evaluating each position he felt that to save the company and transform it he needed a very strong set of new executives that he hand picked, function by function.

Innovation at Campbell’s
Conant developed a 10-year plan called “The Campbell’s Journey” around his concept of focused, mission-driven innovation. Broken down into three phases beginning in 2001, the first was the Transformation Plan from 2001-2004, the second was the Quality Growth Plan, and the last, currently under way, is the Building for Extraordinary Growth Plan from 2008 to 2010.

The mission is to build “the world’s most extraordinary food company” which he equates to “a sustainably good company.” In the first three years, Campbell’s went from being non-competitive to competitive by upgrading the management team, improving employee engagement and working on innovative product improvements. In the next three years, the target was quality growth through enhancing the overall value proposition for customers and above average total shareholder returns. As a result, earnings per share has improved every year for six straight years in a very competitive marketplace.

Today, the goal is to deliver the best total shareholder returns in the food group. Since 2005, Campbell’s has delivered a higher return to shareholders than the S&P Packaged Foods Group. Campbell’s set the following targets: to grow sales by 3 to 4 percent, adjusted earnings before interest and taxes by 6 to 7 percent and adjusted earnings per share by 5 to 7 percent.

The biggest problem Conant’s team faced was the overall deterioration in the company’s biggest volume category—soup sales. The company was selling basically the same old soup packaged in the red-and-white cans that generations of moms and dads grew up on. Competition, on the other hand, was offering healthier, more wholesome soup packaged in more attractive, easier to use cans and in sizes more in keeping with current customer consumption requirements. Campbell’s was stuck in a mass-market mode of thinking, while competitors like Progresso and other specialty soup makers were successfully implementing niche market strategies.

Conant’s team noticed early on that supermarket customers had difficulty finding their favorite soup on the shelf. The competition, however, had visible shelf space that appealed to consumers. A time study revealed that customers do not want to spend more than 20 seconds looking for a particular soup. But the same study indicated that it took consumers 70 seconds to find a similar Campbell’s soup.

Furthermore, the arrangement of its soups was confusing and labels were hard to read as compared to competitive brands. The solution: a new shelving system, easier to read labeling and healthier soups. In addition, the team added simple innovations like pop-top cans that increased sales of their condensed soups 8 percent in 2005 and another 5 percent in 2006. They also introduced lower sodium soups with natural sea salt. Campbell’s current portfolio consists of 43 varieties of reduced sodium soups with over $400 million in sales.

The team simultaneously began to upgrade product quality. By 2003, the company launched a new line of products, starting with microwaveable healthier soups that are now a $300 million business. In addition, the company rebooted its international marketing strategy by targeting two giant foreign soup markets: China and Russia. The two largest soup consumption markets in the world, both are dominated by homemade soups. Campbell’s put researchers in homes in both countries to conduct ethnography sessions to determine these customers’ deeper cultural values associated with soup. As a result, the company came up with a way to create a consistently higher quality broth that saved between two to six hours in the household soup preparation process. This gave the firm another successful major new market entry strategy.

Conant’s goal is to increase total shareholder returns by achieving exceptional employee engagement. Doug says, “Extraordinary things are achieved by people determined to leave a legacy.” Among the top managers, Campbell’s 2007 engagement scores were 35:1, up from 8:1 in 2003. Campbell’s was also awarded the Gallop Great Workplace Award, which recognizes the most engaged and productive companies in the world. From 2002 to 2007, sales grew from $5.8 billion to $7.9 billion with a 6 percent five-year CAGR.

For Campbell’s 2008 fiscal year, while soup sales increased by only 2 percent in a tough economy, beverage sales increased more than 10 percent, resulting in overall profits of $1.17 billion, up from $ 854 million in 2007. Based on these results Conant reiterated his expectations for a 5 to 7 percent earnings increase in the coming fiscal year. Given the economic circumstances since then, it will be challenging for any company, including Campbell’s, to achieve these expectations. However, Conant and his team are positioned to weather the economic storm with a line of food products for the masses. We all have to eat, even if it is more hearty beverages and healthy soup than before.

Innovation at Schering
Fred Hassan was working his plan during this same time period. Although operating in a highly regulated industry with technical constraints, he was, like Conant, focused solely on customers. “The most critical engine of innovation in any organization is a passionate attitude of customer focus and people who are liberated to pursue that passion,” he said.

His team started by studying the market for Claritin, which had switched from a prescription to an over-the-counter (OTC) product in December 2002. Claritin had been the No. 1 product in the prescription market, bringing in more than $2 billion in annual sales. By the end of 2002, Claritin sales in the U.S. had declined significantly due to patent expiration.

In 2003, Hassan and his team focused first on restoring the company’s top line sales and product market shares. Their goal was to put themselves in the shoes of the consumer and to communicate in ways that resonated. An important early step was to build more brand equity in OTC-Claritin through a new consumer campaign in the U.S. called “Claritin Clear.”

The campaign was launched in 2004 with a series of commercials that illustrated the patient benefits of the product. Building on consumer insights around a “foggy-to-clear” presentation, the innovative messaging contributed to Schering gaining market share in the U.S. This campaign was followed by a series of similar innovations designed to deliver a better consumer experience. The team broadened the Claritin product franchise through a series of line extensions and product re-formulations, such as a new chewable form, improved syrups for children and a greater emphasis on Claritin Redi-Tabs (easier to swallow because they dissolve in the mouth).

Hassan also focused his team on prescription pharmaceuticals R&D. The average commercial life of a branded portfolio product in pharma is about 10 years. So renewing the product portfolio became the key driver. Hassan inherited an R&D spend of less than $1.5 billion. By the end of 2007, he raised that to nearly $3 billion.

One beneficiary of this investment was Remicade, a product first launched in 1999 for rheumatoid arthritis. By investing in clinical research to investigate new applications, Schering identified and received regulatory approval for six additional indications; psoriatic arthritis, adult Crohn’s Disease, pediatric Crohn’s Disease, ulcerative colitis, ankylosing spondylitis and plaque psoriasis. As a result of these indications and growing demand, Schering-Plough’s sales for Remicade increased from $349 million in 2003 to more than $1.6 billion at the end of 2007.

The company revived another older product, Nasonex, a spray for allergies. Research indicated that patients wanted an unscented form of the product. Working side-by-side, scientists and manufacturing teams reformulated the product without the rose-scented alcohol ingredient. The marketing team then focused on an overall brand transformation— building a blockbuster in just a few years.

By educating patients on allergy symptoms and promoting the unscented formula with a series of “Bee” animated commercials, the product generated over $1 billion in 2007 sales globally, more than double the sales in 2003. The work on Claritin, Remicade and Nasonex demonstrated the power of listening to customers and close collaboration among research science, marketing and other parts of the company.

The overall cultural change implemented by Hassan’s leadership behavior model and emphasis on innovation has proved successful, especially at a time when the industry is seeing a drop in the productivity of more traditional R&D work. From 2004 through 2007, Schering delivered a total shareholder return of 41 percent, the best among its peer group. Sales went from $8.6 billion in 2003 (when Fred Hassan arrived) to $15.2 billion in 2007, a CAGR of about 15 percent.

The recent economic downturn pulled 2008 3Q profits down 23 percent, to $551 million from $713 million in 3Q 2007. But revenues are up 63 percent in 3Q, to $4.58 billion from $2.81 billion, suggesting that Fred

Hassan’s business model makes good strategic sense in facing both turbulent economic times and stiff competition from generic drugs threatening Schering’s cholesterol drug franchise. “The company is on track with a cost-cutting plan that will trim its staff, while keeping it in a solid position financially in a turbulent market,” Hassan said. “Schering-Plough has more than $3 billion in cash on hand, with no need to access capital markets and no debt maturities upcoming.”

Focus + Innovation Works
What these two CEOs accomplished working independently of each other after inheriting similar circumstances speaks to the power of team building and motivation by CEOs with a vision and steadfast focus on innovation. This is not to say that either CEO doesn’t have continuing issues with competitors. The global marketplace never stands still, and technology always evolves. Campbell’s continues to have a serious competitor in industry giant HJ Heinz. Last year, Campbell’s sold off Godiva, a line that did not “fit” its mission, and purchased the complementary Wolfgang Puck line of soups, but there is more work to be done to achieve the goals Conant has set for the future in a U.S. soup market where it already has a 70 percent share.

Schering, on the other hand, has had a few bumps recently with the recent disclosure that its cholesterol drug Vytorin does not achieve the expected results, as initially promoted, against the cheap generic form of Zocor. Sales declines resulted in job losses and may impact forecasted future results.

Changing the culture of an organization is not easy, and the larger the company the more difficult it is. These two CEOs did it, largely through getting the people aligned with expectations. “You may have a technology edge today, but somebody else will have the same thing tomorrow,” Conant told a group at NYU’s Stern School. “The real competitive advantage is your workforce and its ability to be agile and deal with dynamic markets and situations.”

Bob Donnelly writes the online “Entrepreneurial CEO” column for Chief Executive. He can be reached at redonnelly@chiefexecutive.net.

You would think that anyone starting a business would have a well thought out and written business plan – wouldn’t you?

How about someone who has been in business for years – maybe?

But the truth is that many CEOs of growing firms do not have a well done business plan. Some don’t even have a good budget. Case in point: Arnie Miller, CEO of Matrix Essentials. When I met Arnie he was running a $220 million business with about 800 employees and no business plan. He was running alright, running just to keep up.

I wrote a seminal article for Inc. Magazine a while ago about one of their Inc. 500 firms entitled “Stop the treadmill – I want to get off.” It was about another CEO of a rapidly growing firm who was in danger of losing his business and his family because what he set out to achieve – fast growth – was strangling the life out of him and leaving him no time for his family.

In both these cases, and many more, I was able to get these CEOs to step out of the combat zone and put away their fire extinguishers long enough to focus on the age old questions facing any CEO:

Where are we now?

Where do we want to be?

How are we going to get there?

Without a plan every day is a crisis. What else can it be?

When the only plan you have is to sell more today than yesterday, and when that doesn’t happen panic sets in, there is no way you can think clearly. Many CEOs of growing firms that I have met spend more time planning their vacations day-by-day, and sometimes hour-by-hour, than planning for the future growth and profitability of their business.

Planning is anticipating the inevitable, but if you do not know what the inevitable will be you certainly can’t plan for it.

Business is a numbers game pure and simple. It’s about customers, competitors and your unique selling proposition. Many CEOs I have met cannot clearly articulate what their unique selling proposition is, or in other words what is really different about their product or service than those of their competitors? The fundamental rule of the marketplace is that if you are not offering anything different, even if it's just better customer service, why should customers select your product or service over those of your competitors? For that matter why should they even seek you out?

Isn’t that the fundamental problem that American car manufacturers have gotten into? Except for a few niche models there really is nothing unique or different about their cars when compared to their foreign competitors, notably Toyota. Toyota has achieved excellence in the three basic components of perceived customer value: quality, service and price.

Did that happen by chance? No – it was planned.

Planning is the process by which an organization can become what it wants to be. Planning is the identification of what we as a company can do to satisfy the specific requirements of a defined collection of customers better than our competitors. It is our core technology converted into our unique selling proposition for those customer types.

Planning is the identification of a problem that a distinct number of customers have and the packaging of your solution in such a way that it makes it difficult, if not impossible, for your competitors to duplicate for those customers. It is the work required to identify these types of opportunities and the allocation of resources in the form of a strategy to exploit them.

These strategies need to be clearly laid out in a narrative describing in detail who is going to do what with what resources in a specific time frame, and what are the expected profitable outcomes; and how are we going to control and measure progress along the way quarter-by-quarter?

The real purpose and value of planning is to determine what we must accomplish this week, or this month, or this year so that our business will continue to grow profitably over the next years.

Success at planning requires information – information about customers and their changing requirements. If the customer gets to the future before you do, they will leave you behind. I have met many CEOs of growing firms who really do not know their customers as well as they need to. In reality, you are in the customer business.

One of the first questions I ask when I meet the CEO on a new planning assignment is “who is your most profitable customer?” Typically, the response is “you mean who we sell the most to?”

Or, “our most profitable products are?” No, I am interested in which customers buying what mix of products represent your most profitable customers?

Business is about solving problems for customers. The goal should be to delight the customers with solutions to problems before they know they have them. Isn’t that what any well managed company does? It is part of their planning process. They are constantly looking for ways to deliver excellent customer satisfaction by modifying their products to keep up with their constantly changing requirements

Isn’t that what Toyota has done with the Camry? And now with the Avalon and Lexus? Are you planning for the changing requirements of your customers?

My next column will be on the need for an Advice Squad for CEOs of growing firms like you.

Email me  at  rmdonnelly@chiefexecutive.net with questions or comments so that we can begin a dialogue to help you to get your business to where you want it to be.

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

“I have been thinking for some time of setting up an eBay Store.  I’ve been researching what to sell on Worldwide Brands (www.worldwidebrands.com), and I have found some really interesting items, but I’m still not sure what my niche should be.  In the meantime, I’m planning to make my business a ‘sole proprietorship’.  I want to start doing the legal papers right away, but my problem is that I’m still not sure what to sell, and I want to find my niche before getting my DBA (‘doing business as’) license, because when you fill out the DBA form you have to pick a name.  If my DBA fictitious name is ‘John Doe the e-store’, do I have to name my eBay Store ‘John Doe the e-store’ or can I call it something else?  I want to file my DBA as soon as possible, but I don’t want to name my eBay Store now.”

Technically, you don’t have to file any paperwork to create a “sole proprietorship”.  A “sole proprietorship” is merely a human being who is of legal age and who is engaged in a trade or business.  If you are using your name as the business name (for example, “Clifford R. Ennico, Attorney at Law”), you don’t have to file any legal paperwork because that is your legal name, and you are always allowed to do business under your legal name.

The only paperwork you have to file for a “sole proprietorship” is as follows:

• the IRS allows you to use your Social Security Number as a tax ID number, but I don’t recommend it – fill out IRS Form SS-4 at www.irs.gov and get a separate tax ID number for your business; and
• if you are doing business under a name different than your legal name (for example, “Clifford R. Ennico doing business as Cliff’s Antiques”), you have to fill out an file a DBA registration form with your county clerk or town clerk – this is a legal notice letting people know that if they are run over by a truck that says “Cliff’s Antiques” that Clifford R. Ennico is the person who should be sued.

You should not be filing a DBA form at all until you have a fictitious or DBA name for your business.

Now for the tougher question – should your eBay Store name be the same as the DBA for your business?

According to Janelle Elms, a leading authority on eBay Stores and “visionaire” of the Online Success Institute (www.osirockstars.com), you should name your eBay Store in a way that will be picked up by the Google search engine spiders, because this will have an effect on your search engine rankings.  “Calling your eBay Store ‘Janelle’s Stuff’ doesn’t give the spiders a lot to go on,” says Elms, who recommends using words that specifically describe your merchandise as part of your eBay Store name (for example, “Mildred’s Toys and Marbles”).

“You want the buyers who are looking on Google,” explains Elms, “because 72% of all online searches are being done on Google.  If you’re not one of the first five listings on page 1 of the Google search engine results, nobody’s going to see it.”

But Elms cautions that you can go too far the other way:  naming your eBay Store “Antique Banks, Toys, Games, Cast Iron” is great for search engines, but it won’t help you build a recognizable brand on eBay.  Explains Elms:  “You have to lose the mentality that you will always remain small.  Even though you’re small now, we all strive to have our business name become a household word.  If your business name is ‘Cliff’s Oddities’ then that should be part of your eBay Store name, for example ‘Cliff’s Oddities and Antique Toy Banks’.”

Elms adds that your eBay Store name is not the only place you can put search engine keywords; they should appear in your Store description, categories, and custom pages for starters.  This will assist the  Google search engine spiders in finding and ranking your eBay Store.To create a profitable list of search engine keywords, Elms advises starting at eBay Pulse (http://pulse.ebay.com) and looking there for the most common searches people are making within your eBay product category.  

Finally, Elms advises that when choosing keywords for your eBay Store name it’s important to use your buyer’s vocabulary.  “What the people with money call something is more important than what you call it,” says Elms.  So, for example, if you call something a “coin bank” but your buyers call it a “penny bank,” you will lose lots of sales if your call your eBay Store “Cliff’s Coin Banks” because people won’t be searching on eBay for “coin bank”. 

Elms has just released “The Profitable eBay Store Video” series, an almost 30-hour step-by-step video program on building a successful eBay Store, which can be purchased for $299 plus shipping at www.onepercentcoach.com.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO. ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

Hi, all.  I just returned from an investment conference where for four days from 9 AM to 3PM (when I usually manage your accounts), I listened to numerous industry experts, economists, strategists, money managers and analysts from our company, its affiliated investment funds, and a couple of “screamers” from CNN, who discussed the current economic environment.  Even though these were the same people who loaded us up with mortgage-backed securities and forced us to be sold off to The First National Bank of Southern North Carolina earlier this year, we have every reason to believe these are the right people to help us through some challenging times, especially now that they’re no longer worried about their jobs and can focus 100% on the task of rebuilding our company with your money.

The consensus was the same:  no one had expected or experienced a time such as what we are now going through.  As for how long it will last, the experts were also in agreement:  “sure beats the Heck out of us”.  Having gotten that out of the way, the panelists then told us (and you) what you should do in these difficult times. 

In his opening address (titled “Oopsie!  Didn’t See That One Coming”), our president O. Leo Leahy said:  “I know a lot of people say that we’re stockbrokers, and that the primary duty of a stockbroker is to get their clients into the market when it’s down, and get them out of the market when it’s up.  Which means that you all should have put your client’s funds 100% in cash in the first quarter of 2008.  But we are NOT stockbrokers.  We leave that business to the ‘day traders’ and that’s what you need to tell your clients right now.  What we are . . . are . . . FINANCIAL ADVISORS, which means we are bound by the higher laws of finance to focus on the longer term, no matter how much the World may be crashing around our ears today!”

Virtually all experts felt that the markets bottomed on October 10th and that we are going through a “retesting” of that bottom.  “You’ve seen bottoms before,” said Leahy, “and you’re looking at one now.  We may see several more bottoms before we see the real bottom.  But let me assure you, ladies and gentlemen, that when the Dow Jones Industrial Average hits zero, we are absolutely certain that will be the last bottom, and the market will have nowhere to go but up!”

The experts also were optimistic about the nation’s political future.  “Now that the 2008 election is over, the 2012 Presidential race is under way, and it becomes ever more likely we will be a one party state within the next few years,” said Leahy, “we will NEVER, EVER AGAIN be plagued by market-disrupting election year uncertainties, and will be able to focus our full attention on growing assets for our Government to take over. That way, the Chinese will be sure to buy our assets in 20 years and ‘the World will be as one’.”

So what does an investor do now?  The experts were unanimous that what you should do now is to “stay the course” and keep putting what little money you have into the stock market.  They gave four reasons for this:

• any roller coaster rider knows the ride down is a lot more thrilling than the ride up;
• you will make it easier for the “day traders” to get THEIR money out before the market tanks;
• the market is bound to go up again someday, and you will recoup your losses (assuming, of course, you have some cash to buy stocks with and can handle a 50% capital gains tax); and
• hey, if you put everything in cash there won’t be anything for us to do, and nothing for the experts to talk about.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED DISTRIBUTED BY CREATORS SYNDICATE, INC.

With a new Democratic administration due to take over Washington in January 2009, there’s been a lot of speculation about exactly what President-elect Barack Obama will do, what he won’t do, and what he will be able to do given the current economy.

About the only thing the pundits have agreed on so far is that the new administration is likely to be much more “pro labor” than the current one, so we can expect new laws and regulations giving workers increased leverage over their employers.

Maybe so, maybe not.  My crystal ball is no clearer than anyone else’s.  But if the new administration is indeed focused on “jobs, baby, jobs,” something important is being overlooked – something that hasn’t gotten a lot of attention in the press.

It’s no secret that millions of Americans have been downsized from corporate jobs over the past 20 to 30 years.  When pressed for a reason, the pundits and politicians have mostly focused on the “outsourcing” trend – companies (mostly in manufacturing and heavy industry) that shut down plants in the United States and hire workers in China, India and other countries because they’re cheaper than American labor.

But something else is going on in the economy that has contributed at least as much, if not more, to the decline of the American middle class.

That something is . . . technology.

Since the late 1970s, we have been (and still are) living through a historic period of technological innovation and change – one rivaling the Industrial Revolution of the 1800s in size and importance.

Anyone old enough to remember what it was like to work in an office in 1980 will appreciate the total transformation of that environment since then.  Back then, I worked for a law firm that had over 100 attorneys in two offices.  These attorneys were supported by approximately 150 staff employees – secretaries, administrative assistants, librarians, mailroom personnel, copy machine operators, messengers, etc.

Today that same firm has over 600 attorneys in eight offices around the globe.  Those attorneys are supported by only a couple of dozen staff employees – mostly professional types such as marketing and human resources experts.

What happened to all those jobs?  Well, if you walk down the hallowed corridors of that law firm and look in any attorney’s office at random, what will you see sitting on his or her desk?  A personal computer, of course.  Today lawyers do most of their own document production from their desktops, and most of their legal research online.  That reduced drastically the need for secretaries, librarians or “admins” in the traditional sense.

If you ran a billion dollar (in sales) company in 1980, you needed hundreds if not thousands of middle management employees to run the complex systems that made that business possible.  Today, with the right information technology solutions, you can run a billion dollar company with fewer than 100 full-time employees.

Think I’m exaggerating?  Last year Google acquired YouTube (the online video website) for $1.65 billion.  At the time YouTube had only 65 full-time employees.

No argument – technology has freed us in ways that couldn’t be imagined back in 1980.  I wouldn’t be able to do what I do for a living without desktop computers, laptops, cellphones, PDAs and the Internet.

I only point out the obvious – that what technology gives with one hand, it takes away with the other.

Please don’t get me wrong – I’m all for saving the American middle class and increasing employment.  But trying to hang onto jobs that have been made obsolete by technology is the wrong way to go about it.  Not only will it keep American labor costs artificially high and a burden to employers, but it will set us back in the global competitive race that will inevitably mark the 21st century.

What we need are laws that encourage and embrace technological progress, so that the mind-numbing, soul-destroying factory and middle-management jobs of the past can be replaced by more creative, challenging, intellectually fulfilling jobs at smaller companies with horizontal, collaborative management structures.  Perhaps also some programs (like the one already in place for workers whose jobs have been outsourced overseas) to help American workers get the education, skills and training they will need to perform those jobs.

Wouldn’t you much rather live in an economy with thousands of smaller employers offering fast career tracks than a few corporate behemoths where it takes five years to climb each rung of the management ladder?  As I recall, Mr. President-elect, you got where you are today pretty fast.  Please make it possible for others to do the same.

Clearly, the past several weeks have not been kind to small businesses (heck, they haven’t been kind to ANY sort of business).  There is a growing consensus that we are looking at some “hard times” in the world economy for at least the next several business quarters, and possibly longer.

If your business has experienced a falloff in sales, now is the time to take action.  You will need to examine your business model very closely, and make whatever changes you feel necessary, no matter how painful that might be.

Here is a “checklist” of questions you should be asking yourself right now.

First, look at your customers. 

Who are my most loyal customers, and what do they look like demographically?  Are these groups going to grow or shrink in the coming years?

Have any new types of people started buying my products or services in the past several months?  Would it make sense to target these groups as future growth opportunities?

If I am seeing less of a certain type of customer, why is that?  Is there anything I can do to bring them back without drastically cutting prices?

Are people in this area looking for products and services that nobody is providing, and how difficult or costly would it be for me to provide them? 

What are the products and services that people will still shell out hard money for even in difficult times like these, and how many of those can I provide?

Have I been saying “no” to people’s requests for certain products and services?  Should I change my mind and start offering these?

Are there any markets for my products or services (for example, overseas or on the Internet) that I haven’t pursued aggressively enough?

Might there be uses for my products and services that I’m not aware of, and that might create new marketing opportunities?

Am I giving my customers too good a deal on any of my products and services?  If so, can I possibly increase my prices and still beat the competition?

Am I spending too much time providing services to lots of small accounts when I should be working for fewer and bigger accounts?

Am I doing business with anyone who owes me money?  If so, will putting the customer on a payment schedule resolve the situation?  If not, should I fire the customer so as to focus my full attention on the customers who are paying their bills on time?

Next, look at your competitors. 

What are my competitors’ biggest liabilities and weaknesses?  How do I take advantage of them?

What are my biggest liabilities and weaknesses?  How do I keep my competition from taking advantage of them?  If my competition is a lot stronger than I am, is now the time to sell out and either join them or strike out in another business direction?

Can I “leapfrog” the competition by offering new products and services that are better “fits” for people’s current needs?

Next, look at your costs.

Do I really need all of the employees I currently have?  Can I or a member of my family step in and do the work of some of these employees so we can reduce costs?  Can I bring in my minor children to help out part-time on evenings and weekends?  Are there software or other technology solutions that will do what any of my employees are doing for a fraction of the cost? 

Do I really need an office or storefront for this business?  Can I work instead out of a home office?  Can I possibly negotiate a reduction in rent with my landlord?

Where are my customers coming from, and how are they hearing about my business?  Where is the “fat” in my advertising budget, and what programs should be cancelled or renegotiated at this time?

Should I replace my landline telephone with a cellphone?  Should I replace both with a low-cost computer based telephone service such as Skype?

Am I taking advantage of every possible tax deduction I can take?  Can I negotiate “flat fees” with my accountants, lawyers and other professional advisors?  Instead of using a large firm where they bill by the heartbeat, can I save money by spreading my legal or accounting work among several local “solo practitioners” who work out of their homes?

Lastly, look at yourself.  If there are any notches left in your belt, now is the time to tighten them.  If you have no notches left, drill some new ones.

Do I really need a new car this year?  Should any of my credit card debts be “rolled over” into my home equity credit line so that I can reduce the overall rate of interest and deduct that interest on my taxes?  Can I save money by converting from oil to natural gas heat?  Can I get a lower quote on my homeowners’ insurance premiums?  Instead of a vacation, should I be taking tax deductible classes that will enable me to learn new, more marketable skills that will generate new business?   

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

“Last week’s column on ‘The Changing World of eBay’ got me thinking a lot about building an e-commerce presence for my small business.  Do you have any thoughts on the right way to do that in a rapidly changing online environment?”

Consider the octopus.

The octopus basically has two parts:  a combination head and digestive system, and a bunch of tentacles that spread out from the head into the surrounding water, enabling the octopus to swim and catch prey (okay, okay, I’ve been watching too many nature documentaries on cable TV, but you get the general idea . . . ).

The tentacles of the octopus contain numerous “suckers”, which catch prey in the open water and then “feed” the prey to the mouth of the octopus, which then digests the prey.

That system of operation is exactly what you should strive to build when you create an e-commerce empire on the Internet.

The “head” of your online octopus is . . . your business Website.

Five years ago, I would have conceded that there are at least some very small, local businesses that don’t need a Website to be successful.  Not anymore.  These days, every small business, whether it does business primarily online or offline, needs to have its own Website.

Why?  For two reasons.

First, people these days expect that you have one if you are in business.  When someone hands me a business card at a speaking engagement or networking event, the first thing I look for is a Web address so that I can find out more about the person (assuming of course that I want to).

If I don’t see a Web address, or if it’s written by hand on the back of the business card (never do this, by the way – it sends the signal that you’re too cheap to send the right marketing message to your customers), the person instantly loses credibility in my eyes.

Second, and more importantly, there is one place . . . and only one . . . on the entire Internet where you can sell merchandise and keep 100% of the proceeds of each sale.

That place is your Website.

Whenever you list merchandise for sale on a platform other than your own Website (such as eBay, Yahoo! or Amazon), you have to pay fees for the privilege – either a listing fee, a “success” fee (a percentage of the sale amount or winning bid), or some combination of the two.

When you sell stuff from your Website, you don’t have to pay nothing to nobody.  So, here’s a “pop quiz” question:  when selling merchandise online, where do you want the bulk of your sales to come from?  Why, your Website, of course!

The “head” of the octopus is your Website, but you need “tentacles” as well.  Your merchandise listings on eBay, Yahoo!, Amazon, or Craigslist, your online “blogs” and your profile pages on the major Web 2.0 networking sites (MySpace, Facebook, LinkedIn, Plaxo and Squidoo) are all examples of the “tentacles” you will put out in the e-commerce ocean once you’ve established your own Website.

What exactly do tentacles do?  Well, at least according to the nature documentaries I see on TV (my experience with real “octopi” doesn’t go much further than fried calamari), the tentacles on an octopus serve two basic functions:

• they use their sticky “suction cups” (or whatever they’re called) to  trap and ensnare prey that may be swimming by; and
• once having caught prey, the tentacles use their “suckers” to pass the prey backwards towards the mouth of the octopus, located in the head, where the prey is consumed and digested.

Your e-commerce “tentacles” serve much the same goal.  Your presence on eBay, Yahoo!, Amazon and other high-traffic e-commerce sites serves to attract customers surfing the Web who would otherwise not find you in a million years.  People are searching for things on the Web every day, but only rarely will people be searching specifically for your Website, at least until you are so well established that your business is a “household word” (and I hope that happens someday).

Once customers buy a few things from one of your “tentacles” and become “hooked” on your merchandise or services (or “sucked in,” since we’re talking octopus), they will want more.  That’s when your “tentacles” should be feeding them to the “mouth” of your e-commerce empire:  Your Website.  Where you can sell lots of stuff to these customers and keep 100% of what you make.

Now, sometimes it won’t be easy for you to build an Internet octopus for your business.  Some online platforms, particularly eBay, have rules restricting your ability to post your Website URL on your listings or otherwise drive traffic off of their site.  But with a little creativity, some online research and professional advice, you can find effective ways to assemble your Internet octopus so that the maximum Web traffic occurs in the places where it really impacts your bottom line the most. 

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

In my almost thirty years of experience as a manager, executive, and consultant I have had one lesson taught to me over and over again. Culture eats strategy, period.

Ron Willingham, creator of the Integrity Systems model™, sets the basis for this when he talks about two related areas. The first is the construct of our values and beliefs. He proposes that we operate on three levels – each larger than the other. The three levels have been depicted as a “snow man” and I think that is an excellent metaphor.

The “head” of the snowman is our rational processes or “I think”. The next circle is the emotional or “I feel” and the last and largest dimension of our processors is the “I am.” The “I am” is that cluster of experiences, learnings, and related activities that shape what we call our values. It also holds our world view of ourselves and others.

The next concept from Willingham is that of congruency. Dr. Willingham talks about congruency on several levels – our view of an activity, our view of our ability to perform the activity, our view of the activity as it relates to our values, commitment to do the work, and our belief in the product or service.

I would submit that organizations have these same kinds of constructs- we just don’t talk about them.

When we go into an organization within an intention of changing the “culture” without consideration for these underlying constructs, we will achieve at best short term compliance but most likely near and long term failure.

Elements of a culture include the following:

• Values
• Norms
• Beliefs
• Behaviors

If we don’t take these elements into consideration, do we really expect to sustain meaningful change?

I spent a number of years in the credit union industry working with organizations that wanted to create a “sales and service” culture. That is a more difficult proposition than it sounds like as many of the people in credit unions are “refugees” from traditional banking or financial services because they feared or were incongruent with the concept of selling. They felt, as a member based, not for profit organization, “pushing” products was both uncomfortable for them and inconsistent with the mission and values of the organization. Only by accepting and embracing the concept of congruency between beliefs, values and behaviors, were we able to make meaningful differences in creating a sales and service cultural shift.

The good news is that identifying cultural issues and addressing them will significantly improve your chances of success. The bad news is you have to go further. You must also look at your systems.

In this context when I talk about systems I am including the following:

• Measurements
•  Models
•  Tools
• Connections

You have to reinforce your “new” values through your hiring and selection process, your reward systems and your products and services. You have to continuously benchmark and realign them.

You might be asking yourself – why do I want to go to all this trouble? This sounds like a lot of work. I submit a very simple reason:

The Environment Is Changing!

• From Process Focused Business To Customer-Needs-Focused
• From Name or Product Loyalty to What Best Meets Needs
• An Increasing Need for Higher Per-Worker Productivity
• Changing Employees Expectations

There are other reasons, as well, but the reasons listed above are some pretty compelling reasons.

My partner and I share a very simple premise:

“People join and support a culture not a system. Long term success will only be achieved and sustained when employees believe that embracing a culture is in their best interests and the interests of their customer. Changing systems without changing culture will not sustain long term success.”

So we change cultures. We call our model: Moving from compliance to Commitment™.

Ron Majetka in his book Why This Horse Won’t Drink, describes commitment this way-

“Commitment is the act of being physically, psychologically, and emotionally impelled. It means that employees gladly give up other options.”

By making cultural changes that create congruency between employees’ values and how they view their work, you will have an organization of committed employees who value their work.

Think about it. How would you like your employees to describe their relationship with your organization?

Mark Herbert is a principal in the firm of New Paradigms LLC and has assisted organizations including Honeywell, Spectra Physics, Mobius, Oregon Research Institute, and Oregon Community hire the right people. He can be reached at MarkHerbert@newparadigmsllc.

“Over the years my company has developed a close working relationship with one of our suppliers, and we’re thinking of setting up a joint Website where we can offer each other’s products and services, sometimes with blended or reduced prices if people buy ‘packages’ of our products.  Do you see any potential legal issues with that?”

Generally, whenever two people or companies either hold themselves out as partners, or conduct business in such a way that people can reasonably believe they’re partners, the law will impose a “de facto” partnership on them even though they never actually intended to be partners (even, in fact, if there’s an agreement between them saying they are NOT partners).

So, for example, let’s say that I sublease office space from another lawyer.  We are not partners, although we may share some expenses (such as salary and benefits for a joint receptionist/admin person).  You are a prospective client.  When you walk up to our office door, you see a sign that says “Cliff Ennico and Joe Blow, Attorneys at Law”.  The receptionist answers phone calls the same way.  The business card and marketing brochure you pick up in our lobby say the same thing.  Your appointment is with Joe Blow, not me.  Joe doesn’t even mention me during your meeting with him.  If Joe Blow should commit malpractice on your legal matter, you can sue both Joe and me, even though Joe and I clearly agreed we were not partners.  The law in this case would look at things the way you yourself looked at them – you had every reason to believe that Joe and I were partners, and the law will back you up on that.

Another example:  you are a computer consultant, and I hire you to do an e-commerce website for me.  You’re terrific at the techie “under the hood” stuff, but you’re not the greatest Web designer in the world, so you subcontract that portion of the job to your cousin Suzie Creamcheese (any Frank Zappa fans out there?).  You and Suzie show up together at every meeting with me, and both you and Suzie call me with questions about the project.  Even though I know Suzie is primarily responsible for the Web design work and you are doing the other stuff, unless one of you specifically tells me that the two of you are not partners, I have every right to believe you are partners.  So if I get a nasty letter alleging that some part of my website design infringes another company’s copyright, I have the right to sue both of you even though Suzie was clearly responsible for that fiasco.

As the boldface language in the above example indicates, the way to avoid creating an “inadvertent partnership” with someone is to make sure third parties (customers, suppliers, etc.) know that you are not partners.  In the Web design example above, I would actually put a clause to that effect in my contract with the customer.

In the case of your joint Website, I would divide the site into two clearly identifiable spaces so that people know you are two separate companies.  While your products can be listed on a single order page, I would clearly distinguish which products are being offered by Company A, and which are being offered by Company B.  Your e-commerce “shopping cart” should clearly indicate which company is receiving your payment and will be responsible for refunds, returns, and so forth.  And there should be a clear statement at the bottom of the order page (preferably a “click through” box requiring the customer’s agreement) that “www.whatever.com is a joint website offered by two independent companies, _________, Inc. and _________, LLC.  ___________, Inc. and ________, LLC are not partners or agents of each other, and each company is not responsible or liable in any way for the other company’s products or services.” 

Also, each company should post its own Privacy Policy along with a statement that customer information will be shared freely between the two companies.

A better approach would be for each company to have its own e-commerce website for its own products, with links back and forth between the two sites allowing customers to obtain discounts on products that are offered on each site if they can prove purchase of one or more of the other company’s products (or that they were directed to the site from the other company’s site).

One more thing:  if your two companies are technically competitors, creating a joint Website like this one may create antitrust and “unfair trade practice” issues.  Be sure you work with an attorney who is familiar with “joint ventures” like this one to make sure your Website will not be viewed as a way to engage in illegal “price fixing”, “tying arrangements” (requiring customers who buy Product A from one company to also buy Product B from the other company), and other antitrust violations.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

Imagine getting in your car and expecting to get to your destination without gas. Silly, right? Now, imagine trying to create a successful business without marketing? Hmm…see where I’m going with this?

By Randye Spina

Marketing IS the gas that fuels your business.

There simply is no other way to bring revenue in the door without some form of marketing. It’s just flat out impossible.

Now, before you say “I’m just starting out, I don’t have a marketing budget”, or “times are tough, I don’t want to spend a lot”, let me stop you. You can market your business without spending a fortune. Perhaps without even spending at all.

Let’s look at some amazingly affordable marketing solutions you can implement right now:

1. Email – Do you have signature block at the end of your emails? If not, you are missing a large opportunity to get the word out. Make sure you include all the ways to contact you & even add a tag line. You’d be surprised how much mileage you can get out of this consistent branding opportunity.
2. Email Marketing – At every opportunity, try to collect emails from prospects as well as existing clients. Then, using your existing email system (no subscriptions required) just be sure to send them something relevant & of course don’t forget to use the “BCC” line to protect everyone’s privacy.
3. Phone – Do you have a message on your after hours, or voice mail system that plugs your business? A short, simple message that states “Thank you for calling _____. The company that ____. This is ____. No one can take your call right now, so please leave us a message & someone will return your call as quickly as possible.” Even if you use your home phone as your business line, do it! Remember, for a first-time caller, impressions are everything. You may also want to consider stating your cell number for client emergencies.
4. Business Cards – Be sure you have them stashed everywhere. In your briefcase, padfolios, wallet, purse, notebook, pockets – I mean everywhere! You never know when an opportunity arises to give someone your card, or to put it up at a community location. Also, don’t forget to include a business card with every piece of correspondence you send out. It can subtly say “pass me along”.
5. Write articles – If you want to set yourself up as an expert in your field, set aside time & write articles that will get people’s attention. Send them out on the web & be sure to send them to your local media outlets & publications.
6. Website – If you already have one, be sure to consistently update its content to stay fresh & of course, add to it as necessary. Learn how to update verbiage yourself. It’s not that difficult and you can save money by doing these yourself.
7. Network – Pick up the phone & call 5 people everyday that you think will be great resources for you. Call friends & ask if someone they know needs your product or service. Ask everyone, everywhere you go & make time to network once a week. I like Fridays when people are more relaxed & open to a quick (& I mean QUICK!) chat. Then, ask those people for more referrals & the list keeps going.
8. Do reviews – Go to book sites & review books within your industry & area of expertise. Get your name out there & be sure to include links to your email & website, if you have one.
9. In store/office – If you are lucky enough to have a retail location use it to your marketing advantage. Invite speakers, have distributors give product demonstrations. Then serve tea or wine & cheese and invite your customers & prospects. Tell them to bring a friend. You’d be surprised how well this can work for you.

Good luck!

Randye Spina is the Chief Solutions Officer at Affordable Marketing Solutions, LLC and can be reached at 203-559-8838.

By Lawrence Garvey

If your firm or company is anything like mine, the credit market crisis did not start last week but rather sometime late last year. What Wall Street is experiencing now has been apparent, on a lesser scale, throughout our region for some time. Lines of credit have been closed or reduced, small business loans have become almost impossible to obtain and the dire circular effects of this credit squeeze, now being prophesized by every talking head with a microphone, have been apparent to us for some time.

Receivables are way up, payables are climbing, good clients and customers are cutting back wherever they can and many of us find ourselves spending more time on business development and collections then actually completing the work needed to continue to feed the monster. When I first started my law practice, I asked a friend who had been practicing for a number of years, how I would know that my practice was a success? His reply was simply “you’ll know when you look at your accounts receivable they make you want to throw up”. Thankfully, my firm passed that threshold some time ago, but I now see that some small and medium sized businesses have their very survival at stake due to the uncollectability of the money they are owed from clients and customers who just a year ago were their best payers. This very real threat is the true fallout of the credit crisis, not the banks on Wall Street.

The situation leaves the small business owner in a tough spot. You need the money to continue your operations and you need the client or customer for your future survival. What if the client can’t pay? What if the customer goes bankrupt? Should the business owner get aggressive immediately, change payment terms, insist on everything up front and risk losing the business or alienating the client? What about the business owner’s vendors and suppliers, they have to get paid also, we need to survive as well!

The answer is threefold: Communicate, Negotiate, Litigate.

Communicate. Keep the lines of communication open with your clients and customers. We run our businesses on our personal relationships. If your client is slow paying call him or her up and find out why. Don’t even address the situation directly (believe me he or she will know why you’re calling) commiserate about the economy, read between the lines and find out if he or she is just slow in getting paid from his/her clients or if there is real trouble. If there is no personal relationship, call and ask when you can expect payment. Call early and call often. The squeaky wheel does get oiled and your job as a business owner is to work your way up your customer’s payment priority list. Most importantly, keep communicating, if possible through direct telephone or face-to-face conversations.

Negotiate. Start with your older receivables and offer them a discount if they pay quickly. A customer who has owed you five hundred dollars for over a year may jump at the chance to pay just $350.00. You get some cash, the customer gets a way out and maybe even the customer becomes a customer again. Try this also with your current slow pay customers. Be flexible, take some now and some later, work with the customer. Remember, right now CASH IS KING. These are not the times to be obstinate about full payment. You need to survive! Get what you can and move on. When times get better you may want this customer again. On the other hand, in a matter of months or weeks some of theses customers will be gone altogether and on their way out someone like me will be advising them on who they should and should not pay. Unless you have collateral or a personal guarantee, believe me, you will end up on the no pay list.

Litigate. When all else fails, use the courts. If you are in a lower invoicing business, figure out how the small claims courts work and use them. Don’t wait, file and again be open to negotiation. For larger collectables, get a lawyer. You may be surprised at how quickly a heretofore silent account will wake up and respond to the attorney’s letter. If the letter fails, then speak with your attorney about the cost analysis of full scale litigation. Be informed and make an informed decision. Attorneys have different payment arrangements and may work with you on a full or partial contingency or offer a flat rate. After all, we’re business owners as well.

Lawrence Garvey is partner at Cushner & Garvey LLC. Cushner & Garvey is a full service Law Firm with an emphasis on Business and Personal Financial Matters, Trust and Estate Planning, as well as Corporate Law, and Litigation. The firm represents clients throughout New York and New Jersey. For more information, visit their website at www.cushnergarvey.com or call (800) 644-2733.

“We opened up a franchised retail store using a home equity loan a couple years ago. We’ve been keeping our head above water, but with the current economy things are going south. To add insult to injury, the home equity line of credit has been since frozen by the bank because the value of our home has gone down.  I looked at our lease, and we are stuck with a personal guarantee for the rent for 10 years. I think we are going to have to close the doors and was wondering what I should do about the lease.”

The basic problem here isn’t the rent – it’s cash flow.  Obviously the business isn’t generating sufficient cash to pay the rent each month and pay you a living wage without your having to tap your credit line.  Do everything you can to get your costs down to rock bottom – fire your employees and hire your kids and teenage nephews and nieces.  Not only are they inexpensive labor, but you actually get tax breaks for that.

Then, call your franchise, explain the situation, and ask them for a “break” on your monthly royalty payments until you turn cash-positive.  If that doesn’t work, tell the franchise you want to sell your location, and start looking for buyers.  Focus on recent immigrants to the United States – these folks will jump at the opportunity to own their own business if the price is affordable, and they stand a much greater likelihood of success because their cost-of-living expenses are likely to be much lower than yours.

If all else fails, it’s time for a “heart to heart” conversation with your landlord.  Explain your situation, and be prepared to back it up with hard numbers so the landlord doesn’t think you’re a “crybaby”.  Offer the landlord a monthly “percentage rent” in exchange for a reduction of your fixed monthly rent – this is a percentage of your gross sales each month, and usually is in the range of two to five percent.  Doing this makes the landlord a partner in your success or failure – if the economy improves, he may actually do better with this arrangement than he is currently with just a fixed monthly rent payment.

If the landlord isn’t willing to “play ball” (and many won’t, because their mortgage banks are playing the same games with them that your home equity lender is playing with you now), then it’s time to throw in the towel.  Tell the landlord that you will have to vacate the space in a few months, and let him know he needs to show the space to prospective new tenants.  If your landlord is able to find a new tenant for your space before you run out of money, you will still be liable on your personal guaranty, but there’s a good chance you won’t be called on it if the new tenant is a solid one.

If the landlord has to reduce the rent for your space in order to attract a new tenant, you will be on the hook for the difference between the rent you were paying and the rent the new tenant is paying.  Offer to pay this amount each month rather than in a  “lump sum” installment.  Not an attractive prospect, of course, but it’s a whole lot better than being on the hook for 10 full years of monthly rent charges.

“We’re a small business that’s been operating in the same location for over 40 years.  Our lease is up for renewal in a couple of years, and we’re a little worried.  We live in a very upscale community, and our landlord feels he should be getting a lot more rent per square foot from his tenants because other landlords in town are getting a lot more rent from theirs.  Earlier this year our landlord asked for 50% increases in rent for two other stores in the center whose leases came up for renewal – the owners had to go out of business or move out of town because they couldn’t afford the increase, and the store locations remain vacant to this day.”

Hopefully your landlord’s experience with the two other tenants will “wake him up” to the idea that his rent increases are unreasonable, but you can’t assume that will happen.  Start looking for other space in town, and focus on spaces that are owned by large commercial realty companies as opposed to “Mom and Pop” landlords.  “Professional” landlords don’t make decisions based on emotion or guesswork – whatever you are offered will probably reflect a fair market rental for your area.  Once you get an acceptable quote, show it to your current landlord with an offer to renew your current lease on the same terms – and the implied threat that you have somewhere else to go if he refuses.  Hopefully that will bring him back to reality.

I love this quote by Gandalf the Gray from the book Lord of the Rings by J. R. R. Tolkien, “When we despair we cease to choose well.  We give in to short cuts.”  It’s so true and we all know that we have been guilty of it at some point in our lives. 

It reminds me of the Dot Com Bubble that burst in March of 2000 and caused the stock market to crash, I remember those heady days of “irrational exuberance” as Federal Reserve chairman, Alan Greenspan referred to it. It seemed like everyone was worried they were going to miss out on the digital revolution.  They were motivated by the dreams of easy money.  It was all about taking a short cut. 

Several start ups approached me to help them promote their new Internet businesses in exchange for stock options.  I looked at a couple of cobbled together companies that were little more than a guy with a website and the hopes of mining some venture capital.  The idea was to generate web page hits with a clever name or gimmick, sell a ton of stock at the Initial Public Offering, then retire a millionaire.  I decided to stick with those willing to pay in cash. 

After the burst, I read about a repo man in Silicon Valley who repossessed the expensive cars of former Internet millionaires.  He reported that he frequently found dozens of losing lottery tickets in the cars -- evidence that the former car owners were acting out of despair and looking for short cuts back to the elusive wealth that had slipped from their grasp. 

Beverly Sills, the famous opera soprano, once said, “There are no shortcuts to any place worth going.”  But, too often when times are good we pile on the responsibilities.  Later on when we encounter adversity, we look backwards instead of forward.  We attempt to go back to where we enjoyed success in the past even when it is counter-productive to our current goal.  

In my seminars on innovation, I conduct a fun exercise that demonstrates how we frequently feel we must go backwards before we can go forward.  A volunteer from the audience is selected and sent out of the room.  The audience chooses a simple behavior they want the volunteer to do (like jumping up and down on their left foot). What makes it fun is that the volunteer must guess the behavior.  The audience can only help by saying the word, “yes” when the volunteer does anything that comes close to the desired behavior.  They are not allowed to say, “no” or give any other hints.   

Once the volunteer performs the desired behavior, the audience rewards it with a round of applause.  I ask for a second volunteer, but this time we change the rules after the person leaves the room.  When the desired behavior is reached, the audience goes silent, says nothing, and gives no applause. Since the volunteer is no longer getting feedback in the form of “yes” he or she will go back and repeat behaviors that did elicit a “yes.”  The audience, however, remains silent. 

As we watch the volunteer, we can see despair forming on his or her face.  The volunteer will then go further backward to find a previous behavior that generated success.  Eventually the volunteer quits going backwards and starts initiating brand new behaviors in the hopes of regaining another, “yes.”  It is after several new behaviors are performed that the audience is signaled to applaud and reward the volunteer for his or her efforts.  The purpose of the exercise is to force the volunteer to backtrack to the point that he or she realize success can only be found by moving forward. 

In life, the trick is to stay focused even when our luck seems to be changing.  We may have to slow down or make changes in our methods, but the goal must remain the same.  Henry David Thoreau observed, “We rarely hit where we do not aim.”  In other words, if you’re moving backward you are moving away from your goal... and it’s hard to hit a target when you’re facing the wrong direction. 

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

A rose by any other name…… I just read a study on successful change management and it totally reinforced my belief in our Compliance to Commitment™ model, again. The study, commissioned by Global Knowledge indicated that people issues remain the key problem in deploying or upgrading enterprise level software systems. Another study cited in the same article indicated that 70% of "re-engineering projects fail, and a third study which examined efforts ranging from "strategy deployment" to "culture change" showed a similar failure rate – 66%. One in three efforts yielded success!

So what caused all these failures? Well, the studies conclude that the two biggest impediments to successful change initiatives come down to two primary drivers- employee resistance and lack of proper training. Just for the record, employee resistance is by far the bigger issue. They have actually been able to identify the three key reasons employees "resist" the change:

1. Fear of job loss
2. Fear of increased responsibility
3. Frustration with the process

So how do we address these issues? We have several suggestions-

• Recognize and address the "people side" of change management- this may sound intuitive, but given slightly better than a one third success rate I would suggest not. We talk about re-engineering, restructuring, resource reallocation, etc. There are treatises written on processes, policies, procedures, and technologies to improve "efficiencies", but at the end of the day people do the work.
• Develop and hone effective interpersonal and communication skills for front line managers- some of the key skills that help people deal with change include team building, coaching, constructive feedback, effective delegation, and clear expectations. These skills are not being taught in the business schools! You are going to have to "buy" them or develop them in house.
• Recognize that change is systemic and inevitable- change has become an organizational reality. In our dynamic environment nothing is static. If you have not built an ongoing system for monitoring your environment and incorporating changes into your strategies and systems you are in trouble.
• Anticipate resistance and plan for it- step back and look at change from your employee’s perspective. Reacting to resistance is inefficient and frustrating. It is management’s job to guide employees through the process. Make sure your leadership team has the skills and the tools to implement the change proactively.

Some Practical Tips
There are some very practical things you can do to make change occur more efficiently and reduce resistance.

• Tell people the truth and give them as much information as possible as often as possible
• Give them reasonable time to "process" the news- don’t expect immediate buy in.
• Give them time to vent and recognize that some level of anger is normal.
• Empathize! You don’t have to agree, but you can try to understand and recognize their concerns.
• Recognize that trust will be off balance temporarily. Be patient , it will return
• Get them involved! You worry about the what; let them participate in the how. Let them participate in determining the tasks and timelines.
• Build on their ideas. Their ideas may surprise you; after all they do the work.
• Be proactive. Discuss the new realities constantly and be sure your management team are effective communicators.

Some of this sounds familiar I hope from previous articles on our Compliance to Commitment model™ with its five elements of Respect, Responsibility, Information, Rewards, and Loyalty and our more recent information about successful engagement strategy. We talked about the financial and organizational successes of companies who embrace the models. So you have to ask yourself a question, similar to engagement strategy two thirds of "change" initiatives fail- Which category do you want to be in?

Mark F. Herbert is a principal in the management consulting firm New Paradigms LLC. He has successfully helped organizations manage their change management strategies on a regional and international basis. He can be reached at Mark@newparadigmsllc.com.

Robert Evans Wilson, Jr. is a motivational speaker and humorist.  He works with companies that want to be more competitive and with people who want to think like innovators.  For more information on Robert's programs please visit www.jumpstartyourmeeting.com.

“Cliff, we love your column, and we would love to hear your reaction to the Wall Street shenanigans of the past several weeks.  Do you have any special wisdom on how small businesses can survive the coming, almost certain, financial storm?”

This is a column of practical advice for business owners, and I generally try to avoid political and “macroeconomic” topics.  It’s not that I’m squeamish, or afraid to take a stand on an issue – I actually have very strong opinions about what’s happening in the business and financial world right now.  It’s just that this column is not the place for them.  There are many, many places – both online and off -- where you can get information and opinion on this topic, and I doubt I would have much to add to the thousands of pundits, commentators, and “citizen journalists” who are weighing in with their opinions.

Having said that . . .
I do strongly believe there is one thing business owners need to have in order to survive in these unsettled times – something that has been sadly lacking in the business world the past few decades. 

What is that something?  It’s not cash.  And it’s not love or passion for what you do.

It’s discipline.  Discipline and self-restraint, pure and simple.  The ability to say “no” to a deal that doesn’t make sense when everybody else is saying “yes”.  The ability to set standards for who you will do business with (and who you won’t) and sticking to them.  The ability to set a budget for yourself and stay within it, even if it means making sacrifices (remember when people actually made personal sacrifices for things?) in other areas of your life.

The last 50 or so years have been a great time to be alive in America.  Three whole generations of Americans have grown up thinking that nothing bad ever happens here.  Wars happen, but they’re always on the other side of the world – just wave a few protest signs in the air and even those go away.  Recessions happen, but they’re short and shallow and the economy always bounces back quickly.  Poverty and starvation happen, but only to people in developing countries.  Ten years ago someone actually wrote a book called “The End of History”, arguing that historical cycles of good and bad economic times are gone for good (or can be easily managed) due to our technological brilliance and intellectual flexibility.

In a word, “oopsie”.

Just as Andrew Jackson once said, “eternal vigilance is the price of liberty”, eternal discipline is the price of a free market economy.  Just because the law permits you to do something doesn’t mean it’s the right thing to do, or that you should do it – even if “everybody else is doing it”.  Your parents didn’t buy that argument when you were a teenager, and neither should you when running your business.  Thinking about bad times when times are good is very difficult to do – it’s a little bit like negotiating the divorce terms right after someone has accepted your proposal of marriage – but it has to be done. If you wait until the bad times to discipline yourself, you may not have to time to correct the problems and weaknesses that expose you to disaster.

Back around 400 B.C. a Greek guy named Aesop wrote a short story about that.  It’s called “The Ant and the Grasshopper”.  You probably haven’t read it since childhood.  Go back and read it now.  It’s the best business advice you will ever get about surviving tough times.

Once you have discipline, there are two things you DON’T need.

Fear.  In similar times, a famous U.S. President once said “we have nothing to fear but fear itself.”  He was right.  When you panic, you do and say things you (and society) live to regret later.  Action is the surest cure for fear.  Stop worrying.  Look for threats, and take action to avoid them. Look for opportunities, and take action to exploit them.

Anger.  As Shakespeare said, “what’s done is done; it cannot be undone.”  The time for anger was years ago.  Being angry now is a waste of your precious time.  Also, when you are angry, you do and say things you (and society) live to regret later.

We are all upset about what’s happened on Wall Street.  We look for someone to blame.  But as Shakespeare (again) said, “the fault, dear Brutus, lies not with our stars, but with ourselves.”  We are all responsible for the current mess.  Every last one of us.  Either we were living beyond our means, or we failed to insist loudly enough that the spending-and-lending habits of those who were be curtailed.  If you must be angry, be angry with yourself – look closely at the things you did, or did not do, that contributed even in a small way to the credit crunch.

And make a vow to yourself, and to your children, that they will never happen again.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

We’ve got so many ways to connect  --  voicemail, email, texting, fax;  landline, cell phone, PDA and probably mental telepathy. Downside:  we’re assaulted by offers ranging from the unwanted to the unspeakable. To just function, we’ve got to spam filter and call-screen. Even in good times, we try to keep out everything – and everyone -- but the essential.

Doing What Comes Naturally
You may have seen women as more naturally inclined to work together, to help each other. Certainly we share personal confidences on life’s most intimate adventures, including our loves, our bodies, and our children, as well as our career experiences. Thousands of women gather to support each other every minute of the day, from the informal traipse to the ladies’ room to the formal standing ovation we offer in salute to women community leaders who inspire and support us.

(Hey, and just maybe this week you feel like you know more of the ones Madeleine Albright had in mind when she proposed the "… special place in hell for women who don't help other women." )

If a few too many days feel like you’re fighting the tide, take a break. Beyond spending time kvetching over coffee, get right out of the office and do some good for somebody else for a change. Volunteer for a shift at a food bank or meal shift at a shelter…and don’t wait for Christmas or Thanksgiving. Struggling to balance work and family? Consider taking the kids, too.  That can get your whole family thinking about things with a lot more gratitude.

How hard would it be to find ways to join forces in common cause rather than go it alone? Imagine the positive change we would make in our lives, in our businesses, and in our communities by treating challenging times as a call to come together.

Judy Bradt , The Smart Woman’s Guide to Government Contracts, is Principal of Summit Insight LLC (www.summitinsight.com; blog at www.sell2usgov.com) in Washington DC.  As author and expert consultant, she offers her clients business strategies for government contracts made easier.

The US federal government will spend over $400 billion this year on goods and services. State and local government contract spending will hit $5 trillion. Those contracts will include commercial and consumer items and professional services as well as highly specialized niche technologies, and everything in between.

If your business is already performing well with your commercial customers, government contracts can drive your business growth…or they can drive you crazy. Knowing what to expect makes all the difference. These five tips suggest whether you’re ready to take on the world’s biggest buyer.

1. Strong Performance Today & Determination For Tomorrow.

Government customers want reliable suppliers with established track records. And successful suppliers are prepared to finance the up-front investment to pursue, win, and then perform government business. Remember, you don’t get paid til after the work is done – so working capital is essential.

2. A Unique Value Proposition – for Government.

Successful vendors know just how to research exactly which government buyers benefit most from what they offer, and craft their marketing campaign precisely to reach those buyers. (Free data, consulting services, and personal networks all help.) Then they create online content and literature to focus on issues and challenges that government buyers face. They can articulate in the buyers’ language how their offering stands apart from the alternative options the buyers have.

3.  Relationship Mastery.

Successful vendors know that when you sell to government, you’re not selling to a process or an order machine. Government buyers do business with people they know and like and trust, people who understand their needs exquisitely well – even when they have to follow complicated rules to do that.  Winners build  formal networks (like creating a connected corporate board of advisers), contribute to specialized industry networks in which their buyers participate, and are alert to the casual perfect connection that a friend or neighbour can bring. 

4.  Focus on the Details.
While relationships are essential to attract the business, governments operate under complex rules that vendors must know. Companies who hold government contracts – whether as a prime contractor or a subcontractor – must be aware of and comply with dozens of precise requirements. Government contracts carry legal obligations that can include workplace regulations and contract administration as well as product specifications or service performance standards.

5.  Value Specialized Help.
Winners are prepared to invest considerable time and money to develop cost-effective and successful government marketing strategies. They pinpoint their prospects, and know how they’re superior to their competitors in every way. That effort includes getting the best insider expertise they can – about opportunities, competition process, and connections. They make the most of free resources, but they understand that the right specialists can dramatically shorten their time to market.

What’s next? Get reading!

• www.sell2usgov.ca
• www.business.gov/topic/Government_Contracting

Judy Bradt, Principal & CEO of Summit Insight LLC of Alexandria VA brings 20 years’ experience helping over 5000 clients land over $200 million in government contracts. She has been covered by Entrepreneur Magazine, Fortune Small Business and ABC Radio, and has just launched “Answers in an Hour”, a new turnkey service for clients who want government contract ideas they can use right away. email: Judy.Bradt@SummitInsight.com Web: www.summitinsight.com Blog: www.sell2usgov.com

“I do a lot of public speaking to promote my small business.  Most of my speaking is for local organizations; I don’t charge them a fee, and there’s no contract involved.  But lately I’ve been contacted by some event planners to speak at trade shows around the country, and their contracts are several pages long!  What are some of the things I should be looking for in these contracts?  Do I need an attorney to look at each of these when I receive them?”

Generally, when I look at speaking contracts, I focus on three basic questions:

“How and When Do I Get Paid?”  Speaking contracts are usually clear about the amount you will be paid for speaking, but you would be amazed how many contracts are “fuzzy” about when payment is due.  Most event planners will want you to submit an invoice for fees and expenses after you speak, which is fine, but if there are significant expenses involved – such as cross-country air travel – you might want to ask to have those expenses reimbursed before you board the plane.  Watch out for language saying the event planner will pay you if they or their client are “satisfied with” or “have accepted” your work – that can be awfully subjective, and you don’t want your payment held up on somebody’s whim.

“Who Owns My Presentation?”  There should be only one answer to this question:  YOU should own the copyright and all other rights to your PowerPoint slides, handouts and other materials you give to attendees, and any other content you create for the event.  Many speakers’ contracts require you to assign your copyright to the event planner, and you should resist these provisions as much as possible.  Once someone owns your copyright, they can do whatever they want with your presentation, you get nothing for it, and you can’t use that same presentation anywhere else.  Consider instead giving the event planner a “nonexclusive, perpetual, royalty free” license to use your content only for certain specified purposes – such as posting the content for a limited time on the event’s Website. 

 “Am I Restricted From Speaking for Someone Else?”  Never, ever sign a noncompete agreement for a speaking event.  No event planner has the right to prohibit you from speaking for other organizations or clients.  If they protest, tell them you won’t agree to a noncompete unless the planner agrees to give you a minimum volume of speaking business each year while the noncompete clause is in effect.

It’s a good idea to have an attorney review your first couple of speaking contracts.  I would recommend you meet with the attorney and have her “educate” you on the things you need to look for to avoid getting into legal trouble with the event planners.  After that, you can probably review these yourself, keeping your attorney on “speed dial” if a particular contract has language you haven’t seen before.

“I am a corporate training professional who conducts programs at hotels and convention centers in my state two or three times a year.  While I can limit myself to my home state, a future goal is to offer training in other locations across the country, and I understand I may be subject to income and sales taxes in other states if I conduct programs there. What’s the best way to learn about the tax rules in each state where I may wish to conduct training?”

When you conduct training classes in another state, especially if the classes last for more than one day each and/or you conduct several classes in the state each year, you may have “nexus” with that state for tax purposes.  This means you are responsible for paying income or sales taxes to the tax authority in each state where you conduct training programs.

To find out a state’s “nexus” rules, find the state tax authority’s Website – you can search online for “[name of state] revenue department”, or go to www.taxsites.com/state.html for a nationwide directory of state tax Websites.  Once you get to the state tax authority’s Website, search for the “nexus information” page.  There almost always will be one.

Each year, the Bureau of National Affairs in Washington, D.C. conducts a survey of state tax departments about their “nexus” rules and publishes the survey in book form --  for a current copy of this survey, call BNA at (800) 372 1033 and ask for Item STSV01.  But be forewarned:  it will set you back $185.

As a last resort, you can always call the state’s tax department, ask to speak to a Revenue Examiner, and ask them flat out if your proposed activities within the state will subject you to income or sales taxes.  The good news is that they’re usually fairly friendly, and will tell you exactly what to do.  The bad news is that they will almost always find you have “nexus” in the state and will have to pay taxes.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

“I have a small service business.  I was doing okay until recently, but in the past several months a lot of my business has dried up and I’m struggling to stay afloat.  Do you have any tips on how to run a service business in difficult times?”

When you run your own business, there’s never anything BUT difficult times.  The rules of good management apply no matter what the economy’s doing at a particular moment.  Having said that, though, recent events in the financial world have shaken a lot of people’s confidence, so it’s a good idea to review the basics.

“Talk to Me, So You Can See, What’s Going On . . . “  With apologies to the late Marvin Gaye, a sudden drop in business usually means you have a marketing problem.  Your customers have had a change of heart about you and what you’re doing, and you’ve got to find out what’s happening.  Sitting around the office thinking about the problem won’t solve it.  You’ve got to get out into the marketplace and start talking to your customers.  Ask them point blank why they’re no longer calling.  Is it something you’re doing or not doing for them?  Are their needs changing?  Is there a new competitor in town who’s offering them better prices, better service, or a more convenient location?

Frankly, you should be doing this ALL the time, but especially now you need to worship your customers.  Offer them a little something for participating in a telephone survey and they’ll probably give you an earful.  Oh, and if they’re telling you they want something new and different from your business, say “yes” and start offering it . . . whatever it may be. 

“Is There Anybody Alive Out There?”  With apologies to Bruce Springsteen, changing times create new marketing opportunities as well as threats.  For each customer who’s drifting away from you, there are others who are being abandoned by other service providers.  Take a good, long look at your community – what’s NOT being done that people are willing to pay good money for?  If two or more customers ask for Service X and you are offering only Services Y and Z, maybe Service X needs to be added to the mix.  Chances are, a lot more people are looking for Service X, and it’s good to be the only one in town (or in your industry) doing it.

Maximize Revenue, Minimize Cost.  These are the two cardinal rules of growing a business in tough times (or indeed, any other time).  Here are the key questions you should be asking:

Are your prices high enough?  Since your customer base is declining, you will have to squeeze more cash out of fewer customers.  Your gut instinct is to cut prices in difficult times, but if inflation is pushing everybody’s costs higher, now may be an excellent time to actually RAISE your prices because people are more resigned to it. 

Are there other complementary products or services you can sell your regular customers?  If you are a rare coin dealer, you should not be selling just the coins themselves but also the supplies that coin collectors need.

Are there new markets or uses for your products and services?  Consider selling internationally via the Web – there may be huge markets in Brazil for stuff you can’t give away in the United States.  Perhaps you can reach out to an ethnic group in town that’s not being adequately served by your business (three little words that will dramatically expand your service business – “se habla espanol”).  Perhaps there are new uses for your products that people aren’t aware of.  In good times, a bicycle is a fun way to exercise.  In tough times, it might be a primary means of transportation.

Are you spending too much money on anything?  In tough times you have to be downright ruthless about cutting expenses and living on “a drop of water”.  Do you really need a second employee working on Saturdays?  Can you get another year out of your old truck?  Most of us don’t spend wildly on high-priced items, but the little expenses -- $10 here, $20 there – really add up.  Cut your spending by even $20 each day, and you will save $140 each week, and $7,280 each year.

At all times, there are two steps to success in any service business:

• Find a dirty job that has to get done but that no one likes to do; and
• Charge a premium price for doing it.

People will always pay good money to have work done if they are too nervous, time-starved or nauseated to do it themselves.  In tough times people are more motivated to do mildly objectionable things themselves, but they will still outsource the really scary, distasteful jobs.  Be prepared – and willing – to tackle some of the really nasty stuff people want done, especially if your competitors are too squeamish to do it. 

You won’t love it, you might not smell too great, but you will survive.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

When you write a column like this one, you get lots of e-mails from public relations firms talking up their clients who offer services and “resources” to business owners.  Most of them are “ho hum, same old, same old” – companies offering employee benefits, information technology services, and the like, with little that is new, exciting or innovative.

But every once in a while a company comes along that “kicks it up a notch” and leverages the awesome power of the Internet to solve some long-standing problems for entrepreneurs.  Here are two cool new Websites, launched just this week, that you should know more about.

Are you thinking about buying a franchise?  Are you worried that you will not find the right “fit” with your skills and interests?  Are you afraid of dealing with franchise brokers because they deal only with a limited number of franchises and you are concerned they will try wherever possible to fit your “square peg” into one of the “round holes” they have available?  Then you should check out www.ezmatchfranchising.com – a new website that uses behavioral matching technology to match entrepreneurs with the franchise of their dreams.

  “We intend to do for franchising what eHarmony.com and other dating sites have done for couples,” says Chris Delaney, CFO of EZMatchfranchising.com, explaining that “we are the only website that provides a behavioral assessment questionnaire specifically designed to help some 20 million adults annually who seek to find a franchise.” 

There are franchise portals on the Web, of course, but most of these are merely directories of franchises organized by product or service type.  So, for example, if you love ice cream, you may think you are a good fit for an ice cream franchise.  By looking at these other websites you can find a list of franchises that specialize in ice cream.

But Delaney points out that an ice cream business may be a terrible choice for you:  “how do you feel about working seven days a week, supervising minimum wage employees with a 60% turnover rate each year, and starving during the winter months?  That’s what an ice cream business is all about.” 

While ezmatchfranchising.com offers a traditional franchise directory for those who know what they’re looking for, it also offers a behavioral assessment survey for those who don’t.  You fill out the “personality report” (it’s free) describing your interests and skills, as well as answering questions such as “do you mind working weekends?” and “do you prefer working alone?”.  Delaney says the process takes about ten to fifteen minutes on average. 

When you hit the “send” button, up to 10 franchises pop up that meet the criteria you specified in the survey.  You can then click through to look at a longer one page description of each franchise.  Your information is automatically sent to the franchise, which will contact you via e-mail to continue the discussions.

 The site currently does not charge either franchises or prospective franchise buyers for using the site, although there is a small charge to franchises for forwarded leads.  “The franchise industry’s number one complaint is poor lead quality,” says Delaney.  “By scientifically matching prospective franchisees with models that fit their personalities, both parties will be more productive and efficient.”

In another first for the franchise industry, EZMatchfranchising.com will introduce state of the art video presentations designed to enhance a franchise’s image.  Videos will also allow prospects a way to “see and feel” an organization as part of their selection process.

Why use EZMatchfranchising.com instead of a traditional franchise broker? “We do in fifteen minutes what it takes franchise brokers months to do,” responds Delaney, adding that because the site does not receive any portion of the upfront fees if a prospect decides to buy a franchise “we don’t have a vested interest in people buying a franchise the way that traditional brokers do.”

www.uradeadbeat.com.  Any business owner who’s been cheated by a customer who fails to pay bills knows how difficult it is to get justice from the small claims court system or the Better Business Bureau.  Along comes www.uradeadbeat.com, which uses Web 2.0 social networking technology to solve an age-old problem:  how to give a deadbeat a proper “black eye” in a quick, cost-effective manner.

For $9.99 a pop, you can post a complaint about anyone who has cheated you. The site then generates an e-mail to the accused and/or sends an 8.5 x 5.5 inch color postcard in the U.S. mail, notifying the accused that they have been added to the “Deadbeat List”. 

The accused is given the chance to rebut the accusation, which is also posted, and posts are never taken down. A dialogue back and forth can go on for as long as both parties participate.  The “Deadbeat List” is searchable, so people can check on businesses or individuals they may associate with.

Just be sure everything you say in these postings is 100% accurate, or else you open yourself up to a libel lawsuit.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series 'Money Hunt'.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2008 CLIFFORD R. ENNICO.  ALL RIGHTS RESERVED. DISTRIBUTED BY CREATORS SYNDICATE, INC.

Some of you may already be familiar with our concept of moving your organization from Compliance to Commitment™, which I have also referred as the concept of building in employee engagement as a strategic weapon in your competitive arsenal. I will admit that much of the information I have shared with you previously has been anecdotal, but a new white paper I just received from Peppers & Rogers Group, entitled Engagement - the New Competitive Advantage, provides some interesting facts that I think it is important to discuss here.

One of the first things that study distinguishes is a new view of engagement. They distinguish between the traditional view of the intellectual, behavioral, and emotional elements we have traditionally associated with engagement. To describe those a little more fully, the intellectual level is where an employee agrees with your company vision statement and/or a customer values the attributes of your brand. The behavioral level, recommending or purchasing your product or service is where you start to see energy or discretionary effort. The third level, the emotional level, is where you actually see "buy in" and enthusiasm. You can see in some ways this parallels Ron Willingham’s three dimensions of congruency; the I think, I feel, and the I am. Willingham pointed out, and Pepper and Rogers agree the emotional "buy in" is much more impactful than the intellectual appeal.

They go on however, to describe a different more comprehensive model which includes five levels and incorporates critical concepts like satisfaction, quality, and loyalty.

The "new" levels in hierarchical order are; satisfied, loyal, recommend, best products and services, and pride. Most importantly they also describe the critical foundation that this system is based upon, a foundation called trust. The point here as I have discussed thoroughly is without a trust based relationship, the rest of the engagement initiative is a wasted effort; and trust is built at the front line level between the immediate supervisor and the employee. It is the trust factor that the five elements of Compliance to Commitment™; respect, responsibility, information, rewards, and loyalty address. There is also a clear relationship to the Human Resources Pyramid™ that I have described before as well.

While I am not going to go into a great deal of detail describing each of these "elements" one of the important differentiators between this model and others is that it points out that willingness to recommend is not the peak performance an organization can achieve, and more importantly it measures the relationship over a long term. Pepper and Rogers point out the "satisfaction" index can fluctuate from transaction to transaction or you can "game the system" by asking the "right" questions. Manipulating the more comprehensive index becomes much tougher, especially factors like pride or excitement toward the organization.

This model also takes into account both employee and customer engagement and argues they are inextricably linked. They also say that true engagement affects three critical elements that every organization should be concerned about: Productivity, Performance, and Sustainability.

The most important thing in this article is it provides some pretty definitive numbers in each of these categories.

Productivity
Depending upon what business you are in your costs for "human capital" on average represent 60 to 70% of total expenditures. As we know in some businesses it is much higher. As we point out, the best companies are recognizing this and leveraging their return on investment in this area. A 2008 study by Development Dimensions International (an international training and consulting firm) indicate that moving an employee’s level of engagement from low to high represented a 21% increase in individual performance. Employees at the highest levels of performance have per capita productivity of 20% higher than the average across industries and offices with high levels of engagement are 43% more productive according to studies by the Society for Human Resources Management and the Hay Group.

Engaged customers also enhance your productivity through repeat business and word of mouth recommendations.

Performance
In addition to the productivity increases you also direct correlations to financial performance. Engaged employees tend to stay with their current employers at a rate of 85% versus 27% according to a 2008 study by BlessingWhite, an international consulting firm. The savings from reduced turnover alone are huge. Additive to that other studies showed similar correlations to companies with double digit versus single digit revenue growth and an average total shareholder return of 24% for organizations where 60 to 70% of employees rate themselves as engaged versus 9.1% total shareholder return for organizations with an engagement percentage of 49-60%. In retail environments stores in the top 25% engagement level deliver 36% higher operating income than stores with low engagement.

Customer engagement shows similar statistics including higher loyalty, increased revenue, increased profit, and increased wallet share. When you combine high employee and high customer engagement the results show literally a 100% difference in financial performance on a peer to peer basis.

I don’t know about you, but to me those kinds of bottom line impacts get my attention!

Sustainability
Beyond the financial and productivity gains let’s talk about sustainability of the organization. I want to talk about three different areas that Peppers and Rogers identified:

• Brand- a 2003 study stated the experience a customer has with your employees influences repeat purchase decisions so much that "they are your brand." In the same study they reported that 51% of consumers report than "outstanding service" is the number one reason they continue to do business with an organization and that conversely 80% state they will discontinue doing business because of a bad experience.
• Strategy- the biggest reason CEO’s fail is not bad strategy, but bad implementation of their strategy according to a study by Ram Charan reported in Fortune magazine. Engaged employees play a critical role in that implementation.
• Human Capital- over the next 10 to 15 years the demand for experienced talent is expected to increase by 25% while the supply decreases by 15%. Under these circumstances retention of critical talent becomes even more important. Remember that "engaged" employees are 87% less likely to seek alternative employment.

The 2008 BlessingWhite study that I referenced earlier identifies less than 30% of employees as being engaged. The same study identifies 19% as being "disengaged", but it gets worse, disengaged workers are not the most likely to leave- they "quit and stay".

The same study found that only 27% of organizations globally have a formal program or strategy to increase employee engagement and 19% don’t even have it on their radar screen.

So let’s go back to the beginning. Consistent with our thinking at New Paradigms, the foundation of employee engagement is the same as any healthy relationship- mutual trust between the parties. We believe there is a direct relationship between the five elements of Compliance to Commitment™ and building that foundation of trust.

I think that what we describe in our case study- A New Paradigm for Credit Unions is a real illustration of employees and customer/members beyond the "recommend" level that we have accepted as the ceiling of employee engagement. In that setting we were able to create "pride". That "pride" translated into some pretty impressive results including:

• 4000 new membership accounts
• A 21% increase in asset size
• $150 million in net revenue
• A significant increase in "wallet" share

It sounds remarkably consistent with the statistics in the Peppers and Rogers study, doesn’t it? The reality is that technology or processes or outsourcing or off-shoring are not going to create engagement. You are not going to have customer engagement without employee engagement. You are not going to have employee engagement without trust.

So let’s go back and review those numbers again:

• A 21% per capita productivity increase opportunity
• An average 60% higher retention rate for valued employees
• A shareholder return of over 50% higher than non-highly engaged companies.
• Financial performance of 100% higher than peer groups for organizations with both high employee and customer engagement scores.
• Less than 30% of organizations with a program in place.

So in summary I would say that if you don’t do it for reasons of employee satisfaction, retention, or other related factors consider it as a competitive advantage.

In the end I will leave you with this thought from Margaret Wheatly-

In organizations, real power and energy is generated through relationships. The patterns of relationships and the capacity to form them are more important than tasks, functions, roles, and positions.

It would seem like the "numbers" bear that out. Compliance to Commitment™, simply a better way to manage your organization, the "numbers" tell the story.

Mark F. Herbert is a principal in the consulting firm of New Paradigms LLC. He has over 30 years of experience as a corporate executive and consultant specializing in optimizing organizational performance. He speaks and writes frequently on topics related to human resources management, organizational development, and executive and managerial coaching. He has developed and implemented a management system called Compliance to Commitment ™ that has seen significant measurable results in multiple organizational settings. His first book, Managing Whole People will be published in the fall of 2008. He can be reached at mark@newparadigmsllc.com or www.newparadigmsllc.com  

Often my clients ask me to review existing or prior print ads they have used but that did not produce the desired results. 99% of the time I see the same few issues again and again.

No matter what product or service you are marketing, I do believe that a business owner can create their own effective ads if they follow a few basic guidelines and understand that advertising is just ONE marketing method that when implemented correctly creates a cohesive marketing strategy.

Following are some basic “isms” as I call them to help make this process easier for you to create ads as well as purchase the space they’ll appear in that has a much better chance of succeeding for you.

First – Sell the sizzle, not the steak.
Because they are so close to their own product or service they know what it is, but not why people buy it. In other words, they are selling features not benefits.

The fix - Try this fun but powerful exercise to try for yourself - Turn 3 features of your product or service into benefits. For example, “weights less than a pound” would be stated in all marketing and advertising as “lightweight and portable”.

Second – Twice and Thrice is Better than Once.
Another powerful concept in advertising is frequency. This means that an ad seen just once is lost in the jungle of advertising. Ads seen more than once will produce much better. The problem is that is costs more and most small businesses are looking to save money.

The fix – design a smaller ad and place it more than once. This will be approximately the same cost as a larger ad placed once and should (all other things being equal) pull better for you.

Third – Audience is everything and 60% of your marketing success relies on getting this right.
It’s easy to fall prey to those salespeople who call and promise you the “best way to advertise” but is it really best for YOU?

When you get a call from a well known media outlet and are sure who their audience is, great. That’s an easier decision. Then it comes down to price and whether your budget is available. Of course, some due diligence is required here as well.

But when you get a call from an unknown or lesser-known publication do your homework with a thorough due diligence. Do not fall prey to very seasoned salespeople.

The fix – Ask the right questions. Ask for a media kit (often they are available online). Ask for rerun rates (how many advertisers rerun their ads). Ask if they have a graphics department and if the ad creation is included in the price. Ask if they offer remnant rates (last minute discounts for available space). 

Bottom line it’s your budget, your image, your company – do your homework and your chances of success are higher.

Fourth – be clear and concise.
Esoteric, vague or overly designed ads can be great when used by a fashion house or other well-known higher end brand that has an established image. But when trying to sell an unknown, be as clear as you can be about the offer.

The fix – send the ad for review to friends and family. Ask them for their honest evaluation. If they saw this ad in print would they know what the product’s benefits are? Where they can buy it? Why they should buy it? If not, rewrite it to be sure you don’t lose buyers.

Fifth – be sure to proofread.
Have you ever read an ad and saw a typo or other mistake? You have to wonder how THAT happened.

The fix - Dial the phone number, log on to the website and send an email to the address in the ad. Make sure your ad reads perfectly before it goes to press.

Once you have the benefits down and know the right way to implement marketing and advertising, you are well on your way to creating an impactful, successful campaign that will drive revenue to your bottom line.

Randye Spina is Chief Solutions Officer of Affordable Marketing $olutions (www.myaffordablemarketing.com) and can be reached at (203) 559-8838 or randye@myaffordablemarketing.com

In business, we can borrow from the classic three-act drama of Ibsen and the contemporary high concepts of Tinsel Town.  Here are three structural elements of an effective pitch – they may seem obvious yet they are seldom optimized:

1. Use a strong hook to capture initial interest (perhaps an intriguing fact, question or brief anecdote).
2. Describe and solve a problem or meet a need in a unique way (including how your process or approach is timely, different, or measurably better).
3. Conclude with evidence of success, growth, or visionary ambition. Perhaps an endorsement or very brief (one sentence) anecdote can work as a finish. You don't want to tell the whole story, you want to induce curiosity and prompt a question or response.

Pitching your elevator speech or brand vision is uncannily similar to pitching a two-hour film in less than five minutes.  It must be brief yet far more specific than the sweeping goals of a codified mission statement.  “Deliver world-class service” or “value-added” aren’t sufficient – an elevator speech needs to say “how” and “why” in a few words to elicit a distinct response.

• Align your pitch with your current mission, vision and values statements (these are sometimes updated separately and don’t always create a consistent theme).
• Define your value proposition and it’s target market in one or two sentences (think problem-solution scenario).
• Clearly articulate differentiation from top competitors – be specific.
• Include active language that conveys momentum, generates inquiry, avoids generalities (that sound like any other business), and stimulates discussion.
• Edit your pitch to about 75 words (or 30 seconds, more or less). Remember that this is a distillation of your core business.  You can convey more dimensions of your business during follow-up conversation. That’s when concise anecdotes (case study summaries) and salient talking points become brushstrokes for your complete brand picture.

THE WHOLE STORY: BRAND TALKING POINTS

• Include input from your executive team, managers, board, or other relevant stakeholders – everyone should be on the same page and tell a consistent story.
• Make sure that the points reflect your mission, vision and values statements, and convey your best core competencies and most successful outcomes.
• Like a good story, edit the talking points to convey the essence (not minute detail) of how your organization meets challenges and solves problems.
• Use brief anecdotes and case studies when appropriate – specific, colorful examples always help demonstrate a point.
• Avoid statistic overload – a few exceptional numbers capture attention, while too many numbers dilute the overall impact
• Work with your communications team to practice delivery and Q&A.  If media will be present, the communications team will brief you accordingly.  If you don’t have a communications team, use your managers or executive team to anticipate questions and practice response scenarios.

1. Be prepared.  The more you know how to articulate your content, the more confidence you’ll convey.  Memorizing the basic elevator speech is good, but be fluent enough to improvise based on the audience and situation.  Agility is vital.  Preparation includes practice!  Be sure to include practice answering hypothetical and challenging questions.  Don’t pull punches.  Be objective and assertive when challenging yourself.
2. The handshake is often underestimated and, like eyes and body language, it triggers a first impression.  Make it a firm and brief shake (don’t oversell), with direct eye contact.  The handshake also signals time for you to listen carefully to the person’s introduction and perhaps their elevator speech.  It’s your moment to get a sense of your audience.
3. Maintain eye contact.  DiVinci said it best: “The eyes are windows to the soul.”  Studies reveal that first impressions are formed within the seven seconds of contact, and opinions are formed within minutes.  Your authenticity will project (or not) from your eyes – it’s subconscious but very real.  If you’re bored, the best written elevator speech can fail. Unless you’re a highly polished and expert salesperson, it’s difficult to hide your feelings when you have solid eye contact.  (Of course, eye contact etiquette and introductions vary with different cultures.)
4. Define when to emphasize key words and phrases, and when to fluctuate your volume.  When memorizing or practicing, underline what you want to emphasize.  Be selective.  Everything can’t be emphasized.   Volume can become an irritating din if the level never varies (even if it’s a good level).  Would you want to hear or watch a story with one energy, one pace, beginning to end?
5. Apply the Three P’s – Punctuate with Powerful Pauses.  Know when you’ve made a point that should sink-in for a moment, or when you’re building anticipation for the next sentence.  The well-placed pause can have as much impact as the best information you can imagine.  It’s a visceral impact – personal delivery communicates on an emotional level first and an intellectual level second.  Effective pauses help to sustain connection.
6. Show your passion and personality.  If you aren’t inspired by your content, and if you don’t deliver it with personal conviction, it simply won’t work.  You must generate emotional chemistry.  Conversely, if your enthusiasm appears to be affected or obligatory, you’ll seem like a game show host.  Be an authentic true believer.
7. Visualize successful images of your organization or it’s accomplishments.  Specific images are best.  This requires practice over time, but it will produce results – what you visualize can fuel your attitude and drive your delivery.

It’s said that the object of art is to give life a shape.  Your brand story is art for giving shape to your organization.  Actively champion your brand with an articulate plot and colorful characters.  Rise above the competition.  Get prepared.  Practice.  Tell your story, then your elevator speech will have full impact.   

As a consultant and executive with my formative background and education in human resources management, I typically have a semi facetious response to executives and business owners who ask me what differentiates great companies from "good companies". My response is "It is the people, stupid!" The organizations with the best people aligned in the best way always win. This is especially important to those you running small businesses, where every hire is a critical hire!

So how do we define the best people? I have a couple of recommendations for my clients.

• Identify Key Attribute for Success and Hire "Right"
• Incorporate Responsibilities Into All Job Descriptions
• Provide Appropriate Training
•  "Retrofit" Skills and Attributes of Existing Staff
• Coach and Mentor

So what do I mean by all that "HR stuff"? Very simple, I want everybody on my team to share some common attributes:

• Commitment To The Team
• Ability To See The Big Picture
• Ability To Learn And Share New Skills
• Listening For Key Information

If they can’t or won’t do these things or lack these attributes, I don’t want them on my team – period.

There are reasons why I have focused on attributes rather than skills. You have probably heard some of these before but they bear repetition.

• You can teach smart people to do almost anything!
• It is hard to teach people to be smart!
  
• People who are committed to your mission will reflect it!
• Changing people’s core values is very hard!

Again, in my sarcastic way, I have compared trying to violate these "truths" to trying to teach your dog to sing. It just exhausts you and it pisses the dog off.

People who know me would tell you that patience is not always one of my most noticeable virtues. However, when I have been called in to "retrofit" a number of cultures, I believe there is a very respectful way to go about doing that – a way that requires patience to bring about the desired changes. I believe that companies have the right to define their cultures as long as they do so within the context of the law and are respectful to all employees.

While businesses and most organizations are not democracies, I do suggest to all business owners and leaders that, beyond the attributes that I mention above, they need to ensure that everyone in a leadership role either possesses or is trained in some key skill sets:

• Establishing Clear Performance Expectations
• Giving Periodic, Constructive, and Clear Feedback
• Taking Appropriate Corrective Action

I can honestly tell you that, if 90% of management had mastered and demonstrated these skills on a consistent basis, at least half of the management consultants in the world would be unemployed. You will notice that none of these skill sets address technical skills like financial analysis, marketing, etc. That is not an oversight. Technical skills are task competencies and can be taught. You can have excellent technical skills and be an awful manager. If you don’t believe me, ask staff if they would rather work for a manager who consistently performs my list or a manager who is technically "gifted."

I believe that employees have an absolute entitlement to four and only four things-

1. Respect For Individuals
2. Clear Expectations
3. Meaningful, Balanced Feedback.
4. Equitable , Clear Reward System

People have said to me "What about empowerment and development, and mentoring?" I think those things are awesome and contribute to growing organizations and

reinforcing commitment, but the first four are absolute entitlements that form the basis for the others.

I also encourage clients to "re-recruit" existing staff using the following model:

• Train Current Staff Must On New Competencies And Expectations
• Compliance Works Short Term But Commitment Is Essential For The Long Term
• Retrain, Re-Assign, or……..
• Remember WIIFM (What’s in it for me!)

In the long term, you simply cannot tolerate performance that won’t or can’t meet your expectations. Asking or forcing people to leave your organization is hard on them, on you and on their colleagues, but leaving them in a role where they are not thriving or happy is worse. That’s why I suggest we hire right up front. If you do you reap the rewards.

In the words of Jack Welch- "If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don't have to manage them."

Now you have to admit, that it is a pretty exciting thought!

Mark F. Herbert is a principal in the consulting firm of New Paradigms LLC. He has over 30 years of experience as a corporate executive and consultant specializing in optimizing organizational performance. He speaks and writes frequently on topics related to human resources management, organizational development, and executive and managerial coaching. He has developed and implemented a management system called Compliance to Commitment ™ that has seen significant measurable results in multiple organizational settings. His first book, Managing Whole People will be published in the fall of 2008. He can be reached at mark@newparadigmsllc.com or www.newparadigmsllc.com  

By Jane Applegate

By now, you know the sky is falling and the economy is in a tailspin. But successful small-business owners always find the upside of down times. In these challenging times, you have a real opportunity to shine—especially if your competitors are cutting back on promoting their products and services.

Here are some cost-effective marketing tips to boostmorale and profits:

1. Ask for discount advertising rates. Newspapers, radio and cable television stations are selling a perishable commodity and need to keep the cash flowing. Many newspapers will discount ad rates at the last minute, so be ready to send your ad over just before deadline. Ask for a better rate for all forms of ads; you have nothing to lose.

2. Cut through the email clutter by sending an old-fashioned letter to current and prospective customers. Save money by purchasing several hundred 41-cent “Forever” first-class stamps before the rates go up again in May. Offer a discount on certain products, free shipping or a two-for-one promotion with a short expiration date. Use this mailing as a way to update your database. It pays to use a first-class stamp because if you do, the post office will return undeliverable mail and note address changes. Bulk mailing doesn’t provide this service. Plus, your customers and clients will appreciate receiving a piece of mail that isn’t a bill.

3. Sign up to participate in a local trade show, community fair or charitable event to generate free publicity. Rent a booth and show off your products or services. If you sell a food product or beverage, give away free samples. (You can also hire in-store demonstrators to promote your products year-round). If you have a retail store or are located in a building with foot traffic, put out a big, brightly colored barrel or basket to collect clothing or nonperishable food for a homeless shelter. My mother asks local businesses to ask their customers to donate soap, little bottles of shampoo and bath gel from hotels. She and her friends pack them into colorful party favor bags. They add a disposable razor, a toothbrush and toothpaste, then donate hundreds of these “personal care kits” to a shelter for battered women and a church program for homeless men. The local newspapers love stories like this.

4. Turn your best customers into salespeople. Don’t be shy about asking your customers or clients to recommend you by making an email introduction. Volunteer to draft the email. Be sure to include a link to your company website and your contact information and ask them to send you a copy of the message. This way, you can follow up directly a few days later.

5. Get on the horn. Spend at least an hour a day calling current and former customers. These aren’t cold calls because you know the people. It’s a good way to reconnect, and you may generate new business. If your contacts have changed jobs, ask for current information so you can keep your contact list current. We do business with people we know and trust. It doesn’t matter what company they work for. Leave detailed voice mail messages. Even if they don’t call back, you’re back on their radar.

Jane Applegate is the founder of The Applegate Group Inc. (www.theapplegategroup.com), a multimedia communications company specializing in the small-business market. She’s the author of four books on small-business success and a popular keynote speaker.

By Rieva Lesonsky

I have spent much of the last 22 years of my life advocating for women business owners. In the course of my career at Entrepreneur magazine (where I was the editorial director for many years), I started three magazines aimed at this market—and for various reasons all of them failed. I also helped Entrepreneur.com launch its website for entrepreneurial women, and I have given dozens of speeches to people like you.

And now I’m one of you. I recently left my job of 26-plus years at Entrepreneur to launch my own business, a marketing and communications company helping the country’s major business marketers better serve the needs of entrepreneurs.

All of us entrepreneurial women (I am so excited to be able to actually call myself that) have different reasons and motivations for going out on our own. Although there were many successful (and legendary) women business owners in “the old days,” women-owned businesses truly started taking off in the 1990s.

While a horrific economy propelled a lot of women out of recently attained corporate jobs into businesses of their own, another factor was the infamous glass ceiling. That ceiling definitely existed then and, sad to say, it still exists today. I recently read that younger women in college think the glass ceiling no longer exists, even though female college grads earn less at graduation than young men. In fact, working women aged 25 to 34 make 88 percent of what men in that age group do. While that may be progress, it is simply not good enough.

As a result, many women quickly figured out that the path to equal (or better) pay doesn’t lie on the corporate ladder, but in taking charge of their work lives and running their own businesses. I think that’s a lasting legacy from my generation of women—the baby boomers.

The beauty of entrepreneurship is it’s more or less customizable. As the owner of the business, you get to decide what you want to do and when you want to do it. Of course you need to be realistic—you’re not going to make millions working part time (especially at the beginning).

Now that I’m one of you, I can better understand your concerns, challenges and fears because I’m facing them myself. But I’m trying to heed the advice I’ve given over the years— here’s the abbreviated version, the 4 P’s of success: Follow your passion; plan; stay positive; and be persistent.

And I’m going to add one more here, even though it’s not a “P”: Help other women. Back in the ’90s, at the beginning of the entrepreneurial women’s revolution, a successful woman business owner asked me why should she help aspiring entrepreneurs when no one was there to help her. I told her that was the wrong attitude. And that’s still true today. I strongly believe we women owe it to ourselves (and our daughters and granddaughters to come) to help one another succeed. As Madeleine Albright, the nation’s first female Secretary of State, said, “I think it’s important for women to help one another. There is a special place in hell for women who don’t.”

Rieva Lesonsky is CEO of SMB Connects and Editorial Director of Moran Media Group. She can be reached at askrieva@gmail.com

By Melanie Schutt

Diane James’ floral design skills were in demand long before she started a business. James created artistic silk flower arrangements as a hobby, and friends began requesting her designs for their own homes. One friend suggested that James provide a floral arrangement to auction off at an upcoming fund-raising event. The item sold for $1,700, and the woman who purchased it asked for 11 more. Other attendees inquired about her services. That was James’ first inkling that her hobby had business potential. A decade later, Diane James Designs Inc. is an international enterprise.

James’ standards of quality led her to discover an underserved consumer niche. She grew up “surrounded by flowers” with a mother who loved gardens. After her family moved to Europe, she attended flower arranging classes in both Belgium and London. She continued creating fresh bouquets when she returned to the US, but also wanted floral décor with more durability. At the time, James found that silk arrangements had a poor reputation. With her design background, an artistic approach and top quality materials, she initiated a high-end market for “decorative florals.”

An opportunity with Bergdorf Goodman indicated this market’s promise. In the spring of 1997, an acquaintance was marketing vases through the store and asked James to contribute floral designs for in-store displays. The vases were top sellers, and customer feedback revealed that many shoppers were purchasing the items because of the flowers. Bergdorf Goodman asked James to create her own line. That same year, the first Diane James Designs collection was introduced, and the collection quickly sold out in two weeks.

James had more demand than she could single-handedly supply. She was handling design, production and administrative functions from a 10 x 20 foot room. To grow, she would need staff, a larger space and business advisors she could trust. Her daughter Cynthia James Matrullo came on board to help manage operations. One of her early tasks was performing an industry analysis and identifying target markets. Orders continued coming in, and Carolyn James McDonough, Cynthia’s twin, joined the team a year later.

“Small businesses learn by doing,” McDonough says. Their initial strategies and target clients changed along the way. To finance growth, they formed a relationship with a local bank that understands small-business needs. Most recently, the team developed a comprehensive plan for the future.

McDonough explains their expansion strategy as “extending the Diane James aesthetic to other home accessories.” New additions include decorative spheres and sculpted flowers.Diane James vases and signature candles will complement the existing collections. The family views their products not just as individual pieces, but as important contributions to a room’s environment and visual appeal. “We’re creating something that people connect to emotionally,” McDonough says.

Today, Matrullo and McDonough are vice presidents running the Norwalk, Connecticut-based business while James focuses on design. Diane James products are available in 32 states, Canada, Japan and England, including Fortnum & Mason in London and 39 Neiman Marcus locations.

At this level of success, James still appreciates the day-today work experience. “I’m doing something I love and working with people I love,” she says. “It doesn’t get better than that.”

Melanie Schutt is a freelance writer and marketing consultant based out of New York City.

By Tim Keane

For most businesses, cash comes from a variety of sources—the best source being sales revenue. Managing cash is a critical function for all of us with new or growing ventures. This is especially true when we have revenue, but our cash flow is at or below break-even.

Here are five tips garnered from long experience in the cash-flow trenches:

1. Use your business model to build an early warning system. A business model reveals how your business plans to make money. It incorporates all of the assumptions you are making about your business. You can easily check frequently to make sure the timing and amount of your assumptions are accurate.

Those assumptions include:

• How much you will spend to make your product or provide your service, and whether you make a big investment in the systems needed to do it yourself, or pay a vendor to do it for you;
• How much profit margin you will make on each sale;
• What price you will charge relative to others in the market;
• What your operating expenses are; and
• What your operating income is;
• The timing of all of these activities—how long it takes to make your product or provide your service; how long it takes to get orders; the customer repeat rate; and so forth; and
• A break-even calculation that tells you how many units you must sell to have neutral (that is, breakeven) cash flow.

From this data you can chart the amount and timing of cash requirements. This is the central financial management skill for both startups and growing ventures.

2. Burning the boats is almost never a good idea. Every entrepreneur is faced with a choice: making do with less, or swinging for the fences. “Burning the boats,” by spending more cash than is prudent and leaving you little or no margin for failure, is very risky. If the business model is proven and the input of cash at this level will create real growth, fine. But it’s a rarer situation than most of us think.

3. When seeking cash, match the source of cash to the risk associated with the investment. Banks don’t invest; they lend money at low rates, and they expect to be repaid. Investors seek opportunities to take more (apparent) risk than a bank—and earn a higher rate of return. If you have a bankable business, then debt is your best source of cash. An honest investor will be leery of a situation in which the return opportunities seem much higher than they need to be based on the risk.

4. Clearly understand your biggest source of cash—the customer. You need to know, directly, what the customer is thinking, how well satisfied they are with your product or service, what else they are considering, and if their repeat purchase rate is going up or down. Get this information yourself, not from someone else in your company. There’s no cash management substitute for firsthand information about the biggest source of cash most of us have.

5. Make everything possible an indirect cost. There will be plenty of time to build a factory or hire more people—after your business model is proven. In the meantime, wait until objective proof exists of your business model’s performance. Then, and only then, investigate ways to use capital investment to lower per-unit costs.

Keeping these five principles in mind will help keep your cash flow steady and your business growing.

Over at Vosges Haut-Chocolat in Chicago, exotic and delectable truffles are packed in elegant purple boxes made from 100 percent recycled paperboard. White sun shades hang from office windows to reduce air-conditioning bills in the summer. Printer cartridges always get refilled— not thrown out—and junk mail finds another life as paper for printers or packing material once shredded. Employees are offered incentives for riding bikes to work, and organic ingredients are used whenever possible. And in the next year or two, the company will achieve its biggest environmental goal yet: opening a LEED platinum manufacturing facility that will be 100 percent off the grid and generate almost no waste.

To be sure, running a green business is a top priority for chocolatier and founder Katrina Markoff—but it wasn’t always that way. Though she launched in 1998, it wasn’t until about two years ago that she decided it was time to extend the commitment she had to environmental issues in her personal life to her business. “I just kind of slapped myself in the face,” says Markoff, 34, who projects sales of $20 million this year. “I was like, I can’t be a hypocrite anymore. I have to apply the same principles to my business.”

Many entrepreneurs today are thinking the same thing but are held back by cost and other concerns. “There are a lot of preconceived notions with businesses,” says Rebecca Kinnestrand, senior associate with Cascadia Consulting Group Inc., an environmental management firm in Seattle. “When I walk into businesses, they think that green costs money. On the contrary, going green often does not cost money. Even if it does have a little bit of capital outlay, it has a very quick payback.” And, she adds, it’s incredibly easy to get started.

Reduce your carbon footprint. Buying environmentally friendly company cars is a start, but you should also encourage employees to carpool, take the bus (you can provide free passes), ride their bikes or even telecommute one day a week. “It really makes a difference for those people not to be on the road that day,” says Kinnestrand. In terms of lighting, install motion sensors, dimmers and timers so lights turn off when not in use.

Purchase earth-friendly office supplies. Some examples include used furniture; mugs instead of Styrofoam cups in the break room; Energy Star appliances; paper, folders and other office supplies made from recycled materials; nontoxic cleaning supplies; and “green” packaging for your products. Instead of water bottles, install a water filter in the office.

