There are many pressures on organizations to make the most out of every customer interaction and maximize the return on investment on marketing and sales spend. However, businesses often don’t have the work force necessary to handle these functions as timely and effectively as they would like or the tools and processes in place to measure and track success. Companies that are able to track interaction, engagement, investments and customer patterns and behaviors often enlist the help of a customer relationship management (CRM) tool.
“A CRM tool helps businesses manage sales, marketing and customer service operations without significantly expanding their work force,” says Gina Rosen, a consultant at Columbus. “CRM, in the past, may have been nice to have — a luxury technology, but in today’s marketplace, it’s a must have to stay competitive.”
Smart Business spoke with Rosen about CRM, its applications and how it has helped businesses improve processes to better engage customers, target sales and gauge marketing effectiveness.
What are the typical features offered by a CRM system?
The features offered by CRM are very diverse. It’s primary applications are contact management; marketing automation; sales force automation; sales and lead management; reporting and analytics; call center and case management, particularly with respect to customer inquiries or complaints; workflow automation, or automating manual processes; and social media integrations. Businesses have the option for on-premise solutions where the software is hosted at the business on its servers, or they can utilize a Web-based or cloud option, which involves less initial financial investment. The software can also be customized to meet the particular needs of a business.
Is CRM cost prohibitive for businesses?
No it is not, however, had this question been asked six or seven years ago the answer would have been yes. Previously, enterprise-ready CRM software required significant funds to get the software and hardware in place. But with the advent of cloud-based solutions, even businesses run by a sole proprietor can afford CRM and leverage its applications to optimize processes. The cloud-based model allows business owners to pay through subscriptions that charge per user. The pay per user cloud-based model offers a low-cost opportunity to implement CRM, experience the value and see the return on investment (ROI).
What are the most compelling reasons an organization would implement CRM technology?
A recent survey of 200 top-performing small and medium-sized businesses showed that the number one reason businesses implement CRM software is to establish data-based metrics for sales and marketing. It also provides the ability to show ROI and quantitative key marketing metrics that mean a lot to businesses.
The second reason CRM is implemented is to proactively communicate with customers. Customers expect a lot these days, and one of those expectations is that businesses, whether small or large, interact with them. To stay in front of your customers and offer personal interaction is critical.
Within that same vein, the third reason companies take advantage of this software is for custom-targeted sales and marketing. With CRM you can customize that end user experience, which makes your sales force more effective. Customers can interact directly with your CRM custom solution through your existing website and experience a tailored visit based on previous interactions, or your sales force can utilize the standard feature when interacting with customers and have all of a customer’s history available in one spot.
What are the most important value drivers for CRM?
The top value for a business is the software’s ability to help manage marketing and sales campaigns. CRM can help businesses test marketing and distribution strategies and gauge customer reactions. This information can be applied to future marketing efforts.
Another important value driver is that the software serves as a customer data repository, allowing you to consolidate customer knowledge within the organization in CRM. This includes far more than just contact details, but also customer behaviors and attitudes and price sensitivity. This, combined with personal data, can allow businesses to build more effective and predictive sales models and marketing campaigns that result in higher sales.
Further, CRM systems can help demonstrate ROI. With CRM you can quantitatively show increases in sales, customer referrals and participation in promotions.
What is the most common challenge a business faces when implementing CRM?
Typically the challenge is user adoption — getting your sales force and front line users to embrace CRM. They often see populating the fields as double entry, an extra step, or another way for management to check in on them. But once the sales force sees that using the software results in more sales, they can easily overcome that hurdle.
What are the most common performance metrics?
The top one, hands down, is revenue growth. The faster you can show ROI the better.
Second is growth in a business’s customer base, which means adding new customers or converting leads into paying customers.
The third most common performance metric is aggregating customer data. Many companies have customer data spread out over disparate systems. CRM gives businesses a one-stop shop for their records.
Can you give us some examples of companies that have benefited from implementing CRM?
The Toledo Mud Hens baseball team, which works within the media and entertainment industry, had ticket sales go up 88 percent in one year and their internal operations couldn’t keep up with demand. Adopting CRM allowed them to automate and streamline inefficient processes, which translated into more ticket sales. A customer testimonial is available with more information.
Another example is the human resources consulting firm Findley Davies. Implementing CRM in their call center has given them the ability to manage daily responsibilities and track productivity. It has dramatically changed and improved day-to-day operations within their Benefits Administration department.
