Always Under Promise, Over Deliver

What happens when your sales are better than your product or service? Your client gets monorailed:

Lionel Lanley had a persuasive presentation that any salesperson would envy (WARNING: include songs in your sales pitch at your own risk). But he left the town with his life in jeopardy because he sold the town a shoddy product. Nothing will ruin a business faster than poor service to clients, no matter how spectacular the pitch is on the front end. In fact, many businesses claim to have a sales problem when they really have a service problem or a fundamental flaw in their product. From a revenue perspective, it's simple: if you maintain long-term and repeat customers, you won't be required to exert as much sales effort to meet the bottom line. And the best way to keep your customers happy is always exceeding their expectations.

Good salespeople set expectations for the client, but the fundamental question for every business is can you deliver on those expectations time and time again? Take a lesson from the folly of Lionel Lanley and always under promise and over deliver.

Cheap is the New Green

Gimmick commercials using buzzwords like "bailout" and "stimulus" are all the rage these days. The Domino's Pizza commercial above is one of the most egregious examples of using current economic language to sell their product. With belts tightening in unison, it's hard to blame them for picking up on the prevailing mood of the country. But these ads actually trivialize the economic situation and leave the trend of economic awareness susceptible to becoming a fad instead of a new consumer culture.

In our oversaturated media culture, the life cycle for trends has reduced tremendously, much to the peril of worthy concepts like moving towards fiscal responsibility. Take for example the portrayal of "going green" in the mainstream. I can't help but feel the "green" trend, which was en vogue in the not too distant past before being bumped aside by the recession, still hasn't had the opportunity to make a full impact on society. While people are more aware of the concept of "green", people still don't fully grasp important concepts like sustainability. Certainly the "greenface" (acting green without actually being conscious) put on by celebrities, politicians and other prominent figures certainly didn't help the cause either. But will the same thing happen to financial awareness once the economy shows signs of improvement?

This recession has really made an impact on most people's bank accounts, but it's not a foregone conclusion that the buying habits of people will actually change. The marketing campaigns designed to encourage you to spend frivolously under the guise of fiscal responsibility are extremely dangerous for the psyche's of consumers. Not to mention it attempts to protect the status quo in a system where many people are enslaved by debt. While it's certainly not pleasant, this recession offers an opportunity to adjust our economy and increase fiscal responsibility. Let's not waste it on a "taste bailout" or an "automobile stimulus".

Who Knows You?

There’s an old adage out there: “It’s not what you know, it’s who you know.” I suppose the fact that this adage has been around for so long lends some credence to its applicability to life, but I’m not terribly fond of it. Maybe it’s because I’m an engineer by training and I’m proud of all that I know. Maybe it’s just because I’m simply too proud! Or maybe it’s because this adage is missing something; maybe it’s focused too much on you; maybe it’s missing the influence of the rest of the world! I propose this adage be amended to become the following: “It’s not what you know; it’s who knows that you know that you know things, you know?” Okay, maybe that doesn’t flow very well. Let me try this again. How about: “It’s not what you know, it’s who knows you.” Does that flow better? Good.

(An aside: As I write this, it amazes me that non-native speakers can learn to speak English. Knife is pronounced nife; knew is pronounced new; but know isn’t pronounced now, it’s nough. Why? Now that I don’t knough!)

Okay, back to business. When I first graduated from college as a Chemical Engineer, I did what the rest of my classmates did: I lined up for interviews and prayed that someone would give me a job! That’s when that old adage really started cropping up in my life, and back then, it really did seem true. However, since hindsight is 20/20 and I now have some perspective, I conjecture that it really doesn’t matter who I know. Think about it this way: I know Carson Palmer, the Heisman Trophy winning quarterback for the Cincinnati Bengals. We went to high school together. I saw him practically every day and even met him a couple times when I was a Senior and he was our superstar Junior quarterback. Now, could it be said that Carson Palmer knows me? No, not really. So, do you think it’s worth a hill of beans that I know Carson Palmer? No, not really. It’s all about relationship, and there can’t be a relationship if the other party doesn’t know you.