Take a serious look at your paper consumption. According to the Environmental Defense Fund, paper and pulp is the third largest consumer of energy. So don’t just recycle paper, buy recycled paper—and use less of it. Print only when necessary, widen the margins of your documents and use both sides when printing.

Green your tech. Unplug BlackBerries, cell phones and other gadgets when they’re done charging, turn off monitors when you and your employees leave for the day, and recycle old PCs properly. When buying new ones, choose energy-efficient products.

Experts agree that before long, the expectation will be that all businesses are green businesses. “It will just simply be the way that business is done,” says Kinnestrand. “There is just no way that a business can remain on the track of the oldschool thinking.”

Charlotte Jensen, a journalist in Orange County, California, specializes in business topics.

I recently wrote an article on the effectiveness and importance of executive coaching as a tool for business growth. My premise in this article was that just like successful professional athletes I believe that business people can benefit from working with the right coach.

I have had a number of inquiries as a result of my article as to whether or not "certification" of a coach should be a critical criterion in the selection process. That caused me to pose that question to my "network" and I received a number of interesting and illuminating responses. I actually asked the question regarding two professions that are highly interpersonally related and that are seeing a definitive movement towards certification, Human Resources and Coaching.

While you could say simplistically that the answer is "it depends", I think there is a more definitive thread in what I received.

Although almost everyone agrees that a certification is not a guarantee of effectiveness or relevant experience in a particular setting it does provide a few key indicators:

• The person has committed themselves to a course of study and education to improve or form a "baseline" of skills in their chosen profession.
• They will have at least been exposed to the fundamental competency areas that are part of the profession.
• They will in all likelihood have been required to possess some experience, passed an examination, or received training in their area; potentially all of the above.

It is also true that all "certifying" institutions are not the same. There are organizations which apply the standards and requirements with a great deal of rigor- some examples would be a Certified Public Accountant or Professional Engineer.

I will suggest these guidelines for you if you are seeking out the services of either a "coach" or human resources professional:

• When in doubt check with references and ask for referrals from colleagues who you trust and respect and who has had occasion to utilize similar services.
• Certification may be a good first screen- especially in areas where the person’s qualifications and experience in their field are not immediately obvious to you.
• Check relevance not only to their profession, but to your situation. The person may be highly competent in their chosen field, but may not possess an appropriate understanding of your business or requirements.

At the risk of alienating huge numbers of various professions I have also determined some other helpful experiences.

• Professions like teaching or counseling do not automatically translate into effective coaching and/or human resources professionals. In some cases they may possess the "people" skills, but not the "technical" skills.
• The practice of law, even employment law, is not a direct substitute for human resources experience. The law is primarily about compliance and interpretation. I once had a colleague who was a very successful attorney state," I can tell you whether or not it is legal, I can’t tell you how to make it work in a practical application."
• "Liking "people is not a guarantee of effectiveness as a coach or human resources professional. In fact both of these professions are about increasing successful performance; either personally, professionally or both. This means holding people accountable. They don’t always enjoy that process.

In the absence of personal knowledge or a strong referral certification is an excellent tool to narrow the field, just don’t assume it is a guarantee.

Mark F. Herbert is a principal in the consulting firm of New Paradigms LLC. He has over 30 years of experience as a corporate executive and consultant specializing in optimizing organizational performance. He speaks and writes frequently on topics related to human resources management, organizational development, and executive and managerial coaching. He has developed and implemented a management system called Compliance to Commitment ™ that has seen significant measurable results in multiple organizational settings. His first book, Managing Whole People will be published in the fall of 2008. He can be reached at mark@newparadigmsllc.com or www.newparadigmsllc.com  

By Kathleen Moran

Is the clutter in your office getting in the way of your success? An organized, peaceful work environment is essential not only for your day-to-day business activities, but also for your well-being. Eliminating office chaos will improve your overall workflow and productivity. Whether you are working out of your garage, at your dining room table or in an office, make sure you have an effective clutter-busting system in place.

Here are five basic rules to keep your office clutter-free.

1. Clean out. In order to work at your desk, you need to see it. A messy desk will clutter your mind with too many distractions, and you’re more prone to losing important papers or being unable to find them when you need them…like when your biggest client calls. Remember this rule: Messy desk =stress.

The same tenet applies to a messy office. If you moved into your new office five months ago, it’s time unpack those boxes in the corner, and hang the pictures leaning against the wall.

2. Everything in its place. Set up a filing system. Instead of letting papers pile up on your desk, file them as soon as you are done with them. Some documents can be filed electronically, saving space and eliminating paper waste. Use baskets, containers and shelving. Arrange reference guides neatly on a bookshelf. Keep today’s “to-do” pile in a basket on your desk. If you’re one of those people who needs to have papers “in your face” or you forget them, use an upright file holder on your desk, or a wall-hanging folder holder, to keep folders corralled so you don’t have piles all over your desk. Place a wastepaper basket or shredder within arm’s reach so you can discard unneeded papers right away. When you have dealt with something, either file it properly or throw it out immediately. Apply the “everything in its place” principle to your office, and you’ll never be searching for the stapler again.

3. Keep it ergonomically correct. Ergonomic design focuses on designing a workspace to fit your body’s needs. If your chair is uncomfortable, you will tire sooner and won’t be working to your full potential. Invest in a good chair that’s adjustable to your height and has proper back support. Make sure your computer setup doesn’t put undue strain on your neck, shoulders or wrists. Your elbows should be at a 90-degree angle when you type; your computer screen should be angled so you don’t have to strain your neck either up o downward to read it. Use a pullout keyboard tray under your desk for your keyboard, if needed. Make sure your office is well lit, both overhead and task lighting such as a desk lamp for reading. Position your computer screen so it is free of glare from the windows. Provide an ergonomically correct workspace for each employee, as well.

4. Keep your computer clean. Just as a clutter-free office runs more efficiently, so does a clutter-free computer. Run maintenance programs on a regularly scheduled basis to debug your system and purge unwanted files. Keep your security software up-to-date to prevent viruses and potential hackers from gaining access to your files. Streamline the look of your office by controlling loose cords. In addition to being aesthetically unappealing, this can cause safety hazards such as tripping or electric shock. Your office supply store has many options for bundling cords together to keep them neat and out of the way.

5. Be consistent. At the end of each work day, leave your work area organized. Put everything back in its proper place. Take 10 or 15 minutes before you leave to organize your workspace. The next day, you can start with a clean slate and focus on seizing the day.

Kathleen Moran is an interior designer and workspace organization expert. She can be reached at katmo66@mac.com.

By Cassie Kreitner

Entrepreneurs seeking new and innovative ways to distribute their products and create more revenue should consider QVC, the world’s leading home shopping network and online retailer.

For those whose products match QVC's customer-focused principles of quality, value and convenience, QVC can be a new channel of distribution for a company’s product line. Showcasing products on QVC can expand awareness of your brand dramatically, as the channel's 179 million phone calls and $7 billion in net sales in 2006 illustrate.

Tarte Cosmetics, a New York City cosmetics company that focuses on healthy products for the skin, partnered with QVC in 2005, almost five years after its products first debuted in stores.

Founder Maureen Kelly decided to expand her product line to the home shopping network after she realized “it’s a way of exposing my brand to millions of women at once. It’s also an incredible outlet because I get to tell my story without having it watered down or changed in any way,” she says. “I also get to reach a larger and more diverse audience.”

Before agreeing to the partnership, Kelly wanted to make sure her brand would be able to handle the inventory and operations changes that would occur once Tarte was introduced on QVC. Since the channel is so large in scope, she knew that the brand’s reputation would be at stake if something went wrong. “We didn’t want to mess up,” she says.

Today, Kelly typically appears on the channel twice a month to promote Tarte, while the QVC website also features over 80 Tarte products that can be purchased online. Tarte, which is sold in department stores, high-end boutiques and beauty stores, takes advantage of the wide audience and demographics of QVC viewers. Since the channel reaches approximately 96 percent of all U.S. homes with cable, women who might not have access to Tarte products in stores are now able to purchase them through QVC, where the audience is typically older than Tarte’s in-store customers.

QVC is such a lucrative opportunity for any company because it doesn’t charge a fee to evaluate a product or sell airtime to promote it. If a product is chosen to appear on the channel, a minimum purchase order of $30,000 to $35,000 per item at wholesale cost is placed.

With a set format of one product selling for eight minutes, or eight products grouped together in a one-hour segment, it is easy to see how quickly sales can add up on QVC. The company website says it is interested in products that are “highly demonstrable, solve problems, make life easier, appeal to a broad audience and have unique features and benefits [that] are of interest to QVC.”

Beyond beauty products, QVC can help any small business succeed. Over 1,600 products are featured each week, with themed hourly programming targeting different audiences. Product searches are conducted multiple times annually to evaluate new products that will continue to attract an “upscale discerning, and loyal customer base” to QVC and QVC.com.

Cassie Kreitner is a freelance writer in Syracuse, New York

Jennifer Walzer of Backup My Info! a company that sells hosted backup services to businesses, always tells me that her number-one concern is her employees. She says her employees’ number-one focus is Backup My Info customers. This is powerful. Unfortunately, many business owners don’t follow Walzer’s lead of pouring their primary energy into employees. If you have great employees who feel empowered, challenged, loved and happy, they’ll take care of your business and work to ensure your customers are taken care of.

A few weeks ago I sat down with Paul Albright, general manager, SMB and CMO for Success Factors, a company that sells HR and employee management software. Paul helped me understand the power of technology in managing and building a motivated and dedicated team of employees.

There are many components to building the right pool of talent. Much of it does not involve technology. However, technology can surely aid in retaining employees.

For instance, consider performance reviews. If your performance reviews are scattered in a variety of paper files, even if they are in nice and neat folders, you can’t get a transparent and global view of your employees the way you could if this data was systematized.

As your company grows from five to 50 employees, or from 50 to 100 employees, you’ll need a tool that can help you keep up with growth and manage employee performance.

Using technology to help you manage your employees means that good employees rise to the top and are clearly visible–you know who to promote. It also means employees who are not so good also become clearly visible, so you know who needs more training, needs to be reassigned or needs to be let go.

Project management software tools ensure each project is on time, profitable and aligned with your business goals. Employees are no different. You need to ensure that your goals and vision for the future are aligned with your hiring policies.

Part of ensuring that great employees are acknowledged and rewarded is giving employees (and others) the ability to praise or acknowledge other employees. An employee management tool makes this not only possible, but also easy to do. Imagine any employee being able to tell management what a great (or not so great) job a colleague has done.

According to Success Factors, performance and talent management software provides a holistic approach to maximizing your company's potential by helping your employees realize theirs. It encompasses a set of technological solutions and processes that help you:

• Identify your talent needs, your best applicants and your star players.
• Align employees' goals with the organization's goals.
• Evaluate performance, coach people to improve over time, and reward excellence.
• Eliminate favoritism and politics from the compensation process, increasing employees' commitment and engagement.
• Build motivation by giving employees responsibilities and challenges that spur them to higher levels of performance.
• Link succession planning with career planning and create a shared vision of an exciting future with your employees.

Some employee management software programs to consider are those from Halogen Software (halogensoftware.com), iEmployee.com, Softscape (softscape.com) and Success Factors (successfactors.com). Take the time to think about your needs and what you are seeking in an employee management tool. Then carefully assess what each software tool can do for you. The right performance and talent management program can help your business outperform the competition.

Ramon Ray is editor and technology evangelist for Smallbiztechnology.com.

By Julie Moline

Business travel used to mean being out of touch—with the office, with the family, with the world. Now the lives of road warriors everywhere are made more productive with electronic devices that help you communicate, work and network (with people and with technology) while you’re away. Here are a few new, very clever, products to keep in mind:

Virtual keyboard. This gadget is not only the salvation for sore thumbs everywhere, but is also incredibly cool: The i.Tech Bluetooth Virtual Keyboard uses a laser to project a full-size QWERTY keyboard onto a flat surface. There are even sound effects (clicks) so you know when you’ve successfully tapped the key you want. (You can also adjust the device to accommodate your typing style—feathery, pounding or in between). The unit is light (3 oz.) and connects to a compatible Bluetooth-equipped computer, PDA or smart phone. For pricing and other information: virtual-laser-keyboard.com.

Converged device. ASUS, a brand name well known in Asia, has just launched its first product in the US : the P527 GPS smart phone. Smart is right: it won the Innovation, Design and Engineering Award from the Consumer Electronics Show in January. Besides combining a cell phone, navigator and PDA in a slim (candy-bar) form, there are two noteworthy features for road warriors: Travelog, which lets you record travel routes, and Location Courier, which sends your GPS position to five preset phone numbers in case of an emergency. Other features: a 2.6-inch color screen and alphanumeric keypad. For pricing and other information: usa.asus.com.

Networking tool. Go to a lot of conferences, conventions and trade shows? Spotme is a handheld, wireless communication device that combines an RFID card reader, positioning technology, color screen, keyboard, and a wireless microphone and speaker. Meeting-goers can use it to keep organized via personalized agendas, meeting scheduling and electronic business card exchange. Have trouble matching the name with the face of the dozens of people you’ve just met? You can browse the participant list by photo. Looking for a group of people with something in common? Enter a few keywords in a text box, and Spotme returns a list of participants that match those key words. For pricing and other information: shockfish.com.

Universal Charger. Portable electronic devices make you more productive—unless they run out of juice. To keep the various gadgets you carry charged, consider the MFUEL Universal Power Bank, an external battery pack that can boost a laptop’s run time up to 12 hours (so useful on long flights) and a cell phone up to 100 hours (so useful when you never know when you’ll find a conventional plug). There’s a car charger adapter, and 27 hot tips that double as power and data transfer cables. Travel internationally? Another adapter lets you charge and power your electronic devices in 120 countries. For pricing and other information: mfueldirect.com.

Portable Internet device. Think of the chumby as a way to access your favorite Internet sites without touching a laptop. A little bigger than a coffee cup, the chumby uses a Wi-Fi connection to deliver whatever Web-based content you want: streaming Internet radio stations, custom “alarm tones,” news, weather and entertainment. You can also use it to share photos, widgets and e-cards with family and friends. CBS, MTV Networks, MySpace, The Weather Channel Interactive, AOL’s SHOUTcast and Scripps Networks are now all offering content through the Chumby™ Network. For pricing and other information: chumby.com.

Julie Moline, is a freelance writer, editor and editorial consultant in New York city.

• Handling or managing change
• Working well within a team environment
• Interpersonal relationships
• Developing or enhancing "executive" presence (speaking ability, communications, etc).
  

You can see just in the target skills that the type of coaching has a huge role in selecting the right resource and the coaching plan.

Why Entrepreneurs Need Coaching
Whoever coined the phrase "It’s lonely at the top" must have had the entrepreneur in mind. It doesn’t get any lonelier. You are the business is many cases. You have direct reports, family, maybe even a board; but there is no "organization" to hire a coach for you if you need additional resources, or even to require or suggest you might benefit from coaching. You face the same issue as the "corporate" CEO; you just don’t typically have access to the same resources.

I have found most the successful entrepreneurs that I have worked with to have a number of characteristics in common; they are visionary, driven to the point of obsession, have a high need for control, and in business dealings may tend to be more loners. They have built the business from the ground up. They made the decisions and founded the key relationships.

Skills like delegation, collaboration, and "process management" do not come naturally to them. They will seek advice from technical advisors like accountants, attorneys, and the like, but many of the "business" skills that those of us learned in corporate America are not part of their experiential base.

I have seen them struggle with things like delegation, selection of staff, succession planning, and team or collaborative based decision making. Bluntly, many of the "technical" advisors have limited experience outside of their core competency areas. The relationship between them and their clients grows from trust and time, not always broad expertise. I find their advice tends to be biased from their area.

I will freely admit my "core competency" is in the management of people. I have designed hundreds of human resource management systems with the elements of hiring, selection, training, performance management and related skills.

As an entrepreneur and C level executive I was also required to broaden my skill set to include other functional skills like marketing, finance, sales, etc. Because of my corporate experience I am comfortable reaching out to others with technical skills in those arenas. That makes me in my experience a bit of an anomaly as an entrepreneur.

As businesses move forward and evolve you will find it is critical to do several things:

• Recognize and link your "human" processes and business results
• Develop and strengthen relationships with your "team", including succession planning for yourself and other key staff.
• Be able to clearly articulate your personal mission and vision, especially as the business grows and becomes less "personal".
• Create feedback opportunities for your staff to discuss with you both their needs and your "opportunities for development."
• Delegate portions of your responsibilities to allow you to move to the "30,000" foot level and focus on the long term success of your business not the day to day.

Annika Sorestram, Tiger Woods, Venus Williams; besides being world class athletes, what do they all have in common? They all have a coach.

I also believe that in smaller or closely held businesses some of the issues targeted by executive coaches are even more critical. In the small organization every hire is a key hire, every decision is a key decision. A significant erroneous business decision doesn’t mean I don’t get my "bonus" it means I might lose my life savings and my home. I have found from personal experience the "golden parachute" I have from my business seems a little more like it was constructed from that liner in chewing gum wrappers.

Another interesting note for those of you that like statistics-

• A return on investment study from Fortune 1000 companies showed an average of a 600% return on the dollars they invested in executive coaching. They saw specific improvements in productivity, quality, organizational strength, and customer satisfaction.
• Another study showed a 529% ROI directly attributable to coaching and other intangible benefits. When they included the savings from decreased turnover the number was 788%.

I don’t know about you, but those are the kind of numbers that get my attention, and my bankers, and my accountants!

So in conclusion I think the case for "executive" coaching is pretty clear, the issue is hiring the right coach.

I won’t presume to tell you who the "right" coach is for you, but I will give you these tips.

First, two effective questions to ask prospective coaches:

1. What kinds of clients do you work with particularly effectively?
2. What kinds of clients do you not work with effectively?

The second tip I have for you, with apologies to the various entities out there that are "certifying" coaches, is what I and others believe are essential competencies in an effective executive coach. These include:

• They must be competent at coaching and influencing others. They must be self aware, empathetic, excellent listeners, and have the ability and willingness to give candid, balanced feedback in a nonjudgmental or confrontational way.
• They have to be trustworthy. You will need to be able to trust them with intimate, sensitive information about your business.
• They have to have at least a baseline understanding of your business and business in general. A coach with no experience in business practices, organizational "dynamics" and other areas won’t do you much good.
• They must have the integrity and strength of character to stand up to you, even if it means losing your business.

Mark F. Herbert is a principal in the consulting firm of New Paradigms LLC. He has over 30 years of experience as a corporate executive and consultant specializing in optimizing organizational performance. He speaks and writes frequently on topics related to human resources management, organizational development, and executive and managerial coaching. He has developed and implemented a management system called Compliance to Commitment ™ that has seen significant measurable results in multiple organizational settings. His first book, Managing Whole People will be published in the fall of 2008. He can be reached at mark@newparadigmsllc.com or www.newparadigmsllc.com

By Patti Fralix

If your company is like most today, you’re struggling with the challenges of managing a work force that includes more diverse generations than ever before. Different perspectives and goals among employees are further complicated because of the age differences between managers and employees. As a business owner, you can’t assume that employees of varying ages will understand each other or have the same perspectives and goals. In order to be successful, managers need to understand and value the differences, perspectives and goals of each generation.

Each generation has always complained about those in younger age groups. So the fact that there are differences in the generations is nothing new. What is new today is the magnitude of the differences. It is time to understand and value this diversity so that we can benefit from it. Today’s workplace requires successfully managing generations—and failing to do so can harm your business.

There are predominantly three generations coexisting in today’s workplace:

• Baby Boomers—born between 1946-1964
• Generation X—born between 1965-1976
• Generation Y (also referred to as Millenials or Echo Boomers)—born between 1977 and the present

The differences between the generations create many challenges in the workplace. These challenges can be negative or positive. It is the manager’s job to make sure that these challenges are turned into positives. Here are some of the most common differences between the generations and ways to make sure that each group’s talents are recognized, accepted and maximized.

Different Work Attitudes
One of the most common complaints Boomers are heard to make about Gen Xers and Gen Yers is that “they don’t have the same work ethic!” Well, they don’t, that is true. This does not mean they are not hardworking. What it does mean is that they place a different value and priority on work. While many Boomers have a love/hate relationship with work, Boomers consider work an end in and of itself. Not so for Gen Xers and Gen Yers. They work to be able to fulfill other, more important priorities. Although Gen Xers and Gen Yers are motivated by different things, both age groups need the following:

• Frequent communication, including being told the “why,” not just the “what” of projects and priorities.
• To be included, and not just in what affects them most directly.
• To have fun at work, with a capital “F!”

To motivate Gen Xers:
Make sure you provide the flexibility needed for them to manage their other priorities, such as dependent children, aging parents, and even educational endeavors. This flexibility can be as simple as providing schedule changes to accommodate these needs. Understand that these are needs, not wants.

Provide many opportunities for collaboration and teamwork. This is the generation that “fuels their fire” through teamwork.

Provide recognition in ways that connect with what they value the most. Some value handwritten thank-you notes for a job well done, while others are motivated by a tangible gift, such as flowers or gift certificates.

To motivate Gen Yers:
Provide Gen Yers flexibility in when and where work is done. Gen Yers resist what they see as rigid workday starting times. They do not understand why coming to work 15 to 30 minutes late is viewed by Boomers as irresponsible behavior. If you can provide technology that allows them to work at home one or two days a week, all the better!

Gen Yers are interested in change and challenge. They will leave a higher-paying good job for the opportunity to experience something new. They do not see their careers as needing to be linear, and they are right. Remember, these are workers who will have at least five different careers, not just jobs, over their life span. Their tenure in a particular job is often no more than two to three years.

Do not interpret their rebellious nature as negative. Let them vent, do not take it personally, and by all means, avoid “writing them up” for it. This is the generation that will challenge and change much of what needs to change in today’s workplace.

To motivate Boomers:
Boomers are typically motivated by position, power and prestige. Boomers are often traditionalists, and perks of the position matter. They want titles and authority commensurate with responsibility.

Allow Boomers to participate in associations and conventions that keep them professionally connected to their peers. Boomers are motivated by working together on professional projects in affiliation with others like them.

Compensation that is more long term, such as profit sharing and health care benefits including long-term care.

Different Loyalties
Boomers have always been seen as loyal to their companies. They feel a sense of belonging and dedication based on their history. This is not so for the Gen Xers and Gen Yers. They are more focused on the present and future. They do not see a problem in going elsewhere when another, better opportunity comes along. This is often seen as disloyal to their current company, but this isn’t necessarily true. Xers and Yers can be very committed to their work, although not to a particular job. They will do what is required—not because of a sense of belonging based on tenure or what the company has provided in the past, but because they find meaning in the work. They need to feel that they are making a difference.

How can you motivate a work force whose loyalty lies mostly within? The answer is simple, although the solutions are not always easy to provide. To motivate Gen X and Gen Y, directly connect the job to their interests, and make sure that they find meaning and fun (yes, fun!) in their work.

Providing fun in the workplace does not mean goofing off or wasting time. Examples include:

Provide regular work group outings, such as sports, picnics and concerts. Be sure that the social outings relate to the culture and interests of the coworkers. Make them optional; not all will be interested.

Celebrate successes, both work-related and individual. Throw a late afternoon party at a favorite watering hole when an important project is completed, or throw a party for no reason at all occasionally.

Be more creative than just a monthly birthday celebration. When someone in the group has an important moment, such as school graduation, new baby or new house, celebrate with them. Vary the celebrations, so surprises can accentuate the fun. Again, make these optional, so that those who do not want or need these types of activities are not made to feel they are not a part of the group.

Close the office unexpectedly an hour or two early on occasion, and send people home to play, to have their own fun.

Try some of these ideas for managing different generations differently, and you may be able to avoid the revolving door syndrome that is very costly in terms of advertising, recruiting, hiring, training and replacing your work force.

Each generation requires a different set of standards to motivate them at work. In order for a company to be truly successful, all generations in the workplace need to understand and value each other, even when their perspectives and goals are vastly different. Management plays a key role in how the different generations interact.

Instead of looking for a quick solution, spend some time getting to know your employees, focusing on their perspectives and goals. Then everyone will be in a better position to minimize the challenges of generational differences, and to capitalize on the strengths the differences can bring.

PATTI FRALIX, author of How to Thrive in Spite of Mess, Stress and Less, inspires positive change in work, life and family through speaking, consulting and coaching. She is founder and president of The Fralix Group Inc., a leadership excellence firm based in Raleigh, North Carolina. Fralix has spent the past 20 years providing practical solutions to audiences of all sizes. Contact her at pfralix@fralixgroup.com.

By David Levy

It’s a big day. Your printer just dropped off your bright shiny new product brochure. This is the big marketing push for the year. The mailing list is purged and clean. Your entire staff of five got in at the break of dawn, coffee in tow, to stuff, stamp and bag. Hope is high and you’re licking your chops in anticipation of the phone ringing off the hook and inventory flying off the shelves. It really is a good day.

On the way to drop off the mailing at the post office, your eye is drawn to the giant billboard of a competitor in town announcing a big sale event. Ouch! As you punch the buttons on the car radio trying to ease the frustration, you catch a local TV celebrity singing the praises of your chief nemesis, who is introducing their new core product, a niftier version of your best seller.

Suddenly, that shiny new brochure has lost some luster. That familiar feeling of frustration and helplessness creeps into your mind as it has for a long time. You ask, How can I compete when the big fish are outspending me 100 to one and dwarfing my marketing efforts?

If this story sounds familiar, that is not surprising. You are one of millions of small businesses competing with larger companies that have significantly more powerful marketing budgets and sales resources than you have. That is the reality of small business in America today.

But don’t despair. You have what it takes to outthink, outwit and outsmart those bigger competitors. Here are six ways to do it. Let’s get started right now.

1. Build a Board of Advisors.
A Board of Advisors (BOA) is anywhere from three to 10 people you know who have diverse experience in areas that can help your company grow. A BOA can provide great advantages over competitors who are relying entirely on their employees. An experienced and well connected BOA can help your business grow and prosper in ways you’ve never imagined.

Your BOA will help you make better, faster and more informed decisions. Collectively, the board should have deep experience, powerful resources and valuable contacts that can lead to new business opportunities. The BOA also acts as part of your sales team, touting the virtues and strengths of your company.

Your BOA can be particularly helpful in areas like marketing, operations, human resources, legal and finance. These are all areas where small businesses are generally weak due to the expense needed to staff such positions.

THE BENEFITS OF YOUR BOA ARE:

• Unbiased perspective from people you trust
• Provides powerful influence for networking and new business referrals
• Enhances community and public relations
• Added credibility for customers, vendors and lenders
• Helps you avoid costly mistakes
• Adds key skills to the management of the company
• Provides support for key strategic planning and decisions
• Lends a calm hand and knowledge in times of crisis
• Helps anticipate changes in the market and trends

Board members generally meet once a quarter for about 4 hours, and should be paid for their time. Very small businesses can generally get away with a meeting fee of $500 per board member. For midsize companies, the fee generally ranges from $1,000 to $1,500 per member. You need about three to five board members with a range of various expertise.

2. Become a “competitive intelligence” detective.
You can’t outsmart your competitors if you don’t fully know what they are doing. By taking the time to study your competitors and understand as much as you can about them, you can develop ideas for ways to differentiate yourself, and identify tactics to compete better and win business. Just by answering some essential questions, you will be amazed at how easy it is to see new paths and creative opportunities to gain a competitive edge. Answer these three vital questions:

• WHO ARE MY COMPETITORS? List them all.
• HOW DO THEIR CUSTOMERS PERCEIVE THEM? First, collect and make notes on all the marketing tools your competitors are using. Then, stand in the shoes of your target market and view that competitor from the customer’s point of view. Write down your observations and feelings about each of your rivals.
• WHAT COMPETITIVE EDGE DO THEY HAVE? Be honest with yourself and answer to this question from the customer’s point of view.

This effort will take some time but is well worth it. Enlist friends and family to help. They can “mystery shop” the competitors in person, on the phone or online. Get input from business associates, vendors and people in the media such as local newspapers’ business reporters. Your Chamber of Commerce, library, Small Business Development Centers (SBDCs) and trade associations are all excellent sources of information about competitors.

In order to easily compare and contrast your various competitors, create a simple matrix grid by listing the competitors vertically with the question categories along the top. Just fill in the answers and you will then have an easy-to-compare snapshot of each competitor.

3. Create your competitive edge.
Now that you have studied the strengths and weaknesses of the competition, coming up with ideas to take advantage of opportunities is limited only by your imagination. In business, you need to find ways to stand apart from the competition. Being different, in a relevant, meaningful way, is the foundation to establishing your competitive edge.

Since you now have a clear understanding of how your competition is perceived by their customers, how they market themselves and their products, and their competitive advantages, carefully consider what makes your business unique. Evaluate the benefits and strengths you provide to your clients and identify those that are different from and superior to your competitors. Or create new ideas based on opportunities you have identified that your competitors are not taking advantage of.

For example, your small size may enable you to be more nimble and provide better customer service or customize your offerings. Or you may have identified an opening in the market that your competitors have missed. Now you can take full advantage of your size and ability to act quickly and get the jump on your rivals.

Once you have pinpointed the reasons why potential customers should choose you over your competitors, and why current customers should buy more and remain loyal, you need to find clever, affordable ways to reach your target audience with your new messages, over and over again. There are a number of smart, inexpensive ways to accomplish just that.

4. Treat your customers like gold…and you’ll earn more gold.
It’s amazing how many companies look right past their current customers when they think about building their businesses. Growing any business should always start with its existing base of business—its customers.

It takes far less money and time to build a business with current customers than to find new customers. Think about this. If you learn your current customer retention rate and create a plan to increase that by 10 percent, you have just added 10 percent to your growth rate. Considering the high cost of promoting to and wooing new customers, centering your growth strategy on your current customers makes great financial sense.

Remember, you now know your competitors’ strengths and weaknesses. You have created new ways to get a competitive edge. Here are several good ways to let your customers know about these important new reasons to continue doing business with you:

• CONNECT WITH CUSTOMERS. Customers want to know you are thinking about them and care about what they have to say. Construct a simple survey to get feedback on your customer service, current products, special offers or new product offerings. Use the survey to send messages about your new competitive strategy. Or create a newsletter to share helpful information, new product offerings and specials, your press clippings and any other positive messages.
• MAKE COMPLAINTS WORK FOR YOU. When a customer lets you know they are unhappy, either in a survey, over the phone or in a letter, they are likely to complain to many others in their sphere of influence. Create a program to handle these complaints quickly and find creative ways to go the extra mile to win the client’s confidence again. If you do this consistently and satisfy the customer, they are actually more likely to remain a happy customer and to tell others about the impressive way you handled their issue.
• GET TESTIMONIALS. Once you have created a two-way communications channel with your customers, you will be able to identify those who are exceptionally happy with your services. Offer a small reward or certificate of recognition to those who would be willing to provide a testimonial quote about why they do business with your firm. Post testimonials on your website and incorporate them into your outbound marketing tools.
• GET REFERRALS. Create a program to reward your customers for referrals. These are simple and easy to manage. And best of all, your customers will appreciate that you value their business.

5. Form strategic partnerships to generate qualified leads and referrals.
One of the fastest routes to closing a deal is to begin the sale with a qualified lead or referral provided by a strategic partner. These partnerships are one of the most efficient and cost-effective ways to generate frequent and reliable leads for your business.

A strategic partner is a company that is doing business with your target audience and does not compete with you. An example of such a partnership would be a web developer and a marketing consultant. The web developer could refer the marketing consultant to its clients for strategic assignments; the marketing consultant could generate new business opportunities among its clients that need web work.

Begin this process by identifying businesses that complement yours and serve the same customer base. Discuss the potential advantages with your partnering prospect and work out a business deal that benefits both sides equally. Each business prospers since it receives opportunities that it might never have been able to acquire on its own.

Make sure that you select your partners carefully. Be certain that the companies under consideration are financially strong, trustworthy and have a solid reputation. A failed partnership could create an uncomfortable situation among your referred customers.

6. Jump into online social networking.
Social media marketing is providing a new wave of business promotion and brand building, and you’d be smart to jump on board. It’s called business social networking. There is no cost to join, and by participating in these vibrant and growing communities, you can build business relationships and promote your products and services.

Social networks attract members who have shared interests and opinions. As the network grows, a trusted cluster of connected associates and friends is established. When a member discovers your business or product and recommends it or comments about it, it has a powerful “word of mouth” impact. If you spend the time needed to establish your social networking presence, you can build leads and referrals and convert those into sales.

Just Google “business social networking” and investigate the various sites that can contribute to your particular business or niche. Then create and monitor content, track your referrals and leads, and keep building on your experience and success.

You can start outsmarting the competition tomorrow. The process is simple. Take it one step at a time and you’ll be amazed at how much progress you can make. The best part is that you can generate serious business growth without adding anything extra to your budget. In fact, a wise strategy is to gauge your success and reinvest a portion of the new profits these six steps generate into bigger and better marketing tactics. Before you know it, you’ll be one of the “big fish” that the others will be trying to outsmart.

David Levy is president and owner of GrowthFactorX (www.growthfactorx.com), a virtual full-service marketing solutions firm based in Philadelphia. GFX provides strategic marketing expertise and a full range of creative and media services to both large and small businesses.

By Steve Cooper

Eliminate your fears of Web 2.0 and begin embracing it. Web 2.0 is today’s toolset you need to stay competitive. That’s not to say that you need every bell and whistle that will wow your 13-year-old, but in order to make your web presence look and feel contemporary, a splash of new technology will go a long way. Who knows? You may already have Web 2.0 technologies on your website and not even know it.

Defining Web 2.0
What’s the difference between Web 1.0 and Web 2.0? In Web 1.0, websites offered static content that could be read or viewed with little or no interaction. Web 2.0 offers interactivity and collaboration that wasn’t possible before. The rise in this new functionality is largely due to the widespread adoption of high-speed internet. There are infinite buzzwords pertaining to Web 2.0 that all refer to the varying technologies that enable these new capabilities. Here are some of the terms you should know:

AJAX: A combination of two popular computer languages, XML and JavaScript. This new language allows websites to act more like desktop software applications and has been the engine for many of the new online innovations.

BLOG: A regularly updated online journal. Blogs range from personal musings to company updates. Popular platforms include Blogger, Live Journal, Moveable Type, TypePad and WordPress.

MASHUP: The combination of two or more applications or types of content to create a single enhanced application. One popular use is to mash a map with data to show gas prices in a particular area, for example.

PODCAST: The syndication of audio content through the internet, typically using RSS feeds. (This has nothing to do with Apple’s iPod, although you can listen to podcasts on an iPod.)

SOCIAL BOOKMARK: A method for internet users to save, organize, share and manage bookmarked pages on the internet. Most of these bookmarks are tagged which allows others in a particular social group to quickly access your preferred pages. Popular social bookmarking sites include: del.icio.us, Digg, Newsvine, Reddit, StumbleUpon and many more.

TAG: A keyword or term used that is relevant to an item such as an article or picture. Many items have one or more tags that are used to access and organize information. Many blogs and news outlets tag their content.

WIDGET: Simple, self-contained applications, typically with a single purpose. Many widgets display feed results, others offer a saying of the day or picture of the day. The possibilities are infinite. Widgets are also a good way to reach a mobile audience.

WIKI: A website that allows visitors to quickly edit, modify or delete content on the web. The most popular wiki site is Wikipedia.

XML: An open standard computer language for exchanging structured documents and data over the internet. Think of it as a newswire for your website. RSS feeds work the same way. According to a report by Awareness, a provider of social media technologies, 74 percent of businesses with fewer than 500 employees use Web 2.0 technologies. Blogs are the most-used technology, being employed by 87 percent of respondents.

“Web 2.0 tools have made it easier and more cost-effective for small companies, in particular, to have a web presence with rich functionality,” says Katherine Spencer Lee, executive director of Robert Half Technology, a recruitment and staffing firm. “The No. 1 question I get right now is, How can I drive business value from social software?” says Anthony Bradley, research director at Gartner. “The second one is, Where do I start?”

Great questions. Some businesses have already begun to figure out the answers.

Businesses Using Web 2.0
When done right, Web 2.0 engages, connects and adds value for visitors. Domino’s Pizza recently updated its website with a few new tools to do just that. In January, Domino’s launched a campaign that allowed visitors to create their own pizza, give it a name and track how many customers ordered their creation. The contest ran for 10 days and awarded the winner a $500 gift certificate. Domino’s new website also included a pizza tracker tool—an industry first. This allows hungry patrons to track their pizza from the time they order until the pizza is delivered.

Dove concluded a campaign earlier this year asking customers to submit their own 30-second video commercial for Dove Cream Oil Body Wash. Over 1,200 videos were submitted and voted on, with the final two appearing during a commercial break of the Academy Awards. Viewers were then asked to text their final choice. The winning video has been viewed more than 50,000 times online. Amazingly, one of the losers has been viewed over 70,000 times.

According to Bradley, GM used its GM FastLane blog to get community feedback on the new Camaro leading up to an auto show. As a result, GM had a record turnout at the auto show and received and implemented many ideas from the community.

GM isn’t the only one wanting to use new online technology. A study by the Kelsey Group, a research and analysis company, found that 59 percent of auto dealers said they plan to use internet video on their own websites during the next 12 months. The study also showed a large increase in the number of auto dealers wanting to add social networking to their sites.

Auto dealers aren’t alone. A survey of senior executives by the Economist Intelligence Unit found that 79 percent see the collaborative web as a way to boost revenues and cut costs.

“One of the really interesting things is how social software interrupts the leverage model. I call this the Tom Sawyer effect,” says Bradley. (Remember how Tom Sawyer convinces his friends it’s fun to paint his aunt’s fence, and they end up doing the job for him?) “That kind of an approach is very difficult for companies to grasp. I anticipate a growing bifurcation between older-thinking companies versus those that understand how to catalyze the community, and that really disrupts the leverage model.”

What Else Can Web 2.0 Do?
One of the largest boons for small business is the emergence of cloud computing. Cloud computing allows small businesses to take advantage of world-class technology and infrastructure from established players like Amazon, Google and Microsoft.

“Historically, you’d have to build a data center in advance of the business. You don’t have to do that now; it’s already built. You’re using it on an as needed basis,” says Bradley.

So rather than building your own video hosting platform and storage infrastructure, businesses can sign up and use YouTube, for example, for free. This dramatically changes the barrier of entry in regard to technology and shifts the challenge toward innovation.

Bradley highlights dating site PlentyOfFish.com as an example of how Web 2.0 has changed the game. Bradley says their revenues are $10 million a year. Want to guess how many employees they have? One and a half! Founder Markus Frind, with help from his girlfriend.

Taking Advantage of Web 2.0 Services
Your business could be the next big fish. In a report by Scene7, a provider of rich media technology and a unit of Adobe Systems Inc., 63 percent of manufacturers and retailers said Web 2.0 technologies increased the number of clicks and usage on their websites. Sixty percent reported an increase in their conversion rate, 47 percent saw a boost in their revenue, and 30 percent saw an increase in repeat purchases.

There are a lot of easy things you can do to add Web 2.0 functionality to your business’s website and take advantage of Web 2.0 technology. Here are a few online software service providers to explore:

ADDTHIS (addthis.com): Allows businesses to add social bookmarking and sharing capabilities.

APP2YOU (app2you.com): Lets visitors create custom interactive web applications without programming knowledge.

COGHEAD (coghead.com): A webbased system that allows visitors to create their own application such as a CRM or project manager through a drag-anddrop interface.

DAPPER (dapper.com): Extract and use information from any website on the internet through feeds without any programming.

FEEDBURNER (feedburner.com): Helps promote and deliver feeds. Users can also monetize their feeds through the Feedburner advertising program.

OCTOPZ (octopz.com): Online collaboration software using text, voice or video chat that enables creative professionals to share and annotate media files including videos, documents and images.

SENDALONG (sendalong.com): Allows users to send large files to any e-mail address.

WIDGETBOX (widgetbox.com): Lets users add or create their own widgets to share with site visitors.

WIKIDOT (wikidot.com): Offers free wiki hosting and publishing.

There are an infinite number of other services available including blog platforms, mobile applications and so on. The key is to take the first step and understand why.

Taking the First Step
“Don’t ignore [Web 2.0]; don’t think that it’s for the bigger players or the teenagers,” says Bradley. “Definitely explore it. The top three things for social software success are purpose, purpose and purpose. Know what you’re building it for and build a business case and measures of success.” Sixty-eight percent of senior executives expect Web 2.0 tools and methods to be the single biggest factor changing the ways their company interacts with customers, according to the Economist Intelligence Unit. Furthermore, 49 percent believe Web 2.0 will have the same impact on how employees interact with each other and the company.

“Web 2.0 also is about serving the needs of clients and customers, which requires an understanding of what appeals to specific audiences who visit your site,” says Lee.

When seeking outside help, Lee recommends looking for IT experts who have web development experience, application engineering and database management experience. Web 2.0 isn’t a single language, but a series of tools and languages. Some specific programming skills to keep an eye on are AJAX, Java, .NET and Open Source application development. Also, ask to see examples of their previous Web 2.0 creations.

“Experts in Web 2.0 often collaborate with marketing and other non-IT staff members to develop a company’s online strategy,” says Lee. “So, in addition to solid programming skills, hiring managers should look for job candidates with strong business communication, project management, web design and consumer marketing skills.”

The Risks of Web 2.0
Web 2.0 may be the future, but it still has some wrinkles that need to be ironed out. Many businesses are putting the kibosh on Web 2.0 activity for fear of security and bandwidth usage.

Gartner issued a press release identifying the top five challenges facing business regarding social software. Among the challenges are delivering business value, overcoming cultural barriers, ensuring privacy, governing participant behavior and managing personal and professional time.

A lot of time is spent on watching online videos. Nielsen Online shows that the highest web traffic for online video happens between 12 p.m. and 2 p.m., when most people are at work.

“There are significant challenges, not necessarily due to the nature of social software, but due to complexity of human interactions and social behavior in particular,” says Bradley. He explains that even though businesses build a particular tool with specific intentions, how visitors use that tool or not is a challenge many businesses struggle with. Remember, you can’t control human behavior.

Security is another major concern. A study by CA Inc. predicts that social networks and Web 2.0 will be among the top potential targets for online attacks in 2008. On the flipside, preventing an employee from sharing company secrets or intellectual property also has become increasingly difficult.

Bradley says businesses need to understand the tradeoffs of what they’re getting, what they’re gaining or saving financially and what they are risking, such as control of user behavior and control of their files if hosted by someone else.

Regardless of the risks, Web 2.0 is the future. “Web 2.0 represents a significant opportunity for the emergence of smaller competing businesses,” says Bradley. So grab your paintbrush and get to work— or if you’re Tom Sawyer, just have your friends do the painting for you.

By Geoff Williams

Heather Stouffer, 34, started her Alexandra, Virginia based business because she had a need and couldn’t fulfill it. In the case of Mom Made Foods, Stouffer’s need was healthy, fresh foods for her baby son, Emory, born shortly before the organic market exploded. “As a new mother, I wanted the best for my son, and so I was making all of his foods from scratch, spending most of my Sunday making them and freezing them for the week,” says Stouffer, whose meal-making time was mostly scotched during the week due to her job as a business development director at a high-tech consulting company.

Her Martha Stewart methodology, though, was wearing and wearying, and that’s when the idea of creating her own line of organic baby foods hit her. But there’s a wide chasm between a concept and actually launching a business around it. Stouffer, who soon quit her day job, knew it, too, which is what led her to the Small Business Development Center in Alexandria.

At the SBDC, Stouffer was given what she describes as “a whole load of information,” including contact information for the Department of Agriculture and the Department of Health, both agencies she was going to have to get to know. The SBDC told Stouffer (who, no, isn’t related to the family that owns the frozen food giant) about a program at the Virginia Tech Business School, which did a competitive analysis for her company.

Her counselor pointed her to a book, which became her bible: From Kitchen to theMarket: Selling Your Gourmet Food Specialty by Stephen Hall. And the SBDC also provided a database of information that ultimately helped Stouffer connect with Whole Foods, which now carries her line of products in several states.

“The SBDC has been an incredible resource,” says Stouffer. “Their willingness to help has just been extraordinary.”

Word of Stouffer’s business has since “spread like wildfire,” she says. In the last two years, her products have been featured on “The Oprah Winfrey Show”, and she has been able to continually release new product lines. Mom Made Foods is currently in seven states and Washington, DC, as of this writing; by the time you read this, it will likely be in quite a few more.

Meanwhile, Stouffer can be pleased Emory was born when he was. Today, she would have no trouble finding baby organic products on the shelves and quite possibly wouldn’t have started her business. The organic market, of course, has exploded, where one can find anything from organic bed linens, laundry detergent and even toilet paper. In both riding the organic industry wave, and finding a friendly neighborhood SBDC, Stouffer found herself in exactly the right place at the right time.

By C.J. Prince

Entrepreneurs may have a keen intuition about their businesses, a clear understanding of the markets that move them, and a cool finger on the pulse of their industries. But when it comes to the capital they need to grow, many still have a lot to learn. According to a survey of small-business owners by OPEN from American Express, many entrepreneurs harbor a number of misconceptions about basic financing terms and the strategies that will put cash in their coffers. The following are a few of the more popular myths, debunked.

1. Financial credit options are all alike. More than one-third of survey respondents believed a term loan and a line of credit were pretty much the same—a mistake that could lead them to the wrong financial tool, and possibly to debt they can’t afford. A term loan capitalizes a specific asset for a specific period of time. In general, you want to match the loan to the life of the asset you’re buying, says Rebecca Macieira-Kaufmann, executive vice president and head of Wells Fargo’s small-business segment in San Francisco. “If you knew you were remodeling a space that had a five-year life, then you’d want a five-year loan to match that depreciation,” she says.

A line of credit, on the other hand, is a revolving finance tool you can tap as needed. The lender sets the maximum amount it will make available, and interest typically accrues only when you use the funds, says Jed Scala, vice president of small-business finance at OPEN from American Express in New York City. Its quick availability makes it ideal for short-term cash-flow needs.

2. My bank will save me. Almost half of entrepreneurs who completed the survey believed banks commonly make loans to loyal customers in the midst of a cash-flow crunch. That’s not entirely false, says Tom Nist, senior vice president and manager of the small-business segment at PNC Bank in Pittsburgh, but it depends on the reason for the crunch. “If it’s an issue of approaching insolvency, of not generating the revenue and so on, we’d probably not grant credit,” he says. If, on the other hand, the sudden need is a result of rapid growth or building a new warehouse to accommodate the expanding customer list, “those are what we call positive cash-flow crunches, consistent with growing the business,” says Nist. He recommends that before business owners undertake any significant growth plans, they discuss them with their banker so there are no surprises.

3. One egg, many baskets. Nearly 4 in 10 respondents believed it made good business sense to cast a wide net by applying for loans with as many lenders as possible. Sounds logical, but Scala points out that every request you make for credit shows up on your credit report. So if you’re close to using up all your lines with other providers, all the requests for cash can raise red flags with lenders’ risk-management departments and hurt your chances of receiving financing. “Instead,” says Scala, “it’s best to limit your inquiries to a small set of financial institutions at a time.”

4. More money can fix whatever is wrong with my business. Nearly one third of survey respondents said their biggest frustration was needing more money to grow their business and having difficulty finding it. In some cases that need is legitimate, but experts say that too often, business owners think more cash can crank up a slow business. “They over simplify the problem and focus on needing more money when, in fact, they haven’t done a good enough job assessing what their business is, what the target markets are, and how their business is running,” says Michele Abraham, director of Ohio’s Small Business Development Centers in Columbus. They also tend to focus on fast growth as a remedy, even when higher sales at the wrong price point can lead to a loss. Growth is good, she says, but “you really have to grow strategically.”

Reprinted from Entrepreneur magazine, ©2007. C.J. Prince is a New York City writer specializing in business and finance. Reach her at cj@cjprincemedia.com.

By Roger Pierce

It’s difficult to know what to believe about self-employment. Tell anyone you’re considering starting your own small business and you’ll receive plenty of conflicting advice and differing opinions.

To help you decide whether or not entrepreneurship is your next career move, it’s important to challenge some common myths:

Entrepreneurs make a lot of money. During the first few years of your new small business, you may earn less than employed friends. However, you’ll enjoy much larger income potential. In North America, 75 percent of millionaires are self-employed.

You need a business degree to run a small business. While a formal business education can help, you may actually trip over that MBA while running your small enterprise. Practical, real-world and hands-on tactical skills will help the most, and are easily obtained through part-time courses or work experience.

A business idea must be kept a secret. The more people you tell about your idea, the better. You’ll receive valuable feedback, attract people who will help you develop it, and reinforce your personal commitment to actually starting your small business.

A great invention makes entrepreneurs rich. It’s not what your small business does, but how it does it. Successful companies simply brand, market and serve clients better or differently than their competition. Look for opportunities to improve on an existing product or service rather than invent something completely new.

It takes a lot of money to start a small business. Some very successful businesses are launched with just a few hundred dollars. Others may cost millions and still fail. Your skills as an entrepreneur make the difference. Start small, think big, seek advice and be patient.

You can lose everything. Entrepreneurship does carry financial and emotional risks. However, smart small business owners protect themselves by separating their personal and business assets, spending less than what they earn, and listening to the advice of an accountant and a lawyer.

Running a business is easy. It just looks that way! In reality, most entrepreneurs work 60 hours per week. As a micro-company, small-business owners must endure considerable stress associated with getting, doing and managing all of the work.

Businesspeople must be tough and ruthless. While that may be true for big business, small-business owners typically operate with high levels of integrity, trust, honesty and fairness.

It’s lonely. True, you may feel some isolation if you choose to operate your business from home. However, with 25 million other small businesses in the United States, you’ll find growing small business communities offering plenty of great opportunities to network and interact with fellow entrepreneurs.

Bottom line, you won’t know what entrepreneurship is truly like until you try it yourself. After all, nothing ventured is nothing gained.

Roger Pierce is co-founder of Canada’s largest small-business training company, BizLaunch.ca. He has launched nine small businesses of his own and has personally experienced what he calls “the good, the bad and the ugly” sides of entrepreneurship. Pierce is also the Entrepreneurship columnist for The Toronto Sun and 24 Hours. He may be reached at www.bizlaunch.ca.

By Ruth King

Inheriting a city with a budget deficit of $82 million in 2001, Mayor Shirley Franklin treated Atlanta as she would any major business. She made difficult choices, restored accountability to city government, and worked to improve the quality of life for the residents of Atlanta. Leading by example, she cut her own salary by $40,000 before eliminating half of the staff positions. She also eliminated job vacancies and convinced the public of the need for raising taxes (which was done).

With the city’s budget finally balanced, Mayor Franklin focused on making Atlanta a “Best in Class” city. The Atlanta citizens gave her their overwhelming support and re-elected her to office in November 2005. Mayor Franklin received more than 90 percent of the votes cast.

Her accomplishments as Mayor include:

• Balanced five budgets, which has generated a healthy reserve for the city of Atlanta.
• Implemented one of the strongest ethics reform programs in the country and an Ethics Task Force.
• Laid the foundation for a $3.2 billion overhaul of the city’s aging water and sewer system
• Established a commission of city leaders to study the problem of homelessness in the city and created the “Blueprint to End Homelessness in Atlanta in 10 Years.” The Gateway Center, designed to serve 500 people a day with needed personal and health services, opened in July 2005.
• Created “Next Step…The Atlanta Promise,” a program designed for high school seniors in the city’s public schools to plan for their future beyond high school. The 2005 program raised $1.9million, including $1.1 million in scholarships for 300 graduates.
• Administered the $150 million Quality of Life Bond Program, which leveraged funds to add new sidewalks, beautify major arterials and enhance both pedestrian and vehicle safety. Nearly 1,200 projects are underway or completed.

In 2005, Mayor Franklin was finalist for the Top Ten Mayors in the World contest. She received numerous supporting statements for her nomination. All pointed to her compassion and dedication to making Atlanta a better city in which to live. Comments included: “She does what she says she will do and is what she says she is.” “She cares deeply for the city and its people, especially those in economic distress.” “She reaches across political boundaries to focus on ‘rolling up our sleeves and getting the job done.’ ”

Since this is her last term as Mayor, Shirley Franklin is committed to leaving a legacy of urban development and growth as well as making Atlanta a better place to live than when she was first elected mayor. It is my opinion that Mayor Franklin’s legacy is firmly in place.

By Julie Moline

For more than 30 years, long before diversity became a buzzword, chemical giant DuPont has been seeking out and hiring minority-owned and women-owned lawfirms whenever it out sources legal services. For DuPont, this route wasn’t taken just out of a sense of corporate social responsibility. The company also benefits immeasurably from the talent and superb services these firms provide.

DuPont, along with dozens of other Fortune 500 companies, including Microsoft, Xerox, Accenture, Pepsi-Co, Nike, Aetna, Marriott, Domino’s Pizza and Harley-Davidson, feel so strongly about supporting women- and minority-owned firms that they have become corporate sponsors of the National Association of Minority- and Women-Owned Law Firms (NAMWOLF).

The organization, based in Milwaukee, was founded in 2001 and has worked as a tireless advocate, building the case (literally and figuratively) that diversity is not only the right thing to do ethically, but also the right thing for the corporate bottom line. Besides catering to the needs of its members, part of NAMWOLF’s brief is as pirational: It believes that the best way to increase diversity in the legal profession overall is through partnerships between big business and small law firms of exceptional ability

How? Minority- and women-owned law firms hire and promote minority and women lawyers at much higher rates than majority-owned law firms. That, in turn, leads to more opportunities in the legal profession for minority and women lawyers. It’s a virtuous circle that ought to be imitated in many more industries.

NAMWOLF, like most associations, serves two constituencies: the buy side, which in this case includes the major corporations with diversity initiatives that encourage bidding by minority- and women-owned firms; and the sell side, the minority- and women-owned firms, which need to market themselves on a national scale but often lack the resources and expertise to do so. Having a blue-chip company as a client gives considerable legitimacy to a small law firm; hiring a woman- or minority-owned firm gives corporations a chance to put a mission statement into action.

For law firms, merely joining NAMWOLF adds credibility to visibility. Members are carefully vetted by NAMWOLF’s executive committee in a painstaking process that can take six to eight months. Once they’re in, NAMWOLF is committed to facilitating partnerships on their behalf. “We often find,” says spokesperson Yolanda Coly, “that companies want to hire women- and minority-owned firms, but have no idea where to find them. So we’ll help them locate suitable firms with the specialties they need. For our members, having an association act as an intermediary gives them access to potential clients they ordinarily wouldn’t be able to reach.”

The lesson to learn from NAMWOLF is this: Corporate procurement programs with a diversity element are an essential conduit to big business and prime contractors. Finding an association in your business’s field and joining its business networks is one of the smartest, most strategic investments your small business can make.

Recently I began a task I thought would be relatively easy—stripping linoleum from my kitchen floor and replacing it with shiny, new tiles. The linoleum had probably been there since the Civil War and was quite old, ripped, and ugly.

As I grasped the first inches of linoleum, I realized that this was not a simple task. After tearing off a few more inches, it became obvious that this process was going to be absolutely grueling.

Could I stop now? No, the floor was a mess and I really wanted a better-looking floor, so I pressed on. I learned much about technology while stripping the floor, and I think the lessons learned will help you, too.

When in doubt, research.
My computer is never far from me. Taking a break, I wiped my hands off and went to my favorite search engine, Google, to find out if there was any easier way to get this job done. Yes, there was—something called adhesive remover.

What does this mean to you?
If you have no clue about what computer to purchase, take some time to read a few good magazines or websites. For instance, if you are buying a notebook computer, Walt Mossberg of The Wall Street Journal publishes an annual notebook buying guide. My company has a notebook buying guide (www.smallbiztechnology.com/notebook) and many other sites (Cnet, PCWorld, PC Magazine) have great notebook-buying resources as well. Of course, buying a notebook is only one example; doing research applies to all technology.

Verify your research.
I went to Home Depot and picked up two cans of adhesive remover. But before making my purchase, I talked to a few customers and the Home Depot staff about what I was doing and got their input. Everyone was very helpful and gave me good tips and guidance (“Expect a lot of blood, sweat, and tears” is what I heard the most).

What does this mean to you?
Once you do “desk research,” get advice beyond a search engine or magazine, especially if you’re spending a lot of money. If you are buying a $20 piece of software you don’t need as much advice as if you're buying a $2,000 computer or $10,000 phone system.

Start small and then progress.
I’m the type of person who will hop into the pilot seat of an airplane and try to figure things out as I go. Unfortunately this does not always work. I wasted half of the first bottle of adhesive remover because I didn’t know how to apply it properly. Although the instructions explicitly state wait 15 minutes (it was in big red letters on the front of the can), I figured 15 minutes could also mean 5 seconds. Only after seeing minimal results did I let the chemicals sit for 15 minutes and then my scraping speed became faster.

What does this mean to you?
Before rolling out technology to your entire company (assuming the company is more than just you and your dog), do a test or pilot phase first. Maybe you want to move from PC-based sales management software to one hosted exclusively online. Instead of forcing your employees to switch the next day, ask two or three of them to evaluate the new hosted application. This small group can help work out problems, see if the service works for your company, determine how hard it is to learn, help evaluate the cost of training and migration from your current system to the new system, and see if they will even use the new system. After this pilot phase, you can then roll out the service to the entire company, knowing what challenges you’ll experience thanks to the pilot phase.

Hire an expert.
I’m glad that I finished the floor myself—I love hard, manual work (as most of my life is spent in front of a computer screen and in meetings). That said, I probably would not do it again. Next time, I’ll spend the money to hire a professional. I’m sure they could do it in less time and my body wouldn’t feel like a golf ball after Tiger Woods hit it for a few hours.

What does this mean to you?
Sometimes it’s nice to do things yourself. But sometimes it’s not in your best interest or the interest of your company to do so. You’re an expert and guru in your business. Maybe it’s accounting, carpentry, gardening, law or graphic design. You are not an expert in every aspect of technology. Instead of securing your own computer network, it’s best to hire a professional who can ensure that your network is as secure as possible. Instead of trying to install your own server to save a few bucks, get it done right by having an expert do it for you. And, if you’re interested, my kitchen floor came out great!

The U.S. Small Business Administration announced a new initiative to boost entrepreneurship in 11American inner cities as the latest component of its strategy to advance entrepreneurship in underserved markets. The SBA’s Emerging 200 initiative will focus on small, poised-for-growth inner-city companies with potential for job creation. The designated cities where the program will begin are Boston, Philadelphia, Baltimore, Memphis, Atlanta, Chicago, Milwaukee, Albuquerque, New Orleans, Des Moines and Oakland.

“SBA is increasing outreach to areas historically challenged by high levels of unemployment and poverty,” said Steven C. Preston, SBA Administrator. “We believe bolstering entrepreneurial success in these areas will generate new jobs, attract investment, and provide amore sustainable economic base in distressed areas.”

The SBA also intends to modify its Community Express loan program so that it is simpler for lenders and borrowers to use and focused more on underserved markets. This program, which has the highest minority participation of any SBA lending product, involves a cooperative effort between SBA lenders and development resource partners to focus the agency’s financial and technical assistance on distressed communities.

According to SBA’s Office of Advocacy, small businesses are the greatest source of net new employment in inner cities and account for 80 percent of total employment. However, the job growth rate in inner cities lags behind the rest of metropolitan areas (“State of Inner City Economies: Small Businesses in the Inner City,” Oct. 2005).

As part of a broader initiative on underserved markets announced in September, the agency is working to accelerate entrepreneurship in inner cities through new and improved SBA programs and activities that fall into four main tracks:

• Improving entrepreneurial literacy and technical assistance in inner-city communities
• Providing more advanced financial and developmental assistance to emerging growth companies in innercity communities
• Enabling access to capital across underserved communities
• Improving access to government contracting opportunities.

In October, the SBA announced a partnership with Operation HOPE Inc. in New York City’s Harlem neighborhood to provide training, counseling and business education to budding entrepreneurs. In this first series of pilot programs, the SBA and its resource partners, the New York Small Business Development Center and SCORE, will provide free business counseling and one-on-one training to local entrepreneurs at the Harlem HOPE Center location. In FY 2007, SBA made more than $5 million in loans and counseled and trained more than 1,000 entrepreneurs in Harlem.

The SBA has many resources to help entrepreneurs and small-business owners in underserved markets, such as Small-Business TrainingNetwork online, theHUBZone program, SBA’s network of Small-Business Development Centers, Women’s Business Centers and SCORE Chapters. Information on these programs can be found on SBA’s website, www.sba.gov.

Greg Brooks, 42, figures he’s participated in or played a major role in approximately 200 public-sector bids. But the one that he played his first major role in is the one he remembers best.

Today, Brooks is co-owner with his wife, Grace, of West Third Group, a Plattsburgh, Missouri, marketing, public relations and communication firm that frequently competes for government projects. But back then, it was 1997, and Brooks, then an employee at Kiewit, a giant construction and mining company, was a key part of a $1.3 billion RFP (request for proposal), a bid for a 15-mile design-build reconstruction project of Interstate 15 through Salt Lake City. It was Brooks’ first major involvement in a government bid, and the then-32-yearold was learning from the master, a man named Jerry Pfieffer, his mentor, who he fondly refers to as “the most anal-retentive, organized person on the planet… He was an evil genius.”

It was a time, reminisces Brooks, of “war rooms, allnighters [and] clever tricks that screwed up the other bidders.” Good times. If they won the bid, Brooks would have a job handling the public relations nightmare that was sure to come as soon as commuters understood the depth of the delays and detours in store for them. If they lost, then Brooks would have missed a plum opportunity to dash up the corporate ladder.

“Typically,” says Brooks, “the idea of a good bid means neat handwriting on the bid form. I mean, your whole universe involves knowing your costs, but when you’re doing a design-build project, it’s a new beast because you’re going to partner with another company. You’re designing and building, so you’re selling Company A and Company E’s services.” And when you’re working on a project worth $1.3 billion, you want to do your best possible job, period.

So they did. These bids were presentations in front of 40 people on the review committee, so leaving nothing to chance, Brooks and about 30 coworkers put together an elaborate PowerPoint production involving numerous speakers and 200 slides. They timed it until they had everything down to a 15-second margin of error.

They didn’t stop there. Brooks and the others put out ice-cold drinking water for the audience. They gave away trinkets like pens with the company logo. They even anticipated the questions that might arise during the Q&A, so that when someone brought up a new issue, the speakers could address it and quickly pull up a new slide.

All went smoothly, and when the speech was over, Brooks and his coworkers gathered their belongings— including the pitchers of water. This unnerved the next team, which had been assuming that the Department of Transportation had provided the refreshments. The night before, Brooks had also bought the rights to all of the color copying at the local Kinko’s, in case Kiewit needed emergency printing—which had the desired effect of forcing their competition to drive 20 miles to the next copy center.

Kiewit won the right to the project. What did Brooks take away from all of this? “There were a lot of lessons,” he says. “There is no detail too small to overlook, and you can teach elephants to dance: We took engineers who were brilliant but should not be allowed in front of a podium, and we made them effective speakers.”

But maybe most important, says Brooks, “There are always three types of competitors on any job where there are multiple bidders. There’s the guy who is expected to win it. There’s the guy who it would be politically expedient to give the project to. And then there’s the guy who has so overwhelmingly anticipated all of the questions that they’re flummoxed when they stop talking to you. You want to be that last guy.”

Geoff Williams is a writer in Loveland, Ohio. Reach him at  gwilliams1@cinci.rr.com.

The U.S. government is the largest consumer in the country, spending nearly $560 billion each fiscal year on contracts. It’s probably the most complex consumer as well. Different types of agencies–defense, civilian and intelligence–have different types of needs to help meet different mission requirements and objectives.

Doing business with the government requires an understanding of these unique needs and challenges, as well as an appreciation and understanding of the nuances involved in doing business with such a vast consumer. It also requires a good amount of logistical know-how, and following a handful of “must do” steps.

If you’re reading this article, chances are you’re already on the GSA (General Services Administration) Schedule. The GSA establishes long-term, government wide contracts with commercial firms to give customers access to millions of state-of-the-art products and services at volume discount pricing. Getting a GSA contract, and getting on the GSA

Schedule of contracts, is a good choice. The lowest-cost way for a commercial supplier to enter into government contracting is to get onto the GSA Schedule. Doing so enables you to enter into a buying environment rather than just a contracting environment. (If you have not yet done this, now’s the time. Visit gsa.gov for more information about getting on the GSA Schedule.)

Understanding GSA in 2008 and Beyond
Let’s face it: GSA got rocked in 2007. From congressional hearings to contract disputes and more, GSA had its share of being in the spotlight last year.

This year, however, you’ll see a shift in focus back to its benefits and advantages. This year you’ll see:

• Expanded offerings, which have the potential to bring contract holders into new markets
• Companies that had left the program coming back into the GSA fold, and more companies joining the program for the first time

A handful of trends will drive these changes, not the least of which is a new administration. In fact, with an actual FY08 budget in place and a new administration on tap, you’re likely to see a larger and quicker flow in government spending, as agencies and programs spend the money they’ve been allocated.

What does this mean for you, the contract holder? It means the requirements will be there for the bidding. Your job is to be prepared.

Here are some truths you may not know about the GSA Schedule that can maximize your exposure within GSA and increase the chances of winning that bid.

1. CHANGE IS GOOD–AND ENCOURAGED.
In winning any kind of business– commercial or government–flexibility is key. You may not know just how flexible you can be in your bidding process, as well as in overall schedule contract maintenance–i.e., changes and tweaks you can make to your contract during its duration.

For example, did you know you can add and delete services and products from your contract at any time? This holds true whether you provide office supplies, technology, office furniture, cleaning services or vehicles. This means:

• If you upgrade your technology or your product offerings, you can change your contract.
• If you change your service offerings in any way, you can change your contract.
• If you acquire a company and expand your services and products, you can change your contract.

This flexibility helps both the contractor and the federal buyer. For you, the contractor, it ensures you can always offer the latest technology and services to what may potentially be your largest customer; it means you can stay up-to-date and competitive. This flexibility means your contracts are not stagnant–you’re not boxed in.

For the government buyer, it means having the chance to buy the newest services and technologies. It means the customer is not locked in to a particular version of a product or a particular level of service. From the customer perspective, this flexibility means they’re guaranteed continuous improvements. It’s the proverbial win-win.

2.BPA TOOLS ARE YOUR FRIEND.
Blanket Purchase Agreements (BPAs) are one of the most powerful vehicles for a contractor selling to the government. If you’re providing services or products through a BPA, make sure your sales team is aware of all the tools they can use to sell within the schedule program. “Spot pricing” is one of the greatest advantages your BPA can offer. Through spot pricing, you can readjust your price at any time, in any size order. Why? Your BPA contract permits you to refer to three ingredients when setting your price: inventory, sales goals and market penetration. This means you have a fair and reasonable discount, but you can reduce it at any time.

Say, for example, you have a high inventory; that can affect your price. If you’re below your sales goal, the contract allows you to change your price. Or, if you want to get into a particular market segment–if it’s a new segment for you or you’ve been previously unsuccessful getting into this market, you can adjust your discount accordingly.

Many contractors believe their contract discount is set in stone. On the contrary. You should view your schedule discount as the ceiling price–you can always go lower.

Speaking of pricing … pay attention to your Economic Price Adjustment (EPA) negotiation agreement and execute it on time. Make sure it’s in line with your commercial business prices.

Something else to be aware of with regard to your BPA contract: A BPA is designed to keep the contractor focused. It includes a 30-day cancellation provision. In a traditional environment, the government won’t cancel your contract. Some companies take advantage of that.

According to a BPA agreement, however, the government customer can cancel. Look at the terms and conditions of your BPA. You need someone on your staff monitoring it to ensure the necessary level of service is being met.

3. YOU’VE GOT MORE FLEXIBILITY THAN YOU THINK.
You already knew (or if you didn’t, you just learned) that you can change your schedule contract discount at any time, and add or remove services and products at any time. Your contract flexibility does not stop there.

Chances are you’ll be asked for a firm-fixed price, unless you can show that you cannot accurately estimate the extent or the duration of the work. With the green light there, you’ll be asked to provide a time-and-materials estimate– with a ceiling price. This significantly enhances your pricing options even beyond those mentioned above, by allowing you to work under a fixed price or a time-and-materials price, depending on the product or service provided.

4.YOU CAN USE THE SCHEDULES E-LIBRARY TO YOUR ADVANTAGE.
When you’re awarded a GSA Schedule contract, your company name, contract number, service/product, point-of-contact information and more is automatically listed within the Schedules e-Library on the GSA website. The Schedules e-Library provides a listing of the latest contract award information for the GSA and Veterans Affairs (VA) Schedules, as well as Government wide Acquisition Contracts (GWACs).

Once you have a GSA Schedule contract, there is nothing you need to do to get this listing. However, there’s more you can do to take advantage of it once you’re there.

First, make sure all the information is correct. Also make sure your keywords are accurate. Government customers can search by keyword, contract number, Special Item Number (SIN), GWAC category, etc. There will also be a direct link to your website.Make sure it works.

Customers can also search by socioeconomic status. In other words, if you’re a small, disadvantaged, women-owned and/or veteran-owned business, it’s in your best interests to ensure this information is available and accurate.

State and local government customers have direct access to your contract information as well, as the Schedules e-Library identifies those contractors participating in Cooperative Purchasing and/or Disaster Recovery Purchasing. (More on state and local government in No. 9.)

5. GSA ADVANTAGE!® CAN GIVE YOU AN ADVANTAGE.
The Schedules e-Library provides a direct link to GSA Advantage! This is essentially an electronic shopping and ordering system for the government– an online catalog. Government customers look here frequently, so once you’ve got a GSA Schedule contract, make sure your company and product information is available through GSA Advantage!

Unlike the Schedules e-Library, your information is not automatically listed here; you must populate GSA Advantage! yourself. Many times, business owners get so caught up in celebrating their contract award(s), they forget to take advantage of this free marketing opportunity. Populate GSA Advantage! You’ll get more exposure and will have a better chance of getting noticed.

6.E-BUY IS AN E-MUST.
The Schedules e-Library also provides a direct link to e-Buy, which is a component of GSA Advantage! It is an online Request for Quotation (RFQ) tool, designed to help both the contractor and the buyer get a broader–yet more targeted– response to a service or product request.

It works by sending you an automatic notification when an RFQ has been issued in your service or product area. For example, if an office within the Department of Health and Human Services needs copier maintenance, copier companies participating in e-Buy are automatically e-mailed that RFQ.

Before we go any further, let’s define our terms:

• An RFP is a Request for Proposal. An RFP eventually becomes a “contract.”
• It takes about 268 days for the federal government to award an RFP.
• An RFQ eventually becomes a purchase order (PO), or a “buy.”. It takes between 30 and 45 days for an RFQ to be awarded.

The advantage of e-Buy is immediate notification of an RFQ–which can turn into a PO within 45 days. When dealing with the government, it’s one of the fastest ways to win a bid.

7. YOU CAN, AND SHOULD, EXHIBIT AT GSA EXPO.
If you haven’t been to GSA Expo, go. It is the GSA’s annual conference where thousands of federal, state and local, and military employees gather to see what kinds of services and products they might need to help them better achieve mission success.

Once you’ve attended an Expo and understand the lay of the land, take advantage of the opportunity afforded only to GSA Schedule and GSA GWAC holders and secure a booth.

In most cases, booth space sells out in less than an hour. If you’ve got a booth at GSA Expo, you have the opportunity to reach as many as 14,000 people in two days. It’s one of the most highly targeted audiences you’ll come across. It will be well worth your investment. GSA Expo is an annual event, held in the spring. You can find more information at expo.gsa.gov.

8.GSA OFFERS FREE MARKETING.
As you already know, getting your schedule contract(s) means you have the opportunity to compete. Getting the attention of the government buyer–and winning the order–is an entirely different proposition. You still need strong sales and marketing tactics and teams.

GSA’s bimonthly magazine, MarkeTips, covers acquisition programs, training and upcoming events. As a GSA schedule holder, you are entitled to free advertising in this publication. The wait for ad space is usually quite long–but it’s free advertising. Hard to beat that.

9. YOU MAY HAVE INCREASED ACCESS TO STATE AND LOCAL GOVERNMENT.
The state and local government market is enormous–larger than the federal market and potentially growing to over $25 billion this year, according to FedSources.

Today, state and local governments use Schedule 70. In recent months, however, states have been looking more favorably at GSA as a way to help offset their decline in revenue base yet expand buying options. GSA and the states are both pushing for open, cooperative purchasing across all schedules in 2008.

If all schedules are opened for the states to use, this means GSA Schedule holders have the opportunity to be in front of a vast audience they have not been privy to before. To prepare for this, you should stay informed of the policy and political landscape, and make sure your company is aligned to target and support a new state and local market.

10.GSA IS GOING GREEN.
Going green is a major objective in government, and its importance is only expected to increase. Agencies are feeling pressure from within and outside government to make eco-friendly choices.

The GSA has set up an Environmental Aisle as part of GSA Advantage! to help buyers more easily find “green” choices among the thousands of schedule offerings. According to GSA, “Customers are encouraged to purchase products designated for preferred procurement: biobased and recycled content, ENERGYSTAR and FEMP qualified, water-efficient, and non-ozone depleting materials.” Green is good. Get yourself green, and get yourself set up in the Environmental Aisle. You won’t regret it. Bottom-Line Advice: Stand out When’s the last time you heard someone say, “This contract is going great”? It’s probably been a long time, if ever. We hear a lot about contracts that go wrong, or integrators that do not provide what was promised.

There is a way to stand out among the thousands of other suppliers on the GSA Schedule contract. In addition to preparing for upcoming trends by following the above advice, the number one way to get noticed is: Prove yourself. Demonstrate your ability to be a stable provider. Show that you’re experienced and you’re engaged in government for the long haul by having a strong business development team. There’s a long runway before acquisitions take off. Show that you’re reliable, trustworthy, and will provide whatever support will be necessary now and for the foreseeable future. Once you prove yourself, business will come to you.

Bill Gormley is president and chief executive officer of the Washington Management Group, the leading GSA Schedule contract and VA Schedule contract consulting services firm in the nation. For more information on Washington Management Group, go to www.washmg.com.

For centuries, English foxhunters dragged a red herring in front of their hounds in order to distract them from the scent of the furry little guy. In time, this practice produced the metaphorical “red herring,” which is an attempt to win an argument or negotiation by diverting attention from the real issue.

Introducing a red herring in a sales discussion or negotiation can be a handy defensive tactic. But sometimes we use personal red herrings, which essentially means when we lie to ourselves.

It’s one thing to use red herrings with others as a communication strategy. But when we use them on ourselves, it’s unproductive at best and destructive at worst.

Shakespeare addressed this issue five centuries ago in Hamlet, when Polonius said: “This above all: to thine own self be true…”

If you can’t be true to yourself, you can’t be true to your dream. And a false dream is an entrepreneurial atomic meltdown waiting to happen.

Perhaps the most difficult challenge you’ll face is knowing when to continue to believe in whatever you’re working on and when it’s time to move on. One of my mentors helped me learn how to face these “go—no go” decisions by asking this question: “Do you have a fighting chance or just a chance to fight?” The key to success in business, and indeed in life, may be as simple as knowing the answer to that question.

One way to tell if you’re dragging a stinking fish across the trail of your dream is by checking your position. Here are three examples:

1. Have you conducted enough due diligence to find out if your plan has a reasonable chance of being successful? If not, telling yourself things will work out is a red herring.

2. Is your activity resulting in any success? If nothing is working, convincing yourself that you just need to work harder is masking reality.

3. Are your assumptions performing? If you’re only consuming resources without creating opportunity, you must tell yourself this truth: I’m not on the right trail— yet.

If even small successes can be found mixed in with the failures, you may have a vision merely in need of adjustments and worthy of extra effort. In order to evaluate all of this, small-business owners need all the facts they can get their hands on. And they need the truth from all parties— especially from themselves.

The marketplace is formidable enough. Use red herrings for foxhunting and negotiating, not on yourself. Write this on a rock ... “This above all: to thine own self be true.”

Jim Blasingame is the award-winning host of The Small Business Advocate Show and creator of the small-business knowledge base www.AskJim.biz. Also find him at www.SmallBusinessAdvocate.com.

Julius Howell, Sr., 54, knows something about the wisdom of backup and the value of good leadership. After all, as a master sergeant when he retired from the Air Force after 22 years, Howell saw history in the first Iraq War and was in the thick of things during hot spots in Somali and the American raid on Libya in 1986. So after retiring in 1995 and making the transition to the civilian life by working at a chemical manufacturing firm, Howell quickly recognized that the company lacked leadership.

“I really thought I could do a better job, so I left,” recalls Howell, “but not intending to do what I’m doing now. I was going to be an independent distributor.”

Today, Howell owns Deep Reflection Products & Services, Inc., a janitorial services company in North Wilkesboro, North Carolina that services churches, professional offices, banks, schools and some of the biggest agencies in the U.S. government. The company, started in 1997 and now staffed with 56 employees, brought in $2.7 million last year and continues to expand exponentially. But Howell is quick to point out that his success never would have had happened without skilled backup supporting his mission.

In his case, it was the Small Business & Technology Development Center, headquartered in Raleigh, North Carolina and with over a dozen branches across the state. After his underwhelming experience in chemical manufacturing, Howell became an independent distributor selling chemical-based janitorial cleaning products. One of his customers worked at a facility owned and maintained by the Federal Emergency Management (FEMA).

“They were having problems with the chemicals. I went up there to talk about the problems they were having,” says Howell, who soon found himself being talked into starting a janitorial business and taking the FEMA facility as his first client.

Knowing he didn’t have the infrastructure or experience to start his own business, Howell happily took the advice to visit the SBTDC, where a counselor walked him through the steps of putting people on a payroll and a host of other complicated tasks. “I had never written a business plan,” says Howell. “I knew nothing about how to do that, or anything with the registration process. I didn’t know what a Dun & Bradstreet number was, or any of those things that are necessary to do business with the government. They even aligned me with an accountant, who is still my accountant to this day.”

They also helped him get a business loan. With two kids in college, Howell was paying for his life with credit cards to the point where his credit score was in tatters. Despite a representative from the SBTDC accompanying him every time, Howell was turned down for a loan at 12 banks. He finally was granted a $2,000 business loan from Wachovia.

Even there, he got the loan because he found a loan officer who had a lot of knowledge of the SBDC in general. And the loan officer understood what should be a no-brainer—it was worth lending the man $2,000, so he could have the working capital to secure a $100,000 contract.

“FEMA, in turn, paid their invoices within 10 days, so we could have cash flow,” says Howell. “The SBTDC, my contact at FEMA and Mr. Billingsley at the bank basically formed a circle with me in the middle to help me succeed.”

And Deep Reflection has, not just for giving Howell a legacy and employing citizens in North Carolina. Howell, you see, never forgot how the leadership at the chemical manufacturing plant treated, or didn’t treat, the staff. That’s why Howell gives his workers full benefits, including dental, life, cancer, accident and of course, health—all plans that the SBTDC helped Howell implement.

“I’ll always be a client,” says Howell. “You’ll never know everything.”

Monika Moo-Young, 34, may be a small business owner but she’s definitely no stranger to big business. Since founding MYI Consulting, an information efficiency firm, in 2000, Moo-Young has won procurement deals with the United States Environmental Protection Agency, the U.S. Department of Transportation and even IBM. By helping government agencies, pharmaceutical companies and transportation-related organizations manage large sets of data and processes for their internal projects, she has put her Chester, Pennsylvania-based business securely on the map.

Moo-Young’s current endeavor is to provide project management and coordination support for one of Hewlett-Packard’s infrastructure rollout projects—a multi site, $75 million effort. In order to close the deal on the contract, Moo-Young had to undergo an intense selection process which involved compiling a 50 page Request for Proposal report detailing information about her company’s internal operations, quality processes and past performance—with a turnaround time of less than 48 hours. “We had been given a ‘window of opportunity,’” says Moo-Young, whose revenues are just under $1 million, “and we had to deliver.” The 18-month HP contract has greatly added to the company’s credibility, has possibly opened doors to more procurement opportunities down the road, and has granted Moo-Young invaluable insight into how to work effectively with big businesses. “It has given us an opportunity to boost our skill set on other projects,” says Moo-Young. “We know what things need to happen in those kickoff meetings and [how] to communicate with the customer.”

Winning corporate contracts can single handedly make a small business—but it can also break one. Having personally reaped the benefits of such opportunities, Moo-Young advises other small-business owners to have their own procedures and processes securely in place before pursuing a contract, to be prepared for every type of contingency, and to have the financial means to independently fund the project if necessary. “Payment may not happen in 30 days,” she says. “Some companies have different payment terms.”

Entrepreneurs who are still just trying to get their businesses noticed should start by registering their businesses online. A lot of corporations, including HP at www.hp.com/go/supplierdiversity, will allow suppliers to register on their websites to be considered for procurement opportunities. HP also proactively searches for small businesses by attending Business Matchmaking events, trade shows hosted by organizations like the National Minority Supplier Development Council and the Women’s Business Enterprise National Council of which they are members, and by hosting their own trade shows, says Brian Tippens, manager of HP’s Global Supplier Diversity Program. According to Tippens, the program spends more than $1 billion on minority owned, women-owned and veteran-owned businesses in the U.S. per year.

Once they’re given the spotlight, entrepreneurs can shine simply by avoiding one very common mistake. “All too frequently small businesses come to HP and say, ‘Hey, what can I do for you?’ rather than saying, ‘This is what I can do for you. I know what the competitive landscape looks like, I know how I stack up in comparison to my competitors, I know how I can add value to your enterprise,’” says Tippens. “At the end of the day, it doesn’t matter if you’re small, minority- or women owned. If you can’t add value to the supply chain, you can’t do anything for HP.”

In order to sweep a corporation off its feet, entrepreneurs should be prepared to roll out the red carpet if so desired–even when working within the constraints of a small-business budget. Knowing that a job well done would pay off in the end, Moo-Young went out of her way to over-deliver on the HP contract, assigning 12 people to the project even though the initial proposal only called for one. She explains, “You have to figure out creative ways to create that kind of importance with the customer.”

Sara Wilson is a writer in New York City.

Are you thinking about government contracting? Are you in the process of competing for a government contract? Have you already landed a government contract? Whatever your level of experience with government contracts, a Procurement Technical Assistance Center can help.

The 93 nonprofit PTACs nationwide provide an invaluable source of information for small businesses looking to expand their knowledge of government contracts. Last year, 99,000 contracts totaling over $14 billion were awarded to small businesses that are PTAC clients.

The centers serve as a liaison between government organizations and the small-business contractor community. Their purpose is twofold. PTACs help small businesses expand their market and obtain more contracts. They help government agencies reach their quota of small-business suppliers, while providing them a wider variety of competitive bids to choose from.

Congress authorized the Procurement Technical Assistance Program (PTAP) in 1985. to help expand the number of small businesses contracting with local, state have opened throughout the country in cities, on college campuses, and in government buildings.

The United States is split into 10 PTAC regions so that programs can be tailored for different geographic areas and demographics. While the services and resources PTACs offer may vary depending on location and the needs of their surrounding areas, each center is well equipped with trained and experienced professionals offering the latest, up-to-date information. Services offered at most locations include marketing (ranging from developing a brochure or presentation to an entire marketing plan), helping with pricing strategy, contract proposals, accounting and more.

For beginners, procurement professionals at PTACs can help you learn the steps behind the necessary registrations and certifications, and can help you become familiar with the time-consuming process of bidding on a contract. For those with prior contract experience, PTACs provide a range of resources ranging from networking seminars to one-on-one consultations. Small businesses can also reach out to PTACs for follow-up assistance even after a government contract is secured.

PTACs primarily aim to fill contracts for the defense industry, since the PTAP program was first administered by the Defense Logistics Agency, part of the Department of Defense. However, a range of other areas within the government now use clients from PTAC as well.

If you’re considering entering government contracting, PTACs can help you determine whether federal contracts are a good untapped source of business, or whether you’re better off focusing on other markets.

For more information on Procurement Technical Assistance Centers and how to find a location near you, visit www.aptac-us.org/new/.

Cassie  Kreitner is a sophomore at Syracuse University majoring in magazine journalism and marketing. Search the Web: Syracuse University Search News.

Whether you’ve already launched a business or are just thinking about it, the odds of long-term success are against you! How do the survivors successfully identify, attract and keep good customers? What’s their secret?

Whether you’re just setting up shop or already have your business off the ground, you need marketing strategies that get new customers in your door and keep them coming back. The following steps will help your business not merely survive— but thrive.

1. Profile your customers. Who are your most valuable customers, and what do they want? While it’s important that you understand the products and services that you offer customers, it’s even more significant to understand what your customers value and why, so you can fulfill their needs. Don’t assume you know; ask them.

2. Play 20 questions with your clients. Imagine that your five most important customers are sitting in a room with you. What questions would you ask them about their purchases, their needs and interests, and the factors that influence their decision-making processes? Compile a list of 20 questions that will help you define your customers.

3. Keep your friends close but your enemies (i.e., competitors) closer. Identify several companies that offer competitive products or services. Discover what their benefits are to potential or current customers. Now compare your message, value proposition and target audiences. Make sure you can answer the question, “What sets you apart?”

4. Identify partners that support win-win relationships. What do you expect from a partner and how can it contribute to your growth? Can a partner’s strengths be leveraged to empower your business? A strong marketing alliance can reduce risk, share costs and improve time to market, so choose carefully.

5. Find out if perception is reality. How do your customers and prospects perceive you? Branding is the impression you leave through every customer touch point and involves more than a nice logo or cool tagline. Everything you do has to incorporate your message, because if you dilute it in any way, you won’t be sending a clear definition of the value you provide.

6. Prepare a strong elevator pitch. Ever find yourself in a room with a key prospect and you couldn’t succinctly explain your business to him or her? Perhaps you rambled on, never getting to the point, or you froze up. A 30-second elevator pitch will help you whet prospects’ appetites and get them interested in learning more.

7. Align marketing programs to meet sales goals. Sales and marketing have to work together to support growth. Develop a marketing program based on how many sales leads you need to generate and how long that process will take. Be proactive in planning your marketing strategy so it generates critical bottom line sales results.

8. Harness your passion as a strategy. Even the most successful companies have their share of ups and downs. How will you use your passion to get through the rough patches? List 10 reasons why you feel passionately about your business. Post this where you’ll see it every day to remind yourself why you’re going to work each day (even if that’s just down the hall). These 10 reasons will keep you motivated on the good days as well as the bad ones!

Beth Goldstein, author of The Ultimate Small Business Marketing Toolkit, is president of Marketing Edge Consulting Group (www.m-edge.com). She has more than 22 years’ experience in sales and marketing, teaches at the Boston University School of Management and is the instructor for the InnerCity Entrepreneurs business growth program. She can be reached at bethg@m-edge.com or 508-893-0976.

By Julie Moline

Kermit the Frog may have lamented that it’s not easy being green, but suppliers of environmentally responsible products and services are finding that there has never been a better time to be green.

Companies large and small, colleges and universities, nonprofits and NGOs, along with government agencies, from the federal government to the pokiest of local municipalities, are making concerted efforts to adopt procurement strategies that give preference to environmentally sound products and practices. The interest in all things green is sweeping, from the bulbs in light fixtures and the paper in copiers to the vehicles in fleets and the computers on every employee's desk. These organizations’ objectives are far-reaching, too, beginning with a desire to be responsible stewards of the planet and including the need to save financial and other kinds of resources—time, natural, human. At some organizations there’s even a willingness to rise above the lowest-price at- all-cost mentality, allowing buyers to purchase certain green products even if they’re more expensive than conventional ones.

Buyers have become so sophisticated in their green procurement efforts, in fact, that they’re considering the environmental track record of every company in their supply chain when they choose vendors. That means there’s a focus not just on whether a supplier offers a green product, but also on whether it exhibits green best practices in manufacturing and distributing that green product.

The Private Sector
Corporations are looking at ways to green up their consumers, too. General Electric, BP and DuPont all have programs that seek to reduce their and their customers’ environmental impacts. Wal-Mart has stepped up as an unlikely leader, using its ubiquity and purchasing power to educate and enlighten customers on the benefits of energy-efficient and nontoxic products. That initiative, called Sustainability 360, began last year, and also included a summit bringing together suppliers to figure out ways to move away from using nonrenewable energy in manufacturing the goods that Wal-Mart sells. One quick result of the summit was an agreement by manufacturers of laundry detergent to produce more concentrated formulations. That offers a triple benefit: It reduces packaging, lowers the cost of shipping, and produces fewer emissions during transportation.

Philips Electronics has also been a leader in encouraging its suppliers to better their environmental track records as it works to boost its own energy efficiency, water conservation and responsible manufacturing. (It is seeking to reduce or eliminate hazardous substances such as lead and mercury used in the manufacturing process). For two years in a row, Philips was ranked the top-performing company in its sector (cyclical goods & services) by the Dow Jones Sustainability Indexes. “We’re proud of this achievement,” says Barbara Kux, chief procurement officer at Philips. “But besides what we’ve been able to accomplish internally, we’re also looking at our entire supply chain to deliver an even greater impact.” Suppliers must agree to commit to sustainability and ethical practices to continue doing business with Philips, she explains. Philips, which is interested in helping vendors meet its own green criteria, created self-assessment tools so suppliers could follow Philips’ example. Beyond that, regular audits, using internal and external auditors, nudge suppliers toward compliance. (Noncompliant companies, Kux says flatly, are rejected by her organization.)

Another area where there is significant opportunity for green suppliers is in construction. The quick embrace of green building has led to an explosion of newly built and/or retrofitted buildings that consider every conceivable detail that could be made green: in the structure itself (construction materials), the interior design (green flooring, furniture and fixtures), maintenance (cleaning supplies and paper products), heating and cooling (alternative energy sources, insulation and coated windows), lighting (energy- efficient fixtures/bulbs and skylights), water use (restricted flow devices), and landscaping (green roofs, xeriscaping and composting). LEED certification is the ultimate objective; along the way, buyers are looking for recycled materials, from lumber to concrete to paint, and for supplies that come from renewable sources (upholstery fabrics made from soy rather than petroleum, hardwood flooring made from bamboo).

In Portland, Oregon, one of the most environmentally savvy cities in the U.S., green purchasing case studies are posted on the city website as a way to share its experience with the quality, price and performance of the green products it’s testing out. You can read about Portland’s experience with recycled and extended-life antifreeze in city owned vehicles, vegetable-based inks, retreaded tires, rerefined motor oil and solar-powered parking meters.

Portland, like many cities, also gives preference to small, local, and women and minority-owned businesses in its quest to be green. The vegetable-based ink it uses is supplied locally by Great Western Ink. Exterior latex paint from MetroPaint, another local organization, is consolidated, meaning it’s sourced from the city’s hazardous waste collection program, filtered and blended with other discarded paint. This process is far less resource-intensive than manufacturing new paint; reusing 10 gallons of latex paint saves 1,060 kilowatt hours, enough energy to power the average Oregon household for a month, the city claims. And since recycled paint involves minimal processing, no new VOCs (volatile organic compounds, a pollutant that can cause health problems) are produced during its formulation.

The Public Sector
The government is a voracious consumer—and is probably the single largest purchaser of green products in the nation, if not the world.

The government’s efforts to buy green date back several decades, but became formalized in 1997, when Federal Acquisition Regulations (FAR) were enacted to reflect the government’s preference for environmentally sound and energy efficient products and services. An affirmative procurement program was established, favoring items that contained the maximum “practicable” content of recovered materials. The choice of wording allowed some discretion on the buyer’s part, allowing him or her to balance availability, cost and performance in a purchasing decision.

More recently, the FAR issuing agencies amended their procurement rules to complement the Energy Policy Act of 2005. The amendment now requires all federal acquisitions of energy-consuming products and all contracts for energy consuming products to be

ENERGY STAR rated or Federal Energy Management Program (FEMP) designated products. Products in either case are in the upper 25 percent of energy efficiency in their class.

In January 2008, NASA, the Department of Defense and the General Services Administration announced they were requiring all new computer purchases to meet Electronic Product Environmental Assessment Tool (EPEAT) standards as well. These standards cover everything from energy efficiency to the level of toxic materials used in manufacturing to the recyclability of components. The three departments join the Department of Energy, the earliest adopter of EPEAT products. The DOE has integrated

EPEAT into agency requirements and purchased more than 10,000 EPEAT computers, valued at more than $10 million, in fiscal 2007.

Not surprisingly, the Environmental Protection Agency has acted as a lead agency in developing green purchasing policies and programs. One of its most sweeping achievements is Environmentally Preferable Purchasing (EPP), a practice for buying products and/or services that have a less impact on the environment and human health than competing products and services that serve the same purpose. The website (epa.gov/oppt/epp) is a massive clearinghouse of information, tools, tips and best practices in EPP.

The idea behind EPP was not only to help federal buyers buy green and contractors to sell green, but to use the federal government’s enormous buying power to stimulate market demand for green products and services in the private sector as well. Although it’s geared mostly toward the consumer (government and otherwise), there are several areas on the EPP site that will help vendors understand green purchasing requirements, and find the information on standards and requirements that they’ll need for bids. Several sample contracts are posted, covering everything from recycled paper and copiers to hydraulic fluid and insulation made out of recycled denim. There are also links to green contract language and specifications used by federal and state governments and others to buy environmentally preferable products and services. Also worth a look is EPP’s Promising

Practices Guide (epa.gov/oppt/epp/ppg/toc.htm), which includes 16 success stories highlighting how government agencies have successfully incorporated environmental concerns into the purchasing process.

A tool called the EPP
Assistant helps buyers analyze products from cradle to grave so they can prioritize their EPP efforts by purchase type. The tool, developed as a joint venture between the EPA and the Texas Commission on Environmental Quality, lets buyers drill down to a granular level; they’ll be able to see the relative environmental impact of each commodity, and compare two different purchasing scenarios to determine which offers the best outcome.

Interestingly, the creators of the EPP site are especially sympathetic to small and midsized businesses, and acknowledge that many SMBs have difficulty navigating the complex and often arcane rules of government procurement. Accordingly, the site has an excellent FAQ section, an entire area called “information for vendors,” details on preference programs for small, minority- and women-owned small businesses, and the email addresses and phone numbers of EPP experts at each agency.

Many major government agencies and individual states have their own dedicated green purchasing websites; for example, The Department of the Interior’s, called Greening the DOI, can be found at doi.gov/greeningnew; and the state of Massachusetts has an in-depth EPP microsite on its main mass.gov site.

With so many tools to help you, and so much demand from both private sector and public sector buyers, now is the time for small businesses to start seeing green and reaping the many rewards of being environmentally friendly.

Julie Moline is a freelance writer, editor and editorial consultant in New York City.

By  Mark Amtower

If you’re reading this, I’m assuming that you currently sell (or want to sell) to the government, whether via GWAC, GSA Schedule or an open market (micropurchase) approach. (If you do not have any track record in selling to the government, go to GovernmentExpress.com, click on “Resources,” and spend a few days clicking on the links there. This web site is a tremendous free resource for the novice—and even for the experienced contractor, because in this market, the learning doesn’t stop.) Here are a few facts to put the potential of the government market in perspective:

• The U.S. government market (federal, state and local) represents over 25 percent of the GDP. If you add in education and health care, it comprises one-third of the GDP.
• There are over 87,000 governments in the U.S when you include the feds (1), states (50), territories (5), counties, school districts, townships and municipalities, special district governments (like transit authorities) and Native American tribal nations.
• There are over 20 million full-time government employees in the U.S. The Bureau of the Census reports that there are 151 million full-time employed adults in the U.S., which means that more than one in eight employees in this country works for a government or school district. Combined, these activities purchase every imaginable business product and service, as well as some consumer products and services.

In the business-to-government (B2G) arena, we deal in the “T” word—a trillion dollars spent annually— and it grows each year!

So, you want to market to a niche audience in the biggest business arena anywhere. Where do you start?

The first thing you have to understand is that this market, like any other, is driven largely by relationships: who you know, how you know them, and what they think and know of you. Once this process is started, you may have the basis for success.

The second thing you have to know: This is a slow-moving market, and no one makes a big hit quickly. Market share grows very slowly here. The third thing you need to know is that not all traditional B2B marketing methods work well here. Even if they do work, they may need some tweaking to conform to the rules and regulations (such as government ethics standards) that apply.

Here are the marketing methods most widely used to sell to the government—plus my take on the pros and cons of each, based on my 25 years in this market.

Marketing That Works
Developing an integrated marketing campaign to reach a specific government audience is predicated on many things, but mainly two: how they buy, and how they gather information. As my friend Fred Diamond of Diamond Marketing (www.FredDiamond.com) says, marketing that does not support sales is a waste of time. So make certain your marketing plans are aligned with your company’s sales goals.

SPACE ADS are the major traditional method of getting your message out to an audience. As there are many publications that target government audiences (Federal Computer Week, Government Security, Governing, Government Product News and many more), there are many places one can advertise.

There are some problems with space advertising, though. First, it is expensive, especially when you consider that space ads work only when you buy several and run them over time. According to research in the annual federal buying study by Market Connections(www.marketconnectinc.com), space ads are not that effective in the government market.

DIRECT MAIL still works in the government market, but with several caveats. In Washington, DC, the mail is still irradiated due to the anthrax issues a couple years back. This not only delays the mail, but makes packages less than attractive when they finally get through.

Mailing to regional offices has a better chance at being delivered and being effective–if you are targeting the right people with your mailer. Catalogs are still popular with both mailers and recipients, if they are targeted to the right people.

NETWORKING: We know from experience that face-to-face contact works. Selecting the right special interest group (SIG) or association to network within is critical. There are many to choose from, and often these forums have both private-sector and public sector members. The best way to determine which group you should join is to ask your customers which groups they belong to, and find out if contractors can join.

SEMINARS & EVENTS: Another way to get valuable face time is to host your own seminar or briefing. As these happen frequently any major city, there are a couple of ways to get attention and attendees for your event. The first way is to partner with another company, association, SIG or publication to publicize it. Another way is to make it more convenient for attendees by hosting a webinar or teleseminar. While there is no face-to-face during the actual event, you can offer those who attend and need more information a visit from one of your salespeople. There is much less cost associated with a webinar or teleseminar, and attendance should be higher.

EMAIL: Without a doubt, this is the most popular method of reaching audiences in recent years—but does it work? Government officials find email as annoying as everyone else does, and they are more likely to receive more of it–until the spam filters kick in. Government spam filters are set by the agency webmasters and predicated largely on two things: the amount of email coming through from a specific ISP and the time window in which that occurs. For instance, the webmaster may say that any email from a single ISP exceeding 150 emails in a 90- minute window triggers the filter. Spam does not work here. And if you are on any government contracting list, you have surely received emails from those offering the Instant Roadmap to Government Success via an email list of your buyers. Do not, under any circumstances, buy and use this stuff.

Reputation Matters
If you want credibility in the government market, you get it in only three ways: experience (reputation), speaking at key events, and being written about in the industry publications relevant to your audience.

PUBLIC RELATIONS: There is a credibility that comes with being in an article that you can never get from ads. Reporters are perceived to interview only experts, so if you appear in an article, you are obviously an expert. Selecting the right PR firm or getting out there and meeting key editors and reporters yourself is the only way to accomplish this. I have been quoted in several government trade publications, business magazines and other publications, and I can tell you this takes lots of work and lots of trust from editors and reporters. Once these relationships are established (note the “R” word again), however, you will be quoted with some frequency.

SPEAKING AT EVENTS: Speaking at an event often requires being an exhibitor, but not always. You must contact the event at least six months prior to the conference date(s) and ask about speaking opportunities. Have a one-page bio sheet (pdf format is good) prepared with your photo, brief bio and previous speaking engagements you have done.

A good way to break in to speaking is to offer to be a last-minute replacement speaker and/or a last-minute panel replacement speaker. All conferences have last-minute cancellations. Contact the event producer again 60, 30 and 10 days out from the event to remind them you are available as a replacement. Make it as easy as you can for them to select you.

SALES REPRESENTATIVES: Sales reps visiting government offices are important components of any marketing effort, and they must go armed with enough marketing and sales collateral to cover any contingency. Work closely with your reps to understand their needs and develop whatever they need to go bring home those sales.

CONFERENCES & TRADE SHOWS: One of the best ways to increase face time is to exhibit at industry conferences and trade shows. There are too many events all over the country every week for you to be at all of them. So you pare down the list two ways. First, ask your customers which events they attend. These go on the “possible” list.

Second, see if the event producer has a history of doing events in this market. After 9/11, many fly-by-night companies emerged to offer “exclusive” events with “key government decision makers.” My experience is, the more adjectives used in the promotion, the less likely the event is to deliver. Several companies also employ high pressure telesales to get exhibitors and sponsors. Some industry associations, like AFCEA (afcea.org) and ACT/IAC (actgov.org) have long track records producing events. The Federal Business Council (fbcinc.com) produces over 100 events annually and has been doing so since 1976. Select the events you attend and exhibit at carefully.

