The Handoff - A Business Owner's Role in Supporting A Sales Team

I've just heard this story too many times not to share it as a learning moment.

I received a call from a salesperson asking for advice as he struggled to meet his quarterly sales quota. I assumed he was calling looking for new sales techniques or particular guidance on moving a client to close. But this was not the case at all. Here is how the dialogue went:

Salesperson says, “I’m selling a product in a market where I have a competitor selling the exact same thing.”

I replied, “Same thing? You mean same features, same everything?”

“Yes”

“Are you more price competitive?”

“No, not really. We offer trade in of older equipment to bring the price down but so does our competitor”

“What about service?”

“Yeah, we do support the customer better than they do.”

”That’s good. But will your customer pay more for this better service?”

“No.”

“Interesting, so tell me what kind of direction have you received from the owner of the business you work for?”

“What do you mean?”

“Well, given the market realities you’ve outlined, how does your owner expect you to win new business? Is he doing things to separate you from this competitor? For example, specializing in a certain niche (becoming experts and thus the preferred vendor) or using marketing and strong advertising techniques to build brand preference (aka, Colgate vs Crest toothpaste)?”

“No, the only guidance I was given was, “Treat it like it’s your business.”

Even the best salesperson will under-perform or fail under these conditions.
  
It is not the salesperson's job to identify target customers and invent ways to differentiate.

The role of the owner, President and/or CEO of a business is to equip your sales team with the tools to be successful. At a minimum this includes the following:

• A list of “target customers” 
• those inline with the customer mix outlined in your short and long-range growth plan
• who match the profile of those who will value your product, expertise and/or differentiators
• The compelling story to support why clients should buy your product over competitors
• Who are the competitors the sales team can expect to face and what differentiates us from each
• A supportive marketing (lead generating, branding, demo tools, social media, samples, brochures, etc...) strategy
• The right sales tools and support (travel budget, conference attendance, CRM, bid and proposal, quoting, etc...) - tools that actually help the sales team do their job versus those that help the owner monitor the sales force.

Given that only 28% of a salesperson’s time is spent in front of the customer and about 50% of that time is actually selling (the rest is prospecting (35%), relationship building (10%), and training (5%)), it is imperative, you the owner, equip him/her with the tools to ensure it is the right prospect and that he maximizes the productivity of that time.

In my 12 years of consulting "under-performing sales" has been by far the number one pain point with the blame typically placed squarely on the salesperson or VP of Sales. It is not long into the engagement when humility kicks in as the owner discovers it is their lack of a long-range plan, a clear understanding of what makes them different, a detailed knowledge of their competitors, and an ineffective or non-existent marketing strategy that are the real culprits.

Want to give your sales team the best chance for success? Let's talk about your metro Atlanta business over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Elevator Pitch Challenge. Can You Say Yours In Two Floors (10 sec)?

Ah! The infamous "elevator pitch". How many of you have this refined in such a manner that you can actually give it in an elevator or any other setting for that manner?

Why is this even important?

Well here is a case where a strong elevator pitch can be valuable. At the start of nearly every Board of Advisory event at the Metro Atlanta Chamber of Commerce the host would send a microphone around the entire room giving everyone an opportunity to stand up and state your name, your company name and "what it is you do". There are several ways the moderator would keep this from consuming the entire time allocated for the event itself. One way was to restrict the person to saying this in three breaths (three sentences). Another was to limit it to 10 seconds. In other words, an opportunity to give your elevator pitch but to an audience of 50 to 100 local business leaders. This kind of scenario is not uncommon. Are you prepared for it?

I use the following elevator scenario with my clients to hone their ability to clearly articulate what it is they do.

"You just walked into the 3rd floor elevator at a shopping mall and just before the door closes an important business acquaintance you haven't seen in a long while squeezes in the door at the last second. He/she recognizes you and says, "Mike! Good to see you again. What are you up to nowadays?" He presses the first floor button. The elevator starts to move. How will you reply?"

A typical elevator will cover two floors in 10 - 16 seconds. To allow for a response I suggest your pitch should last no more than 10 seconds.

So now that we know how long it should be, what are the ingredients to a good elevator pitch? When stating what you do it should be, (1) clear enough for your grandmother to understand, (2) be stated in a manner that clearly sets you apart from others in your sector, and (3) is intriguing enough to warrant the following sincere (versus the brush off) reply, "Wow, that's interesting. I'd like to hear more. Let's get together for coffee." Of course, if the person is not in the market for your services another good response could be, “Interesting, I might know someone who could use your services.”