I think this is especially true in business. A business’s success (or lack thereof) can be largely attributed to its ability (or inability) to create and maintain healthy relationships. Let’s start back with those interviews I talked about earlier. The old adage says that I have to know someone at the hiring company just to get an interview. Even if that were so, it’s not the interview I was after; I was after the job! The real opportunity came when the interviewer talked with me and got to know me. It’s only when the interviewer knows enough about me that he can make the recommendation to hire me. On the other side of the same coin, high-caliber employees may not want to sign with a company if they don’t know anything about the company. See, it’s all about relationship. A company won’t hire me if they don’t know me, and I won’t sign with a company if I don’t know them. It’s as simple as that.

Fortunately for many HR departments, hiring employees isn’t the only thing most companies do. They also have to abuse those employees, er, I mean maintain the relationships with those employees. Sorry, Freudian slip. Anyhow, if morale is down and employees start saying of the company, “we just don’t feel like we know you anymore,” then all sorts of nasty things can happen, not the least of which is low productivity. To make matters even more difficult, businesses have many other relationships they need to create and maintain.

Relationships with customers are critical and can take many forms, but frequently the embodiment of these relationships is the company’s brand. Brand management is like dating: showing off your good attributes while covering up the not-so-good attributes. Even if a company knows everything about its customers and creates exactly the products they want, those products aren’t worth much if customers think the company is creepy.

Relationships with vendors are also critical, even if vendors sometimes take a back seat. Vendors may not want to sell to a company with a low credit rating and I can’t imagine a supplier partnership working out too well if it isn’t based on a solid relationship. It’s like meeting someone in Las Vegas and getting hitched; most of those marriages don’t survive past the honeymoon. Except in business there aren’t any annulments, just divorce proceedings.

Relationships with shareholders and stakeholders are an even bigger ball of yarn, but I’ll spare you that tangled mess for the time being. Let’s just say that shareholders and stakeholders are like parents in business, and as we all know, if mama ain’t happy, ain’t nobody happy!

In the end, even if you completely disagree with me and you know with certainty that I’m wrong – that it’s who you know that counts and not who knows you – at least I can take solace in something: it’s not what you know …

Nate Barber is Vice-President of Barber and Barber Associates, Inc. and is a student in the Executive MBA program at UTSA. You can reach him at nate.barber@barberassociates.com or (210) 782-8912 for more business insights.

San Antonio Clean Tech Forum Wrap-up!

Photo courtesy of UT Health Science Center San Antonio

Today my colleague Nate and I had the opportunity to attend the San Antonio Clean Tech Forum (SACTF) at the UTSA downtown campus. If you don't already know, SACTF is a think tank founded by former Tesoro CEO Michael Burke (pictured above) to change perceptions of energy in the River City. As a major city San Antonio is well behind others in "going green" and needs more innovation, which SACTF aims to provide.

Today's presenters covered a wide variety of topics. Mark Still, an Assistant VP from USAA (Employee Support Services) discussed USAA's sustainability measures, specifically NuRide. As most customers and anyone living in San Antonio knows, USAA sets the standards for employee and customer satisfaction with unheard of approval ratings internally and externally. It was refreshing that they've targeted green initiatives as a way to continue their campaign of peerless employee support. Here at BBA, we're huge proponents of the fact green doesn't haven't to inconvenient or expensive and USAA is proving that for huge corporations. Still focused mainly on NuRide and the benefits employees receive by partaking in the ridesharing network, which is an incredibly simple and effective way to carpool with your neighbors.

Our next speaker was Laurence Doxsey, the Director of Environmental Policy for the City of San Antonio. I'm thrilled they've created a position within the government to advocate on behalf of sustainability at the city and community levels. The position was created in July 2008 to pursue Mayor Hardberger's Mission Verde, which is exactly what Doxsey spoke about. Not only is Verde something sorely needed in San Antonio, it appears the next Mayor will continue the program. With the new administration's emphasis on technological innovation and environmentally friendly policies, Doxsey's position will be critical.