WEB SITE: The most important item on the list is your company web site. In order to compete successfully in this market, you must have a web site that “speaks government”–that uses the language of the public sector and understands and treats this market as separate from the business world. Government is about delivering service to citizens, accomplishing missions mandated by public law, and keeping our country safe. If your web site does not address these issues, you will never maximize your market share.

If you do all of the above correctly and manage your relationships well, you will start to get the much-desired colleague referrals. These are worth their weight in gold, as they cannot be purchased and they are coming from people that government buyers respect and trust. Now, you are well on your way to achieving success in the biggest market in the world.

Mark Amtower, founder of Amtower & Company, is one of the best-known marketing consultants in the government market. His web site, FederalDirect.com, is one of the most visited pages in the government industry, and his book Government Marketing Best Practices (GovernmentMarketingBestPractices.com) is in its fourth printing. Every month tens of thousands read his enewsletters and books, listen to his radio show “Amtower Off Center” on FederalNewsRadio.com, and attend conferences and events to hear him speak. He consults with a limited number of CEOs each year. He can be reached at Mark@FederalDirect.com.

By Tim Keane

Every one of us whose company has sold to large customers has faced this issue. It’s usually some form of waiting for an order. The customer (almost always a middle manager) has told you that you are the selected vendor. It’s just a matter of a “bureaucratic” step or two, and things will be great.

In the meantime, of course, you wait. And since the order is large, quite a bit depends on it.

The inequality in your relationship with the elephant often causes you to hesitate about doing what you know you should do. Each time you talk to your contact, you get reassurance—and, after a couple of times, a little testiness. So you wait. After all, you do not want to lose the order because of a perceived pushy attitude on your part. So you wait.

And, more often than not, you get a very rude surprise. . .at the very last minute. “I’m really sorry,” says Marvin Middle Manager. “Our CEO/CFO/COO/CTO has decided to cut back on XYZ and, well, we’re going to postpone this order until next month/quarter/ year.”

How can you protect yourself from this rude awakening happening again? The next time you’re trying to sell to the elephant...

1. Realize that when Marvin Middle Manager tells you, “Everything is great,” he believes it. At least, he believes it 90 percent. Be positive and sympathetic when he explains the situation to you.

2. Realize, however, that he’s seen orders like this cancelled by his superiors before. Ask him directly about the last time he saw a similar order cancelled and why. This can give you some insights to help you avoid the same fate.

3. Listen for the sound of office politics. If there are opposing camps surrounding this purchase, don’t assume your contact has won the battle just because he tells you he has.

4. If the specs change, worry. I recently saw an “order” coming that Marvin had specified in writing. “It just has to light up and blink,” he said. No problem. A month later, there was a whole lot more than that happening. New requirements. Competing camps. Non-cash alternatives.

5. Be positive with the client, of course. But plan— hard and severely—for the “Sorry, but...” phone call. Don’t bet the business on getting the order, or you will leave yourself no alternative but a very painful one.

6. Don’t tell Marvin how badly you need the order. He probably can’t do anything about it, and he may use this information to save face with his boss in a way that can hurt your reputation. (“Yes, Mr. Big, I now agree with you—I don’t think they are as financially sound as we had hoped.”) It’s not very nice, but it happens more frequently than you’d like to think.

7. If you have a client who gives you straight answers, doesn’t hedge and always delivers, do everything you can for them—above and beyond the call of duty. They are a pearl of great price.

Tim Keane is the Entrepreneur in Residence at Marquette University in Milwaukee.

By Dyanne Ross-Hanson

Experts and laymen agree that one constant of successful companies is a loyal, motivated group of key employees. Who are these key employees? They behave much like you, the business owner. They think like you and they act like you. They typically ask for more challenges and opportunities. They want to prosper and grow as the company does. These qualities not only contribute to corporate success, they are also a key component to the business owner’s successful exit strategy.

You may be wondering what motivating your key employees has to do with exiting your business. Should you decide to sell your business to a third party, you’ll discover that potential buyers place significant value on the strength of your management team—if that management team can be expected to remain after you have left the business. Similarly, if you contemplate selling the business to family (or to employees), the amount you’ll receive for the business after you’ve left is entirely dependent on the strength of your remaining management team. In short, capable management remaining with the company is the key to getting top dollar for your business.

One of the many factors involved in creating, motivating and keeping key employees is the creation of a properly designed incentive plan for key employees. Successful plans share four basic elements:

First, the plan is specific. Employees know, in advance and in writing, what standards need to be met to receive the incentive. These performance standards need to be measurable, i.e. company net income or revenue levels. The key employee earns the incentive bonus based on this performance standard, which when attained, increases the value of the business. This element is critical in a properly designed incentive plan.

Second, the incentive is substantial. For many years, a bonus of at least 10 percent of annual compensation (either in stock or cash), was the minimum necessary to motivate a key employee. But today, the minimum potential incentive has risen to 25 percent of annual compensation, and sometimes more.

Third, the plan handcuffs key employees to the business. Employees are motivated to stay with the company. If the employee severs employment before he or she is “fully vested,” he or she forfeits at least part of the deferred benefit.

Fourth, the key employee plan needs to be communicated in writing. To be successful, key employees must understand exactly how the plan works. It is best to present the plan face-to-face, with advisors present to answer any questions.

Having identified the elements that make up a successful incentive plan, you (as an owner) and your advisors must determine whether a stock-based plan or cash-based plan (or some combination thereof) will best motivate your key employees and cause them to stay with your company.

Equity-Based Plans
Providing the opportunity for stock ownership is one of the most powerful motivating and retaining factors a closely held business can offer to a key employee. It ties them to the company by making them part of it. It often requires them to pay for ownership.

This demonstrates their dedication and commitment to the company. Stock ownership also provides strong incentive for increasing the value of the company. These are all great reasons for transferring stock.

I would be remiss, however, if I didn’t mention the “not-so-great” aspects of transferring stock to employees. Even a minority position carries with it significant rights. Shareholders enjoy more than the right to share in the growth of the company. They also enjoy the right to access company books and records, the right to be informed about the financial condition of the company (including your salary and “perks”) and often, a right to be consulted and given the opportunity to vote on major company decisions including future sale of the business.

Cash-Based Plans
Most key employee incentive plans are cash-based rather than ownership-based. Or they take the form of rights to appreciation in stock value rather than stock itself. The primary cash-based incentive plans include:

• Non-Qualified Deferred Compensation plans (NQDC);
• Phantom Stock plans and
• Stock Appreciation Rights (SAR) plans.

The NQDC plan is a promise to pay benefits in the future. When contributions are based upon performance standards, funding the plan is often tied to profitability. Contributions are flexible and carry no minimum or maximum limits, unlike most Qualified Retirement Plans. NQDC plans can be completely discriminatory. Owners can vest future benefits or make them totally contingent upon staying with the company for a designated period of time. Forfeiture provisions are commonly part of the plan design. Benefits awarded to a key employee under a NQDC are not taxable until received. It is often advantageous to structure the payout over a multiple-year timeframe. This reduces the employee’s tax obligation and prevents giving a vested employee “seed money” to start a competing business.

Phantom stock offers key employees something that looks like stock, grows in value like stock and can be turned in for cash just like stock, but is not stock. Phantom shares corresponding to shares of stock are allocated to the participating employees’ account. The value of the phantom stock increases as the true stock value increases. When the employee terminates employment, the company pays him or her the per share equivalent value for each of the vested Phantom shares in his or her account.

A Stock Appreciation Rights (SAR) plan is similar to the phantom stock plan in that the value of benefits in the SAR plan is tied to the value of the corporation’s stock. Unlike phantom stock, the employee under a SAR plan is only entitled to receive the appreciation on a certain percentage of SAR units valued against the corporation’s stock, not the entire principal value of the stock. In all of these cash-based incentive plans, success depends on the careful design of vesting, forfeiture, payment schedules and funding devices.

Motivating key employees is critical to the overall success of your business. Not only do they represent your greatest business asset, they likely will be sending you the checks to support your retirement years.

Dyanne Ross-Hanson is the founder of Minnesota-based Exit Planning Strategies, LLC. Her company helps business owners achieve their financial and exit planning goals by making more informed, more strategic, and more tax-efficient choices. She can be reached at drh@exitplanstrategies.com.

By Chris Penttila

Walk into Fluid’s New York City studio, and you’ll see the firm’s 20 employees hard at work on music and editorial post-production projects for companies including eBay, FedEx and Sony. The company’s workload generates more than $6 million in annual sales. But on any given day, Fluid’s employees might also be doing pro bono work to help a nonprofit organization. The company’s pro bono projects have included producing post-9/11 public service announcements for the New York City mayor’s office and working on ads for the Alzheimer’s Foundation. “Our skill set allows us to do all kinds of promotions, ads and things like that,” says co-founder David Shapiro.

Fluid is just one company where employees—either individually or as a team—use their specific job skills to help a nonprofit entity. “There’s a lot of buzz around skills-based volunteers right now,” says Jason Willett, communications director for VolunteerMatch.org, an online nonprofit in San Francisco that connects nonprofit organizations with companies.

Large companies pushing the skills based trend want more from their employee volunteering efforts than good PR; they see volunteerism as a recruiting and retention tool and a way to groom company leaders. They’re also looking for better ways to measure the impact of their philanthropic efforts. “More and more businesses are tying their philanthropy—both their charitable donations and support for workplace volunteering—to their strategic business goals,” says Robert Goodwin, CEO of the Points of Light Foundation, a Washington, DC, organization focused on nationwide volunteering. “It’s not simply random philanthropy but is tied to a larger set of objectives.”

Skills-based volunteering taps every level of expertise a company has to offer. “You can go to the highest level of professional skill development, and volunteers [are] needed for that,” Willett says. “There’s especially a need for [highly specialized volunteers] because those are typically the most expensive skills to pay for professionally.” Meanwhile, the Deloitte/Points of Light “Volunteer Impact Study” done in 2006 found that 40 percent of volunteers actively look for opportunities to use their workplace skills.

Shapiro sees skills based volunteer projects generating direct benefits for Fluid, such as publicity and greater artistic freedom. But he warns entrepreneurs to manage the time investment, because pro bono projects have a way of expanding. “In the heat of the moment of doing something good, you can create a logjam in your company,” he says. Fluid tends to take on small, local projects to keep things manageable.

Want to get in on the trend? Start thinking about in-house expertise that could transfer to a nonprofit setting and the benefits it could generate. Ask employees for their ideas, too. “They might know about needs in the community that aren’t even on your radar,” Willett says. Be careful how you approach nonprofit organizations, however, because it can be hard for them to create specific opportunities on the spot. “Be sensitive to what the nonprofits are actually looking for,” Willett says. It could take a while to get an effective skills-based opportunity up and running. Once you do, get regular feedback from employees and the nonprofit organization so you can track results.

The impact of the skills-based trend will also depend on how well nonprofit organizations attract the help they need. Only 12 percent of nonprofit organizations in the “Volunteer Impact Study” matched projects to volunteers’ specific workplace skills. For employers who find the right fit, however, the payback can be compelling. “There’s a good feeling,” Shapiro says, “[in] doing something in your day that helps people, as opposed to just making money.”

Reprinted from Entrepreneur magazine, ©2006.Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area.

By Dennis Stauffer

Alright, you’ve gotten the message that to compete in today’s global economy, you need to be innovative. That part of the discussion is over. If you’re not already persuaded, stop reading now.

You’ve also heard about “the creative class” and the need to become the sort of place where talented, creative people want to work, but you’re still a bit skeptical. You wonder: Exactly what sort of “creative” people are we talking about? Moody, artistic types? Flighty “idea people” with little sense of the practical and relevant? You reason quite correctly that “creative” can be used to describe many different personalities. Yes, you need people with great new ideas, but those ideas need to be relevant to your business and all the hard realities that implies. You want people who are creative, yet practical; who are doers, not just thinkers; who understand that creating real value in the marketplace and capturing some of that value are crucial business objectives.

Those are the kinds of innovative people you need to find, not just the merely creative. So, how do you do that? How do you attract employees who will help drive your future growth, while screening out those who would “rock your boat” just because they think it’s fun? There are several answers to that question, and in many respects they are surprisingly old–fashioned.

Provide meaningful work.
This is a much bigger deal than many business owners realize. Very few of us go to work solely to earn a paycheck. Sure, we want to be paid, and fairly, but we also need to feel that we’re making a contribution to something beyond ourselves, that what we do matters. Research, going back more than 20 years, demonstrates that this is especially true of creative work. People are most creative when they enjoy the work itself and find intrinsic satisfaction in it. That can’t happen in an environment in which the larger purpose is unclear or discounted, or where employees feel no personal connection to a goal.

The bottom line is always important, but if that is the only objective you can point to, you’re not just failing to attract innovative people, you’re driving them away. There’s also some simple logic at play here: If you want people with ideas that connect to your business, you have to first ensure that your business connects with them.

Be flexible and challenging.
Do your people have real autonomy in how they do their work—including sufficient time to consider better ways of doing it? If everything’s nailed down and carefully monitored, you’re squeezing out everyone’s creative impulses. My dad, who worked for decades in retail management, used to say, “There are two kinds of bad employees: those who won’t do what they’re told, and those who won’t do anything else.” He wasn’t talking about managers, but he could have been, because managers set the tone that allows (or fails to allow) for that initiative. Creative people crave challenging opportunities to stretch themselves and use their wits. Are you leaving room for the “anything else”?

Get serious about cleaning up your “messes.”
It’s time to deal with the manager who berates people instead of coaching them. Control freaks? Rein them in. Hidden agendas? Expose them. Information bottlenecks and poor communications? Fix them. All those personnel and relationship issues you’ve been putting off dealing with because they’re not urgent to your business objectives? Think again. In the new economy, the so–called “soft” skills are the new “hard” skills.

Extensive research has found that employees can readily identify good and bad working environments, based on characteristics that measurably impact creativity. Trust, transparency and a low level of conflict are among those essential characteristics of an innovation culture, not to mention the sort of working environment we are all entitled to. When those characteristics aren’t present, your most capable and creative people are the first to recognize such problems—and, if those problems are not addressed, they’re the first to leave. Dysfunctional behavior is something you can no longer afford. Make everyone accountable for eliminating it.

Relax and laugh.
Seriousness does not equate with productivity. During the boom days of the ’90s, much was made of companies bringing in foosball tables and basketball hoops, and building creativity centers. Such steps may or may not be appropriate for your organization, but what’s always appropriate is a healthy sense of humor and a little playfulness. It energizes people, especially those who are creative. The Harvard Business Review cites research showing that highly effective managers use twice as much humor as their average counterparts.

Forgive.
Creativity and innovation are about trying things that haven’t been done before. Inevitably, not all attempts will succeed, so you have to allow people to fail. When you come down on someone for trying a new idea, you’re sending a powerful message to them and everyone else: “Don’t do that again.” Result? They won’t. You can’t eliminate all risk from new ideas, so focus on managing that risk by setting appropriate boundaries and implementing thoughtfully, leaving some room to experiment and even play a little. You want people taking thoughtful risks, so create an environment that makes it safe to do so.

Get going.
Does this sound too “touchy feely”? It shouldn’t. What makes a great working environment hasn’t changed, but those characteristics now have greater value. They’re needed to attract and keep those individuals who will drive innovation for you. And there’s another benefit, an important one: The same strategies that attract innovative people (and, yes, if you do these things, the word will get out) are strategies that will turbo-charge the creativity of every employee you already have. What’s especially reassuring is that none of these things compromises your business objectives.

Oh, and what about those flighty, flaky types? No problem. This is much too practical an approach. They just won’t connect.

Dennis Stauffer, founder and president of Insight Fusion Inc., works with organizations, associations and global companies to boost their innovation and growth. He’s the award–winning author of Thinking Clockwise: A Field Guide for the Innovative Leader. For more information, go to www.InsightFusion.com or e-mail info@insightfusion.com.

By Ruth King

Atlanta, Georgia, has always been a magnet for people. Its geographic area, moderate climate and transportation advantages have always attracted residents and visitors to the city. From the early 1800s when it was called Terminus (because many different railroads terminated in the center of the city) to today, when it has become a metropolitan area of over 5 million residents, people have been drawn to the city’s genuine Southern hospitality.

Railroads, and subsequently cars and airplanes, were responsible for Atlanta’s exponential growth and its concomitant problems and solutions through the centuries.

Now, the city is proactively dealing with its over 20 percent growth rate since 2000 and becoming a “Best in Class” city.

Some history: Atlanta’s first airport was started by visionary William Berry Hartsfield in 1925. As mayor from 1938 to 1961, he oversaw tremendous growth in the city. As a result, Atlanta slowly became racially divided, with the African-American population in the urban areas and the white population in the suburbs. Atlanta was becoming a city where race was an issue that divided the city and caused it to lose its attractiveness.

In 1969, when racial tension was high, the city’s leaders formed Leadership Atlanta. The organization’s purpose was to foster communication and understanding and to create an environment for different races, cultures, religions and beliefs to work together.

Leadership
Atlanta achieved its goal. It is now the oldest training program of its type in the United States and is the model for many other cities. (Full disclosure: I was a member of the Leadership Atlanta Class of 1991).

Airports and roads contributed to the continued growth and urban issues. When Hartsfield Jackson Atlanta airport was expanded in the late 1970s, then-mayor Maynard Jackson was instrumental in ensuring that at least 25 percent of the work on the $450 million new airport went to minority-owned businesses. This became his legacy: an airport that was completed on time and on budget with white and minority business owners truly working together.

In the 1990s the city experienced more growing pains. The population swelled to well over 3 million people, and the city faced budget deficits and government corruption.

A strong public leader emerged. Shirley Franklin had never run for public office. However, she was instrumental in Maynard Jackson’s term in office, and was the most senior female executive on the Atlanta Committee for the Olympic Games (ACOG) for five years before and during the 1996 Atlanta Olympic Games. In 2003, Ms. Franklin was elected Mayor of Atlanta and began the difficult task of turning around the city and leading its growth once again.

She asked Bain and Company whether they would assist her in determining what a “Best in Class” city would look like. They agreed to assist the City of Atlanta pro bono. In the spring of 2003 Bain and Company began looking at best practices and developing the “New Century Economic Development Plan” (EDP). The EDP was approved by the Atlanta Development Authority in December 2004. The goals that were set were aggressive and not easily achieved.    

In addition, Mayor Franklin had to convince both the public and private sector that the EDP was a worthy goal for Atlanta. She succeeded, and over 50 private, city, county and state organizations banded together to work towards becoming a “Best in Class” city. The chart below shows the goals and results of their efforts to date.

As a result of the New Century EDP, three key initiatives emerged: the Atlanta BeltLine, The Peachtree Corridor and Downtown Development. All are receiving national attention and scrutiny.

The Atlanta BeltLine
The city wants to entice people who are interested in having greenspace and mixed developments to move to Atlanta. As in every great city, increased greenspace is a major driver for economic development. Mixed-use communities are attracted to the linear park and new park acreage. The BeltLine’s park system will be as important as its railroads, streetscapes and other infrastructure in determining the location and concentration of development in Atlanta.

The Trust for Public Land has named the Atlanta BeltLine as one of its top program initiatives. The Trust for Public Land (TPL) is a national, nonprofit, land conservation organization that conserves land for people to enjoy as parks, community gardens, historic sites, rural lands and other natural places, ensuring livable communities for generations to come.

Today, Atlanta ranks near the bottom of U.S. peer cities in available park land. The BeltLine proposal increases greenspace in a connected linear system that would become, in effect, one of the nation’s great regional parks. It is the part of the New Century EDP that has progressed the least since 2004.

The goal is for the BeltLine to add 1,200 acres of greenspace to the existing 700 acres. In addition, the BeltLine will create a linear park to connect 40 of Atlanta’s existing parks.

This is a very challenging goal. However, like the 1996 Summer Olympic Games, this project has captured the imagination of Atlantans and their leaders. The beauty of the BeltLine is that it runs through 45 of Atlanta’s neighborhoods, while also touching areas that are abandoned or underutilized.

The BeltLine’s unique configuration and prime location provides the framework to concentrate Atlanta’s growth for retail and industrial business, as well as housing. As Will Rogers, president of the Trust for Public Land, stated, “This is the most exciting urban greenspace project in any American city.”

At the present time, it is 17 percent towards achieving the goal in 2009.

The Peachtree Corridor
Peachtree Street has always been synonymous with Atlanta and the heart of Atlanta. In the 1800s it was the Terminus. Atlanta’s growth has expanded in all directions from Peachtree Street. The Peachtree Corridor, which encompasses Peachtree Street and some connecting streets and loops, is 14.5 miles in length. For some perspective, it is two miles longer than Manhattan Island. The corridor stretches through the heart of Atlanta, and is the cultural and economic spine of the city. It links many of the city’s attractions, and more than a quarter-million people travel to the corridor every day.

The Peachtree Corridor represents both the center of Atlanta’s existing economic strength and one of the greatest opportunities for economic development and commercial activity. Effectively coordinating, planning and developing the city’s efforts will encourage balanced growth in the corridor and, with other city initiatives, will support increased connectivity in Atlanta.

The Peachtree Corridor Task Force has just completed its comprehensive set of recommendations to Mayor Franklin. The plan includes trolley systems as well as residential, commercial and walking areas.

The recommendations are for a pedestrian-friendly Corridor, supported by a transit system that will promote economic development by encouraging significant new commercial and residential activity. It is modeled after Michigan Avenue in Chicago, the Champs-Elysees in Paris, and many other walking city streets worldwide.

The overall plan is for a 20-year, approximately $1 billion development that brings together public and private money. Although the Peachtree Corridor will not be completed by 2009, it shows the ability of the city to bring public and private sectors together to work toward a common goal that is good for the city and the region.

Downtown Development
Creating and sustaining a true middle class is an important goal of Mayor Franklin, according to Sonya Moste, Communications Director for the Atlanta Development Authority. This requires both housing and job opportunities.

Housing
As part of the New Century EDP, Mayor Franklin established a goal of creating 10,000 units of affordable workforce housing by 2009. To assist in accomplishing this endeavor, the city, the Atlanta Housing Authority and the Atlanta Development Authority have partnered to implement a new $75 million workforce housing initiative for persons and families who desire to reside in the city. The program has already received unanimous support from the City Council, the Atlanta Housing Authority Board and the Atlanta Development Authority Board of Directors, and funding should be available in 2008.

More than 900 housing unit buildings have been approved for the homeless and are in various stages of construction. The goal is to end long-term homelessness and help homeless families stabilize their lives and regain a stake in the community.

The single-family mortgage assistance program is geared toward helping people make down payments to purchase their first homes. It attracts potential buyers who might not have been able to afford a home in the city without the assistance.

The Eastside Tax Allocation District (TAD) Affordable Housing Purchase Program is helping to make home ownership affordable for low- and moderate-income buyers. There are more than 180 homes available within TAD, and since 2006, 24 homeowners have purchased homes.

Other programs are ongoing with the Atlanta Development Authority the Atlanta Housing Authority, and private builders to reach the goal of an added 10,000 housing units for the Atlanta workforce.

Job Opportunities
Job opportunities are also critical for those who seek jobs and those who run businesses.

For job-seekers, many organizations are working toward attracting businesses to the Atlanta area. The Economic Development arm of the Metropolitan Atlanta Chamber of Commerce is committed to creating a high-quality business environment in what the chamber calls “Industries of theMind.”

These are companies that are heavily dependent on intellectual capital, including biotech and other technology-oriented companies, as well as logistics/transportation, computer software and services, and telecommunications companies.

The Chamber’s 2007 goal is to bring 50 new companies and 3,900 new jobs to Atlanta. This will spur a ripple effect that brings the Chamber’s contribution to new job growth to 10,000 in 2007.

For business owners and potential business owners, help is available to start and grow businesses. Metro Atlanta is home to three thriving business incubators and at least one more will be completed this fall.

Major Atlanta universities teach business and entrepreneurial courses as well as offer aid to new and existing business owners. The Small Business Development Centers, with offices at Georgia State University and other locations around the metropolitan Atlanta area, and Georgia Institute of Technology, with its Atlanta Technology Development Center (ATDC), are two examples.

The Women’s Economic Development
Agency (WEDA) was founded in 1992 as the Women’s Entrepreneurial Center (full disclosure: I was one of the founders; however, I had lost touch with the group and didn’t know that it had merged until I did the research for this article). To date, WEDA has assisted over 10,000 Atlanta area residents through a variety of economic development programs. The organization includes programs in English, Spanish and Braille, and makes accommodations for physically challenged clients.

Since 2002, nearly 900 businesses have started as a result of WEDA’s programs, which include a 14-week business planning process. Within one year 75 percent were still in business and within three years 55 percent were still in business. Nearly 200 jobs were created (excluding the owner’s position).

WEDA is one of the 12 organizations created to assist new and existing businesses in Atlanta. Other major organizations include the Service Corps of Retired Executives (SCORE) and University Based Technical Advisors.

Will Atlanta become a Best in Class city by 2009? Mayor Franklin has pulled together the community and focused it on achieving that goal. Economic and other forces could derail the goal. However, with a strong leader and a strong history of successful public/private partnerships, Atlanta is poised to become a “Best in Class” city by 2009. This will be Shirley Franklin’s legacy to Atlanta.

Ruth King is a serial entrepreneur. Over the past 25 years she has owned seven businesses. Her first, Business Ventures Corp., began in 1981. Through Business Ventures Corp., she travels throughout the United States coaching, training and helping small businesses achieve the business goals they want to achieve. The Ugly Truth About Small Business: 50ThingsThatCan Go Wrong and What To Do About. It is her first business book.

By Peter B. Terenzio

Hiring the right employee the first time not only saves you time and money but will enhance the overall success of your business. The wrong hire will certainly cost you time and money, but could also cost you customers, reduce productivity, or worse, damage employee morale. While hiring the right employee will never be an exact science, implementing an interviewing and hiring process will go a long way towards ensuring that the new employee you hire will not only have the skill and attitude to do the job you need done, but will also fit into your company’s culture and work well with your other employees and your customers. There are 12 key steps to a successful interviewing and hiring process:

Step #1
Prepare a list of the responsibilities and skills the job requires. This list of responsibilities should include all the duties, tasks, skills and schedule requirements which encompass the job being filled. The list should include any required past work experience or professional certifications required in the position. Finally, and as importantly, you need to identify and list those attitude and personality elements of the job that will be important to you, your other employees and your customers.

Here is an example of a list of responsibilities for an in-house customer service representative who will be interacting with customers over the phone:

• Full-time position Monday through Friday (8 a.m. to 4 p.m.), some Saturdays required in season
• Ability to work overtime
• Computer skills (strong keyboard skills), knowledge of Microsoft Word and Excel, ability to talk on the phone and type in orders, requests, etc.
• Writing skills
• Pleasant, professional telephone skills (to be assessed)
• Basic math skills (to be assessed)
• Bilingual in Spanish a plus
• Past customer service experience, particularly in a home service company
• Demonstrates a positive attitude toward customers and solving problems
• Demonstrates an ability to work with others and be a team player
• Flexible, able to handle several tasks at the same time, willing to help in the stock room or other assigned duties when phones are slow
• Demonstrates an interest in the business and willingness to learn
• Reliable

This list now serves as your guide for filling the open job. You will use the list to develop the questions to be used during the next phase of the process. Also, this list of duties, required skills and experience will help you compose the ad you will use to solicit applicants for the job.

Step #2
Prepare the standard list of questions you will use for both the initial phone screening and the first in-person interview. Based on your list of responsibilities and duties, prepare a list of questions you will use for an initial phone screening and first interview. You should use the same list of questions for every candidate. These questions should be direct and open-ended and should cover the skills, duties and behaviors required in the job.

Open-ended questions are the most effective means to elicit the information you need to judge job candidates. Closed-ended questions (those that can be answered with only a “yes” or “no” response) can lead you to an uninformed conclusion about the candidate’s skills or attitude about the area in question. For example, a poor question on customer service is: “Do you have good customer service skills?” A more effective question regarding customer service would be: “Can you give me some examples of how you went above and beyond in providing outstanding customer service to a customer?” In the first question, the candidate can give you a simple “yes” or “no” answer and you will have to accept their word on the matter. However, the second question forces the candidate to go into detail and give you specific examples. In this case, if the candidate is unable to cite solid examples, he or she is most likely not the right candidate for the job.

Always include in your list of questions: “What attracts you to this position?” and “Why are you open to a job change at this time?” These two questions help you assess the candidate’s motivation and their degree of interest in the position. You should be able to sense the level of excitement and enthusiasm of the candidates— thus indicating better potential candidates for the position.

Step #3
Conduct a screening interview over the phone. Using three or four set questions, conduct an initial phone screening interview with each candidate you deem may be a good possibility for the position. Again, these should be the same questions for each candidate. These questions should be basic but key to the job. Good screening questions may ask about a particular skill set that is essential for the job, about compensation expectations, and about the candidate’s ability to meet the schedule for the position. A quick phone screening eliminates candidates who don’t meet the basic requirements of the position, can’t meet the required schedule, or want more compensation than you are able to offer. This will save you time in the hiring process because in a few short minutes you can ascertain the candidate’s basic fit and reserve your time and energy for in-person interviews with candidates that meet the basic job specifications. This phone screening interview has an additional benefit for any position requiring telephone skills because you can determine how professional the person will sound over the phone to your customers, vendors and other business contacts.

Step #4
Review the candidate’s resume in detail prior to the first in person interview. During this review, focus on the number of jobs the candidate has held and what the tenure of each of those jobs has been. Also assess how each of those jobs may apply to the position you are looking to fill. Of greatest importance is to identify any date gaps in the candidate’s resume. If the person didn’t work between 2003 and 2004, you need to ask about the gap. You should also always question why the person left past positions. Both these areas of inquiry will give you insight into the candidate’s work attitudes, dedication and reliability. Don’t be overly optimistic. If someone is changing jobs frequently, what makes you think your position will be different? And if every job change was because they couldn’t get along with their boss, what makes you think the candidate will like their next supervisor? Set aside time to do this review before meeting the candidate; it should not take place 5 minutes before the interview or in front of the candidate.

Step #5
Test for skills. When possible, it is important to incorporate some assessment of key skill requirements into the interviewing process. Whether the skill is a candidate’s knowledge of how to use a particular piece of software or of how to operate a forklift truck or a jackhammer, make arrangements that allow you to observe the skill being performed by the candidate. If the job requires writing, set up a scenario in your place of business to check their ability to produce a well written document that fits your needs. Be creative and be sure to observe the skill performed in person.

Step #6
Approach the interview as if this is the candidate’s first job assignment. It is important that you have this mindset when evaluating the job applicant’s candidacy. Ask yourself the following questions:

• Was the candidate on time for the interview?
• Was the candidate’s dress and grooming appropriate for the position?
• Was the candidate enthusiastic and prepared for the interview? Did he or she ask good questions?

If the answer to any of these questions is no, look out! If a potential employee is not on time, unenthusiastic and doesn’t display a strong interest in the position during the interview, what makes you think he or she will do so as an employee when taking care of your customers?

Step #7
Set the stage for the interview. To receive open and honest responses to your questions as well as be able to evaluate the candidate’s responses accurately, it is important to set the right environment. First, interview in a place where you will not be interrupted and can focus only on the interview. If your place of business won’t work, then improvise— use a hotel lobby or a coffee shop. Start the interview by telling the candidate, “I need you to be open and honest about your responses to my questions and I will do the same so that we can both properly conclude whether or not this job is a good fit for you.” You don’t want to make a mistake by hiring the wrong person or—even worse—let a great candidate go by because you were not focused.

Step #8
Don’t talk too much during the interview: let the candidate do the talking while you do the listening. Most interviewers talk too much during the interview and either end up feeding the right answers to the candidate or don’t find out enough about the candidate. Again, use open-ended questions, ask for examples of their successes or behaviors, and keep your ears open. You will be surprised by what candidates will tell you if you let them.

Step #9
When possible, use multiple interviewers. If at all possible, especially if you are hiring an important position for your firm, use multiple interviewers as part of your process. In this instance, the first interview process will consist of two separate interviews. Each interviewer should have a distinct set of questions to ask with a few duplications to check for consistency of the candidate’s responses. Two views are better than one, and often a second interviewer will discover something positive or negative that the other interviewer missed. If you don’t have an appropriate person in your business, use your accountant, lawyer, business coach or a business colleague you trust.

Step #10
Always see a candidate twice before you think about extending an offer. This is a critical step that should always be followed when you think the candidate could fill your job opening. In many cases, you will have your top candidate/ candidates come back for a second interview, but it should only be individuals you are seriously considering hiring. You may think this is time-consuming, but when making an important decision, you need to reflect on your decision. You need to see the candidate again to validate your earlier impressions. During this interview, you also need to ascertain how the candidate feels about the opportunity. I highly recommend you ask these questions at the start of the second interview: “Now that you have been in for an interview and had a chance to think about this job, what excites you about this opportunity? What concerns you?” If you still feel strongly about the candidate, the second interview is a chance to begin the bonding process and tell the candidate why you think they would fit well in your company.

Step #11
Always check references. Many people feel you can’t get honest references today or that candidates will only give you references who will say great things about them, so checking references is not worth the time and effort. I couldn’t disagree more! A reference list is an important part of the due diligence process in hiring the right employee. If you use the reference process right, you can get some valuable information to confirm your decision. To make references valuable, you need to do the following:

• In almost all cases, the references should be business references only.
• Review the list. Make sure you have titles and know their relationship to the candidate. Try to get at least two former bosses, a peer and, if the candidate was in a supervisory position, someone who worked for them. If a candidate doesn’t list a former boss as a reference, warning bells should go off in your head! If a former supervisor can’t list a former subordinate as a reference, another warning signal should go off in your head.
• Make the call yourself to at least one supervisor; don’t delegate that to someone else in your company or a third-party recruiter. When you talk to the supervisor, first verify the business relationship and time the candidate worked with the individual. Then ask pointed questions to verify the candidate’s skill set. For example, “Did the candidate use Excel often in their position, and what was their level of competency?” Finally, try to ask these two open-ended questions: “What is the best way to manage and motivate this person? What could this person improve on?”

Step #12
You are both a buyer and a seller in the interview process. Remember—always be a buyer first! There are times when you will fall in love with a candidate immediately during the interview process. Resist the urge to short-cut the process. If the individual is the right candidate, then using the process will confirm your first impression. If not, you saved yourself a bad hire. You become a partial seller during the second interview and a complete seller only after you have completed the reference checks.

Interviewing and hiring will never be an exact science. But, if you use a process and stick to it, you will make more solid hires and greatly reduce the chances of making a poor choice that could hurt your business.

Peter B. Terenzio, Jr. (pterenzio@tab-newjersey.com) is the co-founder of L&T Associates, Maximizing Business Results, LLC. L&T Associates specializes in providing management consulting and coaching services to businesses. Prior to forming L&T Associates, Peter spent 25 years as a senior business executive in the fields of human resources, operations and general administration within the manufacturing, home service and retail business sector.

By Steve Cooper

This year, the Department of Homeland Security (DHS) is celebrating its five-year anniversary. Like other federal agencies, DHS is looking for small businesses to step up and help with its efforts. Last year DHS awarded roughly $3.9 billion to small businesses. Talk about a security blanket.

Larry Orluskie, a spokesperson for DHS, says, “Anyone who wants to do business needs to get a handle on the Federal Acquisition Regulation (FAR). Getting an understanding of how the federal government does contracting is one of the core processes.”

To get started, visit the FAR website at acquisition.gov/far and download the voluminous PDF manual. Next, head over to the Open for Business section on the DHS website dhs.gov/openforbusiness.

“Open for Business is our one-stop website for businesses,” says Orluskie. Here, visitors will find information on grant opportunities, points of contact, event information and much more.

One of the first links you’ll want to click on is “Contract Opportunities” in the left-hand navigation. “We do a forecast of opportunity. We reach out to the different components of DHS and say, ‘Tell us what you’re going to be looking for in the future,’ says Orluskie. “Then we look at it and say, ‘That may be a good thing for small businesses, something to set aside.’” Set-asides mean that a certain percentage of a government contract is reserved, or “set aside,” for small business.

Clearly, reaching out to small businesses is a priority for DHS. Last year, of all contracting dollars awarded from DHS, 32.5 percent went to small businesses. Women-owned small businesses received roughly $790 million of that money.

A great opportunity to make initial contact with DHS is to attend one of its events held throughout the country. The Open for Business site lists details of where DHS representatives will be waiting to hear from small business owners. Their Vendor Outreach sessions allow business owners to set up a pre-arranged 15-minute appointment with DHS officials. Orluskie notes that one of the biggest challenges business owners face is grasping the federal procurement process. He says these free events are the perfect opportunity to get your specific questions answered.

If you’ve got the technical chops, Orluskie says a lot of DHS’ success with small businesses has to do with two large IT contract opportunities: EAGLE and FirstSource. EAGLE, which stands for Enterprise Acquisition Gateway for Leading Edge Solutions, is a department-wide platform for acquiring IT service solutions in five areas, including software development; management support services; engineering design, development, implementation and integration; operations and maintenance; and independent tests, evaluation, validation and verification. The goal of FirstSource is to provide DHS with a variety of IT products like networking equipment, imaging products and wireless technology.

If you’re worried about competing with the big guys, don’t be. Even when a contract is awarded to a big company, Orluskie says DHS works to partner that company with small businesses to fulfill the contract. DHS has even created a Mentor-Protégé Program to assist in just that.

At the time of print, the national threat advisory level was “elevated” (yellow). That means DHS has more needs—and if your small business can help with those needs, you could be seeing green.

Steve Cooper spent over six years at Entrepreneur Media, most recently as managing editor of Entrepreneur.com. He now runs his own business, Hitched Media Inc. (hitchedmag.com)

Virtual businesses take off with a big boost from a variety of technologies. Here’s how to make virtual work for you.

It doesn’t matter where your office is located. It doesn’t matter how many employees in cubicles you have. You may be working from a room in your house and still marshalling the skills and experience of five, 10 or 20 workers that are scattered around the globe. When a customer visits your web site or calls your phone, you give off the impression of a much larger company. You’re a virtual small business and it takes the smart use of the right technologies to make your business tick.

Not every business is built to be virtual. Professional services like consulting, public relations, web design, real estate services and graphic design are all good candidates. Businesses that require you to be mobile or visit your clients on location can benefit from a virtual setup. When you don’t have to have employees at desks underneath the same roof, you can build a lean company that relies on trusted contractors, freelancers and virtual workers to get the job done.

NONTRADITIONAL EMPLOYEES
No business is an island. Whether you need full-time employees, temporary contractors or partners, finding the right people in the virtual world requires just as much due diligence as it does in the physical world. Kathy Donnell, founder of Donnell Meeting Management in Colorado, found her virtual workers in a decidedly old-fashioned manner. She met her future administrative assistant while working on-site in Los Angeles, and her travel and transportation expert is a friend she already knew who lives in Orlando, Florida. Being able to offer staff the flexibility of working for a virtual business has allowed her to attract top talent. “I don’t want the people who work with me to feel I own their souls,” says Donnell. “I want them to enjoy the same flexibility that I have.”

There are many web sites that can help you find virtual workers to complement your business. Elance (elance.com) lets you search for workers and sort the possibilities by criteria like feedback, reviews and hourly rates. Guru.com is a massive online service marketplace where you can look for freelancers, post your projects and get quotes. Business focused social networking site LinkedIn.com is a great way to stay in touch with colleagues and get recommendations for and view the work histories of potential employees.

YOUR HOME ON THE WEB
As a virtual business, your web site is often your main calling card to the world. You may decide to hire an independent web designer to get you started, or you can look to one of the many affordable services available online. It doesn’t get much cheaper than the Microsoft Office Live Small Business program (smallbusiness.officelive.com).

A custom web site domain name, hosting, multiple email accounts and simple do-it yourself web site templates are all free for the first year and $14.95 per year after that. Yahoo! Small Business (smallbusiness.yahoo.com) recently unveiled an $11.95 per month web hosting plan with unlimited disk space, data transfers and email storage. Straightforward web site design tools get you up and running quickly. With either of these services, it’s an easy step to move into ecommerce and online sales using Microsoft’s Store Manager or Yahoo! Stores. Many web hosting companies also offer their own template- based site design programs. Look for a company with extensive small business experience that can help you as you grow.

TALK UP A STORM
A lot of business can be conducted over the internet, but phones aren’t going away anytime soon. “For many of our businesses, their phone system is their lifeline. It’s the first thing that their customer interacts with,” says Erik Arvidson, public relations manager of GotVMail (gotvmail.com). A virtual phone system features an automated attendant that answers all incoming calls and then connects the caller to the appropriate person (regardless of where they are). Extra features like fax handling, toll-free numbers and having calls forwarded to multiple numbers (including your cell phone) can accommodate the particular needs of any virtual business. All of this comes without having to invest in any new phone hardware. Providers like GotVMail, OneBox (onebox.com) or RingCentral (ringcentral.com) can give you a professional edge while accommodating remote offices, home offices or your mobile lifestyle. Monthly subscriptions can start as low as $10 per month.

If you have more complex needs and are interested in consolidating your internet, wireless internet and voice services, an option like AT&T’s Business in a Box (att.com/businessinabox) can handle your calling requirements as your virtual business grows. This Voice over Internet Protocol (VoIP) solution is an all-in-one hardware and services system that is designed for small businesses that don’t have their own IT person. On the other end of the scale, simple home office setups can take advantage of VoIP cost savings through service providers such as Skype (skype.com) or Comcast Digital Voice (comast.com) if you have a cable internet connection.

SOFTWARE EVOLVES
You don’t necessarily have to give up your familiar desktop software when you run a virtual business. These applications are all finding ways to connect with the web to help you share and collaborate with far-flung workers. “Sometimes it’s important to have information when you’re not online,” says Beth Kohler, director of product management for ACT! from Sage Software (sagesoftware.com). Customer relationship management software ACT! is a desktop focused program, but add-on services can turn it into a web hosted product. Most virtual businesses will find it takes a mix of online and offline applications to run smoothly.

Web applications are a great way to keep your team in touch, your business streamlined and your costs down. Microsoft Office Live Workspace (workspace.officelive.com) is an online site for storing and sharing Office documents. If you want to go completely web-based with your document needs, Google Apps (google.com/a) and Zoho (zoho.com) are two popular providers of net-based office, communications and productivity applications. You can create, edit, share and collaborate on documents with your virtual workers or clients.

With so many web applications available, chances are you can find one that will fulfill your particular business needs. Even though Kathy Donnell’s meeting management company is virtual, she still has to handle real-world tasks like registrations, name badges and travel preferences for attendees. She uses the Isis GoldReg (goldreg.com) web-based attendee management system that can be accessed from anywhere–whether she’s at her home office or on site at a meeting. These sorts of industry-specific niche web applications can be smart tools for a virtual business.

While web applications can fill the shoes of desktop software, web services are a compelling way to handle many of your virtual business necessities. Even your printing can be done without ever having to set foot in a copy shop. VistaPrint.com is a popular stop for low-cost business cards. 48HourPrint.com is geared up to quickly handle demanding virtual business print needs ranging from business cards to brochures to pocket folders. “We are a virtual business ourselves. What we’ve done is leverage the internet and very advanced technology. People all over the U.S. are getting their printing needs fulfilled from wherever they are,” says Ray Pinard, president and CEO of 48HourPrint.com. “This is a much, much more efficient, streamlined and cost-effective process.”

TAKE YOUR ACT ON THE ROAD
Most virtual business owners can’t keep still. With no main office to tie them down, they’re apt to be found on the road, in vacation spots, traveling to clients’ offices, logging onto wireless hot spots in airports and checking into hotels all over the world. Having a reliable cell phone and trusted software and services to turn to is half the battle of being a successful mobile and virtual entrepreneur. Another part is having the hardware that gets you online and keeps you in touch.

Laptop computers are still the top tools for working on the road. Since your business is virtual, you can’t afford to be out of touch with your web tools. Wireless hot spots can be useful, but wireless broadband is gaining in popularity as an anytime, anywhere way to get online. Older laptops can be retrofitted, or you can now purchase a new laptop with wireless broadband that works out of the box. “We’re starting to really integrate broadband technology into notebooks with the card, antenna and software pre-installed,” says Lisa Baker, director of Small and Medium Business Marketing with

Hewlett-Packard. “It provides that really high-speed internet connection through 3G (third-generation) wireless networks.” AT&T, Sprint and Verizon cover most of the larger cities in the U.S. with wireless broadband and are expanding their networks all the time.

GET THE WORD OUT
Your virtual business is off and running. You have a professional web site, phone system, web applications and virtual workers in your corner. Now it’s time to attend to some virtual business marketing. “If you don’t have that physical presence, your communications play an even greater role in connecting you and your customers or prospects,” says Eric Groves, senior vice president of worldwide strategy and market development with email marketing and survey products provider Constant Contact (constantcontact.com). “In many respects, your communications are your storefront.” A professional looking email newsletter, web site and search engine ad word buys can all help generate sales. If marketing isn’t your strong suit, don’t hesitate to bring in a virtual assistant or other remote worker to help shoulder the load

Virtual businesses make sense for a lot of reasons. “The greatest advantage is that you can offer the same quality of service to your clients and you don’t have to charge them for the overhead you would normally have,” says Donnell. “I can well compete with the bigger companies.” The biggest point to remember when you’re launching or growing your virtual business is that you are not alone. You’re connected by technology to your employees, contractors and customers. Experiment with the available tools, take advantage of online communities and prepare for virtual business technologies to just get better and better.

AMANDA C. KOOSER is a journalist with nearly a decade of experience covering small business and technology issues.

By Marlene Bauer Pissott

“A small business’ first instinct is to cut spending when the market slows,” says Marlene Bauer Pissott, Founder and President of InGroup, Inc. and WebSwagger.com. “Where they make a mistake is cutting their marketing budget altogether. Now is actually the time to step-up marketing efforts.”

The Center for Research and Development conducted a study during the 1990 recession that reported businesses who increased their advertising during the economic downturn obtained 4 ½ times the market share gain of competitors who did not increase marketing spending during the same time period.

Pissott explains however, that when the economy is suffering, small business owners need to market wisely. Here are some ways to focus your strategy:

• Stick to the basics of marketing. Every small business should have at least a Web site, brochure, and proper signage with important contact information including a Web address. 
• Evaluate your marketing budget by reviewing previous campaigns to weed out any that did not have a favorable return on your investment. Repeat what worked the best.
• Consider staying local with marketing and advertising campaigns. Target a smaller audience in your surrounding area. When times are tough communities become tight-knit and prefer to support local businesses that they know and are close-to-home.
• Target your message to the audience (or demographic) you are reaching out to.  Speaking specifically to them will more likely get you a response.  
• Call to action!  Every advertisement, direct mail or e-mail campaign, and Web site should have an incentive to motivate a response such as a free consultation or limited-time offer.
• Don’t rush to offer deep discounts. This can affect the perceived value of your business, which can have a bigger impact on your bottom line once the economy turns around. In addition, the customers you gained while you reduced your prices will most likely leave as your prices return to normal.
• Offer referral incentives to maintain long-time customers and encourage new business. Your loyal customers can bring in qualified leads and new clients who are ready to purchase the great product or service they heard about from their friends.

 “The most important thing to remember is that the economy will turn around,” says Pissott. “You want to maintain your visibility so that you’re the first name on customers’ minds when they start spending more freely again.

Marlene Bauer Pissott is the President and founder of InGroup, Inc. and WebSwagger.com.

Serving the needs of small businesses and professional service firms around the nation, WebSwagger.com offers unique, professional and affordable Web sites and co-branded marketing materials. Web services include creative development, hosting, e-mail, basic site optimization, e-commerce and more.  Print materials include brochures, folders, announcement cards and other collateral to assist with sales and marketing efforts.

WebSwagger.com is managed by InGroup Inc.— full-service creative agency, in Bergen County, N.J., providing innovative marketing and communications services since 1995.  For more information visit www.WebSwagger.com or call, (888) 772-6400.

By Marlene Bauer Pissott

“Marketing is such an essential aspect of running a business,” says Marlene Bauer Pissott, Founder and President of InGroup, Inc and WebSwagger.com. “For small businesses, getting the most out of their marketing dollars – no matter how much they are spending – is vital.”

Ask a sample of small business owners how they determine how much of their budget is allocated to marketing, you’re likely to get many different answers. Most however, fall within one of three categories.

Some small business owners are very aggressive and use a large portion of their budget for marketing. “This group tends to spend a lot of money on many different marketing campaigns,” explained Pissott. “While they are actively marketing, they can fine tune their efforts to get a better return on investment.”

Pissott offers the following suggestions for this type of marketer:

• Measure the success of the strategies currently being used to see what is working and what's not. Concentrate on those efforts that had favorable results and consider pumping them up.
• Try something new and unexpected. It can be surprising what attracts and motivates people to purchase something or use one service provider over another.
• Evaluate the type of customers they want to attract and focus efforts on getting the message to that group. Targeted, purchased lists can be very effective tools.

Then there are the middle-of-the-road marketers. They distribute a fixed amount for marketing, equally dividing it between tried and true methods including the yellow pages and standard ads. “This is a conservative group,” said Pissott. “They decide how much they will spend and then use cookie-cutter efforts. They will get results, but they could be doing much better.”

Pissott recommends these adjustments to help get more out of their spending:

• Break out of the mold and think outside of the box. Look at the current strategies and replace tired, old efforts with fresh new ideas.    
• Ensure a portion of the budget goes toward having a presence on the Web. Be sure to have the Web address on all print ads, brochures, business cards, etc.
• Zero-in on the type of customer they want to target. Create a campaign that focuses on attracting that type of person.

There are also a number of small business owners who do not budget any money for marketing endeavors. “A business cannot grow without any type of marketing,” said Pissott. “These businesses will not survive if money or time is not put into promoting themselves.”

To get their marketing efforts off the ground, Pissott proposes these ideas:

• Get going and go grassroots. With no money in the budget for marketing, start off by focusing on free marketing. Send out press releases, begin a referral program for existing customers, and make sure your business listings are completely up-to-date.
• Try industry specific or niche marketing. Use what little money you do have and focus on a very small target group or stick to advertising within your specific industry.

Whatever your budget, you can improve your marketing efforts. Start by revaluating your current strategies and go from there. And, don’t be afraid to reach out to experts for ideas. Marketing agencies are not just for big companies.

 Marlene Bauer Pissot is the founder and President of InGroup Inc, and WebSwagger.com. Serving the needs of small businesses and professional service firms around the nation, WebSwagger.com offers unique, professional and affordable Web sites and co-branded marketing materials. Web services include creative development, hosting, e-mail, basic site optimization, e-commerce and more.  Print materials include brochures, folders, announcement cards and other collateral to assist with sales and marketing efforts.

WebSwagger.com is managed by InGroup Inc.— full-service creative agency, in Bergen County, N.J., providing innovative marketing and communications services since 1995.  For more information visit www.WebSwagger.com or call, (888) 772-6400.

“Now, staying in-touch with your customers is easier and more cost effective than ever thanks to e-mail,” says Marlene Bauer Pissott, Founder and CEO of WebSwagger.com,  “E-mail can be as effective as any marketing tool and best of all it’s delivered to your customers instantaneously.”

According to December 2007 statistics reported by JupiterResearch, 87 percent of consumers spend their time online reading e-mail. “The e-mail inbox has replaced the mailbox for direct marketing,” explains Pissott. “This shift is a big advantage for small businesses given that the cost to distribute an e-mail is significantly less than traditional printing and mailing.”

A report from Shop.org of the National Retail Foundation in conjunction with Forrester Research stated that in 2006 the return on investment for e-mail marketing was $51.45 per $1 spent. In addition, the projected sales from e-mail for this same time period was $18.5 million. 

There are several ways to send marketing e-mails, which vary depending on the cost. “Simply typing your message using the e-mail account set up for the company is a great way to start for beginners,” added Pissott. “Then, there are easy-to-use e-newsletters offered by Internet e-mail marketing services, such as IntelliContact or

Constant Contact, that allow you to create eye-catching marketing e-mails.  Professional marketing agencies also handle the entire development process from design to distribution.”

Pissott offers these tips to help make marketing e-mail as effective as possible.

• Build your database by collecting e-mail addresses every chance you get. Include a sign-up feature on your Web site and have a way for in-person customers to give you the information.
• Stay in contact, but don’t overdo it. Send regular communications to your e-mail database, but don’t exceed a reasonable frequency.
• Make your subject line interesting and enticing. The subject line is what your customers will base their decision on whether or not to open the e-mail.
• Include a link to your Website in every e-mail you send. Make it easy for your customers to get to your site immediately while reading your message and, when possible, make the link specific to a page of the site relevant to your e-mail.
• Ensure your e-mails make it to your customers’ inbox. Ask customers to add your e-mail address to their contact list, safe list, address book, etc to avoid being blocked by spam filters.
• Give your customers opt in/opt out options.
• Ensure your customers’ privacy. State up-front that you will not sell your customers’ e-mail addresses and that you will only use them for the purpose of sending informational e-mails.

Serving the needs of small businesses and professional service firms around the nation, WebSwagger.com offers unique, professional and affordable Websites and co-branded marketing materials. Web services include creative development, hosting, e-mail, basic site optimization, e-commerce and more.  Print materials include brochures, folders, announcement cards and other collateral to assist with sales and marketing efforts.

Outsider Perception: The market is impenetrable.

Reality: Entering the federal market is no different than entering a new segment of the commercial market; it just appears mysterious from the outside.

Lesson: Don’t shy away from the federal market. Entering the market can transform your company and it is an effective way to counter a slowing economy.

Background:
The federal market is growing so fast that it’s virtually impossible to determine its size. Experts theorize that between $450 million and $500 million is spent annually.

Do you find yourself asking, “Why did my competition win that big federal contract and not me?” You deserve some of the $500 billion being spent annually so go after it. It isn’t as mysterious as you think.  Succeeding in the federal arena requires a focused effort up front to unravel the red tape and figure out how the game is played.  Consider entering the federal market as a defensive move against a slowing economy. So what if the economy doesn’t slow down? You will have increased sales and strengthened your company. 

Although deciding to tap into the federal market is generally a smart business strategy, companies often shy away from the prospect. The most prevalent reasons for this are:

1. The apprehension concerning the red tape associated with federal work
2. The perception that the market is a closed one dominated by the big players
3. The misconception that if your business is not located in the nation’s capitol, it won’t be successful in the federal game
4. The fear that the federal market is completely different from the commercial market

Most of the reasons outlined above boil down to a lack of understanding of the market or a fear of the unknown. With just a little bit of research and the knowledge gleaned from such research, you may find federal business right in your backyard. From a political standpoint, both Congress and the White House favor small businesses because of their voting power and importance to the economy. Recent legislation enacted by Congress encourages federal installations to purchase from small business owners. Why shouldn’t these customers do business with you?

Outsider Perception: The federal market is enormous.

Reality: The market is much bigger than you think. In order to enter the market, your sales staff should tackle the federal market as they would any new customer in the commercial setting.

Lesson: The federal market is virtually identical to the commercial market. The major difference is that your business must have to have a way to close (transact) a deal that it has sold under the federal purchasing rules.

Background:
As discussed in the previous newsletter, the federal government spends approximately $500 billion on an annual basis. Half of all federal contracts are awarded through limited competitions or sole-source awards. By any measure, the federal government is the world’s biggest and most lucrative customer. Study the federal market and then go after the business in the same way as you do in your current market. If your company qualifies for a small business preference program, it can quickly become a $100 million company if it learns to play the federal game.

What is needed to make the federal government your customer?

1. A unique product or one with a feature that distinguishes it from all of the rest or a demonstrated history of providing exemplary, high-quality services
2. A sales staff member who can focus his or her efforts on federal sales
3. A pre-awarded federal contract which provides for pre-approved pricing for federal agencies

Doing business with the federal government may seem mysterious on the surface. At its core, it is virtually identical to the commercial market or any other market in which you might be selling. Government red tape makes the process seem daunting but the sales process is the same as the commercial market up to the point where the sales is transacted. In order to actually make a sale to a federal customer, your sales staff must:

1. Identify a federal buyer who is looking for what you sell;
2. Knock on the buyer’s door;
3. Weather the buyer’s initial reluctance to partner with new companies; and
4. Convince the federal buyer that your business will provide value that your competitors can’t offer.

Think about it. Don’t you have to do all of the foregoing when making a sale to your current customer base? Now for the variance; federal rules require varying degrees of competition before your sale can be transacted. The reality is that in the majority of federal sales, there is little or no competition. Contrary to popular belief, federal purchasing rules allow limited competition. The insiders or experienced federal contractors know how to close their sales within the rules. The rules are different under different circumstances. Determining factors are those such as the dollar amount of the buy or the availability of vendors with an approved price list. So what’s the secret? Learn how to play within the federal rules which limit competition.

There is a growing trend in federal procurement offices to transact purchases using pre-approved price list contracts. Your company can close your sales quickly – while still following the procurement rules - if you hold this type of contract (e.g., a GSA Schedule contract). When an approved price list is in place, a purchase can be closed quickly because federal procurement rules presume that the competition took place when you negotiated the price list. The standard rule requiring that competition take place at the time of the order is either reduced or eliminated. Future installments in our newsletter series will help to clear up any confusion regarding the level of competition required under the rules.

Outsider Perception: The federal government keeps detailed statistics on what it purchases.

Reality: The tracking of federal spending is marginal at best.

Lesson: Do what you can and then apply your "street smarts."

Background:
The size of the federal market is not a particularly meaningful number if only a tiny slice of the market is really available to your company. A janitorial services company in the Chicago area has a limited geographic area in which it can realistically deliver its services. The key questions for this type of company are "Are there federal offices or installations in our locale and do these entities need our services?" Once the foregoing question is addressed, the next question becomes "How much of the available work is currently held by incumbent contractors and how much of it is new work?" By doing research, your company should be able to target the sources and amount of work available to local vendors. Once the analysis is completed, your business should have a list of federal customers it wants to pursue.

A company selling office supplies has a different set of questions to answer because office supplies can be sold by telephone to virtually any federal customer regardless of his or her location. The critical unanswered questions are:

• Where should our efforts be focused when attempting to sell to a federal customer?
• When and how does price enter into the picture?
• What importance does the customer place on service?
• How difficult is it to replace an entrenched office supply company and how can it be done?

Now we are in the world of what we call "street smarts". Your sales staff will most likely have to get on the telephone to answer these questions. You could test the market by making small sales to federal buyers who use their government credit cards to transact the sales. In the long run, your business will most likely need a pre-approved federal price list in order to compete (such price lists will be discussed in greater detail later).

The federal government’s product and service coding system is not detailed enough to make research by product type very meaningful although some raw data is available in the following public contract award databases.

Federal Funding Accountability and Transparency Act (FFATA) Database: http://www.ffata.org/

Federal Spending.org Contracts Database: http://www.fedspending.org/fpds/index.php

Outsider Perception: The federal market is dominated by insiders.

Reality: A large portion of the federal pie is given to insiders who know how to play the federal sales game.

Lesson: Become an insider by selling in your own backyard with an aggressive sales program.

Background:
Consider becoming an insider and share in the fruits of the world’s largest market. Remember, the insiders were outsiders at one point in time and the game is not that tough to play once you understand it. In order to become an insider, you must first understand how competition (or the lack of it) influences how buys are made. Furthermore, your company must hold a direct contract with a federal customer. It only takes one. Having an existing federal contract allows your business to demonstrate, through your partnership with the government, that your product or service provides value to the federal buyer or end user. This partnership becomes the path of least resistance. It is the path that minimizes the federal buyer’s risk and the path that allows buyers to obtain what they want quickly and efficiently. As in the commercial market, federal buyers go with the proven vendor. Think about it. You do the same thing when purchasing goods or services.

You may be saying to yourself, "This sounds easy. So, what’s the catch?" Landing the first contract requires the establishment of a business relationship with the buyer and you probably don’t have one. Any sales person will tell you getting through the glass wall to a new customer can be a formidable task; the potential customer most likely already has business partners and may not realize that she needs you. But getting through the glass wall is not any more difficult than selling to a new commercial customer.

Don’t go the Washington, D.C. area initially. There are too many entrenched insiders playing there. Find federal buyers in your locale or region. You will be dumbfounded by the volume of federal work to be found in your immediate geographic area. Use federal directories published by military bases, federal agency web sites, and your local blue pages (which list federal telephone numbers and addresses).

Military bases and the federal installations and offices located outside of Washington, D.C. prefer to buy locally. If you were a federal procurement officer, you would probably prefer to buy a dozen digital cameras from a local photo shop rather than a national chain. You would have better access to service and it is the politically correct thing to do. Natural disasters and the threat of terrorism have also resulted in new, more flexible purchasing rules that allow sole-source buys under emergency situations and specify that preference should be given to local sources for products and services.

Ask for introductions to federal buyers through your current network of existing customers, neighbors, fellow church goers and the like. Attend local chamber of commerce events, business conferences and industry events. Attend local or regional business opportunity conferences held by federal agencies. Make cold calls beginning with the contracting offices for those federal agencies in your area.

In short, selling in the federal market is just like selling in the commercial market. People buy, not agencies, and most sales are based on the development of strong relationships with federal buyers. The two markets diverge when it comes to closing the sale you have made with the buyer. Market characteristics and how they impact closing the federal sale will be the subject of the next two newsletters.

Outsider Perception: The federal market is open and competitive.

Reality: Competition does take place but, for most transactions, it is limited so that purchases can be made quickly and at reasonable costs to the taxpayer.

Lesson: Learn how purchases are made under the rules for limited competition and use this knowledge to win business.

Background:
It is a fallacy that federal purchases are made only after full and open competition takes place. Competition may or may not occur but, when it does, it is usually limited. In most instances, a company is not going to win a federal bid opportunity it stumbled onto online. The truth is that your competitors met with the federal buyers long before the opportunity was publicly announced and the federal buyer already has one or more companies in mind. Federal bureaucrats do not like to admit this reality because they are tasked with the responsibility of getting the best value for the American taxpayer. The reality is that federal purchasing rules not only allow federal buyers to meet with vendors prior to the announcement of a public bid but they actually encourage it. How else would a federal buyer assess the value of proffered products and services?

On the surface, this reality may seem discouraging. On the other hand, those companies with aggressive sales people and a distinct message should have no problem becoming one of the few companies being considered for a contract or order. Learn how to limit competition and become one of the chosen few. Treat the market just like your current market and go after federal end users.

A second myth is that federal buying decisions are made based solely on price considerations. Once again, the federal market is like the commercial market in that you can sell based on value rather than on price. And best value is defined broadly in federal purchasing rules. My father used to say, "Son, you get what you pay for." While it is true that, at one point in time, federal government buyers made purchasing decisions based primarily on price, the government has modernized its regulations to allow buying decisions based on best value.

As a taxpayer, you should be happy that best value can now be considered. As a sales person, it’s an answer to your prayers. It gives government buyers the latitude to use their judgment and the sales person the opportunity to sell quality, features, benefits, results, and past performance. All of these factors can be considered in determining best value. Making direct sales calls to government buyers will pay off in the long run as long as you are selling quality and value.

Most federal sales, like commercial sales, start with a customer relationship. To be successful in the market, you must consider the entire sales cycle as a business process. Many outsiders think that they can jump into the middle of the process. Because the federal government publicizes its bidding opportunities at a central web site, companies hoping to win government business think they can simply conduct a search and pick and choose projects on which they hope to bid. They are setting themselves up for failure. Your company must commit to doing the dirty work prior to the bid’s announcement or it will have no chance for success.

Outsider Perception: Most federal bids are wired for insiders like Halliburton.

Reality: The term "wired" is too strong a word. Companies which pre-sell federal opportunities are in a favored position.

Lesson: Identify federal opportunities early, sell your solution, and place yourself in a favored position.

Background:
Many members of the American public believe that federal bids are "wired," implying that the bid is set up or rigged to favor a particular company. Although public bids are not wired in the truest sense of the word, the truth is that decision makers may favor the incumbent contractor or one or more companies that have done the following:

• Convinced the end user, through pre-selling, that they offer a superior product or service
• Taken the time to get to know the agency and the specific requirements of the procurement through pre-selling or through having done prior work for the agency
• Demonstrated in previous contracts with an agency that they are proven performers
• Proven to the agency, through references from other customers, that they are a reputable vendor

Purchases made through public bids represent a relatively small percentage of buys made in the federal market. More often, purchases are made through pre-approved price list contracts or modifications to existing federal contracts.

An opportunity may be put out for public bid if:

• The agency knows a number of companies have been aggressively pre-selling the opportunity and the only option, from a political standpoint, is to conduct a public bid.
• The project is large and highly visible.
• The vendor the agency wants to work with doesn’t have an approved price list and there isn’t a prime contractor available to use as a conduit.
• The contract that was originally bid publicly comes up for re-bid.
• The agency needs to pad its public bid numbers.
• The agency truly doesn’t have a vendor pre-selected (yes, this happens on occasions).

Don’t bid on a public procurement if you haven’t done significant advance research. A bidder must have all of the background information in order to understand the nuances of the deal. There is always a back story and the vendor which eventually wins the contract will have uncovered all of the intelligence well in advance of the posting of the bid.

Outsider Perception: In order to participate in the federal market, you must accept the mountains of red tape that come with handling such business.

Reality: The red tape is not so onerous that it should scare your business away from participating in the federal arena.

Lesson: Don’t let the red tape scare you. It’s a series of administrative tasks which, although tedious, can be easily tackled.

Background:
Many people lose sight of the fact that doing business with the federal government is done according to a contract. A federal contract is nothing more than an agreement between your company and the federal government under which your business agrees to provide a product or service in accordance with the terms of the document. The contract dictates the parameters of the deal and is the underlying basis for your relationship with the customer. Federal contracts contain countless pages of boilerplate language and convoluted clauses. Don’t let the terms of the contract scare you – the contract is only onerous on the surface. Pick out the wheat from the chaff and perform as you would with your commercial customers. Go to the contract when issues arise and let the contract dictate how disputes are resolved or an issue should be addressed.

The role of the federal contracting officer is central in the federal purchasing process. The contracting officer is the person authorized to execute federal contracts and orders. He or she is the only person with the legal authority to act for the government. Think of the contracting officer as the equivalent of the purchasing agent in a larger company. The contracting officer is charged with ensuring that, as required under the Federal Acquisition Regulation, the required amount of competition occurs. To say the least, the procurement rules are complex and long.

The contracting officer has considerable latitude in determining how a buy is made and can consider subjective factors in determining how to close a sale. "Factors" is the operative word here. Factors that can affect the contracting officer’s final decision include the dollar amount of the buy, when the product or service is needed, the type of businesses competing, the qualifications of the bidders and more.

When commodities are purchased (such as office supplies), contracting officers are often the sole decision makers in determining who gets the business. In contrast, the federal end user is the person consuming or using what you sell. They buy to support their program or operational responsibilities and make the final purchasing decisions concerning the acquisition of more complex products and professional services. An end user makes procurement decisions based on opinions they have formed from meetings or telephone discussions with corporate sales people and through their experience in working with a particular company in the past.

End users often find themselves in conflict with contracting officers. They are averse to taking risks and, as most of us do, they generally protect their self interest. Furthermore, end users usually want what is needed quickly and without hassle. The purchasing process is often slowed down by contracting officers who are charged with ensuring that the rules are being followed. Because a contracting officer cannot realistically monitor a particular company’s performance or make substantive decisions regarding a particular product or service’s value, he or she will delegate these responsibilities to the end user.

Think of the end user and contracting officers as partners. Then think of yourself as the third partner in the deal who has been entrusted with the responsibility of performing and delivering under the terms of the contract. This may seem trite but your key to success will be constant (sometimes daily) communication with both government partners. They want to know and trust their business partner. This is why it is critical that you become a partner (or an insider) and gain this trust.

Outsider Perception: Federal agencies order products and services only from their favored vendors.

Reality: People buy -- not agencies -- and favored vendors have to sell to government buyers just as any other company hoping to do business with the federal government.

Lesson: In the federal market, products and services are sold by people to people. You must sell an end user first and then close the sale within the government’s purchasing rules.

Background:
Contrary to popular belief, people buy in the federal market, not agencies. The best way to make a federal sale is to contact a buyer through a direct sales call. Making direct sales in the federal market can be challenging, just as it is with your commercial customers. Yet the dollars are there if you make a determination to go after them. Don’t let your inexperience in the market deter you from going forward.

The primary difference with the federal market is that it is critical that you have a way to close the sale. And, of course, it is more difficult to find the end users who buy what you sell because you are new to the market. Federal end users, such as human resource program managers, engineers, or facility managers, make most purchasing decisions. As the term implies, the end user is the person who will actually use the service or product bought. Services and complex products and solutions must be sold to the end user because this person is the one who determines if the service or product meets their needs and solves their problem.

Although rules and regulations often tie a government buyer’s hands, they don't turn the buyer into a robot. Federal buyers are people with the same general motivations and inclinations we all have, rules or no rules. Federal end users buy from vendors they know and trust. The government employee’s success and future promotions depend on the value of the products and services they buy and, because of that, they want to be assured that their vendors will perform well.

It's not just about getting the best deal for the taxpayer. Although certainly a factor, "taxpayer protection" is often a fuzzy, nebulous concept. The reality is that the federal buyer wants to get the deal that works best for him and his superiors. From a federal buyer’s perspective, a good deal is one in which risk is minimized.

Almost all newcomers to the federal market make the mistake of thinking that a sales opportunity arises when a request for a proposal or bid is published. In truth by the time a bid is published, the sale has probably already been made. Successful vendors have long-standing relationships with the end users and contracting officers with whom they work and, in many cases; help identify problems and solutions before any thought of issuing a contract has arisen.

How many vendors will be selling the same opportunity? It depends on both the size and type of opportunity. The level of competition increases proportionately with the size (in terms of dollars) of the contract to be awarded. Some vendors will have the opportunity on their wish list but will burn out in the proposal-writing phase. Others may want to bid but simply haven't laid enough groundwork to be serious contenders. Others will be dead serious, focused, have a relationship with the end user and the willingness to spend the time and money it takes to win a bid opportunity. The amount of competition also depends on the risk perceived by the end user. The question to be addressed is whether the federal officials involved believe there is a practical and economical solution to their problem. The more uncertainty, the more likely it is that the procurement will be competitive.

Outsider Perception: Federal sales are almost always announced through public bids which are open to all; federal buyers then evaluate vendors’ responses and pick the eventual winner.

Reality: Federal sales are closed (transacted) in a number of ways and the least preferable way is through a public bid.

Lesson: Learn the ways sales are closed and use the most appropriate way to your advantage.

Background:
Closing a sale in the context of this newsletter means getting the order, winning the contract or collecting the money (e.g., in the case of a credit card purchase). Closing a federal sale is where the rubber hits the road; it is the fundamental difference between the federal and commercial markets. Experienced federal contractors know how to close their sales. They also know the "closing rules" and the rules are not that mysterious once you boil the rules down to their bare essence. Outsiders mistakenly believe that federal agencies have to open an opportunity to all who want to bid. As previously discussed in this series, this is a fallacy.

As public policy dictates, federal contracting officers must strictly follow the procurement rules. When the government has a need for a product or service, the federal end user generally meets with one or more vendors to obtain information about the features and benefits of a particular product (or service) and the past performance (or experience) of the company offering it to the government. The end user then meets with the contracting officer to discuss the issues concerning the procurement.

The contracting officer will then close the deal using the quickest method allowed under the rules. This is where the process becomes complex. The contracting officer may or may not seek additional competitors depending on the amount of money involved and whether or not the companies involved have pre-approved price lists.

The following summarizes the methods in which a federal purchase can be closed or transacted:

• By a government credit card buy (the quickest and simplest method)
• By the issuance of a purchase order for amounts under $100,000; the federal purchaser must first obtain at least two quotes (relatively simple)
• By the issuance of a public bid (a long, lengthy and expensive process which is usually avoided if possible)
• Through a contract which allows the government to purchase from a select list of companies which have pre-approved price lists (e.g., a GSA Schedule contract)
• Through a subcontract with a prime contractor that already has a federal contract
• Through a subcontract with a "preferred" small business with which the government can contract quickly and with limited or no competition (e.g., a small disadvantaged business, Alaskan Native Corporation, etc.)

The manner in which a purchase is completed depends on the size of the transaction. More information about the differing sizes of transactions and purchasing procedures will be presented in upcoming newsletters.

Outsider Perception: Federal purchases are made the same way regardless of the amount of money involved.

Reality: The rules regarding credit card purchases and quick buys make it easy to do business in the federal market for transactions of less than $100,000.

Lesson: Use the rules concerning credit card purchases and quick buys to your advantage. Federal buyers located outside of Washington’s Beltway use these procedures extensively to do business with local small businesses.

Background:
The uninitiated do not realize how easy it is to do business in the under $100,000 segment of the federal market. Federal purchases of less than $100,000 are theoretically set aside for small businesses (although there is a current dispute between the Small Business Administration and GSA regarding whether this is indeed true). Think about it. Many small businesses across the country would not consider a $99,000 sale insignificant. The federal small buy market is divided into two sectors.

Credit Card Procedures for Single-Source Purchases

A federal buyer may place orders of less than $3,000 using a government credit card. Such orders can be placed without the necessity for competition and with a company of the buyer’s choice. These buys are usually made by end users and can be made without the need for a contracting officer’s involvement.

The following example demonstrates how a credit card purchase may transpire. Let’s assume that a federal end user’s hard drive crashes. He has an immediate need for a replacement so he buys a new computer by credit card from a local retailer. Under this scenario, the end user is up and running in a matter of hours. How much closer to the commercial market can you get?

If the purchase is made in support of a contingency operation (in simple terms, one that is made for military purposes during a time of war or natural disaster) or to facilitate a defense against terrorism, the credit card limits increase to $15,000 for purchases made inside the United Sates and $25,000 for buys outside the United States.

Quick Buys from $3,000 to $100,000

Small buy rules also apply to orders of between $3,000 and $100,000 but the procedures are slightly more stringent. We call such transactions "quick buys." In the federal vernacular, the procedures used for quick buys are called "simplified acquisition procedures." Quick buys can be made after obtaining quotes (by methods such as fax, e-mail or orally) from a minimum of two sources. If the purchase supports a contingency operation or is necessary to facilitate a defense against terrorism, the quick buy limit increases to $250,000 for purchases made within the United Sates and $1 million for buys outside the United States.

National Emergency Procedures

In this scenario, contracting officers may set aside opportunities for businesses located or doing business primarily in the area affected by the disasters or emergencies. In essence, the new legislation allows contracting officers to make sole-source purchases from companies located within areas affected by disaster without Congress coming down on them for rule violations. Keep in mind that the President must make a formal declaration first.

Outsider Perception: Most federal business is conducted with direct contracts between the end users and the vendor.

Reality: A large amount of federal business is done through commercial subcontracts with federal prime contractors.

Lesson: Subcontracting is a valid way to close a sale when your business doesn’t have another method to do so.

Background:
Companies which don’t have pre-approved federal price lists usually have to start out as a subcontractor to a company that already has a contract with the federal agency.  These insiders are commonly called “prime contractors.” Assuming they want to do business with you, contracting officers can elect to have one of their existing prime contractors execute a subcontract with your business as a way to close a deal under the rules. For example, your company could sell a product or service to an end user at a particular agency and the agency may decide that the best way to close your sale is through a subcontract with a trusted prime contractor (as opposed to going through a lengthy and expensive public bid process).

The contracting officer may also elect to put you in contact with a small business which holds a preference certification (such as a Section 8(a) small disadvantaged business certification) because the government can sole source to this type of business if the transaction is under $3 million. Under this scenario, a new contract would be executed with the certified small business and your company would become a subcontractor under the new preference contract. Convoluted as it may sound, many federal sales are closed using commercial subcontracts.

Outsider Perception: Selling products and services to a federal prime contractor is easier than selling directly to the federal government.  

Reality: Selling services and solutions to a prime contractor can be as frustrating as selling directly to federal agencies.

Lesson: You must sell your products and services to prime contractors in the same way you would to your prospective federal customers.   

Background:
As discussed in the previous newsletter, most small businesses start out in the federal market by serving as subcontractors to federal prime contractors. These companies are forced to do so because they don’t have ways to close their sales. In fact, most small businesses don’t know about pre-approved price list contracts until they have been in the game for six months or more.

Prime contractors are required by law to subcontract a percentage of their federal work to various types of small businesses (e.g., small disadvantaged businesses, veteran-owned businesses and the like). This is a major element in the federal government’s small business advocacy program and it works. Most people believe that mandatory subcontracting is a good approach but small businesses beware. There is an inherent flaw in the system in that prime contractors agree on paper to use good faith efforts to use small businesses but do not do so in practice. The way to keep the primes honest is to force the prime contractor to sign an airtight teaming agreement which obligates the prime contractor to send small companies the work outlined in the bid proposal.

Selling services and solutions to a prime contractor can be as frustrating as selling directly to federal agencies. The primes usually have a plethora of varying types of small businesses under their umbrella and making cold calls to a prime contractor is like any other cold call. Your first task is to find the key decision makers in the organization and most are buried deep within the inner layers of the prime’s bureaucracy.

If your primary contact directs you to the prime contractor’s Diversity Department or Small Business Advocacy Group, you have been given the kiss of death. These departments will ask you to submit your capabilities statement for entry into their small business capabilities database. Your proffered statement will most probably wind up in the department head’s circular file and it is not likely that your business will hear back from that prime.

In contrast, there may be limited scenarios under which the prime contractor will welcome you with open arms.  They are as follows:

1. Your sales staff has sold your company’s services to an end user at a military base near your hometown.  The end user wants to do business with your company and has money to spend. You don’t have a closing mechanism, such as a GSA Schedule contract, so the base referred you to the contract manager for their favorite prime contractor.  Under this scenario, the prime will embrace your company because you have brought an unforeseen opportunity to its attention and also because it will make a handsome profit by marking up your fees and costs.
2. You have a unique capability that the prime contractor needs and therefore can’t find elsewhere.
3. Someone in your network of contacts knows a decision maker in the prime contractor’s organization and has provided an excellent reference for your company.

Outsider Perception: Federal work is awarded only after a lengthy public bid process takes place.

Reality: A great deal of federal business is conducted through companies with “pre-approved federal price lists” rather than through the public bid route.

Lesson: In order to compete, you must get one of the aforementioned pre-approved federal price lists.

Background:
We have previously discussed how closing a federal sale is different than closing a sale in the commercial market. Federal sales must be closed under federal purchasing rules which most often require that some type of competition take place.  Established federal contractors usually close their sales using pre-approved federal price lists. These special contracts are awarded to a selected number of companies (those which submit an offer for consideration and are deemed of merit by GSA). The contracts reduce, and sometimes eliminate, competition because sales opportunities are offered to only the companies holding the contracts.

From our perspective, the best pre-approved price list contracts for small businesses are General Services Administration (GSA) Schedule contracts. To get a GSA Schedule contract, you must have sold your offered product or service to others first.  As a result, GSA Schedules have limitations for start-ups and for companies hoping to offer new or beta products. In spite of these limitations, Schedule contracts are ideal for small businesses because they are open to all qualified businesses.

In the simplest terms, GSA Schedule contracts make your company’s products and services available to any federal buyer at prices pre-negotiated with the federal government.  Products prices are negotiated on a unit basis; service prices are negotiated on an hourly basis. In essence, the Schedule contract is a pre-negotiated federal price list that can be used by federal buyers to make purchases from your business quickly and with limited paperwork or red tape.

The following is an example of how a GSA Schedule sale is transacted.  Let’s assume you run a small office supply business located near a military base.  Your sales staff has been calling on the base for an extended period of time but has not yet had success.  In fact, the base has been using the same large office supply company for years and is reluctant to change this practice. It is late August and it appears that the base’s printing center will have around $300,000 remaining in its annual budget.  Furthermore, the government’s fiscal year ends on September 30th and the printing center doesn’t want the $300,000 to go unspent (under the axiom “use it or lose it”). The base’s management directs its procurement staff to send work to small businesses so that the base meets its annual small business participation goals. 

The printing center manager calls and asks if your company can deliver 10,000 cases of multi-purpose printer paper to the base for the sum of $300,000. Because he is familiar with the costs associated with office supplies, the manager knows that $30 a case is a fair price for a high-volume order. He tells your sales person that the base has several thousand cases in inventory but it can always use printer paper and that the $300,000 needs to be spent by September 30th. He further states that you may take your time in delivering the product since the base’s store room is fairly full at this point. The center manager then says, “I hope you have a GSA Schedule contract because we do not have time for a public procurement and this buy needs to be inked ASAP.”  Thankfully, your company does indeed hold a GSA Schedule contract for office supplies and your pre-approved price for the product in question is $36 per case.  Knowing that GSA allows a Schedule contractor to agree to pricing that is lower than your awarded GSA pricing – especially in instances in which a high-volume order is involved – you strike a deal.  Imagine if your business had not held a Schedule contract. The opportunity would have slipped through your hands. 

Outsider Perception: Doing federal business requires that you jump through bureaucratic hoops.

Reality: In order to get a pre-approved federal price list, your company must jump through several hoops.

Lesson: Although the process is tedious and often painstakingly slow, take the plunge and work towards getting your pre-approved federal price list.

Background:
The previous newsletter stated that having pre-approved federal prices is critical to sales success because competition is limited to companies with approved price lists. The best of these types of approved price contracts for small businesses are General Services Administration (GSA) Schedule contracts. They are ideal for small businesses because companies can apply for them at any time and they are open to all qualified businesses.  Companies should apply for a GSA Schedule contract immediately upon deciding to enter the federal market.

Getting pre-approved federal prices requires considerable red tape. Companies submitting a GSA Schedule proposal must, among other things, describe their corporate experience, provide their commercial prices for the offered product or service and disclose their commercial discounting practices. There is an entire industry devoted to helping companies get through the application process (our company, in fact, is one which offers GSA schedule services).  Companies can complete GSA Schedule proposals on their own provided they have a person with government contracting experience or they have a senior financial person with lots of time and the tenacity of a pit bull.

Although GSA Schedule applications are tedious, the critical components of your company’s GSA offer are the disclosures concerning your commercial pricing and the level to which you have discounted off your commercial prices. GSA uses these commercial discounting disclosures to seek the lowest price you have offered others.  The American taxpayer should be pleased that GSA contracting officers have this mandate. 

Outsider Perception: The federal government likes to do business with small businesses.

Reality: Federal buyers need incentives in order to convince them to contract with small businesses because the same buyers perceive that there’s more risk with small companies. 

Lesson: If available to your company, use any and all small business preference programs to help you close business with the government. 

Background:
Federal purchases of less than $100,000 are, in most instances, set aside for small businesses. This program helps small businesses considerably but keep in mind that there is competition for set-asides. As discussed in previous newsletters, you must pre-sell these opportunities rather than bid on them blindly.

A similar program requires that federal prime contractors subcontract a percentage of their federal contracts in excess of $550,000 to small businesses. Like set-asides, this program helps small businesses.  However, your company still must sell itself to a federal buyer before it will be considered as a subcontractor. Or you have to become a favorite in a prime contractor’s stable of small businesses which requires direct sales efforts to prime contractors just like your current market.

It is not uncommon for a large prime contractor to use small businesses programs as a way to close a federal sale if they can’t close it in a better way. Under this scenario, the prime contractor becomes a subcontractor to the small business with preference status. The terms of the federal contract will most likely specify that at least fifty percent of the contract’s personnel costs must be spent on work performed by employees of the prime contractor (the small business) or personnel of other small businesses. This stipulation is in place to keep prime contractors from using small businesses and preference programs as fronts when closing sales. Large prime contractors may legally participate in small business preference contracts as long as they closely adhere to this stipulation. Detractors say that in spite of the fifty-percent rule, the small business is still a front for a large business. In the final analysis, the practice works in favor of small businesses so the rules are not likely to change.

The most significant small business programs are the “preference programs” for special types of small businesses. These are the programs that have the greatest potential to increase the sales of a small business quickly. The major preference programs are for (i) small disadvantaged businesses, (ii) disabled-veteran small businesses, and (iii) small businesses operating in a historically underutilized business zones (HUBZones). These programs allow sole-source awards for contracts under $ 3 million. Such programs give businesses which qualify a significant edge and these programs have been used to build multi-million dollar companies. Qualification requirements for these programs are available at http://www.sba.gov.

Outsider Perception: Selling to the federal government is more difficult than selling to commercial counterparts.

Reality: It is and it isn’t. Although the process is the same in both markets, your sales pitch to federal buyers must be more thorough and effective due to the level of competition your business is facing. 

Lesson: Develop a distinguishing message to get through federal doors and establish personal relationships with buyers.

Background:
Everyone thinks their competitors are worthless and that they alone have the best product or service known to man. Federal end users have heard “we are the best” so many times that it makes them scream when they hear it. End users want to hear simple facts backed with evidence. Because they have hundreds or thousands of vendors barraging them with messages, you have to have a sales pitch which distinguishes you from the rest.  Offer “green” products. Consider having a past federal customer contact the end user to provide a reference.

Distinguish yourself through your initial message to the customer. Federal buyers are like any other buyers in that they want to talk with only those companies that sell what they need. You need a distinguishing message to get through the glass wall encountered by all sales people, commercial or federal. Your message should not be delivered via a link to a web site or a glossy brochure. Such tactics don’t work in today’s market. Both give the immediate impression that you don’t want to take the time to determine what the federal purchaser needs. The message delivered must cut to the heart of the customer’s problem. The sales pitch must be individually tailored to the federal buyer’s specific needs.  Otherwise, it will be quickly cast aside or dismissed. 

The following examples show how a message may be crafted to meet the needs of the customer. Let’s assume you are an office supply vendor and your headquarters is located near a military base.  How do you distinguish your company from the numerous other players in your market? Your message to the base’s procurement officer should stress the service you provide in conjunction with the sale of your products. Consider the following sales pitches:

1. We have a GSA Schedule contract and we will do all of the paperwork for you. We stock everything you need and can have it at your delivery points within an hour.
2. If you have problems with a particular product, it will be replaced within three hours.
3. If you need anything beyond what we sell, we will find it and include it in your order.
4. Our sales staff and management will be available 24/7 and we will give you our personal cell phone numbers to contact us.

Professional services are inherently difficult for buyers to evaluate because their value is intangible. Your message for professional services might be:

1. We are experts in the subject matter required for your solution and we have compiled a list of references for your perusal. 
2. We understand your needs and the solicitation’s requirements because we have solved similar problems. Brief descriptions of our previous solutions are attached.
3. Attached is the resume for our proposed project manager.
4. Here’s my cell phone number and I am available 24/7.
5. I will call you to set up a meeting to discuss our proposed solution.

Outsider Perception: All federal business is done within the confines of the Washington Beltway.

Reality:  False.  More than $250 billion is spent by federal installations and agencies located outside of the nation’s capitol.

Lesson: Identify the federal agencies and installations located in your region and sell aggressively to these potential customers.

Background:
Most are unaware that the federal government spends more than $250 billion on projects located outside of the Washington metropolitan area. In fact, the federal government's buying power extends across the United States and even worldwide. Some of this money may be spent at military bases or other government installations in your state. You would be shocked to discover how much federal business is conducted within 100 miles of your office. Federal officials prefer to work with small businesses located near them since doing so is sound policy from a political and practical standpoint. 

Small businesses located within the Washington metropolitan area do reasonably well because of the vast amounts of money available for contracts in the region. However, the abundance of contract opportunities is offset by the level of competition. The Washington area is home to the very largest prime contractors and small businesses are playing in their backyard.  Small businesses hoping to win federal business near the Beltway must learn to play nice with the large primes or they run the risk of being shut out of the market. 

Many small businesses emerge and prosper by staying close to home where the competition is not as intense. There are countless federal facilities located throughout the U.S. and overseas.  Such facilities include military bases, research centers, Veterans Administration and military hospitals, and regional offices of various federal agencies.  Use your local blue page telephone directory or peruse the federal agency web sites for in an effort to locate contact information.

As previously mentioned, federal facilities located outside of the Beltway prefer, for political and social reasons, to work with local companies.  Local businesses are also perceived by federal officials to be more cognizant of delivering value.  It is not uncommon for a small business owner to meet an end user from a local federal facility at a social occasion or at a networking event.  He or she can then turn the contact into a business relationship and ultimately a sale.

Take out a local map and draw a circle around your office’s location.  Contact the federal installations located within the circle.  Use the following links to help you find local federal sales opportunities:

General all agency searches: USA.gov (the official federal web portal) http://www.usa.gov  

For federal offices in your area:

• Federal Phone Directories: http://www.usa.gov/Contact/Directories.shtm
• Peruse the blue pages in local telephone directories

Locate a military base: http://answers.usa.gov/cgi-bin/gsa_ict.cfg/php/enduser/std_adp.php?p_faqid=5837

Federal Funded Research and Development Centers: http://www.nsf.gov/statistics/nsf06316/ 

Veterans Administration Hospitals: http://www1.va.gov/directory/

Federal Funding Accountability and Transparency Act (FFATA) Database: http://www.ffata.org/ffata/

Outsider Perception: Getting a corporate federal sales initiative started is an administrative and logistical nightmare. 

Reality: The process isn’t as bad as you may have heard.

Lesson: Don’t let start-up costs and red tape deter your company from entering the federal market. 

Background:
We are frequently asked, "What procedures should be followed by small businesses eager to participate in the federal market?" The answer to this question is that a small business should implement an aggressive federal sales program and simultaneously work toward obtaining a GSA Schedule contract. The latter should be of highest priority. A Schedule contract is the only practical way a small business can obtain an approved price list.

What do you do while you are waiting to submit your GSA offer or are waiting for a submitted offer to be evaluated? The offer evaluation process can take three to nine months so you have plenty of time to do other things.  We suggest that your company undertake the following steps:

First and foremost, your company should put a federal sales program in place.  Instruct your sales staff to concentrate their efforts on selling directly to federal end users. Do this on Day 1.

Provided your business qualifies, submit your 8(a) application to the SBA. Acquiring the 8(a) small disadvantaged business certification is essential for qualified businesses. The aforementioned application should be filed within thirty days of instituting your federal sales program.

Contact prime contractors with the goal of working with them as a subcontractor. 

Use credit card transactions (those under $ 3,000) or purchase-order transactions (under $100,000) to get your foot in the door.

Even if your organization fits within the parameters of one of the small business preference programs, approach selling to the government as if you didn’t have such a status.  Sell aggressively and effectively. Then use your preference edge to help close the deal. Get started today. Start making sales calls as soon as possible.

Outsider Perception: Red tape is the biggest barrier to entering the federal market.

Reality: The red tape is not as bad as it seems from the outside.

Lesson: Don’t let the red tape deter you from cracking the federal market.

Background:
Encountering mountains of red tape is an inevitable consequence of doing business with the federal government.  You will be required to register with various federal web sites (such as www.ccr.gov) and will be asked to provide company certifications in government databases. Keep in mind that in completing these tasks, you aren’t making any actual progress towards making a sale. Government buyers don’t use databases to find vendors. Instead, the vendors find the buyers.

As much as they would love to ignore it, federal contractors are forced to comply with the government’s red-tape requirements in order to do business with the government. A newly-hired college graduate or someone in your accounting organization should be able to wade through the red tape. The task may appear daunting at first but, with patience and tenacity, the person assigned the task will find out that it is not rocket science. Complying with the government’s requirements becomes second nature after the first time through the process.

Your designated person should tackle the following tasks first:

Obtain a DUNS number
http://www.dnb.com/US/duns_update/

Register at the Central Contractor Registration (CCR) web site
http://www.ccr.gov/

Register at the ORCA web site
https://orca.bpn.gov/

Sign up for e-mails from the Federal Business Opportunities site
http://www.fedbizopps.gov/

Do companies need to enlist the services of an attorney when they do business in the federal market? Lawyers have a role to play in the federal market just as they do in the commercial market. The trick is to realize when you need one and when you don't. Don't assume you need one for every little thing you don’t understand.

Are special accounting systems required when doing business with the federal government? Yes, you will most likely need one at some point in time but not at the time of market entry. A somewhat generalized accounting package, such as QuickBooks, will do to start. Your business will need to invest in a more specialized accounting system as your involvement in the federal market grows and your revenue increases.

Outsider Perception: Although exciting, winning your first federal contract is not really a big deal.

Reality: Winning your first federal contract is critical because it gives your company insider status.

Lesson: Use your coveted insider status to leverage additional sales. 

Background:
You won one! Your company is now an insider and insiders use their position to leverage more sales. They work on-site with their federal customers on a daily basis and can legally look under every stone for more dollars. Use your insider position to nurture your contract into something much, much bigger.

Federal contractors working on-site at a federal facility are in an ideal position to generate more business. Their billable staff sits with the customer every day and, in most cases, gains invaluable intelligence about that customer. On-site personnel also have the opportunity to learn everything there is to know about the customer, the customer’s problems, possible fixes, the agency’s budget, the agency’s procurement plans and the like. It’s all perfectly legal because it is all public information. In this instance, the insider just has much easier access to it.

Perhaps most importantly, a contractor’s on-site staff establishes strong relationships with federal customers. Establishing such relationships is critical to success in the federal market and the on-site contractor gets paid to do it. If you were the customer, to whom would you turn if you needed help? You would turn to the people with whom you are working every day, the ones you know and trust.

Outsider Perception: Writing a federal proposal is like writing a commercial proposal.

Reality: Federal proposals are a breed unto themselves.

Lesson: Learn to write federal proposals using a business process that integrates proposal writing and sales. 

Background:
Learning to prepare outstanding, first-rate proposals is a task that is difficult at best and often impossible.  Many contractors fail to ever master the assignment. Corporate management must be fully committed to the task and must also devote substantial time and resources to developing and keeping a good writing team. In order to start the process, we recommend doing the following:

1. Sell the opportunity first and then write a proposal. Don’t write proposals for projects that you haven’t sold.
2. In order to put your best foot forward, present customer-centric proposals based on solutions you have proposed to the federal end user.
3. Make sales and proposal writing an integrated and structured business process. Start the process early and have the proposal started when the actual Request for Proposal (RFP) is published.
4. Propose what the customer wants first and then sell them what they need.

Outsider Perception: The federal market is tough to crack.

Reality: The perception is true.

Lesson: Although the federal market is difficult to tackle, companies that are successful in doing so quickly realize that it’s an extremely lucrative one and that their actual sales costs – once they are  entrenched – are actually less than in the commercial sector.

Background:
This newsletter concludes the 22 part series entitled “Cracking the Federal Market: The Small Business Guide to Federal Sales.” The federal market is not really more difficult to enter than any other new market your business has targeted. Don’t let the fear of the unknown hold you back. Approach the task of tackling this new market in the same way you would if it were a commercial market. Market entry requires tenacity and patience.  The federal market offers rewards commensurate with the effort your staff puts into delving into this new endeavor. For highly -focused companies, the rewards can be exceptionally rich and lucrative.

Keep in mind that federal buyers will never get rid of companies which perform at the highest levels because trusted performers make the buyers’ professional lives easier and risk free. These buyers will go out of their way to make sure that your company remains their business partner. The partnership truly begins when your company wins its first contract and, once this occurs, your company has total control over its destiny in the market. It is entirely possible for one-person firms which work in the federal market to grow to $100 million businesses in just a few years.

Small business preference programs can dramatically impact upon your company’s growth.  Those which cannot take advantage of preference programs take heart -- companies without the benefit of preferences have also experienced explosive growth.

The critical steps to success in the federal market outlined in this series are:

1. Sell to federal customers as you would in the commercial market.
2. Learn the rules for closing federal sales.
3. Get a GSA Schedule contract and sell with a pre-approved price list.
4. Target federal customers in your region first and become an “insider” like the large federal prime contractors.
5. Use the inherent advantages of being an insider to help your business succeed in the federal market.
6. Certify your company as one of the preferred small businesses if it qualifies.

Archives of the newsletters in series can be found at www.fedmarket.com.  Feel free to send a copy to your friends and business associates. 

GSA Proposal Preparation eLab
Fedmarket.com assists companies in completing their GSA Schedule offer during the course of a three-day computer workshop.  We provide you with a detailed Request for Information (RFI) at the time you register for the workshop. The RFI outlines the required corporate data and pricing that must be gathered and prepared in advance of the eLab. Attendees will, with the assistance of our GSA consulting staff, complete their GSA offer prior to the end of the workshop. In fact, many complete the offer and leave with a completed proposal in fewer than three days. If you are a procrastinator, the GSA eLab is the solution for you. The GSA Proposal Preparation eLab is offered monthly at the Federal Sales Academy in Bethesda, Maryland and quarterly in Las Vegas, Nevada. Call a Fedmarket representative at 888-661-4094 x 8 to learn more about this 3-day workshop.

• Which federal buyers have purchased your products or services.
• What they purchased.
• When they purchased it.
• How much they paid.
• Which agency the buyers work for.
• How to contact the buyers.

• First and last name
• Address
• Phone and fax
• Email
• Office and agency information
• Recent contract awards

Written by Cory Johnson and John Meyer of The Company Corporation (http://www.incorporate.com)

Starting a business can be one of the most rewarding and satisfying undertakings a person can pursue. For some it involves chasing and achieving a personal dream, and for others, it provides an opportunity for freedom and flexibility from a corporate job. Launching a new business venture comes with a lot of hard work and many challenges. Countless tasks impose themselves upon entrepreneurs trying to get their businesses off of the ground. 

With so much to accomplish, business owners may not be aware that incorporating can be an important step to ensuring the success of a business. Whether it’s a sole proprietorship or a large-scale operation, the advantages to forming a corporate entity are numerous. Advantageous tax benefits, credibility with customers, and the protection of personal assets are just a few of the many reasons business owners choose to incorporate or form a Limited Liability Company. In fact, an ongoing business that has yet to incorporate would benefit the most. With an established and growing clientele, there may come a greater chance of getting sued, and a corporate entity would help shield its owner’s personal assets. One the responsibility of the owner is to realize just how important it is to have a lasting and proven business structure.

Here are the most critical items to consider when selecting your business structure:

1. Protection of personal assets - Sole proprietors and partners have unlimited personal liability for business debt or lawsuits against their company. Creditors can attach homes, cars, savings or other personal assets. Incorporating or forming an LLC helps separate your personal identity from your business identity. Corporate shareholders or LLC members have only the money they put into the company at risk.
2. Pass-Through Taxation - For sole proprietors and partners, company profits/losses    pass directly through to their personal tax returns. For corporations, profits are taxed, distributed to shareholders as dividends, and taxed again on the personal level. This “double taxation” can be avoided while still enjoying the benefits of personal asset protection by forming an LLC or by electing an S Corporation. S Corporations and LLCs can be taxed just like partnerships.
3. Uninterrupted business -Sole proprietorships and partnerships may automatically end or become legally entangled when an owner dies or retires. Corporations and LLCs are enduring legal business structures. They continue regardless of individual officers, managers, or shareholders. Corporation ownership may be transferred, without substantially disrupting operations, through sale of stock.
4. Access to capital - Sole proprietorships and partnerships may find investors hard to attract because of personal liability. Investors are more likely to purchase shares in a corporation where they can separate personal and business assets.
5. Credibility -Adding “Inc.” or “LLC” to your company name helps a business seem larger and more established.

How does one go about incorporating or forming an LLC? A common misconception regarding the incorporation process is that only a lawyer can guide entrepreneurs through the process. Lawyers can be a trusted and knowledgeable source for incorporation, but legal fees can quickly mount. Numerous entrepreneurs have chosen to forego a lawyer and go the route of using a service company, such as The Company Corporation, or CorpAmerica. Service companies can provide valuable timesavings for business owners learning about the business formation process. The service is usually much more affordable than going to a lawyer, extremely quick, and more convenient. Service companies provide the opportunity to incorporate or form an LLC over the phone or on the Internet.  In most cases the process can be completed in less than ten minutes. Service companies have helped thousands of small business owners navigate the incorporation process and answer questions such as, “Which entity type is right for me?” and “What states are the most advantageous for forming an LLC?” Service companies provide information to business owners allowing them the opportunity to make the decision on what type of business structure and in what state they should form a business.

Most business owners choose to incorporate or form an LLC in the state in which they plan to conduct business. Typically, filing in your home state is the least complicated, and less expensive as it helps avoid paying franchise taxes and filing annual reports in multiple states. For many entrepreneurs, they find it necessary to expand their businesses into many additional states. Doing business in multiple states requires that companies “qualify or register to do business” in each state. A corporate agent can be very helpful in making small business owners aware of any additional filings that may be required by law.

No matter which business structure you choose, it is important to carefully examine the advantages and benefits of incorporating or forming an LLC. Why leave your personal assets exposed and advantageous tax benefits on the table? Service companies are ready and waiting to assist you in taking your business to the next level.

The Company Corporation is a service company and does not offer legal or financial advice.

