Failure Into Success

I've talked about failing before, stating that most entrepreneurs fail sometime in their "careers"-if you will, and it should be considered an achievement. I've also stated that I have never failed before, actually it is kind of a fine line between temporary failure and long term achievement. I get emails asking me if I have ever failed, if so, how. So I decided to write about how I actually "salvage" businesses that might have tanked and turn them around, in order to break even, if not profit from them afterwords.

Usually, no business tanks so horribly, that there is nothing left to use in a new venture. For instance, if I were to build a candy shop, from scratch, which later failed, I would still be left with the building and even the equipment inside as long as it wasn't financed or I keep paying the loan off. So after I close up shop, I would sit down and think about what would work at that location and how I can use the "bad investment" I have made in the building and make a profit from it. In most cases, I would probably go ahead and put another type of shop up at this location or try selling the building. Now, one may argue that the candy shop was still a failure, but I look at it as just a higher investment for my next business that I put at the same location.

Another good example would be if I had an internet business which failed, and then I somehow managed to use the code and setup from my previous venture in a new one and try to salvage anything and everything I could, so I could lower my new investment. By doing so I would be able to save on new programming costs and perhaps launch the new venture sooner than later.

Sometimes it just isn't practical to try to use assets of a failed business in a new one because people try to save money and adjust their new business to their old one, leading to starting another failure or at least something not as good as it could have been, given you didn't use anything from a failed venture. I would only use parts of an old business if it naturally fit the new business concept.

I would say some of the prime assets of a failed business can be its staff and the other connections you have made in the industry due to starting your failed business. It can be of great benefit to have a skilled and ready to go staff to implement into a new business venture, instead of having to find the right team and take your chances. And any networking ever done, is never a waste, part of a failure, or ever forgotten, so those contacts could very well be used to kick start a new business.

Build Employee Loyalty

We always talk about building a brand and building customer loyalty, but rarely, do we speak of building employee loyalty. It is a really important factor in running any kind of business because it can mean the difference between saving money and spending money. The post on Turnover talks about how you can keep employees happy, without spending a lot of money, but building their loyalty to your company is a whole different discussion.

I have found, if your employees are loyal to your company, then it is easier to influence your customers to be loyal to your company and products as well. For example, a company that doesn't have loyal employees, will probably see higher turnover, which means regular customers will deal with new people more often than not. This shows that the company cannot retain a regular employee base, so how can the customer put faith forward and believe that you have a regular customer base. This is only scratching the surface, the assumptions in customers minds are truly infinite. They start thinking into things much deeper and sometimes even go elsewhere due to speculation they have.

Employee's who are loyal to your company will also represent your company in a better manner, on and off the clock. When they are with their friends and family, everyone will probably end up talking about how much they hate their employer, but if your employee talks about how much they like working for you, that will be a positive form of marketing.

Building the loyalty of an employee takes a period of time, but it arises from various things. For example, I have not laid off anyone due to the economy, so all of my employees don't have to worry about losing their jobs on a daily basis. Instead they can focus on the upbringing of the business they are running and making it more profitable. The less worried employees are, the better off the employer is. But back to the point of not laying off any employee, this shows that their employer stood by them in tough times, where another employer might have let them go. So even indirectly, they will think about the next time they want to leave your company to pursue a career elsewhere, but the job security might not be there. Experiences count and the more positive ones you can put out for your employees, the more chances of them staying with you for a long time.

Now, just because I don't lay off people due to the economy, it doesn't mean that I won't fire anyone for their poor quality work. In essence, I am not giving people a free ride and do as you please, type of job. You have to keep a balance between being a nice employer and being too nice of an employer where it affects the work output leading to your company's failure in some cases.

Making employees proud of your brand and loyal to your company is the first and most basic step in company reputation, marketing, and branding. Your company can only be as good as the people who represent it!

Underqualified Staff

Having already stated the various ways of avoiding employee turnover, the reality is that turnover is rising each and every day. It seems, more than 50% of the companies I deal with, whether it is in regards to purchasing for a business or personal use, have inadequate staff with an extreme lack of knowledge. Employers are putting less time, effort, and money into training which really hurts a business in the long run. I always say putting an extra few bucks into payroll, as long as it isn't skyrocketing, can't hurt. But if it comes to the point where you are hiring someone new, make sure you TRAIN THEM PROPERLY! The only way that you can educate your customers and meet their needs, is if your staff is educated and can deliver to the customers wants.

A scenario:

We've all had to deal with customer service whether we've received a bad product or service, but it is how customer service treats you that makes you decide whether to do business with the company again or not. I can't even count how many times I've had issues with customer service departments for inaccurate billing issues for NATIONWIDE COMPANIES. You call once, they say the problem is resolved, but in the next bill the problem is there. You call twice, they say it is taken care of, for sure, this time. The next bill arrives, it is still there, then I just call my lawyer.

