Developing your Brand

Whether you realize it or not, your company is already branded. Customers make, every day hundreds of evaluations of companies based solely on what they know. Rarely is any additional effort made to dig deeper, to learn more before forming an opinion. Realizing this, and what branding really is, is vital for the small business owner.
The best laid plans are useless unless the worked-for goal is accomplished. You can easily attempt to brand yourself as the industry leader in your field, but if you fail to live up to that, even once, the results can be detrimental. It is far better to be seen as a middle of the pack player than as the complete fraud you will be perceived as should you fail to live up to the image you are projecting. This fact must play a huge role in developing your marketing concept and budget. So where do you begin?
1. Start by realizing how you are currently perceived. Make calls, send surveys, ask many questions in an attempt to see how past clients have liked (or disliked) your service or product. How did their interaction make them feel? What are their expectations should they work with you again? Even more importantly, how would they describe you and your company to a friend?
2. Take the replies you receive and compare them to your mission statement. Are they different? How so? Was the response you received expected? Why or why not? Work with a trusted friend, coworker or consultant to honestly evaluate your current position.
3. Develop what you want to be. Do not try to be too much! A very common mistake is to attempt to be all things to everyone. You want to be the fastest, cheapest, and the highest quality in your industry? Good luck with that. Focus on one area where you can differentiate yourself. Be the most creative, easiest to work with, or the fast in response time. Be able to quantify this.
4. Develop a business plan focused on your new brand, enabling you to deliver it well. Emphasize this focus in all client and company meetings, as well as in a consistent theme in your mission statement and marketing. Do not attempt marketing campaigns that emphasize a variety of benefits, focus on one, and be able to quantify it.
5. Set controls. These are benchmarks in your processes that will tell you if you are on track to deliver what you have promised. If you brand yourself as the company in your industry with the fastest response time, have you lived up to this even before the project is completed? How quickly are phone calls and emails being replied to? Is there a company guideline for this?
Having a company that is not well branded and without a business plan to back it up results in a company that cannot grow. Pick one area of expertise, and do it well. Once it is mastered and can be maintained, you can add to it. “Jack of all trades, master of none” is great for the neighborhood fix-it guy, but disaster for your business.

The role of a Management Consultant.

Unfortunately for the small business world, owners don’t typically look to a management consultant until they are in dire straits. Money is running out, your suppliers are at your door, and payroll seems to never end (here’s a hint-it doesn’t). But with a good consultant on board, these issues could have been avoided long ago.
Why? Because the normal issues in business are not the problem. For the small business owner, the real issue is accountability. Staying motivated and accountable to someone is extremely difficult over time, especially when the monotony of the day to day development kicks in. Usually, the business was started by someone very skilled in his particular field, but not necessarily so in business. And soon, the initial excitement wears off, and the issue staying motivated kicks in.
Not only will a great consultant give you direction, and the knowledge necessary to accomplish your goals, but he will break down your long term goals, setting smaller, attainable, ones. It is a simple concept, yet often hard to stick to. Consider, for example, weight loss. If one has 100 pounds to lose, it seems daunting. Break it down to 10 pounds a month for 10 months, it becomes far more manageable. A great consultant becomes your guide. He will help you set small goals, and then be there for the “weigh-in”, keeping you focused on the big picture.
Often, consultants are hired to perform a specific task, say, develop a sales team or install a computer network. A management consultant should be regarded differently. Establish a long term relationship with a consultant you trust, and he will be with you every step of the way. You should feel free to call with issues, even between meetings, and he should keep you motivated. Your regular meetings should review past goals and set new ones, establishing a level of responsibility to your consultant, working with him in paying attention to even the smallest of details.
To make this work, don’t wait until you’re in dire straits, and desperate for help. Start earlier, even as you start your company, in working with the right consultant. Look for one that is priced to allow you a long, steady partnership, and in the end, the result will be a company that enjoys consistent growth. There will always be issues, but very few that good management cannot handle, and a great consultant will partner his skills with yours to maintain a healthy company.