The bottom line is be clear, be different, and be brief.

Here is how the elevator ride would be for me.

We see each other in the elevator and the business owner says, "Mike! Good to see you again. What are you up to nowadays?" He presses the first floor button. The elevator starts to move.

I reply, “Good to see you Tom. I’m with Allegro Consulting, a 12 year old firm working exclusively with private companies on matters related to growing a sound business like strategy and process definition."

In this 10 seconds I emphasized a key differentiator for my company, longevity, that we’ve been around longer than almost everyone of my competitors. I made it clear who I specialize in working with, “private(ly) (held) companies”. And, I gave two concrete examples of what I do for my clients. You noticed I didn’t say something vague like, “I help companies go to the next level.” even though this is the most common phrase I hear from potential new clients. The reason is this phrase can mean different things to different people. There is no doubt what strategy means and implied in that is, I help companies who are ready to grow based on a strategy.

Was this helpful?

Want to sharpen the elevator pitch for your metro Atlanta business?   Let's talk about it over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy, and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

5 Lessons Building My New Fully Responsive Website

Every three years or so my company website starts to look and feels stale and dated. I don’t know if there is a study out there to back this up but this is what my 12 years of consulting experience (8 years with a website) has taught me. It has become clear that people’s expectations for a website “experience” are constantly evolving. Social platforms like Twitter, Facebook, Pinterest, and Instagram, and YouTube have influenced the web audience to desire bite sized pieces of information preferably through media such as videos and telling photos. On line stores like Amazon too have influenced expectations along these lines.

I am a consultant. I help businesses who are struggling for one reason or another. My clients are serious people burdened and kept awake by serious challenges. If things have gotten to a point where they need an outsider to help you can bet they are prepared to research options. My old website was tailored to that research. It provided the client some things to think about in the way of solutions and why I was the best guy who could help. But now even this audience wants the same type of information presented differently - in meaningful bite sized nuggets.

Oh, and one other observation. Two years ago less that 1% of my web traffic came from devices other than a desktop. Today 21% of my traffic is from mobile or tablets.

My old content ladened, static website had run its course. (Good bye old friend - you served us well).

So you might be asking, because of the title of this article, why I took on the challenge of designing and building a website myself rather than contract the project to a web developer or marketing firm. I have three reasons for doing this. First reason, given the importance a website is to any business I feel as a consultant I must know enough about the process to credibly advise my clients through it.

Secondly, so I know what kind of effort and skills are involved and thus the value attached to such a project. And the third reason is to fully understand what a business owner must know about his/her business and customer BEFORE he/she begins this undertaking.

That said here are the top five lessons I learned from this one-month project:

1. Know everything about your business - your growth plan and your target customers. This is not something you casually hand off to a marketing firm or web developer to figure out. You should be able to articulate your 3-year strategy (your web presence is but a tool to help get you there), details about current state (customer/product mix etc...), your target customers, your competitors, and the landscape in which you compete. With regard to your customers, you should know how they shop, what they value about your company, what products and services they favor, and what their expectations are when they land on your site. (By the way, this is by far the most requested service of  Allegro Consulting - growth strategy development.)

2. Know the difference between the skillsets of a web developer versus a marketing firm. Web developers are best equipped to bring functionality to your website whereas marketing firms bring creativity and design. Asking a web developer about layout, colors or the appropriateness of artwork would be like asking the carpenter to design your house. Likewise, expecting a marketing firm to efficiently create the coding for a web form or transaction integration would be equally outlandish. To get the most out of this important marketing spend, task the experts to do only what they are most trained for.

3. Don’t outsource the content. Once again if you know your business and you know your customer then you know best how to connect with them. Sure it is ok to have a third party edit your writing but you have to take charge of the messaging. This is not something you outsource.

4. Web audiences will scroll. It used to be that you had to worry about putting the most important content “above the fold”.  This is no longer the case. Thanks to Facebook and Twitter people are now use to scrolling and will automatically do this when on a website. Here is a great article on this subject.

5. Preserve your URLs. If you have a strong Google ranking be careful about how you introduce change to your website - especially the URLs I learned it is very important that you do whatever you can to preserve your old URLs (exactly) even if they are not an ideal name for your pages. Don’t throw them away as there is valuable Google history there. If you can’t use them in your new rebuilt site use a 301 redirect rather than discard. Here is an article about that.
Let me know what you think of my new website. BTW - I used a pretty impressive tool to build it - a company called Webflow.