Bob Shemwell from Overland Partners wrapped up the forum. While his presentation entitled "Drivers of Change" was fascinating, the compact time frame didn't allow him to fully expound on all of his points. But he did speak in depth about one overarching principle that stuck with me, simply because we've discussed it before at BBA: decentralization. With the rise of the internet, everything from companies to energy is becoming decentralized and focused on local action and actors. We've seen giant monoliths once described as "too big to fail" being held up by the government because of tremendous bloating on multiple levels. The idea is not political, it's simply the way society's currently moving. It would be beneficial for every business to consider the ramification of decentralization and prepare yourself and your business as such. I know we certainly have because this movement means opportunity!

The SACTF was an informative and inspiring way to spend the morning. I highly recommend anyone interested in the environment or technology attend. The next meeting on April 15th is a must-see: "A Mayoral Debate on Sustainability, Alternative Energy, Nuclear and Water Issues" featuring Julian Castro, Diane Cibrian Trish DeBerry-Mejia and Sheila McNeil. If you'd like more information, email me at the address listed below. Hope to see you there.

Jon Pyle is the Director of Business Development and Senior Business Consultant for Barber & Barber Associates. Email him at jon.pyle@barberassociates.com to discuss all things green and decentralization.

You Can’t Squeeze Innovation from a Cardboard Box

Have you ever tried to squeeze blood from a stone? It sure seems like a silly thing to try. Stones don’t even have blood in them! Unless, of course, it’s some sort of igneous lava rock in someone’s bloody hands, but who’d be crazy enough to squash a stone in their hands for hours on end? So I wonder, who conjured this asinine proverb? My guess is that a musty old king, centuries ago, thought he’d cleverly comment on how fruitless it was to try to collect tax revenue from his peons. Elitist, sarcastic and equivocal; it certainly sounds like something an antiquated king might say. Little did this king know that his proverb would also apply to 21st century corporate America.

Many of today’s organizations demand more and more productivity from their employees while simultaneously lacing them in with restrictive policies and structures. For many of these companies, though, the state of affairs should not be all that surprising. Rigid companies with rigid structures and rigid policies foster a culture of stiffs who too often become so focused on staying within the established boundaries that they forget how to loosen up and be creative at work. If companies want their employees to think outside the box, maybe these companies ought to take a look at the cardboard boxes they’ve created to contain their employees. After all, the organization’s structure is a critical determinate of the organization’s performance.

Notice I didn’t say that structure determines success. Heaven’s no! There are way too many successful cardboard box companies out there. Just look at Wal-Mart: incredibly successful with more than $350 billion (yes, billion with a “B”) in revenues last year, but with so many stores and employees to keep hemmed in, the Wal-Mart policy manual must be twice as thick as a phone book and half as fun to read. You might argue that for a company as large as Wal-Mart, rigid structures and policies are a must, and you might be right. Otherwise they’d either fall apart or be litigated into oblivion. Yet if you argued that many (or any) Wal-Mart employees are innovative thinkers who think outside the box, you might find yourself alone on your soapbox. Don’t get me wrong; I’m not bashing the ingenuity of the millions (literally) of Wal-Mart employees out there. Nor am I discounting Wal-Mart’s revolutionary efficient distribution system and massive market leverage. I’m simply saying that you probably wouldn’t get a job at a local Wal-Mart store to exercise the right side of your brain.