The Value of Branding

Good branding is one of the most successful tools in starting and growing a business. It does far more than advertising alone; it provides your company an identity, setting exact expectations for your potential clients. While good branding often provides a larger client base, its greatest asset is that it provides the golden egg of business: higher profit margins.
General advertising has one goal: bring in more customers. This is easy to measure; responses to a phone book ad can be measured, a coupon placed in the local penny saver can be tracked. Sometimes it works, sometimes it may not. Branding does something different: its goal is simply to be the answer to a potential need a customer may have. Let’s use pizza as an example.
Consider a potential customer arriving home from work and looking through the mail. They see a flier for a competing pizza restaurant. To that point, they were not thinking of pizza, but since there is a coupon, and it’s about dinner time, they call and enjoy pizza that evening. This is the goal of advertising. It can create a need when there was none previously. Now let’s say that same potential customer, on his way home was thinking about pizza. And when he thinks about pizza, he thinks about your pizza place. In his mind, there is no other pizza place. When he gets home, he sees the same flier for your competition, but it goes ignored, since you have already branded yourself as the place to go for pizza. Now here is the largest advantage: there was no need to sell at a discount, no need for coupons to drag them in. In fact, you could even charge premium prices, increasing your profit margin. In your customers mind, you are not just an option; you are the only option.
Consider a women’s clothing store that primarily sells dresses. There are a million such stores in every county; there are a few in every strip mall. And should a potential customer see your flier or commercial, they may get the idea to visit your store. And more than likely, they will visit your store between visits to similar stores; your competition. But let’s say you have branded your dress store as the solution to a need they may have. For example, prom dresses. Through your logo, your website, and the copy in your advertisements, you have branded yourself as the place to visit for prom dresses. Now, when that need arises, you are the option. Sure, you sell more than prom dresses, and you are free to point this out when your store is flooded with new customers every April that are willing to pay top dollar for their daughters prom dress.
The key is this: before you spend a fortune on full page phone book listings, television commercials, and magazine ads; focus on branding your company. Decide what need in your market you want to fill, and show it. Develop a logo and/or tag line that makes this clear. Consistently use it in all marketing. And watch the money roll in.

Time management

The single biggest issue I encounter in working with small companies is time management. Or lack thereof. There seems to be an enormous amount of small business owners far too busy to get anything done at all, and the result is a large amount of half-completed projects lingering on your desk, and worse, cluttering your mind, effectively allowing you to focus on nothing. So let’s take a moment to focus on the items each day that must be performed in order to stay in business at all.
First, you must have an accounting department. An updated QuickBooks account, preferably daily, and knowledge of your complete accounts receivable and payable is essential. Know in advance upcoming financial demands. Accurate knowledge of today’s accounting can give you a very good idea of tomorrows. And while this is easy when the company is doing well, and there is more cash than bills, it is even more crucial when this is not the case. Avoiding the issue will not, no matter how much you pray, make it better. Set aside time each day (I typically start my day this way, from 8:00–9:00 AM) to handle the accounts, make collection calls, manage debt, and print out a current financial report. It is important at this time you are focused only on this, your mind not cluttered with thoughts of other work or concerns outside your financial matters. Avoid taking phone calls if possible. Doing this daily will free your mind to focus on other tasks the rest of the day, and the report you hand to the CEO (you, later in the day) will allow business decisions to be made with accurate information.
Next is marketing. It is vital that your marketing department be up and running every day, not just when you get slow and need work. Again, start with an empty desk, all other matter filed away, before you begin. Eventually, as with accounting, you will fill this position in with an employee, but until then, I suggest about 2 hours a day on marketing. Website development and updates would be handled during this time, and get in the habit of spending as much time on the phone as possible, speaking with past and potential clientele. I will discuss marketing more in future posts, but for starters, join a chamber of commerce and take the time to personally call or visit each member introducing yourself. No matter how busy you are, keep this time each day allotted for marketing. A failure in this area may not show itself for a few weeks or months, but also takes that amount of time to become effective. After the allotted time, fill out a daily report and give it to the CEO.
I prefer to get these necessary areas handled early so that they are properly handled during working hours. The remainder of the day (or night!) will be applied to your skill or profession, your labor department. As much as this will vary from business to business, a daily report is very helpful here as well. Your day will conclude with you performing your tasks as the CEO, reviewing daily accomplishments and using this accurate information to achieve company goals. As a consultant coming is to help a company, it is difficult to look at areas that need change to improve profitability without these reports. The CEO or a consultant needs to know exactly what is happening now to make the adjustments to what needs to be happening, so take accurate reporting seriously no matter how tired you may be at the end of each task. When you reach the point that you will hire an employee for a particular department, make sure daily reports are a part of their job requirements.
Often, small business are started because of a love of your craft, so spending appropriate time in those other areas sometimes get pushed to the side. Don’t. Handle them diligently, and manage your time well, and in time your craft can become a very profitable company.

Should I accept credit cards?