In another case:

As entrepreneurs and business owners we always think of experiences with bad customer service and how it can hurt business, but many times look over the fact that underqualified employees mess up things which COST the company serious money. Owning multiple retail businesses, my management teams face this a lot. You can't really check over each employee each minute of the day, but the problem with employees who have a lack of knowledge, is that they don't charge people enough or give customers products that are not part of the deal. It isn't a problem, until it's a problem though. For instance, if employee A is giving product X and Y for the price of product X because they think the two products go together, the customer is used to that price. Then employee B comes around and charges more the next time for the order of product X and Y, but the customer gets upset because they have been paying for only product X each time they ordered. Now, the customer isn't wrong, but since they were being undercharged the whole time, they feel like they are paying more, when it truly was the employees fault.

I have a strict policy about training people, until the know the "pulse of the business." I require each employee to know the ins and outs on ALL of daily operational issues. I know I put more time and money into training each employee than most other people in my industry, but I know I also save more money by having a knowledgeable staff, which most other businesses lack, all across the board.

Turnover

Turnover and labor costs are always big issues that entrepreneurs are battling. Employers put a lot into training employees, most of the time, which makes it difficult to see people leave after just a short amount of time. If employees are not compensated "enough" for their work, they will leave sooner than later. The effort and dollars you put into training new employees and time it costs to fully train people, is usually more than just giving that raise to someone or that bonus at the end of the year.

Of course in an economy like we have today, it is difficult for businesses to give out bonuses and a lot of companies are having tough times even keeping up with regular payroll costs. Some small business owners are not thinking outside of the box though. There are plenty of ways to keep people happy without giving out cold hard cash.

-Give some other "freebies"- Giving out tickets to basketball games or even gift certificates to employees can keep their work morale up. I try to keep my employees happy, especially during tough times like these, people seem to really appreciate the little things more.

-Time off- We all need some time off sometime. Unfortunately, for business owners, there is no "true" time off. However, giving your employees some time off or personal days, can really help them stay focused when they ARE at work again.

-Time on!- For hourly staff, it might be beneficial to give people more hours, instead of less. It's getting tougher and tougher to pay the bills for each household, so throwing in a few extra hours could possibly be rewarding in and of itself.

-Company events- I've seen, from personal experience, when people that work together, get together outside of work, it really helps the team operate as a team when they are working. Holding company events, be it dinners, picnics, taking your staff to a sporting event, etc., can all help bring your staff together off the clock, so they can operate more in sync, on the clock.

Taking care of your staff, will help you retain employees over a longer span of time. Usually people won't shift jobs as quick because they have such a strong bond with their employer and things are moving so smoothly. This DOESN'T mean however, if a person is getting a $50,000 raise, they won't leave you because in most cases they will.

Billion Dollar Employee

I've acquired a number of employees from different companies and other companies have "taken" my employees in the past as well. It all revolves around my "billion dollar employee" theory. Some people ask me how some of my staff is so powerful and the truth is because they have worked for leading corporations in their career before they have worked with me. Of course they are getting the same benefits and some more otherwise I highly doubt they would have left their companies, but they are worth every penny, in most cases.

As a business owner or entrepreneur, depending on the amount of money you have decided to spend on payroll and related costs, you might be able to acquire employees that have tons of experience under their belt and who can truly take your business to the next level. If an employee makes me a billion dollars, why wouldn't I pay them well. If an employee makes me five million, again, why wouldn't I pay them well? I mean after all without each member of my staff, I definitely wouldn't make the money I do now.

If you are just starting out, you obviously want to get the most powerful people or most experienced on your side, but sometimes the funds are just too dry. So what can you do? Keep looking for someone that fits the pay scale. From personal experience, when I have hired people from other companies to work for me, they at least bring in some profit if not a huge amount with the project they are working on. The reason I pay these employees really, really, well is for plenty of valid reasons. First, their experience, then their connections, then their PROVEN performance, and the results they give me.

It's not good to commit to an outrageous pay, but if you really think the employee will be able to pull through with a high profit on their work then it might be worth the risk. Even then you should be careful how you play the cards because you don't want to spend all your money before you make any, otherwise you will definitely fail.

If I know I am going to get involved with a future project (3-6 months later), I have even put an employee on payroll once for doing NO WORK for a few months because I knew they were an asset to the project that I would be doing. The results were that they BEAT my expectations and now work with me on various projects. Even though I "wasted" payroll, it wasn't a waste in the long run. If I hadn't acquired that person at the time I did, they would have been employed elsewhere and I wouldn't have that particular "guru" on my team today.