Remember, your website is a marketing tool and the role of marketing is to attract "qualified" prospects. It is incumbent on you to understand what is a "qualified" prospect and how they go about researching then buying your type of product or service. It is also your job to know what differentiates you from alternative choices. Don't spend the time or money creating a new website until you know this information cold. These are the topics covered in a well run strategic planning engagement. And this is what Allegro has been doing for metro Atlanta businesses for over 14 years.

Let's talk about your business over a cup of coffee.  The first cup is on me.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Worst Sales Direction EVER! “Treat it like it’s your own business.”

I've just heard this story too many times not to share it as a learning moment.
I received a call from a salesperson asking for advice as he struggled to meet his quarterly sales quota. I assumed he was calling looking for new sales techniques or particular guidance on moving a client to close. But this was not the case at all. Here is how the dialogue went:
Salesperson says, “I’m selling a product in a market where I have a competitor selling the exact same thing.”
I replied, “Same thing? You mean same features, same everything?”
“Yes”
“Are you more price competitive?”
“No, not really. We offer trade in of older equipment to bring the price down but so does our competitor”
“What about service?”

“Yeah, we do support the customer better than they do.”
”That’s good. But will your customer pay more for this better service?”
“No.”
“Interesting, so tell me what kind of direction have you received from the owner of the business you work for?”
“What do you mean?”
“Well, given the market realities you’ve outlined, how does your owner expect you to win new business? Is he doing things to separate you from this competitor? For example, specializing in a certain niche (becoming experts and thus the preferred vendor) or using marketing and strong advertising techniques to build brand preference (aka, Colgate vs Crest toothpaste)?”
“No, the only guidance I was given was, “Treat it like it’s your business.”
Even the best salesperson will under-perform or fail under these conditions. It is not the salesperson's job to identify target customers and invent ways to differentiate. The role of the owner, President and/or CEO of a business is to equip your sales team with the tools to be successful. At a minimum this includes the following:

• A list of “target customers” 
• those inline with the customer mix outlined in your short and long-range growth plan
• who match the profile of those who will value your product, expertise and/or differentiators
• The compelling story to support why clients should buy your product over competitors
• Who are the competitors the sales team can expect to face and what differentiates us from each
• A supportive marketing (lead generating, branding, demo tools, social media, samples, brochures, etc...) strategy
• The right sales tools and support (travel budget, conference attendance, CRM, bid and proposal, quoting, etc...) - tools that actually help the sales team do their job versus those that help the owner monitor the sales force.

Given that only 28% of a salesperson’s time is spent in front of the customer and about 50% of that time is actually selling (the rest is prospecting (35%), relationship building (10%), and training (5%)), it is imperative, you the owner, equip him/her with the tools to ensure it is the right prospect and that he maximizes the productivity of that time.

In my 12 years of consulting "under-performing sales" has been by far the number one pain point with the blame typically placed squarely on the salesperson or VP of Sales. It is not long into the engagement when humility kicks in as the owner discovers it is their lack of a long-range plan, a clear understanding of what makes them different, a detailed knowledge of their competitors, and an ineffective or non-existent marketing strategy that are the real culprits.

Want to grow your metro Atlanta business?  Let's talk over a cup of coffee about what we can do to give your sales team the right tools for success? Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

Strategic Marketing

2013 has been an interesting year so far.

I met with five owners who came to me with stories of spending $5K, $8K and $10K respectively on marketing campaigns. They proudly showed me their new website, logo, car wrap, etc... They each said they thoroughly interviewed the marketing firm - great credentials and reputations.

So why did they call me?

Despite the spend they weren't getting new customers.

Clearly these marketing campaigns were ineffective.

Stand by for a new article I'm writing about the role of marketing and when and how to engage this service.

Hint: The role of marketing is to generate quality leads - it takes a strategy first to determine what type of leads you want. It takes a strategy to understand the competitive market your campaign will be conducted in.

Do you have a long and short-term strategy?