So what’s any of this have to do with squeezing blood from a stone? Ah, I’m glad you asked! It’s all about getting out what you’ve put in. If you need a pint of blood, you won’t find it in a stone. Likewise, if you want a dynamic and innovative company, you won’t find it in a cardboard box. It’s simply a matter of human nature. Even if you explicitly tell cardboard box employees that you want them to be innovative, they won’t be. Cardboard box employees may in fact willingly be in a cardboard box, but they aren’t stupid. They realize that they’re in a cardboard box, and they also understand how to be successful in that box. They’ve seen that if they stick to the rules and tow the line, they get promoted. They’ve also seen that if they propose a crazy new idea, they might get hung out to dry. If you haven’t noticed already, we humans really don’t like feeling alone, so if innovation isn’t encouraged, recognized and rewarded on a consistent basis, no one will see innovation as the path to a successful career.

What then, does an innovative company look like? Don’t ask me! I’m just some MBA wonk who also runs a small engineering consulting firm. Heck, I might not be able to spot an innovative company even if I was standing in on its board meetings. What I can guess, however, is what an innovative company does not look like. It certainly does not look like a cardboard box. As soon as you start erecting structure, you’ve already put up boundaries to innovation. Also, it’s probably a safe bet to assume that no two innovative companies look alike; that wouldn’t be too innovative, would it?

In the end, innovation should be about avoiding cardboard boxes and finding new and better ways to do things. Just be careful. If you think outside the box long enough, you just might find you’ve erected a new cardboard of your own box next door. But that may not be a bad thing. If structure determines performance, isn’t it possible that no structure could mean no performance? Elitist, sarcastic and equivocal; sounds like something I might say!

I guess it’s too bad that musty old king didn’t predict the application of his proverb to 21st century corporate America. He could have written a book and made a fortune.

Nate Barber is a student in the EMBA program at UTSA and is Vice-President of Barber and Barber Associates, Inc. You can reach Nate at nate.barber@barberassociates.com or by calling (210) 782-8912.

Start me up!

While you may be extremely concerned about your current employment and economic situation, now is a great time to start a business! I covered this a few weeks ago and the New York Times agreed with me today. The market is starved for innovation and effective services, now matter what the stock market reads at the end of the day.

Inevitably, the question is about what comes next. So, what do you do after deciding to pursue your own business (assuming you've got the idea, of course)? Here are three crucial tips to ensure you start your business on the right foot:

1. Schedule an appointment with a SCORE consultant

Nothing beats free advice from qualified professionals. As a business consultant it doesn't necessarily behoove me to plug a competitor, but this is an invaluable resource that every person interested in starting a business should utilize. SCORE stands for Service Corp of Retired Executives and they've been serving professionals as a national organization since 1964. Take a few moments to schedule an appointment today, which you can usually do through the SCORE or SBA website.

2.Determine tax status for free

One of the biggest questions a potential start-up business owner has is how to classify their business. C or S Corp? Sole proprietorship or LLC? Could it even be a non-profit? Many people spend lots of money to hire a lawyer to consult with them and prepare the documents, but that's not necessary. You can save yourself a great deal of your start-up capital by doing some research. Spend some time getting in depth with all the free sources about business tax status the internet has to offer. Then contact the appropriate representative from your state (in Texas, it's the Secretary of State's office) to determine what paperwork needs to be filed. You may be able to do it yourself and put the money you save toward your business.

3.Market research

While it may seem mind-numbingly simple, it's often a missing component for small businesses. Not only is solid market research a necessary component for a business plan likely to receive financing, it also is crucial to determine where you'll fit within your chose market. Is your innovation actually innovative, or is someone else already doing it? Does a large competitor actually have an easily exploitable weakness? Understanding the competition will be incredibly valuable as you carve out your own niche.

Jon Pyle is the Director of Business Development and Senior Business Consultant for Barber & Barber Associates. Email him at jon.pyle@barberassociates.com for more small business insights or help starting your own business.

Lies, Damned Lies and Small Business Statistics

"There are three kinds of lies: lies, damned lies, and statistics."