There might be an ethical dilemma when you are hiring someone who works for another company. I NEVER take employees from small business owners, even if I don't know the owner because that creates bad air between a possible future encounter. Employing someone after they leave a large corporation, I believe, is okay because large companies burn through people more frequently and have a large number of performers.

Finding A Good Staff

While it is true that tons of people are out of jobs and there are increasing unemployment rates, it is still tough to find good help. There are plenty of smart individuals out there, even those willing to work hard, but it is still tough to sift through the applications. I always find that referrals are the best way to hire people, but even then, you can never predict the future each employee will bring to the company, whether it be positive or negative.

Skills my management team seek when interviewing:

-Achievement: There are numerous people that can "work," but my team always tries to find people that have truly "worked" for other companies in the past. By "worked" I mean that either they have done something significant for the company or have proven to be an asset for the company.

- Energy: My management team always looks for energy an enthusiasm in people, but sometimes it is just superficial. Anyone can act and that is what a lot of people do when they are on interviews. They try to pass off as really interested in the job and try to put that big smile on, but when you get deep into the interview, the interviewer can see through the smile- to see if it is fake or not. If the person doesn't know too much about the company or position, it may be that they aren't truly interested and they are probably going to stick around for 6 months or so.

- Vision: People always ask about the past, my people ask about the future. It is good to know what an applicant has done for companies in the past, but asking them how they would make your business better can give you an idea of their "visionary" skills. If my team doesn't have a vision, they have no motivation and I will be seeing no growth.

- Paths Crossed: We all work with different companies even though we are employed by one. It is good to know if your applicant has worked with people from other companies in the past or if they have "connections" with other companies in your industries, because they truly may be an asset for your business.

- Innovation: "If you are given the opportunity to create something significant for my company, how would you go about it?" While my interviewers don't ask for a novel, they touch base on key thoughts. If the applicant was put in charge of assembling a team and executing a plan, they are asked what skills they have and would use to get the project started.

The Domino Effect

I am pretty sure you have heard the phrase “Domino Effect” before, but have you ever questioned how a domino effect can impact your business in particular? There is always an outcome for every decision you make, whether it plays out for your business in a positive or negative manner. I’ve seen many entrepreneurs that make decisions based on narrow-vision- or not looking into the distant future, which isn’t bad, but you need to plan for outcomes of your decisions so you can take the proper steps in order to avoid potentially closing your doors or even prepare for higher sales.

First off, I want to explain how you can plan for the “Domino Effect” in your business. Whether you make decisions on a macro level (decisions based on long term goals) or at a micro level (daily operations) it is important to map out “routes” that you can take once the decision plays itself out. Lacking to plan different options for when it comes time to take the next step, can often lead to taking a bad step or even not taking the maximum beneficial step for your success.

For example, if I was to hold a product giveaway for my business, which drew a lot of attention, leading to more sales, but I didn’t have enough product inventory for the bump in sales, I would be shooting myself in the foot essentially. On the other hand, if I overstocked my inventory, but instead didn’t see enough sales flow through, I would end up with blocked dollars in my inventory on inflated projections. However, if I were to map out potential routes I would be able to take for the spike in sales I would find that I might be able to work with suppliers and have priority shipments made to me on a daily, bi-weekly, or semi-monthly basis depending on the amount of traffic coming through. I would also be able to explore other options beforehand, which would give me an upper hand when dealing with the “Domino Effect” of the initial decision, which was to hold a product giveaway.

A “Domino Effect” can be seen in internal operations as well. When dealing with human resources for example, I would have to plan for future hiring for product promotions. At the same time, I have to be thinking about how much I have afford to blow on payroll, while my sales are the same. Since I am bringing in the same dollars in sales, while working on innovation for new products or publicly promoting new products, I will be seeing less cash on hand, but more being sucked up into the business. If I don’t plan for a reserve or more funding through the launch of new products, I will end up closing my doors before any new sales are made, since all my funding will be consumed.

Overall, I hope I made the point across that you have to not only plan for your business, but you have to plan different options or paths you can explore after your initial plans are implemented into your business. If you don’t plan the “Domino Effect” for any decisions you make, you will be brought to a dead end and be forced to make decisions on the spot when the “Domino Effect” plays itself out.

Running A Transparent Business

Being transparent as an entrepreneur or running a transparent business gives you an upper hand in whatever you are dealing with. If you have been transparent with your business year after year and continue to be, you will more likely deliver higher customer service, at the same time run into less troubles. Being transparent will also help you deliver more quality within your business.

If you have not been running a completely transparent business or haven't started a business yet, you will notice that when you do start being transparent, there will be a stronger relationship between you and your employees and also you and your customers. The strong link will probably get more customers to come back to you, essentially giving you repeat sales and at the same time get your customers talking about your business among their friends or family.