It seems inevitable that at some point in the near future accepting credit cards will be synonymous with being in business. They are everywhere. Many small business owners have taken up the idea that they have “graduated” to a higher level when they have finally set up a merchant account and can accept credit card payments. I beg to differ.
Let’s first be clear that this is regarding small service oriented businesses. A retail store that does not accept credit cards may as well be selling trinkets to cruise ship passengers on the Jamaican coast. It is an absolute necessity. But a very simple fact exists for retail, restaurants, and gas stations: not accepting credit cards results in lower sales. McDonalds and Burger King, along with numerous additional fast food restaurants, have begun accepting credit en masse, largely based on fast food becoming two trips. A potential hungry customer, realizing they would first have to find an ATM to get cash, and then return back to the restaurant, would simply go home. Once one chain began accepting credit cards, the others quickly followed to avoid a distinct competitive disadvantage. The same applies for numerous other retail establishments.
In the service field, where it is known in advance there is a price to be paid, the advantage is not so clear. Especially when one considers the cost incurred. Current credit card processing rates vary from 1.5 to 3% of the overall charge, pre-authorization fees per transaction, and monthly fees. If accepting credit cards results in additional business, great! That’s the ideal. However, when current clients begin to replace current payment methods (cash, check) with a credit card, you have a problem. And this is far more likely to happen than a drastic increase in sales. When is the last time a client you “I know you have better service and more skilled technicians, but I’ll work with the loser down the street so I can use my card”? Hopefully, never (and if it has, that’s one hell of a coincidence).
Suppose your overall sales are $1,000,000 annually. With sales remaining the same, and just 20% of your payments now coming through credit cards, you will lose approximately $6,000 per year. Not a small amount of money, especially when taken from your marketing budget, where those dollars can be put to much better use. This picture gets far worse as the percentage of your overall sales paid with credit cards increases. Another question to consider is how each card is processed. Is the technician accepting payment at the customers’ home? Does he call the office, wait for your secretary to finish her cigarette break, get an authorization code, and then have your client sign a carbon tissue paper that will end up covered in coffee stains on the floor of the work van? Is that really the customer service you had in mind?
Clearly, all of this goes away if accepting credit cards results in business you did not previously have. But is this really the case? If you believe it is, then start now. If not, ask yourself which is better: Offering to pay 2-3% of the bill so your customer can have miles, or just buying the plane ticket for them?

Developing a sales structure

The issue of how to pay a sales staff is a complex one, with many options available. In the design fields, especially kitchen design, a draw vs. commission structure is typical, but often counterproductive. Some may offer a strict commission only system, but rarely will this work with anyone other than very experienced, financially stable professionals. A starting point for developing a pay structure (not pay scale, we will discuss this at a future date), is analyzing why people in general work. Abraham Maslow in 1943 developed his “Hierarchy of Needs”, which is commonly used in the psychology and business development fields. The chart is as follows…

For purposes for this discussion, we will eliminate the financially stable seasoned professional. These often are more concerned with long term, and in the kitchen design industry, are few and far between. More often, the typical designers are younger or experiencing a career change, are not college educated, and cannot afford to go very long without a paycheck. This chart can give us some valuable information on motivation for these employees, and a consistent way to keep them focused on the tasks you need done, and hopefully long-term employment with you.
Your goal is to have employees at the self actualization stage or close to it. Here they are comfortable in their career, see the big company picture, and have enough freedom of thought to be creative and truly excel. The opposite end of the spectrum is the psychological stage, where the basic human needs are the overriding drive. Humans will always work to make sure they have food, a place to live, and can simply maintain existence. However, those in this category are often robotic, going through the motions, as these basic needs are all-encompassing. It is difficult to focus on anything other than these needs when they are not met. How well do you focus on the sales process when you have not eaten in a while? Can you really put your customers first when you are constantly concerned about paying your rent or possible eviction?
It is important to know where on the chart a potential employee falls, or if a current employees’ situation has changed to a point that his/her status has changed. You will notice a lack of focus, a lack of follow through with existing clients where a majority of commissions have been paid, or even simply a constant discussion about money (raises, advances, etc.). However, keep in mind that the amount an employee is making is not often a factor in this. Two employees making the same amount can be in different stages depending on personal situation, such as family issues, or even just a difference in perceived needs.
We can now use this information to develop a pay structure. The most typical in the industry is a draw vs. commission. Here, an employee is paid each week an amount that will be paid back to the company with earned commission. For example, if the weekly draw is set at $500.00, within 13 weeks (1/4 year), if no commissions have been paid, the employee with essentially owe the company $6500.00. At 26 weeks, this is $13,000.00, and continues to grow. Considering the amount of time it takes to make sales in the kitchen design industry, it is not unrealistic to think this may be the case, even with a skilled designer. If the employee is in the bottom group, and already very concerned about money issues, this will seem to them as an additional burden, and will greatly decrease productivity. It is for this reason that car dealerships have a very high turnover. Once the draw amount starts to increase, the stress on the employee and employer increases, and can create great tension in the workplace.
I would strongly advise against this pay structure. It is often used by employers as a means to “hedge your bet” in hiring new designers, but really is irrelevant. Since you’re going to have substantial start-up time for new designers in any case, would you rather have a happy, focused employee starting to experience sales success, or an employee that is now burdened down with an increasing draw amount and added debt to the company (and likely ready to quit)? There is no real benefit to a draw system in paying employees. The employee will always feel like they are “borrowing” money from the company, despite the fact that they are working a full time job, and the increasing amount will only serve as a distraction.
To replace this, you may consider a lower commission structure and a base salary. The amount needs to be enough that basic human needs are met, but it is money well spent. The chance of real success greatly increases in this structure, and the new employee will more quickly become part of the “team.” Sure, some employees will not work out, but the end result will be no different than had you paid a draw, and overall a sales staff with fewer outside pressures will yield stronger results.