By Geoff Williams

Every day, the men and women behind the wallets at SJF Ventures set out to prove that money isn’t the root of all evil. Like any good venture capitalist firm, SJF wants to become wildly wealthy, and fast, but their mission statement truly is a statement. The Durham, North Carolina, company invests in businesses across America that have $1 million or more in sales, and that have made their homes in unlikely, underserved locations, like formerly seedy neighborhoods in the inner city, or seed-strewn farmland in rural areas. According to managing director Rick Larson, SJF wants to help businesses with the potential to create quality jobs (higher than minimum wage, with benefits and opportunities for advancement), and whenever possible, they also like to find enterprises that are environmentally friendly.

In other words, if you’re an entrepreneur with dreams of making the world a better place, and are looking for equity capital of $500,000 to $5 million, then introductions are in order. Yes, these are the good guys.

Larson has a good example at the ready: he’s on his way to a board meeting at Ryla Teleservices Inc., a call center in Kennesaw, Georgia. “When we made the investment in Ryla, in 2002, a lot of people said, ‘What are you doing?’” recalls Larson. “All the call centers are in the Philippines or Bangladore.”

But it turned out to be money well-spent. Ryla is thriving, bringing in are ported $14 million in revenue in2006, and what’s more, the company is helping their community. They have200full-time employees receiving a full benefits package, 70 percent of which is paid for by the company. Ryla offers stock options to all of its employees, including the people who are on the phone. Not bad, considering this is a rapidly diminishing industry in America and known for offering lousy pay and few, if any, benefits.

But again, Ryla is profitable, stresses Larson, explaining, “Some entrepreneurs, when they make a pitch to us, lead with their environmental side, their redeeming side, and they forget that for their investors to be successful, people have to buy their product. So we’re most interested in strong business models. And that’s what’s going to make us—or any investor—interested in a company, more than where it’s located or how righteous that they can be.” But Larson adds that if a business model is formidable, then the righteous stuff that likely drove the entrepreneur to create the business will fall into place.

He offers another success story for SJF Ventures. Brightside Academy is a nearly care and education provider mostly based in Pittsburgh and Philadelphia. “They’re located in parts of the city where quality daycare isn’t available,” says Larson. “We like them because they’re a strong job creator, and there’s a real need in those neighbor-hoods for childcare that isn’t being met.” But Larson adds that while the Academy has “had their share of challenges over time,” the company is making money and growing, with 40 schools now open.

But for all the good that SJF is helping to create, the odds of linking up with them are slim. Of the approximately 1,200 to 1,500 businesses that send pitches to the investors annually, SJF invests in three or four companies. But Larson stresses, “Venture capital is only one form of capital, a very expensive form, and entrepreneurs need to realize that there are lots of other ways to capitalize on business. The key thing is not to get discouraged.”

And, according to Larson, many entrepreneurs doing their thing in the inner city are hard-wired to be persistent, optimistic, and ultimately, successful at finding a way to operate their businesses, no matter how cash strapped.  “Inner-city management teams tend to have a set of issues that they have to deal with everyday,” he says, “and that often makes them very good problem-solvers.”  

Three years ago I was approached by a startup in Metrowest that had just purchased and renovated a building to develop private office suites. Their goal was to attract business people looking to move out of their home office, expand their business or set up a satellite office. They were interested in developing and launching a marketing program to drive clients to their door. I was impressed with their concept and presented the idea of first conducting a needs-based analysis of the market to clearly define who their potential clients were and how they could best fulfill those needs. I also recommended a competitive assessment to determine how they should position their “suites” and create a powerful value proposition that would resonate with these new clients. The goal was to do the research before they opened their doors to ensure their message was on target and they were spending their limited dollars on marketing activities that would have the greatest impact in the shortest amount of time.

However, they were anxious to launch, believed they understood their clients’ needs and simply wanted to get out there and promote themselves. They thanked me for my proposal and let me know that they would contact me when they were ready for a more research-oriented approach to developing a marketing strategy.

This was not the first time a company has believed they were ready to open their doors before assessing the needs of the market. But just because you build it…doesn’t mean they’re going to be beating down your doors to get in. Market research is not a ‘sexy’ nor interesting project that small businesses want to hear about…most prefer to discuss website launches, designing brochures and creating promotional pieces. Ironically, on a tight budget those are the items that cost the most and are the most risky because if they’re not properly targeted, they cause the fastest drain to scarce financial resources.

Roll the clock forward to a few weeks ago and guess who called? Finding themselves at 40% capacity and never having reached the success they had anticipated, they paid a heavy price for a nicely designed (but ineffective) website and a pretty brochure (that they stopped mailing after the first attempts failed to attract clients). Without first doing their ‘homework’ to understand the value and services their prospects needed, their effort was untargeted and misdirected…and so was their money. Almost 6 out of 10 new businesses fail before their fifth year. With failure rates this high it’s critical to use limited resources (people, money and time) to target customers as precisely as possible. That doesn’t mean simply getting them in the door but making sure you’re attracting the right people so they’re not exiting as quickly as they came because you failed to offer them services worth sticking around for.

Like an airline seat that goes unoccupied….each office suite that remains vacant cost this business money. If they had held off on their web design and advertising they could have allocated their budget toward a solid assessment of the market and identified organizations and individuals who need their services, leading to a steady stream of revenue-generating clients.

What can they do now? Here are a few quick ideas (pending confirmation from research):

1. Explore All Target Markets: They need to look beyond small business owners as the only market. They’re located close to one of the largest employers in Metrowest. Therefore, there might be an opportunity to help visiting vendors who need office space when they’re in town.
2. Study Their Competition: They don’t have a sense of what their competition is offering so it’s impossible to position their value juxtaposed to what else is available or needed.
3. Network: They must identify groups where a constant flow of small business owners congregate and get the word out about their services. Networking is the least expensive drain on a marketing budget and often times the most effective way of driving attention to a business.

Have a sales or marketing challenge that you’d like some advice on? Send Beth an email at bethg@m-edge.com. Beth Goldstein is President of Marketing Edge Consulting Group (www.m-edge.com). She has over 22 years experience in sales and marketing and is the author of The Ultimate Small Business Marketing Toolkit (Mc-Graw-Hill). Beth runs Boston University’s Online Certificate in Entrepreneurship, teaches entrepreneurial marketing at The BU School of Management and is the Instructor for the InnerCity Entrepreneurs business growth program in Worcester.

From The ULTIMATE Small Business Marketing Toolkit (McGraw-Hill)

Nearly six out of 10 new businesses fail before their fifth year. If you've launched a business or are thinking about it, the odds of long-term success are against you! How do the survivors successfully find, attract and keep good customers? What's their secret? Could it be their passion for their business?

There are several ingredients that go into a winning business, including a great idea, a great team, great passion, and great leadership. All are important, but great passion can be the fire that helps fuel the success. It can also destroy the business when it is misguided.

Like all fires, passion can spark other flames and become contagious, igniting the passion of investors, business partners, and customers, as well as employees. If left uncontrolled, passion can consume, destroy, and leave a business with an empty dream. However, when controlled, directed, and focused, it can boost a business’s chance for success. Nonethelss it isn’t the only important ingredient. A great business idea alone will not make a business profitable, but a passionate team that has the vision and the ability to execute the idea, even if the idea is only pretty good; can help a company achieve success.

Therefore, in order to be successful in business, you don’t have to come up with the most ingenious and creative business concept. However, you must have a solid concept that satisfies a need, and you must be able to properly funnel your passion to execute the plan. The failure to fuel your passion can cause you to skip or dismiss basic business principles. In fact, that’s where you see really smart businesspeople with good intentions make fatal errors in judgment.

Passion can also be misdirected when you’re caught up in the day-to-day activities of your business and don’t take the opportunity to sit back and think about how to focus your energy.  Joanna Alberti’s business, philoSophie’s® (www.sophiesphilosophies.com), is a good example of the importance of taking time to reflect on your business goals and where you want to direct your passion. PhiloSophie’s is a successful start-up greeting card company launched by owner and entrepreneur Joanna Alberti. In 2005, at the age of 24, Joanna was recognized by BusinessWeek as one of the top five young entrepreneurs under 25. Known for her whimsical designs and her humorous illustrations depicting women and their interests, Joanna’s style and creativity fueled her passion to launch a greeting card business just one year after receiving her college degree.

As a business mentor to Joanna, I had the opportunity to work with her as she developed philoSophie’s. I also watched her struggle as she worked 20-hour days; often coming into my office covered in glitter from the greeting cards she had hand-embellished. She was doing it all, but was she doing too much?

Joanna was trying to launch her business in so many venues that she was not taking the time to determine who her customers were, why they were buying from her, and what needs she satisfied. She was trying to get into as many markets as possible without thinking about which of them made the most sense for her limited budget and time. She was clearly spread too thin and was unable to prioritize her marketing efforts.

Most business owners, like Joanna are so busy with the day-to-day management of their company that they don’t realize the importance of focusing their business passion to reach their goals more rapidly, more efficiently, and with greater overall success.  The following is a list of marketing techniques that I helped Joanna implement and always recommend to my students and clients. They are designed to ensure your passion fuels your success, not your demise.

1. Profile Your Customers. Who are your most valuable customers? Can you describe them succinctly, in 50 words or less? Profiles are descriptions of your customers’ values, beliefs and decision-making processes. While it’s important that you understand the products and services that you offer customers, it’s even more significant to understand what your customers value and why so you can fulfill their needs. Don’t assume you know, ask them.
2. Play 20 Questions With Your Clients. Imagine that your five most important customers are sitting in a room with you. What questions would you ask them about their purchases, their needs and interests, and the factors that influence their decision-making processes? Hopefully you already know how they found your company, what they have purchased, and why. If you don’t, these should be among the first questions you ask. Compile a list of 20 questions that will help you define your customers. Then develop a framework that will allow you to obtain critical information, determine the methods you will use (i.e., surveys, market research) and define sources of this data.
3. Remember to Keep Your Friends Close but Your Enemies (i.e., Competitors) Closer. Identify several companies that offer competitive or substitute products or services. Discover what their benefits are to potential or current customers of yours. Now think about how you compete against them by comparing your message, value proposition and target audiences with theirs. Based on your assessment, develop at least three strategies that you will use to position yourself effectively against them and are prepared with this knowledge when prospects ask, “What sets you apart from ABC Company?”
4. Identify Partner Companies That Will Create Win-Win Relationships. What do you expect from a partner and how can it contribute to your company’s growth? Can your potential partners’ strengths be leveraged to empower your business? What does your ‘must have’ list look like in order for your partnership to succeed? Do you each add value to mutual companies while not competing with each other? A strong marketing alliance offers many benefits, including reducing risk, sharing costs and improving time to market, so choose your partners carefully.
5. Find Out If Perception Is Reality. How do your customers and prospects perceive you? Branding is the impression you leave through every customer touch point and involves far more than a nice logo or cool tagline. Everything you do has to incorporate your message, because if you dilute it in any way, you won’t be sending a clear definition of the value you provide customers. As the saying goes, “Perception is reality,” so in order to ensure that your brand is strong, your message must be clear, focused and on target at every touch point.
6. Prepare a Strong Elevator Pitch. Ever find yourself in a room with a key prospect and you couldn’t succinctly explain your business to her? Perhaps you rambled on for minutes, never getting to the point, or you froze up. Elevator pitches are designed to help you prepare a very brief pitch explaining clearly to anybody you meet why they would want to continue a dialogue with you at a future point in time. You don’t want to tell them everything about your business, just enough to whet their appetite and get them interested in meeting with you again.
7. Align Marketing Programs to Meet Sales Goals. Sales and marketing have to work together to support business growth. Even if the same person wears the sales and marketing hats in your company, you must plan your marketing program based on how many sales leads you need to generate and what your cycle time is. For example, if you know you need 1,000 leads over a six-month period of time to attain the number of new customers required for business growth, proactively plan your marketing programs well in advance so they generate the desired results.
8. Harness Your Passion as a Strategy. Even the most successful companies have their share of business ups and downs. How will you use your passion to get through the rough patches and continue to grow? Consider your passion for your business. What do you love about it? Why are you starting or did you start it? List 10 reasons why you feel passionately about your business. Post this in your office or some place where you will see it every day to remind yourself why you’re getting up each morning and going to work (even if that’s just down the hall). These 10 reasons will keep you motivated on the good days as well as the bad ones!

Implementing many of these techniques allowed Joanna to candidly evaluate the effectiveness of her strategy for expanding philoSophie’s and to successfully channel her passion in the optimal direction. Through hard work she identified her most valuable sales channels and developed more efficient ways of allocating her time, ultimately leading to critical growth in both new and existing markets.

Beth Goldstein is President of Marketing Edge Consulting Group, LLC (www.m-edge.com). She has over 22 years experience in sales and marketing and is the author of The Ultimate Small Business Marketing Toolkit.”She oversees Boston University’s nationally recognized Online Graduate Certificate in Entrepreneurship program, teaches entrepreneurial marketing at the BU School of Management and is the instructor for the InnerCity Entrepreneurs business growth program in central Massachusetts. Beth can be reached at bethg@m-edge.com

By Barry Farber

What if you could take your sales to the next level in just30 days? It’s more feasible than you think —especially when you break the process down into small, achievable steps. Remember: Action is our greatest teacher, and the only way to see a difference in your sales is to act! When you act on an idea, it builds your confidence and enthusiasm, and you start to see a clearer path to reaching your goals. Consider this article your 30-day action plan for sales success. Here is my challenge for you: Today, act on just one of the 10 ideas mentioned below. Each one should take you a few days to complete. Tackle another one when you’re through, and in 30 days, you can expect to see results.

1. Keep a positive attitude. Everyone talks about the importance of attitude—and for good reason. High achievers in all types of professions often cite attitude as the top factor in their success.

Here’s an action that can keep your attitude in check: Take an honest look at the people around you. What kinds of attitudes do they bring to the table? Do they pump you up or bring you down? Everyone is entitled to have a bad attitude now and again, but if some of the people you’re around are constantly angry, bitter and bringing you down, it might be time to move on.

Every 30 days, make a list of the people with whom you spend the most time. Put a plus sign next to the person’s name if he or she has been a mentor, a role model or has uplifted you in anyway. Try to add one or two names to this section each month. Others on the list may have neither a positive nor a negative impact on you. You can put a zero next to their names. Then there might be some people on the list who are negative and always seem to be bringing you down. Put a minus sign next to their names. You can either try to help these people or just stop spending time with them. This may be tough, but if you can do it, you’ll be amazed at the difference you’ll see in your attitude and the way you think. We become what we think about, and our environment plays a big part in what we think.

2. Map out your goals. Many people underestimate and under use one of the most powerful tools on the planet, and it’s right between their ears. When was the last time you sat down with a blank sheet of paper with your number-one goal written at the top of the page? It’s amazing what you’ll come up with after brain storming for 15 to 30 minutes each week. Try to list at least 20 ideas that will bring you closer to your sales goal, and choose one of them to act on right away.

3. Gain access. My entire career revolves around this skill, from selling and marketing unique products and helping business owners gain access to new markets to getting through to the toughest accounts and decision-makers. The list of ways to gain access is endless: Ask for referrals from great customers, send helpful information out to key prospects, and attend important trade shows and walk the floor. But the most successful tactic I’ve found is becoming relentless when the ROI is apparent. You can’t just be tenacious without a purpose. Otherwise, you’ll eventually turn off your prospect. But if you can uncover information about the prospect—such as his or her challenges (business or personal)—and then re-search information and materials that could be useful to that person, it makes a lasting impression.

For clients who can really benefit from what I have to offer, I send useful magazine or newspaper articles that address what’s important to them. After awhile, the prospect sees my efforts helping theirs and doors start to open. All it takes is a little time, a stamp and a note attached to a relevant story simply saying, “Thought you might enjoy what’s enclosed.” Mail an article to one key prospect today.

4.Ask questions. Most salespeople like to talk—myself included. But most customers prefer salespeople who listen well. So I remind myself to do an exercise that keeps my listening skills sharp. Every time I meet a new person on the road, in meetings or anywhere else, I make it a rule not to share anything about myself until I’ve discovered what the other person does, their interests and so on. Even when he or she asks about my business, I give a short answer and go right back to my questions: “You mentioned you were opening a second store. How did you get to that stage?” The goal is to get them to elaborate on what they’ve said. Then I can decide if it makes sense to share what I do and what area of my business to talk about, or I might realize there’s no opportunity right now and move on. Questions are the key to selling. Nobody ever listened themselves out of a sale!

Next time you meet someone new, try to listen 70 percent of the time and talk only 30 percent. Get them talking about their challenges, goals and interests.

5.Offer stellar service. It’s the details—the little things you do—that make the difference. It’s been proved over and over again that the reason most customers don’t make a purchase is they feel salespeople don’t care, lack interest or show indifference.

I remember conducting a seminar more than 10 years ago and inviting some of the company’s top sales achievers onstage to share the one most important idea that contributed to their success. One of them had a very simple answer. He said, “Every time I meet with a prospect or client, I continue to ask them this question: Is there anything I’m not doing that I could be doing to serve you better?” What he was doing was constantly searching for problems. Problems become opportunities—once you solve them, you have a more loyal customer than you would have had if they’d never had any problems at all. This is because the customer sees your efforts in action and knows you’re ready to serve. These customers will feel comfortable making the decision to do business with you again because they know you’ll be there to solve any problems that come up.

Make a list of your top customers and call one each day, asking, “Is there anything I’m not doing that I could be doing to serve you better?” You can’t go wrong when customers tell you what to do and you deliver.

6. Differentiate your business. What makes you stand out in a positive way? How will your potential customer remember you after four competitors make their presentations? Following through, understanding the customer’s business, and service after the sale are important to customers, so before the sale is made, you need to come up with ways to demonstrate your track record of providing these. I used to interview my satisfied customers on tape and use their success stories and comments to handle my prospects’ concerns. At the time, no one else did that, and it helped me stand out in a positive way that also increased my closing ratio.

I remember talking to a sales rep for Oracle who would tell each customer he was going to tape and transcribe their entire needs assessment meeting so they both had all the notes, key criteria and action items for review. They were complex sales, and he made his customers feel at ease and that they were on the right track. Think about it: What can you do to differentiate your presentation? 

List three positive things that differentiate you and your message from the competition, and keep them on-hand so you can present them at any time.

7.Sell value. I remember a sign a printing company had on its wall that said:

1. Price
2. Service
3. Quality

(Please Pick Two)
Great quality and outstanding service come at a price. How many times have you gotten a great deal on a productor service, only to find out later that the product wore out or fell apart, or that the service was nowhere to be found when you called with a question or problem? When customers challenge your product’s price, your company and even you, what they’re really saying is, “What am I getting from you for that additional investment that I’m not getting from your competitor?” Is someone asked you that today, could you respond with at least three reasons that illustrate why you’re unique and why they should buy from you? Write down at least three answers and memorize them.

8. Follow through. After making a purchase, every customer wants to feel like he or she has made a good decision. When you follow up with a call, a thank-you note, materials you promised or just to ask how the first day went with the new system in place, it will make the customer feel taken care of and not like they’ve been sold.

Review the criteria the customer had prior to making their decision, and when you make your follow-up call, ask them, “How has our company delivered on your key needs?” Then ask, “What can we do now to keep you as a lifelong customer?” Also be sure to find out what times are best for keeping in touch. With all this information, create customized outlines of long-term follow-up steps for each customer.   

9.Create a sense off urgency. Top sales-people seem to always push themselves to move things forward. They’re constantly reviewing their accounts and thinking of ways to increase business and get things done. They end every call with a question or statement that will either close the deal or move the sale along. Say, for example, “Why don’t we get together next week and review the product samples?” Or ask the customer, “What’s our next step?” Sometimes we can get overwhelmed with so much activity that we need to ask ourselves every hour, What can I do right now to make the most productive use of my time? It’s a good idea to put this questioning your daily planner.

10. Turn obstacles in too opportunities. Great salespeople know that rejection comes with the territory. And when you get knocked down, thrown around and beaten up, it has a negative impact on your attitude. What’s important is the mental position you take toward a set-back or obstacle. As Henry Ford once said, “Failure is the opportunity to begin again, more intelligently.” When we run into obstacles, we have to continue to believe in our goals and keep our faith strong. Never, ever give up. A “yes I will” attitude has been responsible for more achievements in this world than anything else because of the belief, faith and commitment attached to it.

I’ve worked on many projects over the years that would have been easy to give up on when the road got bumpy ,but they have come through in the end. I received 27 rejections on my first book, more than 50 rejections on a patented writing instrument and a countless number of rejections while selling a now-world-famous comedian to radio and TV. But deep down, I knew there was value in what I was doing.

I dare you to look at every obstacle, rejection and setback as a time to learn. The next time you face any adversity or challenge that gets in the way of your goals, remember that facing them head-on with action is the key to success. Increase your sales activity, call mentors and others you respect to gather their insights for your next move, and make a list of things you can do to get yourself back on track. Whatever you do, don’t give up and let obstacles get the best of you. Attacking them with intelligent action will tear them down. 

Barry Farber (www.barryfarber.com) , author of The 12 Clichés of Selling, has taught thousands of individuals and corporations how to break through barriers to achieve their sales, management and personal goals.

John Butman’s workday at Boston marketing firm BzzAgent is pretty typical. He goes to company meetings, chats with employees in the hallways and occasionally has coffee with the CEO. Butman’s job, however, is unusual in one big way: He’s an outsider who has been hired to come inside the 70-employee company and blog about what goes on there.

Butman’s work includes 90 Days of BzzAgent, a blog that followed BzzAgent’s growing pains for three months last year. Labeled as an “experiment in organizational transparency,” the blog detailed everything from employee concerns about moving into a new office to a failed client pitch that left BzzAgent founder Dave Balter pretty mad. “I’ve tried to be as honest as I possibly can,” says Butman, a professional writer who describes his job as “some weird other zone” that’s part journalism and part marketing. Now he’s writing BzzAgent’s latest blog, The Bento Box, a sort of postmodern Advent calendar that features drawings and blog postings.

Balter thinks hiring an outsider to blog was a great idea. “It’s what we envision corporate transparency will be like,” he says. “If blogging stays boring, it won’t go anywhere.”

BzzAgent is just one story in the budding annals of corporate blogging, a practice that’s gaining more participants every day. One study by Jupiter Kagan Inc. expected the number of corporate blogs to double by the end of last year. Blogs are “going to have to be a part of every company’s website,” says Debbie Weil, a Washington, DC, corporate blogging consultant and author of The Corporate Blogging Book. “It will be expected.”

Blogging can be manna from tech heaven for growing companies. It gives a company personality and is a low cost way to reach potential customers and solicit product feedback. It can dramatically improve a company’s search rankings, too. “You’ll end up getting hundreds, if not thou-sands, of [website] visitors for absolutely no cost,” says Brian Brown, a Janesville, Wisconsin, small-business blogging consultant who reviews small-business blogs on his website, PajamaMarket.com.

But the impact of blogging on corporate bottom lines is still unknown, and with companies blogging about anything and everything—from Go Daddy founder Bob Parsons’ reasons why the company pulled its IPO filing to Edelman PRCEO Richard Edelman’s story of his mother’s battle with bipolar disorder—there’s the question of how much transparency is too much. “It’s like putting the minutes of meetings [online],” Brown says. “At what point do you stop with the minutiae of information?”

There’s also the issue of credibility: Can we believe what we read on corporate blogs? Some people see the term “corporate blogging” as an oxymoron, because blogging is supposed to be an organic, stream-of-consciousness experience—a concept foreign to buttoned-up, PR-sensitive corporations. The term “synthetic transparency” has entered the blog icon in the past year to describe how corporate blogs are really just engaged in a very calculated form of marketing and PR. “[It’s] pretending to be transparent because it’s cool and it makes you look good,” Weil says. “But you’re not really being transparent.” A 2006 Jupiter Kagan survey found that the majority of companies surveyed posted blog content hoping to generate “natural” buzz about their products and services.

Weil calls BzzAgent’s The Bento Box “corporate blogging 2.0”—a creative way to use blogging as a marketing and publishing channel—but she’s also suspicious because controversy swirls around BzzAgent’s business model, which enlist volunteer agents to spread word-of-mouth buzz for the company’s clientele. And there’s also the matter of paying an outsider to blog. “Are they hiring [Butman] so they can get him to manufacture the picture of what they want people to see?” asks Weil. “I’m not sure. It’s hard for me to believe that [it] is really, truly transparent.”

Balter readily acknowledges that Butman is on the payroll, and he reiterates the company’s blog guidelines, which prohibit the disclosure of BzzAgent’s financial information and require people’s consent before they appear in the blog. The point of the experiment, Balter adds, was to do some-thing different that pushes the boundaries of corporate blogging. “It’s not a marketing piece,” he says.

Butman’s role, meanwhile, hasn’t always been easy. BzzAgent’s employees were leery of him at first, and one key senior manager demanded to stay out of his 90 Days posts but eventually relented. Blog readers have chimed in, too, and not all their comments have been favorable. “People started telling me it’s not enough of a rant,” Butman says. “It was different than what people thought a blog should be.”

As companies decide what corporate blogging should be, they’ll also have to establish legitimacy with readers. “If the boss had a bad day, they don’t expect you to write about it,” Brown says. “What [readers] do expect is to be treated with respect, which means that you don’t talk about your products in public-relations-speak.” In the no-holds-barred world of the blogosphere, many companies could learn the hard way that authenticity is everything.

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area.

By Amanda C. Kooser

Web 2.0 is a nebulous term. It implies an upgrade, a better version of what has come before. It includes innovations in the ways we think about and use the internet. Just like the growth of Web 1.0 before it, this new incarnation of the net is set to change the way businesses function and how entrepreneurs interact with customers, employees and colleagues.

Web 2.0 is a people-oriented technology movement. Ease of use, social features, collaboration, fast-loading applications, interactivity, quick development times and real-time updates are all major trends. Instead of a million features packed into one expensive software program, you get smaller, sleeker online applications that aim to do just a few things very well.

A Computing Platform
The applications you associate with your desktop are moving over to the internet. Web-based e-mail is probably the most widely known and used application. Big companies like Google, MSN and Yahoo! all offer sophisticated online alternatives to desktop applications. “A lot of the Web 2.0 services have richer user interfaces. They look more like desktop applications,” says Ed Anuff, 39, co-founder of widget directory startup Widget box in San Francisco. Online programs have the advantage of being accessible from any web-connected device, giving them the power of portability and flexibility.

Even desktop workhorses like word processing and spreadsheet and presentation software are going Web 2.0.ThinkFree (www.thinkfree.com) is one example. Google Docs & Spreadsheets (http://docs.google.com) stems from Google’s acquisition of online word processor Writely. Documents can be imported, exported, shared with other users and published to the internet or posted to a blog. “The internet is the new super platform,” says Dion Hinchcliffe, founder and CTO of Web 2.0 consultants Hinchcliffe & Co. in Alexandria, Virginia. “All our productivity software, communications software—everything is moving to the web in better versions.”

Getting Interactive
Web users are coming to expect a level of interactivity and customization in the sites they visit—and social networking is one way entrepreneurs can provide this.

Web widgets—small programs that can be embedded into a web page—can help businesses build online communities within their sites. Eric Alterman, 44, is founder and CEO of KickApps (www.kickapps.com), a hosted platform launched last July that helps companies bring social net-working and user-generated content onto their websites using widgets. “Wecombine  Flickr, MySpace  andYouTube,” says Alterman. KickApps, which expects 2007 sales in the millions, handles video, audio and photos on hosted sites and lets users build personalized spaces while KickApps runs unnoticed behind the scenes. Individual widgets can be “stolen” by web visitors for use on their own sites or blogs, but they still link back to your business’ site. It’s a new twist on viral marketing that helps businesses take advantage of the human networking aspects of Web 2.0.“This is what the next generation of social networking means,” says Alterman. “The minute you deploy us, you deploy over the entire web.”

Collaboration Innovation
E-mail has become the default way for businesses to communicate and collaborate on projects, but lists of CCs, forwards, attachments and replies can become easily scattered. Near-Time (www.near-time.com), a hosted online collaboration service based in Chapel Hill, North Carolina, mixes wikis, blogs, group calendars and file sharing. It’s an open-ended, self-service platform that could one day be used for marketing, sales, tech support, customer service, product development and supply-chain management.

Now is a good time to pause and reflect on how your business functions online. But don’t pause too long—get out there and use the social, collaborative and productive innovations that are already available. Says Hinchcliffe, “The aftershocks of Web 2.0 are going to be enormous. The web is going to be woven into virtually everything we do.” So start weaving your own vision of Web 2.0 into the fabric of your business.

By C.J. Prince

Before autumn rolls into winter and thoughts turn to holiday-season planning, you might want to think about giving your credit history a once-over. Even if you’re not currently in need of working capital, forecasting business cycles is always an imperfect science, so you never know when you’ll need a cash infusion— or when one of your potential business partners or vendors will decide to check up on your credit.

What you don’t know about your credit history can hurt you, so the time to assess your credit is before you need it. “We get so many calls from entrepreneurs in distress because they were denied credit and they badly need working capital,” says Lathea Morris, co-founder of The Credit Alternative Group, a Montclair, New Jersey, company that helps small businesses and individuals gain access to capital. “One of the first questions I ask is, ‘Did you check your credit report before you applied for financing?’ I would have to say that 80 percent do not.”

Now it’s easier than ever to get the facts. As of September 2005, thanks to the Fair and Accurate Credit Transactions Act, consumers in all 50 states can get their credit reports for free each year from each of the three bureaus— Equifax, Experian and TransUnion—by visiting www.annualcreditreport.com. Because your personal credit history is inexorably tied to your business, you’ll want to review all three reports carefully, as well as pay to get your FICO credit score, well in advance of needing capital. Fighting inaccuracies and repairing problems in your credit report can take time, says Howard Dvorkin, founder of Consolidated Credit Counseling Services, a nonprofit financial counseling agency based in Fort Lauderdale, Florida. “You’re not talking a few days; you’re talking a few months.”

Once you have all three reports, scan all personal information for accuracy. “Something as simple as two numbers on your Social Security number being inverted could eliminate your chances of getting credit,” says Dvorkin. Next, address any inaccurate late payments or charge-offs. Don’t be afraid to call creditors and ask them to remove one-time late payments. If you’re tenacious, “99 percent of the stuff can be removed,” says Dvorkin.

If you can’t have an item deleted, send an addendum to all three credit bureaus explaining the reason for the late payment. “It won’t improve your score or get [the item removed,] but when lenders review your credit profile, they can take that into consideration,” says Brad Stroh, founder and co-CEO of the Freedom Financial Network, a consumer debt resolution company in San Mateo, California.

Next, order a small-business credit report from D&B (www.dnb.com). For $140, you can get a comprehensive analysis of your business’s creditworthiness. For $349, you can sign up for D&B’s SelfMonitor service and receive unlimited access to your business’s report, as well as e-mail updates notifying you of any changes. “A lot of vendors and business lenders will review that,” says Stroh, so you’re better off finding out the information before they do. And to keep your personal credit as insulated as possible, Stroh also recommends asking to have any personally guaranteed trade lines or credit cards transferred solely to the business once your company gets a few good years under its belt.

Speaking of credit, you should also take stock of your business’s cash flow and outstanding balances to make sure you’re not extending yourself too far. As of January 2006, most credit card issuers have agreed to comply with guidance issued by the Treasury Department’s Office of the Comptroller of the Currency and other regulators stating that cardholders should pay back more than their minimum payments to chip away at the principal. With interest rates up, that could mean trouble for small businesses with big balances, says Stroh. “Entrepreneurs who were living month to month may really need to do a gut check now and [ask], ‘Do I have the right financial game plan in place?’”

The bottom line on your credit review: Even if it doesn’t feel like a priority next to the pressing tasks related to running your business, make it one.

Getting a clear look at your company’s credit position today can help you not only address the past, but also plan more accurately for a successful future.

C.J. Prince is a New York City writer specializing in business and finance. Reach her at cj@cjprincemedia.com.

By Chris Penttila

Jonah Ansell is co-founder of Rivalfish.com, a 3-year-old online sports merchandise company based in Chicago. Its products play up the rivalry between teams. “We’re taking the whole ‘us vs. them’ mentality to the world of sports,” says Ansell, 24.

Being a young leader comes with its own sense of rivalry, however. Ansell remembers making a presentation to a large company as Rivalfish was getting off the ground. The Rivalfish team wore dark suits and ties, and they came armed with a 14-page overview of their business model. They sprinkled their talk with all kinds of industry jargon.

Then the feedback rolled in. “Some people said, ‘Well, you clearly know all the terms,’ ” Ansell says. “It was almost like that was a way to say we know the language, but the actual progress we made from this wasn’t as tangible.”

Ansell realizes he downplayed his youth and did a lot of posturing. “We felt we had to play this role, like this abstract notion of what it meant to be running a business,” he says. “In our industry, it kind of pushed us away from people. People saw these hotshot kids as opposed to actual down-to-earth kids who had a great idea.”

Young leaders bring a deep knowledge of certain market segments, but they often think they have to know everything. Then they fake it to save face. In the process, they lose credibility. “Young people get caught in some kind of mythology about leaders,” says Allan Cohen, a professor at Babson College in Wellesley, Massachusetts, who has advised young leaders for years. “Instead of identifying that they’re being tested, they start trying to do heroic things to pass the test.”

If someone is testing you, ask politely what this person is after. Is he or she testing your depth of knowledge? Doubting your ability to lead? Naming the game “is an act of incredible power. It says, ‘I’m strong, but I don’t have to have the answer. I just have to identify that there’s something going on,’” Cohen says. In the process, you’ll gain credibility.

Don’t discount the power of first impressions either, warns Joe Swinger, author of Leave Your Nose Ring at Home: Get the Job You Want by Creating a Powerful First Impression. High-octane energy, a sense of confidence and engaging friendliness are qualities that will attract others to your leadership abilities. “It’s tough to look down on people who are doing the best they can,” he says.

It seems counterintuitive, but understanding your dependence on others is at the center of gaining authority. Being flexible helps, too. “If young people can get over the idea that they have to always seem to be in control, then they’re off and running,” Cohen says. “All leadership calls for some balance between listening to ideas from below, pulling things from people, letting things bubble up and occasionally driving from above.”

These days, Ansell acts his age when he makes presentations, and it’s making a difference: Rivalfish has landed partnerships with three top NCAA companies.

“When we embraced [our youth], we got a lot farther,” he says. “Accept who you are. Understand where you are.” In other words, just be yourself.

By Sara Wilson

At 21, Marcus Ellison’s list of accomplishments rivals those of people twice his age. He has worked as a financial planner, produced his own film and is well on his way to becoming a serial entrepreneur. He co-founded Saulter and Ellison, a Houston-based real estate development company, and is executive director of Student Relief Organization, a Boston-based group designed to promote equal access to sustainable learning for students. How has Ellison, a senior at New York University, already been able to achieve such success? It all came about when he was honored with a Jackie Robinson scholarship in 2003.

Established in 1973, The Jackie Robinson Foundation’s mission is to help minority youths attain higher education by providing financial aid and mentoring. Through the New York Citybased foundation’s work, founder Rachel Robinson hopes to perpetuate the memory of her late husband, baseball legend, human and civil rights activist, and successful entrepreneur Jackie Robinson. More than 1,100 students have received scholarships since the foundation was established. In Ellison’s case, it changed the course of his life.

When Ellison was a child, his family lost everything and lived in a shack without electricity, heat or water. The $6,000 per year he receives in financial aid from the foundation along with the resources and mentoring it offers have helped him find his direction in life. “The Jackie Robinson Foundation has grounded me,” he says. “It has given me a consistent group of people to inform me about where I’m going, the choices I make, how I’m accountable for my actions and the person I should be. Mentorship is the most important thing— especially for an entrepreneur.”

Ellison is not the only scholar pursuing entrepreneurial endeavors. Over the past several years, Della Britton Baeza, the foundation’s president and CEO, has witnessed an increasing interest in entrepreneurship.

The foundation has responded by offering entrepreneurship career panels and seminars on personal financial management and other practical skills. Says Baeza, “Our work in promoting ownership, empowerment and entrepreneurship is our way of honoring and continuing Jackie Robinson’s quest to ensure equal opportunity and first-class citizenship.”

Sara Wilson is a writer for Entrepreneur magazine.

By Mike Hogan

Does it feel like you spend more time in your car than in your office? You’re not alone—even if you don’t carpool. A recent wide-ranging study by The Dieringer Research Group revealed that almost 21 million Americans work in their automobiles. Of course, entrepreneurs can be found “mobile working” just about anywhere—in airplanes, trains and even parks.

The continuous stream of laptops, cell phones and all things portable has left us pretty well-outfitted. The only thing missing is a place to plug them in—and I’m not talking about an AC power outlet. Most new cars are equipped with outlets for electronics, and there are plenty of aftermarket addons. The thing that will take mobile working to the next level is a broadband internet onramp—a wireless one is just around the corner.

As cellular providers build out their 3G networks by year-end and more hard hardware vendors exploit that availability, you’ll be able to wander just about anywhere.

You can already find 400Kbps to 700Kbps service in more than 200 metro areas, with 100Kbps-plus speeds pretty much everywhere in between. Bandwidth will increase and prices will fall next year as Mobile WiMAX (802.16e) and other multi-megabit-per-second networks like Flash/OFDM come into their own.

Your telecomputing gear won’t need to change much. At most, you may want laptop, phone or printer/fax/copier versions that fit your car’s ergonomics and connectivity options—or maybe accessories that make it easier to dock and undock your tools as you dash in and out of your mobile office. The other necessary piece of equipment is a short-range wireless network in and around your car.

You may soon see more Wi-Fi/3G router combinations. But fully half of all automobile brands are already building 1Mbps Bluetooth connectivity into at least some of their models, says Phil Magney, co-founder and principal analystof Telematics Research Group, a research and data firm in Minneapolis. Carmakers have long design cycles, and

Bluetooth was settled on before the arrival of 480Mbps Wireless USB. But Bluetooth is fast enough to connect digital entertainment systems to widely available Bluetooth enabled phones and computers, says Magney.

New models let you voice-dial a docked cell phone or choose a number from an automatically synced contact list in your car’s entertainment system. Incoming calls automatically mute music on the radio and can be answered using a steering wheel button. In-dash information displays are designed for safe access to in-vehicle communications and navigation systems. At some point, maps, directions and various menu options could be transparent images on your windshield. GPS-based navigation is on its way to becoming standard automobile equipment, says Magney, as are satellite radio and connections to iPods and other MP3 players.

Late-model cars already use computers to electronically control braking, steering and other major systems. Digital entertainment systems are adding DVDs, LCDs, and magnetic and flash drives to the cabin. This time next year, says Magney, we’ll see car-top antenna packages with various combinations of “cellular, GPS, Wi-Fi and WiMAX—you name it.”

We really don’t have that far to travel before your car will be outfitted just about as well as your office or home.

Mike Hogan is Entrepreneur magazine’s technology editor. You can reach him at mhogan@entrepreneur.com.

By Mark Hendricks

When Constance Cincotta needed to hire two key employees, her search led to an unexpected place. Glenwood Mason Supply Company Inc., the $25 million building supply company Cincotta founded in New York City in 1992, needed a worker with excellent integrity and loyalty to check shipments leaving the company’s yard and a manager who could mold yard workers into a cohesive team.

“When I started thinking about who I was looking for, all the characteristics were [those] I associated with the military,” says the entrepreneur. Cincotta wound up hiring two former Army officers and was so satisfied with the attitudes and skills they brought to the job, she later hired another former soldier to work as a maintenance mechanic for her 80-employee company.

The thousands of people who leave active service with the U.S. military each year are becoming increasingly attractive employee candidates to entrepreneurs. “Even five years ago, the commonly held belief was that anyone who spent significant time in the armed forces was too inflexible to succeed in the private sector,” says William M. Houchins Jr., vice chair of executive search firm Christian & Timbers in Columbia, Maryland. “All this has changed. CEOs and boards now value the lessons learned from military experience.” As military personnel continue to return from stints in Iraq and Afghanistan, entrepreneurs can put this experience to use while helping vets who are ready to embark on civilian careers.

Drew Myers, president of RecruitMilitary LLC, a Loveland, Ohio, company that matches employers and ex-military job candidates, says military veterans offer good character and a strong work ethic. “When you hire a veteran, the reference checks have already been done before the interview, by virtue of honorable service,” he says. Many veterans have extensive training in areas from IT to leadership, all paid for by the government. About a quarter of officers have engineering, science or technical backgrounds, making them attractive to construction, manufacturing and high-tech firms,

Myers says. Many others specialize in logistics and transportation— key areas of expertise for a variety of companies. Even soldiers strictly trained to fight offer finely tuned abilities to lead teams and solve challenging problems in stressful situations.

Most veterans enter the civilian labor force with an appealing combination of work experience and eagerness to prove themselves, Myers says. Of course, they also present challenges. For instance, few small companies can match the benefits former soldiers received as government employees. Nor is it always immediately obvious how to translate military training into profit-making work activities.

Most issues can be dealt with through careful interviewing. Cincotta was careful to avoid those who seemed as though they’d have trouble integrating into her firm’s culture. She asked candidates pointed questions about their ability to lead in an environment where lines of authority are less absolute than in a typical military hierarchy.

“I was concerned they might be too forceful or abrupt with employees,” says Cincotta.

You can find veterans by visiting local military bases and contacting the office in charge of helping former service members transition to the civilian world. There are also a number of online recruiting tools that allow employers to search veterans’ resumes and post job openings. These include Corporate Gray (www.bluetogray.com), The Destiny

Group (www.destinygrp.com) and RecruitMilitary (www.recruitmilitary.com).

Before extending an offer, Myers suggests making it clear to veterans how their work will fit into your company’s plan for success. And emphasize that pay will be based on performance. After you’ve brought a vet onboard, explain how he or she will be trained to handle new duties. Says Myers, “Vets respond best if they understand the training plan and it’s realistic and measurable.”  

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

By Mark Hendricks

Innovation is the water Stefane Barbeau swims in. Without a constant stream of new ideas for consumer products, Vessel Inc., the Boston design company he co-founded, would quickly cease to exist. “It’s really important,” the 34-year-old entrepreneur says of the company’s ability to innovate. “It’s what sets us apart from other companies.”

Thanks to a series of well-received original designs such as Candela rechargeable lights and Time Tag clip-on watches, Vessel has grown to four employees and $3.5 million in projected annual sales in only three years. Barbeau doesn’t expect to run out of ideas soon. But he’s a little concerned about other small businesses.

Vessel has to deal with a regular lineup of knockoffs and, contrary to popular belief, they are coming from U.S.-based companies as well as some in China and elsewhere. “There seem to be a lot of me-too entrepreneurs,” Barbeau says. “It doesn’t mean they’re not valid, but it’s a little weird that there are so many out there.

So is there reason to be concerned about the innovativeness of American small businesses? The answer is complicated. For one thing, innovation resists easy measurement. Furthermore, whatever American businesses do with regard to innovation, they have to compete with entrepreneurs from other economies, and global innovation is clearly on the rise. Finally, most studies of innovation focus on large companies—despite the significance of small-company innovation.

Some evidence suggests that innovation may pose a challenge to American business in general. In 2004, according to the Organization for Economic Cooperation and Development, China surpassed the U.S. to become the world’s leading IT exporter. In 2005, the U.S. Patent and Trademark Office listed six foreign-based corporations among the top 10 recipients of U.S. patents.

“Whether U.S. innovation is going up or down, everyone else is catching up,” says David Attis, senior director of policy studies at the Council on Competitiveness, a Washington, DC, public policy action group. “Whatever we’re doing now, it might not be good enough in the near future as everyone catches up to us.”

Nevertheless, other evidence shows that the U.S. still has a good lead on the rest of the world in many areas. The U.S. has more scientists and engineers than any other country, Attis notes. Although China and India are catching up, this still gives U.S. companies an advantage in cutting edge areas such as nanotechnology, chemistry and materials science.

What’s more, the U.S. is better equipped to finance business innovations than other individual countries. At the end of 2004, according to the National Venture Capital Association, U.S. venture capitalists managed an all-time high of $261 billion. By comparison, all European Union nations combined had the equiva has more scientists and engineers than any other country, Attis notes. Although China and India are catching up, this still gives U.S. companies an advantage in cutting edge areas such as nanotechnology, chemistry and materials science.

What’s more, the U.S. is better equipped to finance business innovations than other individual countries. At the end of 2004, according to the National Venture Capital Association, U.S. venture capitalists managed an all-time high of $261 billion. By comparison, all European Union nations combined had the equivalent of approximately $323 billion in private equity under management.

That financial system helps the U.S. spend more than 2 percent of its gross domestic product on R&D, handily beating other industrialized Western nations such as the United Kingdom and Germany, and putting the U.S. well ahead of the European Union’s average of 1.2 percent, according to the UK’s Department of Trade and Industry. While some U.S. companies are offshoring R&D to take advantage of lower costs, there are more Asian companies coming here to do research than U.S. companies going to Asia, Attis says.

U.S. environmental regulations are often cited as barriers to innovation. But Americans’ concerns about health and the environment have also encouraged companies to become leaders in electrical power storage, organic products and clean-air technology.

And it may be that the most important sources of innovation aren’t caught by these and other conventional metrics. Since large firms spend the most money on product R&D and other innovation related activities, studies tend to focus on them. However, SBA studies show a small firm’s patent is more likely to be among the top 1 percent of frequently cited patents than one granted to a large firm.

Not all innovation is measured by counting patents and employees with Ph.D.s, however. Much of the innovation taking place in U.S. small companies is in service industries, where patents are of little use. Furthermore, R&D spending isn’t always an indicator of innovation. Attis points out that Apple Computer is an icon of innovation, yet it spends less than its industry average on R&D.

To observers such as Attis, small companies seem to come up with better ideas and are also better at making something out of them. “When people talk about innovation, they talk about Apple and Intel and IBM,” he says. “But beneath all that is a continuous curve of innovation coming from small firms.”

Being Innovative
Small businesses can’t keep generating innovations unless their leaders make a priority of sustaining innovation, Attis says. “It’s hard to stay focused on innovation when you’re trying to make payroll,” he adds. Small companies are also usually underrepresented at hearings on government policies likely to impact innovation, he notes. “The CEO of a small firm can’t take time off to come to Washington and testify, whereas Microsoft has a team of people who work on this full time.”

Even small companies that make the effort to focus on innovation may find it heavy sledding. Manufacturers, for example, have to overcome the effects of a couple of decades of strident emphasis on cutting costs and increasing quality. “Now, when you have global low-cost competitors, you have to think about what you can do that your Chinese counterpart can’t,” Attis says. “That’s about innovation, and it’s difficult for a lot of manufacturers. They’re not used to thinking about new products and markets.”

The shortcut to innovation runs outside the company. Bringing in an outside perspective is the quickest way to inject some innovation into an enterprise, says Anand Chhatpar, founder and CEO of BrainReactions LLC, a Madison, Wisconsin, innovation consulting and training firm. Chhatpar sells innovation-seeking companies ideas generated by a brainstorming pool of creative college students. He says many companies should first look to their customers. “Your most creative customers can be your biggest assets and resources to find new innovations,” says the 24-year-old entrepreneur, who has grown his company to seven people and seven-figure projected sales in two years.

Harness your employees’ innovative spirit by sharing information and decision decision making powers with them, suggests Lisa Gundry, management professor and director of the Leo V. Ryan Center for Creativity and Innovation at Chicago’s DePaul University. It’s a mistake to rely too much on your own innovativeness, she warns. “The myth of the lone genius or idea that the founder or CEO is solely responsible for innovation is a real obstacle.”

Send employees to meet with customers, and seek ideas from experienced veterans in your company. “The experts in a firm can really put their finger on the pulse,” Gundry says. “And innovation is often driven by the market, so you need to get employees in touch with that market.”

None of this will work if you don’t stay open to all kinds of ideas. The most innovative companies celebrate and reward any ideas, including those that may result in only small improvements. According to Gundry, “They encourage employees to experiment, [creating] a culture where you’re rewarded for nice tries and not just home runs.”

A Sense of Urgency
Although small business as a whole retains its innovative capacity, individual entrepreneurs must not fall into complacency. “This isn’t just about growth,” cautions Gundry. “Years ago, we thought innovation was something nice to do when you [had] the time. Today, it’s about survival.”

If a one-size-fits-all approach to surviving through innovation exists, Barbeau says it consists of strenuous effort and market focus. “The feedback loop of product development and product selling is really important,” he says. “You can learn a lot from listening to your customers about how they are using your product.”

Hard work aside, Barbeau has a final word to entrepreneurs who think innovation requires deep understanding of cutting-edge technology. Many noted innovations, such as Apple’s paradigm-busting iPod, combine existing technology in useful and easy-to-grasp ways. “Innovation and simplicity need to work off each other,” Barbeau says. “Because if you’re being innovative, that innovation needs to be communicated to markets clearly and efficiently.”

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

By Jackie Larson

As businesses continue to rebuild in the year since Hurricane Katrina’s devastation, SCORE volunteers in the Atlanta; Baton Rouge, Louisiana; Gulf Coast; and New Orleans chapters are finding there’s still much work to be done.

Many affected entrepreneurs have already received valuable assistance from volunteers. Case in point: Carling Dinkler III of New Orleans. When his city’s hospitality industry went from being the top employer, with some 50,000 employees, to having all meetings cancelled through March 2006, Dinkler’s destination management and event planning firm, Custom Conventions, was just one of many businesses caught in the crossfire. “I’ve dodged a lot of bullets in my business career, but no cash flow? That was impossible,” says Dinkler, 60.

Prior to Hurricane Katrina, Dinkler’s company was pulling in more than $1.5 million in business a year, most of that dependent on New Orleans tourism. After Katrina, an SBA counselor referred him to SCORE for advice. At New Orleans’ Canal Place, he met with John Ryan, one of 10 members of a SCORE task force volunteer team from Baton Rouge.

“I got the info I needed from him,” Dinkler says. “These were all seasoned businesspeople, and they were very supportive. They provided a mentorship to guide me through the process of applying for SBA loans, as well as tips and hints. They walked [me] through it; they did everything in their power to help [me].” Dinkler’s business is getting back on its feet: The office in New Orleans is back up and running, a major convention for the American Library Association was his first big gig, and he’s hoping for a large national convention in 2007 or 2008.

Baton Rouge chapter membership chair Len Sedlin says Ryan and the Katrina task force did an amazing job helping entrepreneurs like Dinkler. “Until you actually went down to look at it, you couldn’t imagine the scale of the destruction and the tremendous impact on life in general. It was extremely important to get business up and running, because without business, nothing else happens,” Sedlin says. “The SCORE volunteers made a combined effort to assist displaced businesses and get the word out that we were there and ready to serve.”

In Atlanta, 17 SCORE volunteers worked six and seven days a week to counsel evacuees at four rescue centers. Baton Rouge SCORE volunteers counseled at SBA disaster recovery centers, forming their Hurricane Katrina task force to meet local needs. Volunteers were trained in disaster loan programs by Lousiana State University’s Small Business Development Center. Relocation from damaged Gulfport to Biloxi didn’t keep the Mississippi chapter’s 13 volunteers from providing counseling by e-mail, phone and in person, says Gulf Coast chapter chair Dave Philo.

“Just about everybody in our group suffered some kind of damage in the storm—we’re struggling to get our own lives together while continuing to help others. I’m proud of our guys doing that while they’ve got so much on their plates at home,” Philo says, noting that when given the chance to scale back their annual goal of seeing 410 clients by fiscal year-end in October, the chapter chose a full court press instead. “By May, we already had 411 clients,” Philo says.

Bring it on, adds Philo, a financial manager retired from the shipbuilding industry. “We feel we have something to share with those who are still in business, and it’s one of the most fun things I’ve ever done in my life,” he says. “[The entrepreneurs] do all the work; we’re there to provide support.”

Jackie Larson is a nationally published, award-winning writer and author. Her work has been featured in many publications, including Entrepreneur magazine.

By Isabella Trebond

When it’s time for you to get your business in the papers, you want a witty, groundbreaking ad that tells readers all about who you are. Right?

Wrong. Super-original graphics, copy that’s packed full of information, a trick headline that’s clever once you “get it”— advertising disasters are made of these. What works in ads doesn’t always make intuitive sense, so follow these basic guidelines to create an ad that gets and keeps you in business.

1. Don’t propose to strangers.
Suppose someone you just met asked “Will you marry me?” Are you wasting your precious marketing dollars doing the advertising equivalent?

A print ad commands only a tiny slice of the reader’s time and attention. Expecting it to represent your business, explain your offerings and instantly build a buy-sell relationship with your prospects is about as reasonable as asking your customers to accept a proposal from a perfect stranger.

The “Before” version of the sample ad on the opposite page is a cross between a catalog, a sales letter and a press release, and it doesn’t work as any of those. Treat your ad like an introductory handshake, and design it to get prospects to take that one vital first step toward becoming a client (visiting your website, coming in for a free consultation or just calling to ask a question). And don’t expect to induce instant buying in people who’ve never heard of you.

2. Save the best for first.
If you save the best for last, no one will see it. Your most important message is the answer to the question all your prospective customers are asking: “What’s in it for me?” So put it where people look first—in your headline or in a caption for your visual.

Customers won’t call you because you have a nice name or logo, so don’t splash these over the top of your ad. Customers don’t care that you’re one of three companies in America that carry certified organic cat food, so don’t make that your central point. Tell them instead that their cats will live longer and stay healthier if they buy your cat food. Always focus upfront on what they gain, not what you sell.

3. Write for eyes, not brains.
You never read the ad sections of the paper word for word. Neither will your customers. At most, they’ll skim over the page, and their brains will activate only when their eyes are captured by a key word, phrase or image.

A clever headline that forces your readers to think in order to make the connection to what you’re selling is the kiss of death to your ad. When in doubt, show it to a few acquaintances for five seconds, then immediately ask them to tell you what you’re advertising. If they can’t, simplify it until they can.

Choose visuals that obviously relate to your product or service. Your readers won’t stop to analyze metaphorical graphics for hidden meanings. No one glancing briefly at the clouds in the sample “Before” ad could be expected to guess it’s about cat food. (Heavenly cat food. Get it?) Stick to simple imagery that will activate your target audience’s “look here” reflex, like the big cat in the “After” version, which hooks cat owners.

4. Speak a thousand words—the right way.
Eyes grab pictures before words, so it’s usually a mistake to have an ad with no visual. But you can’t rely on a picture alone to make your point. If the visual is the bait, your copy is the hook. Make sure you have a good balance of both.

Use one primary image, not lots of distracting smaller ones. When in doubt, go darker with your main visual, because people instinctively glance at the darkest part of an open page first. Never slap copy across a background picture (see the “Before” ad), because this invariably turns your ad to mud in newspapers.

Keep visuals simple—fine details can get fuzzy in newsprint. Statistically, photos sell better than drawings, but only if the print quality is good. Look at ads the same size as yours in the publications you intend to use, and make sure the resolution is acceptable before you commit to a photo.

5. Tell prospects what to do—and why.
Never leave readers asking “What now?” Tell them exactly what you want them to do, when you want them to do it, and how. If you possibly can, offer a limited time, discounted or free something to create a reason for them to call right away. If you don’t, they’ll put off responding, something will distract them, and that will be the end of you.

Make your contact information easy to see, and if you give a phone number, provide relevant hours.

6. Know thy limits.
Are you perfectly confident in your language and graphic design skills? Remember, you’re staking the future of your business on these. The most expensive part of hiring a professional to design an ad is paying for the time it takes to figure out exactly what you want in it and where. Consider using the tips in this article to piece together a rough ad (with the general tone of the copy, images and basic layout already in place), then hiring a professional to polish it. It should be downright cheap, quick and a whole lot less risky.

Isabella Trebond is a marketing consultant who specializes in startup-business planning and copywriting.

By Sheree R. Curry

Anyone who starts a business receives all kinds of advice. But which of these conventional statements about entrepreneurship are true, and which are false? To get the real picture, we asked five Junior Chamber International members and business owners to reveal what they think about the myths and realities of running your own company. Our experts are Dominique Döttling, 38, who took over her father’s management consulting firm, Döttling & Partner Beratungsgesellschaft mbH in Uhingen, Germany, and is former executive vice president of JCI and current representative to the International Chamber of Commerce & World Chambers Federation; Brian Stahlhut Christiansen, 35, co-founder of professional training company Keys2passion in Copenhagen, Denmark; Rune Møller-Hansen, 35, immediate past president of JCI Norway, and senior consultant and country manager of Oslo-based ConTra Norway AS, the Norwegian part of a Danish retail consulting and training company; Marco Sessa, 33, co-owner of Zündschnur Marketingkommunikation, which does event planning, PR and promotional design in Switzerland; and Jun Takahashi, 37, who started the legal and business consulting arms of his family’s company, Grupo ECREL de Assessoria, a consulting firm in São Paulo, Brazil. Here’s what they had to say about five common adages on entrepreneurship.

1. If you fail to have a business plan, you plan to fail.
Entrepreneurs hear time and again that one of the first steps to starting a business is formulating a business plan. Investors often look for a smartly crafted, 30-page business plan to land on their desks before they will even consider setting up a meeting. When Møller-Hansen was first making contact with some of ConTra’s biggest customers, showing the customers parts of the business plan really paid off. “We started negotiating on a much higher level,” he says.

This is one adage with which our experts generally agree: You really do need a business plan for business success.

Christiansen: Write it—do it now. But don’t go overboard. Make it brief. You will find that writing a short and simple business plan forces you to analyze your business. It will lead you to clarity. If you can’t explain why I should do business with you in 30 seconds, you don’t have a business plan.

Takahashi: It’s better to have a business plan written on a napkin than to have no plan. But just because you have that business plan, it doesn’t mean your business will be successful.

Sessa: You need to have a clear vision, inspire the people working around you—and then the most important thing is to take action. Having a business plan and not really putting the thinking into action does not make your goals happen.

2. You need a ton of money to start a business.
As entrepreneurs know, money doesn’t grow on trees. But too many wannabe entrepreneurs think, “If I only had enough money to start my business, everything would be great,” says Mike Ryan, director of the Small Business Development Center at the Schulze School of Entrepreneurship at the University of St. Thomas College of Business in Minneapolis. “It’s a big myth that most successful entrepreneurs have a lot of venture capital behind them. Only about 1 percent of all new businesses do. The majority start out with less than $50,000.” Our experts say you don’t need a lot of money starting out to make a lot of money down the road.

Christiansen: You don’t need loads of money, but you do need money. How much money you need obviously depends on what kind of business you want to create. I have helped several startup businesses, and generally they tend to underestimate the need for capital. But there are many ways to finance your idea. Don’t let money get in your way.

 Döttling: The more money you take from a bank, the more you will have to work for the bank. So focus on the necessities. And do not concentrate on making big bucks. Focus on making your customers happy.

Sessa: Money makes you lazy. If you don’t have the money, you treat every client as your best client, and you try harder to make the best of every project—even if it’s a little project. This helps you think like an entrepreneur in action and not like someone counting the money.

3. Be budget-wise, not time-foolish.
One way to pinch pennies is to keep initial overhead expenses low by wearing more than one hat in the business or by starting out of your garage, basement or dining room.

But for some, being a work-at-home multitasker might be too costly. “Time is money,” says Paul Casey, author of Is Self- Employment for You? “Look at yourself as being worth $70 an hour going in. If you’re licking envelopes in the middle of the day, you can’t sell. Hire someone to do it for you for $10 an hour. Hire an accountant for $25 an hour.” Pay them with the $3,000 per month you’re saving by not leasing an office.

On the flip side, there’s still something to be said for spending a little for a professional office. Here’s what our JCI leaders think.

Sessa: Always try to keep the overhead expenses low! Everybody should do everything in the beginning of a small business. If you hire somebody to assist you in helping your vision come true, this is OK, but if you hire somebody to make coffee, get the post and answer the phone, then maybe you’re not on the right track. The start is hard—the future is even harder.

Döttling: Keep in mind that hiring and training someone takes time, too.

Takahashi: Usually in small startups with low investment, the entrepreneurs are multitaskers. That means they take care of the business aspects, and they also make coffee, clean the office, send mail and pay bills. What’s good about this is they can learn every detail of the business while it’s small and then teach others when it’s bigger.

Christiansen: Get out of the garage—fast. We started out as a homebased business, but it is too cozy and familiar. When we moved our business to an open office space with other consultancy businesses, we gained inspiration and motivation every day—the value is way more than the rent. You need a full business day, in a business setting, with business people doing business. Of course, an office has a price, but it’s a great investment, too.

4. Going into business with your best friend, spouse or other relative will ruin the relationship.
“Working with your father becomes a daily routine, just like working with any other person,” says Döttling, who worked with her father for five years. “Working together did not bring us closer emotionally. But spending that much time and having so many common subjects [to discuss] keeps you close even at a time when the parent-child relationship usually starts to loosen up.”

A lot of people go into business with someone they are close to, but these partnerships rarely work out, says Carol Frank, author of Do As I Say, Not As I Did! Gaining Wisdom in Business Through the Mistakes of Highly Successful People. But don’t despair. You may be able to make it work if you have complementary strengths, says Frank. “Only go into business with your friends or family if you know your weaknesses and strengths complement each other and you map out upfront what can go wrong.”

Döttling: My father never asked me to work with him. I decided to come and work in the company, and he agreed. You have to make a distinction between your private family life and your business, especially in front of your employees. In conflict situations, consider [that] there are business conflicts that are very normal from time to time, and [there are] father/daughter or father/son conflicts that are also very normal. So if you find yourself in a conflict with your father, try to sort out what kind of conflict it is, and then solve it step by step. And for your employees, keep in mind that there are a lot of assumptions and common ground within a family that outsiders cannot understand. So be sure to include employees in communication processes in an appropriate way.

Sessa: My partner is not just my partner in business—we are also living together and working closely in JCI. It is important that you are always clear about the roles, the responsibilities and the position of each person. From my point of view, it’s not a problem in the business that makes it impossible [to work together]. It’s most likely the combination of private stress and personal matters that influence the work.

Takahashi: What really ruins relationships are false expectations or bad communication. Put everything on paper, and make all involved read and sign, revise, reread, re-sign. Have evaluation meetings as [often] as possible, and respect others’ thoughts.

5. Business takes passion and skill, not age.
When Møller-Hansen was a shop manager in Denmark, he participated in a three-day leadership-training course. On the last day, the trainer took him aside and said, “I want to give you two pieces of advice. The first is to join JCI or another organization like that to develop your network. The other piece of advice is to study psychology and pedagogy so you can let your energy and passion be a tool for others to succeed.”

Møller-Hansen followed his advice. “I am still grateful that he saw that in me,” he says. Some people might be born leaders, but without the right training, skill development and passion for work, they will not get very far, no matter how old they are.

Møller-Hansen: In retail, you can get a lot of respect at a very young age. If you are a skilled, hardworking and honest person, customers, partners and investors will do a lot for you. My advice is that if you are young and depend a lot oninvestors, you really need  to be humble, and at the same time show some results and have a “stayer” mentality. If not, you will just be another high-flier with a crash landing.

Döttling: Credibility does not come with age. It is your personality and your background—your skills and experience. Launch a business that follows your passion, and you will be happy. And eventually, the emotional payback will be followed by some financial joys.

Takahashi: Many businesses did well with passion, but many more failed because they were based only on passion. Many experienced people have failed and, on the other hand, many really outstanding businesses have been started by inexperienced people. You can do well if you have commitment, passion, true will and good planning.

Sessa: You need to have passion for action. If you don’t believe in your vision, the dream will never come true—have a vision and the action. Not every vision brings you a successful business, but it makes it much easier to believe in what you are doing. If you lose your passion, the money will never come.

Møller-Hansen: Don’t dream your life. Live your dream.

Sheree R. Curry is a business writer in Maple Grove, Minnesota.

By Mark Hendricks

Writing a business plan is one of the first steps you should take toward startup—well before you launch your business. “A lot of businesses fail to write a business plan at all until they get in a jam,” says Linda Pinson, author of Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company’s Future. “They need money or a strategic partner. They come across a requirement for [which they need] business planning, and all of a sudden they’re panicked.”

A business plan will serve as your guide to decision making during the life of your business, beginning with the question of whether to start in the first place. The second use of a plan is to satisfy lenders and investors, virtually all of whom will require a written business plan before approving a loan or making an equity investment. Plans also serve as a means of communicating with potential partners, allies, vendors, employees and even customers.

1. Before putting pen to paper, research resources and tools that can help. Books and software programs can automate the task. You can get live help from your local SBA office or Small Business Development Center, college and university classes, and private courses or conferences. Unless you have a big budget, you probably shouldn’t plan to farm the entire job out to a consultant: “Good consultants run anywhere from $300 an hour down, and generally, the quality of the services is commensurate with the fee,” says Pinson, adding that having a consultant craft a good plan will run you $5,000 to $10,000.

2. Back up your concepts with numbers. Keep in mind, a business plan is both qualitative and quantitative. “[Creating] a business plan is not just writing about what your vision of your business is,” Pinson says. “It’s interpreting it in financial terms that you can measure.” That means you’ll need some numbers—as precise and accurate as possible—in addition to verbal descriptions of your plans.

Start by writing the conceptual part, then move to the financial part. “Interpret those concepts in terms of dollars,” says Pinson. For instance, starting with an idea of how frequently you’ll advertise, how large the ad will be and where it will run, you can find out your total costs. This will give you a number to plug in for advertising costs. Says Pinson, “The conceptual or text part of your plan has no validity without the financial part.”

3. Be realistic when making projections. “One of the most frequent errors made when writing a business plan is overestimating revenue and underestimating expenses,” Pinson says. Improve revenue estimates by narrowing your target market down to a realistic niche, then interpret revenue and expenses in terms of that market, Pinson advises. Start by identifying potential customers, then slice off those who aren’t ready to buy, can’t be marketed to effectively, can’t afford your solution or don’t consider it a need.

4. At minimum, include monthly cash-flow projections for the first year. “Cash flow is the critical issue,” Pinson says. Also, prepare an overall projection of profit and loss for three years, as well as a projected balance sheet. Calculate the break-even point, at which sales will cover costs. Research financial ratios specific to your industry, and look at published industry-specific ratios to make sure your assumptions are realistic. Says Pinson, “If grocers make a one-half-percent profit and you’re [projecting your] grocery store [will have] a 28 percent profit, you’d probably better rethink your projections.”

5. Pay special attention to marketing. First, develop goals. Second, do a market analysis, including identifying target markets, researching competition and assessing market trends. Then prepare a marketing strategy, including your approaches to sales, promotions, advertising, PR, networking, community building, customer service and other marketing channels and tools. Develop a plan to implement that marketing strategy, and include benchmarks to see if what you planned actually happened.

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

By Sam Boykin

After a 10-year career in the NFL playing defensive tackle for the Indianapolis Colts, the Philadelphia Eagles and several other teams, Steve Martin retired in March at the ripe old age of 31. Now what? After a decade of earning his keep on the gridiron, was he ready to make the transition into the business world?

“It’s been tough,” admits Martin. “The longer you’re in the league, [the more] you lose touch with the real world. You live in this utopia. Everybody around you is wealthy, and you’re a star. When your career ends, suddenly there are no more cameras, no more hoopla.”

Though Martin dabbled in several entrepreneurial endeavors during his football career, none of them succeeded. But after retirement, there was more at stake. To help him better navigate the world of business and finance, he participated in a unique program called Entrepreneurial Management: Transitioning With Success. The program is organized by the Wharton Sports Business Initiative at the University of Pennsylvania’s Wharton School and sponsored by the NFL and the NFL Players Association.

The program offers business education to NFL athletes, focusing on everything from marketing skills and financial analysis to real estate development and stock market investing. “It addresses the issues and problems that many football players confront when they retire,” says Kenneth Shropshire, WSBI director and a professor.

The program, which runs for six days—three days of classes and three days of follow-up sessions—is now in its second year, and Shropshire says it’s been a big success. “Last year, it started off with two schools, Harvard and Wharton. This year, we added two more schools—Stanford and Northwestern—and we expect it to continue to expand.”

Martin attended the program’s inaugural session last year. He has since invested in Fitness Stride, a resistance training product designed to help people lose weight and get in shape. Through his Kansas City, Missouri-based management company, Martin Management Group, Martin oversees administration, operation and marketing for Fitness Stride. “The Wharton program cleared up a lot for me at a time when I really needed some answers,” says Martin, who adds that Fitness Stride is putting together an infomercial and distribution deals. “Once the infomercial launches, we hope to start hiring people for various positions. Then we can move on to another project.”

Hardy Nickerson, 40, is another former NFL player who attended the Wharton program last year. Starting in 1987, Nickerson played middle linebacker for four different teams before retiring 16 years later. Nickerson admits he felt lost once he stepped off the football field. “I felt way behind,” he says. “It was like I was starting all over again. I had been financially smart off the field, but I knew when I retired, I wouldn’t be happy just sitting around the house and playing golf.”

Nickerson already had an idea for a business venture inspired by his NFL experience. During his career, he moved 29 times, leaving and joining teams as a free agent. Last September, he launched Nickerson Realty Group, which specializes in helping athletes, entertainers and executives relocate. Currently, Nickerson and his wife, Amy, run the company, based in Weddington, North Carolina, and they recently hired two brokers. “Not only do we handle real estate, but we help with [aspects] such as [telling clients] the best places to get a haircut, eat and shop,” says Nickerson. “It helps make the transition to a new city much easier.”

Although he already had the vision for his new business, Nickerson says the Wharton program helped him bring his idea to life. “It was very eye-opening,” he says. “The program helped me put everything together.”

Sam Boykin is a freelance writer in Pineville, North Carolina. He has written for Car and Driver, Maxim, Reader’s Digest, Salon.com, Sierra and US Airways Magazine.

By Lindsay Holloway

Despite having three kids of his own, 35-year-old Brian Spencer is a kid at heart. He’s always been an extremesports fanatic, drawing on the “I am invincible” mentality of youth when he propels himself into a helicopter spin on skis or flies off jumps on a dirt bike. This daring, adventurous quality is also what led him to his latest feat: launching Vurtego LLC.

Inspired by an equally energetic cousin in 1999, Spencer approached his father, Bruce, now 61, whose background is in aerospace engineering, to create the first advanced pogo stick targeted at adults in the extremesports market. Bruce decided a pneumatic device would work best to support the weight of an adult and provide the ability to launch the rider several feet high. “It became pretty obvious that it was going to work,” says Brian.

In 2002, the Vurtego pogo stick demoed at the Winter Olympics festivities in Salt Lake City, garnering extensive media coverage and customer interest. But father and son came home to a falling stock market, and with no one willing to fund their endeavor, the invention sat dormant. Meanwhile, the world leader in pogo stick manufacturing, SBI, jumped on the idea.

When SBI’s Flybar was released in 2004, Brian and Bruce were stunned at the product’s inferiority. Within months, they were back at work, refinancing Bruce’s home, finalizing the design, securing a patent and founding Mission Viejo, California-based Vurtego.

In January 2006, they released the finished product, and in the first month, revenue exceeded $50,000. Sales have tapered since, but Vurtego has been able to capitalize on the initial interest it created in 2002 and the new market SBI helped carve. “They’re spending a lot of time and effort validating the whole concept of adult pogo sticking,” Brian says. “We’re not spending a dime on marketing. We’re letting them lead the way, and [now we’ve] come in with a superior product, taking advantage of their first-to-market position.”

Lindsay Holloway is a writer for Entrepreneur magazine.

By James Park

Eric Hoover grew up wanting to make a difference in people’s lives. At 22 months old, he was diagnosed with rheumatoid arthritis and spent much of his early childhood in hospitals. “I thought I was going to build a hospital for kids,” says Hoover, 41. The hospital may have been out of reach, but his community wasn’t. Hoover’s connection with his Northern Pennsylvania community is one reason he was named National Small Business Person of the Year by the SBA in April.

Hoover’s machine tool business, Excalibur Machine Co., began in 1988 as a small machine shop, but it now employs more than 100 people from the town of Conneaut Lake. And he recently opened another location in nearby Linesville to handle the company’s growth.

The Pennsylvania community where Excalibur Machine Co. operates has seen limited job growth in recent years, but Hoover has used his creativity to add jobs even during tough times. His keys to success: great customer service and the skills and experience of his employees. “A lot of our workers are older and displaced people,” Hoover says. “Unlike other places, we embrace that.”

Bettering the community is at the heart of Hoover’s business. This year, he even created his own qualified charity, Excalibur Charitable Foundations, to award scholarships to local students. With 2006 sales projected at $11 million, Hoover isn’t ruling out that children’s hospital just yet. “Who knows, I still might be able to build one.”

James Park is a writer for Entrepreneur magazine.

By Lauren Payne

It wasn’t long ago that the term“eco-friendly” conjured up visions of hippie cultures and hug-a-tree mentalities. Not anymore. Organic foods and beauty products are readily available at the local supermarket, electric or hybrid cars no longer turn heads, and household recycling of cans, bottles, and paper is commonplace. Clearly it’s no longer a fringe movement.

It’s not just households that are embracing the trend; businesses are as well. As a small business, applying green principles is a good way to do your part to help save the environment while saving on your operating costs. As an added bonus you can market yourself as an environmentally friendly company to the media and to your customers.

“Going green” is now a mainstream practice, says Alan Abrams, a Washington, D.C.-based architect. “It’s all about energy efficiency and creating a healthy environment inside our homes and offices,” he says.

As a small business owner, why should you take notice? Architect Eric Corey Freed, principal of organic ARCHITECT, an environmentally conscious firm based in San Francisco, is quick to point out that the buildings of the world consume more than 40 percent of our energy and resources and represent 70 percent of our total consumption. The damage to our natural environment over the last three generations is largely a direct result of how we build and operate our buildings.

For instance, says Freed, growing health concerns have brought to light the hidden toxic secrets embedded in traditional building materials. In fact, poor indoor air quality has directly led to the rise of chronic asthma. “The question should not be, ‘How much do healthy, green materials cost?’” says Freed. “In truth, they cost about the same. The question we should be asking is, ‘How can we afford to continue to build with these toxic materials?’”

How can you make a difference? It’s easier than you think.

1. Recycle, reduce, and reuse
As the mantra for the entire environmentally conscious movement, it also applies directly to how you run your business. Establish a recycling program for office paper and purchase only recycled paper. Recycle office supplies, for instance; refill computer ink cartridges rather than throw them away. Rather than throw out obsolete computers, donate them to a school or non-profit organization, or check with your municipality for guidelines to recycling them.

2. Purchase energy-efficient products and systems
Short of installing a wind farm outside your office, you can still make a difference. Replace burned-out light bulbs with compact fluorescent bulbs, which use a fraction of the energy and last years longer. Install renewable or high-efficiency heating and cooling systems. You can even go so far as to install solar panels to provide heat and hot water (which may make you eligible for tax rebates).Other smaller gestures :Replace wornout appliances with those that have the Energy Star rating, which can reduce energy consumption by significant amounts. Even exit signs can be more energy-efficient if you purchase those with LED lighting. Inside the company kitchen, providing simple items like inexpensive plates, mugs, and silverware can eliminate the use of disposable paper products.

3. Encourage green transportation
Offer employees incentives for using public transportation to and from work, or for carpooling with co-workers. If you have company cars or trucks, purchase hybrid vehicles (which may also qualify you for a tax credit).

4. Improve indoor air quality
Use low-VOC paints and finishes, solid-surface flooring (carpeting can contain harmful chemicals and can harbor mold spores and other allergens), and eliminate formaldehyde, which is commonly found in insulation and plywood.

5. Reduce paper waste
Utilize electronic communication as much as possible. Send inter-office memos by e-mail; send invoices as a pdf attachment. Avoid faxing what can be sent as an e-mail and never use a cover sheet. Print double-sided documents whenever possible.

Turn off equipment when it’s not being used, fix leaky faucets and toilets, purchase non-toxic cleaning supplies. Added up, even simple changes can make a difference in saving the environment.

By Carol Tice

As an entrepreneur, leadership is the most important part of your job. But in a constantly changing business climate, you can’t model yourself on leadership archetypes from the past and expect to meet the challenges of today’s workplace. Barking orders at your subordinates a la the domineering 1950s boss won’t get your staff on your side. And the buddy-buddy, hang-loose management style of the 1990s won’t get results fast enough to keep pace with the competition.

So what are the traits the 21st century leader needs to succeed? Some of the factors that make a great leader haven’t really changed. The abilities to innovate, execute and be a strong role model for your staff will always be essential. But in addition to these qualities, a new leadership style is emerging, with skills uniquely tailored for success in today’s environment. One management consultant has dubbed this new leader The Enlightened Warrior.

Today’s successful business leader is decisive, insightful and constantly challenging company conventions to keep ideas flowing, says management consultant Mark Stevens, author of Your Management Sucks. This Enlightened Warrior is the model of the 21st century leader.

Enlightened, Stevens says, means that a modern leader identifies opportunities before the competition, taking in information from all sides to spot possible new directions. The warrior side symbolizes a passion for achieving a goal and a willingness to go on the attack—against the competition, and against weaknesses in yourself and the organization.

“You need to wage constructive war continuously,” Stevens says. “It’s not just firing people who aren’t doing the job, but [also] saying, ‘What are we not doing right?’ and then acting on it. It’s a war on complacency.”

Several new factors in the current business environment demand this kind of creative thinking, leadership experts say. One is the increasingly rapid pace of technological change, which opens up new possibilities for nearly every business. Two big changes are people-focused: the growing diversity of the nation’s work force and the anticipated worker shortages as baby boomers retire.

Coping with these trends will take some stretching for many CEOs. Here’s a digest of the key traits that are crucial in our changing workplace.

�¡ Adaptability: If you could have only one skill in your toolkit, this is the one you need right now, says Marty Linsky, co-founder of consulting firm Cambridge Leadership Associates in Cambridge, Massachusetts. With the marketplace changing practically overnight, CEOs need to be ready to learn fast and shift on the fly.

“The whole idea that change is the norm rather than the exception is not a tweak, but a profound change in your job as a CEO,” Linsky says. “Your job now is to help the organization develop the capacity to adapt, rather than stake out a vision and drive toward that.”

The tough part is knowing what should change at a company and what can’t be altered without negative consequences, Linsky says. “Adaptability is a very complicated process,” he adds. “You’re making hard choices, including sometimes giving up values or beliefs, or ways of doing business that may even have been crucial to earlier success.”

Linsky says leaders need to design their whole company for adaptability, not just possess the trait themselves. Build an environment where workers are encouraged to express their points of view and to raise tough issues before they become crises. Have an organization wide emphasis on learning from mistakes.

“I know one global bank where the CEO literally selects the biggest mistake of the year from which they learned something important and sends the person responsible [for the mistake] around the globe to talk about what they learned,” Linsky says. “You don’t see that much.”

Putting flexibility first helps leaders break out of established problem-solving patterns to explore new options, says Rick Lepsinger, co-author of Flexible Leadership: Creating Value by Balancing Multiple Challenges and Choices.

“What’s needed is to really understand the situation and not necessarily do the thing that has worked before, but ask, ‘What’s working here?’” Lepsinger says. “Different situations require different behaviors.”

�¡ Self-awareness: Before leaders can tackle the challenges at their organizations, they have to look in the mirror, says Ken Blanchard, co-author of the management classic The One Minute Manager, and more recently author of Leading at a Higher Level. “The journey of leadership is first taking a look at yourself,” he explains. “Then you’re ready to deal one-on-one, then you can take over a team, and then an organization.”

Alan Gilburg, principal at the Gilburg Leadership Institute in Holyoke, Massachusetts, agrees. Leaders need to look within and root out negative patterns. Gilburg says two types are common today: autocrats who like to make big decisions but don’t take responsibility for fulfilling their goals, and abdicrats who shift key decisions onto others when they should be leading. “It’s not about the tools and techniques,” he says. “It’s about the user of the tools.”

Once you’ve assessed your leadership strengths, you can play to those, work on improving weak areas, or hire people whose strengths will complement your own.

�¡ People skills: Everybody says their employees are their top priority, but management consultants say few companies’ actions show it. Changing work force dynamics make managing people an increasingly crucial skill for leaders, says Trudy Bourgeois, president and CEO of the Center for Workforce Excellence in Lewisville, Texas.

Generation X and Y workers know they’re in demand as the American work force shrinks, Bourgeois says. Leaders need to learn how to keep this new wave of younger workers happy, or risk losing them. Many women leaders have an edge here, because they tend to focus on relationships more than male CEOs.

Among the traits younger workers want from leadership are authenticity, accessibility and respect for their individuality. “They want personal credit for the results they get for the organization,” Bourgeois says. “If a leader says, ‘Under my leadership, we … ,’ [employees will] stand right up and say, ‘You didn’t do crap.’ Leaders need to develop their ability to connect with the most diverse work force in history.”

Aside from adjusting to a new generation’s sassy attitude, one of modern leaders’ prime responsibilities is helping their people adjust to the changes sweeping their workplaces. Whether it’s a change in direction, a merger or a job reassignment, employees are nervous when change comes, says Doug Staneart, president and CEO of The Leaders Institute in Fort Worth, Texas. “The number-one thing I’ve seen that makes great leaders now is they have a need for change,” he points out, “and they allow people in their organization to feel safe about that change.”

Staneart takes clients through a four-step program to teach them how to help workers embrace change. He says first, leaders must establish trust and reduce conflicts by airing them honestly. Only then can a leader start to gain buy-in and cooperation with a planned change. Once the team is onboard, leaders should step up efforts to recognize and reward the potential of their staff.

At clinical-test monitoring company Coast Independent Review Board in Lake Forest, California, CEO Darren McDaniel says he has helped his employees cope with the company’s explosive growth—from annual sales of zero to $7 million in four years—by constantly evaluating and rewarding their performance. He says that annual performance reviews, or even quarterly ones, are not enough input these days, adding, “I have people who’ve been promoted five times and tripled their income in the past 18 months.”

�¡ Decisiveness: The days of holding endless meetings to discuss possibilities are over, says Stevens. At the current rate of change, fast action is what matters. The desire to reach consensus or get buy-in from all parties has to be curtailed at some point, and the leader has to make a decision. 

Women leaders, in particular, often need to work to boost their skills in this area. With her women clients, founder and partner Janeé Harrell of Amplyfi Consulting in Dallas encourages an attitude she calls “Stand and Not Quiver.” “I recommend women get very data-driven and approach men very directly and decisively,” Harrell says. “Base it on facts, and gain the respect you deserve.”

On the plus side, women tend to be confident in relying on their intuition, which can serve them well in cutting to the chase, says Bourgeois. “It’s good to be intuitive, because the world is changing so dramatically that the data isn’t there to support good business decisions all the time,” she explains.

The ideal management style for the 21st century, Bourgeois says, blends typical female and male traits—you’ll need both intuition and a focus on the bottom line, both people skills and analytical strength.

�¡ Collaborative skills: The problems today’s companies face can’t be solved if department leaders stay in their own silos, says Cynthia McCauley, senior fellow at the Center for Creative Leadership in Greensboro, North Carolina. CEOs need to create cultures that foster idea exchanges among all corners of their organizations. McCauley says, “We need more managers who can work across boundaries—with vendors, external partners, across business units.”

Some Things Don’t Change
There are some basic skills leaders have always needed. The only difference is that now these skills are even more crucial. A few key classics:

�¡ Walk the walk. The days when CEOs could give themselves fat bonuses while cutting workers’ pay are over—that maneuver cost American Airlines CEO and chairman Donald Carty his job in 2003, and that’s only one example. If you’re not staying late to make the big project deadline, employees won’t either, says Evan Wittenberg, director of the Wharton Graduate Leadership Program at the University of Pennsylvania in Philadelphia. The ethical standards you model will be picked up by employees, he notes. “You’ve got to lead the organization in a way you’d want others to emulate when you’re not around.”

�¡ Innovate. Too few leaders are creating organizations designed to encourage innovation, says Lepsinger. If there isn’t a system in place to share new ideas and move those ideas along to become salable products, innovation will be stifled. He says, “You need to get everyone trained to think out of the box and be creative.”

�¡ Execute, execute, execute. One of the biggest leadership gaps these days is between vision and execution, says Lepsinger. Too many leaders spend their days dreaming about the big picture, while research shows that more than half of workers despair of being able to execute the boss’ sweeping vision. “We find that vision doesn’t drive execution of the business results,” he says. “You need to develop an operations strategy and execute that strategy.”

Seattle writer Carol Tice reports on business and finance for The Seattle Times, Seattle Magazine and other leading publications.

In 1992, Fran Biderman-Gross took the entrepreneurial plunge. Shortly after graduating from college with her husband David, they started Advantages, a printing company. The business began slowly and was built through various partnerships. Advantages shared costs with another small business and started printing in black & white and two-color. Soon their business grew. Through another business partnership, they added four-color and digital machines.

In June 1999, Biderman-Gross received tragic news. Her husband David was diagnosed with terminal cancer. Two years later, he passed away. At a crossroads, Biderman-Gross decided to continue with the company and planned to figure out how to make it her own. “Advantages was like one of our children,” she said of the business. “It was David’s legacy.”

It took almost 18 months to find the strength to push forward in earnest. Part of her support came from the Entrepreneurs’ Organization (www.eonetwork.org), an international group of like-minded business owners she joined while running Advantages.

Biderman-Gross said that one of the key factors in her success has been hiring the right people consistent with the purpose of her company. She looks for employees to join the team that fit her vision and motto. “I screen and hire for that purpose. Whether hiring employees or marketing new clients, the right fit makes all the difference.” Today, the company works under the motto of Get Noticed. “Our true gift is getting companies to stand out amongst the crowd.”

With a full team in place, Advantages now offers clients a full marketing strategy, ranging from conception to completion. Last year, Advantages became certified as a New York City and New York State Minority- and Women- Owned Business Enterprise. Biderman-Gross said the certification has opened even more doors of opportunity. “I love executing a successful campaign and getting calls from my clients that their phones are ringing off the hook.”

In 2008, Advantages will add direct importing to its list of services. Biderman-Gross wants to take an additional high-level design and manufacturing ability to direct import and design premiums that are custom-made. “That would add a tremendous edge, enabling us to deal with Fortune 500 companies.”

It might even help Advantages, and Fran Biderman- Gross, Get Noticed.

For more information on Advantages, visit their website at http://www.advantages.net.

By Anthony Box

In recent years, the increased attention to corporate fraud has forced many large companies to implement fraud prevention programs. However, fraud prevention continues to be woefully neglected by many small businesses who view fraud prevention efforts as too costly and time-consuming. While some programs may be costly, others can be done simply by assessing your fraud risks and implementing the appropriate safeguards. Small business owners should learn as much as they can about preventing fraud in their organization and take the necessary steps to protect themselves.

Law enforcement agencies are frequently contacted by small businesses after they become victims of various fraud schemes. The losses from these schemes can cripple or destroy a thriving business. Fortunately, there are ways to protect company assets before being victimized. The following are a few ways in which small business owners can minimize their fraud risk.

1. Promote ethical and honest behavior
Small business owners need only read about the latest corporate scandals to realize how important it is to create a culture of ethics and honesty. Such a culture begins with solid leadership at the senior level. Company management should establish the roles of owners, managers, and all other employees in promoting ethical and honest behavior. At a minimum, employees should be made aware that the company values and expects ethical and honest behavior in all business dealings. This message should be frequently communicated through formal and informal messages.

Fraud will almost certainly have financial costs; however, there may be other serious consequences. In addition to the financial costs, fraud can damage a company’s reputation and destroy employee morale, especially if they have a history of fraud occurrences. A culture of honesty and integrity will be welcomed by ethical employees and will discourage dishonesty in the workplace.

2. Protect assets by having strong internal controls
In addition to promoting strong ethical policies, small businesses should consider strengthening their internal controls. Having effective internal controls is the best way to protect company assets from fraud. The type of internal controls will vary depending on the size and type of business, but every business regardless of size should:

• Examine the operations of the business and look for ways in which it may be vulnerable to being victimized by fraud
• Assess the likelihood of each of the events and focus on the ones that pose the greatest risks or hold the potential to cause the greatest harm to the business
• Implement improvements or new controls based upon the risk assessment
• Regularly review internal controls and implement improvements as business changes

One of the most important elements of an effective internal control system is separation of duties, designed to ensure checks, balances, and accountability in the financial process. When possible, it is best to separate the operational and financial responsibilities of those actively involved in the business process to minimize the risk of fraud or mistakes. Effective separation of duties can deter fraudulent activity because it will require employees to work together to commit the fraud.

Complete separation of duties is not always possible in small businesses that may only have only one or two employees to manage the company’s financial affairs. However, some controls can be established even in very small businesses. Here are some of the specific controls small business owners should consider implementing:

• Require receipts and disbursement records for all funds received and disbursed
• Require that all checks over a certain amount have a second signature
• Ensure that the cosigner fully understands that checks are to be signed only after they are completely filled out and the cosigner knows the purpose and legitimacy of the check
• Ensure that the bank account balances are reconciled with bank statements
• Require backup documentation for check transactions
• Examine cancelled checks for consistency of payee and endorsements and comparing the amount and payee on each check with the information recorded on check stubs and in the disbursement journal
• Ensure supporting documentation for all invoices are maintained

The following is a case study demonstrating the importance of internal controls.

Joe is the office manager at Mike’s camera shop. In addition to being the office manager, he also handles the accounting. Joe has carried out these dual responsibilities for years and has always done a good job for Mike. Yet in the last six months, Joe has been experiencing financial difficulties. Meanwhile, Mike has been spending an increasing amount of time away from the business, touring the country on his new motorcycle.

While Mike is away, Joe sees an opportunity to get some extra money from Mike’s company. Joe sets up a fictitious vendor in the system, JC’s supply company. JC are Joe’s initials; he has named the company JC’s because it is likely that he will be able to cash checks made out to JC’s without creating a new company or operating a new bank account. Joe knows that many legitimate invoices are received and paid by Mike’s, and a few small invoices to JC’s would not stand out among the many larger invoices.

Joe submitted the false invoices to the company and paid himself with a company check payable to JC’s. He then placed the check in his personal bank account at the local bank. Joe was so successful with his initial false billing scheme that he continued it for three years and eventually stole more than $250,000 from Mike’s.

In this case, having the appropriate separation of duties would have made Joes’s theft very difficult and would have probably saved Mike a lot of money, time, and inconvenience. Some recommended separation of duties for Mike’s include:

• Regularly reviewing vendor lists for new additions
• Requiring official documentation from all new vendors such as providing the company’s articles of incorporation
• Have a process for reviewing vendor list for names similar to other known vendors, vendors with names similar to employees, and vendors with initials the same as employees
• Require all vendors to provide the company with their business identification numbers, physical addresses, and telephone numbers
• Review vendor lists for addresses and telephone numbers which match employees’ data
• Ensure that the person who enters the vendor information does not have additional disbursement duties
• Require a different person to approve payment of the invoice only after confirming that the goods or services have been received

3. Know your employees
Many small businesses operate off a system of trust. Trusted employees are often responsible for conducting the most important aspects of the business. Many small businesses cannot maintain a complete separation of duties, but they can minimize their fraud risk by using their close contact with employees to observe unusual activities and attitudes.

Be alert to changes in lifestyle where employees appear to be living well above their means in a lifestyle that cannot easily be explained. Such lifestyles could indicate that company assets have been or are being stolen. Employers should be attentive to indications of financial distress, excessive gambling, and the use of drugs or alcohol. These types of behaviors increase their employees’ need for money and may motivate them to steal from the business to satisfy their needs.

Pay attention to changes in employees’ attitudes, such as unexplained defensiveness, paranoia, or anxiety. These attitude shifts may indicate that the employee is hiding something about their activities at work and may provide early warning signs of a troubled employee.

Be attentive to behavior indicating displeasure or dissatisfaction with the company or its treatment of employees. Employees are more likely to steal and commit other unethical or illegal acts when they are dissatisfied with their employer or with management. Owners and managers should pay attention to and investigate any of these behaviors or activities. Because of the nature of small businesses, they are particularly vulnerable to the activities of a few trusted employees. A breach of trust and theft by a trusted employee may mean the end of a friendship or possibly the end of your business. Your attention to these matters will show concern for the company and contribute to a positive work environment where employees feel that management is concerned about their feelings.

In addition to observing their activities and attitudes, small business owners must protect their companies by carefully screening possible employees. Companies should not rely on checking resumes as a way to thoroughly screen potential employees. According to a poll conducted by ResumeDoctor.com, recruiters and hiring managers stated the most common misleading information being put on résumés is: inflated titles; inaccurate dates to cover up job hopping or gaps of employment; unfinished degrees, inflated education, or mail-order degrees; inflated salaries; inflated accomplishments; and false information about specific roles and duties.

Background checks for new employees are an excellent way to cut down on hiring dishonest employees. At a minimum, they should be obtained for key positions and for those involved in the financial process. Background checks should include:

• FBI Fingerprint check
• Criminal history from all appropriate county and federal districts where the applicant has recently lived
• Driver’s license check for revocations, suspensions, and other serious violations
• Education verification for degrees attained from the institutions listed on the employment application

The information from the background check should be used along with the résumé and all additional information from the job application to evaluate and make a hiring decision. During the interview, the applicant should be asked questions about their application to check their honesty and integrity.

4. Investigate complaints and suspicious activities
The following is a case study illustrating the importance of investigating complaints.

A business owner receives a call from a person who claims to have important information about embezzlement at the business. The caller informs the owner that the company’s bookkeeper has been forging and cashing checks stolen from the company. The owner does not believe the allegations because the bookkeeper has worked for the company for several years and there has not been a noticeable change in her lifestyle. The owner believes that the bookkeeper is honest and loyal to the company, and that is why she has not taken a vacation or a day off in years.

Several months later the owner found out the allegations were true. The bookkeeper stole checks directly from the company checkbook and entered them as VOID in the check register. She also changed the bank statement address and had the statements diverted to her personal P. O. box. A change in lifestyle was not noticed because the bookkeeper had a gambling problem and the money was being spent to support her gambling habit.

She had not taken a day off in years because she was afraid that her scheme would be discovered by her replacement if she was not there to hide it. Small business owners should require employees involved in the business process to take days off and to take annual vacations. Many small businesses have been victimized by employees who were once good and loyal workers but were tempted and believed they could get away with the crime. The policy of mandatory days off should apply to all employees, especially long-term employees.

Companies should also immediately investigate complaints from customers that statements or letters of delinquency are in error, particularly those with copies of cancelled checks attached. The complaints could indicate instances of lapping, a scheme where payments by customers are partly or wholly misdirected by an employee and future payments are used to make up deficits in older receivables before customers are billed for goods they have already paid for. If a business owner hears about or suspects fraud, they should always investigate it.

The latest National Retail Security Survey reports that theft cost U.S. retailers $41.6 billion last year including $19.5 billion— or 48 percent—from employee theft. Fraud in the workplace continues to be a pressing problem for small businesses and is one of the primary reasons why they fail. Every small business owner should consider the risk of being victimized by fraud, assess their strengths and vulnerabilities, and immediately implement the necessary fraud protection measures to safeguard the business.

By Brian Moran

Have you ever wondered if your product, company, or new idea has what it takes to advance to the next level? Authors Chip and Dan Heath wrote a book that may help to answer that question. Made to Stick: Why Some Ideas Survive and Others Die considers six principles shared by all sticky ideas—ideas that people understand, remember, and that change the way people think or act.

What’s a sticky idea, and who needs to make their ideas stick?
A sticky idea is one that people understand when they hear it, that they remember later on, and that changes the way they think or act. We all need to make our ideas stick sometimes. Business owners need to get ideas across to their employees and customers.

Teachers need to get ideas across to their students. Parents need to give advice to their teenagers.

Yet stickiness is a rare commodity— how much can you recreate from the last memo you read or the last presentation you saw? And you probably couldn’t fill an index card with what you recall from high school chemistry.

What are some of the most common problems that arise when ideas just aren’t structured with enough stickiness?
People forget. They misunderstand. They get confused. They pick the wrong priorities. They don’t believe you. They believe you but they don’t act. They believe you but they don’t much care. If you’re the kind of person who needs to make ideas stick—a business owner, a teacher, a parent, a manager, a nonprofit leader, a politician—these are not theoretical problems. These are huge, everyday realities.

You start your book with the urban legend about a ring of thieves that steals kidneys from unsuspecting business travelers. What do urban legends have to do with sticky ideas?
Urban legends are some of the stickiest ideas around. Think about it—urban legends propagate without a shred of resources behind them. No advertising campaigns, no PR machine, no executive support. They spread on their own merits. In fact, there’s a whole class of what we call “naturally sticky” ideas— everything from proverbs and fables to conspiracy theories and gossip. But urban legends are some of our favorite naturally sticky ideas.

What is your favorite example from the book of a true sticky idea?
Our favorite is JFK’s speech from 1961—he challenges the nation to put a man on the moon and return him safely within the decade, and that sticky idea motivated a whole nation for years. We found there were six principles that link sticky ideas of all kinds. Your idea doesn’t have to have all six, but the more, the merrier. JFK’s idea to “put a man on the moon in a decade” had all of them:

Simple: A single, clear mission.
Unexpected: A man on the moon? It seemed like science fiction at the time.
Concrete: Success was defined so clearly—no one could quibble about man, moon, or decade. That’s not true for most of our goals.
Credible: This was the President of the U.S. talking.
Emotional: It appealed to the aspirations and pioneering instincts of an entire nation.
Story: An astronaut overcomes great obstacles to achieve an amazing goal.

You spend a lot of time in the book discussing the Curse of Knowledge. What does it have to do with sticky ideas?
The Curse of Knowledge is the archvillain in our book. The Curse of Knowledge happens because when we know something, it becomes hard for us to imagine not knowing it. As a result we become lousy communicators. Think of the ITguy in the office who can’t give you a clear answer to some computer question. All the vast experience he has with computers renders him unable to fathom how little you know. So when he talks to you, he talks in jargon and abstractions that you can’t follow. And the irony is that we’re all like the IT guy in our own domain of expertise. If we know enough to come up with an important insight, we also know too much to communicate easily with others. That’s why knowledge is a Curse. But the principles in our book can reverse the Curse.

So how do you dodge the Curse of Knowledge?
You go back to the principles. One of the best stories in the book is about a group of nutritionists who found that a typical medium movie-sized popcorn had 37 grams of saturated fat. They’re experts and they knew that was a ludicrous amount. But they had to come up with a concrete way to convey the ludicrousness to the rest of us. Here’s what they said: “A medium sized popcorn contains more fat than a bacon-and-eggs breakfast, a Big Mac and fries for lunch, and a steak dinner with all the trimmings—combined!”

That message is a perfect example of at least three of the principles in the book—it’s very concrete, but it’s also emotional and unexpected. And it worked:

Moviegoers stopped eating popcorn until movie theaters stopped popping in coconut oil (the source of most of the saturated fat).

By the way, JFK also dodged the Curse. If he’d been a modern-day politician or businessperson, he’d probably have said, “Our mission is to become the international leader in the space industry, using our capacity for technological innovation to build a bridge towards humanity’s future.” That might have set a moon walk back 15 years.

What’s a typical error made by someone trying to suggest a new idea in a business meeting?
Businesspeople love abstractions. We love to talk about “shareholder value” and “quality” and “innovation.” The problem is that if there are 10 people in a meeting, they’ll have 10 different understandings of these terms. And our brains are wired to remember concrete images, not abstractions. If you don’t believe us, try to remember what was discussed in your staff meeting two weeks ago.

How have you personally experienced the success of a sticky idea or the failure of something that didn’t stick?
Dan: I have a failure story. I was trying to raise venture capital for my startup. And my co-founder and I would have these meetings with venture capitalists, and we’d get so excited, and we’d start telling them everything we knew about our product and our industry and the enormous opportunities we saw. No fact was left unspoken. And, at various times, we’d notice that their eyes were glazing over, so we’d adapt by speaking louder. We were rejected so many times that it began to feel like rejection was part of my job description.

And, finally, one kindly venture capitalist took me aside and said, “Look, your elevator pitch is more of an Oregon Trail pitch. We just don’t care as much as you do about this business. We care about whether it’s a good investment, not whether it’s a neat product. You need to go back to the drawing board.” It was an incredibly painful idea failure. I hadn’t learned about the Curse of Knowledge back then, but in retrospect we were big victims. Our story was way too complex.

So how do you overcome the tendency towards making a business idea overly complex?
Small businesses complicate their business models in a way that leads to mission drift.

Technology firms experience technology creep with their products that causes them to add that 52nd button to the DVD remote. Jeff Hawkins, the leader of the Palm Pilot team, carried around a wood block in the shape of the Palm Pilot. It became a living reminder of what the team was trying to build—a PDA that would be extremely simple to use (in contrast to, say, any remote control in your house).

Hawkins would pull out the wood block to “take notes” in meetings, and if people had new feature ideas, he’d make them show him where the new feature would fit on the block of wood. The block of wood was, in essence, a visual proverb. A proverb is a compact idea that packs in a lot of meaning. Proverbs help people make decisions in ambiguous situations. “A bird in the hand is worth two in the bush” helps you see that you should be grateful for what you have. Hawkins’ block of wood helped his team see that they should err on the side of simplicity.