Gina Rosen is a consultant at Columbus. Contact her at (248) 850-2195 or firstname.lastname@example.org.
With more than 20 years in the market and 6,000 successful business implementations, Columbus is a preferred Microsoft Dynamics business partner for ambitious companies. Columbus’ key deliverables include flexible and future-safe ERP, CRM, BI and related business applications that deliver competitive advantage and immediate impact.
Polly LaBarre is the co-author (with Bill Taylor) of “Mavericks at Work: Why the Most Original Minds in Business Win.” The strategies, tactics and advice in “Mavericks at Work” grew out of in-depth access to a collection of forward-looking companies. These maverick companies are attracting millions of customers, creating thousands of jobs and generating billions of dollars of wealth.
Here is a portion of my interview with LaBarre about the book, which covers forming strategies, unleashing ideas, connecting with customers and enabling employees to achieve great results.
Q: Describe what you mean by “maverick.”
A: Mavericks are different, edgy and independent of spirit. Their personal style or message may not appeal to everyone. But that’s precisely the point. Mavericks are defined by the power and originality of their ideas. They stand out from the crowd because they stand for something truly unique. What’s more, they take stands against the status quo, in defiance of the industry elite and offer compelling alternatives to business as usual. Mavericks may be fighters, but they’re not rebels without a cause. Their sense of purpose is not only powerfully distinct (Think: Southwest Airline’s quest to democratize the skies); it’s provocative and disruptive (Think: HBO’s declaration of originality, “It’s not TV. It’s HBO”).
Don’t confuse mavericks’ unswerving commitment to a cause and their lack of patience for the status quo with the egotism, monomania and power mongering modeled by too many celebrity CEOs and moguls. Mavericks, in fact, have a sense of humility.
Q: Are mavericks born or made?
A: It’s probably a little bit nature, a little bit nurture. We wrote this book to nurture the maverick in all businesspeople. What red-blooded working person wakes up in the morning, looks in the mirror and says, ‘I think I’ll stand for business as usual today’? We all want to make a mark, forge our own path and express ourselves in the world. It’s just that some of us need more of a nudge down that path than others.
Hopefully, the maverick individuals and ideas we present are inspiring and instructive enough to move people. The 32 companies we feature have vastly different histories, cultures and business models. We examined glamorous fields like fashion, advertising and Hollywood, as well as old-line industries like construction, mining and household products. The maverick leaders of these organizations are young, old, women, men, Americans, Europeans, charismatic and preacher-like, retiring and almost reticent. They just don’t fit any one mold.
Q: How does a maverick survive within a traditional company?
A: We encountered a bunch of mavericks inside big traditional companies. They all seemed to have a couple of survival strategies in common: They unleashed tough questions and critiques of their organization without losing their sense of loyalty to it. They’re the kind of questions every CEO should be asking. For example, Jane Harper asked of IBM, ‘Why would great people want to work here?’ And Larry Huston, now vice president of innovation at Procter & Gamble, argued, ‘The current business model for R&D is broken. How can P&G possibly build all of the scientific capabilities we need by ourselves?’
Mavericks don’t just ask questions, they act. We saw this again and again: They just got started, usually without a budget or formal permission, by designing an experiment around their question. Jane Harper launched an experimental Extreme Blue lab in Cambridge and spent a couple of years begging and borrowing resources until the program’s impact became clear.
Mavericks look for peers and fellow travelers outside the boundaries of their company. Not surprisingly, mavericks tend to click when they meet other mavericks. They’re great networkers and learners and are always looking for kindred spirits for support and ideas.
Q: Who is the quintessential maverick in American business?
A: Herb Kelleher and the team at Southwest Airlines. In the midst of the financial carnage and heartaches of the airline business, there’s one company that keeps growing, keeps creating jobs and keeps generating wealth. And that, of course, is Southwest. Southwest didn’t achieve these results because its fares were a little lower than Delta’s or its service was a little friendlier than United’s. It achieved those results because it reimagined what it meant to be an airline. If you ask Herb Kelleher what business he’s in, he won’t say the airline business or the transportation business. He’ll say that Southwest is in the freedom business. The purpose of Southwest is to democratize the skies, to make it as easy and affordable for rank-and-file Americans to travel as it is for the well-to-do. That’s a pretty commonplace idea today but largely because Southwest fought the entrenched conventions of the industry so doggedly in pursuit of that purpose. Its unrivaled success is based on its unique sense of mission rather than any breakthrough technology or unprecedented business insight.
Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, and The Art of the Start. He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at email@example.com.
It seems that every other week there’s a major story in the media about a company claiming that one of its competitors has purloined a cherished secret that provided an unfair competitive advantage. This is all part of running a business in today’s fishbowl environment, where sensitive information is too abundant and can be obtained by almost anyone and everyone who is so inclined.
In this era of heightened visibility, some of the best companies, especially high-tech firms, play everything incredibly close to the vest, particularly when it comes to providing information about current sales trends, new products and projects that they are exploring or developing. This is because such information is a coveted company asset. In today’s “victory at almost any cost” world, too many are looking for that edge to leverage whatever they can to stack the odds in their favor.
We also read too frequently about how easily these secrets have somehow wound up in the wrong hands. Sometimes a loose-lipped employee simply talks too much to too many people in the wrong places. Occasionally, someone simply leaves a briefcase or smartphone, jam-packed with confidential information, in a bar, at a restaurant or on a plane.
What’s not talked about much is the frequent practice of competitors simply asking what appear to be innocuous questions of lower-level personnel in a company in order to garner nuggets of “inside information” usually without risking the perils of violating any legal statutes. It’s also common practice for Wall Street security analysts to simply walk into a retail store, as an example, and begin asking questions about trends, what products are selling and which aren’t. It all gets down to the reality that it never hurts to ask a question because one never knows when a valuable tidbit will be revealed.
Like it or not, this is just the way it is, and there will always be people who ask and others who tell. What can you do to protect your coveted information? The answer is basic: mandate that providing revealing responses to specific questions is a violation of company policy and could result in draconian consequences for anyone who spills the beans, no matter if well-intended. Once your employees and suppliers know the ground rules and the consequences, you’re one step closer to closing the possibility of vital information inadvertently slipping through the sieve.
The best way to accomplish this is to establish, enforce and continually reiterate a “one voice, one company” policy. This translates into all hands within your organization knowing what can be told to outsiders and, more importantly, what can’t. This policy must be in writing and must state what types of questions are off limits. It must also explain how the questioner is to be handled when the interrogatory is posed. In my retail chain experience, we often had competitors, vendors and industry analysts visit stores and ask all types of questions. Candidly, I don’t blame them, but with a clearly understood policy, employees know how to respond by referring the questions to headquarters and a specific department or individual. Ninety-nine percent of the time the person asking the question never follows up with the corporate office because he or she knows the desired answers will not be forthcoming.
Most employees want to please their employer and most want others to think they are in the know. When you create an ironclad policy, it takes the pressure off of your people and adds another layer of security about things no outsider needs to know. For your suppliers, require that each sign a confidentiality agreement and specify that you have a simple “one strike and you’re out” policy. Also use your own secret shoppers to test your vulnerability by having them ask the forbidden, just to verify that the company veil is not being lifted by the unauthorized.
This protocol is certainly not foolproof, and periodically, there will be lapses — the most frightening of which are the ones you’ll never learn about. It all gets down to a numbers game. Confidential information, just like the cash, equipment and other assets on your balance sheet, can never be taken for granted and must be protected. Anyone can look in your fishbowl in this day and age, but it is your job to make sure that what they think they might find is not what they get.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at firstname.lastname@example.org.
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Are we grateful for the things we have? Are we grateful that we live in a country where the government can’t seize our businesses, where there’s no threat of rebellion and where we can go home to the comforts of our modern homes?
Many people in the world don’t have any of those luxuries. Some can’t even look forward to a good meal or clean drinking water. Most of us here in the United States don’t have to worry about such problems because the people that came before us worked hard to create a nation that has an amazing standard of living. The generation before us rose from the troubles of the Great Depression, led the fight against Nazi aggression that killed millions and returned home to finish making America into a superpower, but do we ever pause to think about the contributions our mothers and fathers made to make things easier for us today? They lived in small houses, often sheltering multiple generations, and worked long hours to make a better life for their children and grandchildren and selflessly went off to war to protect our freedom.
Do we ever think about any of that? The answer for many is no. Gratitude is in danger of becoming a lost art as we focus on accumulating money and possessions, always looking to be better or richer than the next person.
How many times have you read about or talked to someone who had everything you could ever ask for — nice home, nice car and no money problems — lamenting the fact that he or she doesn’t have as much as or more than someone else? We sometimes catch ourselves comparing who has more instead of who has less.