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping turnaround businesses wrestling with stagnant growth. He grew his very first client’s business from $8M to $35M in just two years. Mike is also a prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

What Sets You Apart From Your Competitors? - A few words on Core Competency

I attended a gathering of a select group of small business owners who were runner-ups for the “Small Business Person of the Year”. During the event each owner was asked to stand up and briefly state what they thought made his/her business so successful. One of the owners stated proudly it was his employees - he felt he was able to attract and retain good employees. That was his “secret”. Later, I had the opportunity to privately ask him what made his employees “better” and how was he able to attract these better employees.
“Are your employees more qualified than industry standards - have higher degrees?” I asked.
“No”, he replied.
“Do you offer better benefits or pay and thus can attract better employees?”
“Uh, no.”
“Do you offer performance incentives or shares of company stock?”
“No.”
“Is your work environment any different than others in your industry?”
“No.”
“More vacation time, gym memberships, or other perks?”
“No.”
“So then why then do you believe it was your employees and your ability to attract them that sets you apart from your competitors?”
He hesitated, gave a puzzled look, then said he didn’t really know.
The sad fact is this company president didn’t know what attribute made his company successful. Most likely his employees are no more or less qualified than other in his industry. And because he doesn’t know, he is more likely than not to stray away from it or unknowingly allow it to waste away. Once this happens, the business is gone.
This owner did not know or understand his company’s core competency; the unique thing they do or process they employ or value they add to win business that would be difficult for their competitors to imitate. Your company’s core competency is the foundation of your business and therefore you should know how to identify it, nurture it, and exploit it if want to successfully grow.
Let’s take a moment to discuss, as an example, the core competencies of two well known businesses, Dominos Pizza and Honda.

Dominos made its mark by guaranteeing a quality pizza delivered to your door in 30 minutes or less. Their core competency was the “process” they designed starting with the how they selected the store locations and ending with the delivery method. It was this value added benefit (a warm pizza delivered quickly) that drove their customers to choose their product over the plethora of other pizza restaurants. Dominos continuously invested to refine that process (their core competency) and keep it as a discriminator and a method for growing their business beyond pizza to now include hot wings, pasta, etc....

Honda’s core competency was building high quality, reliable, light weight engines; first for motorcycles then later small cars and the rest is history. Their continual investment in engine technology is a reflection of how well they understood what made their product the preferred choice regardless of whether it was in a weed whacker, a lawn mower, an ATV, a motorcycle or a luxury automobile.

What is your company’s core competency(ies)?

By the way, it is very rarely “our customer service” or “our people” as this is considered a prerequisite for participation or an expected standard of most businesses.

Investing in your core competency will ensure it continues to provide you with the competitive advantage necessary to grow your business.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Mike has helped companies large and small, international and domestic, plan and execute their growth strategies. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Going International! - The Fundamental Rules of Business Still Apply

Over the past year I have met with several small and mid-sized international businesses that have chosen Metro Atlanta as their launch site for international growth into the U.S. market. Our high consumer spending rate, low relative business cost, and significant service industry focus makes America a prime destination for foreign companies who choose to grow their business through international expansion.

Germany, France, Israel, Brazil, Ireland, and the UK are the home countries of some of these businesses and in most cases I was thoroughly impressed with their product or service offering - it was unique and I could quickly see the value proposition. But their venture in the U.S. was not succeeding. I suspect some will soon give up and return home - having spent thousands of dollars on office space, computers, staffing, advertising, corporate legal fees, and travel.

So where did they go wrong? Some of this may surprise you.

 No plan – As big a deal as it is to go international not one of these companies had a strategic plan in which expansion into the U.S. was a critical and important element. In each case, the owner either arrogantly felt they had succeeded sufficiently in their own country and/or had some international success to declare it was time to expand into the U.S. market. Some, on the other hand, were “encouraged” to make this move by their prime global customer (i.e. we are doing business in the U.S. and we want our suppliers here as well.) Regardless, it was clear that little time was spent studying the business climate, understanding and defining the short and long term opportunities, the competitive threats, and how best to take advantage or minimize their relative strengths and weaknesses in this pursuit.

 They sent their best salesperson to launch the business … who quickly found themselves making critical operational decisions such as where do we best locate the company, what size and type of office space do we need, what accounting and law firms do we retain, what are our computer hardware, software and network requirements, phones, banking, our staffing needs and the appropriate compensation and benefits, etc…. This poor person whose skill-set is sales is forced to make significant and long lasting business decisions better suited for a COO or CEO. Worse yet, that salesperson has little time remaining to pursue critically needed sales.

 “Englishizing” their marketing material and sales presentations – If the message worked in Germany or France then, when translated (by our German or French marketing firm), it should work in America, right? Wrong.

 Poor/excessive fiscal spending – Rather than preserving capital these companies spent lavishly on office space and furniture, homes, office staff, new computers and networks. Sadly, several followed poor advice or purchased higher priced products or services than needed from supposedly trusted companies of similar nationality who they later discovered did not necessarily have their best interest in mind.