What would be your top three tips for presenting an idea effectively?

Tip 1: Be concrete . Trader Joe’s describes its target customer as an “unemployed college Professor who drives a very, very used Volvo.” That’s funny and clever, but more importantly, it’s practical—it allows the workers at Trader Joe’s to share a common mental image of who they’re trying to serve.

Tip 2: Use stories. People will remember your stories, not your advice. Aesop’s

Fables have endured for centuries, but Aesop’s Thesis Sentences wouldn’t have made it 10 minutes. Choose your stories carefully, so that after the fact, your audience can reconstruct your core meaning, just like we can do with “The Fox and the Grapes.” Any business owner o rmanager will have lots of stories about hard-won insights. Stories act as flight simulators for our brain—they let us vicariously experience situations we haven’t seen yet—where as our advice flows in one ear and out the other. Tell your stories and not your Thesis Sentences.

Tip 3: Find uncommon sense. Common sense isn’t sticky—you’ve got to find the uncommon sense in your message. When we hear something that surprises us, or something we wouldn’t have predicted, it grabs our attention. Nordstrom is an upscale department store that justifies its high prices by providing really outstanding customer service. They spend a lot of time telling unexpected stories: About the “Nordie” who gift-wrapped a package a customer bought at Macy’s. About the Nordie who refunded money for an unsatisfactory set of tire chains…even though Nordstrom doesn’t sell tire chains. Those messages highlight the uncommon sense about Nordstrom’s idea of outstanding customer service. Wal-Mart talks about “outstanding customer service,” but they don’t tell the same kind of stories as Nordstrom!

Chip Heath is a professor of organizational behavior in the Graduate School of Business at Stanford University. Dan Heath is a consultant at Duke Corporate Education. A former researcher at Harvard Business School, he is cofounder of Thinkwell, an innovative new-media textbook company.

Made to Stick Excerpt:

In this book excerpt, Chip and Dan Heath discuss the principle of simplicity, a key challenge for small businesses:

Every move an Army soldier makes is preceded by a staggering amount of planning, which can be traced back to an original order from the President of the United States. Then orders and plans cascade downward—from the President to generals to colonels to captains.

The plans are thorough, specifying the “scheme of maneuver” and the “concept of fires”— what each unit will do, which equipment it will use and how it will replace munitions. The orders gain enough specificity to guide the actions of individual foot soldiers at particular moments in time.

The Army invests enormous energy in planning, and its processes have been refined over many years. The system is a marvel. There’s only one shortcoming: The plans often turn out to be useless.

“The trite expression we always use is, No plan survives contact with the enemy,” said Colonel Tom Kolditz, head of behavioral sciences at West Point. “The enemy gets a vote. Many armies fail because they put all their emphasis into creating a plan that becomes useless 10 minutes into the battle.”

Colonel Kolditz said, “Over time we’ve come to understand more and more about what makes people successful in complex operations.” Plans are useful—in the sense that they are proof that planning has taken place. The planning process forces people to think through the right issues. But as for the plans themselves, Kolditz says, “They just don’t work on the battlefield.” So, in the 1980s, the Army adapted its planning process, inventing a concept called Commander’s Intent (CI).

CI is a crisp, plain-talk statement that appears at the top of every order, specifying the plans’ goal, the desired end-state, e.g. “My intent is to have Third Battalion on Hill 4305, to have the hill cleared of enemy, so we can protect the flank of Third Brigade as they pass through the lines.”

The CI never specifies so much detail that it risks being rendered obsolete by unpredictable events. “You can lose the ability to execute the original plan, but you never lose the responsibility of executing the intent,” says Kolditz. In other words, if there’s one soldier left in the Third Battalion on Hill 4305, he’d better be doing something to protect the flank of the Third Brigade.

Commander’s Intent aligns the behavior of soldiers at all levels without play-by-play instructions from the leaders. When people know the desired destination, they can improvise in arriving there. Col. Kolditz gives an example: “Suppose I’m commanding an artillery battalion and I say, ‘We’re going to pass this infantry unit through our lines forward.’

The mechanics know that they will need lots of repair support along the roads because if a tank breaks down on a bridge, the whole operation will come to a screeching halt.

The artillery knows they will need to fire smoke in the breech area where the infantry unit moves forward, so it won’t get shot up as it passes through. As a commander, I could spend a lot of time enumerating every specific task, but as soon as people know what the intent is, they begin generating their own solutions.”

The Combat Maneuver Training Center recommends that officers arrive at the Commander’s Intent by asking themselves two questions: If we do nothing else during tomorrow’s mission, we must _________________. The single, most-important thing that we must do tomorrow is ________________.

No plan survives contact with the enemy. No doubt this idea resonates with people with no military experience whatsoever. No lesson plan survives contact with teenagers. No business strategy survives contact with the marketplace.

It’s hard to make ideas stick in a noisy, unpredictable, chaotic environment. For us to succeed, the first step is this: Be simple. Not simple in terms of “dumbing down” or “sound bites.” What we mean by simple is finding the core of the idea.

To get to the core, we’ve got to weed out the superfluous and tangential elements. But that’s easy. The hard part is weeding out the really important ideas that just aren’t the most important. Commander’s Intent forces its officers to highlight the most important goal of an operation. You can’t have five North Stars, you can’t have five “most important goals,” and you can’t have five Commander’s Intents.

Research in psychology and economics shows that when people are given a good choice, they take it. When they are given two good choices they…delay, hoping to find a good way of deciding between them. Small businesses are filled with choices to make. Without a Commander’s Intent, dozens of critical choices may go unmade, waiting for the right choice to become clear.

The French aviator and author Antoine de Saint-Exupéry once offered a definition of engineering elegance: “A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.” A designer of simple ideas should aspire to the same goal—knowing how much can be taken out of an idea to highlight its essence.

By Karen E. Spaeder

Look into the eyes of a single mother and you’ll likely see a thousand stories brimming at the surface---tales of the first world, the first step, the first skinned knee, the first, “I love you, Mommy”. Yes, they’ve got stories to tell. And for many of them, one of those stories has something to do with starting and growing a successful business- somewhere in between their kids’ piano lessons and hockey practices.

The idea of a single mom toting her BlackBerry to soccer games and sending out client e-mails at 2 a.m. is becoming more familiar. According to a 2006 study from the SBA’s Office of Advocacy, approximately 1 in 4 families, or more than 8.3 million, is headed by a single mother caring for children who are under the age of 18. And while it’s unclear what percentage of those women own their own businesses, one thing is certain: Single “mompreneurs” aren’t sitting on the sidelines, waiting for good fortune to come to them. They’re in business for themselves and for their children. And as any good mother will tell you, those are two powerful motivators when it comes to creating a successful business.

We’ve talked with four of these women to get their perspectives on what it’s like to start a business as a single mom—in their cases, with little or no financial or emotional support from the fathers of their children. Read on to learn how they’ve turned their passions into successful businesses that allow them to balance work and family

Bethany Newell
The Nesting Instinct
Word-of-mouth is huge when you’re a new mom—you want to know where your friend got her diaper bag, where your sister got that cute maternity top, where your co-worker found her nursery décor. That’s exactly what Bethany Newell found when she was pregnant— only in her case, it was other people who wanted to know where she was getting all her goods. Thus was born the concept of The Nesting Instinct, right along with her son, Dillon, who is now 4.

Newell’s New York City company, launched in 2003, provides personal shopping services for expectant parents nationwide, with Newell finding everything from car seats and strollers to a wardrobe for Mom, Dad and baby. First, Newell sits down with clients to find out what kind of lifestyle they lead; for instance, if they live in the city, do they need a car seat? From there, she determines what they should have in terms of baby gear and what they can leave off their wish list. “There are so many things out there, and so much of it is unnecessary,” says Newell, 39, a single mom from Day One. “[My task] is tuning in to what they need and streamlining the process.”

As it turns out, word-of-mouth is still huge for Newell—only now, it’s in the form of positive buzz generated by her services. Her challenge these days is juggling the many projects on her to-do list. She’s already added to her coffers by creating a line of party favors as a division of The Nesting Instinct, among other endeavors. She’d also like to write children’s books and create children’s music CDs, and she is looking to expand her small line of children’s clothing. Does Newell think she’s got too much on her plate? Not a chance. “Challenges are what make a business grow,” says Newell.

Being passionate makes a business grow, too. Newell, who expects to grow her business to six figures this year, pursues the things she cares about, and that’s precisely why she’s successful. Says Newell, “When business is consistently coming in, it’s an amazing feeling to know this is really a success story, as a parent and as a business owner.”

Brandi Bolger
Apple Blossom Tea Room
Brandi Bolger didn’t always plan on working outside the home. But her life changed in 2004, when, after being a married, stay-at-home mom for seven years, she was faced with a divorce and realized she would need to support herself and her two children, Andrew, now 10, and Madison, now 4.

Bolger took a job at a local tearoom and fell in love with the entire tea experience—though she admits her affection began long before she set foot in the tearoom. “I have always loved tea—Anne of Green Gables, Little Women, all that kind of sappy, girly stuff,” she says.

After Bolger had been working in the tearoom for about a year, the owners decided they wanted to sell the business. “I considered buying it, but it wasn’t making enough money for me to purchase it at the price they were asking,” she says. But at that point, she knew she wanted a tearoom of her own. When another local tearoom closed, she leased the space from the building owner and reopened it as Apple Blossom Tea Room in December 2006. The best part about having her own business? “I like that when I come in the room, [I know] it’s mine,” says Bolger, 29.

Her Gettysburg, Pennsylvania, clients seem to like it, too. “They’re all very pleased with the changes I made here,” says Bolger, who projects sales of $40,000 for this year. “They love the menu. A lot of them already know me in town, and they’re very supportive and encouraging.”

Making the transition from managing a tearoom to owning one hasn’t been easy. As the owner, Bolger is responsible for everything from bookkeeping to planning the menu, not to mention paying rent and utilities. But through trial and error and her commitment to juggling her roles as entrepreneur and mother, she’s taking big strides in her business. “I’m kind of in a fog,” she jokes. “But I’m really trying to live by the saying ‘Don’t put off for tomorrow what you can do today.’ I leave work at work and concentrate on home when I’m at home.”

Mia Jackson
Doro Marketing Services
“I always had an entrepreneurial goal,” says 39-year-old Mia Jackson. “The rushing back and forth of trying to have a corporate career and be there for my daughter were not meshing. I was not doing either [job] to the best of my abilities.”

A single parent from the beginning, Jackson was formerly employed in Charles Schwab’s advertising department. In 2001, she decided to use her marketing background to launch her own firm, Doro Marketing Services, in North Bethesda, Maryland. “I knew that having my own company would require much more of me,” she explains, “but I also knew I would have more control over when and how I did things.”

Having her own business gave Jackson the freedom to attend school events when her daughter, Taylor, was in high school. She was able to work around Taylor’s schedule and be there for her when she got home from school. At the same time, Jackson has been juggling a growing client roster that includes nonprofits, government entities and small businesses. Now that Taylor is 17 and in college, Jackson will have more time to grow the business, and she expects sales of $200,000 this year.

Along the way, Jackson has learned to deal with the special challenges that a homebased business can bring: the distractions, the isolation, the feeling of being overwhelmed. What’s helped tremendously, she says, are weekly meetings with a fellow homebased entrepreneur— an “accountability partner,” so to speak— where the pair discuss strategic planning and goals. “If you’re a one-person shop, it’s easy to get distracted,” she says. “[It helps] having someone who knows what you’ve been working on—someone who can give you a little push.”

Jackson also schedules time for herself—to refresh, renew and prepare to tackle all the challenges that come her way. “Pulling it all together can be daunting at times,” she says. “Being the only decision-maker for yourself, your business and your child or children can be extremely exhausting. But I feel I’m at a tipping point. My business is poised to grow.”

Brandi Ramos
Buy BIG From Brandi
Being a single mom is nothing new for Brandi Ramos, who has been on her own with her son, Solomon, since he was 6 months old. Still, she never ceases to be amazed by the way he inspires her. “I wake up every morning and look at that face,” says Ramos, 31. And evidently, that’s motivation enough for Ramos to continue building her Springfield, Illinois-based business on eBay, Buy BIG From Brandi.

Ramos, who started her company in 2004, provides personal shopping services for big and tall men in approximately 50 different countries. She’ll handpick a wardrobe for an entire season, making it easier for larger men to get clothes they like in sizes that fit. In fact, she’s gotten so good at the ins and outs of running a business on eBay that she now teaches other potential eBay sellers how to set up shop on the online auction site.

Along with growing her business, Ramos has had the added challenge of caring for a son with autism. Solomon, now 9, was diagnosed just before his third birthday, but “from the beginning, I knew there was something wrong,” says Ramos. For a time, she and Solomon lived in Germany, when Ramos was in the Army. They returned to the U.S. when Solomon was 17 months old, and he started receiving special services for his disorder about a month later. “Autism threw a loop into things,” says Ramos. “But I feel like I can overcome anything.”

Ramos isn’t just paying lip service. She takes steps to grow her business, involving herself in networking groups, blogs, her local chamber of commerce and the eBay community itself. Having that support system in place will likely prove useful as she achieves her next set of business goals—among them, having her own internet storefront.

And while Ramos notes that becoming a single parent was the hardest thing she has ever done, she also says it’s taught her a lot about herself—as a person, as a business owner and as a mom. “You have to be a fighter,” says Ramos, who projects sales of more than $100,000 for 2007. “Have a goal, find your focus and make that goal happen. When you do that, it builds character. In turn, people respect you.”

Karen E Spaeder, former managing editor of Entrepreneur magazine and editor of Entrepreneur.com, is a freelance writer in Southern California specializing in small business and education

By Matt Edelson

That communications is the lifeblood of any business isn’t exactly a revelation. One can imagine Oog’s House of Clubs taking their first over-the-boulder order and sending it via carrier pterodactyl to the quarry, only to discover that the dinosaurs hadn’t bellowed ahead to let the boss know their ride-share had gotten stuck in a tar pit. Since Triple-A hadn’t yet been invented, they wouldn’t be coming in that day and the order couldn’t be filled. Back at Oog’s, curses were exchanged, the client left in a huff (as this was before the wheel, it was a long walk anywhere, so huffing was common), and Oog couldn’t help feel that there had to be a better way to keep tabs on his business.

Flash forward an Ice Age later and inefficient, insufficient communications is still a major headache for many a small business. Yet, strangely enough, many small businesses express more concern than conviction when it comes to fixing the problem. They are too comfortable with the status quo: Analog phones, customers being dumped into voice mail, employees out of touch at critical junctures, long-distance bills higher than a caravan of RVs gassing up for a cross-country trip.

Push ‘1’ if you’re fed up with that nonsense.

The telecomm solution for many small businesses may be something called Voice-over Internet Protocol or VoIP. VoIP—which in its simplest form moves a company’s phone service to an internet network by digitalizing voice to data—is growing at a rate of 60 percent annually. That’s according to Sanjeev Aggarwal, vice president of SMB IT Infrastructure Solutions for tech analyst AMI Partners. One reason for the growth, says Aggarwal, is that “a VoIP solution lends itself well to making small businesses appear more professional and larger than they really are.”

While VoIP has been around for some time—computer geeks created free, cranky shareware in the early ‘90s that allowed savvy users to plug headsets into their 286s and call Madrid at midnight for bupkus—its commercialization has only recently exploded. Vonage, with its rather offbeat ads, sold VoIP to the residential market as a cool way to beat high long-distance charges. One flat rate and you could call all over the world cheaply. VoIP was to phone service what e-mail was to snail mail; by utilizing different routing, costs dropped dramatically. As its niche in the residential market place grew, and, more importantly, as larger bandwidth became available and affordable (small bandwidth=poor data flow=poorer VoIP call quality), business became the next logical target for VoIP.

Now, it’s a rare week that a small business isn’t approached by a VoIP provider. The big phone companies, cable TV conglomerates, value-added resellers, small business solution entities, and local outsourced ‘hosting’ firms are pushing VoIP. Their names differ, but

their pitch is pretty much the same: Come out of the dark ages. Unify your office’s many forms of communication. Save money. Increase productivity. Make customers smile.

Your CFO, too.

Small Business Success spoke to VoIP analysts, customers, product resellers and developers to find out what companies should know before they take the VoIP plunge. While understanding the technology is important, it shouldn’t drive the conversation. In many ways VoIP technology is like a highway: It offers connectivity from Point A to

Point B, with many stops along the way that offer services that may make the whole trip more enjoyable. Or not. It’s understanding the features that VoIP offers—not all the bells and whistles, mind you, but specific features that dovetail with your business needs—that determine if VoIP is a cost-effective solution for your business.

Here are some important items to consider:

1. Long-Distance Charges: This is especially true if your business has clients or offices overseas, says Bob Halper, CFO of New York-based Janou-Pakter, an Executive Recruiting firm. They place creative directors in the fashion and advertising industries, and have offices in Milan and Paris. International long-distance calls were killing Halper, as the contract his firm signed with another company prior to his arrival was onerous. Since switching to VoIP, he estimates that his 50 employees now spend $2,500 a month (the average monthly cost per ‘seat’ is $50-60) to make unlimited calls anytime internationally. Halper, who opted for $10,000 worth of top-of-the-line Cisco phones to go with his VoIP transition, says the savings were immediate and obvious. “I started saving between a thousand and fifteen hundred a month,” says Halper. “I figured that after one year I’d be ahead of the game and have a great system. It was a no-brainer.”

Add-on benefit: Elimination of fees associated with conference calls.

2. Mobility: Does your staff work off-site? Do you have satellite offices? Are your employees constantly on the road? VoIP puts them all on one seamless worldwide phone link. The same four-digit exchange you now use inhouse can ring across the world (and, again, usually with no long distance charge). Pat Duffy, sales director for M5 Networks, explains how a mobility feature convinced a doctor to install a VoIP system in his small practice. The doctor chose this even though Duffy told him his office was too small to warrant the VoIP switchover, and that he’d be paying $3,600 more annually than if he stayed with his current conventional PBX trunk system. The feature allowed after-hours patients to reach the doctor no matter where he was. “We can reach out to him in 12 different ways. They can leave a message and we’ll send it as a .wav (audio) file, or transcribe that message and send it as text to his PDA, and we can ring him in four different places simultaneously if he wanted to, after hours. So, from a call-distribution strategy, that was the turning point for him.”

Mobility works both ways: Not only can employees be located, but they also connect with the home office in novel ways. Gretchen Witti, a sales manager with Altura Communications Solutions, recalls accidentally leaving her cellphone charger home on a convention trip to Houston. Without VoIP, she would have been seriously out of touch.

“Thank goodness, I have an IP softphone license on my laptop,” saysWitti, explaining that a softphone headset plugs directly into a computer and uses a licensed program to dial and make calls through the home office’s VoIP network. “I was at the Westin; I made all my phone calls through my laptop. Back to the office and everywhere.”

Add-on benefit: Customers can dial local numbers nationally or internationally and be connected anywhere you wish (call center, procurement, warehouse, etc.) The fixed cost for adding these local numbers is minimal, though calls from international cell phones to local overseas numbers may incur charges.

3. Connectivity: Are your employees always running to the fax or dialing into their voice mail? Does each interruption impair their productivity? VoIP turns voice into digital data and sends it through the internet, traveling the same thoroughfares in much the same manner as e-mail, faxes, and voice-mail. This interconnectivity allows what’s called “Unified Messaging.” By using a dashboard that comes up on the computer, all messages, no matter what their data source, can be viewed at once. “What’s really cool is that when I get a voice mail, I have it set up so that [hisVoIP provider] e-mails me the voice mail,” says Lou Casal, a Long Island security software consultant and developer. “So while I’m working ,my e-mail account gets an e-mail that says, ‘voice mail.’ And I open it up and play it off my computer.”

Add-on benefit: Keep the word “Presence” in mind; this emerging technology allows voice via VoIP to connect with real-time tech such as Instant Messaging.

4. Productivity: Monitoring employee productivity is always challenging. Often it involves asking the employees themselves. They might not be able (or want) to objectively measure their worth to your business. VoIP dovetails well with existing Customer Relationship Management (CRM) applications, such as salesforce.com and other monitors that offer hard data on employee productivity.

“A law firm will say, ‘We want every single call answered. We don’t want to go to an auto-attendant,’” saysM5’s vice president Jeff Silbert. “We’ll say, ‘How do you know they’re being answered?’ ‘Well, we tell the people to answer them.’ ‘How do you really know?’ And they go ‘Well, we don’t really know.’” VoIP applications help solve this, especially in off-site settings. M5’s Silbert noted how a VoIP set-up allowed one business to precisely monitor the call activity of new salespeople. “They wanted to know how many calls their guys were making in the first month, because that can be a leading indicator of whether long-term they’ll perform or not,” says Silbert.

Add-on benefit: VoIP integrates well with measuring call center productivity, especially for staffing purposes.

Note: While many VoIP features are turn-key, linking to other IT applications may involve modest set-up costs.

What’s next?

Once you’ve decided that VoIP could work for your business, the toughest choice may be how to implement the system. Will you want your network on or off-site? Many factors play into the decision, some of them as psychological as practical. We’re talking comfort level here. As in:

5.On-Premise VoIP: This solution usually applies to two types of small businesses. The first are those with very few employees and almost no data processing. These really don’t need to integrate computers into their VoIP system. A hairstyling shop, for example, might want to cut its long-distance bill, but only the owner/receptionist accesses a single computer. For this owner, implementing a VoIP solution can be as simple as going down to Best Buy or Staples, picking up a few VoIP capable phones and a VoIP software package, reading the manual, and installing them herself. The only time this business is likely to use the VoIP internet link directly through the computer (as opposed to just picking up the phone) is to download software updates that automatically load into the existing phone system.

Altura’s Gretchen Witti recently went to a construction client armed with only three phones and a small switch box, and a six-step installation list. The contractor had insisted they be able to put together the system themselves. “They plugged everything in and figured it out very quickly,” says Witti. “Within 7 minutes they had it up and working on their conference table.”

At the other end are businesses in certain sectors that, for security or compliance reasons, have IT staff available on-site and have particular reasons for keeping their phone system in-house. Financial firms with S.E.C. and other regulatory compliance concerns often fall into this category. Larger small businesses with established IT departments may find keeping their VoIP in-house is cheaper. “Companies with more than 100 employees, I think the cost for a hosted [off-site VoIP] solution becomes more than an on-premise solution. These companies have more IT resources, so they can have a [network] person with some level of voice specialization,” says AMI’s Sanjeev Aggarwal.

That understanding of how voice works over the network is key, as its often foreign to many IT professionals. “Can you guarantee that at 3 p.m. you’re not doing a big data base download, backing up huge amounts of data on a network that’s really creeping, and now you’re trying to put voice over it at the same time?” asks Mark Massingham, Avaya’s production information marketing manager for small business. “You have to make sure you have the infrastructure to handle VoIP. ”That includes switches that prioritize VoIP data packets over e-mail and other data traveling through the network. Otherwise, call quality can breakup, much like what happens when a mobile phone goes through a bad cell.

Add-on benefit: On-premise VoIP networks may qualify for tax depreciation. Also allow immediate access in case of problems.

Potential Problems: If power goes out or the network goes down, phone service is often lost for the duration.

2)Hosted (off-site) VoIP: Just as with payroll and the advent of ADP, hosted VoIP allows companies to focus on what they do best, and not worry about an important part of their infrastructure. “I didn’t want to be in the telephone business,” says Janou-Pakter’s Bob Halper, echoing a sentiment expressed by many. “Get it off my premises.” The prime advantage of going to a hosted system is that the continual technical patches and upgrades that are part of VoIP networking are now integrated invisibly off-site.

It’s also possible to find solutions often impractical in an on-premise situation. M5’s Kelly points to the recent disastrous steampipe explosion near New York’s Grand Central Station. Many businesses were instantly evacuated and shut down for days. “One of our clients was right there,” says Kelly. “While everyone else couldn’t send or receive phone calls, they had a plan in place. They couldn’t get into their office, but we were able to transfer, automatically, their calls to their cell phones. A normal phone system, people would think you were out of business.”

Hosting is also good for companies that are seasonal or experience sales force fluctuations. These often lead to dead extensions, unanswered voice mails, and customers left in the lurch. With hosting, reassignments of extensions by the host occur with one phone call, with incoming calls automatically forwarded to live people. The line itself becomes—and is treated—as a valuable business asset.

Add-on benefit: Hosting works very well with growing businesses that see relocation in their near future.

Potential problems: Insist on guaranteed bandwidth to insure voice quality. This usually means purchasing a direct T-1 or DSL line to the host. The direct links also greatly improve network security.

One last word about security: Many VoIP advocates say security along VoIP lines shouldn’t be a concern if you have either on-site IT people or your host monitoring the network. Some reports appear to severely contradict this. A recent article in Forbes by Andy Greenburg highlighted security experts who systematically hacked into aspects of VoIP that operate over the public internet (another reason why it’s important to keep as much as possible of your VoIP on a private network). Greenburg’s report made mention of one analyst who stole and played parts of VoIP conversations on stage, and another who pointed out that, although conversations may be encrypted, that may not be true of the tones produced by the numbers one uses to pay a bill by credit card over the phone. These are concerns your company should express, and a vendor should answer, before entering into any contract.

By Mark Henricks

When Don Stoneham attended a Business Matchmaking event in Oakland,

California, last spring, he was looking forward to the chance to have 15-minute face-to-face meetings with representatives of some of the more than 150 government agencies and large corporations attending. He left disappointed, but not in the event. He felt let down by his own lack of preparation. “I wasted a lot of valuable time by having the buyer explain the purchasing process to me,” says Stoneham, 47 and founder of 82-person business and technology consulting company Agape Enterprises in Dublin, California. “I only get one chance to make a favorable impression and I knew I had to be better prepared.”

Stoneham was right about two major features of the Business Matchmaking events, which give small businesses a chance to meet with representatives of government agencies and prime government contractors and other corporations.

First, the events are great opportunities, says Debbie Ridgely, director of the Office of Small and Disadvantaged Business Utilization for the Department of Health and Human Services. “If you’re just starting out and want to get a flavor of what it’s about, this is one-stop shopping,” Ridgely says of the Business Matchmaking events which are put on several times a year by HP and SCORE, along with other corporate partners. Several federal agencies also host their own direct procurement events, including the Department of Energy, which has a major national program produced for them by the Business Matchmaking team.

Second, it’s critical that business owners prepare for these once-in-a-while opportunities. All business representatives get the same 15 minutes. But not all use them equally. Of the 50,000 such face-to-face get-togethers that have occurred at Business Matchmaking events, resulting in over $750 million in contracts for entrepreneurs like Stoneham, organizers say some small business owners are disappointed due to lack of preparation. “You need to be ready to do business,” says Theresa Avillar-Speake, director of the office of minority economic impact and diversity at the Department of Energy. “They’re not there to teach you how to do it.” At the same time, Chuck Ashman, Executive producer of the official Business Matchmaking program, reports that the vast majority of participating small business owners understand the opportunity and more than 90% of appointments booked are rated as satisfactory or better by the government and private sector buyers.

Being ready for a Business Matchmaking event starts with registration. It’s a good idea to register as soon as the event opens for signups. Some events are large, such as the OSDBU annual get together each spring in Maryland, where some 2,500 businesses come to meet with government buyers. Others are much smaller and registration is limited. It’s first-come, first-serve, so if you wait until the last minute, you may get turned away. The Business Matchmaking events produced by SCORE, HP and this year’s partner corporations, including Aflac,

FedEx, AT&T, Yellow Pages, RIM, American Airlines, MasterCard and National Merchant Center require no fee from any attending small business owner for registration.

Participation in the official Business Matchmaking events requires registration with the Central Contractor Registration (CCR), which is the vendor database for the entire federal government (www.ccr.gov). Agencies and companies each have their own dedicated procedures, but only CCR registration is required to enter the Business Matchmaking arena.

The Business Matchmaking registration team is available to assist small businesses in correctly identifying their company’s products and services. This helps in making the face-to-face matches more effective. According to Diane Kegley, Business Matchmaking Producer, “the combination of emails, phone calls and code checking before each event assures us high levels of efficiency.”

There are various special categories that can enable small businesses to increase their opportunities, particularly in dealing with government agencies.

Proper certification is important. Women-owned, minority-owned, veteran and disabled veteran-owned companies should be sure that their companies are properly classified. The SBA, SCORE and Small Business Development Centers all provide free assistance in those processes.

The General Services Administration schedule is often relied upon as a guideline for pricing and procurement opportunities. Again, SCORE is a particularly good starting place to gain information about how it works.

Now start learning about the buyers. Visit websites for government agencies and corporate prime contractors. The official Business Matchmaking web site (www.businessmatchmaking.com) will introduce prospective small business participants to government agencies and private corporations attending. There are links to several, and the more preparation an entrepreneur does the better chance he or she will have to maximize benefits when they come face-to-face with the buyers.

At various web sites, you’ll find all kind of information about selling as a small business. Government agencies have forecasts detailing specific amounts and contracts they want to steer to small business. You can get similar information from some corporations. Both types have information on past contracts awarded to small business. Studying these can help you identify which buyers are most likely to be interested in your offerings.

The Business Matchmaking events, Produced by California-based SMA Global, utilize a sophisticated matching technology developed by Dimensions International. It has raised the bar in procurement efficiencies and enables small businesses to select targeted buyers for appointments.

It’s important to narrow your focus on customers, but extend your time frame. Focus is important because of the vast scale and complexity of dealing with an entity the size of government. “You can’t begin to try to sell to the federal government at large,” Ridgely advises. Pick one or two department-level agencies and try to get your foot in the door.

Timing is also critical, and it’s vital to look far ahead. One way to pursue a contract is looking at CCR for small business contractors who are about to leave the program because they have grown too large. “If a company is graduating and a new one’s coming along, are you a good match?” Ridgely asks. But you have to look ahead. “Government agencies fill requirements 18 to 24 months in advance, Ridgley notes. “If something expired at the end of this month or even this year, you’re way behind the eight ball,” she says.

Once you’ve refined what you have to offer and researched your prospective customers, you’re ready for the meat of the matter: The presentation! Prepare and practice your presentation until you can do it smoothly and briefly, Kegley recommends. SMA Global inaugurated the current Business Matchmaking initiative with a partnership between the US Small Business Administration and

Hewlett-Packard. “We still rely heavily upon the individual expertise of SBA speakers, panelists and counselors at our events,” Kegley added.

The Department of Energy suggests a Business Matchmaking meeting presentation should start with a two-minute introduction and company overview.

Devote three minutes to describing your products and services. Another three minutes covers your company’s track record and successes. The last five minutes can go to interacting with the buyer to learn more about opportunities and decide whether and how you will follow up.

While the Q&A session is more free form, prepare for that ahead of time by writing down questions you want to ask. Make sure to dress appropriately and have the right team. Each business can have a maximum of two people attend.

You want the right person or people there to help answer questions if any buyers have them.

Before arriving at the Business Matchmaking event, you should have documents to leave behind with the prospects. These include a plentiful supply of business cards, which you will use not only for giving your contact information to prospects, but for networking with prospective team members and other people at the event. You should, at minimum, have a one-page brief summarizing the main points of your presentation which can be left with each person you meet with in a formal matchmaking session.

Cancel other commitments the day of the Business Matchmaking event and avoid allowing anything to come up that will distract you. Business Matchmaking programs offer useful seminars and networking events in addition to face-to-face selling sessions. In between your face-to-face appointments (which can average 5-10 for the day) small businesses have an opportunity to meet with representatives of sponsoring corporations and support groups like SCORE, the SBDCs and others.

These can often provide unique commercial benefits as value-adds to Business Matchmaking participation. For example, at the Southeastern Regional Business Matchmaking program, held on April 17th in Atlanta, Federal Express introduced a major discount program covering FedEx and Kinko’s for attending small businesses.

There are always some last-minute changes and small businesses often have an opportunity to add new appointments beyond their original schedule. Part of being prepared is having the time available to take advantage of unexpected opportunities.

Also prepare to document your attendance. Collect information from buyers and other businesses in attendance, and consider bringing along a small camera to collect pictures of you or your representative with buyers and other attendees.

The pictures can help decorate your web site and convey the impression that you are a company to be reckoned with because people from large agencies and companies have taken the time to meet with you.

Another way to get ready for Business Matchmaking is to open your mind to the possibility of partnering with other businesses. Many small businesses that sell to the government don’t deal directly with government buyers. Instead, they are subcontractors to large companies that are prime contractors to the government. If you are willing and able to partner with such a prime contractor, your opportunities at Business Matchmaking events will expand dramatically.

Finally, have in advance a plan for following up. Generally, you should engage in regular monthly or more frequent contact with any buyer you meet from a company that seems like a good prospect for three to six months after the Business Matchmaking event. Most Business

Matchmaking meetings don’t result in immediate contracts. It takes time to develop the relationship and figure out the buying process.

Clearly, just getting ready for a Business Matchmaking event can take considerable time. And there is more to learn. The Business Matchmaking web site (www.businessmatchmaking.com) offers an important tutorial as training for its regional events and its online services. Homework can pay off. The 2007 schedule of official regional Business Matchmaking events include Atlanta (April), Chicago (August), Dallas (October) and Little Rock (December). In between those events are several smaller procurement opportunities offered by government agencies and corporations.

Don Stoneham’s experience selling to government and prime contractors started with regional California agencies at the Oakland Business Matchmaking event. After attending two such events, he’s now on a waiting list to become part of a $45-billion Department of Homeland Security project, and has additional opportunities. Stoneham credits his success to learning what he did wrong in the beginning, and correcting it. He resolved to be better prepared before he went to another event.

That summer, Stoneham attended the Business Matchmaking event in Houston. After his meetings, several officials commented on how well prepared Agape Enterprises was for the event. “At the Oakland event in February, I was surprised how little I knew about the matchmaking process,” Stoneham said. “When I went to Houston in August, the surprised ones were the Fortune 500 and government buyers.”

By Geoff Williams

So, like many entrepreneurs before you, you’re wondering how to get a federal government contract for your business. That is, you’re wondering how people do it in a way that doesn’t involve passing a hefty check to your congressman’s campaign, in a manner that doesn’t compromise your ethics or integrity and offer the risk of someday wearing an orange jumpsuit and sitting in a cafeteria between a man the size of an ox and a few people who used to work for Enron.

Indeed, there are better ways. One of the best and most recommended is to contact the General Services Administration. The GSA is an independent agency of the United States government that was created in 1949, and its main mission is to assist in managing and supporting the basic functioning of federal agencies. Where do you come in? Obviously, you could be helping in the managing and supporting.

Among the GSA’s duties are supplying products and communications for U.S. government offices. They also offer transportation and office space to federal employees and develop cost-minimizing policies and other management tasks for the government. So, in theory, you could manufacture pencils, have a nationwide, regional, or local taxi service, or be a business consultant specializing in efficiency, and in all cases, the GSA might have need for you. Maybe you have a real-estate agency, an accounting firm, or a catering business. If you can sell it to the government, the GSA might be your broker and best friend. (Definitely your broker, though; they take 0.75 percent of every sale.) Every year, the GSA spends nearly $66 billion and influences the management of federal assets valued at nearly $500 billion, including 8,300 government-owned and -leased buildings and 170,000 vehicles and technology programs, as well as purchasing products ranging from laptop computers to systems that cost more than $100 million.

And while, yes, the GSA works with plenty of corporations and deep-pocketed enterprises, an average of 40 percent-plus of its budget tends to go to small businesses, nearly doubling the mandate set by Congress, which says to devote 23 percent of the money spent on prime and subcontracts to small business. But maybe most encouraging in all of those numbers is the amount of paperwork and hours that you’ll save by working with the GSA. Go it alone, and you’re going to be a mouse in a maze of contracting procedures; maybe the better analogy is that you’re on a raft in an ocean with not a friend in sight.

But with the GSA’s aid as a broker, they’ll help you find the right clients in the government sector, and they’ll assist the government in finding a trusted and competitive (think: cheap) vendor. With any luck, that will be you. True, it can be a hassle to get in good with GSA, but once you’re in, it’s a little like being the member of an affluent and exclusive club. You had to pay your dues, but it’s probably worth it.

The GSA isn’t perfect, of course. It was embarrassed in September 2005 when its chief of staff—someone appointed to the organization—was arrested for corruption. On the other hand, the corruption was exposed in part because of lies told to the GSA ethics officers. And for those entrepreneurs who initially try to get in good with the GSA, it can be an exercise in patience.

“Not everybody needs it,” says Mark Amtower, a nationally respected authority on doing business with the government. “But for the officials who know you’ve come recommended from the GSA, they have a higher comfort level in using you.”

That recommendation involves your business being put on what’s called the GSA Schedule. Being listed on it is akin to vendors “having a Federal ‘hunting license,’” says Amtower, author of Government Marketing Best Practices, as well as a speaker, radio host, and consultant. “It’s not a guarantee of business, but it certainly does provide credibility to the GSA contract holder. It shows that you have been vetted by the GSA, have a competitive price and a product or service that is commercially viable.”

And while being on the schedule isn’t a guarantee of business, Amtower says that if a company is on it and isn’t eventually leveraging that stamp of approval to make money, “they don’t know how to sell anything and are dumber than rocks.”

One method of utilizing the GSA Schedule, according to Amtower: Some business owners don’t pursue federal contracts, but they’ll mention it to contractors who have major accounts with the government—and then they’ll serve as subcontractors.

And it works both ways. Just as government agencies will know that your company is recommended, you’ll be given online access to knowing what projects are available that you can bid on. Typically, companies that are on the GSA Schedule are checking daily to see what’s out there. It becomes part of the business’s culture and lifestyle.

However a business uses its association with the GSA, what it’s almost certain to do is help a company grow exponentially. That’s what happened with Avineon, headquartered in Alexandria, Virginia, and a provider of IT, geospatial, engineering, and program management services. It began as a small startup in 1992 in CEO Karlu Rambhala’s home, using his personal savings, and for the first two years, he drew no salary. After hours, he did accounting projects for other people and during those lean days was refused a bank loan—the rejection letter is framed in his office.

It’s there for good reason. The company is now a $19 million powerhouse with more than 400 employees and subsidiaries in Europe and India. But as his vice president of business development, Charles L. Erdrich, says, GSA has helped the company’s momentum considerably.

“We had worked with the government prior to getting the GSA Schedule, so it wasn’t a springboard or a trigger, but it certainly helped prospective customers see what we were offering and charging,” Erdrich says. “They could go online and learn about us at their site. Yeah, it provided quite a vehicle for us to sell to other agencies.”

And the more federal agencies that GSA helped Avineon work with, the easier it was to attract other government entities. Some of their government contracts include the IRS, the Department of Interior, South Florida Water Management District, the U.S. Mint, and the Naval Sea Systems Command.

Nobody starts working with the GSA quickly. It won’t happen overnight or even in a fortnight. Suzanne Fuller is in the Baltimore office at Global Lead Management Consulting, an international diversity consultancy, headquartered in Cincinnati, Ohio, and she’s been working for about 18 months to get listed on the GSA Schedule, although she expects the firm to be approved any day now. Eighteen months, incidentally, is a typical length of time for getting approved with GSA.

“It’s very labor-intensive,” says Fuller. “Even if an organization decided to outsource the application, which we have, it’s still labor-intensive. The requirements are stricter than they ever have been, ever since 9/11 and then Katrina, where there was a lot of abuse in the system. They’ve been tightening up the requirements. You have to know the right way to word something. Even just a couple of words could make a difference.”

There are workshops that show people how to fill out their GSA applications, notes Fuller, but even then, “I think you have to work with someone who knows how to do it. It’s not an easy process.” She says that the firm that her company has hired to do the application is full of former GSA administrators, “people who do this day-in and day-out, and know how to build a case so it won’t be rejected.” Even with the contractor, Fuller says that she has worked 10 to 15 hours a week in the application process— with the help of two interns.

But the rewards could make all of the toil and trouble worthwhile. “Even if we get just a few clients, it could mean millions of dollars,” says Fuller. What sort of projects might they do? Well, if the Department of Defense is looking for sexual harassment training, they might employ Global Lead Management Consulting. Of course, they might not, adds Fuller. They might hire some other diversity consulting firm. And that’s why “you have to market to the government,” says Fuller. “The GSA has vendor outreach fairs, and I know there are trade magazines that offer leadership breakfast series, and we’re developing an online ad to go to prospective clients.”

Fuller says that the outreach fairs or some type of event are more important than you’d suspect in these days of digital. “I’ve found that a lot of people like it when you show up at the events, and you get face time. That’s how you distinguish yourself from all the companies on the list. And hopefully once you get to know some of these people, you’ll do work for them, and you’ll continue to. People like doing business with whom they know, and as long as you’re doing quality work, usually they’ll support you. But you have to be strategic, even more so than on the private sector side, because it’s like going through a maze. You have to know the rules of engagement, and where to go and who to talk to.”

For instance, she says that if you’re looking to get a government contract, it’s really not the head of the agency you should be conversing with, it’s the contract officer and the program manager— they make the decisions. Or cozy up with the people in GSA’s Office of Small Business Utilization, because they’re often making suggestions to the contract officer and program manager.

And that’s when you begin to see how right Amtower is. It’s not for everyone. “Can you spend the time and effort and money in this market for 18 months before you begin to get your first contract?” asks Amtower. The flip side: “Once you’re in the market, if they like what you do, you’ll have people who will be pretty much wedded to you. They can tell you how they’ll be buying in the immediate and medium-term.”

Not the long-term, though, Amtower cautions. Things change, like laws, lawmakers, and parties in power.

Of course, the same can be said for the private sector, and in the end, one has to remember that government agencies aren’t all that different from any other company, asserts Dr. Joseph Kayne, Cintas professor of entrepreneur at Miami University in Oxford, Ohio. “Just as any business shouldn’t have a customer that’s 80 or 90 percent of their business, my advice would be not to look at a single federal agency as your source of revenue. You don’t want a single federal contract being such a dominant part of your business that you’re solely dependent on their survival for your survival.”

He adds that when it comes to working through the GSA, “don’t approach it any differently than you approach any other customer. It’s important to be the best and show a dramatic difference why you should be the provider of services and goods, compared to your competition.”

Of course, one might wonder, with all the hurdles to get into the government sector, and if it’s not all that different from private enterprise, why bother? And that’s where Amtower really begins to get excited. “If you’re willing to invest the time, there is no other market than the government that can literally say they’re recession-proof. And it’s absolutely a cool game. There’s nothing bigger. Hollywood has its glamorous sets and its backless gowns, while all we have in the government market is money. And if you like money, be here.”

By Mark Hendricks

Thanks to Ron Cruse, 563 out of 600 Iraqi health clinics now have basic emergency-room care kits. Their delivery was arranged by Logenix International Inc., the 22-person transportation company Cruse founded in Springfield, Virginia. “The only reason we haven’t delivered the other 37 is because those are in Fallujah and Ramadi,” says Cruse. “Nobody’s going in there but the Marines right now.” From a business standpoint, Cruse’s Air Force contract to deliver the kits represented $8 million of the company’s approximately $18 million in annual revenue last year. The challenge and prestige of doing business with the federal government on deals like this—as well as the size of the contracts—are some of the big reasons Cruse focuses his company on federal business.

Another is that, despite widespread opinion to the contrary, small businesses find the federal government is eager to do business with them. “In so many of these contracts, the government is setting aside whopping proportions for small business as a requirement,” says Cruse.

On average, the federal government seeks to award 23 percent of its nearly $400 billion in annual procurements to small businesses. In 2003, the last year for which figures are available, the government slightly exceeded that mark, says Al Stubblefield, the SBA’s associate administrator for business development. “Approximately $65 billion in contracts was awarded to small businesses for contracts and services,” Stubblefield says.

While the big multibillion-dollar contracts for new weapons systems dominate public attention, the overwhelming majority of federal government purchases are for much smaller amounts and much more prosaic items. The contracts and services purchased span every market, from naval ships to paper clips. And of the more than 11 million government contracts written annually, approximately 95 percent were for purchase amounts of $100,000 or less, according to John DiGiacomo, director of the Rock Valley College Procurement Technical Assistance Center in Rockford, Illinois, one of a network of PTACs throughout the country, whose mission is to help small businesses get government business.

There are government customers almost everywhere, and they buy in amounts from trainloads to single chairs. Rebecca Boenigk, the CEO and chairman of Neutral Posture, an ergonomic furniture company in Bryan, Texas, sells $4.5 million a year to federal buyers, most of it in small lots. “Our average order is only four chairs,” says Boenigk, who employs 85 and grosses $19 million a year. “And that takes into account the fact that sometimes we sell 800 or 900 at a time.”

It’s easier than you think to win a federal government contract that could introduce you to this vast marketplace. The overwhelming paperwork requirements that apply to big defense contractors bidding on a major new weapons system are largely irrelevant to small businesses, according to DiGiacomo. “There’s a huge difference between a large business and a small business, and what’s required of them,” he says. “Too many small businesses are afraid of the federal government because they think there are all these rules and regulations that, in fact, don’t apply to them.”

That is echoed by Peter Provenzano, president and CEO of Rockford, Illinois-based SupplyCore Inc., a 100- person, $170 million supplier of products to the Defense Logistics Agency and the General Services Administration, from building materials to office supplies. “People have a preconceived notion that doing business with the federal government is hard, but I don’t see it,” says Provenzano. “They’re a great customer.”

Winning Federal Business
Getting your first federal government contract starts with asking yourself whether this is something you really want to do. It can involve significant commitment and may distract you from other important opportunities that come your way. Many experienced small-business contractors to the federal government say it’s difficult to do only a small portion of your business with Washington, D.C. “If you’re going to make the government a piece of your business, I think you’d have to make it at least 25 percent to 30 percent of your business,” says Cruse, a 23-year veteran of government contracting.

Next, ask yourself whether you are ready to persist in your quest. Government sales cycles can take anywhere from months to years. “Let’s face it—they’re big,” says Ananda Roberts, president of nFocus Software Inc., a data management software developer in Phoenix whose customers include the Army. Getting that deal, her first with the federal government, took years of effort, Roberts says. “They’re the biggest thing going, and they don’t make snap decisions,” she says. “You have to be in it for the long haul.”

Being in it for the long haul means having the financial strength to weather sometimes long sales cycles and even longer deployment phases before you cash your first check. It means taking the time to learn the federal marketplace, finding your place in it, and developing the contacts and expertise to effectively market and deliver your product or service. But the first steps are very basic and straightforward.

Getting Started
Any business that attempts to sell to the federal government has to get a Data Universal Number System (DUNS) number, a unique identifier. (You can get one for free from Dun & Bradstreet at www.dnb.com.) Next, using that number, you need to register your business with Central Contractor Registration at www.ccr. gov, which allows you to win contracts and get paid for them.

Now it’s time to identify target markets. Find current opportunities by scanning the online postings of all federal government contracting opportunities over $25,000 in value at www. fedbizopps.gov. There are also reports available that describe the amount, type and vendors of products and services purchased historically. For example, theDepartment of Defense produces several such reports and posts them online at www.dior.whs.mil.

If you think you might be able to find some customers there, start familiarizing yourself with the Federal Acquisition Regulations. This document is available online at www.acqnet.gov/far. The FAR is the bible of government contracting, laying out the rules under which both buyers and sellers must operate. It helps to become intimately familiar with this document, says Cheryl Amyx, president of Amyx Inc. in Alexandria, Virginia, a 35-person, $4 million business management and technical consulting firm that does all of its business with the federal government. “Some procurement officers want to do it their own way,” explains the founder. “And some of them aren’t that educated on the FAR.”

One specific government agency that’s likely to interest small businesses is the General Services Administration. The GSA is the largest civilian federal customer (the Defense Department takes the top spot overall), and it’s also the place to obtain a Federal Services Supply contract. Getting an FSS contract doesn’t mean you’ve sold anything yet, but it does mean you are an approved government seller, one that other government agencies can place orders with for nearly any kind of business product or service.

Boenigk’s first foray into government contracting occurred when her company hired a consultant to help her obtain an FSS contract. Since, then, all her federal business has come through the GSA. Learn more about FSS at www.gsa.gov.

SBA Resources
Any small business attempting to sell to the federal government for the first time will find allies at the SBA. SBA programs set up specifically for this purpose include the 8(a) program, which helps small businesses grow by helping them obtain government contracts; SCORE, which provides small businesses with low-cost advice from seasoned businesspeople on government selling and other topics; matchmaking events that give small businesses a chance to present their offerings in one-on-one meetings with procurement managers; Procurement

Center Representatives, or PCRs, who work from SBA offices and federal buying centers around the country to help set up small-business set-asides, hook up small businesses with federal buying opportunities and otherwise assist small contractors; HUBZones, which steer contracts to small businesses located in areas designed for economic development, and numerous others.

Eventually, you’re going to have to go out and meet people who buy for the federal government. Although the procurement process is much more mechanized than it was even a few years ago—some contracts are actually awarded by computers, without human intervention—it’s still important to make contacts and get to know people. “Knowing the key people is critical to making this work,” says Stubblefield.

You can meet people through numerous seminars on how to sell to the federal government, sponsored by individual federal agencies such as the Defense and Energy departments; the SBA; and Small Business Development Centers and PTACs, which are located in many cities and towns. These seminars offer a chance to hear government buyers talk about what they’re looking for in terms of products and services and what will likely interest them in the future.

The seminars also give you a chance to introduce yourself and get into the pipeline of information about what’s coming up. That’s essential, according to expert small-business contractors. “By the time it’s in FedBizOpps,” Amyx explains, “it’s too late. We’re looking at what’s happening today, but we’re also looking ahead at least 18 months, sometimes longer. The federal sales cycle is so long that it can easily take 12 to 18 months to make the sale.”

Most small-business contractors feel that opportunities in FedBizOpps are already likely to be snared by companies that were involved early on in the procurement process. If you get into the mix earlier, you’ll be better able to position yourself to take advantage of future opportunities. “You still might not win,” Amyx says, “but you’ll know when it’s coming out, and you’ll know what it’s going to take to win.”

This doesn’t mean that you always have to be in on the planning stages to win a contract, that getting any given government business will require a months-long effort, or that contract opportunities in online databases are not worth pursuing. Most PTACs offer free automated bid services, which scan all government bid opportunities and send you e-mails listing appropriate ones for your company, DiGiacomo says. Most are small contracts for common products or services, which will be evaluated strictly and quickly on price, terms, and delivery. “In 90 percent of cases, it’s a matter of putting in a price and delivery and sending it back in,” he says.

The plethora of buyers in various agencies and subagencies, with different rules for different business sizes and even different products and services, makes federal government contracting seem like a maze through which no one could find their way. That’s why many small-business contractors recommend picking a likely agency and trying to learn the ins and outs of that market, rather than trying to take on the whole behemoth.

“The government is pretty open about what they want,” says Cruse. “If you do enough digging, you can get a sense of what the market is.”

A Short Course on Subcontracting
One way to do federal business without being exposed to the full complexity of the market is to be a subcontractor to a prime contractor. Hooking up with a larger company can open you up to many new markets, including contracts that would be too big for you to otherwise participate in. For example, says Cruse, “If you are a small construction company and want a piece of the reconstruction of Afghanistan and Iraq, you have no chance. If you weren’t one of the big boys, you didn’t even get invited to the party.”

As subcontractors to the big boys, however, small businesses are involved in even the biggest deals. That’s almost assured because, just as the government has goals for the percentage of business it wants to go directly to small businesses, the big prime contractors are required to subcontract out a certain percentage of their deals to small businesses.

Established government contractors can also open doors that small companies can’t. Roberts tried getting government purchasers interested in her tracking software for years without success before hooking up with a midsize company that had experience selling to the federal government. “I couldn’t get anybody at the federal level to listen to me,” says Roberts. “So I looked for a company that was doing business with the federal government, and they were able to get my product demonstrated at the Army.”

Now that the Army is preparing to roll out her software to help track training of all its soldiers, Roberts feels she is ready to go after deals on her own. “It gives us credibility within the federal government to say we have a large deployment,” she says. “There’s something we can point to.”

Big prime contractors have small business liaison officers whose job it is to find small firms who can help them meet the terms of their contracts, especially the small-business subcontracting requirements. Meeting and developing relationships with these people in the industries and companies you have targeted for subcontracting is essential. “That’s the bailiwick of most small businesses,” says Cruse. “They make good partnerships with primes and are good team members.” The SBA maintains an online index of subcontracting contacts and opportunities at www.sba.gov/gc/indexcontacts-sbsd.html.

As big as it is, government contracting is a moving target. For decades, the printed Commerce Business Daily was the prime source for information on current opportunities, but it’s been completely supplanted now by FedBizOpps. Now, many procurements are going completely paperless, with contracts awarded by computers and funds directly deposited electronically into vendors’ bank accounts. “The way the federal government does business has changed more in the last 10 years than in the last 100,” says DiGiacomo.

What does the future hold for federal contracting? The only people who will find out are those who are developing the competencies and contacts to get involved in the information flow and start building knowledge, winning contracts, and making a difference.

Successful contractors like Cruse and Roberts say that, above all, having the world’s biggest customer as their customer helps them have an impact far larger than their small firms might otherwise have. “Through us,” notes Cruse, “the basics of emergency-room care were delivered to nearly 600 places all over Iraq that didn’t have anything resembling that before.”

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

Is Federal Contracting for You?
Some companies are not good candidates for federal government contracts. In general, the government wants companies that have been around at least a couple of years, can demonstrate good quality in both products and services, and have financial stability and solid management skills. John DiGiacomo, director of the Rock Valley College Procurement Technical Assistance Center in Rockford, Illinois, adds, “You have to be a business that can work either nationally or globally if you’re going to do business with the federal government.”

You can’t be a successful contractor unless you can do what you say. When you send back a bid on a government contract, if it’s accepted, you are expected to deliver. If you abandon a contract or don’t deliver to the satisfaction of the purchaser, you may be billed for the difference between what you agreed to do it for and what the buyer ultimately has to pay another source to do the job right.

Finally, a big customer like the federal government attracts big competition. If you can’t hold your own against other companies, you won’t last long. “There is no easy picking,” says Ron Cruse, president of Logenix International Inc., a Springfield, Virginia, transportation service. “If you want to make it a major part of your business, you’d better immerse yourself.”

By Linda Buck

What’s on your agenda today? Maybe its sales, marketing, customer service, packaging, advertising, shipping, employee relations, or all of the above. These are just a few of the priorities and concerns that top the to-do list of the small business owner—priorities that can grow your business.

But, what about all that paperwork? Forms and files, taxes and deadlines must be executed accurately and timely. Talk about stress! However, filing your employee W-2s online can simplify the process and leave more time for the activities that will expand your business.

The Social Security Administration has established an e-file system for filing W-2s that now saves time, allows an extra 30 days to file, gives an electronic receipt and a PDF file of the filing, tracks the status, and gives employees a more accurate Social Security statement. Oh, and it’s free.

The Social Security Administration understands a small businessman’s focus. “Sending W- 2s is not their primary business. Selling their business is their business,” says Chuck Liptz, director of employer wage reporting and relations staff at the SSA. “You sit at your dining room table at 10:00 p.m. to do your W-2s.”

That’s why the SSA offers two simple ways to electronically file yourW-2 forms: Transfer data from your own software package; or use theW- 2 online form. Your first step is to determine which option is best for you.

If you use your own software to create reports, it must be correctly formatted to SSA’s specifications. Accuwage is a test tool available to check wage reports for correctness before sending the information along.

But the second option—using the W-2 online form—is best for submitting 20 or less W- 2s. You can easily complete the online forms on your own computer and electronically submit them and print copies suitable for distribution to your employees. No software is required. Last year, 975,000 reports were submitted online, according to Liptz. “There has been phenomenal growth over the last five years,” says the 29- year government employee.

Getting Started
The first thing you need to do is register in the Business Services Online section at www.ssa.gov/employer.  BSO is a “suite” of business applications that instruct, educate, and execute the submission of required information to the Social Security Administration.

A PIN is assigned immediately and is considered the individual’s electronic signature. Your password will need to be changed once a year to stay registered. Once registered you can verify names and Social Security numbers with SSNVS before submitting the data. Then select whether you want to “Submit aW-2Wage File” or one of the options under “Create FormsW-2 Online.” Be sure to keep all copies for your files.

Reporting your company’s W-2 data doesn’t have to be so daunting after all. So, clear off your dining room table and concentrate on what makes your business the best in the business.

With horror stories abounding about travelers getting stuck for hours on planes idling at the gate or on the runway, three executives from a small Minneapolis-based technology firm were relieved that, when faced with a one-hour delay, the pilot let passengers disembark. The trio went to a restaurant on the concourse to grab a bite.

Forty minutes later, when they went back to the gate, the plane was already gone; the pilot had gotten a quicker than expected clearance, and the men didn’t hear the reboarding announcements. Their briefcases were gone too, still in the overhead compartments.

They didn’t panic. They called their corporate travel concierge, Sue Hagen, president of Avant-Garde Personalized Travel, LLC. After they considered the options she outlined, Hagen quickly booked a corporate jet for them, and they flew to New York without mishap, about $8,000 lighter but relieved they’d be able to make a critical meeting. Hagen also arranged for them to pick up the briefcases, which she had tracked as they were taken off the commercial flight and put in a keyed storage area at La Guardia Airport.

In a world of either megaagencies that book billions in business travel a year, or selfbooking sites like Travelocity, Expedia, and Orbitz, Hagen is a rarity: a corporate travel agent who specializes in intensive, comprehensive service exclusively for small companies. Her client list is modest—a dozen companies, ranging from sole proprietors to a firm with 30 frequent fliers. Staying small means that she knows the itinerary of each traveler well, and she also knows everyone’s travel history— what kinds of trips they usually take, what their preferences and peeves are. She treats her clients the way she’d like to be treated—like a CEO, with a cast of minions running interference at the slightest glimmer of a hitch.

Hitches are all too common for road warriors these days, as aircraft are flying full, flight delays and cancellations are nearing all-time highs, lost luggage rates are skyrocketing, and slow-moving lines at security checkpoints mean that road warriors who cut it close may miss their flights. Amid the chaos and uncertainty, Hagen, whose background includes stints as a trade show organizer and a customer service agent for Northwest Airlines, takes over, advising and taking action when the inevitable happens. She even mans the 24-hour service hotline herself. The only thing she outsources is the back-office aspect of her business, which she launched in 2004.

The concierge service isn’t restricted to dramas in progress. Hagen will advise on developing corporate travel programs, helping clients establish the policies that mix value with comfort and productivity. When she builds a traveler’s itinerary, she works hard to get not only the best fares but the most convenient flights, the fewest (or shortest) layovers, and the most comfortable aircraft. She spends triple the amount of time a traditional agent does on reservations—15 to 45 minutes—and typically presents three options. Once bookings are made, she’ll monitor seat availability for upgrades (something too tedious and frustrating for most travelers to do on their own), and will handle converting frequency points to fares, hotel rooms, and rental car days, a function few traditional travel agents will touch.

Once a business trip is underway, the next phase of her service kicks in: as troubleshooter. She monitors weather where her clients are traveling from and to, and checks on mechanical and other kinds of delays. If something changes (a gate, a departure time), she’ll send a text message or will call the traveler. After a quick consultation, she’ll take the appropriate action, often a rebooking. Meantime, she’ll keep other affected suppliers—hotel, chauffeured transportation, car rental firm—apprised as well. “There’s nothing worse than a long delay in the air to arrive at the car rental counter to be told that your car was given away because you didn’t show up when you said you would,” she explains.

Not all changes are irksome, she adds, and in some cases she can give the road warrior welcome news. “Your meeting may have ended sooner than expected, and you’d like to get on an earlier flight,” she says. “I can do it for you in a fraction of the time you could, even if you had easy access to the Internet. Or your meeting may have run late and you’d really like to know that your flight is delayed, so you don’t have to stress getting to the airport. You’ll know about the extra time from a text message I’ve sent.”

What price personalized attention? Surprisingly, it may cost less than using a traditional or online agent. Even though Hagen charges a $300-$500 monthly retainer for each traveler, pricing is all-inclusive. Industry standards charge for every piece, and changes, of the transaction ($30-$60 average each transaction. “You’re only charged once, not every time you make a change, which is where the little guy gets slammed. Companies are spending thousands of dollars just on fees, because every time something on a trip gets altered, a travel agent will charge $30-$60.” Companies can also save if Hagen finds that a fare or room rate has gone down after a booking was made. “If the fare bought yesterday went down 35 percent in price today, I’ll rebook the lower fare if the traveler approves,” she says. And the client receives all of the savings! “Essentially, we’re continually monitoring price changes for arbitraging opportunities,” she says.

Even with the retainer, Hagen says her prices still come out 10 percent lower than a travel agency or booking engine—and that’s before the concierge-style service. For those travelers who actually like booking their own travel, she does offer a customized online booking tool for them to use. (Still, she’s amazed that a consultant who bills $500 an hour will spend an hour looking to save $50 on a flight.) The monthly retainer also extends to business travelers taking leisure trips, and to all members of the traveler’s family. “It’s one way a small company can add value to their employees,” she says. She’ll advise on everything from destination selection to how to travel with young children. For one corporate client, a veterinarian and entrepreneur, she even arranged a tour of Minnesota dairy farms (and tickets to a few baseball games) for a group of Japanese dairy farmers.

Her clients are vocal about her skill, lauding her for her attention to detail and her uncanny ability to get them out of scrapes. “A business trip is tough enough on its own. You shouldn’t have to worry about being your own travel agent, too,” she says.

For more information: www.travelavant-garde.com.

By John Jantsch

One of the few complaints I hear from small business owners when it comes to generating business or leads by way of referral is that too many of the referrals they are offered aren’t a fit for the business. The referrals are either unqualified, don’t need the firm’s offerings, can’t afford the product or just don’t fit the typical profile of an ideal client for the receiving firm.

If this is your referral reality, then you know that chasing leads that don’t fit your target client can be a grand waste of everyone’s time and energy. The primary reason for this problem: Most small business owners and independent professionals don’t take the time to educate their referral sources.

The solution is really quite simple. I’ve created a tool I call the Perfect Introduction, as part of my Referral Flood program. The Perfect Introduction is a document (although it can take many forms including a web page) that helps educate your referral sources and contains answers to the following questions:

• How would I spot your ideal client?
  Describe, in great detail, the type of clients you work best with. This step will help assure that you get highly qualified leads and make it easier for your lead source to think of prospects that fit a narrow description.
• What I would say to best position your business?
  Give your referral source the exact words you would like them to use when introducing your products and services to prospective referrals. Give them a simple, memorable way to explain the benefits you have to offer.
• How do you add value tomy relationship with a referred lead?
  This is amulti-answer question. Show your prospective referral source what you do to make them look good and outline any offer you might have cooked up to reward and motivate your referral sources. By the way, money isn’t always the best referral motivator.
• What you do with the leads you receive by way of referral?
  Outline the exact steps you take when you receive a name or introduction. This step allows the referral source to get comfortable with your marketing process. Everyone has some fear that the referred party may abuse the relationship by hard selling or calling every night at dinner time.

Now that you have your Perfect Introduction document in hand you can go out there and confidently let the world know that you are someone they can feel great about referring.

Another very powerful aspect of this tool is that often, even if you don’t realize it, you are in competition with others who are seeking referrals. Service professionals seeking referrals, for instance, heavily target CPAs. With your referral process outlined in a very professional manner, you will stand out in the referral competition for some of the best potential referral sources.

John Jantsch is a veteran marketing coach, award-winning blogger and author of Duct Tape Marketing: The World’s Most Practical Small BusinessMarketing Guide. He is the creator of the Duct Tape Marketing small business marketing system. You can find more information by visiting www.ducttapemarketing.com.

By Karen E. Spaeder

Joni Hilton came up with the idea for a safe, environmentally friendly cleaner when she was under her sink. There, she saw “$70 worth of expensive stuff that doesn’t do what it promises,” says Hilton, 50, who founded Sacramento, California-based Holy Cow Products in 2003. “I thought, ‘Someone should invent one product that will do it all and do it safely.’ ”

So in 2001, the mother of four had a chemist concoct a safe, effective cleaner that would work on any surface. The final product made her whisper, “Holy cow!” in disbelief after it took out a tough carpet stain.

Identifying a problem that moms have and then solving it is a great way for a mom to start a business. But solving the problem is only half the battle. You also have to tell other moms you’ve solved their problem in a way that makes them want to buy your product over the competition’s.

“Just because you, as a mom, think a product will be terrific doesn’t mean your market will [agree],” says Stephanie Azzarone, president of Child’s Play Communications, a publicity and marketing communications firm that specializes in marketing to moms.

To convince moms, Hilton started with the product itself—available in three colors with cute cow packaging. But Hilton took her marketing a step further by doing frequent in-store demonstrations at some of the thousands of stores where Holy Cow is sold, including Ace Hardware, Sam’s Club, and Wal-Mart locations. “I talk to thousands of moms this way,” says Hilton, whose annual sales exceed $1 million.

That message appeals to moms of all types—as does the price, at less than $4 for a 32-ounce bottle. But Hilton also reaches out to specific groups at her demonstrations. For example, working moms are often interested to hear that their kids can help with the cleaning because Holy Cow is free of toxins. Stay- and work-at-home moms like hearing that Holy Cow won’t overpower them with the kind of toxic fumes they would inhale from a typical cleaner. Yoga moms like that they’re using an organic product. Soccer moms like knowing Holy Cow can get out tough grass stains. And all these moms carry on Hilton’s message through positive word-of-mouth.

Today’s moms are also online, researching, shopping, and networking. A 2006 eMarketer report shows that in 2005, 32.2 million U.S. moms were online. Azzarone advises generating visibility for your product or service on mommy websites, blogs, and other online spaces where moms gather.

Above all, remember that today’s moms want to be recognized for being the women— not just the moms—that they are. “Pay attention to her roles,” says Azzarone. “She wants to be appreciated.”

Karen E. Spaeder is a freelance writer in Southern California specializing in small business and education. This article is reprinted with permission from Entrepreneur’s StartUps Magazine.

Owning your own business can be one of the most rewarding experiences of your life. However, according to a 2005 LIMRA survey, only 1 in 4 small business owners has a sufficient succession and continuation plan in place. By not having a plan, small business owners are putting at risk the financial futures of their business partners, their employees, and their own families.

“Many people dream about owning their own business, but that dream can become a nightmare for your loved ones if that asset isn’t protected financially,” says David F.Woods, CLU, ChFC, president of the LIFE Foundation. “Every small business owner needs to ensure that he or she has adequate insurance coverage to protect their families, their business partners, and key employees so that no matter what the future holds, their business can continue to provide for those who depend on it.”

To help small business owners understand their insurance options, the nonprofit LIFE Foundation offers the following five tips for putting in place a proper plan that will not only protect their business, but themselves and their families. As with any insurance decision, LIFE advises meeting with a professional insurance agent to discuss your individual needs and learn more.

Tip 1: Obtain adequate life and disability insurance to cover all your assets.
To jumpstart or help grow their business, many small business owners take out loans that are secured with personal assets. That’s why it’s important to protect your income and added financial responsibilities with enough life insurance. While you’re at it, don’t overlook the importance of disability insurance, which can provide income to you and your family if you were unable to work for an extended period of time.

Tip 2: Protect all of your company’s overhead commitments.
If you were to become disabled and unable to work for a prolonged period of time, your whole business could collapse. Business overhead expense insurance is designed to cover the operating costs of running your business in the event that you can’t because of an illness or disability.

Tip 3: Have a plan in case your business partner becomes the only partner.
If you have a partner or co-stockholder, it is important to put a buy-sell agreement in place. This is an agreement between business partners to buy out each other’s share of the business in the event of one of their deaths where life insurance plays an essential role in providing the funds to make the purchase. Many small business owners expect their family members could take over; however, loved ones often don’t have the skills or desire needed to pick up where you’ve left off. Disability buy-out insurance is a similar arrangement and provides money for company owners to purchase a disabled owner’s holdings in the company after a certain period of time.

Tip 4: Insure your right-hand man (or woman).
If you have star employees who greatly contribute to your company’s bottom line, you should consider purchasing key person life and/or disability insurance for them. Should anything happen to that employee, the death or disability benefit can help make up for lost sales or earnings and help cover the cost of finding and training a replacement.

Tip 5: Take care of your employees, and they’ll take care of you.
There are many benefits you can offer to attract and retain employees, ranging from health and life insurance to dental and vision insurance, or even voluntary options that enable employees to purchase or increase benefits themselves. What’s important is that you work with a qualified insurance professional who specializes in the employee benefits needs of small businesses.

For the past 27 years, Small Business Development Centers across the country have helped nearly 13 million aspiring entrepreneurs start, manage, grow, and save their small businesses. The ASBDC is the federal government’s most comprehensive small business management and technical assistance program. The network includes 63 matching grant-funded recipient programs in all 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, and the Virgin Islands. The mission of the SBDC network is to help aspiring entrepreneurs realize their dream of business ownership, and assist existing small businesses to remain competitive in the complex marketplace of an ever-changing global economy.

Need further proof that the SBDC network helps small businesses? Just ask Robert Evans from Independent Energy Systems. At the 2007 Association of Small Business Development Center’s national conference, Independent Energy Systems (IES) was named the top small business/SBDC success story in a competition sponsored by Bank of America.

IES specializes in the design, installation, and sales of solar electric and thermal systems for residential and commercial properties in Santa Cruz and the Monterey Bay area. Evans, president and founder, began his business in 001 with the mission of providing the community with an opportunity to participate in renewable energy. In 2006, the California government showed support of this future in renewable energy by passing the “Million Solar Roofs Bill, SB 1,” which provides $3.2 billion over 10 years in rebates to solar electric system purchasers throughout the state.

The opportunities were there, but so were the challenges. Knowing that the rebate program was solid, Evans was ready to aggressively grow his company with the goal of doubling his revenue. The company had a strong backlog of orders but there was a risk of assuring adequate supply of solar panels if he increased sales. Also, Evans needed to develop sound financial projections to present to local lenders with the goal of securing working capital.

It was time to call the experts. Evans decided to meet with Central Coast SBDC Consultant Jim Weisenstein who conducted an in-depth business assessment. During the first few meetings Evans and Weisenstein outlined 2006 financial objectives, developed an ideal client profile, researched existing and potential solar panel suppliers, and reviewed potential lender requirements.

Additionally, Weisenstein suggested increasing staff so that Evans could focus on growing the business. Evans met with Weisenstein over the course of a year to assess the financial health of his rapidly growing company.

Within a few months of working with an SBDC consultant, IES was a preferred customer for a new solar panel supplier, and Evans had secured a home-equity line of credit. Ten additional full-time employees were added and IES secured 4,000 square feet of additional shop space. By the end of 2006, IES exceeded the original goals set with the help of Jim Weisenstein and the company nearly tripled annual revenue.

IES is just one example of the hundreds of thousands of small businesses who credit the SBDC network when asked about their success. If your company needs some expert advice and guidance in starting, managing, growing, or even saving your business, it’s time for you to make the call. Who knows? Maybe your company will be the next ASBDC small business success story.

By Melaine Schutt

After achieving her childhood dream of becoming a successful chef, Marybeth Boller reached a turning point in her career. She’d spent 16 years rising through the ranks of top restaurants and catering companies in the U.S. and Europe, but found herself asking, “What’s next?” She answered this question three years ago, when she made the decision to launch her own catering enterprise.

Boller had been content working for other establishments, but innate ambition propelled her to venture out on her own. “I’m grateful for my past experience. I just felt I’d gone as far as I could go,” she says. To take her career to the next level, she began exploring the idea of forming a business. Her goal was to bring the fine dining experience of a four-star restaurant to catered events.

While researching her options, Boller realized that buying an existing company made more sense than starting from scratch. She sought a location with convenient access to Manhattan’s culinary epicenter, and a Connecticut home base near her family. After a few dead ends, she came across an 11-year-old catering business housed in a sunny, spacious building in Greenwich, Connecticut, and knew it was the right choice. She made the purchase, and Marybeth’s Catering was officially born.

Boller was excited to get started. “With my own company, I could really put my skills into practice,” she explained. As a new entrepreneur, it was also important that she tap into her business background. She earned a business and marketing degree from

Providence College, with the early foresight that it would help support her culinary career.

One of the most crucial steps to developing her business was securing a customer base. The company she purchased had a built-in client roster, but Boller’s style of cuisine differed from the previous owner’s. “There were no guarantees,” she notes. She called on loyal followers from her past, and utilized newspaper and magazine advertising. Feedback from her satisfied customers became her best marketing tool. “The business has primarily grown through word of mouth,” she says.

As news spread, her next task was hiring experienced staff so she could handle business expansion. With high standards of quality and a specific company vision, it wasn’t always easy finding people who she felt were the right fit. One by one, she built a team by recruiting a mix of former colleagues and local talent.

Marybeth’s Catering ended its most recent year with a sales increase of 15 percent. Boller caters events ranging from private dinners for ten to weddings to major business occasions—including a Marc Jacobs fashion show after party and a 1,500-person reception for the Premiere of Cirque du Soleil Corteo.

Boller has found that life as an entrepreneur suits her well. “I love the flexibility” she says, “and it’s always interesting. Every event is something new, something different.”

Looking to the future, she’s considering adding take-out options to her business and expanding her geographic reach. She can picture a Marybeth’s Catering location on

Martha’s Vineyard, and previewed the area by spending several weeks in August working for a private client there. With these kinds of possibilities, Boller says, “I can’t see myself doing anything else.”

By Robert Holleyman

The Business Software Alliance (BSA) settled claims in June with one of the largest family-owned car-haul companies in the nation. The small business paid $300,000 to settle claims that it had unlicensed copies of Adobe, Microsoft, and Symantec software programs installed on its computers. Unfortunately, this story is not unique. Small businesses paid more than $11.4 million in fines to settle software copyright infringement claims in 2006 alone, according to the BSA.

Through a partnership with the U.S. Small Business Administration (SBA), the BSA is encouraging small businesses to focus on the benefits of implementing a Software Asset Management (SAM) program as a priority, rather than an afterthought.

Many small businesses may think they’re saving money by using unlicensed software, but too few realize they are jeopardizing all their hard work by not properly managing their software as assets. They may not even realize they’re using software illegally. Either way, businesses and individuals using unlicensed software face considerable legal, financial, technical, and operational risks. They are also forfeiting a valuable opportunity to cut business costs and increase efficiency.

In the fast-paced, highly competitive environment of small businesses, every decision counts. Concerns about improperly licensed or outdated software often are not a priority until it’s too late. The cleanup to rectify the various issues associated with use of unlicensed software is time-consuming and ultimately more expensive than if a business had installed licensed software in the first place. Likewise, many businesses see software as an expense rather than an asset that can greatly impact their bottom line.

Preliminary SAM programs are easy to implement and can save businesses money, enabling them to better plan for software purchases and negotiate lower prices with vendors. “Both the SBA and the BSA have a history of working with the small business community to help maximize business success,” said SBA Administrator Steven Preston.

“This exceptional partnership with the BSA will help small businesses be smart about software use, and protect themselves against the risks of unlicensed software.”

A recent survey conducted by Yankelovich Partners for the BSA found that small businesses face the greatest risk for software piracy due to their lack of established software management practices.

The legal, financial, and technical consequences of using unlicensed software are very real and can place any small business in jeopardy. By implementing SAM, your small business can make certain it has all the proper licenses for its software and is not in violation of copyright laws.

Not only is the use of improperly licensed software a dangerous practice, it is against the law. Software piracy can result in fines of up to $150,000 for each software title copied and increases the risk for security and technical complications.

A number of free information tools, including the SAM Toolkit, Guide to Software Management and Best Practices are available at www.SmartAboutSoftware.org.

Businesses trying to determine whether their organizations are using unlicensed software can download the free trial versions of software audit tools and educational materials from www.BSA.org.

Robert Holleyman is president and chief executive officer of the Business Software Alliance, the foremost organization dedicated to promoting a safe and legal digital world.

By Gwen Moran

Quick: If you suddenly found yourself face to face with a top venture capitalist, could you give her a 30-second pitch that would make her want to know more about your company?

Lorraine Howell, founder of Media Skills Training, a media and communications training firm in Seattle, thinks you should be able to do just that. Her book, Give Your Elevator Speech a Lift: How to Craft Your Own 30-Second Commercial, explains how to interest investors, prospects and other audience members by using a brief “elevator speech”—a pitch made in the time it takes for an elevator ride. She offers a few tips for creating your own quick pitch.

Address your audience and what they want. Let’s say you own a bakery and you want to attract affluent customers who are planning weddings. Your elevator speech should reflect that. Howell suggests saying “I bake innovative cakes for once-in-a-lifetime events.” This quick characterization appeals to the prestige and exclusivity this audience seeks, but doesn’t get so far away from what people think a baker does that it’s confusing.

Talk about the result. “If I ask you what time it is, don’t tell me how the watch works,” Howell says. Tell the audience member what the appeal of your business is for him or her. “When people ask you what you do, the question they’re really asking is ‘What can you do for me?’” says Howell. “That’s the question you should be answering.”

Draft several versions. Most businesses have more than one audience. Ideally, your brief first impression will leave your prospect clamoring for more. So create elevator speeches of different lengths—perhaps 10-second, 30-second and two-minute versions—and tailor them to different audiences. Howell changes her elevator speech in different situations. Sometimes she’ll call herself a media trainer, and other times she’ll say she helps people communicate more effectively in front of an audience.

By April Y. Pennington

When dealing with older generations, there are some major blunders to avoid: Don’t lump them into one category, and don’t call them seniors, because they certainly don’t feel like seniors. As of March 2002, there were nearly 45 million people in the United States who were 60 and older, according to the U.S. Census Bureau—those numbers are projected to swell to 70.3 million between 2011 and 2030. Combine that with an AARP study revealing people 45 and older spent $2.2 trillion in 2001, and you’ll see that getting to know and understand each segment of this vast and powerful market is essential to successfully reaching them.

Ann A. Fishman, president of market research consulting firm Generational-Targeted Marketing Corp. in New Orleans and adjunct professor at New York University’s Center for Marketing, says the 50-plus market is actually made up of three distinct generations. “What motivates these three generations to buy is very different,” says Fishman.

Every generation is “molded by the world events that occurred during their formative years,” explains Fishman. Living during the Vietnam War, baby boomers (in 2006, the oldest of 77 million baby boomers will reach age 60) are actually a split-personality group—the older ones crave the nostalgic, while the younger wave feels needy. Both feel entitled to the American Dream and, in good times or bad, are willing to spend money on items they want.

The often-overlooked 63 to 80 set—also known as the Silent Generation—mostly boasts financial stability, claims Fishman. This group started the civil rights and women’s movements and is redefining aging today. “They see themselves as younger, are getting plastic surgery and taking Viagra,” asserts Fishman. Focus on “lifestyle changes,” not “aging,” when speaking to them.

Though the GI Generation, aged 80 and up, tends to be thrifty as a result of the Dust Bowl, the Great Depression and World War II, they are living life to the fullest. “They are very brand loyal and want a friend in the business,” says Fishman, who adds that members of this generation prefer to do business face to face so they can chat. They also love to read, so providing literature about your business is a good move.

When marketing to any of these generations, give your product or service a youthful, positive slant, advises Fishman, who hears from boomers who desire not the standard senior-care facility, but to spend their golden years in something more akin to a hippie commune with in-house services like massages or medical services. Present home health care and other services as lifestyle enhancements. And take the meals-on-wheels concept up a notch by offering specialized, gourmet meals for more mature palates.

Finally, Fishman emphasizes the influence younger generations have on older generations. Whether it’s advice on high-tech devices or other products, the older generation relies significantly on younger consumers’ savvy. Discounting any of these generations is a surefire way to not generate business.

April Y. Pennington is a staff writer for Entrepreneur magazine.

By Laura Koss-Feder

Michael Lacey knew he needed PR assistance to help promote his growing business, Digineer Inc., a Minneapolis high-tech consulting firm. Although the 8-year-old company had been performing solidly year after year, when his salespeople and recruiters called on potential clients or tried to hire new staffers, they weren’t familiar with the business. Rather than employ a full-time, in-house PR staffer, the president and CEO decided to outsource with a PR firm eight months ago. The move allowed Lacey to increase awareness of the company while still watching its bottom line.

“We had a great story to tell and needed more recognition to help compete as effectively as possible for both clients and employees,” says Lacey, 37, who employs 65 people and has annual sales of $7.5 million. “That’s [why] we hired an outside PR professional who could focus on getting us publicity.”

Lacey asked others in his field for referrals, interviewing about six agencies in all. For a $3,000 per month all-inclusive retainer, Digineer has so far been featured in both local and national publications, and Lacey says he’s quite pleased with the results from Wax Marketing Inc. in nearby St. Paul, Minnesota.

“You need to go into PR with a plan of action and decide as a business owner what you are trying to accomplish and how publicity will help your company,” Lacey says. “You don’t want to see your name and face in the press just to make yourself feel good . . . If you want to see your face, just look in the mirror.”

Finding the Right Fit
Deciding when to hire a publicist—usually outside your firm first to save on the cost of bringing in a full-time publicist for at least $50,000, plus the added expenses of benefits—takes place when you are trying to increase awareness of your business in general or if you are rolling out a dynamic new product or service and need to get the word out to the press in a timely fashion. 

“Good PR helps promote the validity of your service or products and offers you the kind of exposure that advertising alone just can’t,” says Gene Fairbrother, lead business consultant for the National Association for the Self-Employed and president of MBA Consulting Inc., a Dallas-based firm that advises entrepreneurs nationwide.

If you are just looking for short-term publicity, it makes more sense to hire someone on a project basis and pay a fee based on how many hours will be needed. If you are seeking more ongoing guidance, as many growing ventures are, seek out a monthly retainer relationship, says Judy Phair, immediate past president of the Public Relations Society of America in New York City.

Most entrepreneurs find publicists by asking others in their industry for recommendations. Consider contacting the major trade association in your field, which may offer referrals. PRSA offers a listing by city at www.prsa.org. Interview at least four agencies, ask for a written proposal, and check references. Don’t necessarily pick an agency that offers you the stars and the moon.   

“There are no guarantees of anything in this business, and be wary of anyone who makes elaborate promises,” Phair says.

While PR firms come in all shapes and sizes—from local boutiques to worldwide empires—it may be best to start off with a smaller local or regional company with 20 or fewer employees that can devote more resources to your growing business. “You don’t want to be the smallest client in a very large PR firm,” Phair points out.

Although there are always exceptions, retainer fees tend to be lower with smaller PR firms, and there is a greater amount of wiggle room when it comes to negotiating price and contracts with smaller players who are hungrier for your dollars. Remember, they, too, are entrepreneurial in nature—just like your company. Although monthly fees are very region-dependent—with the East and West Coasts being the most pricey—expect to pay between $2,000 and $5,000, Phair says. Contracts usually last a minimum of six months to a maximum of a year. Wax Marketing, for example, targets smaller clients with sales between $5 million and $20 million, says Bonnie Harris, the firm’s president.

“You don’t want a contract that is too short. It can sometimes take months just to get a company in print, particularly in publications with long lead times,” Harris says.

Also, with a smaller firm, you are more likely to know who will handle your account directly, rather than finding out afterward that you’ve been handed off to a more junior person within the company. “Ideally, you want to meet the person who you will be working with ahead of time,” Lacey says. “You need to feel like you ‘get’ each other and that you can communicate easily with one another.” 

Connie Zack, co-owner along with husband Aaron Zack, 29, of Sunlight Saunas Inc. in Lenexa, Kansas, elected to work with a small PR firm, so she knows who’s handling all her publicity needs: the company’s president, who made the direct pitch for the business. The manufacturer and distributor of saunas wanted additional exposure and public awareness after relocating from Cincinnati to the Kansas City area, so in March 2004, the Zacks hired an outside agency on a $2,000 per month retainer. Sunlight Saunas obtains a lot of sales leads via the internet, and Connie, also chief sales officer, felt that mentions in local and national magazines and newspapers would help boost sales. So far, more than 35 articles on Sunlight Saunas have appeared in 30 publications, she says.

“I know who is doing all my PR—it’s not a new person who doesn’t really know me—and every month I have a succinct report that summarizes what has been done. The PR agency understands what we are about, and we have a great rapport. That’s not something you may have in a very large firm that has employees coming and going,” says Connie, 38, whose 7-year-old company has about $6 million in sales and 18 employees.

All the tasks your outside agency will perform—such as writing collateral material (press releases, media kits, newsletters, brochures and so on), pitching to local and national press, media coaching, planning special events and crisis counseling—should be spelled out in the contract, says Tucson, Arizona, publicist Alaina G. Levine, who is immediate past president of the Southern Arizona chapter of PRSA. She is also a director of special projects in the College of Science at the University of Arizona in Tucson and teaches a graduate class on entrepreneurship.

“You want to know that a consultant can offer you a full media strategy—beyond just pitching a story here and there—and you want to know how this person or agency will carry out its role for you,” Levine says.

Although it is not mandatory, you may include in the contract how often you will meet or speak with the outside agency and how frequently you want written reports. Lacey and his publicist speak with each other at least weekly to discuss ongoing projects. Although he and his PR firm have the advantage of meeting face to face because they are in the same area, you can still have just as much contact via telephone and e-mail with a publicist located in another part of the country.

Naturally, the monthly price tag should be included in the contract, as well as costs for any additional work and expenses that you will cover.  

Consider working with a specialty agency or one that has some background in your field, Fairbrother says. This is particularly important if your business is in a highly technical industry or if you are specifically seeking trade press and need a publicist familiar with your industry’s publications.

Harris, for instance, used to work in marketing for a high-tech company. And Jerry Daly, president of Daly Gray Public Relations in Herndon, Virginia, is another example: He has been in business for 19 years, handling travel and hotel publicity for clients seeking recognition in their particular industries. He also worked for two major hotel companies before going out on his own.

Says Daly, “Clients realize that we have a longtime knowledge of the industry as well as solid relationships with travel writers working on both consumer and trade publications.”

Get the Balance Right
Once you’ve established a solid relationship with an outside firm, it may be time to supplement that help with a full-time, in-house publicist or a marketing director—assuming you have the budget. Or you may hand this job over to someone you already employ to save money. For instance, Lacey is finding that the tasks of running his business are growing so quickly that he doesn’t always have the time to directly coordinate publicity efforts with Harris. Next year, he will appoint someone in-house to handle this job as well as internal communications.

“This way, we will have a dedicated person to give us both a consistent message inside and outside the firm,” Lacey says.

Bringing a dedicated publicist in-house was the way to go for entrepreneur Josh Shaw, 30, COO and co-founder of GoSmile Inc., a New York City manufacturer of tooth-whitening products. In fact, he decided more than five months ago to have a PR team consisting of both a vice president and a director of communications. Shaw previously worked with outside agencies and felt that in his very image-driven, competitive industry, the time was right for his burgeoning business, and he had the budget to bring publicity professionals onboard who could dedicate all their efforts to GoSmile.

“We are looking for co-branding opportunities and taking our products to the next level, and having 20 percent of [the efforts of] two people in a PR firm just can’t compare to having 100 percent [of the efforts] of two people within your own company,” says Shaw, who employs 45 people and has annual sales of approximately $10 million.

However, Shaw is also working with a small agency for a small monthly retainer for a six-month period. Because the agency specializes in broadcast PR, he’s hoping to generate TV stories about the business. Shaw recommends still working with outside agencies even after you have hired full-time publicists, especially if you are looking for very targeted assistance from specialty firms. “Your in-house team is important for ongoing publicity, but they may not have the contacts in the media that you need for a specific media blitz,” Shaw says.

To watch your costs, consider lowering the monthly retainer fee if you are hiring a separate in-house employee and plan to keep both in-house and outside PR specialists, Harris says. Of course, that will mean a reduced amount of work from the outside specialist. The in-house and outside publicists also need to get along and see eye to eye on how to best promote your company.

“Having the proper amount of PR help for your company is all a balancing act,” Harris notes. “You have to see what works best and what makes the most sense for your business—without sacrificing quality.”

Laura Koss-Feder is a freelance business and features writer in Oceanside, New York, who has written for Business Week, The New York Times and Time.

By Crystal Detamore-Rodman

After racking up nearly $900,000 on a revolving line of credit to acquire other businesses for his $9 million commercial and industrial fire-protection company, John Lawlor felt burdened by mounting interest costs—the result of using a financing instrument better suited for short-range capital needs. “When everything slowed down because of 9/11 and other impacts to the economy, those acquisitions were not paying for themselves as robustly [as anticipated],” recalls Lawlor, president of Keystone Fire Protection Industries in Montgomeryville, Pennsylvania.

The solution was obvious: Refinance to rein in runaway interest costs. So Lawlor secured a less expensive form of financing—a fixed-rate term loan—for two-thirds of his outstanding debt, and a new line of credit for the rest. “It wasn’t additional money being requested,” he explains. “It was the same figure that had been approved years before.”

Even so, his bank charged a $5,000 origination fee for the term loan and another $2,500 to establish the credit line. “That’s $7,500 just for the privilege of having the bank restructure the loan,” says Lawlor, 41. “There’s a presumed savings in interest expenses each month. But now that you have to offset that with the $7,500 [fee] the bank picks up on the origi-nation of the recasted loan, did I really save anything?”

Sticker Shock
As Lawlor’s recent financing experience illustrates, even seasoned borrowers are often caught off guard by higher-than-expected loan costs. While it is common for commercial lenders to tack on extra fees for such things as preparing loan documents, those costs are frequently only the tip of the iceberg. Indeed, lenders charge points, or prepaid interest (often called origination or commitment fees), for holding the credit available, and in some instances, they charge ongoing service fees, too.

What’s more, if the lender requires additional documentation, such as appraisals and environmental reports, or if an attorney is required to close the loan, the borrower picks up those costs as well. As a result, it’s possible for a particularly complicated real estate transaction to boost loan costs by thousands of dollars. “If we’re doing an environmental assessment, and [it] comes back that there has been potential of a past environmental problem on the property, both the timeline and the cost are open-ended,” says William Galloway, senior vice president of Hibernia National Bank of Greater New Orleans. Though the typical appraisal costs $1,000 to $2,000, “I’ve seen them run as low as $300 to as high as $17,000,” he reveals.

Borrowers, however, can guard against escalating loan costs by asking their lenders to cap both legal fees and the amount paid for any third-party reports, such as the sometimes-pricey environmental review. “It protects you from surprises down the road, when all of a sudden the deal becomes more complicated because there’s a title issue or a survey issue, and it pumps the lender’s counsel fees way up,” says Peter Smith, an attorney at Semanoff, Ormsby, Greenberg & Torchia LLC in Jenkintown, Pennsylvania. He says that in some cases, lenders can acquire discounted rates from third-party professionals because of the large volume of business they conduct with them. Because third-party fees vary based on the deal’s complexity, an attorney or other advisor can help determine the appropriate fee cap for your particular transaction. In general, lenders are responsive to these sorts of requests, according to Smith.

Timing Is Everything
A successful fee negotiation, however, hinges largely on its timing. Not surprisingly, you lose leverage by prematurely signing the commitment letter outlining the lender’s terms and conditions. But bear in mind that a borrower coming from a position of financial strength has more bargaining power than one struggling for fiscal footing. In Lawlor’s case, only his longtime banker would give serious consideration to his credit request, which greatly diminished his ability to negotiate. “We were not the sweethearts of all the other bankers,” says Lawlor, who met with several lenders to gauge his credit prospects. Most said his company, which had experienced “two very flat years,” needed to boost profits before they would extend funds. “One guy was even candid enough to say, ‘We would be getting rid of customers with this kind of profile,’” Lawlor remembers. As for his bank, “they probably knew there weren’t going to be 10 other banks that were going to scoop me away.”

But if you are in a position to deal, you can negotiate a number of things at the commitment-letter stage, from eliminating the often costly “opinion of counsel” conducted by the lender’s attorney, to getting rid of the commitment fee altogether, says attorney Charles Ormsby Jr., who is Smith’s colleague. Even if the creditor refuses to waive the commitment charge, it might not collect the fee until closing, which is beneficial from a cash-flow standpoint.

Although it’s true that some banks—Hibernia National Bank among them—may eliminate the commitment fee, borrowers usually pay a higher interest rate in return. “We have options where there are no points paid to the bank,” Galloway confirms, “but we’ll increase the interest rate to offset that.” However, the ability to save money upfront—a commitment fee of just 1 percent would run $2,500 on a $250,000 loan, for instance—often appeals to firms that don’t plan to keep a commercial property for long and aren’t opposed to paying a higher interest rate in the short term.

On the whole, borrowers are in a far better position to make those kinds of determinations when they have all the facts about pricing. To that end, Lawlor urges entrepreneurs to ask lenders to give a comprehensive breakdown of all potential financing costs. Based on that information, they can then decide whether the financing plan is economically feasible.

Read the Fine Print
Along with quizzing creditors about potential charges, pay careful attention to the lender’s deadlines, especially cutoff dates for accepting the offer and closing the loan. Missing a critical deadline will not only delay access to financing, but may also drive up the interest rate in some instances. “When you’re in an increasing interest rate environment like we are, the bank might be happy to let some of the deadlines go,” Ormsby says. “Then they can re-quote the rate.”

Failure to lock in an interest rate is just one oversight that can inflate financing costs. Another is not carefully examining the lender’s financial reporting requirements. “Banks will put in the documentation that they expect audited financial statements, but most small to midsize companies aren’t getting audited financial statements,” Ormsby says. “You need to review the documents to make sure you’re not getting sucked into a requirement for an audit.”

Some borrowers disregard that particular reporting requirement because it’s expensive and they don’t believe it will affect their loan status. In reality, their creditor may withdraw financing in response to the reporting lapse. Says Ormsby, “All of a sudden, you have a bank loan that you’re going to default on because you’re not going to hire somebody to do audited financial statements.”

Crystal Detamore-Rodman is a Charlottesville, Virginia, writer who covers the small-business finance market.

By David Worrell

On the road to building his technology company Ascendent Telecommunications, founder Stephen Forte thought that finding funding was going to be the easy part. It was February 2000, and Ascendent was riding high on the double wave of Internet mania and boundless telecom spending. Ascendent’s product, which marries wireless phones to traditional phone systems, had just been installed at the prestigious Beverly Hills Four Seasons Hotel. Ascendent had managed to get through its first year in business with some seed capital still in the bank. Moreover, within hours of announcing a second round of fundraising, Forte received a lucrative term sheet from a large East Coast venture capitalist firm.

The future looked bright for the Encino, California-based startup, but Forte’s prospective investors weren’t expecting the telecom market meltdown of 2001. And Forte wasn’t expecting the extended—and expensive—period of due diligence that followed.

Due diligence is simply the potential investor’s process of fact-finding. By stripping away the gloss and glitz of business plans and marketing materials, investors try to assure themselves that there won’t be any nasty surprises after they write a check.
In practice, due diligence is never simple. Forte recalls when the trouble began for Ascendent. “We spent weeks in due diligence with the VC team,” he says. “We spent probably $50,000 with attorneys going through the agreements and even installed one of our systems at their office. We had the documents finished.” But the abrupt market downturn caused the VC fund to rethink its investment. The deal was cancelled at the last second.

Fortunately, Forte found a West Coast investor more willing to take a chance on Ascendent. The good news: The East Coast firm would ship all the due-diligence documents to the new team. The bad news: The West Coast team wanted more time to see how Ascendent would fare in the new, less friendly telecom market.

Forte, now 38, was in a due-diligence catch-22. “You have to show sales and growth, which take time and capital. So you find yourself pushing on the accelerator even as the wall is getting closer. We got within six weeks of our cash running out,” he recalls. Finally, almost a year after the process started, a nearly broke Ascendent received its second round.

Getting to Know You
Forte’s experiences are typical of entrepreneurs raising money from angels, VCs or private equity groups. And since investors want to know the whole story, young companies will find that due diligence gets more and more difficult as they grow. The more complex your company is, the more Draconian due diligence becomes.

Andrew Lindner, partner at venture fund Frontier Capital in Charlotte, North Carolina, says that after an entrepreneur makes it through Frontier’s first screening process, he or she still faces four different levels of due diligence—financial, market, personal and legal—which get progressively more detailed. “The first wave is financial diligence to validate three things: Is there demand, is the model good, and is there a reason that this team can provide it more efficiently than anyone else?” says Lindner.

If the deal passes Frontier’s financial review, the firm’s partners then examine the company’s customers and partners, including distributors, vendors or integrators. Not all customers will be thrilled to discuss internal operations and purchase decisions with your potential investors, Lindner advises. Let them know what’s going on and how the additional capital from outside investors will help you serve them better.

Skeletons in the Closet
After an initial screening, a financial reality check and a thorough customer interrogation, an investor knows whether your business model is sound. He doesn’t know what liabilities might be hiding in your personal past or in the legal nooks and crannies of the business itself.

When it comes to personal issues, Lindner says, his team checks out both founders and employees. A thorough background check will likely include a review of your personal credit history, your driving record and, of course, a search for any criminal or securities violations.

During this period, investors will undoubtedly ask for personal references. You can also count on an investor talking with your least favorite people, like that disgruntled employee or the vendor you stiffed. If you’ve got those kinds of ghosts, offer them up at the beginning so there are no surprises. “In almost all cases, we can figure out a back-channel reference on top of stated references,” Lindner says.

Of course, an undisclosed criminal past or a pending lawsuit will spook investors. But they’re also interested in the smaller personality issues. Says Lindner, “The more important thing is talking to previous investors, employers and employees to see what kind of performer and manager [the entrepreneur has] been.”

Liabilities and Litigation
Finally, legal due diligence will include a complete review of your company’s contracts and commitments. In most cases, investors will want to see historical records going back at least three years. That means finding three years’ worth of balance sheets; major purchase receipts; correspondence with attorneys, consultants and auditors; and the like. The level of detail required can be excruciating.

It gets worse. Since financial liabilities and securities issues are foremost in investors’ minds, they’ll often ask for tax and corporate records going back seven years or more. Collect all your tax returns, shareholder meeting minutes, banking agreements and investor documents. Any litigation in the company’s history is likely to be important.

Lessons Learned
From his experiences in 2000, Forte learned firsthand how detailed the due-diligence process can be. Today, as Ascendent sales approach the $10 million range, he is in the process of securing a fourth round of funding.

Ascendent’s future is once again rosy, but Forte’s struggle with due diligence will not be fondly remembered. In a phrase? He laughs: “It was onerous.”

David Worrell is Entrepreneur magazine’s “Raising Money” columnist.

To the ordinary entrepreneur, finalizing the sale is the completion of serving the customer’s needs. But for the pro, this is only the beginning. Closing the sale sets the stage for a relationship that, if properly managed, can be profitable for years to come. Repeat customers are the backbone of every successful business. Now that you know how to land customers, it’s time to learn how to keep them.

Building Customer Relationships
It’s tempting to concentrate on making new sales or pursuing bigger accounts. But paying attention to your existing customers, no matter how small they are, is equally essential. The secret to repeat business is following up in a way that has a positive effect on the customer.

Effective follow-up begins immediately after the sale, when you call the customer to say “thank you” and find out if he or she is pleased with your product or service. Beyond this, there are several effective ways to follow up that ensure your business is always in the customer’s mind.

• Let customers know what you are doing for them. This can be in the form of a newsletter mailed to customers, or it can be more informal, such as a phone call. The key is to point out to customers the excellent service you are giving them. If you never mention it, customers may not notice. You are not being cocky. Just make a phone call to let them know they don’t have to worry because you handled the paperwork, called the attorney or double-checked the shipment—one less thing they have to do.
• Write old customers personal, hand- written notes frequently. For example, if you run into an old customer, follow up with a note: “It was great seeing you at the CDC Christmas party. I will call you early in the new year to schedule a lunch.”
• Keep it personal. Voice mail and e-mail make it easy to communicate, but the personal touch is lost. Don’t count these as legitimate follow-ups.
• Remember special occasions. Send regular customers birthday, anniversary and holiday cards. Gifts are excellent follow-up tools, too. You don’t have to spend a fortune to show you care; use your creativity to come up with interesting gift ideas that tie into your business or your customer’s recent purchase.
• Pass on information. If you read an article, see a new book or hear about an organization that a customer might be interested in, drop a note or make a quick call to let them know.
• Consider follow-up calls as business development calls. When you talk to or visit old clients or customers, you’ll often find they have referrals to give you, which can lead to new business.

Customer Service
When you’re a one-person business, it’s easy to stay on top of your customers’ needs. But with employees, you add more links to the customer service chain—and create more potential for poor service.

That’s why creating a customer service policy and adhering to it is so important. Here are some steps you can take to ensure that your clients receive excellent service:

• Put your customer service policy in writing. Every employee should know what the rules are and be ready to live up to them.
• Establish support systems. Give employees clear instructions for gaining and maintaining service superiority.
• Evaluate. Develop a measurement of customer service, and reward employees who practice it consistently.
• Meet regularly to talk about improving service. Solicit ideas from employees—they are the ones who deal with customers most often.
• Be friendly. Act on the knowledge that customers love being treated as individuals and being referred to by name.