Why would customers be happier if I told them something the way it is?

People look for what is really up these days. Nobody has time to listen to manipulated things or even that same sales pitch they have heard a thousand times. If you become honest with your customers, they will probably see through the sales tag and find that it is more beneficial to THEM to buy from you instead of the competition.

Admit your mistakes...

Making mistakes with a business or as an entrepreneur is only natural. It happens to everyone. But what everyone doesn't do is admit their mistakes and say they were wrong, instead they try to cover up their questionable judgment. For example, if you are working with a team to launch a new product, but a decision you make is incorrect, and you try to draw attention to another problem or incorrect decision someone made along the way of the product launch, instead of your own, people will notice that and they might become distasteful with you. On the other hand, if you took action and faced your incorrect decision, people will probably be more willing to work with you to fix it quicker, so less "chain-reactions" arise.

Same thing goes with a business. A matter that comes to thought instantly, is when Facebook launched their Beacon project a couple years back. It was a service that displayed what everyone's friends were buying online and notified people in their mini-feed. People's thoughts for "privacy" suddenly jumped out of the roof and Facebook acted on the feedback. Mark Zuckerberg, addressed the issue on a company blog post, and apologized for the lack of privacy with the project.

What about my staff?

While you cannot think for someone else, you can influence how they act if you create a surrounding that is persuasive. If you try to scope out people that are transparent and hire them, it is more likely that the people that are not transparent, will become more inclined to be transparent. After all, do you really want a employee that isn't transparent, working for you? You are the first step to having them become transparent.

What it all comes down to...

The bottom line shows, being transparent with your business or being a transparent entrepreneur will give you a better reputation in the end. If you remain transparent through the years, consumers will put their trust into you and that is the true key to crossing the finish line successfully.

Maybe the first step to becoming transparent, is to get a transparent business card. :)

Choosing the Right Team

A lot of the success of the business depends on who is behind the operations. Not only because of what kind of innovation employees can bring to the table, but because they are the ones to market the business.

How do you go about choosing the right team, whether it is a retail small business, a professional venture, or an online venture?

I would say that you need to find a group of individuals that will want to work with you to bring up a great business from scratch. You should try to get involved with the people around in your community or network in the same industry as you. The group of people should be able to work together and be able to understand each other. No business can be successful unless the human resources of the company is in sync.

If you are an entrepreneur, you really don't have to look much further than some of the biggest companies around in today's world. Look at Google for example. Sergey Brin and Larry Page were not the greatest friends after they met, but they shared the same idea and wanted to start a revolutionary type of search product. They put their minds together and came up with algorithms for Google Search and that was the beginning of Google. They really didn't talk about money or anything else at the start, but focused mainly on coming up with the product. If you can find or put together a team that will focus on creating the product you have in mind and then looking to monetize it, chances are you will have great success.

Without the right team, many businesses have failed. The basis of a well known business are the people behind it, living up to the reputation of the business.

Being Asked For A Raise

In the corporate world, people are given reviews after 3 months, 6 months, 1 year, etc. of work. So what is the right thing to do, as a boss or company operator, when people ask for a raise in their salary or it is time for their review?

Lets face it, business owners hate to give raises because it means less profit in their pockets. On the other hand some employees don't deserve raises and you need to justify giving someone a raise. In a tough economy it is crucial for businesses to watch their payroll because it can be a leading factor in why a company goes under.

First off, you should analyze the individual employee being assessed. There is no "universal rule" that companies have regarding raises, sure many companies have established charts and tables to assist in the salary ranking process, but it always depends on the employee.

Things to look for:

1. How is the employee's work performance?
A few key points:
-Do they meet expectations?
-Are they following through on their work without constant monitoring by their superior?
-Do they keep on task and stay focused?

2. On a scale between all of the employee's in your company, where does one stand?
-Is this employee one you would like to hold on to?
-Tough to replace?

3. How much have you invested in this employee? Is it worth giving a significant raise after many dollars were put into training one, or can you save by training a replacement and keeping the salary the same?

4. Is the employee a potential loss for the company in general, if they were to go to a competitor?
-Many times, companies lose employee's to competitors, who are willing to pay more and give better benefits, causing the competition to gain an edge and come out with better products, that your company might have came out with had you kept the employee's that shifted companies. This would lead to revenue loss which can make up for the employee's salary in the long run.

Also, you should think about disbursing more responsibilities to one along with a salary hike.
-You can compensate for a higher salary, but assigning more duties to one. This would hold the employee up to new standards, so you may potentially save money by having existing employees pick up some extra slack that you would pay someone else to do.

To conclude, always remember, your company is just as good as the people running it. Without manpower you cannot be successful, therefore you should balance between letting people go due to the inability of raising salaries or benefits and actually keeping people and having a higher payroll.

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