 Bad local hiring decisions – No written job descriptions with qualification and expectations clearly outlined was used when hiring their American leadership or sales staff.

 Poor support, if any, from the home office – There are few experiences more deflating than when calling the home office in Europe, looking for assistance, only to find everyone has gone home for the day.

Going international is a legitimate growth strategy whether you are a U.S. company or one from Germany. But the fundamental rules of business apply. First and foremost it starts with a plan.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Accountability - A dirty word or a must for business?

Recently we watched President Obama accept full responsibility for the multitude of opportunities by the different federal intelligence agencies to “connect the dots” and prevent the “Underwear Bomber” from boarding a flight to the United States. Throughout his speech the President used some variation of the word “accountable” yet he never stated how he intended enforce accountability within his administration.
Does this word not have any teeth any more? Has it been relegated to the same politically incorrect or overused under-enforced trash heap of words such as “deadline,” “delivery date,” “fixed price,” “trust,” and “customer service”?
I contend that if your business has any ambitions of growth and long-term success then enforcing personal accountability is a must.
My experience in government, corporate America, small business and non-profits has taught me that mediocrity begins the moment leadership fails to hold their people accountable for not achieving specific goals and objectives on time. The message sent when this occurs is viral, spreading with firestorm-like intensity and speed throughout the company or organization. And, like a firestorm, the damage can be overwhelming and take years to overcome.
So what does it take to create a culture of accountability in your business?

1) A Plan - First and foremost it takes a written plan. Operating to a well thought out three-year strategic and one-year tactical plan is one of most important characteristics of companies and organizations that grow consistently in good times and bad. But, just having a plan is not enough. The plan has to be shared which allows every member of the team to know his or her role in its execution. Just as a movie cannot be made without a detailed script for the actors, cameraman, director, etc., a business owner cannot hold his or her employees accountable for completing their “movie” (tactical plan) without first giving them a script.

2) Written Job Description - The relationship between an employee and employer is a contractual one. As far as the business is concerned it should be nothing more. In return for a set amount of compensation and benefits, an employer expects you to have a certain level of experience and education, work a scheduled number of hours and be held accountable for defined responsibilities. With both a plan and a written job description in place, an employer has taken the steps to remove the excuse of “I didn’t know” as a means for employees to fend off accountability.

3) Resources - You cannot hold someone accountable unless you have given them the resources to do the job you’ve assigned. If, for example, you expect someone to build a widget in a certain timeframe, then you must ensure the employee has the materials, tools, instructions, and the proper environment to complete the task. The same is true for your salesmen. You can’t hold them accountable for meeting sales objectives unless you have first given them the value proposition, a clear understanding of the competition and other tools necessary to uncover prospects and close the sale.

4) Implication for Failure - Finally, and most importantly, there must be consistent repercussions associated with failure. A plan or job description is useless if you don’t hold the individual and leadership accountable for fulfilling their responsibility and meeting specific goals and objective. Tying bonuses or a portion of base pay to objectives is one method. Private or public rebuke when a deadline is missed is another. This is clearly a personal decision, but whatever the repercussion, it must be doled out with consistency.

Maintaining a strict culture of accountability does not, as some believe, negatively impact morale or performance. On the contrary, this culture takes away ambiguity and ensures each and every individual knows what is expected of them and as a result keeps them focused and comfortable knowing that if they perform they have a long future.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

What Should I Be Doing Now? Advice to Business Owners Who have Survived this Long

What should I being doing now? This is a question I have been fielding a lot lately by the “survivors” - the business owners who had sufficient cash and made the necessary adjustments to their business practices to survive the current recession thus far. Though folks in Washington, DC want you to believe the recession is officially over, it will be some time before a true recovery is felt by business owners and consumers alike. So, what you should be doing now is position your company for that recovery. Here is some of the advice I have been giving my clients:

1. Plan and prepare for the new economy. This recession has rocked both businesses and consumers in a significant way. It will be a long while before they return to old spending habits. The businesses that will thrive in the new economy will have recognized this and adjusted their product offering and business practices accordingly. Strategic planning here is crucial. Identifying your business’s strength and weaknesses, and the external opportunities and threats (SWOT analysis) is an essential element to crafting your plan. As one would never fathom making a movie without a script, transforming your business for this new economy without a plan is equally absurd. I would caution this is not something you do on your own as it requires someone to challenge your assumptions to make certain you are not drinking your own bathwater by building a strategy around a company strength that really isn’t. There are too many examples of companies who have made this mistake and expeditiously and efficiently strategic planned themselves right over a cliff.