Interacting With Customers
Principles of customer service are all well and good, but you need to put those principles into action with everything you do and say. There are certain “magic phrases” that customers want to hear from you and your staff. Make sure all your employees understand the importance of these key phrases:

• “How can I help?” Customers want the opportunity to explain what they want and need. Too often, business owners feel the desire or the obligation to guess what customers need rather than listening first. By asking how you can help, you begin the dialogue on a positive note (you are helping, not selling).
• “I can solve that problem.” Most customers are looking to buy solutions.
• “I don’t know, but I’ll find out.” When confronted with a difficult question that requires research on your part, admit it. Few things ruin your credibility faster than trying to answer a question when you are unsure of all the facts. Savvy buyers may test you with a question they know you can’t answer, and then just sit quietly while you struggle to fake an answer.
• “I will take responsibility.” Tell your customer you realize it’s your responsibility to ensure a satisfactory outcome to the transaction. Assure the customer you know what she expects and will deliver the product or service at the agreed-upon price. There will be no unexpected expenses or changes.
• “I will keep you updated.” Even if your business is a cash-and-carry operation, it probably requires coordinating numerous events. Assure your customers they will be advised of the status of these events. The longer your lead time, the more important this is. The vendors customers trust most are those who keep them apprised of the situation.
• Monday means Monday. Your clients are waiting to hear you say, “I deliver on time.” The supplier who consistently does so is a rarity and well-remembered. A due date that has been agreed upon is a promise that must be kept—to the day. 
• “It will be just what you ordered.” It will not be “similar to,” and it will not be “better than” what was ordered. It will be exactly what was ordered. Even if you believe a substitute would be in the client’s best interests, that’s a topic for discussion, not something you decide on your own.
• “The job will be complete.” Assure the customer there will be no waiting for a final piece or a last document. Never say you will be finished “except for...”
• “I appreciate your business.” This means more than a simple “Thanks for the order.” Genuine appreciation involves follow-up calls, offering to answer questions, making sure everything is performing satisfactorily, and ascertaining that the original problem has been solved.

Neglecting any of these steps conveys the impression that you were interested in the person only until the sale was made. This leaves the buyer feeling deceived and used, and creates ill will and negative advertising for your company. Sincerely proving you care about your customers leads to recommendations...and repeat sales.

Excerpted from Entrepreneur magazine’s Start Your Own Business (Entrepreneur Press) by Rieva Lesonsky and the staff of Entrepreneur magazine.

By Bonnie Friedman

What’s the buzz on your business? Do you know what customers are saying? How can you increase growth? Good marketing doesn’t have to be expensive. Here are five tips to build the buzz that can help your business succeed. Building Business Buzz Want to grow—but not at a cost that will crush your business? Here are some simple but effective ways you can do it

1.Know your customers. It sounds simple, but the more you know, the better you can meet your customers’ needs and bolster your success. Don’t be afraid to ask about their preferences. Offer a short questionnaire or a suggestion box. Engage in conversation. Consider a focus group. The input is valuable.     

If your clients are young, try new forms of media. Create a blog to align your company with a business-related issue. For example, if you sell outdoor equipment, create a blog on a local environmental concern.   If your customers are older, more traditional media—such as coupons, mailers, or ads—will be more effective. Use E-mail with customers who want to receive it.

2.Guard your good name. If you promise service, make sure you deliver it. The same goes for product quality and timely delivery. Expensive advertising won’t makeup for failure in this department.  Think of your entire team as part of marketing and sales—from the person who answers the phone to the one who makes the deliveries. They all represent you, contribute to customer satisfaction ,and help build your success.  Be careful not to cross lines that offend customers or the public. Remember the unconventional marketing campaign in Boston that backfired, creating a security scare and causing the city to close roads and bridges? Talk about a PR nightmare. Not all buzz is good buzz.

3.Stay fresh. Nothing is more boring than yesterday’s news. Your store front windows, website, ads, and mailings should be updated regularly to attract and maintain customer interest. Holidays, local events, and change of seasons provide opportunities for putting a fresh face on promotions. Social issues can create buzz. But care must be taken to avoid backlash.  An edgy storefront window in a big city may be better received than one in a small town. 

4.Build networks. Make your business part of the community, whether through a local Chamber of Commerce or the downtown merchants association. Sponsor a softball league, a school event, or a charity project. Help organize a cultural festival or sidewalk sale. Have a wine tasting or art show in your own business setting. If you’re trying to reach Generation X, consider interactive media such as You Tube or Facebook. They can help you build social networks and position your business. But don’t go down this road unless you know what you are doing or can afford to hire someone to help you.

5.Track your success. Whatever tacks you take to market your business, keep track of your investment—both time and money—as well as tactics, feedback, and results. Build on your success. Refine what works and eliminate what doesn’t. Keep building the buzz that works best for you.

By Mark Henricks

Dennis Krueger doesn’t have it and doesn’t plan to. Genevieve Thiers didn’t think she could afford it but finally decided she needed it. And Scott Elmore spends far too much time and energy trying to make it possible for his company to keep offering it.

“It” is company-sponsored health insurance coverage, and it’s not too much to say that the rising costs, decreasing benefits and shrinking availability of health insurance are creating is one of the key issues facing small business today.

“It’s quite expensive,” says Thiers, who wants to offer health benefits to the seven employees of her Chicago online child-care referral service, Sittercity Inc., but balks at the $350-per-person monthly premiums. When her most recent hires in the expanding business kept asking for the benefit, she says, she finally decided to offer up to 80 percent health-care coverage.

Under different circumstances, Krueger made the opposite decision at St. Louis-based Krueger Pottery Inc. Costs were equally high, but his six employees weren’t demanding it. He and his wife are already covered by a policy through her employer. Providing health insurance would eat into the capital we need to operate the business,” says Krueger. “I’m not against providing the insurance. It’s really just a question of what we can afford.”

Elmore has always provided health benefits to all employees but pays 75 percent of costs at Stan’s Automotive, an 18-person family business in Lafayette, Colorado. But it’s been a constant struggle and a significant burden to continue to offer the benefit, he says. “Each year we decrease benefits and raise the rates,” Elmore says. “And next to payroll, that’s still our largest employer expense.”

The Insurance Scene
These entrepreneurs’ personal experiences with health insurance premiums accurately reflect a much larger trend. Private health insurance premiums rose 11.2 percent last year—five times the rate of inflation, according to a study by the Health Research and Educational Trust and the Kaiser Family Foundation, a nonprofit health-care research group in Menlo Park, California. That followed a 13.9 percent increase in 2003 and was the fourth straight year of double-digit annual hikes.

Last year, the average premium for a family was just under $10,000, or $829 per month, and single coverage ran nearly $3,700, or more than $300 monthly. Four percent fewer workers were covered by employer-sponsored plans than as recently as 2001, when 65 percent had the benefits.

The costs of insurance are becoming insupportable for many companies large and small. A recent survey of more than 500 big U.S. employers found that they anticipated cost hikes of 12 percent for 2005. But the companies, which covered more than
6 million employees and dependents, say they could afford no more than an 8 percent increase, according to Lincolnshire, Illinois, global outsourcing and consulting firm Hewitt Associates, which conducted the study.

How big a deal is it? The biggest, according to a report from the Society for Human Resource Management in Alexandria, Virginia, in which top executives were asked about their primary concerns for 2005. Topping the list was the rise in health-care costs, cited by 57 percent of respondents.

To make matters worse, the impact of costlier health insurance falls disproportionately on small companies because the insurance industry charges them higher rates. The best coverage for the best price is frequently available in group plans sold by large commercial insurance companies, explains Loretta L. Worters, vice president at the Insurance Information Institute in New York City. If a company has fewer than 10 employees, insurance carriers change the way they calculate premiums. For small groups, they set rates based on health histories of individual employees rather than looking at the work force’s overall health. “The larger the group, the fewer the health questions that are asked,” Worters adds. These practices, in effect, reduce choices and increase costs for small businesses that try to provide company health plans.

As a result, fewer small companies offer employees coverage. Ninety-nine percent of companies with 200 or more workers offered health benefits in 2004, according to the Kaiser Family Foundation. But only 63 percent of companies with three to 199 employees had coverage, the foundation found.

The basic problem small businesses face, according to Kaiser vice president Gary Claxton, is that health-care and insurance costs are both rising much faster than inflation—and most other bench marks. “Health insurance premiums are far outstripping the rate of increase in wages,” he says. “The cost of providing health insurance to workers is probably going up faster than productivity, so it’s increasingly hard for businesses to offer the same level of benefits.”

The trouble multiplies for small companies. Since they have to come up with more money for health coverage, they’re more likely not to offer the benefits. “Better employees expect these benefits and choose to work for employers who offer them,” notes Worters. “Not surprisingly, employers who do not offer health insurance experience a greater rate of employee turnover.”

Solutions for Small Businesses
For many years, small businesses’ basic approaches to dealing with this problem has been to push more of the burden onto employees by decreasing benefits and increasing the share of the premiums paid for by the workers. They stop covering some expenses, such as vision and dental and prescription drugs, and reduce the amount they will pay on other expenses while asking employees to kick in some of the premium.

When it comes to reducing benefits, many have increased the amount of the deductible, which must be met before insurance begins paying. For instance, deductibles may be raised from $500 to $1,000 or $2,000 or more. Higher deductibles are often used in combination with raising the amount of the co-pay an insured worker has to come up with out of his or her pocket. Doctor’s office visits that once cost a worker $10 or $15 might be raised to cost $25 or $40, with insurance paying the rest.

Employers also save money on premiums by decreasing the percentage of total annual health-care costs that the plan will pay. The difference between a so-called 80 percent plan that pays $4 out of every $5 of costs can be significant compared to a plusher 90 percent plan.

Part of the rationale behind redesigning plans in this manner is that it forces employees to think more carefully about how they’ll use the benefits. “We got into this mentality that going to the doctor shouldn’t cost more than $5 and prescriptions ought to be $10,” says Elmore. “We’ve demanded the moon, wanted to pay for dirt and expected that to be sustainable, but it’s not.”

Employees accurately perceive such plans to be less valuable, and often resist changes. One way employers are trying to make redesigns more acceptable is through buy-up plans. These offer to pay the full premium for employees who opt for basic coverage. Those who want more coverage have to pay the difference in the premium. “Say the core plan costs $300 a month per employee and the buy-up is $500, the employee is going to have to pay the extra $200,” explains Garland Cole, partner of Austin, Texas, insurance brokerage Ashley Cole Benefits LLC.

Hybrid plans take another approach. With these, employers try to save premium costs by providing plans with high deductibles, but then offer to reimburse employees directly for part of the higher deductible. For instance, a hybrid plan might call for the company to pay the first $500 or $1,000 of a $2,000 deductible.

Health Savings Accounts, or HSAs, offer an alternative that allows workers to save money for medical expenses in tax-advantaged accounts. To take advantage of the tax benefits, employees must accept plans with high deductibles—currently $2,000 for individuals and $2,500 for families. The idea is that employees will be able to draw money from the tax-advantaged accounts to pay for uninsured expenses. Employers, meanwhile, save money because premiums on high-deductible plans are lower.

HSAs also provide valuable added flexibility, notes Janet Trautwein, vice president of government affairs for the National Association of Health Underwriters, a trade group in Arlington, Virginia. Employees can spend HSA funds for a wider range of medical treatments than are commonly covered by health insurance. “If an employer sets up an HSA and the high-deductible plan to go with it, that plan may not cover acupuncture or it may limit chiropractor visits to 10 times a year,” she says. Other plans may exclude dental or vision services that are important to individual consumers. “The Health Savings Account allows them to have choices,” Trautwein says.

HSAs have received a lot of attention, including plugs from President Bush, and almost 500,000 people signed up for them through September 2004. “That’s an outstanding start and it will mushroom,” says Trautwein.

A different twist on health accounts is the Health Reimbursement Arrangements, or HRAs. Unlike HSAs, which are funded by employees, only employers are allowed to put money into HRAs. You don’t have to have a high-deductible plan to set up an HRA, and the employer doesn’t have to put money into the plan until a claim is presented. “Not all employees will go through their deductibles,” notes Trautwein. “So if [a company has] 20 employees with $1,000 deductibles, they don’t really spend $20,000. It’s been real attractive to employers for that reason.”

Still another approach is to change the way health services are delivered. The percentage of health plan enrollees covered by traditional insurance—also called indemnity or fee-for-service—which pays for covered people to receive care at virtually any health-care provider, has declined from 73 percent in 1988 to 5 percent in 2004, according to the Kaiser Family Foundation. Meanwhile, Preferred Provider oganizations, or PPOs, which save money by requiring insured people to be treated by a smaller group of providers with which the insurer has negotiated discounts, have grown from 11 percent in 1988 to 55 percent today.

Health Maintenance Organizations, or HMOs, grew rapidly in the 1990s, expanding from 16 percent of enrollees in 1988 to a peak of 31 percent in 1996. They save money by generally restricting care to doctors and other care providers who are employed by the health plans. They have been largely supplanted by the less restrictive PPOs and an HMO variant called Point of Service, or POS, which allows members to get some coverage even if they use providers outside the plan. By 2003, Kaiser reports, HMOs had just 24 percent of enrollees, while POS plans, which had no market share in 1988, had 17 percent.

HMOs can still offer significant savings for businesses that have tried other options. Elmore said that after cutting benefits to the minimum allowed under Colorado law, he still needed more savings, and found them by switching from a PPO to an HMO last year. “Switching to an HMO pretty much binds us to a few specific providers,” he says, “but the cost savings were enough that that was the best option.”

Educating Consumers
Many of these modifications fall under the umbrella of consumer-directed plans, which attempt to rein in health-care costs by making consumers more responsible for spending—and paying for—health-care dollars. The idea is that when they have to spend their own money, even if it is from a tax-advantaged account, they’ll be more careful about how they do so. But as Elmore pointed out, employees don’t necessarily like the plans. And by themselves, they don’t necessarily change consumer behavior.

That’s why many in the health insurance industry are talking about education as a critical component in the struggle to slow the rise in costs for health care and insurance. “People have to become better consumers,” says Cole. “They have to understand that the day of the $10 office visit is no longer.”

More than simply accepting higher costs, however, employee education efforts aim to teach workers to shop around to save money on doctors, medicines and other costs, and to generally be more me more careful about how they spend their health-care dollars. “Once we become better consumers, we’re not going to run to the doctor every time we have the sniffles,” says Cole. “Then, our prices should go down.”

Some employers hold brown-bag seminars to instruct workers on the best way to make the most of health-care outlays. Others deploy more sophisticated tools, such as internal websites that inform employees about low-cost health options and even health advice hotlines staffed by registered nurses.

The insurance industry itself is a good source of information for employers who need to learn about the topic, as well as materials and instruction for employees. Many insurance companies provide handouts and other information on such topics as using generic drugs instead of more expensive, trademarked varieties. Brokers and agents, too, are generally happy to put on workshops about saving on health costs. Says Trautwein, “There are a lot of educational tools.”

Knowing the Limits
Clearly, there are a lot of initiatives aimed at controlling runaway health insurance costs. Just as clearly, they’re not working so far. Why not? One reason is that health care is vast: Total costs in the United States topped $1.7 trillion in 2003. It’s also complex, involving everyone from sick kids and worried parents to multinational pharmaceutical and medical equipment companies fielding armies of sales reps to lobby physicians to prescribe the latest high-tech—and high-cost—drugs and devices. Untangling the conflicting interests of this massive system has simply proven to be beyond the efforts of any single measure or combination deployed to date.

To give an example of this complexity, while HSAs are regarded as potentially important by some ob-servers, not everyone agrees. Many employees, used to plans with low deductibles, are uncomfortable with high deductibles, Cole says. And so far, insurance companies haven’t offered big enough premium cuts in exchange for accepting higher deductibles to make HSAs a really good option, she says. “If you’re only going to save 5 percent by having an HSA, that’s not significant when you have a much higher deductible,” Cole says. “The price breaks are going to have to be much higher to make it worthwhile for small employers.”

The significance of the number of people who have signed up for HSA accounts is likewise open to interpretation. While HSA fans such as Trautwein call the early figures encouraging, others insist the new accounts haven’t attracted any significant numbers of people so far—and aren’t likely to. “Our survey still finds very low prevalence,” says Kaiser’s Claxton. “There’s some amount of high deductible plans, but few of them offer Health Savings Accounts.” Claxton also says that, so far, HSAs are much more likely to be adopted by large employers than small ones, who need the most help.

Even if HSAs are widely adopted, Claxton is skeptical about how much impact they’ll have on small-business health insurance coverage. While premiums are likely to be lower on the high-deductible plans required for HSAs, the money to fund the accounts still has to come from somewhere, he notes. “While it may make things cheaper,” he says, “I’d be shocked if
it made a huge change in the number of small businesses that offer health insurance.”

Future Shock
Unfortunately, one thing almost everyone agrees on is that the health insurance situation is likely to get worse before it gets better. The Insurance Information Institute projects national outlays for health services and supplies will top $1.85 billion this year, up 7 percent from $1.7 billion last year, and will reach $3.2 billion by 2013.

Government administration and net cost of private health insurance outlays alone should reach $134.7 billion this year—but that’s just a down payment on the nearly $234 billion in premiums that will be paid out in 2013. With that in mind, it’s only natural that small businesses remain extremely concerned about the rising costs of providing health benefits to their employees. “Maybe they can do it this year or next year,” notes Trautwein. “But if it increases at this rate, can they do it in three years?”

With the help of better-informed employees who are smarter about health expenditures, they just might be able to, suggests Elmore. “Three or four years ago, when I started educating my guys about this, their eyes glazed over,” he says. “Now, they’re bringing in newspaper articles and asking how changes will affect them. I wish more small-business owners were doing it.”

By Mark Henricks

Andy Cagnetta ran his business without a board of directors until he took on new investors in 2004. “I thought it was important then that we have a board of directors,” says the 40-year-old CEO of Transworld Business Brokers LLC in Fort Lauderdale, Florida. “Now that I’m not the only shareholder, it is important that [others] have input and I am seen as being fair to minority shareholders.”

Today, the decisions Cagnetta makes for his 55-person, $8 million business brokerage are overseen by a three-person executive board: himself, his attorney and a member elected by the 12 other investors, 10 of whom are company employees. The employees appreciate having input, and the added expertise helps Cagnetta run the company, which last year doubled revenue over 2004. “It’s turned out very well,” he says.

All small businesses should have a board of directors, according to Fred Wainwright, executive director of the Center for Private Equity and Entrepreneurship at Dart-mouth College’s Tuck School of Business in Hanover, New Hampshire. “I consider it essential,” Wainwright stresses. “This is the group that works with the CEO in resolving key strategic issues and identifying opportunities. For any entrepreneur to go it alone is a challenge.”

Most startups can be guided by a three-person board, says Wainwright. “As the company grows and starts getting funding, that number can go to five and perhaps even seven,” he explains. “It’s only large corporate boards that go into the double digits.” To avoid deadlocks, the number should always be odd.

Look for directors who complement your skills. “An entrepreneur who has very deep experience with software programming is well-served by board members who have significant accounting, finance or operations experience,” Wainwright says.

Avoid directors who clash with your personal style. “Especially for a small company, there are a lot of ups and downs and tense situations,” Wainwright says. “It’s critical to have good chemistry and good working relations with people who are making important decisions on behalf of the company.” Resist the temptation to include an investor, even one offering a large sum of money, unless the investor’s ability to work with you and other board members is confirmed, Wainwright warns.

Include at least one outside director. “The whole purpose of the board is to bring a combination of perspectives,” Wainwright says. “A board [that has] only insiders creates insular thinking that may not be good for the company in the long run.”

Personal referrals are a popular and effective way to initially identify candidates. “The referral network is essential,” says Wainwright, who suggests business owners not approach potential candidates without an introduction from a mutual acquaintance.
Once you’ve identified a candidate, do your due diligence, including checking the person’s background and references. Interview a candidate extensively before bringing him or her onboard. Spend time in social and in-formal settings to test chemistry in a variety of relationships.

Don’t make the offer until you’re satisfied that the relationship is likely to work. When you do make your pitch, stress the company’s rosy prospects and the potential director’s role in bringing those to fruition.

Small-company directors rarely receive cash compensation, according to Wainwright. Equity ownership, ranging from 0.25 percent to 1 percent per director, is more common. Directors and officers insurance is too expensive for most small companies, Wainwright says, and compensation can make up for that. Also stress to candidates that you have good corporate governance systems to minimize the likelihood of transgressions.

Even when picking the first director for a young company, keep an eye on the exit. Long-term strategy is the bailiwick of boards, Wainwright says, so it’s a good idea to have at least one director with experience in mergers, acquisitions and joint ventures from the beginning.

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

By Aliza Sherman Risdahl

Returning to school can turbocharge your business, according to Sally Hogshead, author of Radical Careering. But how does a busy woman entrepreneur meet the challenges of both school and running a company? And are the gains worth the pains?

“The biggest challenge for me was learning better time management,” says Laura Alter, 27, vice president of PC Torque Ltd., a custom laptop computer company she started with her husband, Adam, 31, in Austin, Texas. At the time she went back to school, she had an infant and another baby on the way. “It had always been drilled into me that successful people had college degrees, so I decided I should go back before [my life] got even more complicated.”

Hogshead agrees that the most difficult part of returning to school for women business owners can be balancing two lives. “Try to keep the plates spinning at your company,” she says, “even if it means going into short-term ‘maintenance mode’ while you focus your energy on your longer-term educational goals.”

Donna Childs, 39, founder and president of New York City-based Childs Capital LLC, a global provider of financial services to micro- and small businesses, went back to school to gain a broader skill set. “I regarded an MBA program as an investment in my business and began to examine executive MBA programs where classes were held on Fridays and Saturdays so I could combine work and school,” she says. Childs, whose company is fast approaching $3 million, found what she was looking for at Columbia University and set out to secure her MBA.

Fiona Wilson, a lecturer at Simmons School of Management in Boston, which offers the only MBA program in the U.S. designed specifically for women, believes that going back to school provides more than skills—it gives women entrepreneurs a chance to broaden their networks through business plan competitions and other forums.

Says Wilson, “Entrepreneurs always ask, ‘Can I really afford the money or the time to go back to school?’ I believe this is the wrong question. Rather, they should ask, ‘What is the opportunity cost of not going back to school? Do I have the skills and the social capital necessary to grow with my business?’”

Alter, who reports 2005 sales of $5 million for PC Torque, advises that to get through school while working, women entrepreneurs need to be prepared, set goals and remember it isn’t forever. “This crazy part of your life—juggling a successful business and school—is not permanent. This is not the way life will be. This is not the life to which you have committed yourself,” says Alter.

Childs recommends that you plan carefully, communicate with your professors and your teammates, and don’t procrastinate. One of the most valuable lessons Childs learned back at school was teamwork. “You are given so much work, you cannot possibly do it on your own—certainly not while working full time. Each team member must contribute. I always found that our end product was substantially better than what any one of us could have delivered on an individual basis. And isn’t that what being an entrepreneur and realizing a vision is all about?”

Aliza Sherman Risdahl (www.mediaegg.com) is an author, speaker and radio producer specializing in minority and women’s issues.

By Julie Moline

For years, airlines have rewarded large corporations with discounted fares. But these are firms with tremendous purchasing power, and they can easily trade market share for discounts. How can small businesses possibly compete with that kind of clout?

Surprisingly, the answer is simply by asking. Several major airlines and car rental companies offer special purchasing programs for small companies and reward modest spending with all sorts of freebies and/or discounts.

AirTran Airways’ program, A2B, treats members to free upgrades from coach to business class, nixes the required Saturday night stay on discounted fares, refunds fares on cancellations made up to one hour prior to departure, and gives program members first choice of available seat assignments in all classes. Most A2B tickets can be changed without a fee. See www.airtran.com.

Alaska Airlines/Horizon Air offers the EasyBiz corporate online booking program for companies that spend $5,000 or more on airfare in a 15-month period. Enrolled companies earn Mileage Plan miles every time they purchase tickets through EasyBiz. (Travelers continue to earn regular flight miles in their individual Mileage Plan accounts.) There are no transaction fees on online bookings, and companies earn two miles for every dollar spent on the base-fare portion of tickets. The mileage may then be redeemed for free travel on Alaska Airlines, Horizon Air or affiliated Mileage Plan partners. See www.easybiz.alaskaair.com.  

American Airlines’ Business ExtrAA program gives participating companies credit toward points every time employees use the Business ExtrAA account number when they purchase qualifying tickets on American Airlines, AmericanConnection and American Eagle. (Employees earn AAdvantage miles in addition to the Business ExtrAA points the company can accrue.) Points for travel awards are transferable; award options include free travel and entrance to Admirals Club lounges. See www.businessextraa.com.

Continental Airlines offers RewardOne, which allots travel rewards based on points accumulated whenever employees fly Continental. Travelers can choose from thousands of hotels, rental cars and flights. The RewardOne program is available for companies in Canada, Latin America and the United States with at least five employees. See www.rewardone.continental.com.

Northwest Airlines’ Biz Perks rewards companies that book business travel on KLM Royal Dutch Airlines, Northwest Airlines and their alliance partners. Award points can be redeemed for free tickets, upgrades to first class, passes to airport WorldClubs and beverage coupons. Small and midsize businesses with valid federal tax IDs are eligible, although companies with a Northwest/KLM Preferred Carrier Agreement or that exceed $400,000 annually in air travel on Northwest/KLM are not. See www.nwa.com.

Many car rental programs also offer the same kinds of benefits usually reserved for larger companies:

Alamo Rent a Car’s Small Business Benefits program includes a 25 percent discount on regular business rates.

The Avis Corporate Awards Program offers special rates, access to a members-only website, a central billing option and the ability to earn free rental days.

At Budget Rent a Car, the Budget Business Program offers corporate rates with unlimited mileage; if a lower rate is available, a discount of up to 10 percent off the promotional rate is offered.

Hertz’s Business Account Program offers free membership in the Hertz #1 Club Gold and a free rental day each time you accumulate 15 rental credits.

National Car Rental’s Business Partner Program includes a complimentary Emerald Club membership, 24-hour roadside assistance and travel coupons.

Julie Moline is a freelance writer, editor and editorial consultant in New York City.

By Jennifer Kushell

As young leaders and entrepreneurs, we dedicate so much of our lives to community service projects, mentoring and new ventures that we often forget we need some attention, too. All too often we neglect what could perhaps be the most critical component—our health. Relying on the “work hard, play hard” mentality to get by can act like a charm for a while, but eventually it takes a toll.

A few months ago, I found myself sinking into a bit of a depression. I’d just finished a huge project that had consumed my life for the past year, had come off the high of a successful final event and crashed. I think I slept for something like 15 hours on my first day off, but had a lot of trouble bouncing back to my normal self. A few days of dragging turned into weeks of diminished capacity.

I’d certainly pushed my physical, mental and emotional limits on the project, but even when it was over, many of the bad habits lingered and kept me in what I’d soon discover was a rather self-destructive zone. I figured I’d just snap out of it at some point, but instead had the good fortune of having dinner with some friends who changed my perspective on my weakened state of health and performance. In fact, over the next few months, they’d actually change my life.

Ashleigh Bravo and Shawn Leege own a private training and nutrition company in Los Angeles called New Life Private Training. Every time Bravo asked me when I was going to start working out with them, I’d blow off the idea, citing how busy I was. But seeing her and Leege at dinner, looking and feeling fabulous in the midst of dealing with their own entrepreneurial growing pains, suddenly inspired me. The next morning I was in the gym with Leege, who put me on a weight-training, cardio and nutrition program that represented the polar opposite of the terrible habits I had defaulted to time and time again. That meant no more sugar, caffeine or processed foods, but tons of water, fresh fruit, vegetables, protein, and lots of exercise and sleep.

Despite the initial shock of quitting cold turkey all that I had grown to depend on, I quickly became addicted to this new way of living. It was a little brutal at first, but somehow the challenge became a wonderfully exciting one I was suddenly determined to conquer. Every morning I’d meet Leege to work out, and within two weeks I started to see a noticeable difference in how I looked, felt and even worked. I soon was jumping out of bed earlier than ever, glowing with excitement and energy, and even turning a few heads.

It’s been a few months now and, admittedly, my travel and work schedule (and, yes, the reckless abandon of a vacation, too) haven’t allowed me to be as diligent, but I have maintained some outstanding new habits. My favorite is starting each day with a good sweaty spin on the elliptical machine. With music blasting through my iPod, CNN on the TV, and newspapers and trade journals draped over the bars, my body springs to life, the adrenaline starts pumping, and my head fills with creative ideas and solutions. In these 30 or so minutes, my day starts with a bang. (Sure beats dragging myself out of bed each morning and pumping myself with caffeine to wake up!) Perhaps the most valuable takeaway, though, is the epiphany that my overall performance is directly connected to how well I treat my body. Just think of what you could do with all that extra energy, stamina and confidence. Enhance your own health and happiness, not to mention your image as a leader, and become an even greater role model and inspiration to all those you work with.

Jennifer Kushell is the president of Young & Successful Media in Los Angeles and the co-author of The New York Times bestseller Secrets of the Young & Successful. Sign up for Y&S Weekly, its free e-newsletter, at www.youngandsuccessful.com.

By James Park

Even if you love running a business, there’s a reason work is called, well, work. The daily grind may be important, but it can be just as important to take some time off and just, well, chill. 

Andreas Kopf always makes sure he takes the time to get away from the rat race. Kopf, 35, a manager at Debolon Dessauer Bodenbelaege GmbH & Co. KG, a floor coverings and stair systems manufacturer in Dessau, Germany, likes to take one or two weeks off in the summer and again in the winter. “In the wintertime, it’s downhill skiing in the Alps or cross-county skiing in the Erzgebirge,” Kopf says. “In the summertime, I go hiking in the mountains, mountain biking or windsurfing.”

Aaron Rekman, managing director of Azztek Kitchens Pty. Ltd., a kitchen furnishing company in Mandurah, Australia, fondly remembers his honeymoon tour of China. “We landed in Shanghai and then went west along the Yangzte River for about four days,” says Rekman, 29. “We moored at the city of Chongqing and then flew to Xian to check out the terra-cotta warriors.”

However you decide to chill, remember that time off from work should be exactly that. “Vacations are obviously great stress reducers, but they’re not the ultimate solution,” says Jerry Kiffer, a psychologist at the Cleveland Clinic Foundation. “The average person comes back from vacation tired because they tried to do too much in too short a period of time, so you need to make sure that those getaway vacations are also restorative.”

Cengiz Korkmaz agrees. A managing partner at Dekon Congress & Tourism—an Istanbul, Turkey-based consulting firm that sets up conferences, meetings and summits—Korkmaz likes to recount his trip to the Maldives in December 2003. “I could feel and listen to myself. I didn’t have any duties or obligations. I would just wake up, swim, lie under the sun, eat and chat,” says Korkmaz, 30.

Gustavo La Rotta, an owner of Ras K. Bar, a nightclub, and La Rotta & Rincon Construcciones e Inversiones, a construction company in Cucuta, Colombia, doesn’t have to travel far to find his inner peace. “I like to go to a small town in my state of North Santander named Chinacota to rest, enjoy its climate, have breakfast, drink a beer and enjoy its natural setting,” says La Rotta, 28. 

Meanwhile, Korkmaz has a few rules in place when he goes on vacation. “I like to go to silent places where I can enjoy nature and myself,” he says, “especially where I don’t have to use my mobile phone.”

Sweat Equity
Some well-deserved rest and relaxation may have never hurt anybody, but there’s nothing like working up a sweat to burn off excess energy.

“Regular aerobic exercise improves mental health and stimulates the brain,” Kiffer says. “And it’s a natural antidepressant.”

Kopf plays volleyball every Friday, saying the exercise helps him build self-confidence. “The exercise feels great,” he says.

For Jose Deras, playing racquetball not only keeps him in shape but keeps him in contact with society as well. “Actually, every day I find myself playing with someone I haven’t met before. It’s very interesting,” says Deras, general manager and president of Xpression Publicidad, a large format printing and billboard company in Cortes, Honduras. Though he plays almost every night, Deras, 26, jokes, “I don’t think I’m a professional. But at least I can give a hard workout to whomever I play against.” 

For Jared Lorenz, a self-employed video producer, director and writer at The Terminal, a video production company in Toronto, taking at least a half-hour each day to go on a walk helps him keep his head on straight. “Walking is a meditative activity,” says Lorenz, 28. “It gets me away from everything related to work for a little while, which is important when you work for yourself, where there is always more to do.”

Take it Easy
But avoiding stress isn’t just about feeling the burn or getting away. It’s also about taking a step back to find the reason behind all those 60-hour workweeks and endless meetings. 

Ronnie Llontop, 25, a marketing and system director with Multieventos, a business training company in Piura, Peru, finds his reason in Chiclayo. 

“Chiclayo is my favorite city, because I have all my family [there],” Llontop says. “And it is very nice to see my family.”

Lorenz finds writing helps to keep him in touch with his creative side. “It clears the garbage from my head and stores things on paper that are sometimes a source of inspiration later on,” Lorenz says. “Writing is a creative safe space, where I can be boldly creative without worrying about the usefulness of what I’m saying.”

Everybody has different ways of chilling out, but we all do it for the same reason. So whether you’re dealing with customers, deadlines, sales or employees, remember to take some time to look out for number one.

James Park is a writer for Entrepreneur magazine.

By Julie Moline

One of the strangest paradoxes in the travel industry is that jet fuel prices are near record highs while airline ticket prices on many routes remain near record lows. Why the disconnect? One reason is that low-cost airlines, from JetBlue and Southwest in the U.S. to EasyJet and Ryanair in Europe, trigger intense price competition on the specific routes they fly. Legacy carriers are forced to lower their prices, maintaining the buyer’s market.

As established low-cost airlines continue to expand (JetBlue just announced several new routes, including JFK to Austin, and Southwest just began service to Denver) and new low-cost carriers start up (Virgin America, part of Richard Branson’s growing roster of regional low-cost airlines, is planning a 2006 launch in the U.S. out of San Francisco International Airport), airline ticket prices are likely to remain in check, analysts say. That’s great news for business travelers, who are facing quickly escalating prices in other areas, including hotels and car rentals. (American Express is forecasting increases of 8 percent for car rentals in 2006; the National Business Travel Association is predicting a 9 percent hike in hotel costs.)

High Frills
There’s downward pressure on business-class fares, too—at least on the routes that two startups recently began flying between the East Coast and London. The twist: These carriers haven’t gone the no-frills route. Instead, they’re offering all premium-class seats, but are still underpricing even the lowest business-class fares on traditional airlines.

MAXJet Airways (www.maxjet.com) began offering all business-class flights between New York City and London at heavily discounted fares in November, and inaugurated service between Washington-Dulles and London-Stansted in early April. MAXJet uses Boeing 767s configured with 102 seats, each with 5 feet of seat room per passenger. The current round-trip fare between New York City and London is $1,398, not much more than unrestricted coach walk-up fares. MAXJet also has U.S. Department of Transportation approval to serve other European markets, including Austria, Belgium, France, Germany, Italy and the Netherlands, as well as Canada. A frequent-flier program allows up to five passengers to accrue miles on a single account, making it easier to earn a free ticket, according to MAXJet CEO Gary Rogliano.

Another new discount all-business-class airline, Eos (www.eosairlines.com), started flying daily between New York City and London-Stansted in October, using Boeing 757s configured with only 48 seats—billed by the airline as “suites”—all of which turn into cushy, long (6 feet 6 inches), completely flat beds. The suites are configured so two people can sit facing each other; if their tray tables are open, they abut, creating a large work surface between the seats. Reviews are in, and passengers are enthusiastic. Some describe the Eos experience as more like flying in a corporate jet than a commercial one; one described the interior as resembling a hip but austere New York City restaurant. Eos’ current round-trip fare starts at $3,300, compared to major carriers’ walk-up business-class fares of $8,000 and up. Eos’ rewards program, Club 48, offers points that can be redeemed for golf at private clubs, spa treatments, Thomas Pink clothing, Bose Sound Systems, travel on Eos and weekends at various luxury hotels.

As for Virgin America (www.virginamerica.com), the airline is modeled more on Virgin Blue, a no-frills discount carrier in Australia, than on Virgin Atlantic Airways, which offers three classes of service. The idea, according to the company’s filing with the U.S. Department of Transportation, is to concentrate on longer-haul routes—New York City and San Francisco are specifically noted as “excellent examples” of likely markets. For this year’s launch, Virgin America intends to use 33 new, narrow-body Airbus aircrafts to offer what it calls “convenient, low-priced, high-quality service to a number of the top metropolitan markets.” High quality includes the latest in-flight entertainment equipment.

Julie Moline is a freelance writer, editor and editorial consultant in New York City. She is also the former editor in chief of Corporate Travel magazine.

By Vickie L. Milazzo

Every woman has a business edge that comes from 10 inherent strengths. Sharpen this edge, and you can become a force to be reckoned with.

1. Fire: No matter how much you love your business, you won't love every minute of your day. Practice being "on fire" even when doing mundane tasks.

2. Intuitive Vision: You often intuitively know when a good idea presents itself. If you wait for all the facts to come in, big opportunities will pass you by. Don't overanalyze every decision. Be willing to step out with no guarantee.

3. Engagement: Small engagements-answering e-mail, searching the internet, attending networking groups-can make you feel productive though you accomplish little. Engage in the big things that move your business forward, and focus on them daily.

4. Agility: The agility to stretch and grow comes from challenging fixed viewpoints-yours and others'. Don't let anyone, even friends and loved ones, limit what you can achieve. Strive to surpass your own boundaries.

5. Genius: True genius happens when you seek out other voices-people who don't always agree with you. As you explore diverse opinions, ideas spark, and you arrive at a place you couldn't have reached alone, raising your venture to a new level.

6. Integrity: Your integrity is always under the scrutiny of your employees and clients. Deliver on every promise, even when it's difficult or when a more exciting opportunity beckons. Avoid overpromising. Only through integrity will you achieve authentic success.

7. Endurance: When business booms, you need endurance to keep up. When business dips, you need endurance to wrangle it back on course. Don't wait for the big win-fuel your endurance by celebrating the small wins along the way.

8. Enterprise: Entrepreneurs approach every commitment expecting a payoff. Before you invest time or resources on a project, evaluate the payoff. If something costs your company money with insufficient return, either find a way to make that project profitable or ditch it.

9. Renewal: Running a business takes phenomenal energy-physical, emotional and mental. You wouldn't feed a thoroughbred potato chips all day and expect it to win a race. Re-energize often with good, healthy food and exercise. Start your day with a renewal break-wake up half an hour early and renew for what's ahead.

10. Female Infusion: You're expected to make decisions, have all the answers and motivate your staff. Where do you go for a similar infusion? Maintain strong connections with exceptional women to recharge your personal resilience and the resilience of your company.

Applying just one of your 10 feminine strengths will dramatically improve your business. Harness all 10, and you'll be an unbeatable entrepreneurial force.

Vickie L. Milazzo, RN, MSN, JD, is founder and CEO of Vickie Milazzo Institute and author of Inside Every Woman: Using the 10 Strengths You Didn't Know You Had to Get the Career and Life You Want Now.

By Melodie K. Larsen

No entrepreneur wants to be at the mercy of a disgruntled employee who has filed a sexual harassment lawsuit, so many ignore the issue. Don’t make that mistake. You can take simple measures to reduce your risk of liability.

Following Connecticut’s lead, California recently enacted a law that requires companies with 50 or more employees to provide two hours of sexual harassment education for supervisors every two years. The classroom training must include information and practical guidance regarding the law, the prevention and correction of sexual harassment, and remedies available to victims of harassment. Supervisors must be trained by January 1, 2006, while new supervisors must receive training within six months of being hired.

Some view the new law as yet another roadblock imposed by the business-unfriendly state of California. But as Howden Fraser, a lawyer at Rintala, Smoot, Jaenicke & Rees LLP in Los Angeles who represents employers, says, “You can stamp your feet all you want, but this is something you must do.” The new law can actually benefit businesses. Because an employer is liable for harassment by a supervisor even if the employer is unaware of it is occurring, training supervisors properly may reduce claims. One thing is clear: Employers who fail to comply with the law will be hard-pressed to claim they took all steps to prevent harassment.

Though the Golden State’s new law may be more stringent than others, businesses in any state should do everything they can to prevent sexual harassment claims and defend themselves when claims do arise. Federal law allows employers to defend against some types of harassment by showing not only that they took reasonable steps to prevent and correct sexual harassment, but that the employee failed to take advantage of company procedures. Most states recognize a variant of this defense. Institute written policies notifying employees of their rights, defining sexual harassment by giving concrete examples, and emphasizing the company policy against harassment. The policy should state that employees engaging in harassment will be subject to disciplinary and corrective actions up to and including termination.

You also need to provide a written procedure for reporting harassment. Identify at least two people (other than the employee’s supervisor) to whom harassment should be reported. The policy should state that the company will investigate all claims. Employers must also comply with state laws for displaying anti-harassment posters and information sheets.

In addition, complaints must be promptly and thoroughly investigated by a trained, outside investigator. “Perception is reality,” says Catherine Balin of HR consulting firm EXTTI Inc. of Bell Canyon, California, who has conducted investigations for 30 years. “The investigator is required to be neutral and impartial, which is often difficult to achieve from within.” The investigator must interview the employees involved (and any witnesses) and review relevant documents, including e-mails. After carefully weighing the evidence, if harassment is found, the employer must take appropriate action to stop the harassment. The complainant should be notified of corrective action and how to prevent retaliation.

Melodie K. Larsen is an attorney and partner at Rintala, Smoot, Jaenicke & Rees LLP in Los Angeles specializing in advising employers and defending them in litigation.

By Julie Moline

What’s the biggest issue facing business travelers these days? It’s not stress, jet lag or fear (of flying or of terrorists). According to a recent poll, what irks fliers most is the long wait in airport security lines.

The “Business Travel Barometer,” a survey conducted by travel management firm Carlson Wagonlit Travel, found that those sluggish lines have a more negative impact on the hearts and minds of road warriors than safety concerns, flight delays, lackluster customer service or corporate travel policy restrictions. (The survey, released in January, sampled opinions of 1,200 business travelers and 300 travel managers in the United States and Canada.)

The long wait at checkpoints isn’t the only thing about airport security drawing complaints from travelers. Last September, pat-downs were added to federal security screeners’ duties—a policy change triggered by the downing of two Russian jetliners by female suicide bombers who had hidden explosives under their garments. But the pat-downs quickly became problematic. After several well-publicized incidents in which women complained of being groped by male staffers in full view of everyone in security areas, the Transportation Security Administration, which oversees airport security, revised its procedures in December. Now, patting down women’s chests will be standard procedure only if a handheld metal detector sounds an alarm or, as the TSA puts it, if there is an “irregularity or anomaly in the person’s clothing outline.” Otherwise, screeners will pat down an imaginary line beginning just below the sternum to the waist, followed by a pat-down of the individual’s back. Furthermore, the TSA mandates that screeners use only the back of the hand when screening sensitive body areas, including breasts (female only), genitals and buttocks. Screeners are also required to explain what they’re about to do before they begin any physical contact. And if any additional screening is deemed necessary, it will only be conducted by screeners of the same gender as the passengers in question.

Another way the TSA is working on the long-line issue is to expand the registered traveler program. Now being tested in five cities—Boston, Houston, Los Angeles, Minneapolis and Washington, DC (Ronald Reagan National Airport)—the program allows travelers who fly at least once a week and who pass a government background check to receive a card that grants them access to a special—and uncrowded—security lane. According to Mark Hatfield of the TSA, the program, which started in July 2004, has proved to be so popular that the agency is planning to expand it in the United States. For now, he said, the program will be running indefinitely. For details, visit www.tsa.gov/interweb/assetlibrary/factsheet.pdf.

In mid-January, Tom Ridge, then secretary of the Department of Homeland Security, announced that another program involving biometrics was being added in the United States, this time to attack long lines at customs. This new program allows travelers to register for a smart card that stores an iris scan along with passport details. When a cardholder enters the country through New York’s Kennedy Airport, for example, he or she skips the line at passport control, inserts the card into a kiosk and, if the scan on the card matches his or her eye, is allowed straight through. For now, the program is free; a similar program in the Netherlands costs roughly $130 per year.

In the meantime, you can get a rough idea of how long you may be waiting at checkpoints in domestic airports before you get anywhere near them—a new feature on the TSA website lists estimated wait times. Because the figures are based on monthly averages, your actual wait time may vary, depending on, among other things, the weather and the day of the week. For information, visit http://waittime.tsa.dhs.gov.

Julie Moline is a freelance writer, editor and editorial consultant in New York City. She is also the North American correspondent for Business Travel World.

By Sara Wilson

For the past four years, the Harvard Business Review has been tracking down some of today’s brightest people in the fields of academia, business, the arts and politics to get their insight and ideas regarding innovative new methods for running, marketing and managing businesses more effectively. This year’s search was more extensive than ever, as the Review linked forces and minds with the World Economic Forum in a partnership that involved panels and brainstorming sessions. “We’re looking for ideas that are not currently talked about but we expect will be talked about in the next one to five years,” says Leigh Buchanan, senior editor of the Review.

This year’s Harvard Business Review List of Breakthrough Ideas includes contributions from experts ranging from deans of schools to chairmen of companies. Here’s a closer look at five of the 20 ideas and trends that made this year’s list.

The Velcro Organization
Flexibility is the name of the game and can be a business’s key secret of success. Traditional companies tend to be so dependent on titles and roles that they often abide by a solid company hierarchy, overlooking the fact that, at times, it is the very structure of a corporation that prevents positive change and fluidity. 

According to the Harvard Business Review, the ability to do away with rigid titles and embrace a system in which managers can adopt roles according to the tasks at hand is the key to being able to compete effectively in increasingly global markets. “Companies eventually need to put in place the kinds of systems that allow people to move back and forth across these different roles and sort out the corporation’s needs as opposed to just their individual job’s or function’s needs as flexibly as possible,” says Buchanan. “Like Velcro, they should be able to pull up and drop in pretty easily, but stick where they are for the time that they’re needed to stick.”

Demand-Side Innovation
For too long, the focus of businesses has been on the supply side, but change the focus to the demand side and the results may be much greater. Author Jeffrey F. Rayport contends that in today’s society, where products have half the shelf life, a new approach is necessary in order to really capture the consumer’s attention. This new approach is demand-side innovation, where the focus is shifted away from the product and directed instead toward how a company relates and interacts with its customers.

To illustrate his argument, Rayport points to eBay and Priceline as recent prime examples of companies selling traditional products or services but appealing to consumers in a new way by allowing consumers to conduct business and pay the prices they desire. Demand-side innovation can even involve developing a new identity and brand in order to attract a new segment of the population.

Rayport points out additional ways to apply demand-side innovation, such as relating to customers on an emotional level, collecting customer information to create customized offerings such as personalized web page content, and involving customers in the creation of products and services.

“When” Is the New “What”
Countless marketing dollars have gone into identifying who the audience is and what message is best to send them. However, these “who” and “what” elements of marketing are falling to the wayside as it becomes apparent that timing is everything. “People are so time-strapped and overwhelmed with marketing messages that they’re not going to pay attention to any one message—even if they’re the right person for that message and it’s exactly the right one—unless it falls in their laps at exactly the right time,” explains Buchanan.

With this in mind, a variety of companies across all industries are embracing information technology systems that distinguish this element of timing as an important one. According to the Harvard Business Review, dialog marketing, a multistep conversation between the company and the consumer, is leading the way. Effective as dialog marketing is, Buchanan points out that it can be costly to put these IT systems in place, and for this reason it might not be an ideal method for small businesses that can’t afford the investment.

Blog-Trolling in the Bitstream
The marketers of today should not underestimate the importance of blogs. A product of the Internet, blogs are becoming essential in the sharing of ideas and opinions. According to the Review, blogs now influence what people think, do and buy.

It sounds like a marketer’s dream. However, as Mohanbir Sawhney, professor of technology and the director of the Center for Research in Technology & Innovation at the Kellogg School of Management, Northwestern University, points out, blogging comes with its own set of rules that must be understood in order to use it effectively. For example, blogospheres, where blogs are posted, should be perceived as places in which to participate, not to advertise outright. Also, to win over bloggers, marketers must not control them but instead be willing to openly share information about their companies with them.

Blogs are the way of the future, and Sawhney predicts they will eventually become a full-fledged, official media branch. “Blogs are the most conversational of all the forms of media,” he writes. “And marketers can’t afford to be left out of the talk.”

The Coming Crisis Over Intellectual Property Rights
It started out innocently enough with peer-to-peer networking on the Internet and the downloading of songs and movies. However, protecting intellectual property rights (IPR) has rapidly become a serious issue that affects businesses large and small—especially those conducting business in China, where IPR is completely disregarded. Such companies must take extra precautions and plan their overseas activities carefully, taking into account the potential consequences if IPR is not protected.

The Harvard Business Review recommends that companies determine what intellectual property, if any, they can afford to lose. Among the other precautions to take are: Companies should keep key production technologies outside of China; they should stay away from joint ventures where they might not be able to protect their secrets; and they should be prepared to pursue pirates in court.

While businesses can take some steps to protect themselves, the violation of IPR is happening on an ever-greater scale—and is quickly leading to a dire need to revamp the entire system.

Sara Wilson is a writer for Entrepreneur magazine.

By Jennifer Kushell

You need help, and you know it. Your workload is getting crazy, and you’re swamped with things to do. You really need to hire someone, but there are so many reasons you’ve put it off. Besides it being a sizable financial commitment, the process of finding help can easily become another daunting task on your to-do list.

If you’re an entrepreneur just starting out or a small-business owner looking for inexpensive help, an invaluable resource might be right under your nose. There are wonderful low-cost and even free options for getting the help you need. In a word: internships.

Many businesses neglect to consider the internship option because they don’t give themselves enough credit as attractive potential employers—especially compared to brand-name corporations. The truth is, students are often eager to work for smaller, more dynamic ventures where they’re more likely to get tangible work experience, have a chance to make a difference, be appreciated for their contributions and work directly with the founders. 

How do I know? Would you believe I’ve had more than 80 interns work for me? As a small-business owner for almost 20 years now, my ideas and new projects are typically more robust than my budget. I was still a student when I started recruiting others to work as interns for my previous company, The Young Entrepreneurs Network. I had about a dozen journalism majors work on a newsletter, a handful of marketing students do market research and a few PR majors help manage media relations. I even found a couple of management students who were so competent, I ended up hiring them full time.

Ready to find some interns? The process is easier than you might think.
1. Figure out what you need help with. Define the tasks or jobs you need to do.

2. Write a brief job description. Be sure to include any special requirements you might have, such as experience, expertise, time commitment or access to transportation. Include a contact name, phone number and e-mail. Information on your company is optional.

3. Find a school or university near you, preferably with a business program or classes that train people in your industry. If you can, get a copy of the school’s course catalog, and find classes that will most likely have students who would be interested in your business or opportunity.

4. Call the school, an academic department or a professor directly and let them know what you’re looking for in an intern. Send them a copy of your job description. They might even invite you to drop in on a class to present the opportunity in person. If you do, make it brief, and hand out copies of the job description.

5. Set up a day of interviews and meet with each candidate. Collect resumes or portfolios of their work.

6. Be selective. This is a commitment you’re both making, so ask a lot of questions, trust your instincts, discuss your expectations upfront, and chose someone you think would fit nicely into your company. All you have to do from there is extend an offer.

Students have the energy, ambition and dedication to be successful, but they simply lack the practical experience in the real world that proves what they are capable of. Offer them a great opportunity with your company, and the rewards may far surpass the time and energy it takes to mentor them in that role.

Jennifer Kushell is the founder of Young & Successful Media Corp. in Los Angeles and the author of Secrets of the Young & Successful. For more information on hiring interns, visit www.youngandsuccessful.com.

By Geoff Williams

Issues. As entrepreneurs, we all may be different colors, genders, heights and nationalities, but what often ties us together are the issues we face as business owners—issues that can perplex, frustrate, confound and confuse us, except when we conquer them. So we looked at three issues that drive a lot of entrepreneurs crazy, and found three people who we felt had worthwhile solutions.

Hiring the right people
Dana Korey was at a crossroads all successful entrepreneurs eventually face: She knew she needed help. When an entrepreneur realizes he or she can’t work alone, three options are generally available: You can outsource, you can hire someone full time, or you can hire someone part time. Korey had started her Del Mar, California, professional organizing business, Away With Clutter Inc., in 2001, when she was 36 years old. After about two years, Korey’s business had expanded so much, she knew she needed an employee. You can’t really outsource help in something as specialized as professional organizing. She didn’t feel she had the infrastructure or income to hire anyone full time, so she knew she would be hiring part time.

But who to hire? Korey decided to recruit a local rival. It was a rather bold move considering Korey had recently taken down this competitor’s flier at a local gym—and then put up her own. They had every reason not to work together. But Korey was getting so much work, and she knew she couldn’t hire just anyone to assist her in helping businesses and residents organize the paperwork overtaking their offices and rooms.

About a month after the gym incident, Korey called the competitor and explained her thinking, saying she couldn’t keep up with demand, especially after some recent publicity on news shows and in newspapers. Michaela Kuechenhoff, 37 at the time, cautiously agreed to come onboard. Kuechenhoff did some amazing work, which brought more clients. Before Korey knew it, she was hiring more people on a part-time basis.

Eventually, Korey realized she needed a partner. She turned to Kuechenhoff, her first employee, who still ran a competing professional organizing firm. It took some convincing, but Kuechenhoff eventually realized that Away With Clutter had better brand awareness, and that she would be smart to align herself with Korey. They joined forces and are now
co-owners.

The lesson? Be creative in how you find your employees, and be open to unusual ideas, like joining forces with a competitor.

Finding someone who is a good fit for your company is key. Bill Lee has been helping companies hire the right people for more than 18 years as owner of Greens-ville, South Carolina-based Lee Resources Inc. and author of books on the subject, such as 30 Ways Managers Shoot Themselves in the Foot. He has several interesting tips for nabbing the right employees, including getting applicants’ permission to tape the interview so they can be evaluated by several people. He also recommends asking each applicant the same questions so you can compare their answers.

In addition to using tried-and-true screening methods, Lee says you should also “trust your gut” and not “be misled by perfect resumes.” He notes that we all have spectacular failures and can often learn a great deal from them. Says a bemused Lee: “I often ask myself, If everyone has done such great things with their lives so far, why is the world still messed up?”

Coping With Health Insurance Costs
Brooke Pfautz didn’t set out to lower his health insurance costs by encouraging his employees to be healthy, but today, it’s one of his main health-care strategies.

Pfautz, 31, is the president and CEO of First Commonwealth Funding, a mortgage company in Hunt Valley, Maryland. From his company’s beginnings in 1999 when he had just seven employees, Pfautz always had a health insurance plan. “I remember hearing from my insurance agent, ‘Brooke, a lot of companies of this size don’t do it this way,’” but Pfautz insisted on providing a good plan: The employees paid half the monthly premiums—and received benefits like a matching 401(k) on top of their health insurance.

The way Pfautz sees it, the mortgage industry has high turnover, and if he can provide strong benefits like a good health plan, then he increases the likelihood of good employees staying. Providing health insurance in today’s excruciatingly expensive marketplace may make some entrepreneurs want to call a doctor, but as Pfautz explains, “You need to recruit and retain the best employees possible.” First Commonwealth, it should be noted, now has more than 90 employees.

Pfautz helps keep his premiums down by providing a free gym membership to every employee who goes to a gym three times a week, and he just began reimbursing employees who use any form of nicotine patch or gum in an effort to stop smoking. He may never know if he saves anyone from smoking-related diseases, but he imagines there will be an immediate benefit for the company if any of his cigarette-wielding employees take him up on the offer. “We’re on the fourth floor of the building, and you have to take the elevator going down. So let’s say an employee smokes four cigarettes a day, and they take 15 minutes per smoke break. That’s an additional hour a day, which comes to five hours a week, or six and a half weeks of vacation time they’re getting from me a year,” says an exasperated Pfautz. But of course, he really just feels that encouraging employees to quit smoking is the right thing to do.

Whatever the reason, offering health insurance to your employees is a good plan. And indeed, it’s something that business consultant Lawler Kang recommends. “As popular as 401(k) plans are, they’re less important than having a good, quality health plan,” says Kang, author of Passion at Work: How to Find Work You Love and Live the Time of Your Life. “It’s having the comfort and safety net of knowing that [employees are] protected; that’s what employees want, and people won’t mind paying for some of their coverage as long as the plan is branded with a major health carrier.”

Sure enough, most of Pfautz’s employees have stayed, and he’s especially proud that four employees who he was sorry to see go came back asking for jobs. He attributes their return to his ethical and perk-driven business practices, which many of his competitors don’t have. Pfautz rehired the four employees, observing, “I used to have a no-rehire policy, but I decided against that. I try not to burn any bridges. . . . So far, what we’re doing is working.”

Motivating Employees
Jeff Lambert, managing partner and founder of Lambert, Edwards & Associates in Grand Rapids, Michigan, was delivering a speech to his 20 cramped employees as they traveled in an uncomfortable bus on their way to a daylong motivational seminar. Recounting the history of his PR and investor relations firm, founded in 1998, Lambert talked in a monotone, seemingly oblivious to the bored stares he was receiving. It was clear to everyone else on the bus that the day’s seminar was going to be anything but fun.

Suddenly, Lambert told the driver to stop. He ordered everyone to file off the bus—and told them to board several limousines waiting for them. The energy changed immediately, with several people beginning to wonder if this was a stunt like in 2004, when the entire staff flew to a seminar in Mexico. The 2005 Day O’ Fun, as Lambert calls it, didn’t quite match those heights, but during the course of the day the staff participated in a scavenger hunt, bowling, roller skating, lunch, a cocktail hour, shopping and dinner—and everyone went home admitting they’d had a day of fun.

Kang says Lambert is definitely on the right track. “By all means, you should get to know your employees personally,” he says, “and establish those relationships with them. And it’s often something that’s much better done outside the workplace than in the office.” Lambert says the company spent about $4,000 on the Day O’ Fun—a considerable amount, but not so much when one considers that the firm is now making about $2.8 million a year. It’s crucial to motivate your employees, says Kang, because in the end, most people don’t work just for the money. “At the end of the day, what keeps people coming back to work is when they have passion for what they’re doing,” says Kang. “It’s hard to have passion for what you’re doing if management doesn’t show [you] respect.”

Respect is something Lambert definitely appears to have for his employees. “Just to give you some context, we’ve gone to a lot of retreats in the past, and we’ve tried to involve a nice place to go, but it’s still about learning and sharing the best business practices,” Lambert says. “But in this case, we really felt we had a very good year. Revenues were up about 25 percent in 2005, the staff has grown significantly, we’ve moved offices, and we even had a small acquisition in 2005. We wanted to do a retreat, but we also wanted to let people know we appreciated their hard work all year-round.”

It was also a day that Lambert had been daydreaming about since he began his enterprise in his basement. “When I started the business, I always thought it would be fun to be able to do this sort of thing, to just drop everything and go have fun, and for it to be on the company,” he says. It was the type of day Lambert had never experienced when he was an employee at another firm. Echoing Kang’s words, Lambert says: “Compensation comes in many forms. For some people, that’s strictly money, and for others, it’s affirmation. But I think for everyone, it’s to be able to talk with pride about the place [where] they work.”

Lambert says the culture he has created has helped in recruiting—when prospective interviewees hear about the Mexico seminar and presumably now about the Day O’ Fun, finding the best people to hire isn’t so difficult.

And then Lambert says something that makes one realize that almost all issues entrepreneurs face, no matter how different they seem to be, generally come back to finding good employees and treating them well. “In our organization, we put not our clients first, but our staff,” says Lambert, “because without a good staff, I don’t keep the clients or serve them well. So there’s actually an echo effect. And when the clients see you investing in the people who serve them, there’s a very tangible benefit—that is, continued strong morale and business.”

Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com

By Chris Penttila

How to sell more, better and faster: It’s what keeps salespeople awake at night, no matter what they sell. And in an economy that’s still soft around the edges, selling well is more important than it’s ever been. So how can you and your sales team excel at turning prospects into long-term customers? Here are 10 how-to secrets and words of wisdom from sales experts and entrepreneurs for mastering the entire sales process.

How to Make a Crafty Cold Call
“A cold call is not a time to make a sale. It’s [a time] to give something. The first question: ‘Is it OK if I share with you what we do and why people use us? Then, we can decide whether it makes sense to go further.’ Be as discerning of the prospect as they are of you. No one’s going to do business with a beggar.” —Bill Caskey, author of Same Game, New Rules: 23 Timeless Principles for Selling and Negotiating and founder of Caskey Achievement Strategies, a B2B sales training and consulting firm in Indianapolis.

How to Get Past the Gatekeeper
“Voice mail is today’s gatekeeper. The [most important] part of an effective voice mail is establishing your credibility by referencing a referral, your research or some newsworthy event in their company. The secret is to not talk about your product or service; focus on results. Talk like a businessperson, not a salesperson.” —Jill Konrath, founder of Selling to Big Companies, a St. Paul, Minnesota, sales training firm, and president of Leap-frog Strategies

How to Write a Stellar Sales Letter
“The secret to a successful sales letter is making it look just like a typical business letter. You want to position yourself as a peer who has a great idea and a helpful offer. In working with sales consultants at IBM, we coach them to start where the last conversation left off—something like, ‘After your comment to me on the phone last month, I’ve been thinking about a way to X.’ Your opening shot can’t be a misfire.” —Dianna Booher, author of E-Writing: 21st Century Tools for Effective Communication and founder of Booher Consultants Inc., a Dallas/Fort Worth-area communication training firm.

How to Generate Repeat Business
“Our customers aren’t customers; our customers are owners. That sets a certain bar. If one of our owners is going to take a flight, a sales vice president may be helping with the luggage and the catering. We feel like if we get in front of our customers and we hustle, at the end of the day, it will be translated into re-peat business.” —Kenny Dichter, founder of New York City-based Marquis Jet, a global leader in private jet cards whose Marquis Jet Card Program has a 90 percent customer renewal rate.

How to Close a Sale with Class
“At the end of a sales conversation, the customer knows everything [he or she] needs to know to make a decision. The key is to ask the customer to take action. Simply ask, ‘Why don’t you give it a try?’ Don’t sit there hoping that some-how, sometime, somewhere, the customer will take action on [his or her] own. Like a dentist’s job is to pull the tooth, the salesperson’s job is to ask for the order at the end of the presentation.” —Brian Tracy, author of The Psychology of Selling: Increase Your Sales Faster and Easier Than You Ever Thought Possible and founder of Brian Tracy International, a Solana Beach, California, sales consulting firm.

How to Meet a Prospect in Person and Leave a Lasting Impression
“This is your big chance to make an impression. Don’t have your cell phone and your pager on, and don’t have anything in your notebook that doesn’t have to do with that customer. Ask follow-up questions, clarify that you understand what they’re saying, and give them feedback that [shows] you’re listening. You don’t want an hour to go by where [the prospect] didn’t feel it was valuable spending time with you.” —Seleste Lunsford, co-author of Strategies That Win Sales: Best Practices of the World’s Leading Organizations.

How to Give a Great Sales Presentation in Five Minutes or Less
“Whether you have six minutes or 60 minutes to make a presentation, always organize your content, adapt to the moment and dialogue with your audience. Reveal your core statement early and clearly, and support it with no more than three main points. If pressed for time, leave anecdotes and stories on the sidelines.” —Bob Lipp, president of Better Business Presentations, a Great Neck, New York, firm that helps executives improve their presentations and public-speaking skills.

How to Surpass a Sales Quota
“People sit back and relax when they’ve made their quota. But that’s when you [should] really pour it on. At 5 o’clock, make 15 more calls. When you have a lot of business coming in and you are doing well, that is the best time to make calls to surpass your quota. Your actions are much more powerful when you’re doing well than when you’re trying to get started.” —Barry Farber, Entrepreneur’s “Sales Success” columnist and president of Farber Training Systems, a Livingston, New Jersey, sales management and motivational company.

How to Create Customer Loyalty
“The hardest thing is getting somebody to trust you. After you build a relationship, the trust comes. Going the extra mile, being a good communicator, letting them know if there are problems—that makes people feel good. Be consistent. Do what you say you’re going to do. When I see a parent bring a second child to me, that’s when I know I’ve created customer loyalty.” —Kara Vample Turner, president and CEO of 7-year-old Primary Colors day care in Durham, North Carolina.

How to Follow Up With a Prospect
“I learned the importance of follow-up early on. I probably lost several projects because I was shy. [Now], we look for reasons to call back. If we get a sense of what they want, we’ll sketch something, call them and try to get them back in. If you don’t care enough to [take the initiative and] call, I can’t imagine people wanting you to build their dream homes.” —Lambert Arceneaux, owner of Allegro Builders, a 9-year-old Houston home builder with nine employees and $12 million in sales for 2005.

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area.

By Marlene Bauer Pissott

Before there was radio, TV, or even the internet, there were trade shows. For those who know how to use them, they’ve remained effective over generations.

In fact, they’re now enjoying a resurgence as businesses struggle to cut through electronic clutter and get face-to-face contact with real customers. Year after year, tradeshow leads prove to be stronger and easier to close.

A 2005 Tradeshow Week poll found businesses spend up to 42 percent of their marketing budgets on trade shows. But many aren’t investing well. Let’s talk about optimizing your investment—and if you’re exhibiting for the first time, how to do it right.

The Game Plan

• Set concrete goals. How many leads do you expect to get? Do you expect to take orders? Do you have other goals (scope out the competition, spot trends, network, strengthen existing relationships, get PR)? Wherever possible, quantify the dollar value of your goals so you can budget intelligently.
• Choose the right shows. Carefully review locations, past attendance and show history (pay special attention to data from last year—trade shows change fast). Talk to noncompetitive exhibitors. Make sure the right decision-makers attend. Not sure which shows to look into? Try www.directory.tradeshow week.com and www.tsnn.com.
• Get into your customers’ shoes. If you were them, what would make you stop at a booth—and stay there? What would drive you away? Reflect this in your exhibit.
• Plan your message. Pick a few key points every visitor should come away with. What are you better at than anyone else, and why should your potential customers care? Don’t demo everything. Focus on a few hot new products and their benefits. Be creative, but be sure you’re still reflecting your core business culture, principles, and established brand.
• Reach out ahead of time. Make sure your potential clients visit you: Use e-mail, snail mail, and ads before the show. Offer free event admission tickets, private showings, or meals in your company suite. Be creative and professional; show that you’ll go beyond the call of duty to improve their show experience.

It’s Showtime!

• Align your purposes. Make sure your staffers thoroughly understand your intentions, and your collateral and display reflect your brand and goals. For instance, if you’re demonstrating new products, make sure there’s enough room and that spectators have clear sightlines.
• Be customer-friendly. Verify that your literature, signs, and graphics are clear and accurate, and that your staff is up to the challenge. For example, bringing along someone who knows your product but isn’t comfortable with strangers is not a good choice. Anticipate problems and questions ahead of time by conducting trial runs with mock audiences.
• See the rest of the show. Observe exhibitors who draw and hold large crowds. Talk to vendors. Check out their signage, collateral, electronic kiosks, and demos. See what they’re doing right—and wrong.
• Take notes. Discreetly record problems, successes, possible improvements and information about your competitors. In the rush, if you don’t jot it down, you’ll likely forget it. Above all, write down all your commitments.
• Post Performance
  Review your experience. What worked? What didn’t? What did customers like? What did your competitors show and do? Did you attract enough attention? Can you improve the practical logistics (such as setup and packing)? Based on your goals, should you return?
• Contact all your potential leads—even those who weren’t nearly ready to buy. Show consistency and patience. And of course, keep your commitments.
• Ask your contacts for a frank evaluation. You can do this formally with evaluation cards or informally in a brief chat. But either way, find out what they’re thinking—then act on it.
• Get ready for next year. Know you’ll be back? Consider signing up early—often, there’s a discount, and you’ll get a better location. If you didn’t succeed, move on and try a different event. For many companies, it makes sense to try one new show per year.

Marlene Bauer Pissott is owner of InGroup Inc., a marketing and communications agency in Midland Park, New Jersey. Contact her at www.ingroupinc.com

By Gwen Moran

E-mail marketing has been around since before “You’ve got mail” became a household phrase, and it has become a staple in many an entrepreneur’s marketing arsenal. That’s for a good reason, says Gail Goodman, a founding member of the E-mail Service Provider Coalition (www.espcoalition.org), an association of e-mail providers.

“This is the single most effective form of communication for small businesses because they form very loyal groups of people who care about them,” says Goodman. “Since e-mail is increasingly the preferred method of receiving information about products and offers, it’s the best way to reach these people who already have an interest in what you’re doing.”

Still, says Goodman, even if you have a list of people who feel all warm and fuzzy about your business, you’d better be familiar with the laws surrounding e-mail marketing. First, entrepreneurs need to get acquainted with the CAN-SPAM Act of 2003. Created to help stop the flood of unsolicited commercial e-mail, CAN-SPAM applies to all businesses that use e-mail marketing as a method of promotion.

The good news, says Goodman, is that the act boils down to four basic requirements: 1) getting permission to send the recipient e-mail, which is called “opting-in;” 2) sending e-mail in a straightforward manner, and including a clear and correct return address and subject line; 3) providing a simple way to unsubscribe from the e-mail list within the body of the e-mail; and 4) including a physical address for your business within the body of the e-mail.

Recent developments in CAN-SPAM include an increased focus on e-mail to wireless devices. For instance, the FTC (www.ftc.gov) recently published a list of cell-phone and pager domains to which marketers cannot send unsolicited e-mail. So it’s best to monitor the FTC’s website for compliance updates, Goodman says.

Once you’ve mastered the legal issues, you still need to create an effective campaign, says Janine Popick, CEO of VerticalResponse Inc. (www.verticalresponse.com), an e-mail marketing service provider in San Francisco. Since many e-mail programs won’t render images until your e-mail is accepted into the recipient’s address book—also called “white-listing”—solicitation e-mails should be created as a combination of text and images with “Please accept this address into your address book” near the top of the message. It’s likely your text will then be read, even if the graphics don’t download.

Popick says it’s essential to make your offer very clear and appropriate for your audience. Don’t make them wade through paragraphs of copy to get to the offer, because they usually won’t do it. And provide a link to a website with additional information about your offer.

Popick also offers these tips to make your e-mail campaign more effective:

Do:

• Send e-mail only to addresses that have opted-in to receive your messages.
• Create clear subject lines that relate to the message content.
• Remind recipients at the beginning and end of your
  e-mail where you got their e-mail addresses and why you’re sending them information.
• Provide an easy way to unsubscribe from your list.

Don’t:

• Use the word free, because ISPs often block messages containing that word.
• Turn off readers by using too much capitalization or too many exclamation points. Both damage your credibility.
• Send large attachments, which may be blocked or may take too much time to download for recipients who use a dial-up connection.

Popick’s most important tip is to regularly analyze your response rates. If you find that your response rate is low and your unsubscribe rate is high, then you need to re-evaluate the offers and information you’re sending to your target list. Try using a survey or focus group to get better information about the offers your customers and prospects would be most interested in receiving from your business.

Gwen Moran is a writer and consultant specializing in marketing. Reach her at gwen@gwenmoran.com.

By Kirsten Osolind

Spring, a season defined by growth and renewal, is the perfect time for building relationships with customers. While face-to-face meetings, sales-counter encounters and phone chats are fine opportunities for connecting with customers, don’t overlook the effectiveness of internet marketing. Fast and flexible, internet marketing allows targeted segmentation, reach beyond geographic boundaries, impulse-purchase stimulation and success measurement.

Some tips to help you get started:

1 Take a closer look at search engine optimization. Two resources to try: Submit It (www.submit-it.com) from Microsoft and Submit Corner (www.submitcorner.com).

2 Launch an e-mail marketing campaign that delivers. Podcasting and multimedia blogs are en vogue, but e-mail marketing is here to stay. Arc Technology Group (www.arctg.com) specializes in e-mail marketing and website development for growing businesses. The company will help you bridge online content and your business.

3 Devour a good read. The Online Marketing Superstars e-book (www.onlinemarketingsuperstars.com) contains goodies from 24 online-marketing experts.

4 Schedule a refresher course on pay-per-click advertising, e-metrics and more by attending the Inter-net Marketing Best Practices Briefings in Chicago (September 12) or Denver (September 14). Register online at www.wilsonweb.com/seminar.

Kirsten Osolind is CEO and founder of re:invention inc. (www.reinventioninc.com), a Chicago-based marketing consulting company that specializes in marketing strategy, promotions and PR for women-led businesses.

The internet has emerged as one of the most important and lucrative places to conduct business. In fact, many potential customers will get their first impression of your business from your website. How can you make a stop at your website a positive experience?

• More important than anything else is organization. Don’t make traversing your website like hiking through Yellowstone without a map. Make it easy for the visitor to get the information he or she needs.
• At the beginning, place a clear statement of what your company does in just a few words. This will save everyone’s time. 
• Provide a listing of your products, with visuals. If you can list product prices, do it. If you have a large inventory, list the key products early on. Let the visitor go deeper into your website as he or she becomes more interested. But show your basic products early in the visit. 
• Show your brick-and-mortar locations. Make it clear where you’re located. A map is nice, with phone and fax numbers. 
• If you can sell through your website, all the better; most companies offer this capability today. If you don’t offer this capability, list your toll-free or fax order number or e-mail address. And offer a link to an order form that your customers can download, then print out and fax back you.
• Especially if you’re a small company, use photos of people. Give visitors a sense of your company’s personality by showing your senior people and staff. Make them friendly, not “corporate.”
• Offer a list of clients, completed projects or work samples. This is your chance to trumpet your skills and successes, so make the most of it. If you have some killer case histories or testimonials, don’t hold back. 
• Include e-mail capability. In fact, don’t create a site without e-mail. Otherwise, you’re an online merchant who doesn’t speak to its customers. Don’t forget to keep absolutely current with e-mail. If you neglect to do it promptly, the message you send is clear: “You are not that important to me.”
• Keep the information on your website fresh. You’ve got to change things often just to keep up visitor interest. Many websites carry a small indicator of when they were last revised. 
• If it works for your market, make your site fun to visit. Use clever graphics, and write engaging page headings to entertain readers.

Make sure you register your website’s name and address with the various search engines. Since most website visitors first find a site by searching for a keyword, you want to make sure you register your site under as many applicable keywords as possible.

The best way to accomplish this is to register individually with the search engines of your choice. The most popular ones today are Yahoo!, Google, MSN and AOL. You might also want to try a web tool such as TrafficBoost.com, which submits your website address to more than 500 search engines for a modest fee. Keep in mind that many small businesses today are also doing things like buying words on search engines to make sure their websites are part of the results of a user’s query.

RSS
A new, more intrusive technology is making the web even more useful. Called RSS—“really simple syndication” or “rich site summary,” it enables you to use your web presence as a channel to send information to subscribers or staffers at times when their computers aren’t in use. It’s similar to a TV. When your TV is turned on, whatever is on that channel is being pushed onto your screen. With RSS, however, you get to determine what information—or feeds—you’d like to receive from the channels. New material can be broadcast every 30 minutes or so, depending on the feed, the parameters the author has set and whether the computer is on.

Many blogs are able to push data or information from their database into an RSS newsfeed. Most RSS newsfeeds are downloaded into stand-alone newsreaders or through websites that convert single or multiple RSS feeds for viewing on the web.

Businesses can use the RSS/blog combination in many ways. A popular application is project management, in which you and your colleagues can use blogs and RSS to easily track and organize all aspects of a project in one place.

Project members can coordinate schedules, keep up to date while out of the office, track internal deadlines, communicate with contractors and consultants, and share knowledge from workshops. In short, it enables people to share information without having to send thousands of e-mails to everyone.
 
Web Advertising
What’s the best way to advertise your website on the internet today? Hands down, it’s search engine marketing, where you market your website via search engines, whether by improving its rank in listings or purchasing paid listings.

Improving your listing rank involves ensuring that your web pages are optimized to attract as many visitors as possible, such as making sure each of your page titles is designed to match a specific search query. Getting your listings in the top-10 search results can be a full-time job, but it can be rewarding.

Paid listings are also very popular. There are two types of paid listings programs: paid placement or paid-inclusion programs.

Most major search engines carry paid-placement listings, where advertisers are guaranteed a high ranking. These listings are usually separated from editorial results and labeled to show that they are ads.

In paid inclusion, you pay a fee to have your web pages included in a search engine’s editorial listings. However, it doesn’t mean that you will be ranked tops in the editorial results.

Affiliate Marketing Programs
Another form of web marketing that’s popular today is affiliate marketing. Many small companies participate in affiliate marketing programs, where they sell other companies products and services for commissions.

Here’s how affiliate marketing programs work: An affiliate partners with an online merchant. When you join that merchant’s affiliate program, you can put their links on your site. These links come in the form of banners, text, and a number of other, more sophisticated types of links. The HTML code for these links is supplied by the merchants. Then, if a visitor clicks on the links and buys something, you receive a commission. Commissions vary from 2.5 to 15 percent at the low end, and up to 50 percent at the high end.

Affiliate marketing programs are a great way to make your site more valuable to visitors because you are offering goods and services that are likely to interest them. In addition, you can earn extra revenue from your site through partnerships with merchants that compensate you for the traffic, leads and sales you send them.

Excerpted from Entrepreneur magazine’s Start Your Own Business (Entrepreneur Press) by Rieva Lesonsky and the staff of Entrepreneur magazine.

By Jerry Silberman

When you’re an employee, you can always look for another job. But when you’re a business owner, your fate is tied to your business, and you can’t walk away so easily. You’ve probably signed dozens of contracts with banks, vendors, landlords, and finance companies just to open your door. Some of these contracts may hold you personally liable if you default. As the former owner of a collection agency, I didn’t believe that all debtors were “deadbeats.” To me, a deadbeat is a person that can afford to pay but won’t pay unless they are forced to. In reality, most debtors are actually the opposite; they can’t afford to pay but would if they could. So I developed a way for smaller honorable business owners to satisfy their creditors based on what they could afford rather than on what their creditors were demanding.

Since then, I’ve had the privilege of helping thousands of businesses recover from almost impossible odds. Yet there is still much work to be done. Over half a million businesses closed their doors in 2005 according to the Small Business Administration. Most new businesses won’t make it past five years. Business failure has reached epidemic proportions.

As a business owner, you probably wear many hats: salesperson, accountant, cleanup crew, customer service, marketing, human resources, etc. If you stretch yourself too thin, you’re bound to miss important details. If you spend too long pitching your product or services, you probably don’t have a lot of time to keep track of your finances. You might use credit cards to buy inventory thinking you can pay it off the next month. When next month comes around, if you don’t have the money to pay the full balance, you‘re forced to pay interest, which effects the true cost of your purchase. An item bought wholesale with a credit card could cost a lot more than you thought it would.

While there are many ways for businesses to make money, there are just as many ways to lose money. I can’t promise you that your business will be invincible if you follow these tips. I can say that this will put in place some protections that many business owners ignore until it’s too late.

1. Monitor Cash Flow
Cash flow is not the same as profit. Your business may be profitable, yet you may face a serious cash-flow problem. Cash flow is the cycle of cash going in and out of your company. You should be able to know at all times how much cash you have on hand and what the business needs to operate.

One helpful tool is “MyBizHomePage” a computer desktop tool that extracts your financial information from your computer and puts it on your screen to see in real time. You can get it for free at BizHomePage.biz.

Another invaluable business resource that costs nothing is SCORE (ScoreCounseling.org). SCORE provides free business counseling and advice as a public service to all types of businesses, in all stages of development. Its counselors can help you improve your budgeting and financial management skills. SCORE is a resource partner of the U.S. Small Business Administration.

Slow-paying customers can be a big part of a cash-flow problem. Collecting from them can eat up time and efforts that could better be spent making sales and growing your business. If you can’t collect what you’re owed, you may want to use a collection agency. NCO, America’s largest, can help with just about every type of collection problem you may encounter. (NCOGroup.com)

2. Turn to Experts
It is a good idea to develop long-term relationships with experts you can turn to when issues arise and you need help. Include in your contact list at least one of each of the following experts: an attorney; an accountant; a banker or finance broker; an insurance agent or broker; an IT (computer) consultant.

Try to develop an association with each of these professionals, even if you do not have any immediate or pressing need for their services now. This will enable you to call upon them when problems arise and you need prompt assistance.

Your Attorney
For most small businesses, legal advice and assistance is not needed regularly. Rather, you use an attorney for specific issues that you may face in the life of your business—from start-up to your exit strategy.
It’s a good idea to use an attorney for all of the following: to set up your company’s legal framework; to protect your intellectual property; to review your leases and contracts; to represent you in the event of a lawsuit; to structure the sale of the business.

Your Accountant
The IRS says that 80 percent of small businesses use outside accountants. There is a good reason for using this type of expert. The tax laws—federal, state, and local—are constantly changing. The business tax rules you learned this year may not be applicable the coming year. You need someone knowledgeable in the latest rules to help you take advantage of every opportunity in the tax law to save money. You also need an accountant to make sure you do not overlook any tax responsibilities. An accountant can also audit your books.

You can also save money by having an outside company review your past returns for free to see if you are owed a refund. One such company that does that is Taxback (www.TaxBack.com).

Your Banker or Finance Broker
Lack of sufficient capital is the number-one reason why businesses fail. That’s why you should create a banking relationship you can depend on when you need additional funds. Be sure to pick the right bank; it may not necessarily be the one with the lowest checking fees or longest banking hours. You want to find a bank that has the most liberal lending policies.

Ask your prospective banker how many small-business loans have been made in the past 12 months to discern the bank’s attitude toward small-business lending. You also want to establish a personal relationship so that the banker views you as a partner and won’t call your loan at the first sign of financial trouble.

It is often said that a bank will only loan you money when you don’t need it. A finance broker can show you types of financing that may be more suitable for smaller businesses, especially if you run into financial problems. Corporate Turnaround (BusinessFreshStart.com) specializes in finding financing for small businesses.

Your Insurance Agent
According to the National Federation of Independent Business (NFIB), being sued is one of the biggest fears of small-business owners. And there’s good reason for this fear: even fighting frivolous lawsuits that you ultimately win can cost thousands of dollars. The best defense against lawsuits is adequate insurance coverage so the insurance company must defend you if you are sued and will pay any damages that may result (up to the limits of the policy).

IT Consultant
If you’ve ever had your computer freeze or lost an important file, you know how frustrating a computer can be. An IT consultant is someone who has certification in various types of computer software. They should not be confused with your friend “the computer guy.” If you use a computer to store valuable information on your customers, track revenue or process transactions, an IT consultant is critical.

Imagine losing all your data or being unable to process a sale because the computer is down on a busy night. Even worse, imagine your computer being broken into through your internet connection. These common scenarios make it easier to see the value of their services.

3. Meet Your Tax Obligations
Whether your business is profitable or not, you may be liable for taxes. Whether this obligation is imposed on you or on the company depends on how the company is structured. You may owe taxes to the federal government as well as the state (or states) in which you do business. The rules on income taxes vary between the federal government and the states.

Your Obligation
As the owner of a business, you have a responsibility to see that the company files a tax return. A return is required whether the business makes or loses money. It must be filed each year, even if no tax is due.

State Income Taxes
In addition to federal income taxes, there may also be state income tax obligations. Your state tax obligations do not depend on where the business is set up, but rather on where you do business. For instance, if you incorporated in Ohio but operate solely in Illinois, you owe income taxes to Illinois. You may also owe a tax or fee to Ohio.

Keep Accurate Books and Records
You must be able to prove any positions you take on your tax returns. No matter how careful you are, there is always an audit risk. But having required receipts and other substantiation for deductions claimed on a return can minimize the effects if any examination should occur.

File on time
File your tax returns on time, including any extensions you may require. Late-filed returns may receive greater scrutiny from the taxing authority. Also by filing late, you may be subject to penalties and interest.

4. Use Legal Protections for Your Business

Business Structure
The way in which you set up your company can affect your personal exposure for business debts. For instance, if you are unable to pay your bills, are you personally liable? The answer depends on how you’ve structured your business from a legal standpoint.
If a business is a partnership or sole-proprietorship, the owners remain personally liable for their business debts. This means that creditors may be able to take your home, seize your business and personal bank accounts and other assets in order to satisfy their claims if you don’t pay them. In limited liability types of businesses, such as corporations, LLCs or LLPs, creditors can look only to business assets to satisfy their claims unless you sign a personal guarantee to pay the debt. A helpful resource to learn more about your options is The Company Corporation (www.CompanyCorporation.com).

Contracts and Agreements
In the old days, a handshake and a person’s word were enough for even the biggest transactions. In today’s commercial arena, we rely on written agreements. The purpose of having a contract is to set forth the terms and conditions of a deal clearly, concisely, and completely so that both parties know what’s expected. Basic information to be included in any contract is a description of the parties—legal names and addresses, a description of the goods or services to be provided, and the price and payment terms (e.g., on delivery).

A contract does not have to be written in complicated legalese or contain pages and pages of boilerplate clauses (although some of these clauses are helpful) to be an effective binding agreement.

5. Stay in Communication
Whether it’s the IRS, your vendors, or your bank, not responding to an inquiry or audit of any kind can lead to trouble for your business. You may not have the funds a vendor seeks, but if you don’t respond, they may escalate their collection activities. A bank may call in a loan. The IRS may seize assets. When you owe money and lack the means to pay it, staying in communication helps you buy time while you decide your best course of action.

Jerry Silberman is CEO and Founder of Corporate Turnaround. He has pioneered the debt restructuring industry for small businesses. In 1990, he started Interstate Department Services, a nationwide collection agency. He went on to found Commercial Credit Counseling Services, now Corporate Turn-around (www.BusinessFreshStart.com) in 1998. Some parts of this article are excerpted from “Small Business Survival Book,” Published by John Wiley & Sons, Inc., copyright 2006.

By Geoff Williams

If you have a business or plan to start one and there is a day in the distant future when you have to call it quits, you may accept your defeat graciously if a nationally known competitor the size of Rhode Island were to move in across the street and, despite your best efforts, clean your clock. Likewise, you may not blame yourself much if your business were to go south because a tornado carried your entire company due east.

But if your business goes up in flames someday and you know you were the one who inadvertently lit the match— because you were financially inept, or because you took too many vacations, or because you worked your body and mind into oblivion—that’s going to haunt you, probably even long after you’ve packed it in and entered a nursing home where your days are spent watching reruns of Gunsmoke.

Unfortunately, entrepreneurs are often their own worst enemies. Maybe they have the vision but lack the capacity to figure out the details. Maybe they excel at raising money but not spending it.

“The biggest challenge I see business leaders facing is that our very strengths and behavior patterns, which contribute to us becoming successful, actually shoot us in the foot later if we’re not able to adjust our behavior in other, less familiar settings,” says Dennis LaRosee, senior vice president at PI Worldwide, an international management consulting firm in Wellesley, Massachusetts, that specializes in helping people utilize their strengths (see “Searching for Insight,” right). In theory, if you’re frequently using your strengths, you’re able to avoid showcasing your weaknesses. As LaRosee observes, “The more we know about ourselves, the more we understand the connection between ourselves and others in the workplace, [and] the more control we have.”

Read on to find out how three entrepreneurs tackled their bad habits—and helped their businesses succeed.

A Little Understanding
Lara J. Kisielewska wishes she had understood more about her weaknesses before she started her company. She is 33 now, but when she was 20, she was a whiz kid who graduated from college early, even while holding down a full-time job, a part-time job and a 50-hour-a-week gig at her student newspaper. She aspired to be an art director at a magazine. In figuring out how to do that, she searched for ways to make money and thought up a business—New York City-based Optimum Design & Consulting—where she would do graphic design, pre-press work and Macintosh-based computer consulting. Her parents—teachers who were in awe of their overachiever—lent their daughter $85,000 from their savings to help get her business off the ground.

And before Kisielewska even opened her doors for business, she spent every last cent of it.

As her bankbook dwindled, she didn’t think she was being foolish. She took on an expensive three-year lease on a 665-square-foot office in Manhattan. “I fell in love with the place,” she admits, but she now concedes it was more space than she needed. She bought two $10,000 printers—she wanted the best—hired some students who would work part time for $6 to $12 an hour, and bought all new office furniture.

All along, Kisielewska had planned to work a full-time job in the production department of Scientific American magazine while running her side business. What she didn’t plan on was having to take another full-time job creating presentations at night through a temp agency to help pay her employees’ salaries, the lease and her debts, and to keep her business going. She was soon reduced to working at her other jobs from 11 in the morning until 2 a.m.; she would then go to Optimum, where her life was anything but.
She kept a sleeping bag and an alarm clock in her office. After more than a year, “I realized this was nuts,” says Kisielewska, who finally quit her other jobs and focused on Optimum full time. Today, her business has eight employees and revenue is approaching $1 million.

Kisielewska is on the road to recovery because she took a long, analytical look at her mistakes. She came to realize that frugality is a good thing when it comes to business. “I didn’t know what working capital meant at all,” says Kisielewska, who now makes business purchases only if they’re going to bring in income for the company.

Kisielewska also learned not to rely on a handful of large clients. Several years after she started her business, three of her five biggest clients coincidentally left in a matter of one month, and not surprisingly, Kisielewska’s company took a big financial hit. From then on, she started diversifying who she was serving to make sure that even if a handful of clients happened to leave at once, her business wouldn’t be greatly impacted.

But Kisielewska didn’t find all the answers to her problems by herself or because she was crushed under the weight of her own errors—she also opted for outside help. In the early days, she couldn’t afford to bring in a professional to assist her with budgeting, so she began joining organizations like the New York City chapter of the National Association of Women Business Owners. It wasn’t a perfect fit at first—Kisielewska was younger than the other members and intimidated by them, but eventually, she realized: “The best way to get help is to be honest about your problems.”

Heal Thyself
Curtis McClees, 45, president of Winning Concepts USA, a political and business consulting firm in Orange Park, Florida, knew he was in trouble shortly after moving his business from his home office into a commercial building. He and his partner and vice president, Bill Hopkins, 60, had transported all their paperwork—their “mess,” says McClees—into the new office, which was three times the size of the home office. Pretty soon, they had three times the mess.

“The offices were filled to the rim with papers and promotional materials,” says McClees. “In the filing room were stacks of paper, just piles and piles of stuff.” McClees and Hopkins were routinely losing the very work they needed to keep their business humming. “I remember trying to find a catalog to show a customer,” says McClees, “and I’d get so frustrated. I’d know that I had seen it, but I just couldn’t locate it."

McClees concluded that he needed outside help, so he hired a professional organizer. “She was there for two weeks, just going through everything, creating a system for our paperwork, getting our catalogs in order and filing them from A to Z,” says McClees. “We have more than 1,000 catalogs at any given time from manufacturers. It’s made our lives 10 times easier.” And the business has grown in the wake of the change. McClees and Hopkins now have seven employees, and Winning Concepts currently generates $500,000 in revenue.

Indeed, there’s no shame in asking for assistance when trying to change your habits or fix your mistakes. Jack Perry, author of Jack, You’re Fired, a book about the way sales professionals self-implode, muses: “There’s a point where every entrepreneur has to ask, ‘Am I really the best person for this particular job, or should I have somebody else run this?’ Look at it this way—a heart surgeon, no matter how skilled, doesn’t operate on himself.”

Looking Inward
The trouble for bad-habit-prone entrepreneurs is that they often don’t know they have bad habits. Sometimes you can get too busy running the business to notice you’re running it into the ground. “I think people need to look at themselves,” suggests Beth Silver, managing director of Doubet Consulting in New York City. “Everybody has something holding them back. It could be time management; it could be that you’re not getting enough sleep; it may be that you aren’t responding quickly enough to your clients—or yourself. If you don’t feel like you have enough balance, then you have to figure out what’s in your way. You just have to be open to seeing what needs to be tweaked.”

Or what needs major surgery. Sue Murray, 52, is president of EduCorp Training and Consulting in Grapevine, Texas. Like many people, she likes to look for the best in others, so she didn’t run credit checks on several companies for which she consulted. Because these businesses did a lot of work for a large household-name corporation, she assumed that her new clients were trustworthy. “This big company was paying them, and I figured, they’ll pay me. I didn’t know that instead they were paying for Mercedes [Benzes] and second houses.”

Not only did Murray’s company do a considerable amount of work for three particular clients, but she also willingly extended their credit and kept providing her company’s services. But when the three clients went bankrupt before paying EduCorp what they owed, Murray’s business lost $750,000.

“I had to have a long heart-to-heart talk with myself,” says Murray, whose four-employee, $6-million firm now makes every client go through a credit check before it takes them on. “I sat down and said, ‘OK, this is one of my failings. I’m too trusting, and I didn’t do the things that I should have done.’ I vowed to change, and I wrote down what I planned to do for the company, and that helped.”

Murray hasn’t completely changed. She’s not confrontational and she still hates to ask clients for credit checks—so she has her accounting manager do that. “It doesn’t bother him to do that,” she says. Yes, entrepreneurs can take comfort in knowing that if they suspect their bad habits are ingrained, there is always a chance they can avoid the problem by having somebody else make up for what they are lacking. Delegating is, after all, a big part of an entrepreneur’s job.

But only you can determine what your bad habits are and whether you’re willing to keep the worst of who you are away from the company. From disgruntled employees to brutal competitors, there will always be somebody only too happy to help you go out of business. The last enemy you need is yourself.

Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com

By Crystal Detamore-Rodman

By the mid-1990s, Princeton Laundry had fallen on hard times. Despite a healthy client roster—it catered to New York City hotels—the rising costs of operating in Manhattan had taken a toll. A steep mortgage and mounting maintenance expenses for its commercial co-op space made it exceedingly difficult to sustain the operation. To make matters worse, the commercial laundry, owned by the Garlasco family for three generations, was behind on its taxes.

“Our accountant kept telling us, ‘Your business is profitable, but where you’re located [is] driving you out of business,’” recalls Kevin Garlasco, 42, the company’s treasurer and managing partner. Heeding the warning, the family made a move in a dramatic new direction—a 20-minute drive north to the Bronx, where community leaders were dangling business incentives for economic growth. There, the Garlascos built a new production facility that opened in 1997.

Leaving Manhattan was only a temporary solution, though. Even after Kevin, his father, Larry, and brothers John and Michael mortgaged their homes for funding, the family still needed a large infusion of working capital to stabilize the company. Unfortunately, traditional creditors were wary of recent financial hiccups, though the business had been around since 1918. “We tried going to banks,” says Kevin, “and it was always the same thing: They wouldn’t give us a loan because we were in a tight situation and a little behind in paying our taxes. We were falling into a hole.”

The answer to their financial woes was a commercial finance company, Business Alliance Capital, in Princeton, New Jersey. Business Alliance provided a $600,000 revolving line of credit secured by accounts receivable. “We laid everything out on the table with them, and it wasn’t a pretty situation at that time,” Kevin remembers. “It’s gotten drastically better. We were able to clear up our taxes, and now we’re running our business much more efficiently.” Indeed, the family firm grew approximately 30 percent to annual sales of $7 million over the years following the 1998 funding intervention, which also included about $500,000 in equipment financing.

A Different Breed
While Business Alliance Capital obviously saw growth potential, it didn’t place blind faith in the struggling business. Finance companies are simply a different breed of lender than more mainstream creditors, such as banks.

Nonbank lenders such as Business Alliance Capital advance funds based on a percentage of a firm’s assets—usually 25 percent to 60 percent for inventory and 75 percent to 85 percent for accounts receivable—and when that firm’s receivables are paid, the cash is turned over to the lender to pay down the loan. Because the loans are secured by assets, finance companies can lend to businesses with irregular cash flows, even losses—the very borrowers banks try to avoid.

Banks are principally cash-flow lenders, leaving many highly leveraged companies and those with sporadic growth outside their financing domain. Although there was a time when only troubled companies resorted to asset-based funding, it’s an increasingly common financing strategy for businesses with fluctuating capital needs.

Part of the appeal of asset-based lenders is their willingness to give space to borrowers going through rough patches. Banks routinely impose financial covenants on borrowers to monitor operating performance, dictating such things as minimum-working-capital balances and debt-to-equity ratios. Depending on the extent of the covenants, a business may be just one financial misstep away from losing critical funding. Finance companies, in contrast, rarely use the kinds of restrictive covenants that accompany cash-flow loans, instead touting themselves as stable financing sources, even if a company’s circumstances take a negative turn. Ted Kompa, president and CEO of Business Alliance Capital, says, “The company, from a standpoint of calling a loan for financial performance, would have to be in pretty dire straits for a properly secured finance company to want to take action.”

The Cost of Convenience
The simplicity, however, comes at a price. While competition has helped drive down the cost of asset-based credit, small loans may run 15 percent to 28 percent. Both risk- and collateral-monitoring requirements figure heavily in the total asset-based funding cost. For instance, a business that generates a large volume of small invoices typically pays a monthly collateral-monitoring fee ranging from 0.25 percent to 0.5 percent. On top of those fees, prepayment penalties are standard to deter borrowers from refinancing with a bank if creditworthiness improves.

It’s quite common for businesses to get bank loans once their financial situation progresses. Princeton Laundry isn’t one of them, however, despite now having more secure financial footing. Kevin Garlasco says the higher costs are a small price to pay for peace of mind during periods of market volatility, such as the months following the 9/11 terrorist attacks, which dealt a severe blow to the commercial laundry’s core constituency: New York City hotels. “Sales did slow down, but we got through it. If I were with a bank,” he says, “[it] probably would have been breathing down my neck.”

Along with higher fees, finance companies have more arduous reporting requirements. Lenders may require daily reports on sales and collections to establish how much funding a business can draw against its assets; in determining borrowing capacity, lenders subtract ineligible assets, such as past-due receivables. On a positive note, the rigorous reporting forces owners to examine key aspects of their operations. “They may see receivables getting old, but maybe they haven’t looked to see why,” says business advisor Debra Pauli, president of Corporate Financial Solutions in Atlanta. “This lending program forces entrepreneurs to understand intimate details of their businesses. A business is [all about] asset management from cash flow, and that’s what this lending program is all about.”

The lesson isn’t lost on Kevin Garlasco, who knows he has to actively manage receivables to keep the funds flowing. “Anything over 90 days, that money is not available to borrow,” he says. “So I really have to keep control of my customers and keep them paying.”

Crystal Detamore-Rodman is a Charlottesville, Virginia, writer who covers the small-business finance market.

By Sheree R. Curry

Flash floods, mudslides, hurricanes, tsunamis, blackouts or even an executive’s death—would you be prepared if disaster were to strike your business?

More than 1 in 4 businesses will experience a significant crisis in a given year, according to a January 2005 survey conducted by Continuity Insights magazine and KPMG. Of those businesses that experience a disaster and have no emergency plan, 43 percent never reopen, according to The Hartford’s Guide to Emergency Preparedness Planning, published by The Hartford Financial Services Group, an investment and insurance company. Of those that do reopen, only 29 percent are still operating two years after reopening.

Despite your best-laid plans, sometimes it’s the people you do business with who may cause the demise of your business. A Fantastic Sam’s hair salon hit by Hurricane Ivan in fall 2004 is a perfect example of a business that didn’t directly suffer extensively but was still affected immensely. The Pensacola, Florida-based salon never reopened, despite only minor damages from the storm—it was the inability of its mall landlord to remain operational that silenced this tenant’s hair clippers and blow dryers.

“We didn’t incur major structural damage. [But] after two and a half weeks, I still wasn’t up and operational because the shopping center didn’t have power and didn’t have water,” says Mary Blanco, president of F&S Pensacola, which operates a chain of salons—including the disaster-stricken Fantasic Sam’s—around the northwestern edge of Florida.

After losing $65,000 to $70,000 in potential sales across her salons, Blanco opted not to renew her mall lease that had come due days after the hurricane. In the end, the shopping center was closed nearly two months before it reopened—without Fantastic Sam’s as a tenant.

“It is very important for smaller companies to have a crisis management plan because the smaller you are or the newer you are, the more you have to lose if you have a crisis,” says Larry Smith, president of the Institute of Crisis Management in Louisville, Kentucky. “The little company has fewer resources, less money in the bank and less experience to cope with these things. They need to be prepared.”

Seattle-based FusionWare Corp. was not prepared despite the warning it had when CFO David Stefanoff announced he had lymphoma in 2003. “He was healthy enough to go with me to Australia in February 2004, and in August he was dead,” says CEO Alan M. Davis, 61.

Stefanoff worked from home weeks before his death, trying to raise $5 million in VC funding for the $2.5 million middleware integration software firm. “Losing a key member of the management team can have a major impact, and you could lose the company over the inability to recover fast enough,” says Davis.

The company was a tad closer to obtaining the funds it needed in July 2004 than it is today. Although it has since hired another CFO, Davis says, “Our financials for venture capital are not in the same condition as they would be if [Stefanoff] were here. He really understood the process of raising more money and which analysts to involve.”