As business leaders, we should have some sense of moral obligation to help those within our sphere of influence, whether it’s our peers, employees or the person who lives down the street. We should be doing our best to look out for those around us, but too often, our days are consumed with the details of business.
Our world may be built on information, but wisdom is lacking. Business has been boiled down to statistical analysis and quarterly earnings reports while people are just another line on the ledger. There is often little room for gratitude in corporate America, and that’s a shame.
When our focus is on accumulating things, we can never enjoy it, because we don’t know how. How can we enjoy something when we’ve already raced off to try to get more? Like a kid tearing through a pile of Christmas presents, we never really take the time to appreciate each gift.
In this season of giving thanks, we should take a moment to think about those who came before us and who helped us get to where we are. Let’s thank those around us for a job well done and consider reaching out to someone who could use a helping hand. But most importantly, let’s consider putting our lives in perspective by thinking about those who are less fortunate.
When we focus more on gratitude, we’ll make a difference that’s far more effective than any business plan. It will allow us to take the time to celebrate success and enjoy the fruits of our labor. Gratitude doesn’t require a giant donation or a huge event; sometimes the little things are more effective.
In the end, we’ll find that the only things truly worth accumulating are good will and happiness. It’s in our control to start helping everyone around us get their fair share, and that’s something all of us can be thankful for.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
More than 13.4 million people are currently working from home, according to the U.S. Census Bureau. The challenging economy has forced employers to cut back on costs, such as office expenses, and let people work remotely. There’s also evidence that those unable to find traditional jobs are earning a living by starting home-based businesses and work-from-home businesses.
In order to be successful at telecommuting, an employee — or even a home-based business owner — needs to have the right phone equipment.
“When a client is contacting you, you want to put your most professional foot forward,” says John Putnam, vice president of direct sales at PowerNet Global. “You don’t want your client to see that you’re sending calls to people working from home; you want them to get that same professional experience, regardless of where that call is being taken.”
Smart Business spoke with Putnam about how the right virtual phone technology can ensure a seamless transition from the office to home and back again.
What are some of the advantages that can be found with telecommuting?
It reduces cost. Employees don’t have to drive to work, avoiding wear and tear on their cars, paying for gas and spending time stuck in traffic. Business owners don’t need as much space in their facilities and can reduce the heating, air conditioning, electricity, etc., that go along with having that person in your building.
Another advantage is flexibility. When a client calls on the East Coast at 7 p.m., you can route those calls to someone’s home or someone on the West Coast, giving business owners the ability to expand their service hours.
It’s also a recruiting tool. If the employee is disciplined and can do the work from home, it gives him or her the opportunity to work flexible hours that fit better into his or her schedule.
Why do employers need to ensure telecommuters have the right phone technology?
Along with having a dedicated workspace, telecommuters need technology that doesn’t limit their ability to do their jobs. With a home phone, someone within the household could pick up a phone and interrupt a call, and a cell phone only gives you the ability to answer and place calls. A cell phone also has more of a chance to be used for personal calls or get lost or stolen.
With a dedicated work-from-home handset, you have the ability to transfer calls, put calls on hold, place conference calls and create hunt groups that select which of several phones will receive the call. This creates the appearance of the telecommuter being at your facility, while providing customers with a more professional experience.
Using a home or cell phone can lessen the client experience. A prospective client may even think twice about giving you their business because of questioning your company’s level of commitment. The prospect might think, ‘If this guy is working off his cell phone, is he really in business or is he just doing this until he finds something better?’
How does this phone technology create efficiencies for telecommuters?
With a premise-based IP or a hosted IP private branch exchange (PBX), phone handsets can be used anywhere in the world, as long as you have a high-speed Internet connection. With both of these solutions you have all of the business-class features unavailable on a cell phone.
There’s also a higher level of accountability with a phone system that is tied back to the company. The service provider can put limits — such as limiting international calling and the time of day that the phone is in use — on that phone versus just handing someone a cell phone. Also, if an employee uses a personal cell phone, it can raise questions about them receiving business calls after separation from the company.
How expensive are these types of phones?
It’s not that expensive. For between $25 and $35 per month, you can lease an IP PBX handset and get phone service. The company gets a more professional experience for clients that makes that expense easy to justify. Otherwise, the company would be paying for a cell phone or reimbursing for a home line at the same cost, with fewer features.
How will phone technology continue to assist with telecommuting in the future?
As more applications continue making it ‘into the cloud,’ it makes telecommuting even easier. The applications a person needs to do their job — whether voice or data related — are getting taken off office computers and phone systems, so it doesn’t matter where you are located to access those resources.