2. Continue to be conservative with cash. I recommend labeling all cash expenditures in one of three categories, (a) Value-added, (b) Non-value-added but necessary, (c) Non-value-added - scrutinizing the latter two more closely. Value-added expenses are those that directly contribute to the value and/or quality of the product or service (skilled employee, machining tools, raw material). Your customer would not hesitate to pay this line item if he/she saw it on an invoice. Non-value-added but necessary are expenses required to do business and thus cannot be eliminated (business license, tax preparation fees, business planning). Your customer will acknowledge and recognize these very limited expenditures as the cost of doing business. Non-valued-added are all cash expenditures which do not contribute to the quality or value of the product in the eyes of the customer (office furniture, company cars, copy paper, Blackberry). I am not suggesting you do not spend the cash - regardless of the label, but that you make a conscious decision about each expenditure knowing it burdens the cost of the product and/or the profitability of the company.

3. Resist the temptation to return to old habits and practices. These fundamental changes in spending habits by businesses and consumers are here to stay - at least for the foreseeable future. Personal savings and retirement accounts have been hit hard by this recession. Any extra money that is made as we emerge from this economic downturn will be used to re-supply those accounts not only to the levels they were but with additional padding. Having an actionable plan and holding yourself and employees accountable to that plan is the single biggest deterrent to returning to the less disciplined approach of running your business. The plan - especially when shared with all the employees - will also help set the new tone for the company both in the way of personal expectations and instilling confidence in the future.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

What Venture Capitalists Look for in a CEO - a Model for Any Business Owner

I attended The 2009 TAG/GRA Business Launch Competition Finals, hosted by IBM, where three high-tech start-up companies were competing for $100,000 in funding and another $200,000 in professional services. Prior to the finalists’ presentations, the audience had an opportunity to address questions to the judges’ panel made up of leaders of nationally recognized venture capital firms. One of the most interesting answers was in response to the question, “What characteristics do you look for in a start-up CEO?” It was no surprise the attributes they identified for the CEO of a start-up company are exactly the same as those for an owner of an established business. Take a look at these characteristics and see how you compare.

Ability to focus - In the day-to-day life of a business owner, it is easy to get distracted by the internal fire drills of the day, external market forces, and actions by your competitors, suppliers or customers. Before you know it, three, six, nine months go by, and you have failed to do any of the strategic actions you cited were necessary to keep your company on a growth path. The business owner’s ability to stay focused on those critical actions is paramount to any growing company.

Be disciplined with capital - Cash flow is the life-blood of any business. The tone for how cash is spent in a company starts with the business owner. Do you know where your cash is going? One test for fiscal discipline is to evaluate spending as a defendable direct charge to your customer. You may be amazed by the amount of money spent on non-value added activities and items.

Connect “outside” with “inside” - The ideal CEO is one who is able to connect internal developments and activities with the outside marketplace. They accomplish this by responsibly delegating internal roles so they have sufficient time to stay connected with their market and customers. It is all about balance.

Ability to recognize when additional management talent is needed - In the words of one veteran venture capitalist, “CEO’s are the biggest impediment to growth by failing to build out the right management team.” In these cases, the CEO either fails to acknowledge he needs help, or he makes bad hiring decisions. Failing to meet specific goals is one clear indicator that help is necessary. The latter can be addressed by having a well-written job description with specific performance expectations and qualifications.

Be coachable - As the business evolves, so must the leaders - especially the CEO. The first step here is to acknowledge you don’t have to be the expert in all fields; and second, there are folks out there with the experience and knowledge to advise you on new business processes and approaches for growing your business. How receptive are you to these two facts?

Transparency - no surprises - Garnering the confidence of investors, banks, board of directors and employees alike is critical to the long-term growth of a company. This confidence comes from backing your words with specific actions, ideally those consistent with a written plan, and disclosing early when critical milestones won’t be met with a plan for how you intend to recover. Surprising your employees or investors is a certain path for losing the essential support needed for growth.

Be nimble - Don’t be so caught up in your business model that you are unwilling to deviate from the plan when market forces are telling you that you should. History if full of examples where business owners insist the market will eventually come around to buying their product or service.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

The Threat in S. W. O. T.

I was given the privilege of being the Chairman of this year’s Selection Committee for the next recipient of Metro-Atlanta’s Small Business Person of the Year Award. It was quite an experience as there were several outstanding candidates. The announcement of the top five finalists and winner will occur at the Metro Atlanta Chamber on May 21st during an event-filled Small Business Day.