Davis suggests that companies groom a successor or keep names of potential hires for its key management positions at hand, adding that it need not be a death that sets you back. “Maybe a key employee just says, ‘I’m done. I’m moving to Pittsburgh.’ In a small company, a key person walking out the door can be as devastating as someone dying.”

Many Forms of a Crisis
A crisis need not be a major incident. Simply having your computer systems knocked down for a period of time can cause serious issues. Businesses that suffer computer outages of eight days can lose between 2 percent and 3 percent of gross sales, according to The Hartford’s Guide to Emergency Preparedness Planning.

Tom Wilson, catastrophe director at the Orlando, Florida, office of Matson, Driscoll & Damico, an Atlanta and Chicago-based accounting firm specializing in loss, says backing up data is critical to any disaster recovery plan. “Capture data early and often,” he says. “Rotate the backup media frequently enough to ensure the most current data is completely captured. You should also maintain an archive of your historical data.”

As president and founder of commercial insurance producer Multiple Risk Managers in Anchorage, Alaska, Frank Thomas-Mears was so concerned about his customer information database that he used to carry copies of nearly 80 gigabytes of data on 38 pounds of tape with him at all times—even on vacation. “I stored all the tapes in a suitcase
next to the door of my office, taking it with me whenever I left,” says Thomas-Mears, 50.

In May 2003, he switched to LiveVault, an off-site, online backup and recovery service—at an investment of nearly $10,000 per year. “This is a good deal for backups given the [amount of] time tape drives fail, tapes fail, and calculating the cost of human effort to perform and monitor the backups and the cost of network engineers to keep things fixed and tweaked,” says Thomas-Mears of his $250,000 firm. Plus, the system is able to recover data up to the minute of the data-loss event, rather than through the day of the last tape backup.

Plan on It
So now that you know the importance of preparing for a possible disaster, what’s your plan? If you don’t have a disaster contingency plan in place, you’re not alone. According to a study by Continuity Insights magazine and KPMG, 42 percent of businesses with fewer than 500 employees had no plan in place.

“A crisis communications plan is invaluable,” says Denyse Dabrowski, vice president of The Marcus Group, an advertising, PR and crisis-management firm in Secaucus, New Jersey. “When I say ‘plan,’ I do not mean a 30-page book your company puts together about its crisis response, because that’s out of date before it hits the shelf. I’m talking about the ‘plan’ as far as who is the crisis team and what are everyone’s duties.”

While not every crisis can be avoided, increased knowledge, preparation and proper training can help a company put unexpected events under immediate control, and keep them under control as the issue is addressed. What are some inexpensive disaster-preparedness steps you can take? Try the following advice from several business owners and crisis experts:

1.Make duplicates of important communications materials. Debra Caruso operates DJC Communications, a New York City PR firm that was located three blocks from the World Trade Center when tragedy struck on 9/ll. When her business was temporarily displaced, she learned the hard way that she should keep copies of business checks in a remote location.

“The branch I banked at was [inaccessible], so I had to go to another branch and prove who I was to get counter checks to pay taxes and other bills,” says Caruso, 45. Now, “I keep [copies of] certain important materials at home: checks for my business account, company letterhead, envelopes, important phone numbers and passwords.”

2.Keep copies of important records in a remote location. Some business owners were attempting to recreate records after their facility was destroyed in a hurricane. Though they kept important documents in a safe-deposit box, the bank, too, had been destroyed in the hurricane.

“This type of record loss happens more frequently than people think, and reconstruction is a major inconvenience,” explains Connie Bracher, disaster chair for the California Society of Enrolled Agents and a tax preparer at Acorn Bookkeeping & Tax Service in Crestline, California. “Important documents should be copied and stored in another part of the country with a brother or sister, or in a safe-deposit box in another state.”

3. Run through a test drill of your disaster plan. The owner of a small manufacturing business in Oklahoma built two tornado cellars and wrote a disaster preparedness plan about a week before a severe tornado hit the area. He confidently had his staff go to the tornado cellars expecting to be able to communicate with those in the other cellar and with outside business partners, only to find his communication system (handheld radios) did not work underground.

4. Prepare multiple contingency plans. A law firm located in the World Trade Center had planned for the possibility of emergency by renting a “hot site,” an office with computers some distance away from the main office where staff could quickly resume work if their office had to be evacuated. The firm learned what many others learned then: The hot-site owners had the same arrangement for the same site with multiple companies, assuming the likelihood that they would all need the site at the same time was slim. But in the hours after 9/11, it was first come, first served. The law firm had to quickly come up with a Plan B.

5.Don’t skimp on insurance. Eureka Net-works CEO Raul Martynek, 39, says business interruption in-surance helped save his $30 million company. In September 2001, the 200-employee firm had just completed 20 percent of the telecom and broadband hard wiring for its marquee property, the World Trade Center. After 9/11, the property was lost, as well as “the opportunity to leverage that contract and the million dollars we had invested in that,” he says. But stabilization measures, including a two-thirds reduction in staff and a reprioritization of efforts toward highest-margin products—as well as business continuity insurance—helped him stay afloat until he could get more clients. Martynek now has more than 400 buildings under contract while most of the competitors he had 2001 are no longer around.

“If you lose your people in a flood, fire or hurricane, all the data in the world and insurance coverage to rebuild your facilities won’t do you any good,” says Brad Forsythe, a small-business risk management consultant, founder of Milford, Ohio-based Best Practice Advisors and author of Bulletproof Your Business: Cutting Risk for Small-Business Owners and Managers. “As an owner, you should buy business income interruption insurance. It’s the only way to buy the time to rebuild your facilities and rehire people. Small companies tend to skimp on insurance coverage, especially when it comes to things like business income interruption insurance. If they do get insurance, I see them get the least amount they can. It is very cheap to buy additional coverage, but is extremely expensive to pay for ongoing expenses out of your pocket.”

When it comes to disaster preparedness, “we must determine the kinds of risks we can do something about and the kinds of risks that can affect all businesses in the same way,” says risk consultant Paul Laudicina, author of World Out of Balance: Navigating Global Risks to Seize Competitive Advantage. “In all of this, you will never have perfection. Perfect risk protection just means being protected better than your competitor.”

You wouldn’t open your office for business but then go home without locking up, right? That’s essentially what you’re doing if you don’t secure your business ideas. By taking the proper steps, you can protect your trademarks — and your business—using intellectual property laws.

Chicago attorney Kara E.F. Cenar of Bell, Boyd & Lloyd contends that small businesses should start thinking about these issues as early as possible. “Small businesses tend to delay securing intellectual property protection because of the expense,” Cenar says. “They tend not to see the value of intellectual property until a competitor infringes.” But a business that hasn’t registered its trademark and actively defended it may have trouble making its case in court.

Your first experience with intellectual property is likely to be your trademark, since you need to think about that before choosing a name for your company.  Note that your trademark might include not only your name, but also a slogan, symbol, picture or logo. It’s about how people identify your business — how they know that what they’re looking at comes from your company. Think, for instance, of General Mills’ cursive “G,” Apple Inc.’s apple with a missing bite and Nike’s phrase “Just do it.”

If you’ve registered your trademark, you indicate that with an ® behind the name. If it’s a trademark you’re using but haven’t registered, you use a small TM instead. A “service mark,” sometimes seen as a small SM behind a name, identifies a service company such as a retail store.

Any trademark you use is protected under common law as soon as you start to use it — like on your sign or in your ads. Under common law, the first entity to use a particular name, slogan or symbol has the right to it. So if you’re just planning a single shop, it might be enough to know that no similar business in town is using the same name. But if you have aspirations to go further, you’d better have a proper trademark search done and register your mark.

State trademark registration is simple, fairly quick and inexpensive, but it only protects your trademark in your state — so someone with a federal patent still gets first dibs on it.

It’s best to register your trademarks with the U.S. Patent and Trademark Office. You can do a preliminary trademark search online, but because of the complexity of the process, you should still use an intellectual property lawyer to make sure it’s done right. Since the process can take several years, you start by filing an “intent to use,” which is an image of the trademark and a sworn affidavit that you intend to use it in commerce.

International trademark protection, which you’ll want if you plan to set up shop online, is especially complicated. That’s even more reason to spend the $2,000 or so it costs to have an experienced trademark lawyer search the USPTO, NAFTA and the international registry of the World Intellectual Property Organization, as well as state databases and common-law uses. Once you’re properly registered, you have exclusive rights to your trademark in the U.S. and more than 60 other countries.

After you have applied for your trademark, the next step is protecting it. You have to monitor the marketplace for knockoffs and trademark infringement and take increasingly firm steps to enforce your rights. These typically begin with your attorney’s letter of warning to the infringer. If the infringer doesn’t stop, you might have to sue. Courts are often willing to issue a cease-and-desist order and sometimes even assess damages. But if you fail to be vigilant, you may lose your trademark.

What’s the lesson in all of this? Sleep on your intellectual property rights and you’ll lose them. Be proactive and you’ll protect them — and save money in the long run.  

Excerpted from Entrepreneur Magazine’s Start Your Own Business (Entrepreneur Press)

By Rieva Lesonsky

Everyone shops. Everyone. That’s why retailing is one of the fastest-growing segments of the economy, accounts for nearly $4 trillion in annual revenues in the U.S. If you’ve always wanted to open a retail store (instead of selling online) here are some keys to your success.

Location, location, location.
Choosing your location is the most important step in making your dream of owning a retail store come true. What good is it if you have a great staff and awesome merchandise but no customers? Choose a location with high-traffic flow. A new retail store isn’t going to have a following unless it’s a franchise with a well-known name, so you’ll need all the help you can get. Take your time choosing the perfect location; observe the traffic flow over a period of several days before you sign a lease. And don’t choose a location just because it’s close to your home.

Stocking your shelves.
Selecting merchandise for your store can be the most time-consuming and expensive part of opening a business. Before opening your store, visit wholesale marts to get an idea of the merchandise you’d like to carry. Decide what your mark-up will be and what’s appropriate for your area. Choosing the merchandise can be fun, but remember to maintain a general theme and purpose for your products.

Stay current and stay true.
Don’t think you know it all when it comes to trends. Keep up with local as well as national trends. You might see a particular look plastered all over the TV or in fashion magazines, but know your market. Will it sell in your store? Does it fit your theme? And don’t attempt to sell anything that’s way out of your normal buying budget just because it’s trendy. The best thing to do is listen to your customers. Customers will always let you know what they’re looking for, but only if you ask.

Hire Smart.
It’s inevitable—you’re going to have young people work for you. Hire a young person who has a desire to know more about your type of business. A person who’s really interested in cars, but wants to work in your clothing store might not be as suitable as someone who’s attending classes in fashion design. When interviewing a young person, ask them about their interests and hobbies and what they feel they can offer you as an employee.

Loss prevention.
You can always expect theft—count on it and set your prices because of it. The only way to find out how much you’re losing is to do inventory. Use a POS [point-of-service] system that’s r un from your computer and keeps real-time inventory. If you’re selling small items that people can walk off with, keep them in secure cases.

Everything must go!
Customers should be able to easily distinguish sale items from regular merchandise in the store. Placing your sales items towards the back of the store forces customers to walk by the regularly priced merchandise, increasing the probability for sales of regular merchandise. Clearly mark your sales prices and post signs that grab your customers’ attention. Storefront signs will also increase traffic flow and let customers know there’s a reason to stop in your store.

For more information check out Entrepreneur magazine’s business start up guide.

By Laura Koss-Feder

Robert Iachetta, 29-year-old partner of Innivity Marketing Group Inc., is a strong believer in the power of business networking. His 2-year-old Toronto company, which he owns with partners Robert Dawson, 29, Richard Bouchard, 29, and Jeff Chesebrough, 31, with $1 million in sales and 16 employees, has brought in about 5 percent of its business by networking at JCI events. Iachetta, who has been a JCI member since 1998, used to be vice president of his former chapter in St. Catharine’s in Ontario before he relocated to Toronto. He organizes his current JCI chapter’s monthly dinner meetings, which allows him to network as well. “I try to really get to know people, what they enjoy doing, what their families are like, what their spouse does for a living,” Iachetta says. “Being friendly, open and showing an interest in others is crucial to good, effective networking and is just more fun.”

Iachetta is involved with other organizations as well. He attends monthly meetings of the Toronto Board of Trade Young Professionals Group. He belongs to the Canadian Association of Career Educators and Employers, a group that Iachetta’s firm does some marketing for and publishes a twice-a-year publication for as well. About 5 percent of his company’s business comes through this connection. Another 20 percent comes from networking through the Children’s Wish Foundation and Goodwill—both charitable groups. Says Iachetta, “I’m a big believer in volunteer work and social networking with organizations that you really admire.” 
Iachetta espouses the views of many young entrepreneurs. For them, networking is one of the least expensive and most rewarding ways to promote your business—and make valuable contacts along the way.

“We are a networking society. There are six degrees of separation between all of us, and the more people you come into contact with for your company, the more likely you are to find clients and those who can help you obtain clients,” says Carol Kuc, president-elect of the National Association of Women Business Owners and president and founder of Complete Conference Coordinators Inc. in Naperville, Illinois, which has 10 employees and $1 million in sales. 

Making Connections
But there is a trick to networking successfully. It’s not as easy as it seems. And it goes way beyond just joining your local chamber of commerce—which is always a good idea if your business relies on local customers. If you want to become the best networker for your business, you need two main components, according to Kim T. Gordon, president of the National Marketing Federation Inc. in Sugarloaf Key, Florida: the right attitude of wanting to help others you meet without doing a hard sell, and attending functions or events where you can meet prospective clients or those who can introduce you to clients. And always give yourself time—at least six months—to see any tangible results from your networking activities. 

“You want to join associations where you come into direct contact with the key decision-makers who will choose whether to pay for your product or service,” Gordon says.

Find out as much as you can ahead of time via telephone or e-mail about any organization you join for networking purposes. This would include how large the group is, who its members are, what kinds of committees it offers, its annual fees and how often it meets, says Ira Davidson, director of the Pace University (Manhattan) Small Business Development Center.

“Use your time wisely and target those groups that make the most sense,” Davidson says. “You don’t spend evenings going to cocktail parties that don’t offer you the contacts you’re seeking.”

In addition, you may find that joining charitable nonprofits that share a passion or cause directly related to your business could pay off in new customers, Gordon notes. For instance, if you own a dog boarding facility, it would make sense to join a local chapter of your National Humane Society or become active in fund-raising for a nearby animal shelter.

“Even though they will know that you are looking for new business, nonprofits will always appreciate your time, help and energy—as long as you respect what they do and don’t act too pushy,” Gordon says.

Once you’ve picked out which organizations to join, which you can find though the internet, hone your communications skills. Rather than give someone you meet a pushy sales pitch, ask that person what he or she does for a living, what that person’s business needs are and how you can help fulfill those needs, Gordon says.

Some good, open-ended questions to break the ice and get relevant information include: why someone came to a particular event, what is happening in the other person’s industry, and what the person’s relationship is to the group or individual hosting the event, says Darcy Rezac, author of Work the Pond! Use the Power of Positive Networking to Leap Forward in Work and Life (Prentice Hall).

“The most effective networking involves translating what you do into something someone else will care about,” Gordon says. “Make strong eye contact, listen closely and don’t worry about working the room or shaking 50 hands in one evening. Networking is all about building relationships based on trust—one person at a time.”

When networking, always remember to obtain a business card from someone you meet, and immediately add that card to your database. But don’t make the mistake of collecting cards and not following up with a promising contact. Within a week or so, call or e-mail that person, asking to meet for coffee or lunch, says Gene Fairbrother, lead business consultant for the National Association for the Self-Employed and president of MBA Consulting Inc. in Dallas, which advises entrepreneurs nationwide. 

Be on the lookout for new groups to join. Sometimes, you may join an organization that doesn’t really result in any valuable contacts. If you don’t see any potential connections within a few months, there’s nothing wrong with leaving that group and trying out new sources to network with, Fairbrother notes.

“You may have to kiss a lot of frogs before you meet a prince when you’re networking, so be patient,” Rezac says.

Regardless of which organizations you choose, it makes more sense to be active and become well known among members rather than just appear as another face in the crowd, Gordon emphasizes. People will know that you are reliable and trustworthy if you join and even lead committees. Those good feelings can lead to new clients who will already know what your values are and how hard you work. Taking on the occasional guest speaker role also will increase your visibility. Says Gordon, “Instead of going to 30 meetings, maybe just attend three key committee meetings.”

Reaching Out
Another good way to network is through your local alumni group. This helped bring in business for Jason Finger, 33-year-old CEO and co-founder of SeamlessWeb Professional Solutions Inc., a $49.6 million company in New York City that processes online food orders to restaurants and catering companies which are made by employees working in law firms and other companies. Finger, who received a combined law degree and MBA from New York University, contacted about 150 alumni from both degree programs over a four-month period when he started his business in 2000. He asked these people if they could use his services and if they could put him in touch with the decision-makers at their firms. This intense networking resulted in about 80 meetings for Finger and his partners and about 60 clients.

“Even just someone whom you barely knew in school could ultimately wind up sending business your way,” says Finger, who has 53 employees. “It’s always worth a try.”

In addition, Finger and his three partners—Paul Appelbaum, 33, Todd Arley, 33, and Stefanie Finger, 33—each joined two to three professional associations, where they could meet potential clients. For instance, since company comptrollers are often responsible for managing their firms’ food-related expenses, Finger joined local finance groups in New York City—where he could mingle with decision-makers. About 10 percent of his company’s clients have resulted from such networking. And he has preferred to seek out those with smaller, more approachable companies at such events—rather than go for the large firms. Their business may be more lucrative to your bottom line, but they are much harder to attract as clients.

“As long as you find the right groups to join and go at it with the attitude of meeting people and not pouncing on others with your business card as they walk in the door, you will be able to eventually find clients through networking,” Finger says. “And you can make some great, long-lasting friendships along the way.”

Laura Koss-Feder is a freelance business and features writer in Oceanside, New York, who has written for The New York Times, Time and BusinessWeek.

By David Worrell

These days, investors at medical services company Inoveon in Oklahoma City are a pretty happy lot. The company recently served its 45,500th customer and revenue has passed the $2.5 million mark, so investors have much to celebrate. But Inoveon co-founder Dr. Lloyd Hildebrand will tell you that bringing together three founders, seven angel investors and five VCs was not always a party.

When Hildebrand, 49, and his partners decided to commercialize the technology they had been working on at the University of Oklahoma, they started the way most entrepreneurs do—by digging into personal savings and asking friends and family for help. In total, the three founders and seven outside investors put together about $250,000 in seed capital.

From the outset, however, Hildebrand and his team knew that the angel investors’ capital wouldn’t be enough to get the company off the ground. If Inoveon’s technology to diagnose eye disease in diabetic patients was ever to see the light of day, they’d need millions more. Still, they couldn’t afford to worry about that in the beginning.

“At that time, we needed dollars to demonstrate the concept would work,” Hildebrand says. “Money was more important than smart money at the beginning. We needed capital to stay alive.”

That’s a typical—and potentially dangerous—predicament for a young company, says Jonathan Karis, partner and chair of the Business Practice Group at the Boston office of national law firm Nixon Peabody. Karis advises entrepreneurs to consider the time when their company might need more money than angels can provide. Too many unsophisticated or inexperienced angel investors create management headaches and get in the way of raising substantial future capital from VCs.

The real problem for most angel investors comes when the business has outgrown the angels’ ability to contribute growth capital. Karis notes that venture capital may come with terms and conditions that significantly devalue or dilute the original shareholders’ value. A VC firm may even insist on renegotiating the angels’ original investment terms.

Such was the case at Inoveon. Hilde-brand says that both of the subsequent rounds of venture capital Inoveon received were at a valuation substantially below what the angels had negotiated. So the new VC investors actually paid less for their stock than the original angel investors, and as a consequence, the ownership and control held by the angels was drastically reduced. Investors call this a “down round,” referring to the falling valuation. Of course, down also describes the mood of the early investors. “I don’t think anyone was happy about it,” says Hildebrand, “but we all understood the realities of the marketplace and of building a company.”

Karis says that it could have been much worse. He’s seen angel investors refuse to allow VC investment even though their refusal cripples the business. To prevent such a predicament, Karis advises entrepreneurs to look for either one very experienced angel investor or an organized angel club to take the lead role in the initial investment.

As an additional precaution, every company owner should anticipate future funding needs—including possible down rounds—and limit early investors’ ability to torpedo negotiations for subsequent funding. “Position your angels legally so you facilitate venture funding instead of hindering it,” Karis suggests. “Tradition-ally, VCs will require approvals of [subsequent] funding rounds, so angels may ask for the same thing. But I don’t want my angels to have too much control over the next round.”

By anticipating a funding shift, you can set reasonable expectations backed by the legal framework that gives your company the flexibility to grow. “If you’re ready for a $10 million [VC] investment, then the angels just need to come along for the ride,” says Karis.

Part of the dilemma is that setting the valuation (i.e., the stock price) for an early-stage company is more of an art than a science. As a result, angel investors are more likely to worry about the rights they have as shareholders than about price. Later, when the VCs get involved, valuation is more obvious and often well below the lofty price projected by the early business plan.

As much as they need each other, VCs and angel investors often butt heads over issues of valuation and control. The key to defusing this situation is to set out a fair and flexible agreement in writing before accepting the angel’s capital. The agreement should specifically prohibit early investors from blocking subsequent funding rounds under certain conditions. “It’s a hard negotiation,” says Karis. “But if you build flexibility in when you go to them, that’s when you have leverage with them. Once you have their money, it’s more difficult.”

Even in the best of cases, Karis compares managing investors to herding cats. But a reasonable agreement upfront can make the task less painful.

David Worrell is author of the e-book Finding Funding. Visit his website, www.dworrell.com, or contact him at david@dworrell.com.

By Andrew J. Sherman

I have spent the better part of my professional life helping small businesses and emerging companies of all sizes in many different industries develop strategies to grow. I've also observed that entrepreneurs want their businesses to grow in one way or another-whether it's in terms of revenue, profits, number of employees or customers, market share, or number of locations. Not everyone has aspirations to build the next Roman Empire, but everyone wants to see progress from one year to the next, even if it's just in the amount of money they can take home to their families.

Given our rapidly moving and highly competitive marketplace, the challenge is how and when to grow. And these questions lead to other key questions that can be difficult to answer: What strategies should you use to facilitate growth in your particular business? Are there problems with your business structure that need resolving before you can implement your growth strategy? How can you build on your strengths and compensate for your weaknesses? Is this the right time to grow? That is, do you have a proper foundation in place for growth? 

Building your small company into something much larger is a marathon, not a sprint. If you draw a strategic parallel to a NASCAR season (that is, a series of long races as you accumulate experience, victories and defeats in pursuit of a long-term goal), then the five smart ways to grow your business break down as follows.

1. Double-check the functionality of your racecar before putting it on the fast track. Do you have the right foundation in place to grow your business? What are the strategic prerequisites? To grow your small business successfully, your company should have a strong foundation from which the selected growth strategy will be built, launched and monitored. As you build a platform for growth, make sure the relevant components listed in "Firm Foundation" (at right) are in place.

2. Chart your course. Have you drafted a business plan that will navigate your course and identify the human and financial resources you will need to get to the finish line? Have you determined when you will drive full speed ahead with your growth plans and when you may need to pull over for a pit stop? Does the plan include a sensitivity analysis to anticipate the inevitable surprises that the market will throw at you? Or the "what ifs?" If you have drafted a plan, then you may need to dust it off. Did you meet the goals and objectives set for the company last time you engaged in the planning process?
Why or why not?

Business planning is the process of setting goals, explaining objectives and then mapping out a plan for how the company's management team will achieve these goals and objectives. In essence, a business plan is the articulation of why your idea is a valuable opportunity, what resources it will require, who will provide the vision and leadership to execute the plan, and how you will reach your goals. A business plan should tell a compelling story, make an argument and conservatively predict the future. Remember, companies have different stories to tell, different arguments to make and different futures to predict. 

3. Make sure the car has gas. Financial capital is the fuel that serves the growth engine. How will you finance your growth plans? Will you seek debt or equity capital? How do the needs of these sources of capital differ? Virtually all money-raising strategies revolve around four critical factors: risk, reward, control and capital. You and your sources of venture funds will each have your own ideas as to how these factors should be weighted and balanced. Once a meeting of the minds takes place on these key elements, you'll be able to make the deal.

Risk: The venture investors want to mitigate their risk, which you can do with a strong management team, a well-written business plan and the leadership to execute the plan.

Reward: Each type of venture investor may want a different reward. Your objective is to preserve your right to a significant share of the growth in your company's value as well as any subsequent proceeds from the sale or public offering of your business.

Control: From the entrepreneur's perspective, the art of structuring a good deal is to give away only 20 percent of the equity while maintaining 80 percent of the control. But control is an elusive goal that's often overplayed by entrepreneurs. Venture investors have many tools to help them exercise control and mitigate risk, depending on philosophy and their lawyers' creativity. Only you can dictate which levels and types of controls may be acceptable. Remember that higher risk deals are likely to require you to surrender greater degrees of control.

Capital: Negotiations with the venture investor often focus on how much capital will be provided, when it will be provided, what types of securities will be purchased and at what valuation, what special rights will be attached to the securities, and what mandatory returns will be built into the securities. You need to think about how much capital you really need, when you will really need it and whether there are any alternative ways of obtaining these resources.

You'll also need to develop an understanding of the different types of investors: emotional investors, who invest in you out of love or because of a relationship you have with them; strategic investors, who invest in the synergies offered by your business (based primarily on some non-financial objective, such as access to R&D, or a vendor-customer relationship-financial return may still be a factor); and financial investors, whose primary or exclusive motivation is a return on capital, and who invest in the financial rewards that your business plan (if properly executed) will produce. Your approach, plan and deal terms may vary depending on the type of investor you're dealing with, so it's important for you to understand the investor and its objectives well in advance. Then your goal is to meet those objectives without compromising the long-term best interests of your company and its current shareholders.

Achieving that goal is challenging, but it is easier if your team of advisors has extensive experience in meeting everyone's objectives to get deals done properly and fairly. The more preparation, creativity and pragmatism your team shows, the more likely it is the deal will get done.

4. Make sure you have an experienced driver whom others trust. Leadership is a critical component of the business growth plan. It includes not only the CEO, but also the board of directors, board of advisors, and even the outside team of coaches, consultants, lawyers and accountants that you select to guide you along the growth path. Employees will pay careful attention to the integrity, experience and reputation of the CEO's "Kitchen Cabinet." 

In other words, fans rally around the driver, not the car. Who is leading the company, and how did they get there? Do people trust the driver and his or her vision? Are they willing to work longer hours and for less pay to help the company achieve its growth objectives? In Good to Great, Jim Collins discusses the importance of having the right people on the right bus in the right seats. Although I would never advocate entering a bus in a NASCAR race, the parallel to growing a small business is clear.

5. Carefully select your pit crew. Think of your vendors and suppliers as your pit crew. The relationships you build with them are the ones that will assist you in bringing your product or service to your target customers. How should your pit crew be selected? How effective have they been since they've been in place? If your current pit crew is not working, it will be difficult to grow your business.

Business growth is like a double-edged sword. When it is controlled and well-managed, it can provide you with tremendous rewards. When growth is poorly planned and uncontrolled, it often leads to financial distress and failure.

For many companies in highly competitive industries, rapid growth is the only way to survive. These companies must either act quickly to capture additional market share, or sit on the sidelines and watch others play the game. But do these competitive conditions justify unplanned and unbridled growth? Certainly not. Rather, the need for growth must always be tempered by the need to understand that long-term growth is the product of effective management and planning. 

Andrew J. Sherman is a partner in the Washington, DC, office of Dickstein Shapiro Morin & Oshinsky LLP. He is also the founder of Grow Fast Grow Right (www.growfastgrowright.com), an education and training company for executives of middle-market companies. He can be reached at ShermanA@dsmo.com.

By Chris Penttila

Back in 1997, entrepreneur Scott Testa was looking for ways to get attention for his young software company, Mindbridge Software in Morristown, Pennsylvania. Instead of running ads, however, Testa decided to invest $20,000 in a PR campaign where customers entered an essay contest and had the chance to win a free computer. The campaign generated local, trade and national coverage for the company, as well as coverage on a brand-new media outlet called the internet.

“We got some really good coverage,” says Testa, Mindbridge’s founder and COO. “And it was relatively inexpensive.” He’s been sold on the power of PR ever since. The company has been mentioned in publications including BusinessWeek, Entrepreneur, Fortune, The New York Times, and USA Today. Version 4.0 of the company’s software is generating buzz in trade publications even though it hasn’t been formally released yet. The attention hasn’t hurt the bottom line: Company sales have increased by 25 percent every year and are projected to reach $10 million in 2005.

Testa, 39, thinks PR beats advertising both in its effectiveness and efficiency in reaching people, especially for small businesses that don’t have a lot of money for advertising. “There’s so much advertising now that you almost become immune to it,” he says. “PR communicates in a way advertising can’t.” 

Studies have shown that well-planned PR execution can be extraordinarily effective in increasing a company’s credibility. PR “validates your company and makes it stand out,” says Vicki Torres, a former Los Angeles Times business reporter and now a
PR and communications consultant in Los Angeles.

Increasingly, young companies must stand out in order to generate revenue in a crowded, competitive marketplace. As any business owner knows, however, it’s tough to create a PR strategy that cuts through all the clutter. PR isn’t cheap, either: Small businesses can expect to spend anywhere between $1,000 and $8,000 per month to retain a PR agency, and at least $150 per hour to hire an outside PR consultant. On top of the upfront costs, it can take three to six months to see results from a PR campaign.

“The biggest misperception about PR is that it’s too expensive and too nebulous,” says Mary Schnack, a former newspaper journalist and founder of Communication Bridges, a Sedona, Arizona, PR firm. But getting more effectiveness out of your PR strategy is possible, and here’s how to do it.

The ROI of PR
PR is an afterthought for many small-business owners who often don’t see PR as something that requires much budet-ing or planning. These entrepreneurs become reactionary—starting a news-letter because a main competitor has one, for example—instead of thinking about what really works for the com-pany. It isn’t long before their PR efforts go off track and off budget.

Failing to view PR as a business process is “a huge mistake businesspeople make,” says Paige McMahon, a former newspaper reporter and president of McMahon Communications, a Bethesda, Maryland, PR consulting firm. “The costs add up, but you’re not getting any traction. You’re just willy-nilly kind of guessing.”

PR experts suggest creating a budget for PR based on a percentage of annual sales, then thinking about what you want most from your PR efforts. Do you want to raise awareness, increase sales, add credibility or something else? Planning ahead not only gives your company direction, but also lets you compare price and service based on a predetermined budget. “If you only have $500 a month, then you need to budget that out for the entire year, which is $6,000,” McMahon says. “Say [to the PR person], ‘I need to hear what you can do for me for $6,000.’” If you outsource, keep in mind that at least $1,000 will go toward the upfront planning process, with the rest going toward campaign execution.

Schnack requires her clients to develop communications plans that state their PR objectives, from building image and community awareness to increasing sales. The plan also defines how the company differs from competitors, its target audience, what the company sells and which media—from newspapers to trade shows—best fit the company’s message. “It’s really hard for [entrepreneurs] to take a step back and do creative thinking,” she says. “[But] it behooves people to take a day to go over this and dig deep.”

Along the way, you might find the PR function is better performed in-house. Testa used to outsource to a PR agency, but a cost analysis revealed it was more cost-effective to create a full-time, in-house PR position. Mind-bridge still uses PR agencies for side projects. “This is what works for us,” Testa says. “It’s a lot of work getting an agency up to speed on your product and your marketplace.”

Every quarter, Testa and the com-pany’s in-house PR team study clippings and scan the internet for stories mentioning Mindbridge. It’s a “cut and dry” measuring device, says Testa, who’s learned successful PR requires thinking long term, even on the smallest of budgets. Mindbridge budgets $300,000 per year toward PR. “[PR is] something you have to invest in,” he says. “You really have to look at return on investment over years, not months.”

Getting Media Attention
Creating a PR plan is one thing; executing it is another. With advertising, companies are able to control what is said and when it’s said. But the opposite is usually true in PR, where the media control the placement, tone and timing of a company’s message. It may take a reporter nine months to respond to a press release, Schnack says. The loss of control is a hard pill for small-business owners to swallow.

Journalists may seem hard to reach, but they’re all looking for the same thing: A timely, different and trendy story that serves their readership. Is what you have to say really newsworthy? “As I like to say, ‘They don’t call them newspapers for nothing,’” Torres says.
Deborah Davis knows it’s not enough to tout the business of her business to get the attention of journalists. Davis, 42, is founder and president of Cleaner by Nature Inc., a nine-year-old eco-friendly dry cleaning company in Los Angeles. “People tend to think of [PR] as ‘I need a reporter to write about my business.’ Well, not necessarily,” she says. The real story, she says, might be something unrelated, like something unique you or one of your employees has done. Whatever the angle, the company still gets mentioned in the story, which is what you’re after.

Early on, Davis focused on generating coverage in a local newspaper. At the same time, she positioned her 15-employee company in newsletters. The local newspaper wrote about the company, and eventually the coverage snowballed: A Los Angeles Times re-
porter called her, followed by an Associated Press reporter. “I was thrilled. I was getting calls from all over the country [from] people asking me about my business,” she says.

But it didn’t happen overnight. Don’t get hung up on big, national media, Davis says. Instead, start locally, and wait for things to build. “When you launch a PR campaign, you have to be patient,” she says. “PR is about your public. You have to define what your public is according to the scale and type of business that you’re in.”

Make a short list of local and regional reporters who write stories that dovetail with your industry and business. Under-stand the medium you’re targeting, whether it’s radio, TV, daily newspaper or magazine, because they all work on different deadlines and focus on different things. A TV reporter, for example, is interested in stories that have interesting video. To a newspaper reporter, the
visual angle isn’t as important.

Another way to interest journalists is by positioning yourself as an expert source on specific topics. “Let reporters know they can contact you for reactions,” Torres says. “And be OK with being a mention in—and not the focus of—the story.” Starting a brief weekly or monthly newsletter that’s e-mailed to a list of media contacts, or sending a press release that highlights your areas of expertise, are both good ways get on journalists’ radar.

Davis expanded her PR efforts through trade groups she’s joined, including the Dry Cleaners Association, the National Association of Women Business Owners, the Santa Monica Chamber of Commerce, and the Sierra Club. “They have people on staff who can help you develop your press releases and press contacts,” she says, adding that trade associations give out various awards that are a source of free PR for entrepreneurs. “Those organizations will work for you to promote the fact that you won their awards,” says Davis, who has created a link to awards on the company’s website, www.cleanerbynature.biz. “The best way to get attention from a reporter is if somebody else is touting you.”

If you have a talent for writing, consider writing articles for trade publications and local business journals, which often accept articles written from different areas of business expertise. It’s good exposure,  says Torres, and “you’re hitting the folks who might call you up and use your services or products.”

Dealing With Journalists
What should you do when a journalist contacts you? Unfortunately, every journalist has stories about small-business owners who suddenly disappeared when it was time to do the interview. These entrepreneurs quickly end up on a journalist’s “do not call” list.
Savvy entrepreneurs make return calls to reporters a same-day priority—even if it’s to schedule another time to speak—because they know journalists can’t wait for long. Employees should know where to route a journalist’s call, too.

Schnack suggests having up to five “teaching points” about your business that you want journalists to take away from an interview. This could be outlining the broad trends affecting your industry or profiling your average customer. “Have more of a teaching attitude than a selling attitude,” Schnack says. If there’s time, follow interviews with a brief e-mail that re-iterates your main thoughts from the conversation. Make yourself available to answer follow-up questions, and provide the journalist with contact information.

At this point, you’ll have to let the journalist do his or her job. “A journalist isn’t beholden to the business owner,” Torres says. “And the business owner needs to understand that’s a basic difference between journalistic efforts and publications that are industry-related.” The story might not portray your company in ex-actly the way you had hoped, but you got press attention that will lead to more press attention down the line.

Davis has been happy with the payoff from her PR efforts. Company sales are now $1 million per year. “Cus tomers will say, ‘I don’t know how I heard about you. I just did,’” Davis says. “That’s how I know my efforts are working.”

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area. She can be contacted at chris@sitting-duck.com.

By Nichole L. Torres

Long gone are the days of lounging away the summer. Today’s teenagers have loftier dreams—they’re starting businesses. Seeing a rise in entrepreneurial interest among teenagers is Brendan Landry, YouthWorks program director at the Micro Business Development organization in Denver (www.microbusiness.org ), an organization that offers micro-loans to entrepreneurs. “Teen [entrepreneurs] get motivation from what they feel is relevant, what they’re interested in and what they like doing,” he says.

Entrepreneur Chauncey Holloman was interested in creating greeting cards especially for the black youth market when she started her company, Harlem Lyric Enterprises Inc., in 2003. Holloman, now 17, got the idea when looking for a card for a friend. “They didn’t have cards that said exactly what I wanted to say,” she recalls. “I have a long line of entrepreneurship in my family, so I went to my mom and told her this was a gap in the greeting-card industry, and maybe it was something we should look into doing.” Holloman’s mother, Subrena McCoy, helped her get started.

Parental help is key for most teenage entrepreneurs, note experts. They often help with financing the startup and in taking care of tasks while the entrepreneur is in school. “[Teens] need the support of their parents, their guardians and their communities—and they do have this,” says Diana Acevedo, program manager of Girls Going Places (www.girlsgoingplaces.com), a scholarship program created by The Guardian Life Insurance Co. of America.

In addition to a $10,000 scholarship she received in 2005 from Girls Going Places, Holloman had the help of her family and friends. She and her mom held a fundraiser to get manufacturing and distribution capital—and it worked. Today, her products are found in stores all around her Mabelvale, Arkansas community and even in stores from Mississippi to Washington, DC, pushing annual sales to about $100,000.

Being taken seriously as a young entrepreneur can be a challenge, but Holloman notes that the pressure just pushed her to work harder. “It was basically me pushing my-self to be more adult,” she says. But she found that the quality of her products spoke for themselves.

Professionalism will help you increase your credibility, notes Timothy C. Ferriss, a guest lecturer of tech entrepreneurship at Princeton University and author of Lifestyle Hustling: How to Work Less and Live More. “Project a professional image. Having a good website is critical,” says Ferriss. “[Also] try to get press [as a teen entrepreneur], as it helps to validate you in many ways.”

Bottom line: You don’t have to wait to start a business. “Just understand you have control over your life,” says Acevedo. “Don’t be deterred by any limitations you might face as a young person who’s starting out . . . you really can go far.”

There are many resources to help you start your business. Check out the SBA Teen Business Link website, www.sba.gov/teens; Entrepreneur magazine’s www.teenstartups.com; Ve2ntureKids, an entrepreneurship program for minority elementary school students (www.venturekids.org); and YoungBiz Inc., an organization that provides entrepreneurship training workshops and camps as well as online resources for teens (www.youngbiz.com).

Nichole L. Torres is a writer for Entrepreneur magazine.

By Nichole L. Torres

Maybe you’ve dreamed of starting a business with your family—your grown children manage the sales and marketing, your mother-in-law handles customer service, and your brother heads up new business development. In this family utopia, you’re building wealth while everyone works together as a harmonious whole.

Then, of course, you wake up. While a family business can be full of rewards, you know it’s not going to be easy. Along with the typical stresses of entrepreneurship, a family business presents unique challenges: dealing with family conflict, working with nonfamily employees, succession planning and defining each family member’s role. Add to that balancing your work and family life when you all work together and being respected as more than just a mom-and-pop business, and you’ve got yourself a family quandary. Thankfully, we persuaded three successful entrepreneurial families to share their secrets and have tips from a few top family business experts to help you navigate these sometimes treacherous waters. Strap yourselves into the minivan, kids—the family is going for a ride.

Conflicting Emotions
There’s almost no one in the world who can make you crazy quite as well as your sibling. Just ask brothers Rick and Randy Girard, co-founders of Girard Environmental Services, a landscaping company in Sanford, Florida. Rick, 36, believes it’s the passion both he and his brother have for the business that can make their arguments so heated. “It is a very difficult situation. My brother and I learned a long time ago that when we disagree, we need to separate and discuss it again tomorrow,” says Rick. “Arguments are never productive. Things are said that aren’t meant, and it’s kind of hard to take those things back.”

Going to separate corners to cool off can be an effective way to deal with family conflicts, says Ira Bryck, director of the Family Business Center at the University of Massachusetts in Hadley. Some entrepreneurs find it helpful to have offices on different sides of the building. “You need to structure it in a way that you don’t put two pit bulls in the same office,” says Bryck. “There was a [local] case where two brothers who ran a very successful company used to fight all the time until [they] realized they each needed their own office on opposite sides of the city—and now their dealings are more businesslike.”

It can also help to identify old family patterns so you don’t repeat them, says family business expert Larina Kase, founder of Performance & Success Coaching LLC, a business coaching company in Philadelphia. If the older sibling is used to parenting the younger one—or if the younger one was always seek-ing attention—those patterns can repeat. “It’s not that there’s something wrong with your family if you’re having these communication difficulties,” she says. “It’s just that it happens to be coming up in the business as well as your personal life—it’s magnified in that way.” Try to be respectful of each other during arguments—and really try not to argue in front of employees. “It’s important that you’re not showing your employees the family issues that are causing the arguments,” Kase adds.

Though Rick Girard notes that he and his brother Randy, 32, still argue, he says, “We know when to stop.” It doesn’t mean they aren’t close—they even have homes next to each other, and they’ve grown their company to $18 million in annual sales since starting in 1998. They’ve also expanded the company with Girard Garden Centers, Girard Wholesale Nurseries and Girard Pool & Patio (which is still in the works)—all under the umbrella of The Girard Companies.

Says Rick, “We love for people to know [we’re] the two brothers who own Girard Environmental Services. The most rewarding [part] is the pride and reputation of becoming successful together.”

Running a Tight Ship
One of the keys to minimizing conflict and maximizing success is defining each family member’s strengths and gifts and putting each person into the right company role. Susan and Kerry Johnson, the mother-daughter team behind Susan’s Healthy Gourmet, a healthy meal delivery service, have perfected their system: Susan deals with networking and marketing and oversees the kitchen, while Kerry handles customer service, policies and hiring. “We will sit down and say, ‘What’s best for the businesses? Where are our strengths and weaknesses?’” says Kerry. “It [took] trial and error and being honest with each other, but we’re all in the right place now.”

The Johnsons have applied that same reflection and focus to hiring their nonfamily employees as well—it’s about hiring the best people for the job, not just hiring people because they are family or friends, notes Kerry. That type of true meritocracy is exactly what experts suggest when it comes to building a strong family business. The message you want to send to nonfamily employees, says Bryck, is this: “There are no ceilings here—you can make what you earn.” 

Kase echoes that sentiment: “Employee recognition is really important. You want to make sure [the nonfamily employees] feel like they are a part of the group and are recognized for their accomplishments.”

Susan, 58, and Kerry, 33, make it a priority to create a company culture where all their employees feel valued. “They’re not just numbers to us; they’re people,” says Kerry. Since starting the Irvine, California, company in 1996, they’ve branched out into both a kids’ line of healthy meals, called Susan’s Healthy Kids, and a frozen food line, Lifespring, that’s marketed to seniors. Combined annual sales are nearly $4 million.

One of the challenges the Johnsons face now is balancing their work life and home life. “One of my goals is to not be here 60 hours a week,” says Susan.

Kerry has worked to set definite boundaries between the business and her personal life. “To be a good, functioning presi-dent, there are certain things that are nonnegotiable for me—I’ll say, ‘Don’t call me after 7 p.m. about business unless it’s an absolute emergency,’” she says. “I go home, [and] I’m done with work and ready for the other part of my life.”

Family Is Serious Business
Working so hard to build your family business, you might be worried about not being taken seriously or being dismissed as “only a mom-and-pop” by outsiders. Generally, the entrepreneurial families we interviewed didn’t have any issues with how they were perceived in the marketplace—likely because they’re deciding how they want their image to be presented. “A lot of it is going to depend on your industry and the image you want to convey. But more often, it’s going to be an asset,” notes Kase. “From the consumer’s point of view, people like to support a local family-run business. It’s more compelling—it’s part of the American Dream. You can certainly use that to your advantage.”

Promoting themselves as a family business has helped boost the image of Potluck Press, a Seattle-based greeting-card manufacturer started in 2001. Run by Patti McKillop, 58, her daughter, Rosie, 26, and her son Matt, 31, the company specializes in vintage picture greeting cards. They share their traditional feel with all their artists and sales reps, making everyone feel like family, says Patti. Even the company name was inspired by that family dynamic. According to Patti, Potluck Press means a place “where everyone brings something to the table.”

Looking toward the future, the McKillops say they’ve discussed issues of succession planning and carrying the family business into the next generation. Patti envisions her three children running the company (including her son Mike, 33, an archaeologist who currently doesn’t work in the business day to day). “It’s their business as much as it is mine,” says Patti. “I want them to know that what they do now, they’re building for their own future.” Looking to the next generation, the McKillops plan to diversify the Potluck Press card lines and have even branched out into Potluck Paris, importing French fashion jewelry. With that expansion, they could see their high-six-figure annual sales shoot into the seven-figure range this year.

Building for the future is exactly what succession planning is—making provisions for who will eventually take over the business. Though it may sometimes be difficult to discuss this issue, it’s vitally important, say experts. “There’s a lot of fear in both directions,” notes Bryck. “Take the time to learn how to broach the topic, and be diplomatic.” You may even bring in a respected third party—like a trusted advisor, accountant or lawyer—to help start a discussion.

When you’re communicating about possible succession strategies, it’s important to hear everyone’s goals and thoughts upfront. “It might happen that nobody’s interested in being the next owner or president of the company—or it might happen that three of the kids want to be in that role, and then they’re all vying for that position,” says Kase. “Compromises are going to have to be made in terms of who’s going to fill which role—but try to make it so that everybody has some of their goals met.”

Family Fun Time
Now you’ve heard some of the difficult issues you’ll face in running a family business, but remember—it can be fun. All the entrepreneurs we spoke with agreed that it’s a joy to spend time with their families and build their businesses together. Says Rosie McKillop: “It’s just a blast to hang out, the three of us, and with our other employees, too.”

Susan Johnson feels the same way. “We are a close family, and we’re very good friends,” she says. “It’s really nice to be able to share the successes as well as the downsides . . . it’s one of the things I love the most.”

And one of the biggest benefits, according to Rick Girard: “It’s the trust and loyalty factor. The backstabbing that goes on in corporate America—we don’t allow it.”

Talk about family values.

Nichole L. Torres is a writer for Entrepreneur magazine.

By Mat Edelson

At the intersection of Hope and Despair, a child's schoolyard mural asks the question that is buzzing around both poverty-battered Newark and its newly elected wunderkind mayor, Cory Booker. "What can I be?" inquires Nate Elliott (and we know it is he who wonders about his future, for Nate has, with a youngster's pride, loudly scrawled his name mostly horizontally across his cement-canvassed vision of Mother Earth). If he'd been of a mind to do a slow 360 while contemplating his task in the security-fenced asphalt schoolyard, our young artist would have been confronted with his answer: Promising potentialities confronting disturbing realities. A vibrant Home Depot in the distance, framed by squeegee kids in the foreground. A brand-new, low-income housing sub-division-its style identical to $400,000 townhomes just miles away-set against a dilapidated project, its withered aluminum siding as droopy as an old bloodhound's ears. As for the school system responsible for Mr. Elliott's future, it, too, seems caught on the cusp: Half of its students graduate high school. Half get tossed to its streets, the same streets that saw eight shootings in the weekend prior to the new mayor's inauguration.

Young Master Elliott has begged the query. For himself. For his weary neighbors. For an optimistic business community. For a city whose time has come, but could just as quickly pass.

"What can I be?"

It may well fall upon young Mr. Booker to decide.

A survey of Newark's business leaders yields many opinions about Cory Booker and one consensus: From all appearances, he is the right man at the right time to return Newark to the national prominence it hasn't known since the 1940s. Decimated by the riots of the '60s, the city has known only two mayors since that turbulent era: Kenneth Gibson, elected as Newark's first African-American mayor in 1970, and Sharpe James, who ran City Hall from 1986 until this past May, when he decided to abdicate rather than face a contentious rematch with the 37-year-old Booker.

Despite the vice-like grip James held on Newark-he survived corruption findings within his administration and video documentation of numerous incidents of intimidation against Booker in their 2002 race-James helped create the foundation for Newark's resurgence. Under his leader-ship the city's population-which dropped by 30 percent after the riots-is showing signs of growth for the first time in 30 years. His New Jersey Performing Arts Center-NJPAC-stands as a shining centerpiece to the city's emerging cultural commitment, and James squired several important improvement projects, including the resurrection of the Portuguese Ironbound district. "Sharpe James was a cheerleader for our city, and extraordinary in that way," says Bill Marino, CEO of Newark's Horizon Blue Cross Blue Shield of New Jersey.

Yet after two decades, James was clearly a cheerleader getting long in the tassels. When Booker burst on the scene as a young, middle-class, suburban-raised upstart whose look ( GQ), background (Stanford football star/Rhodes Scholar/lawyer), and commitment (he lives in Brick Towers, one of Newark's notorious projects), he caught the eye of U.S. News & World Report, New York Magazine, and the NY Times Sunday Magazine and Newark revved up for something it hadn't seen in a generation: a political donnybrook. "The first time [Booker ran] was really a shock to the system that a Democrat was challenging a Democrat in Newark. That was news unto itself. Then they had the documentary, which raised awareness," says Noah Wrubel, owner of Newark's Bare Necessities, which according to Inc. Magazine is America's tenth-quickest growing urban company. The documentary to which Wrubel refers is Street Fight, an Academy Award-nominated chronicle of Booker's struggles against the James machine. With James refusing writer/director Marshall Curry any meaningful access, the documentary became a vehicle for the charismatic Booker's missionary-like zeal to improve his adopted home-town, where he served as a city councilman before losing the 2002 may-oral election by a few thousand votes. "By the time he ran again," says Wrubel, "maybe it wasn't a fait accompli, but people had a sense he had a real shot. He was the next guy to carry the mantle."

With Booker's overwhelming win in May-a Booker-backed ticket also captured control of the City Council-Newark's business community now has as its champion an up-and-comer whom national observers say has a political future as bright as another rising African-American Democratic star, Illinois Senator Barack Obama. One New York publication cut right to the chase, asking in its headline: "Will Cory Booker be The First Black President of the United States?" Perhaps, but first things first. Newark is Booker's chance to show his organizational moxie on a scale far beyond the scope of his previous efforts. Law partner, founder of the non-profit Newark Now-these are all on the Booker resume, but business leaders say such endeavors may not amount to much more than batting practice. Referring to Booker's business background, Al Koeppe, former PSE&G COO and Bell Atlantic New Jersey CEO, says, "I think the non-profit experience is a very good threshold experience, but there's very little that can prepare you to run a city other than running a large corporation. When you get there, you're in the game, you better hope you have the right skill sets next to you, and you better be prepared to make mistakes."

In some eyes, Booker has already blundered, charging $500 a ticket-and $30,000 for a luxury suite-to attend his inauguration ball. For a man who claimed to be of the people, the fact that he was giving away numerous seats to poor constituents and donating the event's proceeds to charity did little to mollify the annoyed. "The timing was wrong. The message was wrong," wrote Newark Star-Ledger City Hall columnist Joan Whitlow.

Still, such opening-night missteps might be chalked up to youthful exuberance. In the matters that matter most, Booker is reaching out to Newark's business community in all the right ways. A constant criticism of the James administration was its lack of a unified, cohesive vision for the city. After NJPAC opened in 1997, the reaction was positive but haphazard. "You started to see cranes in the sky all over the city," says Koeppe, who now runs one of Newark's largest business consortiums, the Newark Alliance. "There was development going. It wasn't necessarily well-planned, but there was interest in Newark."

How that interest was received in City Hall was a hit-or-miss proposition. As Koeppe puts it, "there was a very arrhythmic relationship between developers who came to the city and the Mayor's office." With no central ombudsmen in City Hall for development deals, the fortunes of any given project could rest on in whose office the paperwork landed, and whether that person had the skill set to understand the value of the deal to the city. For a city long starving for business growth, such a take-all-comers haphazard approach was understandable, as when opportunity came it often appeared in sudden, tsunami-like waves. The most notable occurred in the days and weeks after 9/11, when lower Manhattan businesses gobbled up any office space they could across the Hudson. While the big boys went directly across the river, "a lot of smaller, $10 million to $100 million companies, who would not be able to afford the rents in Jersey City, they went to Newark," recalls NJBIZ.com reporter Shankar Parameshwaran. That was followed over the next two years by the creation of office space dedicated to protecting the massive amount of data generated by financial firms.

Though those needs have mostly been met, another business boom is in the offing, again generated by the dynamo that is New York City. "Midtown has a low vacancy rate of 1 or 2 percent, and rates are going through the roof," says Parameshwaran, who writes under the moniker "Shankar P." "People are paying 100 bucks a square foot [in Manhattan]. This will bring a third wave, and Newark and Jersey City will be the top beneficiaries. So Cory Booker is actually coming in at the confluence of several good things."

And unlike his predecessor, Booker is creating a comprehensive business template to focus his efforts before the horses leave the barn. He's even pulled a "Whoa, Nellie!" on the fleeing strays. Before he'd taken office, Booker successfully sued to stop what he called "sweetheart" land deals traditionally rubber-stamped by the City Council, some of which he had reportedly voted for during his earlier time on that body.

Booker has even threatened to squash the controversial new home of the New Jersey Devils, even though $70 million of Newark's money has already been spent to launch construction of the arena. The arena, slated to open in 2007, is contracted to receive $210 million, but there are rumors that Booker is researching the costs involved in breaking the deal. "This is a poorly conceived project, an unnecessarily rushed project. A project that is not the best use of land and city resource," Booker told the Star-Ledger, days after the Devils changed management companies over-seeing the project.

This cautious approach has earned Booker praise for those looking for a better, transparent business model for Newark. "The land deals that he's criticized...I believe the fact that he's looking at it with a great deal of scrutiny means there could be a methodology for allowing [public/private partnerships] to happen in a way that it's not perceived as dealing with cronies, friends; it's more the proper way of conducting the business of making the city grow," says Alex Garcia, president of El Taller Colaborativo, a Newark-based architectural and engineering firm that's designed many of the area's train stations.

As part of his transition, Booker is tasking numerous community, business and academic leaders to prepare white papers. Early indications are these briefs won't collect dust. Dr. Steven Diner, provost of Rutgers' Newark campus, says "I talked to him and sent him a list of 50 faculty with expertise in different areas. Many of them-20, 25-have been called and have participated in transition discussions, so there's an openness to look to the universities for expertise, a comfort level with academic expertise that's very exciting for us."

Indeed, Newark's long-term financial success probably resides within its academic halls. "We have more students here than they have in Cambridge," says Gabriella E. Morris, president of The Prudential Foundation, the philanthropy, community, and educational development arm of Prudential, Inc. Fifty-thousand college students and faculty-nearly one-sixth of Newark's population-fill the Newark campuses of Rutgers University-Newark, New Jersey Institute of Technology, University of Medicine & Dentistry of New Jersey, Essex County College, and Seton Hall University School of Law. Creating synergies between academia, the business community, and City Hall is seen as a top priority for many concerned with Newark's economic development. The Newark Alliance engaged Harvard Professor Michael Porter's consulting firm, Initiative for a Competitive Inner City, to create Opportunity Newark: Jobs and Community Development for the 21st Century.

Part of Opportunity Newark's plan is to engage higher education to think strategically about curricula, internship programs, and educational career tracks that will create sustainable Newark-based jobs for graduates. Given Booker's familiarity with business and higher academia, both sides feel they have an advocate for their cause. This includes further city involvement in developing student residential housing in the University Heights district and projects such as Science Park and the Digital Century Center building, where incubator companies bring intellectual capital to fruition. In the past, such ideas had no place in Newark to prosper.

"There really was no point person [in City Hall] for either higher education or education in general," says Essex County College President Dr. A. Zachary Yamba, who sits on the Council for Higher Education in Newark (CHEN). "Our hope is he will bring in someone as a point person or surround himself with people who understand the role of higher education in urban revitalization. We think because of his [academic] background, it shouldn't be hard to find."

What Newark really is asking Booker to do is to give the city an extreme makeover, especially regarding how America perceives the area. "There are image problems," says Dennis Bone, president of Verizon New Jersey, which has its headquarters in Newark. "Many people in the business community look at Newark and say it has a great future, but they don't want to take that next step and invest." Yet, much as Martin O'Malley became the young, hip mayoral face that raised the national media esteem of once-blighted Baltimore, Dennis Bone feels Cory Booker's talents, looks, and persona could elevate Newark. "Cory is smart, articulate, and, for a new mayor with only one term on the City Council, he is already on the national stage. People see that, see a freshness in Newark, and say, 'I believe it will take off now.' We're sitting on the brink of greatness, hundreds of opportunities," says Bone, before adding a caveat. "But a year from now, if the new administration doesn't perform, those opportunities will be quick to go away. Not that I'm saying that will happen. A lot of investment is poised to come here."

It's up to Cory Booker to bring it home.

Mat Edelson is an award-winning writer based in Baltimore, Maryland.

By Nichole L. Torres

Show business ain't easy-but it's a damn fine ride when you see your creation getting accolades at the likes of the Sundance Film Festival. Christine O'Malley and Patrick Creadon, the husband-and-wife team behind Los Angeles-based O'Malley Creadon Productions, are examples of what happens when the entrepreneurial spirit meets the entertainment capital of the world.

Up the Ranks: O'Malley, 34, and Creadon, 39, honed their craft during years of freelancing in TV and film production. "We decided we wanted to do our own projects and have creative control," says O'Malley. Starting part time in 2001 while still taking freelance jobs to pay the bills, the pair began producing product videos for a local dental laboratory. O'Malley says, "For us, it was a good training ground to produce projects that would eventually be a lot bigger."

Christmas Morning: Inspiration struck when this crossword-loving couple received three crossword puzzle books for Christmas in 2004. Curious about the author of the books, Will Shortz, editor of The New York Times crossword, they sought out a documentary on the man and found nothing. The pair contacted Shortz and pitched him the idea of doing a documentary that tells his story, what he does and how the crossword is such an important part of people's daily lives. "Will was totally receptive right from the start," says O'Malley.

Celebrity Crossing: The film Wordplay is an entertaining and informative look at crosswords, examining the work of Shortz and his Times collaborators and introducing viewers to the American Crossword Puzzle Tournament. A major coup for the entrepreneurs, though, was securing interviews with celebrity crossword lovers including Jon Stewart, the Indigo Girls, New York Yankee Mike Mussina and Bob Dole. At the tournament, they met a judge from Arkansas who knew former President Bill Clinton-a connection that led to a featured interview with Clinton. "He was so interesting and accommodating. It's a topic he personally enjoys, and I doubt people ask him about it very often," says O'Malley. "He was really exciting to talk to."

Financing Fame: Getting an independent film financed when you're new on the scene is no easy feat, so the pair used funds borrowed from friends and family as well as their own resources. Because they wanted to focus solely on the film, they halted all other projects through the summer and fall of 2005 and were able to produce Wordplay in a year.

Shining at Sundance: Submitting the film to Sundance was an early goal. "When we realized we had a really good story and this was more than something that was of interest just to us," says O'Malley, "we knew this was a marketable project." One of 760 documentaries submitted, Wordplay made the 16 chosen to play at the famous Park City, Utah, festival and was bought by IFC Films for $1 million. The film has been released nationwide, playing in nearly 350 theaters domestically so far, and the Weinstein Co. has picked up the foreign distribution rights and the DVD release.

Nichole L. Torres is a writer for Entrepreneur magazine.

By Betsy Block

Think of the food industry as a pie—OK, as a very large pie. This year, Americans will wolf down hundreds of billions of dollars worth of food. Entrepreneurs hungry for a slice of the action might wonder how they, too, can break into this lucrative bread- and-butter (and juice and jam) field. The answer: Sniff out the hottest trends. Right now, some of the loudest buzz in the food industry is around organic foods; gourmet specialty foods, such as “homemade” jams and candies; ethnic foods; and, of course, restaurants, including both independents and franchises.

With 2005 projected sales of $476 billion in the restaurant industry alone, according to the National Restaurant Association, and growth rates running as high as 20 percent a year in the organic food industry, it’s no wonder so many entrepreneurs are jumping on the food- industry bandwagon. Case in point: There are more than 50,000 restaurant startups each year, according to Gary Worden, publisher and owner of Restaurant Startup and Growth magazine.

As impressive as these growth rates are, however, failure rates are also high. As Worden says, about 1 in 4 new restaurants fails within a year of opening. Still, with a populace that has a seemingly endless appetite for anything new and different, there’s definitely money to be made in food. Here, four successful entrepreneurs share the secrets of their successes (but, alas, not their secret recipes).

Kenneth Perry, owner
Perry’s Gourmet Services
Jamaica Plain, MA
Kenneth Perry has been slinging hash—and rice and beans, and macaroni and cheese—for nearly three decades. He started working in the food business during high school before taking his toque into the military. After his service ended, he worked for hotels and restaurants around Boston, and finally became head chef at City Fresh Foods, a company that provides freshly cooked, nutritious meals for schools, the elderly and community programs. After eight years at City Fresh, the 45-year-old entrepreneur was ready to venture out on his own. Three years ago, Perry heard about a subsidized commercial kitchen run by a nonprofit organization, Nuestra Culinary Ventures (see “A Helping Hand” on page 49), and he knew it would be the perfect opportunity to start his own catering company. (In Massachusetts, it is almost always illegal to prepare food for sale in a home kitchen.)

He chose his menu of Caribbean, Latin and Southern cuisine because, he says, “this is everyday living for most people” in the neighborhoods he serves; not to mention “it doesn’t cost a lot,” Perry adds. Some of his specialties include jerk chicken, fried catfish, fried chicken, collard greens and corn-bread stuffing. Now, a little more than two years after starting Perry’s Gourmet Services in Jamaica Plain, Massachusetts, he and his four employees are bringing in sales in the six figures.

Perry advises other would-be caterers to work for someone else first, both to learn the business and to make mistakes on someone else’s time—and dime. While working at City Fresh, he says, he learned how to order, how to deal with salespeople and purveyors, and how to get the best deals on the freshest ingredients. “When I left City Fresh,” he adds, “I took the catering business with me, so I had [my business] on a silver platter.”

One more thing: “Get legal advice,” Perry warns. He didn’t, and he ended up filling out the wrong incorporation paperwork. Fortunately, it all worked out just fine; he quit his job last fall and has devoted himself full time to his business ever since. Perry knows what he’s talking about when he says, “Don’t let fear hold you back.”

Kim Halmrast and Steve Weaver, managing partners
Seasons at Rose Creek
Fargo, ND
“Think twice before you get into this business,” says Kim Halmrast with a laugh. Talk to her for a few more minutes, though, and you can tell she’s just kidding. Well, half-kidding, anyway. Halmrast, 49, has been in the restaurant business for over 30 years, and she clearly loves the industry. So does executive chef Steve Weaver, 47, who, along with Halmrast, is co-managing partner of Seasons at Rose Creek, an upscale restaurant.

According to Weaver, you have to love the business if you’re going to do all the work required to keep a restaurant running: the ongoing effort to improve as a chef; the last-minute parties of 30; the banquets cancelled due to snow (“We are in North Dakota,” Weaver wryly points out); “the mothers of the bride,” whom Weaver laughingly calls one of the most difficult challenges; and most daunting of all, the competition from the more than 90 restaurants, mostly chains, that have opened in Fargo since Seasons was founded 12 years ago.

So how do they manage to stay viable? Nine years ago, they started cooking for off-site parties, says Halmrast. Now, catering accounts for about 40 percent of their $1 million in annual sales. They also have a banquet room, which, with its location right on a golf course and with the duo’s focus on detail, attracts clients looking for the right place for a special occasion. “It’s a ‘wow’ as you walk in the door,” says Halmrast proudly.

Then there’s Weaver’s determination to learn and grow as a chef, which he does through courses with the Ameri-can Culinary Federation. He admits he started out as a meat-and-potatoes man 12 years ago; now, he says, while it may still be meat, it’s no longer just beef, but also duck, quail and rack of lamb. And finally, the company sells Weaver’s homemade salad dressings at local grocery stores, which only account for about 2 percent of annual sales—if that—but make good marketing sense by getting the restaurant’s name out there.

Halmrast and Weaver stress that, in addition to diversifying your menu and services, the most critical key to success in the restaurant industry is good communication: between management and staff, between the front of the house and the chefs, and, of course, between the customer and the restaurant. “You need to have a pen and paper when you pick up the phone,” advises Halmrast. “That’s a must.”

Ronny Bell, owner and president
Pioneer Organics
Seattle and Portland, OR
Ronny Bell may not eat many hot dogs, but hot dogs, nonetheless, have changed his life. That’s because he spent his early years immersed in the culture of his grandfather’s company, kosher food giant Hebrew National. His childhood exposure to the food business resulted in dual passions for both food and entrepreneurship, so it’s not really surprising that he founded his own organic-food delivery business in Seattle. What is a little surprising, though, is that he did so when he was only 24.

Bell, now 32, learned about the benefits of organic farming when he read The Ecology of Commerce by noted environmentalist Paul Hawken. After graduating from the University of Wisconsin, he volunteered at a farm in Washington. “It became clear to me—after about five minutes of work—that I was not meant to be a farmer,” he laughs. Instead, he started selling the farmer’s “beautiful organic produce” to local restaurants and natural foods stores. He found the work much less backbreaking than farming—though not exactly profitable at first, since all the money he made went back to the farmer.

The profits started coming in 1997 when he took what he’d learned from the farmer and another wholesaler he worked with in New York to found Pioneer Organics, an organic-food home delivery service. Pioneer Organics creates eight different produce boxes a week, available for free delivery weekly or biweekly. The boxes come in different sizes and with different kinds of produce—mixed fruits and veggies, all fruit, even all juices. Customers specify what size box they want and then customize their orders by saying what they do and don’t want in their boxes.

At first, Pioneer Organics consisted only of Bell making deliveries from the back of his Subaru to all of six customers. But his company grew quickly, and what started as the seasonal dream of an inexperienced college graduate soon turned into a year-round business that now boasts annual sales of $3.5 million, a staff of 42 and a total customer base of 4,200 households. His greatest challenge, he says, has been overcoming his inexperience. “I always wished I worked for more people before I started my own business,” he admits. “I was naive.”

Still, his is a success story enviable by any standard or age: He turned his passion into profits while staying true to his most deeply cherished ideals. “What I did,” he says modestly, “was just follow my heart.”

Chip and Debbie Peterson, franchise owners
Cici’s Pizza
Throughout Missouri
How did a registered nurse and her husband, a jack-of-all-trades for Pepsico for nearly two decades, wind up as pizza moguls? By listening to their three kids.

When Chip and Debbie Peterson’s children were young, the family of five would drive from their hometown of Farmington, Missouri, to Houston to visit Debbie’s sister. Debbie remembers looking forward to the trip as a chance to try some new restaurants, but her kids had other ideas. “We want to eat every meal at Cici’s,” she remembers them insisting. Guess who got what they wanted? But Debbie didn’t mind, because the whole family liked Cici’s all-you-can-eat buffet of pizza, pasta, salad and desserts. Plus, Cici’s was clean and family-friendly. In fact, over time she came to look forward to those meals almost as much as her kids did, because while the young cousins ate pizza and entertained themselves, she and her sister could visit. “I said, ‘We need one of these [Cici’s near home] real bad,’” says Debbie.

But there was one problem: The company didn’t plan on opening any stores in Missouri. “I called Cici’s corporate headquarters once a year for seven years telling them I was interested in franchising,” Debbie recalls, until finally, four years ago, she got the answer she wanted.

They opened their first Cici’s in Farmington later that year. Since then, the Petersons have opened seven more Cici’s around the state, and they have three more slated to open by the end of next year. Debbie, 45, and Chip, 46, have made Cici’s their life. “Owning a business is a 24-hour part of your life,” warns Chip. For him, though, the upside is that he gets to work with his wife—something he clearly relishes. “[Debbie and I] are business associates and great friends and married partners—the only way to have an opportunity like this is to go out on your own.” And with annual sales of about $6.5 million and 240 employees, many of whom the Petersons consider a part of their extended family, they certainly have no regrets about leaving their old lives behind.

“I do hate to think of us trying to do this without a franchise behind us,” says Chip. With Cici’s just a phone call away, he says, “We don’t have to be chefs; we have to be entrepreneurs.” And that’s just the way he and Debbie like it.

Betsy Block is a freelance writer in Boston. Her work has appeared in The Boston Globe, Boston Magazine, Natural Health and Gourmet.

By Julie Moline

Being the CEO of a fledgling company is tough under any circumstances. Being the CEO of a fledgling company in the inner city adds another degree of difficulty. Add youth and inexperience, and success is even more unlikely. How many teens have access to capital, a network of experienced colleagues and contacts, much less an MBA?

Which is why the 2006 Growing Up CEO winners are so remarkable-and so inspirational. A joint venture between the Initiative for a Competitive Inner City (ICIC) and the Merrill Lynch Foundation, the Growing UP CEO program was designed to honor and support a talented collection of inner-city entrepreneurs, many of whom are still in high school and all of whom are younger than 21.

Now in its second year, the program identifies 25 to 30 entrepreneurs who operate successful companies, no matter what the size or type. Winners are chosen from a pool of more than 100 nominees made by directors of national youth programs, including the National Foundation for Teaching Entrepreneurship, Junior Achievement, the Future Business Leaders of America, Build, and Diamonds in the Rough.

The honorees on the 2006 list range in age from 14 to 20, with an average age of 17. The winners, from 10 states and 14 cities across the U.S., have founded and manage a variety of businesses-clothing and jewelry design and manufacturing, computer software, dance, salon services, academic tutoring, pet sitting, business services (including a temp service for a teenage labor force), and website design.

As part of the award, the winners are flown to Boston to attend the Inner City 100 Summit, co-sponsored by ICIC and Inc. magazine, which honors the fastest-growing inner-city businesses in the country. Awardees are also invited to the CEO Forum at Harvard Business School, where there are networking and tooling sessions with Harvard Business School professors and other experts. They are invited to set up a display for their business product or service, and attend the Inner City 100 Awards Dinner, which gives them a chance to mingle with entrepreneurs who, like them, built successful inner-city businesses through vision, moxie, and muscle.

"Networking at the Inner City 100 Summit and at the CEO Forum connects the young entrepreneurs-who are the next generation of business leaders-with a network of business leaders who are willing to work with them into the future as both individuals and entrepreneurs," said Dorothy Terrell, president and CEO of ICIC. "The networking, by the way, goes both ways. The kids bring a fresh perspective and plenty of ideas to the Summit. They're also an entrée to the next new thing in fashion, entertainment, and lifestyles."

The program continues beyond the two-day summit with a mentorship network made up of Inner City 100 winners who are available year-round, an alumni network, online tutorials and blogs, and regional Growing Up CEO events.

This year also marks the inaugural International Growing Up CEO program, which brings three international inner-city business owners younger than 21 to the event to celebrate international business ownership and diversity.

Growing Up CEO is currently accepting nominations for the 2007 list. For information,visit www.icic.org.

Enlightening the unenlightened: He hardly has to, at least with iPod users.

Beyond innovation: If the iPod market somehow disappeared tomorrow, Chipping's company would likely live to fight another day. The InvisibleShield is made for numerous devices, from digital heart monitors and watch faces to MP3 players and laptop screens. Check it out at www.shieldzone.com.

Jessica Franz-Christensen
& Scott Christensen
Company: Jessica Scott Ltd., Boulder, Colorado
Started: 2002
The innovation: Jessica and husband Scott, both 29, make organic maternity clothes and organic baby linens. It sounds kind of New Age at first, like the organic movement is being taken to an extreme. What's next? Organic fuzzy dice and organic picture frames? But Jessica makes a great argument for every pregnant mom out there to run, not walk, to their website, www.jessicascottltd.com.

She talks of how the chemicals used in making clothes are eventually absorbed by the oil in our skin. "You know how when you [drop] a french fry on your clothes, and the stain never comes out?" says Jessica. "Chemicals are like that-they stay in clothes, and they're really hard to get out." She figures that moms probably don't want their fetuses exposed to that-nor their babies, which is why the company's bed linens are organic.

She mentions that organic bedding has been available in many countries for years now, and that the rest of the world is further along in the organic movement. In all of North America, she says her company is the only one that makes organic maternitywear, and it's proving there's a market for it: By the end of the year, the company should be clearing $500,000 in revenue.

The inspiration behind the innovation: Jessica came to the organic lifestyle before conceiving her daughter, Kendall, not yet 2 years old. In 2001, Jessica was diagnosed with multiple sclerosis, and she was advised by some naturopathic physicians to start eating an all-organic diet and examine all the chemicals in her house. That's when she began scrutinizing all her household cleaners, beauty products and clothes-and realizing how few products there were for someone like her. Jessica Scott Ltd., the combination of her name and her husband's, was born.

Enlightening the unenlightened: Talk for a while with Jessica, and you'll find her charming. You'll also see why people say that ignorance is bliss. She talks about how she was recently touring a conventional cotton farm and how she was accidentally sprayed several times by chemicals, which gave her a rash that lasted several days.

"Nobody's really talking about organic clothing," she says. Jessica thinks the organic clothing industry is where organic food was maybe 20 years ago. As more and more people learn about the industry, the more hopeful she is that a groundswell of consumers will start insisting on organic clothing. It hasn't hurt her cause that a lot of early adopters have been celebrity moms: Katie Holmes, Angelina Jolie, Gwyneth Paltrow and Brooke Shields have all purchased maternity items or linens from Jessica Scott Ltd.

Beyond innovation: Just as environmentally friendly products often have to make economic sense, Jessica realizes that hers need to be on par with other clothing. "We don't want things to look organic-you know, frumpy," she says. "We want our
clothes to be current, stylish and hip." She and Scott also want to eventually expand their organic clothing company into baby clothes and other apparel.

Bradley Husick, Rakesh Mathur
& Beerud Sheth
Company: Webaroo, Bellevue, Washington
Started: 2004

The innovation: The company makes the web accessible to laptops, PDAs and the like-even if you're not connected. Uh, excuse me?

That's right. Webaroo is free software, and if you have an interest in certain topics-worldwide news or soccer, for instance-it'll download the web pack, and you can transport page after page after page of information into, say, your laptop. If you planned on doing a lot of research on the internet encyclopedia Wikipedia, you could download the entire site onto that laptop with your Webaroo software, then go off to a park and research while lying in the grass, far from any network server. If you're due to fly to Dubai or Chicago-two of the geographical web packs available on Webaroo-you could download those and read all about them on your laptop as you fly to the city. Curious? Get more information at www.webaroo.com.

The inspiration behind the innovation: It was Mathur, 50, who thought of the idea first, says 36-year-old Sheth, whose CTO title suggests he was the one who largely turned the idea into a reality. His pal would go on long walks with his dog around Seattle, supposedly one of the most wired cities, yet he had trouble getting a connection in many spots, and searching the web on his mobile device was a very unsatisfying experience. Mathur then took a photography trip to Alaska with Husick, now 42, to photograph the northern lights-and they began serious discussions about building a product that could search and browse web content from anywhere, at anytime, without a connection.

At that point, says Sheth, Mathur came to him because aside from being friends, Sheth was already an entrepreneur, the founder of an online company called Elance. "We started asking ourselves, 'What if we could store the web in a mobile device?' and we began connecting the dots," says Sheth.

When it's suggested to Sheth that that's pretty impressive-most people remember playing connect-the-dots as a kid and coming up with a picture of a turtle or a bunny-he acknowledges, "There's a big difference between an idea and a business. It requires execution. I guess in our case, we were all serial entrepreneurs, and we were familiar with the process of starting a company and how it all works, how you start with the germ of an idea, flesh it out across different dimensions and start thinking about how the product should look, what the user experience will look like, and what the value or experience to the customer is. And asking yourself: Can you even build the technology to go behind it?"

Enlightening the unenlightened: It hasn't been too difficult to get investors excited about their business, says Sheth, who says of some of their investors, "call us dreamers, call us visionaries, but dreaming of bringing dreams to life is what this is all about." The public, however, is another story. "How do you explain a new idea? It's a marketing challenge," admits Sheth, who says that when it comes to launching an innovative product, "You want to be innovative, new and ahead of your time, but not so ahead that nobody else can catch up and use your product. It's a balancing act between promising and delivering."

Beyond innovation: Sheth says they're projecting that in a year, they'll have hundreds of thousands of customers, if not millions, and that in five years, theirs will be a standard platform for mobile devices sold around the world. Just as Google was recently made a word in the dictionary, "we hope Webaroo becomes a word in the English language," says Sheth.

Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com.

By Julie Moline

For more than 30 years, long before diversity became a buzzword, chemical giant DuPont has been seeking out and hiring minority-owned and women-owned law firms whenever it outsources legal services. For DuPont, this route wasn’t taken just out of a sense of corporate social responsibility. The company also benefits immeasurably from the talent and superb services these firms provide.

DuPont, along with dozens of other Fortune 500 companies, including Microsoft, Xerox, Accenture, Pepsi-Co, Nike, Aetna, Marriott, Domino’s Pizza, and Harley-Davidson, feel so strongly about supporting women- and minority-owned firms that they have become corporate sponsors of NAMWOLF, the National Association of Minority- and Women-Owned Law Firms.

The organization, based in Milwaukee, was founded in 2001 and has worked as a tireless advocate, building the case (literally and figuratively) that diversity is not only the right thing to do ethically, but the right thing to do for the corporate bottom line. Besides catering to the needs of its members, part of NAMWOLF’s brief is aspirational: It believes that the best way to increase diversity in the legal profession overall is through partnerships between big business and small law firms of exceptional ability.

How? Minority- and women-owned law firms hire and promote minority and women lawyers at much higher rates than majority-owned law firms. That, in turn, leads to more opportunities in the legal profession for minority and women lawyers. It’s a virtuous circle that ought to be imitated in many more industries.

NAMWOLF, like most associations, serves two constituencies: the buy side, which in this case includes the major corporations with diversity initiatives that encourage bidding by minority- and women-owned firms; and the sell side, the minority- and female-owned firms, which need to market themselves on a national scale but often lack the resources and expertise to do so. Having a blue-chip company as a client gives considerable legitimacy to a small law firm; hiring a woman- or minority-owned firm gives corporations a chance to put a mission statement into action.

For law firms, merely joining NAMWOLF adds credibility to visibility. Members are carefully vetted by NAMWOLF’s executive committee in a painstaking process that can take six to eight months. Once they’re in, NAMWOLF is committed to facilitating partnerships on their behalf. “We often find,” says spokesperson Yolanda Coly, “that companies want to hire women- and minority-owned firms, but have no idea where to find them. So we’ll help them locate suitable firms with the specialties they need. For our members, having an association act as an intermediary gives them access to potential clients they ordinarily wouldn’t be able to reach.”

The lesson to learn from NAMWOLF is this: Corporate procurement programs with a diversity element are an essential conduit to big business and prime contractors. Finding an association in your business’s field and joining its business networks is one of the smartest, most strategic investments your small business can make.

By Chris Penttila

Gena Y. Davis feels she was born to be an entrepreneur. As a kid, she sold a variety of products and remembers running home to tell her parents about making one of her first sales. “It gave me so much confidence,” says Davis, 38.

That confidence carried her far. After several years as a marketing assistant for a major movie studio, Davis started The Gena Davis Agency in 1995, a three-employee marketing and communications firm in Los Angeles, that specializes in emerging and niche markets. With sales nearing the half-million-dollar mark for 2005, Davis isn’t second-guessing her choice to go it alone. “I’m in control of my own destiny,” she says. “It’s such a good feeling.”

Davis isn’t the only black woman who feels good about leaving corporate America. Businesses owned by minority women are growing at six times the rate of all U.S. firms and represent nearly 36 percent of all companies owned by minorities, according to a November 2004 study conducted by the Center for Women’s Business Research and underwritten by Bank of America. Last year, an estimated 1.4 million privately held firms were majority-owned by minority women, generating $147 billion in annual sales.

 “It’s fantastic,” says Sharon Hadary, executive director of the Center for Women’s Business Research in Washington, DC. “Entrepreneurship is an opportunity that knows no race or ethnicity.”

It also shows no signs of stopping. According to the study, the number of black women-owned businesses grew nearly 33 percent between 1997 and 2004, while the number of Hispanic women-owned businesses grew by almost 64 percent. The numbers of Asian/Pacific Islander and Native American women-owned businesses both grew by nearly 70 percent during the same period.

 Minority women business owners also include first- generation immigrants—a group that continues to grow. The number of immigrant women business owners has increased almost 190 percent since 1990, according to recent research by the Immigration Policy Center, a Washington, DC, group that analyzes U.S. immigration law and policy. The U.S. Census Bureau found that women from Korea, Mexico and Vietnam topped the list of immigrant business owners in 2000.

Opportunities and Challenges
Many banks see a growing opportunity in catering to minority-owned businesses. Wells Fargo has made a lending commitment to women-owned businesses—since 1995, it has lent more than $22 billion to women business owners nationwide. “It’s a growth opportunity we want to support,” says Rebecca Macieira-Kaufmann, executive vice president and small-business segment manager at Wells Fargo in San Francisco.

Although the money is there, minority women still see barriers to capitalization. “The rates are good right now. The problem is trying to get the loans,” says Leticia Luna, 52, a San Francisco entrepreneur who owns a Latin nightclub called Roccapulco Supper Club and a restaurant called Leticia’s. Ten years ago, she applied for a $750,000 SBA loan to update the restaurant, fronting $250,000 in savings to secure the loan. She paid it off in 2001, but was left frustrated by the experience. “It was hard to get the loan; it took at least six months,” she says. “Never did I think it was going to be this difficult.”

Getting enough business, securing contracts and customers and gaining access to capital tend to be the main concerns of minority women business owners, says Macieira-Kaufmann. Anxiety over borrowing is another issue that has kept minority women-owned businesses from reaching the next level.

As any entrepreneur knows, there’s a direct link between networking and revenue generation. For many minority women entrepreneurs, success in business is no longer just about joining a network; it’s about getting access to influential networks that will increase knowledge, spur deal making, provide mentoring and propel growth.

As a black woman, Davis feels she has to hustle a little bit more, to network just a little bit harder. While she sees the government making strides toward diversity in contracts, private industry remains a harder nut to crack. “My biggest challenge is to get bigger pieces of business,” she says. “We have to get ourselves out there, really market ourselves, and be in front of the people we want to do business with.”

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina area.

By Geoff Williams

Entrepreneur:  Jeff Brinkoff, 33

Company: Red Monkey Foods in Mount Vernon, Missouri
A line of organic, gourmet, kosher spices, including seasonings and flavor blends

Projected 2007 Sales: $3 Million

’Tis the Seasoning: Variety may be the spice of life, but when Jeff Brinkhoff started his business, he aimed for a very specific niche, albeit one that offers consumers a wide array of choices—he began producing a line of organic spices. “My passion was cooking, but I had no food industry experience,” says Brinkhoff, explaining that if he had truly understood how difficult it is to get a product on the shelves, he might have been scared off the idea. “I guess in this case, ignorance was bliss.”

In his pre-entrepreneur days, Brinkhoff spent three years working in pharmaceutical sales and two years in business development for a disease management company. What got him thinking about starting a spice business? He says he “saw the need for seasonings that have no MSG and are low in sodium.”

About That Name: Doesn’t everyone equate red monkeys with natural organic spices? Brinkhoff wishes he had a better story for naming his business than saying he hired an ad agency to come up with names, but that’s how it happened. “I passed 10 names out to 40 people—liberals, conservatives, the whole gamut—and they all responded with their comments,” he explains. “A lot of them listed Red Monkey as one of the names they liked the best.”

Two weeks later, Brinkhoff called everyone back, and the one moniker everyone remembered was Red Monkey. That sold Brinkhoff, though he admits, “I lost a lot of sleep over the name [and] whether it would be taken seriously.”

Key Ingredients: When Brinkhoff first began his business in 2001, his office was in his father’s milk barn. “It’s always embarrassing to be talking on the phone and have roosters making noise 10 feet away from you,” says Brinkhoff.

Instead of encouraging him, many people told him he’d never be able to establish a brand in the industry and compete against heavyweights like McCormick. “If you truly believe in something, you’ve got to ignore the people who say, ‘You can’t do it,’” insists Brinkhoff, whose products are now sold in 1,000 stores and counting. “Who is anyone to say you can’t do something? I was always surprised at how much negativity is out there.” But of course, revenge is a dish best served spicy. 

Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com.

By Wendy Lyons Sunshine

Without any furniture-industry background or business-management experience, Rebecca Boenigk and her mother, Jaye Congleton, launched Neutral Posture from their Bryan, Texas, garage.

“Mom put in $30,000, and I put in $20,000, and the first two years neither one of us took a salary,” says Boenigk. The women manufactured and sold innovative office chairs designed by Boenigk’s dad, an ergonomics expert.

After a few years, Neutral Posture employees were handling orders from clients such as Intel and United Parcel Service. To further expand the company’s marketing opportunities, CEO Boenigk submitted the paperwork to get

Neutral Posture certified as woman-owned by the Women’s Business Enterprise National Council (WBENC).

The certification really showed its power when Boenigk started attending WBENC networking events. Suddenly, she was mingling with representatives of corporations she had been pursuing for years. Doors began opening.

“I called the gentleman from Texas Instruments who I had met at WBENC,” says Boenigk, “and he got me in to meet with the company’s procurement manager.” Six months later, Neutral Posture signed a contract with TI. Its value? A quarter of a million dollars.

Although certification cannot guarantee sales, it does provide opportunities. Certification has been the key for Boenigk’s company to gain access to corporate diversity procurement programs. Her company’s bottom line continues to grow as a result.

Corporate and government procurement offices—from city up to federal—target a portion of their business to qualified woman-owned suppliers. Before making a purchase, their purchasing agents typically want to confirm the supplier’s certification.

The basic requirement for WBE (women’s business enterprise) certification is that a woman own and control at least 51 percent of a genuine, established company, and that the employees recognize her as their company leader. Although an application costs only a few hundred dollars, the process can be daunting to entrepreneurs who cherish their privacy.

Applicants must submit a wide range of supporting documents, such as corporate filings, business history, tax records, personal assets and bank statements, all of which are kept confidential. There is also an on-site visit to verify the material.

A variety of organizations can provide WBE certification, but it’s important to know which specific certification is recognized by your target market.

For example, certifications offered by National Women Business Owners Corporation™ (www.nwboc.org) and Women’s Business Enterprise National Council (www.wbenc.org) are often accepted by buyers at Fortune

1,000 businesses. On the other hand, government-buying programs usually want their sellers to have a regional, state, or federal certification. A phone call to your regional economic development center can usually help clarify your specific certification options.

Annette Taddeo, president & CEO of Language Speak in Miami, Florida, is glad she went through the paperwork.

Thanks to her WBE certification, Taddeo’s translation firm won major contracts with Office Depot and ING Financial Services. The firm’s sales now exceed $3 million.

“It’s the best investment I ever made,” says Taddeo of certification. “It paid off tremendously.”

By Carol Tice

Amar Sawhney attributes most of the gray hairs on his head to the FDA. Sawhney's medical-device company, Confluent Surgical Inc., in Waltham, Massachusetts, won FDA approval in April 2005 for a product called DuraSeal. The spray-on sealant keeps spinal fluid from leaking after brain surgeries.

The product's arduous five-year journey went from scientific experimentation and creation in a lab, through animal testing, to human trials in Europe, to a U.S. trial, and finally to FDA approval. Sawhney estimates the process cost roughly $40 million.

In the end, an FDA panel spent nearly a year reviewing data from the company's human-trial study of more than 100 patients before recommending approval, which the FDA later granted. Hanging in the balance was a product that Sawhney says has the potential for roughly $500 million in annual sales.

"We could have done all this work and had it come to zero if they didn't agree [with our findings]," says Sawhney, 39. "It's not for the faint-hearted. The pressure is tremendous." 

For Your Approval
The FDA approval process may be time-consuming, costly and nerve-racking, but for many entrepreneurs, an FDA greenlight is the only way to sell their invention in the U.S. The 100-year-old federal agency regulates products that represent nearly one-fourth of the U.S. economy. Product types that require FDA oversight include drugs for humans and animals, animal feed, cosmetics, medical devices, radiation-emitting devices, food additives and some food packaging. The steps to approval vary depending on who at the FDA oversees that particular proposal, the type of product for which you seek approval and its similarity to existing products.

Say you've invented a nicotine patch similar to existing patches, but it has been improved to last longer. You'll jump through fewer hoops than if you were presenting the agency with a major breakthrough.

"The words FDA and typical can't exist together in the same sentence," says Peter Pitts, a former FDA associate commissioner who's now director of the Center for Medicine in the Public Interest. "The FDA approval process is different every time."

It's different and, in recent years, has become increasingly expensive. Figures from Tufts Center for the Study of Drug Development show the average cost of developing a new drug hit $802 million in 2000-more than triple the cost of development in 1987.

For an entrepreneur who has a new invention, the price tag for shepherding a product through the FDA process to market isn't quite on par with drug and medical-device costs. But it's not peanuts, either.

For instance, Safeguard Medical Technologies LLC found the cost of earning FDA approval for a hypodermic needle-destruction device topped $1 million. The costly three-year process was successful, but financial pressures led the owners to dissolve their partnership this past spring.

Safeguard's former president, 50-year-old Joe Adkins, was a newcomer to the FDA process when he began seeking approval for the Berlin Center, Ohio-based company's product in 2000. At first, he didn't think his Disintegrator unit even needed FDA approval.

But the FDA classified the $80 device, which quickly melts down and seals hypodermic needles for safe disposal, as an infection prevention agent, a category under FDA oversight. Because Safeguard's technology was new, the product needed to go through an exhaustive approval process. "[The Disintegrator] is like a plastic garbage liner that prevents infection," says Adkins. "To them, it was an absolutely new product." Though bumps on the FDA-approval road are common, experts say the journey can be smoothed by following a few steps.

Get help. Both Sawhney and Adkins worked with consultants to help guide their products through the process. Sawhney brought in a big-gun law firm he'd used at a previous employer, and Adkins chose a retired FDA commissioner who proved a more affordable sounding board.

Sawhney had several people on Confluent's 50-person staff involved in the FDA process, but he also brought in a team led by Hogan & Hartson LLP attorney Jonathan Kahan. Kahan's division of the Washington, DC-based law firm specializes in FDA approval and employs doctors, clinicians and biomedical engineers to provide services from helping design trials to creating approval proposals. Using a high-powered firm that does a lot of FDA work also meant Confluent was kept up-to-date as FDA policy evolved.

"I'm at the FDA [offices] every eight to 10 days, trying to present a client's best case to get the product through," Kahan says.

Adkins says that with help from his consultant, Charles Kyper of Kyper & Associates in Durham, North Carolina, he was able to wade through the FDA's regulations and learn how to craft his proposal, accomplishing most of the work with a staff that ranged from 20 people down to five at various times. By only going to Kyper for occasional advice, Adkins says he was able to keep his bill down. Safeguard had obtained cost estimates from bigger consulting firms that ranged from $10 million to $12 million for start-to-finish assistance. Using a consultant can help a company present its proposal to the FDA more confidently, says Kahan. "We take the position [that] you shouldn't ever ask the FDA what to do," he says. "You should tell them what you're going to do."

Meet with the FDA early and often.  FDA officials famously don't like surprises. However, managers are willing to arrange preliminary meetings to discuss prospective FDA applications-that's an offer you should jump on, says Pitts. "The earlier you have meetings with the FDA, the more expeditiously your application is reviewed."

Those early meetings can help ensure your application is done right. Adkins learned at an early meeting that the FDA didn't agree with how he planned to classify his device. That information saved precious months and prevented Adkins from submitting a proposal that would have been rejected outright, likely getting Safeguard off on the wrong foot with the FDA.

Budget carefully. The cost of FDA approval for a particular product is difficult to estimate. After greenlighting a study of a product's safety and effectiveness, the FDA might review the data and grant product approval, or ask for another study conducted in a slightly different way. But companies should realize they'll need cash to begin selling their product when the process ends.

At Safeguard, the process cost more than estimated, eating into the company's marketing budget, Adkins says. After product approval was won, Safeguard ran into additional difficulties getting Medicare to reimburse patients for the Disintegrator device, so sales never took off. Company revenue in 2005 was $350,000, Adkins says-not enough to sustain the business.

Make sure your product is ready. If you need to go back to the FDA after an initial approval because your product needs modifications, it's going to cost you. Adkins notes that for small businesses, the initial application fee is often waived for the Investigational Device Exemption-something Safeguard needed to conduct project tests-but a second application can cost up to $50,000.

Prepare for a long haul. Like most federal agencies, the FDA moves slowly. It's permitted to take up to a year to review study data. For Safeguard's single product, delays meant limping along for three years. The company survived on $1.75 million in venture capital, supplemented with some contract engineering work for other firms and a smattering of sales of the Disintegrator overseas, where it had already been approved.

"The biggest problem is the amount of time between each step," Adkins says. "You're sitting there with a monthly nut to crack, but you're not allowed to sell your product. It's a constant cash drain."

Sometimes products get stymied at some point in the process. That's what happened with another medical device Sawhney had hoped to get approved before DuraSeal. Although the neurology section at the FDA was receptive to Confluent's new sealant technology, the OBGYN department was hesitant about a spray gel Confluent designed to prevent scars after abdominal surgery, Sawhney says. It was difficult to design human trials because the study would require a second surgery to see if the sealant was, in fact, preventing internal scarring. Promising results were seen in a human trial overseas- the product won approval from the European Union's certifying body, European Conformity, a step that had helped ease the way for DuraSeal's FDA approval. But Sawhney says the spray gel has made only slow progress since a 2002 trial in the U.S.

If you're planning to start manufacturing your own product once it's approved, as Safeguard and Confluent both did, be aware that the plant will need to go through its own FDA approval process. In some cases, including Safeguard's, that plant-certifying process can't begin until after the product has its FDA approval finalized. Adkins says the time lag caused by having to work through two different approval processes one after the other contributed to Safeguard's cash flow problems.

Keep a good attitude. No matter how frustrated you are with FDA officials, keep the dialogue going, says Pitts. Keep conducting informational meetings to learn what you can about how to improve your application. Many entrepreneurs plan to submit additional products for FDA approval in the future, or to apply for approval of their product for additional uses. You might be back, so relationships built with FDA officials on one go-round could be useful later.

Of course, a good attitude only takes you so far. As Adkins' experience at Safeguard shows, without the funding to manufacture and market an FDA approved product, a company can go into a stall. Adkins says some former Safeguard investors are forming a new company to continue marketing the Disintegrator and are seeking congressional approval for Medicare reimbursement.

Confluent, which raised $60 million in venture capital, has fared better. In its first year on the market, Confluent's $500 DuraSeal kit has been used in 30,000 surgeries, and 2005 sales were $10 million. 

Though sales are just beginning to ramp up, Sawhney takes heart from knowing his product can help reduce the mortality and complication rates for brain surgery patients. Because about 150,000 brain surgeries are performed in the U.S. annually, Sawhney is hoping to see sales grow as the device is marketed to more doctors and hospitals in future years. Major complications can cost $30,000 or more to address, making the product's cost worthwhile as a preventive measure, he adds.

Confluent also plans to seek FDA approval of DuraSeal for other procedures, such as spinal surgeries. If it's cleared for additional uses, that will add to DuraSeal's revenue. But Sawhney knows that with the FDA, there are no guarantees. "We march forward," he says, "keep our team focused and pray a lot." 

Carol Tice is a Seattle business writer whose work has appeared in Entrepreneur magazine, Puget Sound Business Journal and The Seattle Times.

We have all had those days when nothing goes right, and you end up asking yourself, "Why did I ever get myself into this?" You may have even gone as far as considering quitting what you started. Well, it's time to put those doubts away and truly reflect on what keeps you motivated to be an entrepreneur. "No one ever said being an entrepreneur is easy," says Erin St. Onge-Carpenter, 29. "It takes a lot of hard work, motivation, drive and guts, but the rewards are immeasurable." In 2005, she and her husband, James Carpenter, founded Rapid Removal, a professional debris removal company in Palm Beach Gardens, Florida, because they were attracted to the idea of working for themselves. "Waking up every day knowing we are in control of our own destiny is a huge motivator," says St. Onge-Carpenter, who projects 2006 sales of $250,000.

JCI member Catherine Fogarty says a successful entrepreneur is one who knows his or her own strengths and weaknesses. In 2003, Fogarty started Halifax, Nova Scotia-based Speed Dating Atlantic, a speed dating company. "I'm only discouraged when I hear people say, 'I can't do it,' " she says. "If I am not able to turn that around, then I have not challenged them or myself enough." She advises others to surround themselves with people who inspire them. "My clients and crew keep me motivated," she says.

John Baldoni, a consultant and author of Great Motivation Secrets of Great Leaders, agrees. "Focus on examples of your heroes," he says. "Choose heroes who model behaviors and virtues you admire."

Robert Maffei looks within his company for examples of heroes. The founder of Maffei Landscape Contractors in Mashpee, Massachusetts, who projects 2006 revenue of $7 million for his 15-year-old business, has found his employees to be inspiring role models.

"We have had people who started with rakes and shovels who are now in management positions and have made significant improvements in their pay and responsibilities," says Maffei, 32.

Monyka Berrocosa, 36, started Grape Ventures, a $110,000 food and wine consulting business, in 2000. After years of working in the wholesale food and retail wine industries, Berrocosa realized what she loved most about her job was helping others with their businesses. "I love what I do, and I like to strive to be the best at it," Berrocosa says. She recommends that you motivate your-self by figuring out what you really love. "When you focus on what your passion is, it's infectious and gives you an edge," she says.

"True motivation is not something that can be stirred up from the outside in," says Allyson Lewis, a motivational speaker and author of The Seven Minute Difference: Small Steps to Big Changes. "Entrepreneurs are in business because of something that is inside them."

That's what made Beth Shaw, 38, leave her six-figure job to start YogaFit in 1994. She turned her passion for yoga into a $4 million business. Although her love of yoga is what got her started, her company's potential is what keeps her going. "To continue growing and improving the company motivates me," Shaw says. "It's so exciting to have a vision and then make it real."

Public relations executive Melissa Gillespie's vision to start her own PR firm, Innova Communications Co., in 2001 came after deciding she wanted a career that would let her work from home and be with her family. "I know it sounds cliché, but I truly enjoy what I do and how I do it," says Gillespie, 33. "Can you make a fortune grinding away at a job you loathe? The way to an abundant lifestyle is doing what you love, or at least loving the way you're doing it."

James Park is a writer for Entrepreneur magazine.

So you have a business idea and you think it’s really good
And you wonder if you should, and whether you can or could
Your mind is the car and you are checking under the hood
Digging a little deeper and fast-forwarding through time
Your rhyme and reason seem to be fine
You’re ready for the climb
Mentally you’ve already been to the top
You like the view and now the mind cannot stop
You see yourself with the money, the prestige, the fame
The entrepreneurial game is one that you now cannot tame
You’ve even put the title on your card under your name
People say, “Wow, that’s such a good idea, my friend”
They say that they can see you making it to the endThey introduce you as the one doing brand-new things
Which brings a new sense of pride to these withered wings
And especially when you sing
In the shower, but now comes the hour
Time to get the money, and time to devour
The competition, you are just itchin’ to hit the pavement
Your fingers they are twitchin’
Then smack, here come the stars
Flat on your back, wondering where you are
Instead of hitting the pavement, now you are laying on the tar
Lesson number one is now engraved in your brain
Never think that this will be the easy train
Forget about the blame, money is flying out and you need to get on your game
So you get up again with the lesson in your hand
Knowing what you need to do, now you understand
In the process you’ve lost a few fans, but you’ll be damned
If you give up now and don’t stick to your plan
Then smack, here comes the pain
Worse than the first, nothing feels the same
This is where you wonder if you signed up for the wrong game
From the left and from the right people tell you what to do
They’ve never done it themselves but they know what will get you through
Coaches on the side who want to live vicariously through you
You close your ears to them and you get up and say
This is a lesson that I’ll take to my dying days
Stronger now you rewrite the business script
Your mind is going crazy and you think you might have a fit
Then a mentor says to you that this is just the tip
Of the iceberg and all the things you’ve heard
The chances of making this happen now seem absurd
But there’s a voice inside that keeps on screaming out
It comes along every time you have a little doubt
It tells you to keep movin’ and groovin’ and provin’
That you know who you are and exactly what you’re doin’
And then you move like a stealth into your final quest
Equipped with all the things you need to be the very best
For the past five years you’ve endured every single test
Knowing where to strike and no more second-guess
And then smack, you take one step back
No falling this time, you plunge forward with the attack
Competition looks at you and knows you’ve got the knack
They begin to retract and retrace and now they’re losing pace
You are moving forward now with a smile upon your face
The battle is yours and you know that you’ll never lose again
You pull out a piece of paper and your favorite signature pen
You feel the lesson of it all and you are swelling with elation
Along the page you slowly write the word “Congratulations”
A gift to you for all you’ve been through
Something that you always knew
Would eventually come your way, nothing could be better than this day
You pull out your card and what does it say?
It says “entrepreneur” under your name and now you can see
It’s not a place you want to go, but a place you’ll always be.   