This quote commonly attributed to Mark Twain, who popularized it in the US, but the phrase was actually coined by former UK Prime Minister Benjamin Disraeli. The quote however, may actually be even more relevant in this time of economic hardship as people try to spin the vast amounts of information available to us to support their perspective. Today, I found just that sort of a deceptive statistic:

"The survey, conducted by Herndon, Va.-based Network Solutions and the University of Maryland Robert H. Smith School of Business, polled 1,000 small-business owners in December 2008 and January 2009. Of those surveyed, 69 percent closed the books in the black last year."

It would be fantastic news, if that were even remotely true. It would be easy to use statistics to back this up (85-90% of small businesses fail within 5 years according to various sources), but wouldn't that defeat the purpose? I think anecdotal evidence and logic are enough to disprove this silly assertion.

Obviously 1,000 business owners isn't nearly enough of a sample size to make a valid judgment about a huge portion of our economy. The census estimates there are more than 20 million small businesses, but that number itself is quite misleading because the term "small business" itself is very loosely defined. The current working definition is any firm with less than 500 employees, which is an enormous range. The difference between a 450 employee business and a 4 employee business is beyond substantial. Is a firm with several hundred employees actually small? Even if you choose to use that broad small business definition, profitable is another vague term without proper grounding. Even if they were in the black, take one look at the stock market and you'll see that losses far outweigh any gains made by "small businesses".

This is an attempt to instill confidence in the masses, who are virtually traumatized after watching their investments halved in the last few months. I'm all for improving investor confidence but it's paramount that any encouragement be rooted in fact. The last thing people need is more deception.

Jon Pyle is the Director of Business Development and Senior Business Consultant for Barber & Barber Associates. Email him at jon.pyle@barberassociates.com for more small business insights.

Caveman Capital

Capital:

That portion of the produce of industry, which may be directly employed either to support human beings or to assist in production.

M'Culloch.

Photo Credit: The University of California at Irvine

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The idea of capital started with primitive man. One day Krog the caveman decided to keep one of the brontosaurus bones he had after eating his fill of brontosaurus and Voila, capital was created. Now Krog has something he can employ to help him produce more food, probably by bashing it over the head. (Yes, yes, I know. No human ever met a brontosaurus, I know, I know. But if we can suspend our disbelief enough to enjoy watching Fred and Wilma order a bronto-burger, we can also suspend our disbelief enough to let Krog have a brontosaurus bone!)

We've come a long way since Krog and his brontosaurus bone. Today most of us think of capital as money invested into some sort of company, but the notion of capital is still the same: something which was produced earlier (money) is employed to assist in the production of whatever it is that the company does. If you want to get into the nitty gritty, capital is more than just the money, it's anything tangible used to create goods or services that is not itself consumed in the production process. But since money is our unit of exchange, and since money can get you any of the capital goods you need, let's just keep our definition simple.

But if capital comes from what a company produces, what are you to do if you're trying to start-up a company that doesn't yet produce anything? How do you get your company to produce capital for future use if you don't have any capital to begin producing anything? Well, of course the answer is that the capital comes from someone or some place else. Banks or investors will give you the capital you need to start your company, provided that you promise to pay them back and indeed have a way to pay them back. Anyone can promse to provide a return on capital, but not everyone has thought through exactly how they will accomplish this. That's where a business plan comes in.

A business plan is nothing more than a detailed thought process on how you are going to pay back anyone who gives you money. It's that simple. Well, it should be that simple.

The problem is that these days banks and investors want very specific things in your business plan. Business models, marketing plans and financial pro-formas are all necesary components of business plans, but sometimes even that isn't enough. Though you can always interatively piece together a rock-solid business plan through various encounters with banks and investors, it is obviously much better to have an awesome first impression; people are willing to let go of money much more readily if they feel you've done your homework and came prepared the first time.

So do your homework! Find and use all the resources that can help you make your business plan rock solid the first time. The SBA has several experts who will help point you in the right direction. Call them and use them, they're totally free! They won't write the business plan for you, but honestly, you'd be silly not to call them. If, however, you want someone to do all the research and write that stellar business plan for you, give us a call. Small businesses are our passion, and we believe that our business is growing your business.