What was interesting to discover in this process of selecting the winner was the variety of answers we received to the first of three, and the only business related question asked during the personal interviews. The question was: “We know the importance of strategic planning in facilitating the long term growth of a company…. the basis for building a strategic plan rests with a thorough SWOT analysis....and one element of the SWOT is Threats. Other than the economy, what is the single biggest threat to your company’s future growth?”

We asked this question to get a sense of how well these small business owners truly understood their business and did they, in fact, have a plan for growing their company.

Before reading further, what would your answer be to this question? Write it down.

Now read on.

Here is a quick recap about SWOT. SWOT is the acronym for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is usually done as a prelude to building a Strategic Plan. It drives you to look at your business both internally (Strengths and Weaknesses) and externally (Opportunities and Threats). With this analysis completed, you have the material necessary to craft a Strategic Plan - a plan that should address how you intend to enhance your strengths, minimize or correct your weaknesses, exploit the market opportunities and counter the threats.

Though this may sound simple enough, surprisingly very few small and mid-sized companies undergo this assessment. Worse yet is they perform this appraisal but fall into the trap of drinking their own bathwater by believing, for example, something is a Strength when in reality it is simply a minimum customer expectation. “Our people” or “our customer services” are the most common Strengths I hear from business owners that fit this - bathwater - category. You have to have some highly credentialed (PhDs...) staff or be constantly providing ultra-extraordinary customer service experiences to make either of these legitimate business strengths.

So what are legitimate Threats to a business and why is it important to identify them? First, as far as a SWOT analysis is concerned, a Threat is an external force - never internal. Second, accept the fact every business has real Threats which should be acknowledged and guarded against. Third, failure to identify these Threats and take action to counter them can bring a business to its knees.

There are numerous case studies of businesses large and small that either failed to acknowledge a Threat (“we have no threats”), or failed to change course to counter a threat. Imagine being that company producing tube televisions because you didn’t think LCD - flat panel technology - was legitimate or the mighty internet company (Yahoo) who produced the first marketable online search engine yet failed to believe anyone could make a better product (Google).

As a business owner you should clearly understand the threats to your future growth. Whether it is technology that makes your product or services obsolete (digital camera vs. film), a new trend (Facebook) which renders your product (MySpace) passé, or a competitor who is marketing a better “mousetrap” (iPod), it is incumbent on you to not only be aware of these Threats, but have a strategy in place on how you are going to thrive despite them.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Downsizing the Right Way

Well, it was just a matter of time before this topic came up. Even the best run companies - those that plan well, hold their people accountable, and make prudent investment decisions - may still have to resort to “downsizing” as a means to stave off unbearable financial losses. Though most state and federal laws allow an owner/CEO to make these decisions without prejudice it may be prudent to seek some professional HR guidance beforehand. The topic I would like to discuss here is how best to reallocate tasks and responsibilities to those who remain.

I know of two Fortune 500 companies who, because of slumping sales were forced to lay-off a number of their sales team. They told those who remained they were expected to service not only their original clients but a portion of the clients previously serviced by those who were let go. No expectations were changed with regard to the quality of work, number of sales calls or internal reporting, and no pay adjustments were given to these remaining salespeople. Does this sound familiar? It is by far the most common approach taken my most CEO’s and, in my opinion, one of the worst.

Let’s analyze this.

I start with the assumption that prior to the downturn each and every salesperson was gainfully employed with challenging goals defined, clear written expectations set, qualifications identified and fair compensation for their services agreed upon. That is afterall how successful companies operate. There was no slack in the workforce, no dead wood, no one not pulling his or her weight; because if there were, you, as the CEO, would have dealt with it immediately.

Then the economy slows. As a result, demands on your sales force increases exponentially as it takes that much more creative effort to reach deal closure. These increased demands likely include internal reporting, more frequent status meetings, miscellaneous administrative duties (expense reports, etc...) and the need for more frequent customer calls. If anything, under these conditions, a well managed sales force is working harder than ever. Their plate is full.

Then the lay-off occurs. And, without any change in expectations or compensation you pile the workload from those laid-off onto those few who remain. Sounds kind of silly when you read it in print doesn’t it? How well do you think your clients will be served under these conditions? What impact will this approach have on your remaining talented workforce?

Here is how some owners/CEO’s explain away this action.

“Hey, you don’t understand, the work still has to get done.”

Or, “you don’t understand, they should be grateful they still have a job.”

Or, “you don’t understand, everyone has to make sacrifices.”