You can catch Stuart Knight, president of KnightFlight Productions, every Saturday night performing in the five-person show DECIDE (www.decideshow.com). Knight has written, produced and stars in DECIDE, which takes place in his loft in downtown Toronto.

How to tell the difference between a Deadbeat and an Honorable Debtor.
Deadbeats and Honorable Debtors can both claim to have financial difficulties. How can you determine who really has a serious financial problem and who doesn't?

An Honorable Debtor should be more than willing to provide documentation substantiating their hardship. Deadbeats, those that could afford to pay and really do not have a hardship, will either delay or refuse to reveal their financial condition.

Require the debtor to prove their hardship.
The debtor should begin with a hardship letter. This letter should explain, in detail, their inability to pay. Common reasons are: the economy, competition, divorce, natural disasters and personal illness, but you should require them to be specific as to their unique circumstances.

Additional documentation should include:

• Income Statement
• Balance Sheet
• Recent Bank Statements
• Corporate Tax Returns
• Personal Tax Returns
• Tax Lien Documents 
• Evidence of existing liens
• Evidence of existing lawsuits or judgments
• A letter denying them financing or new credit
• Business credit report
• Personal credit report
• Aged receivables
• Aged payables

Documenting the debtor's hardship will not only help you sort Honorable Debtors from Deadbeats, it will also show you the best way to collect.

A word of caution
None of the above documentation alone can establish their hardship. For example, some businesses may have a second set of books, their books may not be accurate, or they may be purposely deceptive. Require as much of the above documentation as you feel is necessary to validate their dilemma.

Help the debtor find the money to pay you
Even though an Honorable Debtor may be unable to pay you, you can help them find the money to pay you by getting them to implement any of these tactics:

• Liquidate excess equipment or inventory
• Reduce their salary
• Reduce their employees' salaries
• Cut benefits
• Lay off employees
• Relocate the business to reduce costs

Collect for the debtor
One of the reasons companies cannot pay is because they cannot collect their own money. One solution is to collect for them so you can keep the proceeds and deduct what you collect from what is actually owed. We are not suggesting trading the face value of the receivable for the debt owed to you. The debtor can simply ask you to collect their money and must agree that any money collected on that account goes toward what you are owed. If the money is not collected, the money is still owed. A big pitfall of this is if the money goes directly to the debtor.

Help the debtor find financing
Before we discuss financing for commercial debtors, let's establish three points: 1) Most debtors are smaller businesses and it's harder for them to find financing 2) A smaller amount of financing is harder to obtain than a larger amount 3) the debtor's credit and credibility has already been damaged at this point. With that in mind, the types of financing available to debtors are greatly limited. There are however, certain types of non-traditional financing that are appropriate under these circumstances. Here are just a few:

Financing for Credit Card Merchants
If the company takes credit cards, they may be able to borrow money based against their future credit card receipts.

Factoring or A/R financing
If the debtor has receivables, they may be able to sell or borrow against those receivables. This type of financing is feasible because the lender is relying on the credit and credibility of the debtor's customer rather than the debtor. It is also available in smaller amounts.

Refinancing their real estate
If the debtor owns and/or has equity in residential or commercial property, they may be able borrow a portion of that equity using the real estate as collateral.

WARNING: Before leading them in this direction, get them to sign a document stating that the amount owed to you will be paid at the closing of any type of financing. If they won't, you can classify them as a Deadbeat.

Require the debtor to restructure their debt
If financing is not available or not feasible, there is another type of financial assistance that can enable you to be paid. Debt Restructuring, a process by which new, affordable terms are negotiated with the debtor's creditors, can help keep a company in business and subsequently get you paid. In virtually all cases, Debt Restructuring is a better alternative than the debtor filing for bankruptcy.

A good DR firm establishes a monthly budget that the debtor can afford, and uses that budget as the basis for it's negotiations with the creditors.

How to capitalize on this strategy
By being the creditor that is shrewd enough to recognize the debtor's unique situation and referring them to a reputable DR firm, you should be given some type of advantage - either a quicker payment plan or a higher settlement than other creditors. Another advantage of referring your customer to a DR firm is that the customer pays the Debt Restructuring fees instead of you.

Don't confuse consumer credit counseling with commercial Debt Restructuring
Consumer credit counselors are basically not-for-profit entities that simply take a budget and divide it up amongst the creditors. They reduce interest rates but not the actual debts. The creditors they deal with are all credit card companies and basically take what they are given. Consumer credit counseling is not available for commercial debts.

What to look for in a Debt Restructuring firm

1. A legally binding, non-cancelable written contract between the debtor and the DR firm. A legitimate DR firm requires the debtor to make a firm commitment to pay their creditors. Without this commitment, there is no credibility on behalf of the DR firm or the debtor.

2. Authorization to electronically withdraw funds from the debtor's bank account. Otherwise, the DR firm and the creditors are subjected to the day-to-day whims of the debtor. Also, it gives the debtor credibility by allowing this access.

3. A consistently affordable budget must be established. Without the existence of a budget, the DR firm has no basis for negotiations and therefore has no idea what the debtor can afford.

4. The debtor must pledge all their business assets, assuming they are not already pledged, as part of the restructuring terms. That way, if the debtor defaults on their agreement, they have everything to lose. This protects the DR firm as well as the cooperating creditors. Without this type of commitment, there is a lack of credibility and less of a chance of a being paid.

5. Authority to bind the debtor to a settlement. If a debtor has the option of rejecting a settlement that was negotiated by the DR firm, what's the point of negotiating? If the debtor refuses or can't afford the settlement, you have wasted valuable time in negotiations and concessions. The DR firm must be able to commit to a settlement without the involvement of the debtor unless the settlement requires funding that exceeds their budget.

6. Proof of Hardship. As discussed earlier, a debtor that can't or won't prove their hardship is a Deadbeat and a reputable DR firm requires that a certain amount of proof before they will represent a debtor. A reputable DR firm will require certain hurdles that distinguish their clients from Deadbeats. Any DR firm that negotiates on behalf of debtors without establishing their hardship is trying to reduce the debt for their own personal gain.

7. Creditors must be given a vast array of settlement options including payment in full. A good DR firm understands that creditors have different needs and is prepared to work with those parameters. Creditors should be able to choose how much they are willing to settle for or over what time period they would like to be paid. Absent this option, the DR firm is essentially trying to shove an offer down your throat. This is also a reason many restructuring plans fail.

8. Financial Alternatives. A good DR firm offers different types of financing that are appropriate for these types of debtors. (see Help the debtor find financing above)

The collection industry is more competitive than ever Creditors, agencies and attorneys all compete for a debtor's scarce resources. In order to collect more, you simply have to build more pathways to the debtor's assets. Some collection agencies, such as NCO, offer Debt Restructuring as part of their portfolio of services.

When a commercial debtor is on the verge of bankruptcy, you can collect what you are owed. It just takes some patience and the right strategy.

Jerry Silberman (Paramus, NJ) has pioneered the Debt Restructuring industry for small businesses as well as revolutionized the collection industry. In 1990, he started Interstate Department Services, a nationwide collection agency.

He went on to create Commercial Credit Counseling Services, now Corporate Turnaround (www.BusinessFreshStart.com), in 1998. For over 15 years, he has helped thousands of small businesses to:

• Get hard to find financing
• Resolve tax problems
• Collect from delinquent customers
• Renegotiate affordable terms on past due debts
• Avoid bankruptcy

He is a leading expert on helping small businesses emerge from overwhelming debt within their means. He co-authored "Small Business Survival Book", which has been endorsed by Steve Forbes. Silberman has lectured across the country and has been a featured expert on Bloomberg TV, WABC-TV, News 12 New Jersey and on numerous radio shows.

By Amanda C. Kooser

It wasn’t that long ago when most business memos were written out longhand, and cell phones and internet access weren’t considered absolute necessities. But times have changed, and with them so has your business. Keeping on top of all the various technology issues can be a challenge, so we’ve prepared a primer on five big tech topics: VoIP, Wi-Fi, internet security, OSes and data backup. We’ll look at what they are and what they mean to your business, and talk to some entrepreneurs who are putting them to use.

VoIP
This technology has been the source of much excitement lately. VoIP moves your phone calls from traditional voice lines into the digital world by sending them out over the internet. Andrea Peiro, president and CEO of the Small Business Technology Institute (www.sbtechnologyinstitute.org) in San Jose, California, has been keeping an eye on the technology: “The big advantage of VoIP over the old analog lines is the very high level of flexibility that it allows. That is the main reasoning behind the adoption of VoIP in the small-business market.” Cost savings on long-distance calls can be a boon, but the litany of features is what makes the technology really attractive.

Some of those features include find me/follow me, unified messaging capabilities and the ability to connect multiple locations. That last feature is what attracted Gregory Liebowitz, 17-year-old president of IT Media, to the technology. His Hillsborough, New Jersey-based internet consulting and development firm consists of a network of employees and contractors with offices spread out in disparate locations. IT Media keeps a 3COM MBX (an in-house VoIP solution) at Liebowitz’s office. Employees connect to it through the internet, regardless of their locations. “It turned out to be a very good solution,” he says. “The main advantage is it’s pretty much seamless.” He says the call quality overall has been fairly decent.

Most business owners who are considering a solution like that will want to check with an IT consultant for help in selecting equipment and setting it up. Those with less complex operations can visit service providers such as Packet8 (www.packet8.com) and Vonage (www.vonage.com).

VoIP is a technology that is developing quickly. The complexity can be a drawback, but expect improvements in service and ease of use over the next year. Peiro also sees prices falling over the next couple of years and adoption rising accordingly. For businesses like IT Media, with distributed offices and telecommuting employees, it can be well worth the investment.

Wi-Fi
There aren’t too many drawbacks to using a wireless network. You have to keep an eye on your security settings, and sometimes the signal can be weakened by distance or physical obstacles. But those issues can be addressed without too much hassle. Who is a good candidate to install Wi-Fi? “Everybody is a good candidate,” says Peiro.

Even if it’s not an absolute necessity for running your business, it can be a boost to the quality of your workday. Liebowitz is living proof of that fact. “It’s basically just an added convenience,” he says. “I can be anywhere within the house or outside and still be connected. In terms of improving productivity, it’s a nice thing to have.”

Jason Mudd, 30-year-old president of Axia Public Relations and Marketing (www.axiaprm.com), installed Wi-Fi in his Fernandina Beach and Jacksonville, Florida, offices for his 12 employees to use. With Wi-Fi installed on his laptop, he takes advantage of a variety of Jacksonville hot spots when he’s out of the office. Whether he’s having tea at City Hall or lunch at a cafe, he’s able to log on, check his e-mail and keep up with work.

There are several flavors of Wi-Fi, distinguished by the letter after the 802.11. Liebowitz got on the Wi-Fi bandwagon early with 802.11b and has found it completely satisfactory for his needs. Mudd recently upgraded his b system to 802.11g, a higher bandwidth solution that is most common in businesses today. The next step is 802.11n, which features longer range and faster speeds. Both 802.11b and 802.11g are extremely affordable, and entrepreneurs who are relatively comfortable with technology shouldn’t have too much trouble setting them up without outside help. Businesses that already have a solid wired solution may not be interested in Wi-Fi, but it’s worth checking into otherwise.

Internet Security
You can’t get online without hearing about the latest worms, viruses, hackers and spyware. Fortunately, there are simple ways to minimize your vulner-ability. Anti-virus and anti-spyware applications are must-haves. If you don’t have them, now is the time to get them. “Small businesses do not pay enough attention in general to digital security,” says Peiro. He recommends not just installing an anti-virus solution, but also checking up on it regularly to make sure it is updated. Also, be sure to renew the license every year. The cost is minute compared to what a virus could cost your business in lost time and data.

Mudd runs Norton Internet Security Suite and Spybot Search and Destroy to protect against spyware. His business is also set up with a firewall on its router to protect the overall network. Besides firewalls that come on routers, there are also software firewall solutions available. ZoneAlarm is a popular choice, with both free and paid versions available. It’s a good idea for laptops and employees who are on the road logging on at unsecured wireless hot spots. Minimally, users can turn on the built-in firewall that comes with more recent versions of Windows XP. It’s not the most ideal solution, but it’s a start. Anti-spyware programs like Lavasoft’s Ad-Aware (www.lavasoftusa.com) are available as free downloads.

For Windows users, it’s not a question of whether you should use internet security software, but rather which brand. IT Media, however, has a slightly different story. Liebowitz’s business runs primarily on the Macintosh platform and doesn’t use anti-virus or anti-spyware software. “It’s not really susceptible to the same kind of vulnerability as Windows,” Liebowitz says. That leads us to our next topic: your OS.

OSes
The two main alternatives to Windows are Macintosh and Linux. IT Media handles a lot of high-end interactive design and is the kind of small business that’s well-suited to using Macs. “Apple is still a very top-level choice among small businesses as far as the multi-media graphics applications type of development,” Peiro says. If that sounds like a description of your business, Macs may figure prominently in your future (and your present).

But it’s hard to ignore that the majority of businesses are on the Windows platform. Linux has popped up as an intriguing alternative, but it still has limited appeal. “Linux has gone through some major hiccups in terms of providing a consistent user experience,” says Peiro. Expect continued advancements for the desktop version of Linux in the ease-of-use realm, but it may be a while before it becomes a viable alternative for the average small-business user.

In the meantime, open-source software has established some strong footholds in other areas. The free Mozilla FireFox (www.mozilla.org) browser has become popular as a more secure alternative to Internet Explorer.

Data Backup
All of the VoIP equipment, wireless connections and internet security software in the world won’t save you if your hard drive just up and dies. It can happen with little warning. So can natural disasters or equipment failures. It’s your duty to be prepared to handle it. Data backup is an essential part of your technology setup. Luckily, there are a variety of ways to handle it.

IT Media performs incremental backup of its servers and workstations to a Dell PowerVault storage RAID. “We haven’t had any issues with data loss because we implemented data backup from the start,” says Liebowitz. Axia wasn’t quite so fortunate. About a year ago, Mudd lost three weeks’ worth of work when his hard drive quit and he discovered that his last backup was that long ago. That bad experience led Mudd to improve his backup system. His business now uses Windows Offline Files to save a copy on the server, and a tape backup system, which backs up the server daily. Meanwhile, his employees keep copies of their work on their laptops. He has been shopping around for an off-site backup solution for added security and hopes to have it implemented soon.

External hard drives are inexpensive solutions. Using Firewire or USB 2.0, they can also be very fast solutions. There are some online backup services available, but they can take a toll in the sheer amount of time it takes to upload data, especially if you have the need to back up often. Ask around, and take a trial version for a test drive to see if it suits your needs. All of this leads to another question: “How often should you back up? The question is, How much data are you willing to lose?” says Peiro. You may find that a weekly backup will suffice, or that you may be better off on a daily basis. Finding a way to keep your backup in a different location from your main computer setup is a smart step that can protect your data in case of fire or theft.

Wrapping Up
You rely on your technology to run your business. By educating yourself and using outside help when necessary, you can make your technology more reliable. Don’t hesitate to engage an IT consultant or outsourcer if you don’t have your own in-house IT staff. While Mudd handles whatever issues he can by himself, he also uses outside IT help. By paying for blocks of service hours in advance, he saves money.

It’s up to you to stay informed about the technology issues that affect your business. As newer technologies like VoIP and Wi-Fi continue to improve, you may find new ways to use them to boost your productivity and bring added conveniences to your workplace. Just be sure not to neglect some of the less glamorous technology needs. Security and data backup are integral to the foundation of your business technology. And you never know, someday in the not-too-distant future, you may be booting up to an OS with no Windows required. Until then, don’t forget to swap out your backup drives.

Amanda C. Kooser is Entrepreneur’s assistant technology editor.

Starting a small business is not easy. Growing a small business is not easy. And maintaining a vibrant small business is not easy. Entrepreneurs must be willing to take risks others won’t. They must work around the clock if necessary, often acting not only as CEO, but also as head of sales, accountant and whatever else it takes to get the job done. But it can be done, and truly successful business owners take advantage of partnerships and resources along the way.

One of the SBA’s goals is to be a partner to entrepreneurs. Over the years, we’ve helped many of our best-known corporate icons get started: Amgen, AOL, Apple Inc., Ben & Jerry’s, Callaway Golf, FedEx, Intel, Nike, Outback Steak-house, Staples and Under Armour, to name a few. Today, we help entrepreneurs in numerous ways.

The SBA lends or guarantees more than $78 billion in loans and investments.

The SBA helps small businesses procure a fair share of government contracts—a record $80 billion in 2005.

Last year, the SBA and its technical assistance partners counseled nearly 1.5 million entrepreneurs, and the SBA website received 26 million hits.

Through its Office of Advocacy, the SBA helps protect small businesses from harmful new government regulations, and through its National Ombudsman, it helps small businesses deal with the unfair application of existing regulations.

Over the past six years, SBA lending to minority entrepreneurs has increased by more than 150 percent. The number of entrepreneurs receiving SBA counseling is up 40 percent.

You can find these resources by visiting the SBA’s award-winning website (www.sba.gov), which has recently relaunched with improved navigation, updated content, new features and a sharper focus on giving small businesses what they need. We’re building our website’s reputation, which has been highlighted by major awards and accolades over the past few years—Money Magazine has called it the “best stop for one-stop shopping.”

At the SBA, our goal is to give small businesses the tools they need. Whether they need help developing a business plan, additional training, or technical or financial assistance for their growing company, we’re here to help.

The SBA’s site offers more than 10,000 pages of information on starting, financing, developing and managing a successful business. Topics include SBA-backed financial assistance, contracting opportunities, training and counseling, disaster recovery and international trade. Useful links to regulatory compliance information and forms are also available. You can access timely expert advice in web chats, prepared pod-casts on business issues and services, a library, a periodic newsletter, a startup guide, useful statistics and much more. Extensive contact information is provided for local SBA district offices, Small Business Development Centers, SCORE chapters, women’s business centers and Veterans Business Outreach Centers nationwide and in U.S. territories.

The SBA will make numerous improvements to its website over the next year based on feedback received from small businesses during interviews, surveys, usability studies and focus groups from the past year.

Again, starting, growing and maintaining a small business is hard work. I often say that small-business owners match every dollar of equity with $10 of sweat equity. But that’s also why they’re successful when others are not. America has an economy that regenerates, is flexible and adapts to opportunity. Much of this is because our entrepreneurial culture has taught us to dream, see possibilities and act on them.

Small businesses drive our economy. They create 70 percent of new jobs and represent more than half of our nonfarm private GDP. Since August 2003, more than 7.2 million jobs have been created in the U.S.—more jobs than in the European Union and Japan combined.

Entrepreneurs drive a tremendous amount of the innovation in our country; small patenting firms produce 13 to 14 times more patents per employee than their larger competitors do. Small-business ownership allows people to realize dreams, not only for owners and their families, but also for those they employ and those they serve.

We are a small U.S. government agency with a very big reach. We are also an agency with a very big job.

We have a new Congress and expect from it a continuation of the sound economic policies that have helped small businesses flourish, fueled our economy and created more jobs. We do this by:

• Making it easier for small businesses and their employees to obtain affordable, high-quality health insurance
• Keeping taxes low and reforming an unnecessarily complex tax code
• Cutting burdensome government regulations and red tape

Along with the president, I believe ownership anchors us to what is important. We want entrepreneurs to think big because they are the ones driving the economy, creating better jobs for Americans, increasing competitiveness in the global marketplace and transforming our communities. The men and women of the SBA have the honor and the responsibility of helping that engine reach its full potential.

By visiting the SBA’s website and www.business.gov, you will help make your business—your legacy—last for decades to come.

Steven C. Preston
SBA Administrator

The hottest business accessory for 2007 and beyond is the web. It doesn’t matter if you sell shoes in a local shop, trim trees regionally or offer B2B services internationally. The internet can be your Yellow Pages, your magazine ad, your contact method, your marketing machine or your administrative assistant. Whether you’re a one-person shop or a growing 50-employee company, you need to understand the basics of the internet. Welcome to Web 101. Class is now in session. We’re going to focus on getting a web presence or updating and improving your existing site. Your business needs and goals will dictate what kind of website you should have. You might just need a simple page with basic information about what you do and how to contact you, or you might need a more complex site that integrates some of the many web tools available to provide visitors with a more interactive experience.

Naming Rights
What’s in a name? If it’s the name of your website, the answer is “a lot.” The web has gone through waves of domain name land-grabs. If your business has an unusual name, you might still be able to reserve your first choice (like www.yourbiz.com). Otherwise, you might have to look to other domains like .net or .biz, get creative with your website name or incorporate your location (www.coffeehousenameseattle.com). The goal is to get something that isn’t too long and that will be relatively easy to remember. For example, Sarah Lurie, 36, uses www.ironcorelajolla.com  for her website for Iron Core, her kettlebell fitness studio in La Jolla, California. Iron Core has 2007 sales projections of half a million dollars.

At Your Service
Once you’ve picked out a potential domain name, you’ll need a place to put it. Service providers are duking it out to earn small-business web services dollars. There are a lot of options for companies to go with, so you have plenty of opportunities to shop around and compare pricing. All-in-one service providers are popular. A few big names include Dotster (www.dotster.com), Microsoft Office Live, Web.com and Yahoo! Small Business. A package solution from one of these providers can net you a domain name, website, and e-mail and web marketing services all in one fell swoop. “Primarily, you want to look for [a provider] that can help you with every aspect of what you want to do online,” says George DeCarlo, vice president of marketing at Vancouver, Washington-based Dotster. There are several routes you can take to bring your website into existence. Three popular options are to find an independent web designer, use a custom design service through your hosting provider, or do it yourself with an online template solution. When it comes to finding a designer, be sure to ask other business owners for recommendations. That’s how Lurie found her designer, who is in Canada. They work together via e-mail and phone calls. Remember that your website doesn’t have to spring fully formed onto the net from the very start. Many businesses opt for a phase-in approach. “You don’t have to do it all at once. Initially, it was a $3,500 investment,” says Lurie, who added some interactive elements to her site after launching it. Michelle Oldham, 34, founder of marketing and design firm Mahdlo & Associates in Chicago, talks about her site from the points of view of a small-business owner as well as a web consultant. “When we first started, we had a placeholder page,” she says. “From a small-business budget standpoint, you can’t just jump in and create a Flash-based site with a huge back end that has a database.” Oldham’s in-house web designer later added animated elements, a press section and a pod-casting area to the site, and the company saw sales triple between 2005 and 2006. (You can see the site’s current incarnation at www.mahdlo.net.) It’s OK to start out with a basic “About Us” page with contact information and then build the site into something more sophisticated as your needs dictate. Template-based sites offered by your service provider can be an inexpensive option as long as you’re comfortable with taking the time to learn the web-based software. Dotster’s Sitebuilder tool, for example, is a tem-plate program that starts at $5.25 per month with hosting, whereas its most basic custom site runs $200. Which one you choose “really depends on what your skill level is and what you’re looking to do,” says DeCarlo. “We also have customers that want us to do it for them. The custom site can actually be less expensive based on time value.” The custom site is built after a phone consultation with the customer, and you can add a maintenance program that makes it affordable to tweak it regularly. Take a moment to assess your budget, your web skills and what your time is worth.

E-Commerce
Not every business actually needs an e-commerce-enabled website. If you sell services or rely mainly on local customers, there’s probably no need. Retailers who want to try selling on the web sometimes opt for eBay as a low-hassle way to get their feet wet. It can be a smart way to get rid of overstock items, deal with unique pieces like antiques or rare books, and gain access to a thriving international marketplace. For businesses that decide to sell directly from their websites, the process of setting up an online store has gotten a lot easier. Iron Core’s website features a small e-commerce section where visitors can purchase apparel and instructional DVDs. “We have a brick-and-mortar store, so we already had a merchant account,” says Lurie. “Then you just need to get a shopping cart and set up the look of the store. It’s so easy now. Everything is really just a click away.” Your web designer or web service provider can help you get started.

Updates
Updating is an often-overlooked component of having a business website. This doesn’t have to mean a major overhaul every month, but updating your events calendar, news section and blog on a regular basis is a must. As Lurie says, “I have a program that allows me to do simple editing so I can change my class schedule or update my events calendar without having to go to the expense of having the web designer do it.” Don’t think of your website as a purely static entity, but rather as a customizable communications tool that can grow and change along with your business. According to Oldham, “I don’t think you can ever consider [your web-site] complete, because as technology changes and the industry changes, it will always evolve.”

Extras Go the Extra Mile
Web users are savvier than ever before. That makes it challenging for businesses to hold the interest of internet visitors and encourage them to make repeat visits. The simplest approach was mentioned above: Make the time commitment to keep your site updated with fresh content. Consider adding elements like a blog, podcast or video. This is the age of YouTube: Site visitors are attracted to fresh content and even a little pizzazz where appropriate. Oldham has had so much success with her marketing podcasting series that she is looking to take the next step into video. “We’ve seen a 50 percent increase in traffic to our site as a result of the podcasting series,” she says. One of the easiest web tools for businesses is a blog, essentially an online log or journal that can be updated as often as you like. “Blogs and podcasts are very interesting ways to engage with your clients and build credibility within your community,” says Oldham. Consider including company news, accomplishments, news from your industry, perspectives on your market or fun asides that relate to your business. For example, if you run a cookware store, you might include favorite recipes or how-tos on using some of the products you offer.

Searching for Search Engines
Lurie sums up an important view of search engines when she says, “I think your Google ranking is more important than your credit score.” Most web users seek businesses, both local and national, through search engines. “The key thing that most [of our] customers want after they get a web-site is placement in search engines,” says DeCarlo. Local businesses want to drum up local customers by using the web, and businesses seeking a wider audience want their names to pop up early. Having a web designer who can build your site for maximum search engine impact is important. Search engine optimization, or SEO, is a bit of an art form. Of course, a search engine marketing campaign can help things along considerably. “I use AdWords through Google and Yahoo! Search Marketing,” says Lurie. “You just set up an account and then add the keywords. It’s a great way for us to be at the top of the list when people search for ‘kettlebell training.’ ” You can do it yourself through individual search engines and set your own budget, or you can look to your web services provider to run your campaigns for you. For example, Dotster’s Local Site Pro-motion sets users up with pay-per-click campaigns starting at $100 per month.

Out of Site
Getting started with your site or revamping your old site that has been collecting dust on the web is the single most important step you can take to use the web as an effective tool for your business. But the possibilities don’t stop there. E-mail marketing and newsletters are convenient ways to stay connected to both current customers and potential clients. Consider adding a monthly coupon to your site as a way to help gauge the brick-and-mortar impact of your web presence. Slather your web address all over your business cards and promotional materials. It will be your 24/7 business and sales representative, even when your office or store doors are closed for the night. And remember: People will judge you by your website. It pays to invest both your time and money into having a strong web presence. “You, as a business owner, have to love your site,” says Oldham. “People can tell when you’re passionate about something. It should say something about your business and your creativity. It should stand out so people take notice.” Even a basic, clean and simple site says more than a sprawling, jumbled or out-of-date site. The tools to build a great site are avail-able and affordable for any budget.  The web can be a great leveler for small businesses looking to compete with larger companies. Says Lurie, “You have to act bigger than you are, and websites are the way you do that.”

 Amanda C. Kooser is Entrepreneur magazine’s assistant technology editor.

Busines.gov continues to expand its offerings of resources and tools to help small businesses comply with federal government regulations. Responding to feedback from its business community users, Business.gov has developed a tool that helps businesses determine their license and permit requirements.

The site also has expanded the content and context of the information contained in its Compliance Guides and developed relationships with other government and non-governmental organizations to provide more in-depth compliance resources.

Business.gov’s new “Permit Me” feature provides a single source for obtaining federal, state, and local permits and professional licenses for businesses. While every business in the United States is required to obtain a permit, professional license, or identification number to operate, finding the right license can be a major challenge for potential business owners. Although some states offer assistance to help individuals understand their local permit and license requirements, not all provide federal information.

This information gap results in an additional burden to business owners as they must locate, research, and understand federal, state, and local government resources separately and then compile the information to gain a comprehensive understanding of their regulatory requirements. “Permit Me” allows businesses to navigate to a single destination and presents a list of licensing and permit resources across all the federal, state, and local domains.

Business.gov has also added “Feature Topics” that focus on common business concerns and that will be continually updated on a timely basis. “Featured Topics” provide context to the compliance information provided on the site and help business owners understand in plain language the regulatory requirements their businesses face.

Regulatory information is typically written from the individual agency’s perspective and can fail to adequately explain the impact of the requirement on business operations or the steps required to comply. The failure to develop compliance assistance information that addresses the practical concerns of the business community adds to business owners compliance problems.

The Content Partners Program has been established to formalize relationships with government agencies, trade associations, and professional organizations to develop compliance assistance tools and resources for small and medium-sized businesses. Content Partners will provide domain-specific compliance information to Business.gov ultimately to develop compliance resources that will be featured on the site’s “Featured Topics” and “Compliance Guides” pages.

Business.gov is managed by the U.S. Small Business Administration in partnership with 21 other federal agencies and is part of the President’s Management Agenda. Originally launched in 2004, the site provided information on starting, growing, and managing a small business. The relaunched compliance site is designed to better meet the needs of the business community, based on feedback from test groups.

By C.J. Prince

Now’s the perfect time to do a hearty cleanup of your credit history. When was the last time you checked your credit report? Getting clean credit now means you’ll have more opportunities later. Even if you’re not currently in need of working capital, forecasting business cycles is always an imperfect science, so you never know when you’ll need a cash infusion—or when one of your potential business partners or vendors will decide to check your credit.

What you don’t know about your credit history can hurt you, so you should assess your credit before you even have a need for capital. “We get so many calls from entrepreneurs in distress because they were denied credit and they badly need working capital,” says Lathea Morris, cofounder of The Credit Alternative Group, a Montclair, New Jersey, company that helps small businesses and individuals gain access to capital. “One of the first questions I ask is, Did you check your credit report before you applied for financing? I would say that 80 percent do not.”

Now it’s easier than ever to get the facts. As of September 2005, thanks to the Fair and Accurate Credit Transactions Act, consumers in all 50 states can get their credit reports for free each year from each of the three bureaus—Equifax, Experian and Trans Union—by visiting www.annualcreditreport.com. Because your personal credit history is inexorably tied to your business, you’ll want to review all three carefully and pay to get your FICO credit score well in advance of needing capital. Fighting inaccuracies and repairing credit can take time, says Howard Dvorkin, founder and president of Consolidated Credit Counseling Services, a nonprofit financial counseling agency in Fort Lauderdale, Florida. “You’re not talking a few days; you’re talking a few months.”

Once you have all three reports, scan your personal information for accuracy. “Something as simple as two numbers in your Social Security number being inverted could eliminate your chances of getting credit,” says Dvorkin. Next, address any inaccurate late payments or charge-offs. Don’t be afraid to call creditors and ask them to remove one-time late payments. If you’re tenacious, “99 percent of the stuff can be removed,” says Dvorkin.

If you can’t have an item deleted, send an addendum to all three credit bureaus explaining the reason for the late payment. “It won’t improve your score or get [the item] off [the report], but when lenders review your credit profile, they can take that into consideration,” says Brad Stroh, founder and co-CEO of Bills.com and the Freedom Financial Network, a consumer debt resolution company in San Mateo, California.

Next, order your small-business credit report from D&B (www.dnb.com). For $140, you can get a comprehensive analysis of your business’s creditworthiness. For $349, you can sign up for one year of D&B’s SelfMonitor service and receive unlimited access to your business’s report, as well as e-mail updates notifying you of any changes. “A lot of vendors and business lenders will review that,” says Stroh, so you’re better off finding out the information before they do. And to keep your personal credit as insulated as possible, Stroh also recommends asking to have any personally guaranteed trade lines or credit cards transferred solely to the business once your company gets a few good years under its belt.

The bottom line on your credit review: Even if it doesn’t feel like a priority compared to the pressing tasks related to running your business, make it one. Getting a clear look at your company’s credit position today can help you not only address the past, but also plan more accurately for a successful future.

C.J. Prince is a writer specializing in business and finance. Reach her at cj@cjprincemedia.com.

By David Worrell 

On the road to building his technology company Ascendent Telecommunications, founder Stephen Forte thought that finding funding was going to be the easy part. It was February 2000, and Ascendent was riding high on the double wave of Internet mania and boundless telecom spending. Ascendent’s product, which marries wireless phones to traditional phone systems, had just been installed at the prestigious Beverly Hills Four Seasons Hotel. Ascendent had managed to get through its first year in business with some seed capital still in the bank. Moreover, within hours of announcing a second round of fundraising, Forte received a lucrative term sheet from a large East Coast venture capitalist firm.

The future looked bright for the Encino, California-based startup, but Forte’s prospective investors weren’t expecting the telecom market meltdown of 2001. And Forte wasn’t expecting the extended—and expensive—period of due diligence that followed.

Due diligence is simply the potential investor’s process of fact-finding. By stripping away the gloss and glitz of business plans and marketing materials, investors try to assure themselves that there won’t be any nasty surprises after they write a check.

In practice, due diligence is never simple. Forte recalls when the trouble began for Ascendent. “We spent weeks in due diligence with the VC team,” he says. “We spent probably $50,000 with attorneys going through the agreements and even installed one of our systems at their office. We had the documents finished.” But the abrupt market downturn caused the VC fund to rethink its investment. The deal was cancelled at the last second.

Fortunately, Forte found a West Coast investor more willing to take a chance on Ascendent. The good news: The East Coast firm would ship all the due-diligence documents to the new team. The bad news: The West Coast team wanted more time to see how Ascendent would fare in the new, less friendly telecom market.

Forte, now 38, was in a due-diligence catch-22. “You have to show sales and growth, which take time and capital. So you find yourself pushing on the accelerator even as the wall is getting closer. We got within six weeks of our cash running out,” he recalls. Finally, almost a year after the process started, a nearly broke Ascendent received its second round.

Getting to Know You
Forte’s experiences are typical of entrepreneurs raising money from angels, VCs or private equity groups. And since investors want to know the whole story, young companies will find that due diligence gets more and more difficult as they grow. The more complex your company is, the more Draconian due diligence becomes.

Andrew Lindner, partner at venture fund Frontier Capital in Charlotte, North Carolina, says that after an entrepreneur makes it through Frontier’s first screening process, he or she still faces four different levels of due diligence—financial, market, personal and legal—which get progressively more detailed. “The first wave is financial diligence to validate three things: Is there demand, is the model good, and is there a reason that this team can provide it more efficiently than anyone else?” says Lindner.

If the deal passes Frontier’s financial review, the firm’s partners then examine the company’s customers and partners, including distributors, vendors or integrators. Not all customers will be thrilled to discuss internal operations and purchase decisions with your potential investors, Lindner advises. Let them know what’s going on and how the additional capital from outside investors will help you serve them better.

Skeletons in the Closet
After an initial screening, a financial reality check and a thorough customer interrogation, an investor knows whether your business model is sound. He doesn’t know what liabilities might be hiding in your personal past or in the legal nooks and crannies of the business itself.

When it comes to personal issues, Lindner says, his team checks out both founders and employees. A thorough background check will likely include a review of your personal credit history, your driving record and, of course, a search for any criminal or securities violations.

During this period, investors will undoubtedly ask for personal references. You can also count on an investor talking with your least favorite people, like that disgruntled employee or the vendor you stiffed. If you’ve got those kinds of ghosts, offer them up at the beginning so there are no surprises. “In almost all cases, we can figure out a back-channel reference on top of stated references,” Lindner says.

Of course, an undisclosed criminal past or a pending lawsuit will spook investors. But they’re also interested in the smaller personality issues. Says Lindner, “The more important thing is talking to previous investors, employers and employees to see what kind of performer and manager [the entrepreneur has] been.”

Liabilities and Litigation
Finally, legal due diligence will include a complete review of your company’s contracts and commitments. In most cases, investors will want to see historical records going back at least three years. That means finding three years’ worth of balance sheets; major purchase receipts; correspondence with attorneys, consultants and auditors; and the like. The level of detail required can be excruciating.

It gets worse. Since financial liabilities and securities issues are foremost in investors’ minds, they’ll often ask for tax and corporate records going back seven years or more. Collect all your tax returns, shareholder meeting minutes, banking agreements and investor documents. Any litigation in the company’s history is likely to be important.

Lessons Learned
From his experiences in 2000, Forte learned firsthand how detailed the due-diligence process can be. Today, as Ascendent sales approach the $10 million range, he is in the process of securing a fourth round of funding.

Ascendent’s future is once again rosy, but Forte’s struggle with due diligence will not be fondly remembered. In a phrase? He laughs: “It was onerous.”

By Eileen Figure Sandlin

After the 16-hour workdays, eleventh-hour decision making, empty aspirin bottles and half-eaten sandwiches, your business is finally a success—with the revenue stream to prove it. So, how do you stay ahead of the pack? Riding the success of your introduction is not an option—you’ve got to reach new customers and new markets. “There always has to be a next thing,” says Bruce Lynskey, clinical professor of management at Vanderbilt University’s Owen Graduate School of Management in Nashville, Tennessee.
The key to your next move is choosing the expansion method that best fits your company’s product or service; your strengths and weaknesses as a business owner; and the limitations of cash, credit and existing resources. A business taking on a new growth strategy should be walking on steady legs, not looking for ways to avoid unresolved problems. And while growth is the central tenet of business development, be willing to apply the brakes when the expansion rate is too much to handle.
So, what’s the best way to develop your company? One or a combination of the seven strategies below should be enough to turn your acorn into an oak.

1. Introduce a New Product
It takes imagination and a bit of luck to hit on a new product idea that doesn’t distract buyers or make your older products seem obsolete. But, as in the case of Greensboro, North Carolina-based Batanga.com Inc., a product extension can also reinforce connection to a brand and create a niche all its own. An internet radio station, Batanga.com launched a companion print magazine called Batanga Latin Music to offer advertisers more ways to reach its tech-savvy young Hispanic audience. What began as a one-time marketing piece quickly grew into a separate media property. “We started getting calls from newsstand distributors asking if they could carry the magazine and [from] customers who wanted to subscribe,” says Troy McConnell, 43, president and CEO of the $6.5 million company.

Just as you have to be careful when extending your original product, adding products with little or no connection to your product line can be equally dangerous. Exploiting a trend is tempting, but acquiring new customers is less revenue-savvy than squeezing more from existing customers. “The more you can put through the same sales channel, the more cost-effective it is,” says Alan M. Davis, a principal with Revitalization Partners, a Seattle consulting firm specializing in business turnarounds.

Use your existing customer base to vet a new product’s potential market value. A survey combined with a free gift can prompt customers to share a wealth of information. Fred Wainwright, executive director of the Center for Private Equity and Entrepreneurship at Dartmouth College’s Tuck School of Business in Hanover, New Hampshire, says, “Preliminary re-search is essential to getting the pricing right, choosing the right value proposition and developing a product that meets the needs of the market.”

2. Take Your Product to a New Market
Dianne Daniel, president of Handle It LLC in Dublin, Ohio, first marketed GripTwist, an industrial-strength twist tie made of foam-covered wire, to ski shops as a ski and pole binder. It soon became obvious that what could hold unwieldy items such as skis together could also hold hoses, tools, ropes and other items—so the company began selling GripTwists to hardware stores. Next, Handle It took the GripTwist into sporting goods stores. Daniel, 52, hopes the expansion will boost GripTwist sales to $1 million this year.

New market development can help you reach new customers, but reaching too far can overtax staff, budgets and operational systems. Start small, and check progress as you go, says Ed Chap-man, managing partner of VizQuest Ventures LLC, a sales performance and market development firm in Waltham, Massachusetts. “Many companies don’t consider market segmentation and tar-get their products too broadly,” he says. “Take your solution, sample it among a couple of microsegments, and see which ones stick.”

3. License Your Product
Licensing shifts the financial risk from a product’s originator to a company wil-ling to take on the burden of marketing, advertising, production and distribution. The shift also includes forfeiting most of the profits, but it may be a fair price to pay for the chance to build a national reputation when cash flow is low.

For Taggies Inc. in Spencer, Massachusetts, the cachet of its licensing partner more than made up for sharing its piece of the pie. In late 2002, Scholastic Inc., the children’s publishing behemoth, wanted to license Taggies, a line of blankets and toys with satin tags attached, for a book collaboration. “The relationship brought us into a market we weren’t in before,” says Danielle Ayotte, 37, co-founder with Julie Dix, 40.

Ayotte and Dix, who project 2006 sales between $3 million and $7 million, were lucky to have Scholastic approach them first. Most business owners are not so fortunate. Before you search for a licensee, make sure your product is patented—or at least patent pending—and have some research showing sales potential. Then, if you don’t already know of a company with which you’d like to partner, check out trade shows, online databases and local economic development agencies. A licensing agent also can help you find appropriate companies and broker a deal.

Licensees can be picky, and so should the licensor. Davis of Revitalization Partners recommends choosing a partner who can offer potentially high volumes of distribution. Though contracting with a large company might mean a smaller royalty percentage, the potential customer reach will compensate for it. A good licensing partner should also have an established reputation for quality and service, and an aggressive plan to market and advertise your product. For a check on past performance, talk to other licensors contracting with your selected company.

4. Start a Chain
A restaurant, retail or service business that is easily reproduced and can be run from a distance is a great option for launching as a chain. But entrepreneurs must know exactly what makes the original store work successfully. Also look at the aspects that won’t easily transfer to a new site. “You have to ask, ‘How much of this success is tied to me, my location or my staff?’” says Chris Wheeler, managing director of Ballenger Cleveland & Issa LLC in Newport Beach, California, a consulting firm specializing in financial and business turnarounds. Defining operating procedures down to the last detail, sharing staff between locations to establish the company’s culture in the new location and developing a training program for new employees all help start things off right.

Launching multiple locations can present some surprises. When Zoots Corp., an eco-friendly dry cleaning chain in Newton, Massachusetts, opened the doors of its third unit, the company launched a marketing campaign to herald the new arrival. “Suddenly, we had three stores doing three times the business of our first two stores,” says Todd Krasnow, 48, chair and co-founder with Tom Stemberg. The company found it difficult to meet its service standards. To avoid similar deluges in the future, Zoots cut back on big promotions, relying instead on word-of-mouth and periodic advertising. The company has since added carpet cleaning and restoration to its eco-friendly services and projects 2006 sales of $71 million.

5. Turn Your Business Into a Franchise
Who wouldn’t love the idea of collecting fees and royalties while fellow entrepreneurs expand your business? Once you get past the startup costs—on average, between $125,000 and $150,000 for moderate initial growth of five to 10 franchises per year—franchising is an efficient way to expand brand awareness while pooling the business acumen, financial resources and buying power of multiple owners.

Don’t expect a motivated franchisee to make up for any existing shortfalls, however. “Make sure there’s a market for your product, do your competitive analysis and be sufficiently capitalized,” says Andrew Loewinger, an international franchise attorney with law firm Nixon Peabody LLP in Washington, DC. Otherwise, franchisees can be a prickly bunch to have to work with. “You might have franchisees who don’t want to follow the program, who want to break out on their own or don’t want to pay their royalties because they think you’re not delivering value,” Loewinger says. “It can be a challenge.”

Joe Barbat, 30, founder and CEO of Wireless Toyz Ltd., a cellular retailer in Farmington Hills, Michigan, keeps in touch with franchisees through store visits and a companywide intranet de-tailing new cellular plans and promotions. These contacts remind franchisees that the company is always there to help, says Barbat. It also helps the company, which brought in more than $76 million in revenue last year, maintain sales and service standards.

For more on franchising your business, see the “Franchising Your Business” section of Entrepreneur’s FranchiseZone (www.entrepreneur.com/franchise).

6. Join Forces
A merger or acquisition combines the best aspects of two companies, expands the customer base, increases intellectual capital and delivers operational efficiencies. The only trick is finding the right partner. “You have to share the same vision of what it is you’re trying to build,” says Davis.

Such a step is usually the domain of established companies, but acquisitions are how Thought Equity Inc. got off the ground. Shortly after Thought Equity’s CEO, Kevin Schaff, started his Denver business providing stock footage and production-ready advertisements to media companies, he first acquired a nearly bankrupt company selling similar ready-to-use commercials. “We wanted to [increase] the size of our library and provide a critical mass for people when they came to search our libraries,” Schaff, 32, says.

The next target, an advertising agency, supplied the expertise of professionals steeped in TV advertising sales. With this “plug and play team,” as Schaff calls the agency, Schaff estimates the company got up and running with its first customers 18 months earlier than it could have had it tried to create these resources in-house. Both acquisitions were completed in 2002, the year Thought Equity was founded. Within two years, sales reached $3 million.

7. Go Global
Growing markets, rising consumer spending, improved business climate—sometimes the only place to find these things is by going overseas. Doing business internationally can take the form of ex-porting, licensing, a joint venture or manufacturing, but whatever form you choose, the same basic business rules of assessing customer demand, gaining le-gal and accounting assistance, protecting intellectual property and obeying regulations apply.

What don’t come so easily are the nuances of cultural differences. In some countries, particularly those in Asia, a local partner is virtually a requirement. Your first stop should be your target country’s economic development agency, which can help marshal local resources to get you on your way, possibly with a small financial boost.

Melody Brenna, 49, CEO and co-founder with her husband, Steve Brenna, of Milestone Architectural Ornamentation Inc. (www.milestoneltd.com) in Amarillo, Texas, emphasizes the importance of the internet in growing an international business. That’s how overseas customers first found out about her construction technology firm, which specializes in historic reproductions. Today, with 2006 sales projections of $10 million, Milestone’s international business includes exporting product machinery, materials and molds to Thailand, and deals with other countries are in the works. To streamline service, the company creates project-specific websites with regularly updated project news, photos and scheduling information.

Online access also helps businesses overcome the delays of time zone differences. “If there’s something I forgot to tell a client,” says Brenna, “I throw it on the web and it’s there when they get to work in the morning.”

Julie Monahan is a writer in Seattle whose articles on small business and emerging technology have appeared in numerous consumer and trade magazines.

By Kim T. Gordon

We’re naturals when it comes to building relationships. We’ve been doing it throughout our lives. Then why is it so difficult for many of us to network successfully? The answer may have a lot to do with misperceptions about the networking process. Because business networking is a sales activity—requiring one-on-one contact with prospective customers and clients—some entrepreneurs may perceive it as being too forward or pushy. But effective networking calls for exactly the opposite kind of behavior. It requires a giving nature, good listening skills and patience.

Networking is a tried-and-true way to produce leads for your growing business, provided you understand how best to make the process work for you. Here are 10 tips for increasing your networking success. 

1 Choose the right groups. A web designer in Washington, DC, recently complained that she went to countless meetings, even got actively involved, yet produced little return for the time she invested. After some digging, I discovered she was indeed going to many meetings, but they were all the wrong ones. In fact, she was attending groups where she would only meet individuals with whom she had lots in common—other designers or colleagues who might occasionally be able to send referrals, but would not be her bread and butter. It wasn’t until she branched out to groups of business owners and executives who might be shopping for a web designer that her networking efforts began to bear fruit.

There are several great ways to network in groups. One of the best is to identify groups attended by your target audience and make them your top networking priority. Next, you can join networking clubs or groups that meet solely for the purpose of making connections between individuals in a wide range of businesses. You can even create your own networking group made up of entrepreneurs who can consistently refer business to one another. Finally, you can network in peer groups, such as industry and professional associations, to earn referrals from colleagues and vendors.

2 Set strong goals. Before you attend any networking function, it’s important to set realistic goals. Be mindful that this is a sales opportunity, and you should manage your expectations accordingly. What can you honestly hope to accomplish at a single networking event? While it’s unlikely you’ll be able to effectively meet and establish relationships with a roomful of people—say, 30 to 50 at once—it’s not unrealistic to expect to make six solid contacts at any one event.

Most important, you should set a goal for your next step. Decide what needs to happen following each successful networking contact, and be specific concerning the actions you plan to take. Will you suggest a lunch meeting or promise to make a follow-up call? When you have a clear goal in mind prior to attending a networking function, you’ll be fully prepared to move your new relationships to the next level.

3 Create an intriguing introduction. An effective introduction has little to do with what’s on your business card. Instead, it should focus on how what you do, make or offer is beneficial to your new acquaintance. In other words, it must be relevant, specific and intriguing. And you must modify your introduction depending on whom you’re addressing.

Practice describing what you do in a way that’s meaningful to those you meet. For example, I am an author, a columnist, a consultant and a speaker specializing in small business. I also work with Fortune 100 companies as an on-air spokesperson. But that’s not how I introduce myself. When meeting an entrepreneur, I begin with my name and company name, and then say, “I write, speak and consult on how to achieve success in your small business.” And when meeting a PR prospect, I might say, “I’m an author and columnist, and as an on-air spokesperson, I help Fortune 100 companies communicate new product and branding messages to the small-business market.” Get the picture?

4 Make a great impression. Successful networking isn’t about putting on an act to be the life of the party or telling funny jokes. It’s about being yourself—honest, likable and interested in those around you.

As you move politely from person to person, shake hands, make eye contact, and give each individual your full attention. Once initial introductions have been made, the best way to start a conversation is by asking your new acquaintance a question about his or her interests or about the event. This is not the time to launch into a sales pitch or monopolize the conversation. On the contrary, building relationships is all about listening carefully to what others tell you so you discover how you can help them. Then, briefly describe the ways you can provide exactly what they need—and leave the rest for your follow-up calls and meetings.

5 Gather good information. All the people you meet have unique stories to tell—not just about what they do, but about what’s meaningful to them. While your prospects may not readily inform you that they like golf or that they have three children, through your conversations you’re bound to gain some valuable clues regarding your prospects’ lives and interests. Listen carefully for this information, as these observations will become tools for building rapport with your prospects. They are helpful signposts along the road to establishing commonality and a real sense of understanding that’s the foundation of every good relationship.

For example, you may learn that you share an admiration for opera with one prospect, and find out that another lives in the neighborhood where you grew up. Be certain to note your observations along with all the other data on the business cards you gather so you can refer to them in your follow-up notes and meetings.

6 Become a resource. If you go to a networking event focused entirely on what you hope to get, you’ll miss the point and most likely fail to achieve your goals. Successful networking involves patience and, above all, a willingness to give in order to get. It also takes time and effort to build trust. When you assist others, either by referring business to them or by being a valuable resource, you earn their trust and appreciation, which can translate to business in the long run.

Find ways to deliver value to those with whom you network, and look for opportunities to help them accomplish their individual goals. You can be sure that, in return, they’ll do everything they can to help you achieve yours.

7 Send a note. If you want to be remembered, it’s a good idea to send a short and preferably hand-written note after each initial networking contact. It pays to keep packets of notecards on hand; some are even available with slots for business cards. It takes only a few minutes to write each note, and they will reinforce the positive impressions you made at your initial meetings.

This is the perfect place to put that information you gathered about each of your new prospects to good use. Suppose your networking contact is a NASA contractor whose personal hobby is astronomy. Your follow-up note could include a mention of an up-coming meteorological event, such as a meteor shower, or a clipping from an interesting article on the topic. This would not only make your note memorable, but could also help you take the first step toward establishing a positive business relationship.

8 Construct a database. Do you have a contact-management software program in place to manage all your sales and marketing contacts? You don’t need to have a big business or hundreds of employees to justify software that manages your customer and prospect information as well as tracks scheduled sales and marketing activities. In fact, the smaller your business, the more likely you are to be juggling multiple tasks and to overlook the essential actions required to move prospects through your sales cycle.

Making a networking contact consists merely of an initial hello and a brief meeting. It doesn’t become meaningful until taken to the next level. If you’re an experienced marketer, you know multiple contacts are necessary, sometimes as many as eight or 10 depending on your industry, before the average sale is closed. So it’s essential to input your networking prospect data and schedule follow-up activity in a good contact manager, such as ACT! 6.0 (www.act.com) or GoldMine 6.5 (www.frontrange.com/goldmine), to ensure you stay on track with important contacts and action steps.

9 Close the loop. Oftentimes, successful networking will put you in contact with people who aren’t direct prospects but can refer business your way. When they do, it’s vital to keep them in the information loop. First, send a thank-you note for the referral. Then keep them apprised of the activity and positive results from the connection they helped foster.

After all, making a referral requires a leap of faith and a lot of trust. Have you ever referred business to someone only to learn their performance was disappointing? If so, you know how embarrassing it can be. So when you demonstrate that you can proficiently handle the referrals you receive, you can be sure more will follow.

10 Make networking a habit. For many successful entrepreneurs, networking isn’t something they do only at meetings or events; it’s part of their lifestyle. Have you ever met someone on a train or in line at the movie theater and struck up a conversation that resulted in business for your company? Networking opportunities are everywhere. Friends, neighbors, suppliers and current clients or customers can all be potential sources of referrals—as long as they know what you’re looking for.

It all starts with your willingness to talk about your business and to help others with theirs. Let your clients and vendors know that you’re actively pursuing referrals. When friends talk about their work, find ways to help them, perhaps by sending prospects their way, and ask who they believe might be able to use your services. In the end, your enthusiasm and passion for what you do will shine through, drawing others to you.

Contact marketing expert Kim T. Gordon, author of Bringing Home the Business, at www.smallbusinessnow.com.

By Geoff Williams

Jeannette Doellgast spends a lot of time thinking about numbers. She has been doing so for more than a year, ever since she and her husband and business partner, Mohsen Alam El Din, bought the Plumbush Inn in breathtakingly scenic Cold Spring, New York. For Alam El Din, 50, born in Egypt and entrenched for 20 years in the restaurant industry, running his own company is his American dream. Doellgast, 44, gamely switched careers to join him—after about 15 years as an executive in the textiles industry and a three-year stint as an elementary school teacher. With the bed-and-breakfast, she soon found herself immersed in the art and science of setting prices.

First, Doellgast concluded that they would have to raise all the prices for both the rooms and food at the Plumbush Inn, which had been in existence for 30 years when the couple bought it. Longtime customers weren’t pleased, and they made sure to let Doellgast and Alam El Din know it. “It was a risk,” admits Doellgast.

It has paid off. The Plumbush Inn stands to bring in $1.25 million by the end of 2005. Considering that Doellgast and Alam El Din paid $1 million for the business—with a matrix of many loans and all their life savings—they appear to be off to a good start.

Determining the Price
There is no set formula for price-making, because every business is unique. “But the basic questions you need to answer are, What is the market going to pay, and What are your costs?” says Marsha Lindquist, a business strategy consultant in Gaithersburg, Maryland.

Those two concepts get a little tricky when you’re a service business and not selling a product, so let’s stay with products for a moment. Anthony Shurman, 34, president of Yosha Enterprises Inc. in Westfield, New Jersey, sells Momints, breath mints that were introduced in 2002 at $1.99 for a 36-mint package. Later, Shurman dropped the price to $1.79, and in 2003, he took the product nationwide, charging $1.69 per package. Each time he dropped the price, he had a good reason for doing so—to stay competitive with competing brands.

When Momints debuted, Shurman says it was the only liquid breath mint on the market, so its uniqueness allowed him to charge higher prices. As Shurman explains, “I think when you’re launching a new product or starting a new business, there are plenty of examples of businesses going after a target audience and creating a cachet for themselves by pricing a little higher and adopting an elite strategy, where you present yourself as this high-end competitor in the market.” Shurman also felt he could price the product higher because each package had 36 mints, more than any other brand.

Looking back, Shurman believes his first strategy for pricing really wasn’t the best one. “If I were to do it again, I probably would have started with a lower price. Our consumers don’t really give us credit for having those extra mints, and I think a more visible difference to the average consumer would be a lower price,” says Shurman. That’s why he used a regional grocery chain as a test market, where he sold a 28-mint package for 99 cents—70 cents less than his 36-mint package. Says Shurman, “Our sales went up 350 percent.” Yosha now brings in more than $3 million annually, and Shurman has reason to believe he’ll sell even more mints at the lower price.

However, while understanding what the customer is willing to pay is important, so is understanding your own psychology when it comes to money. After all, the price you select for a product or service is going to reflect on both you and your business. Is your company one that attracts those who identify with Desperate Housewives, or the desperate housewives clipping coupons and wondering if their husbands are going to be laid off?

Doellgast and her husband decided they wanted the Plumbush Inn to be upscale, the kind of B&B where romantic couples go. “We are a slow-dining experience,” says Doellgast, who says she raised the prices because offering the public a richer experience costs more money. Says Doellgast, “We don’t buy anything frozen. Everything is fresh, which makes a difference in the price.”

The Plumbush Inn also uses organic products, which cost more. But when people know what they’re getting, they don’t mind paying for it. In fact, Doellgast points out that the customers who had initially been angry at them for raising rates later returned with new expectations—realizing they were coming to a high-end inn—and seemed very happy with the changes.

“People bring a whole set of equations with them when they make a purchase, and one of the values for most people is that high price equals quality,” says Rob G. Docters, co-author of Winning the Profit Game: Smarter Pricing, Smarter Branding. “If you’re successful, you ought to have a price that reflects the success.”

In the same breath, Docters warns not to go overboard: “Customers resent it when they think you’re charging them much more than you should be. It’s an old Puritan ethic—nobody wants to be ripped off. So you have to know your customers and what they will tolerate.”

The Intangibles
If you’re selling breath mints, a lot of fixed costs go into creating your product and distributing it; of course, the store selling your product deserves a cut, too. Even your customers understand that you incur those costs and that you deserve a profit. It’s a little different selling the intangibles—like consulting services.

One smart idea is to turn an intangible into something you can touch. “In my business, financial consulting, we’ll bring out mock financial plans and show them to clients or prospects so they can see exactly what they’re going to get,” says Los Angeles business advisor Robert Pagliarini. “Suddenly, you’ve turned a service into a product. We can show them sample reports, charts and graphs—all these products that really represent the service we provide.”

It’s a shrewd strategy, because adding value to your price is what really wins over consumers. “Pricing is an art, but it’s not only about pricing, it’s about differentiating yourself and deciding what your niche [is], and what the value of your niche [is],” says Doellgast. “If you only build your [business] around your low price, somebody else is going to come along next week and undercut you. And then how have you established your market? You really haven’t.”

Geoff Williams is a freelance journalist in Loveland, Ohio. He can be reached at gwilliams1@cinci.rr.com.

After more than a decade in which other forms of investment stole the limelight, business owners are only beginning to wake up to the hidden value in their own enterprises, says Ray Manganelli, author of Solving the Corporate Value Enigma. Manganelli says the average business creates only 60 percent of the value it is capable of creating. Is that all bad? Not necessarily. That means entrepreneurs may be able to increase the value of their companies by 40 percent simply by paying more attention to it. “It’s a tremendous prize,” Manganelli says. “And that prize can be the difference between profit and loss, between surviving and folding.”

Why Build Wealth?
Dean Dinas, senior economist and director of the Center for Economic and Industry Research for the National Association of Certified Valuation Analysts (NACVA), a trade group for valuation professionals, estimates only about 5 percent of small businesses have had a formal valuation done by a qualified professional. One reason is entrepreneurs are too busy running their companies to be concerned about the value of those companies. Also, some don’t think they need to build or measure the value of their companies unless they plan to sell.

There are, however, dozens of reasons to know and increase your company’s value, none of which have anything to do with selling it. Before you set up a buy-and-sell agreement with a partner, decide how much life insurance to buy as part of an estate plan, create an employee stock ownership plan, or apply for an SBA loan, you must have a documented value for your business, Dinas says.
Many entrepreneurs rely on balance sheets, income statements or a gut feeling to estimate their companies’ true value. But balance sheets and other financial statements used in the daily operation of a business are only the beginning when it comes to valuing a business. Intangibles such as customer relationships and human resources don’t show up on balance sheets but are essential to accurate valuations.

Value 101
The price the company might sell for on the open market is the basic value benchmark. This can be determined by examining recent sales of comparable businesses. But no two businesses are the same, and selling prices vary according to what the buyer is looking for.

Expected future cash flow is the most common basic benchmark for setting value. So, typically, you build value by increasing the amount of profit your business can be expected to generate in the future. You can also boost value by increasing sales or some derivative of revenues. Both methods show your company is on a strong growth track. Unfortunately, however, healthier companies aren’t always worth more. If you’re in an industry that’s on the decline, for example, company value will likely slip.

Building value, notes Manganelli, is often counterintuitive. You may have to go against industry wisdom or sell off assets you would rather keep. Often, entrepreneurs find it’s essential that they de-emphasize their own role in the business if they want to be seen as more valuable. Other times, they may need to terminate longtime employees and bring in replacements.

Building Wealth Now
The good news is that now is a fine time to invest in building the value of your company. And it’s not because other investment options may be less appetizing. A few years ago, one of the biggest complaints of entrepreneurs was that they couldn’t hire enough good people to expand.

That’s not a problem now, says Nate McKelvey, CEO of CharterAuction.com, an online booking service for private jets, with 25 employees. “It’s a fantastic time to find talented people,” says McKelvey, 35. “When I started in 1999, anyone who had computer experience could make six-figure salaries. Those days are over.”

Now, instead of paying inflated salaries, McKelvey can employ his company’s value to build value, as he did recently by acquiring a smaller company loaded with talented employees in exchange for minority ownership in CharterAuction.com. The move preserved cash, encouraged the new personnel to accept reasonable salaries, and locked in talented people by giving them ownership.
Other entrepreneurs say now is a prime time to purchase low-cost inventory, finance capital expenditures at low rates, or improve internal accounting and management systems to boost your company’s visible value.

Building value doesn’t have to cost much money, much equity or even much time. Manganelli says the most powerful value-building systems are based largely on attitude shifts. The first and most important step occurs when a company’s leaders start paying attention to deploying strategy, assets, operations and measurements in a systematic fashion with the goal of increasing value. Still, he says, “It is hard to do because it requires action on a lot of different planes.”

But building value can be done, and entrepreneurs are waking up to the fact that the best place to make a killing in investments is right in their own companies.

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

By Theresa Speake

If you think your business is too small to get a government contract, think again. Sure, billion-dollar corporations work with the government all the time. But so do countless small businesses just like yours. In fact, $1.2 billion in prime contracts were awarded to small business in 2006. Additionally, $3.5 billion in subcontracts were awarded to small businesses last year, and the numbers continue to increase.

Depending on the type of business you have, the U.S. Department of Energy (DOE) is one viable avenue worth exploring. DOE purchases between $18 billion and $20 billion worth of goods and services annually—many of them from small businesses. Among the services that DOE purchases are facility management, remediation, construction, R&D, management and scientific consulting, plate work manufacturing, administrative services, data processing, security, engineering, waste treatment and disposal, and more.

Through its Small Business Programs and its commitment to President Bush’s Small Business Agenda, the Department has increased small business participation and is working to help small businesses gain access to both prime and subcontracting opportunities by positioning small businesses to team, joint venture, and learn more about DOE’s mentor protégé and SBA mentor protégé agreements.

The Department’s Office of Small & Disadvantaged Business Utilization (OSDBU) is looking for qualified small businesses that have a working knowledge of DOE’s needs and requirements. Companies in the areas of 8(a), HUBZone, Women-Owned Small Businesses, Small Disadvantaged Businesses, and Service-Disabled, Veteran-Owned Small Businesses are examples of the many types of companies, which can and should be doing business with the DOE.

So, how can you boost your chances of becoming a DOE contractor or subcontractor? The OSDBU offers the following tips:

• Do your homework. Get to know what DOE needs. Visit the Web site (www.energy.gov) and click on the link “Small Business” at the bottom of the page or “Doing Business with DOE”.
• Register your business. To bid on a DOE contract, you must be registered with the DOE’s Industry Interactive Procurement System online at (http://doe-iips.pr.doe.gov). Register with the Central Contractor Registration (CCR) at (www.ccr.gov).
• Review Forecast of Prime and Subcontract Business Opportunities. You may reach the forecast at (http://hqlnc.doe.gov/forecast) . Match your expertise, capabilities, and experience with a specific DOE procurement opportunity. Once you find an opportunity, prepare a “business development” plan.
• Respond to Sources Sought Notices. DOE issues Sources Sought Notices to determine if there are qualified small businesses that can perform on the contract. If two or more small businesses respond, DOE may set-aside the procurement for small business.
• Be flexible. Consider both prime contracting and subcontracting opportunities, teaming, joint ventures, or mentor protégé programs.
• Prepare a company profile. Develop a succinct, one-page summary of your company’s capabilities, expertise and experience, references from other federal agencies, registrations, and certifications.
• Market your company. Direct contact with acquisition and program personnel is vital to marketing and success. Visit the website at (http://smallbusiness.doe.gov). Click on “Our People” for a directory of small business contacts nationwide.
• Network and participate. Utilize every opportunity to establish and develop contacts by attending the Annual DOE Small Business Conference, Expo and Matchmaking Forum. Visit: (www.SmallBusiness-Outreach.doe.gov) for more information.
• Make it easy for the DOE to do business with you. Become a GSA Federal Supply Schedule (FSS) contract holder (www.gsa.gov). If you’re an IT firm, become a Government-wide Acquisition Contract (GWAC) Holder, (www.gsa.gov/gwacs). Be sure you can accept payments by credit card.

Don’t give up. Learn, network, and persevere until you have a contract.

By Ruth King

Purchasing by federal, state, and local governments represents about 25 percent of the economy. Big businesses and governments need everything from lawn care and public relations services to jet fighters. Winning bids can result in great profits or horrific losses. Here are eight things you must do so that winning bids doesn’t put you out of business.

1. Find the right contact person or partner
Find the contact in the government or big business who has the authority to purchase what your business sells. You’ll also need to contact the users of your product. It’s a two-pronged sales approach. Target your message to the decision-maker and the user of your product. Both audiences are necessary to be successful.

You can also partner with a company that has experience with government contracts. If your company is certified as a women’s business enterprise (WBE), a minority contractor, or other disadvantaged business, look to work with companies who need to work with your type of company as part of their contracts.

Once you find the right partner or government contact person, making him/her look good can lead to other work. HR Anew, a human relations WBE- and minority-certified enterprise, prides itself on always exceeding expectations, according to Deborah Stallings, founder and CEO. Stallings explained, “When one of our contracts was completed, they were so happy with us that the contact person referred us to other government agencies that we have subsequently done work for. Our contacts also keep an eye out for us for bids that are coming up that they think we should bid on.”

2. Get help
If the government approaches you wanting to buy your products and services, don’t try to negotiate the contract yourself. Get help from people who are experts. One large manufacturer was approached to sell its product to the government. This company negotiated the contract itself.

Unfortunately, the contract required the product be delivered in quart bottles. This company didn’t think to negotiate this point and didn’t read the contract. Of course, the government rejected the product, refusing to accept anything larger than a quart bottle. The company resolved the contract by finding a third party to take the product, which had been shipped in a rail car, and repackage it in the sizes required by the government—at a great loss to the manufacturer.

The Defense Logistics Agency has the Procurement Technical Assistance Program. The sole purpose of this program is to help small businesses learn the mechanics of doing business with the government. The agency is staffed throughout the country with procurement experts who can help maximize the dollar value of a contract for any government agency and make sure that you stay in compliance with your contract.

Try www.governmentexpress.com for help with valuable government contacts.

3. Don’t put all of your eggs in one basket
If more than 20 percent of your business revenues are generated by one company or government agency, then your business can be in trouble should that revenue source disappear.

A small business had a contract with a Fortune 50 company. The company liked the small business’ work and asked it to do more and more. Soon this Fortune 50 company represented more than 80 percent of the revenues generated by this small business. Then, there was a problem on a contract, and the services weren’t delivered on time. The company lost the business, and 80 percent of its revenues disappeared overnight. The small business went bankrupt.

Make sure you have the staff to fulfill the contract. One of the questions in Requests for Proposal (RFPs) often is about the expertise of the people who will fulfill the contract requirements and provide the deliverables. If your company is hiring people just for the contract, and your company doesn’t get additional contracts or work for these people after the contract is done, you’ll have to lay them off.

“We are constantly battling the need for men to work on construction jobs with the work available for those jobs,” said Emory Young, CEO of Certified Electric, an electrical and heating and air-conditioning contractor with many government jobs. “It’s especially hard when you have good men and a contract gets delayed. You don’t want to lay them off waiting for the contract. However, it costs the company a lot of money to keep them. It’s a delicate balancing act.”

4. The bid process takes time and is tricky
RFPs can be an inch thick or greater. To even be considered, you have to follow all of the instructions, which sometimes can include the font size that you have to use in your response. Make sure that you only go after those proposals that your company can truly win. Otherwise, you may be spending more time writing proposals than generating revenues for your company.

According to Amy Cohen, marketing manager for software company Acquire, “You don't always know if you are seriously being considered or if a vendor has already been singled out and they are simply going through the process because they are required to do so.

“As far as bids being successful or unsuccessful, it can come down to price, connectivity to certain systems—as is our case being a software company— industry certifications, and expertise, or even recommendations by another vendor,” says Cohen.

I experienced a tricky bid process. A state agency wanted to work with a computer graphics company that I owned. They liked our design for a project they were working on. However, because the price was higher than the “no bid” price, an RFP had to be issued. They created the RFP according to our specifications and price. We won the bid. However, the contracting officer told us that we won it by only $50. Had our price been $1 higher, the agency would have been forced to award the contract to the next lowest bidder.

All bids can be rejected and the process started again with different specifications. A city government wrote the specifications for a new computer network that it needed. The city wanted one vendor’s equipment and wrote the specifications around that equipment. To the city’s surprise, another vendor met the specifications and had a lower price. The city threw out all of the bids and started over again with tighter specifications geared toward the company and equipment that it wanted.

5. Follow the rules and get paid
Government and big businesses have the funds to pay your company for the work you provide. However, without the properly completed paperwork you won’t get paid. Government forms can be confusing and payment will be withheld if you don’t comply.

Mark Amtower, author of Government Marketing Best Practices, helps small businesses successfully market and comply with their government contracts. A company hired him after pursuing government business for a long time. It finally won a contract recently. The company struggled initially to get paid because employees did not know how to fill out the forms required by the federal government. Consequently, no one at the company got paid that week.

It can take weeks to get purchase orders and set up the accounting procedures. In addition, payment terms are often spelled out in the contracts. Many times, payment is net 45 days or net 60 days, especially with large corporations. Or, with construction jobs, there can be 10 percent retainage, which is held back to ensure that all work has been completed. This can be remitted to your company months after the job has been completed.

Make sure that you read the contract, know the payment terms and understand all of the forms required to get paid.

6. Watch set-asides and givebacks
Many government contracts require that you give back funds. For example, most Government Services Administration

(GSA) contract schedules have a 0.75 percent selling fee attached to them. This is paid quarterly to the government. If your company provides $100,000 in products per quarter, you are responsible for paying $750 back to the government for the privilege of selling to the government.

Lauren Walters, vice president for government contracts at Volmer Public Relations, has been responsible for overseeing the completion of federal contracts that had a 20 percent local set-aside requirement. “We have to be careful to comply with the local requirements. Often, it means bringing in corporate sponsors to pay for a portion of the event. We don’t want to be 20 percent short of the funds that we need to have a successful event.”

7.You can get audited
f you work with large corporations and governments, you have to follow their rules. Often, you have to live with certain legal requirements.

“We work solely with large businesses and have learned that legal departments can be inflexible about some of the terms of their contracts, including payment terms,” said Lorin Coles, founder and CEO of Alliancesphere. “As long as we know the terms upfront and can live with the conditions, we accept them because we want the contract.”

Federal contracts are audited for compliance with Equal Employment Opportunity Commission (EEOC) laws and regulations. Setting up these procedures in your company takes time and money. However, you have to know the requirements and follow them. If you are not EEOC-compliant, your contract can be terminated.

There are also accounting audits. The media delight in reporting stories of thousand-dollar screwdrivers and other outrageous costs after a contractor has been audited. Make sure that you comply with the contract costs and deliverables. Then you don’t have to fear a government accounting audit.

8. Successfully completing a contract doesn’t guarantee you the next contract
Winning a contract requires deliverables for a specific period of time. Once that time period is over, a request for proposal will be issued. Assuming that your company has successfully completed the contract, it will be one of the companies on the bidders’ list. However, being on the list doesn’t guarantee that your company will get the next contract.

Volmer Public Relations was a successful bidder for the Houston-Galveston Area Council Buying program. The contract was for one year with a two-year renewal option. The company held the contract for all three years. Even though Volmer had successfully completed the contract, it had to go through the RFP process again. It was easier the second time, and the company was selected to provide work for the next contract period.

One small company had built 80 percent of its business around manufacturing and supplying equipment to comply with a federal program. That program, which had been in place for five years, was abruptly cancelled. The company had to lay off 134 people in one day. It took them 10 years to recover.

Once a contract is completed, there may not be another contract. Once a federal building is built, there isn’t another one to build at that same location. However, there may be contracts as a result of the building, i.e. for maintenance and renovations. Keep your eyes open for additional opportunities that were not a part of the original contract. The work will have to be bid. However, with your company’s input, it might be bid to your specifications.

A small business can be profitable with a strategy of winning government and large-business work. However, as Mark Amtower says, “A company coming into this market blind expecting big bucks leads to a great police chalk line on the ground.”

Forewarned is forearmed. Do your homework and avoid the Ugly Truth.

One area that offers tremendous potential for small businesses is procurement. Whether you choose to work with the federal government, prime contractors or large corporations, these groups are seeking qualified small businesses as vendors for their contracts. Procurement programs are a great way to increase awareness of your company as well as increase sales and profit.

Interested in the federal government route? Good choice! They happen to be the country’s largest buyer of products and services. More importantly, one of their strategic goals is to invest 23% of a $300 billion annual procurement budget into businesses like yours. The government, as well as large corporations, is looking for supplies of anything and everything, from paper clips to airplanes. If you’ve ever thought about bidding on government contracts or doing business with Fortune 500 companies, now is the perfect time for your company to get in the game.

As a publisher of magazines for business owners, we’ve had our own share of successes (and failures) with contracts. It was after one particularly stressful bidding process that we decided to create a magazine to help business owners better understand how to navigate the sometimes murky waters of procurement programs. Twelve months later, we present to you Winning Bids magazine!

The goal of Winning Bids is to help you not only better understand the opportunities available in procurement, but also to de-code the secrets that seemed to shroud the whole process. Too many small business owners assume that working with large corporations and/or the government is a strenuous process, filled with the three Rs—rules, red tape, and regulations.

While the process may sometimes be arduous, in the end, more money can be earned if the right steps are taken. In every issue of Winning Bids, we will work with you on the different steps and give you contact information of the people who are in the best position to assist you.

Now it’s time for you to get in the game!

Brian Moran
President
Moran Media Group
brian@moranmediagroup.com

By Julie Moline

With the astonishing success of online travel agencies such as Expedia, Orbitz and Travelocity, can traditional agencies-the kind with travel agents (or travel counselors, as they prefer to be called) and hefty transaction fees-be of any use to small businesses?

Surprisingly, the answer may be an emphatic yes. "For simple bookings, online agencies work well and they're inexpensive," says Tom Wilkinson, president of TRW Travel Consulting LLC. "But when itineraries get complicated or changes are made on the fly, it may actually be more cost-effective to use a traditional travel agency than to have travelers make arrangements on their own." Wilkinson, who advises companies on ways to manage corporate travel costs, believes small businesses can benefit substantially by aligning with a travel agency. "Almost every business owner travels a lot and likely knows some tricks, but being a savvy business traveler is very different from knowing how to manage travel across your enterprise," he says.

No matter what your travel budget is – even if it's less than $100,000 annually – your firm can benefit from a strategic procurement approach to travel. That means defining spending guidelines and directing your company's travelers to certain suppliers. Then, by channeling all bookings through a single agency, you can see how much employees spend, with which suppliers and for what purpose. That information will give you an idea of where you can save.

At the same time, Wilkinson says, you'll have an ally when the inevitable snafu occurs. "It doesn't have to be something calamitous. You could miss a flight, or a flight gets canceled or delayed, and you need to rebook. Or you have a reservation at a hotel, it's midnight, there's no record of your reservation and there are no rooms left. Here's where a travel agent is a lifeline. You can call an 800 number any time of the day or night and get that room, or get rebooked on a flight in minutes rather than waiting for hours in line at the airport counter. You also have an instant advocate whenever you need one."

Though many small companies don't have the budget to dedicate a full-time travel manager, outsourcing travel management to an agency is actually a cost-effective way to build in spending controls and get professional service while paying on an ad hoc basis. "You don't have to have a travel agency on retainer," Wilkinson says. "You pay as you go."

Travel agencies, for their part, are creating special programs for small and midsize businesses that compete head to head with online agencies on price and transaction costs, while adding value in the form of discounts and rewards.

At American Express, for example, Preferred Extras provides small businesses with discounts and amenities, secured by the purchasing power of American Express, and offers $5 online transaction fees, the same as online agencies. Customers can opt for a range of live agent services, from standard to VIP. Per-transaction fees range from $20 to more than $50. A price guarantee will match or beat any fare on a public website (except opaque sites like Priceline), says John Berkley, vice president and general manager of Middle Market Direct for American Express. Service quality is guaranteed as well. "Anytime the traveler finds service is sub-par, we refund the transaction fee, with no debate," says Berkley.

To sweeten the deal, every airfare earns double Membership Rewards points. Other benefits include 10 different kinds of reports on travel spending and discounts of 10 percent to 40 percent on air, hotel and car bookings. For details, visit www.americanexpress.com/businesstravel. 

Julie Moline is a freelance writer, editor and editorial consultant in New York City. She is also the former editor in chief of Corporate Travel magazine.

By Karen M. Kroll

When Vickie Milazzo, 51, started her company in 1982, she had little more than a hunch to go on. Milazzo’s company, Vickie Milazzo Institute in Houston, trains nurses to work as consultants to attorneys and insurance professionals.

Milazzo, who is an RN and a lawyer as well as an entrepreneur, saw the need for health-care professionals who could assist attorneys handling medical disputes. “How would an attorney who is dealing with a medical case know how to read medical records or know the terminology?” she asks. Nurses, she says, are the answer, as they’re most familiar with patients’ records and are less expensive to hire than doctors. Despite the logic of her insight, as far as Milazzo knows, no one else was offering such services. “I defied conventional wisdom that said if something hadn’t been done before, it’s not worth doing,” she says. “However, I knew I could save attorneys a lot of time and money.”

She was right. Over the past 19 years, Milazzo’s firm has trained more than 20,000 nurses as legal consultants through seminars and home-study courses. Along the way, she’s built a $10.4 million business.

Phrases like “trust your gut,” “follow your hunch” and “go with your in-stincts” resonate with entrepreneurs for good reason. Some, like Milazzo, listen to their instincts and successfully exploit opportunities others don’t even notice. Many entrepreneurs create businesses just by listening to their hearts and bucking conventional thinking. And almost all entrepreneurs find that being able to trust their hunches is a matter of survival, since most have neither the time nor the resources to analyze every option. They’ve got to quickly size up a situation and decide which way to go.

“Gut” Defined
When people talk about trusting their gut, they’re drawing on their experience, observations and knowledge to guide their actions. “Intuition is a quick, almost subconscious reaction to a choice,” says Thomas Becker, associate professor of management at the University of Delaware in Newark, Delaware. “If you’ve got a lot of experience and good judgment, that intuition can be pretty reliable.”

While successful entrepreneurs often go with their gut, they don’t shoot from the hip. “[They make] very informed decisions, but decisions that have qualitative aspects vs. all quantitative,” says ArLyne Diamond, head of Diamond Associates, a Santa Clara, California-based management consulting firm.

Consider Mark Fasciano, 36, CEO of FatWire Software, a developer of content-management and web-application software with 150 employees. In 1999, Fasciano was looking for a new office space for his company. Many VCs insisted FatWire be located in New York City’s Silicon Alley, near other high-tech businesses. Fasciano wasn’t sold. “My gut said major software companies locate outside major metro areas,” he says.

From his years in the software industry, Fasciano knew software firms need access to airports and public transportation so clients and employees can easily get to them. He also knew this type of access could be found outside city centers. Equally important, locating outside urban areas makes it easier to develop a campus setting, a la Microsoft. The clincher: Fasciano had heard horror stories of companies heading to Silicon Alley only to spend weeks without reliable phone and utility connections.

Fasciano and his colleagues decided on Mineola, New York, a 20-minute drive to both John F. Kennedy Inter-national Airport and LaGuardia Air-port, and several blocks from public transportation. Real estate costs were about 40 percent lower than in Sili-
con Alley. While some investors didn’t take to FatWire’s off-the-beaten-path location, one did stick with them. And during FatWire’s latest round of fi-nancing, not one asked why the company was outside Silicon Alley.

Beyond Intuition
What happens if your gut is telling you something, but you’re not sure how valid it is? It’s time to do some hard research.

Denis Kelleher found himself in that situation. Kelleher is founder and CEO of Wall Street Access, a securities brokerage firm in New York City. Throughout its 20-plus years, the company has focused on higher-end investors.

In the late 1990s, however, all the hype said big money would be found in serving independent investors via the internet. Kelleher instinctively questioned the strategy’s feasibility, recognizing it would mean sacrificing personal service to become a low-
cost provider. “That might be OK for one or two players, but we thought that ground was probably staked out,” says Kelleher.

To check whether his instinct was on track, Kelleher calculated how many brokers and operational employees his firm would have to add to reach a mass market and process larger volumes of trades. He also figured in the cost of advertising to a wider audience.
His conclusion: To make a profit, Wall Street Access would have to capture an unrealistically high number of small investors. Kelleher stuck with his initial gut reaction and remained focused on higher-end investors. Says Kelleher, “Your gut is important—but only [until] you have empirical evidence.”

Enter the Experts
Contrary to conventional wisdom, going with intuition doesn’t preclude listening to others’ advice. Most successful entrepreneurs actively solicit input from experts, such as accountants, as well as peers at other companies before making decisions.

“That’s how you use experts: not to tell you what to do, but to feed you the brutal facts,” says Jim Collins, author of Good to Great: Why Some Companies Make the Leap . . . and Others Don’t. Successful entrepreneurs analyze facts even as they exploit their intuition and judgment, says Collins. He compares the process to Mozart’s ability to compose music that has set the standard for centuries: “It’s an intuitive process but also enormously disciplined. The notes have to work together.”

Often, an effective gut call results from closely reviewing an enterprise’s mission. For Mark Raper, 51-year-old chair and CEO of Carter Ryley Thomas, a 53-person PR marketing agency in Richmond, Virginia, that means offering a work environment that fosters creativity and loyalty in employees.

When Raper and his colleagues purchased the company eight years ago, they departed from the normal agency structure in which just a few people have ownership and a chance at the top jobs. An “us vs. them” mentality can spring up between workers and owners, dampening creativity and prompting turnover rates of 30 percent among both employees and clients, says Raper. He thought there had to be a better way, so he and his colleagues distributed owner-ship among all the employees. They’ve also decided to periodically rotate the role of president.

Some of Raper’s advisors warned against the structure, calling it “socialist” and arguing that it left a lack of control and responsibility. Raper counters that the firm has a senior group of executives who make major decisions. Equally important, employees know it’s possible for them to advance to the top spots. As a result, the firm’s turnover rate—among both employees and clients—is about one-sixth that of the typical advertising agency, according to Raper. And revenue has grown to $9 million a year.

Still, the structure isn’t for everyone. Raper acknowledges that, at least at the outset, his paycheck was smaller than it might have been had he organized the firm in a more traditional manner. But he believes the move was worth it. “If someone else makes a few more dollars, that’s OK,” he says. “This is a group effort, and the group should benefit.”

Christine Dimmick, 35, founder of The Good Home Company, a developer and wholesaler of personal and home-care products in New York City, re-turned to her mission statement when deciding whether to listen to an outsider’s advice. In 1995, Dimmick was getting her company off the ground and trying to nab a large home-products retailer as a customer. One buyer told her she’d be better off concentrating on a single product so she didn’t spread herself too thin.

Dimmick considered, then rejected, the suggestion. “It didn’t feel right,” says Dimmick. “How can you create a ‘Good Home’ through just one item? My gut told me it was not my mission.” Still, ignoring the suggestion wasn’t easy. “At the time, I was quite green. That kind of advice, you take seriously,” says Dimmick.

She continued to add all-natural products such as laundry fragrance, home fragrance and home cleaning products. Annual sales should top $3 million this year, and several na-tional retailers, including Nordstrom, carry her lines. Had Dimmick not broadened her inventory, retailers may not have considered her company. She says, “It could have been a disaster.”

Bouncing Back
Though listening to your inner voice is essential, not all gut decisions work as planned. The key is to keep setbacks in perspective and figure out how to bounce back. “You have to trust yourself to know that if you’ve made the wrong decision, it won’t be disastrous,” says Diamond.

One example: Several years ago, Milazzo thought potential customers would want a three-day version of the seminars her company produces, rather than the one-day introductory course she’d been offering. She was wrong. “I thought I knew the market better than I did,” admits Milazzo. Market research might have tipped her off, she acknowledges. With the seminar approaching and enrollment nowhere near a profitable level, she added material and began promoting it as a comprehensive, rather than introductory, course. The revamped offering just about sold out.

Successful entrepreneurs recognize that some decisions simply don’t lend themselves to a from-the-gut approach. These tend to involve more quantitative questions that have one, or just a few, answers. “Regulations, audits, figuring out how contracts should be written—these are clearly outside the realm of the gut,” says Fasciano.

For many other situations, however, a well-honed gut instinct can be the difference between surviving and failing, or thriving and just getting by. “Issues more fundamental to the success of the company, where there are no rules or regulations—that’s where your gut comes in,” says Fasciano. “If your gut says no, you have to go back to the drawing board.”

Karen M. Kroll is a Minneapolis-based business and financial writer whose articles have appeared in AARP: The Magazine, American Way, Business Finance, Inc. and other publications.

“The single most powerful tool for winning a negotiation is the ability to get up and walk away from the table without a deal.”
—Unknown

“It is not the critic who counts, not the man who points out how the strong man stumbled, or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes short again and again, who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause, who at best knows achievement and who at the worst if he fails at least fails while daring greatly so that his place shall never be with those cold and timid souls who know neither victory nor defeat.”
—Teddy Roosevelt

“There is no substitute for hard work.”
—Thomas Edison

“It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you’ve got to have is faith and discipline when you’re not yet a winner.”
—Vince Lombardi

“The fight is won or lost far away from witnesses. It is won behind the lines, in the gym and out there on the road, long before I dance under those lights.”
—Muhammad Ali

Ask Ryan Allis about his company's philanthropic efforts, and you'll get an instant education on poverty throughout the world: Currently, about 40 percent of the world's population-2.7 billion people-live on less than $2 per day, according to a report by World Bank PovertyNet. Eighteen million people die each year from preventable diseases in the developing world, equivalent to almost 50,000 per day, according to a University of California, Berkeley, public affairs report. As Allis, the 21-year-old CEO of Broadwick Corp. (www.broadwick.com), a provider of web-based e-mail marketing solutions, recites these statistics, his words come more quickly, and his voice raises a bit.

"Many people don't have the opportunity to start a business, take advantage of our education system and create positive change in the world," Allis says. "When you realize that, you want to be sure that everything you're doing in the business world has a larger meaning."

Allis is co-founder of the Anti-Poverty Campaign, a nonprofit organization dedicated to reducing poverty in developing countries. The organization's website states its mission is to reduce the number of people living in absolute poverty (under $2 per day) by at least 50 percent by 2025.

It's a tall order, but Allis is one in a legion of business owners who are using their businesses to make a difference. From launching office recycling programs to providing pro bono support to founding, promoting and financially supporting worthy causes, more businesses are seeing that being both good and generous corporate citizens boosts morale-as well as the bottom line.

"Corporate social responsibility is becoming more important for business profitability," says Shel Horowitz, author of Principled Profit: Marketing That Puts People First, and founder of www.principledprofit.com. "Customers will choose a responsible company over a company that doesn't have a solid values structure, even if they have to pay slightly more. In the coming years, companies that practice social responsibility will win out."

The Philanthropic Payoff
There's no doubt that doing good works has paid off for Allis. In addition to his efforts on behalf of the Anti-Poverty Campaign, Broadwick, which had revenue of more than $1.3 million in 2005-a number Allis expects to double in 2006-reinvests at least 1 percent of quarterly profits into its Durham, North Carolina, community. The company's 24 employees have participated in Habitat for Humanity builds, where they interacted with 20 to 30 other professionals each time. Allis estimates that interaction has netted the company two or three new customers.

The company also sponsors its local chamber of commerce. "The relationships with people there have strengthened our name awareness in the area and have created a lot of partner opportunities and customers for us," says Allis.

And then there's the press. Allis was named one of BusinessWeek's "Top 25 Entrepreneurs Under 25" in 2005, which put the company in a positive light in front of a national business audience. Allis and Broadwick have also been covered extensively by local media, and his combination of youth, business acumen and philanthropy has scored him placements on ABC News and in Investors' Business Daily, Young Money and other publications. He has received several local business awards, which have garnered additional exposure for the company.

For Michael Schneider, giving back to community organizations has showcased his Los Angeles web design and marketing company, Fluidesign, and helped him grow it. The company does pro bono web design work for a local hospital, a temple and several foundations. However, his primary passion is his work with Homeboy Industries, which helps young gang members find jobs and leave the gang life behind. As a result of the work he has done for these organizations, he has seen a direct impact on his business.

"With the right nonprofit, there's a ton of publicity and recognition," says Schneider, 25. "We're happy to share in that, and I know we've gotten clients from them seeing our work and from these projects getting our name out there."

But as much as philanthropy creates external awareness, there are some significant internal benefits as well, says Horowitz. First and foremost, investors want to know that a company has a clear values system and strong ties to its community. It's the mark of a dedicated and ethical management team.

"Some of the reasons investors look for socially responsible companies are that they're probably not busy fighting law-suits, they're not dealing with negative publicity, [and] they're out there creating positive change," Horowitz explains. "There are a lot of reasons why it makes sense for investors to look for companies that are doing these things."

Schneider is researching raising his first round of venture capital for his company and was surprised to find that investors are interested in how he gives back. "I think that they're looking for ties to the community, a direct charity involvement," he says. "It's not the first question they ask, but it's something they want to see."

Companies that engage in philanthropy and socially responsible business also have customers who feel good about doing business with them. Twenty-three-year-old Brittany Fischer launched her fledgling online clothing retailer, ThinkHer.com, in October 2005, merging her love of fashion and photography with her desire to make a difference. Because her father is a general surgeon specializing in breast cancer, she was well aware of the effects of the disease on his patients and wanted to help. "First, it was financial: We give 10 percent of the proceeds from a special line of products to breast cancer research," says the Palos Verdes, California, entrepreneur, who channels the funds to the University of Southern California/Norris Comprehensive Cancer Center. She also supports breast cancer walks, runs and hikes by participating and purchasing exhibit space for her business. Though the amount she has given to date is relatively small-several hundred dollars-Fisher is seeing more repeat business as a result of her philanthropy.

"Customers are coming back for specific products, like our socks, because they know that they're supporting a good cause," she says. "We're focusing on gearing up for Breast Cancer Awareness month in October, and we expect our sales to spike then because people will be thinking about breast cancer and making a difference."

And how about the added benefits of employee loyalty, retention and lower payroll costs? Cornell University economist and social critic Robert Frank, author of What Price the Moral High Ground?, conducted a study that found employees were willing to accept lower salaries at companies they considered morally superior. "The results were striking and indicated that you can [hire] the same person for a lower salary or a better person for the same salary," he says.

Allis finds that his employees feel good about the charitable work done at Broadwick. He encourages each employee to take paid time off each year and volunteer during that time, in addition to organizing employee volunteer events, such as the Habitat project, on  company time.

Similarly, suppliers are more likely to stick with and support companies that do the right thing, says speaker and consultant Mark Albion, author of True to Yourself: Leading a Values-Based Business (www.makingalife.com). "You're trying to build a sustainable business," he explains. "Trust is a big issue. The notion of being values-based is partially about investing in long-term relationships. If you have trust, it saves time. You can move on to other things." Albion has clients who have had the same suppliers for more than two decades because of the fair management practices they use.

How To Do It Right
Of course, being a socially responsible business is not without its challenges. In True to Yourself, Albion writes: "When you say you're 'values-based,' you put yourself under increased scrutiny. You also need more patience, tenacity and self-confidence to incorporate your values into a financially successful business." He believes that business owners may have to make tough choices, depending on their values.

"If you're committed to using your philanthropy to uplift the entire population of the company, you can't turn around and fire everyone because they can't keep up," Albion says. "Sometimes, you may have to grow more slowly. Generating volume for the sake of overhead can kill your culture." Being a socially responsible business clearly has its benefits. But before you dive into the philanthropic pool, the experts and entrepreneurs have some suggestions.

Start at home. Horowitz says the first step in becoming a socially responsible business is to examine your internal business practices to ensure that you are adhering to your personal and company values system. Are you practicing responsible environmental controls? Are you supporting local and diverse suppliers? Are you carrying a product mix that is in line with your values? "If you have the choice between buying stuff made in a sweatshop vs. someone paying fair wages and [implementing] environmental safeguards, who are you going to choose?" he says. "It's not sincere to write a check to a charity but not follow through in how you run your business."

Check out the organization. Before you team up with a nonprofit or other group, do some sleuthing. Is it reputable? The Better Business Bureau, local volunteer organizations and watchdog groups like the American Institute of Philanthropy (www.charitywatch.org) can help you find out if the group that tugs on your heartstrings is really pulling your leg. Horowitz also advises mapping out an exit strategy in case the group turns out not to be a good fit for your company.

Watch the self-congratulation. "You won't ever see a press release [from us] that says 'Here's the latest great thing we're doing,'" says Allis. He says word-of-mouth and publicity generated by the nonprofit groups he supports are the best ways to get the word out about corporate good works.

Horowitz agrees that sincerity is essential. "The market will out you if you're not sincere or if you're only doing it for the publicity," he says. "There's a difference between supporting a breast cancer charity because you have a personal tie to the cause vs. doing it because you think it will get you press. The tie has to be sincere."

Set clear expectations. Schneider says there is no exact science to how much time and financial support his company gives. "We give as much as we can," he says. That includes developing and maintaining an entire e-commerce site for Homeboy Industries, which can be a time-consuming commitment. Still, he says the company takes its commitment to its pro bono clients seriously. "If we ever found that we couldn't fulfill our responsibilities to them, we would make sure they're taken care of either through a referral or some other way."

Horowitz says it's important to define the relationship upfront to be sure everyone is in agreement about the level of support that is expected. Don't be overzealous and make a huge commitment that your business won't be able to sustain. Instead, map out a plan for the support you will offer, whether it is money, pro bono services or something else-and remember to have an exit strategy in case the relationship doesn't work out.

All the experts and business owners agree that the support isn't just about checkbook charity. To really make a difference, you need to choose a cause that means something to you and get involved. Albion says knowing that your business is actively making a difference in the community can make the day-to-day challenges of entrepreneurship easier to endure, because you know that, ultimately, the business is serving the greater good. "Being a values-based company and being socially responsible is like that Police song 'Every Breath You Take,' " says Albion. "It's no longer about giving a certain percentage of your profits or just writing a check now and then. It's about mindfulness, focusing on people-centered leadership and always asking yourself 'How does my company affect people and the planet-all living things?' Then, you need to take action to create the change you want to see."

Gwen Moran is co-author of The Complete Idiot's Guide to Business Plans. Reach her at gwen@gwenmoran.com

“Never let the odds keep you from doing what you know in your heart you were meant to do.”
—H. Jackson Brown Jr.

“Courage does not always roar. Sometimes courage is the quiet voice at the end of the day saying, ‘I will try again tomorrow.’”
—Mary Anne Radmacher

“Do not attempt to do a thing unless you are sure of yourself; but do not relinquish it simply because someone else is not sure of you.”
—Stewart E. White

“Believe nothing, no matter where you read or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense.”
—Buddha

“Everything will be okay in the end. If it’s not okay, it’s not the end.”
—Anonymous

“Never ignore a gut feeling, but never believe that it’s enough.”
—Robert Hellerback

By Amanda C. Kooser

You have locks on your office doors and an alarm system in your car. It’s just common sense in an uncertain world. The same precautions need to apply to your business technology, especially when it comes to internet security. Hackers, viruses, worms, Trojans, phishing e-mails, pharming, spam, malware and key loggers are all threats lurking on the internet. Fortunately, an informed entrepreneur can do plenty to protect his or her business. A combination of education, planning, and smart hardware and software choices can help you sleep easy at night. 

Defining Internet Security
Before we dive into the how-to portion of our program, we should define just what the term “internet security” encompasses. Anti-virus may be the first thing you think of. That’s a good start. “Anti-virus [protection] is completely necessary, but it’s not sufficient,” says Laura Yecies, general manager of Zone Labs (www.zonelabs.com) Consumer and Small Business Division at Check Point Software Technologies. It’s also about securing your web presence, your e-mail and all your computers that have web connections. Subjects that can fall under the internet security umbrella include malicious programs, employee training on safe surfing habits, network security and anti-spam measures.

The thought of hackers trying to break into your network may seem far-fetched for your small business. So why should you make internet security a priority? “If I’m a small business and I get hacked, and it makes it to the news, it could be devastating. It’s a credibility killer,” says Jared R. Greene, division president and lead assessor with IT services provider InfoSight (www.infosightinc.com).

There has been a shift in the internet threat landscape: More focused and targeted attacks by hackers mean growing businesses are more vulnerable than ever. “In the past, you had hackers that were hacking for glory. Now the attacks are worse in that. They’re more dangerous,” says Yecies. “[Hackers] can do more damage because they’re motivated by money.”

Hackers target smaller businesses because they’re betting they don’t have sophisticated internet security systems but may still maintain valuable data like credit card numbers or proprietary information. The “2005 FBI Computer Crime Survey” of 24,000 organizations (most with fewer than 100 employees) showed that 87 percent experienced some type of computer security incident. Viruses, spyware and port scans topped the list. It’s your duty as a business owner to make sure you take reasonable precautions and keep your customers’ data safe.

Planning for Security
Now that you know what you’re dealing with, it’s time to get down to the nitty-gritty of formulating an internet security plan. If you’re just starting a business, you’re in a good position to get a plan implemented from Day One. If you’re already established, it’s not too late to get your business in line and your employees onboard with a new set of policies. “First things first—you need to have a risk assessment to understand what your risks are,” says Greene. This is where you take inventory of the ways your business touches the internet. Do you have a website? Do you sell items online? Do your employees use e-mail? Do they have net access? Do you have any remote workers or telecommuters? Do you use wireless networks?

One word we heard several times from our experts is layered. Internet security isn’t just an anti-virus program or a firewall. Multiple layers of protection are your best bet for keeping your business safe. Says Greene, “At a mini-mum, if you have an internet web presence, you need anti-spyware, anti-malware and anti-virus. You need a stateful packet filtering firewall at the perimeter and to have somebody come in and validate the configuration.” We’ll talk more about bringing in a third-party consultant later.

All those programs may seem like a lot to keep up with, but a single security suite can cover the bases in one convenient package. Suites are available from companies like McAfee (www.mcafee.com), Norton (www.norton.com) and Zone Labs. “The best defense is to go to the source of where most of the risk is, which is on the individual PC,” says Yecies. Software suites can be very cost-effective, especially when you consider the cost of cleaning up a computer or business network after it’s been hacked or infected with a virus.

Don’t overlook laptops and computers used by home workers. These should have the same security software installed to protect your employees and your business no matter where they’re getting online. A VPN is a must for your mobile workers and telecommuters when they’re connecting to your business network. Jay Schwartz, 35, founder of Santa Barbara, California-based creative services agency Idea-Work Studios LLC (www.ideawork.com), has a couple of employees who telecommute a few days a week. “We deal with sensitive data from time to time,” he says. “Data transmitted over the internet has to be secured. When we log in from our home accounts, we use a VPN.”

An important component of any internet security plan involves keeping your employees educated. Schwartz says, “My employees know that our business is relying on the security and fidelity of our customers’ information. They’re trained not to take that lightly. There is no personal use of work e-mail.” Some common-sense policies include not clicking on attachments from unknown sources, not using your work e-mail address in online forums and not downloading unauthorized software.

These precautions can help protect your company from social engineering—a way to break business security by using people. An example of this is a phishing e-mail that looks like it came from a legitimate source and causes an unwitting user to click on it and surrender vital information like passwords. “It doesn’t matter how big you are—security awareness training has got to become a huge part of your organizational enterprise security stance,” says Greene.