Though I fully understand things still must get done in tough times, I challenge whether sufficient effort was made to examine all tasks and determine which fall into the “critical must” category versus the “not as important”. Secondly, I will never agree with the notion of being “grateful for a job” - as if a job is some sort of charity. This is demeaning and insulting. A job is a business contract between an employer and employee trading compensation and benefits for an agreed upon service and performance expectation. Which leads me to the matter of “sacrifice”. Yes, sacrifice is and should be reasonably expected from everyone equally for an agreed upon period of time. It is when this “sacrifice” becomes the expected norm that the term exploitation comes to mind.

So what is the “right way”?

Have a plan and communicate it. Be honest with your workforce. Let them know the real story and share with them your plan for survival and recovery. Your employees are more perceptive than you think and are more likely to embrace your request for sacrifice if they know you have a plan. By doing this you instill confidence as their leader but more importantly you set the finish line or timetable for when things return to “normal”. Like distance runners who understand the importance of pacing and the timing of their “kick” to the finish line, your remaining employee’s can and will increase their pace as long as they know where that finish line is.

Be respectful and realistic. It is neither respectful nor realistic to tell someone he must fulfill his 40-hour assignment and that of the laid-off employee(s) with no adjustments to expectations or duties. Prior to any lay-off, take the time to analyze work expectations and decide what tasks are “must have” versus “nice to have”. Eliminate those you can so the remaining employees will concentrate on the important duties. Better yet is to bring the employee into the discussion. By doing so you may discover tasks you have imposed that have a much larger impact on their time than anticipated.

Finally, acknowledge their “sacrifice”. Let them know how much you appreciate them stepping up to the plate to take on the additional work (typically with no additional pay or benefits). Encourage them (and be sincere about this) to come to you if the burden gets to difficult. This will assure you have the opportunity to move work assignments around or take other measures to adjust workload before your customers or the internal operation is under-serviced.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Business Mistake #17: The “Possum” Strategy

News that home foreclosures are continuing to rise has put a wet blanket on consumer spending. The banking bailouts have not only shaken the confidence in one of America’s most conservative business institutions but it has also made precious credit for growth even more difficult to come by. And, on top of all of this, we have a new President about to take office with practically a one party Congress.

How is a business owner suppose to plan in this environment? If you are like most, you will freeze and resign yourselves and your company to whatever fate bestows upon you - hoping for hopes sake you can react quickly enough to limit the damage from the new market forces.

In psychological terms the act of “freezing” in the face of anxiety or danger is known as tonic immobility. It is a natural state of paralysis that animals enter, in most cases when presented with a threat. Though often proven beneficial in the natural environment, in the world of business, where time can be a costly enemy, this in-action can have grave consequences.

A quick calculation can show you the cost of a one month delay in reacting to a downturn in the economy. Let’s assume that market forces drove you to the difficult conclusion to reduce your workforce by ten employees. If these employees were making an average base salary of $60,000, then a one month delay in making this decision would cost you roughly $150,000. Two months, $300,000 in cash.

So, what is a business owner to do when faced with an unknown horizon. I have found from working with numerous companies that the unknown is really not that big of a mystery. The toughest task is usually finding the time for you and your leadership team to get away from the day-to-day chaos and really think about this. A facilitator may be helpful here as they are equipped with a wealth of information gathering and processing tools and can keep you focused on the task at hand. The goal is to identify the most likely scenarios you may be facing. Most, who complete this exercise, end up with a “good” scenario and then a “worst case” scenario. The rest are just variations in between.

The way to prepare for this exercise is to talk with others - your customers, suppliers, or clients and see what they think about the future. But try to be as specific as you can. Ask leading questions that will garner answers you can work with. It is one thing to hear from you customer that they are forecasting fewer sales next year. It is significantly more helpful to learn they are forecasting a 30% reduction in sales. Also, read your industry magazines and see what the editors are saying about the horizon. You’ll be amazed at what you can learn from all of these sources.

By writing these different scenarios down you will have taken the first step in establishing control over your company’s destiny by eliminating some of the mystery about the future. But writing this down is not enough. Creating a strategic plan for each scenario will provide you additional piece of mind - a script for each play. Defining the “indicators” that will help you judge which scenario is actually occurring and then watching for these signs will also further empower you.

Playing possum may work in the wild kingdom. In a good economy this in-action may result in your missing a business opportunity or two. But tonic immobility in a demanding and challenging economy, where every bad decision has exponential consequences, can be catastrophic.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com