As more companies replace their internal phones with an IP phone system, it also gives employees the flexibility to work from home part of the week, for example, by taking their phone home and then bringing it back to the office. They can move that handset to anyplace with a high-speed Internet connection, working as if they were in their office. Employers get the best of both worlds by giving employees the flexibility of working from home one or two days per week, while keeping the same phone system and having the accountability that comes from seeing them daily and knowing they are working.
John Putnam is vice president of direct sales at PowerNet Global. Reach him at (866) 764-7329 or firstname.lastname@example.org.
Insights Technology is brought to you by PowerNet Global
As a business partner, a lender should understand your business and its needs, says Mike Dalton, vice president of commercial lending at National Bank and Trust. But often business owners don’t consider other banks until they have a problem.
“In a lot of cases it just gets to be old habits. ‘This is what I’ve done since when I started my company. I see no reason to change.’ But quite often there is a reason to at least look at another bank,” Dalton says.
Smart Business spoke with Dalton about how to evaluate your banking relationship to determine if you should switch banks.
What should you consider when choosing a bank, and how often should you re-evaluate where you bank?
There are three categories you need to look at:
- The relationship you have with your contact person.
- Do the products and services the bank offers fit your company’s needs?
- The stability of the bank, both from a financial standpoint and its direction.
At least every few years you should look at some options. If you have specific concerns with your bank, then that’s always a reason to re-evaluate.
What questions should you ask when reviewing a bank?
The important thing is to go back to those three things previously mentioned. You want to look at the relationship you have with the individual you’re going to be dealing with because your lender is truly your business partner. You need to have a good communication stream. Look at his or her background and experience. Does he or she have experience in your industry?
How do you determine what you need from a bank?
That falls back to the relationship; a good lender is going to ask you about your business. If you have a lender that’s just an order taker, that wants to ask you if you want fries with that Big Mac, then you’re probably with the wrong person. You need somebody that’s going to ask you about what products and services you use, what kind of pain do you have in your business. If there are needs that aren’t being met, a good lender can come up with solutions — a product or service that would make something easier for you and your company.
For example, a prospect comes in, wants a loan and provides financials. He or she may be overextended or can’t get what he or she is looking for, so the prospect and the banker need to have a conversation. The banker should tell the prospect, ‘We can’t meet that request right now but here’s a path to get there.’ Commercial lenders especially need to be an adviser for your company, by saying ‘Here’s another way of doing it.’ Or, the lender could help with a plan to get your balance sheet or your income statement in the condition it needs to be in.
The first thing a commercial lender should do with a new customer is sit down with the business owner. Financials aren’t always discussed in the first conversation. It’s more about developing the rapport and getting to know each other. For the banker, it’s about learning the business that you’re in and what you’re looking for in a bank.
What should you look at when evaluating a bank?
A majority of banks are publicly traded companies. Look at their annual reports, the balance sheets, etc. If they’re not a public company, go into the bank and ask to see their reports. The best way is to consult your CPA or attorney and ask for a referral. Your CPA is always a good referral source in that aspect and a good first step.
How do you know a bank will stick by you in tough times?
That’s an impossible question to answer, unless you know someone who has been a client at that bank and gone through a hard time of their own. No banker is going to tell you that if it’s tough times they’re going to ask you to leave the bank, but there are certainly some banks with that history. Ask your individual lender if they have other clients that are experiencing difficult times; how did they interact with them and what was the result of that transaction? Any commercial bank will have had a couple of different clients that have been through some very tough times in this down economy; so, did they work with them or find a way to get rid of them?
How important is it to have loan decisions made locally?
It makes a big difference, as opposed to an underwriter halfway across the country strictly looking at the numbers. When you deal with a local bank, local people who know your market and conditions make decisions. If there are questions they can come out to your facility and sit down with you, rather than you having to go to them.
Should you start a banking relationship before you have a pressing need?
When someone comes to a bank with pressing needs for equipment or an expansion, it could be a red flag. It may seem as if the company wasn’t planning ahead for this need. Or, maybe the bank it was with didn’t want to finance the project. If you think you might have a need coming up that your bank can’t meet, start looking. Think about how often you talk to your banker. If you’re not having regular conversations and they’re not meaningful conversations, then you probably have an issue. As banks, we like to do business with people that we know, so developing a relationship is important.
Mike Dalton is vice president of commercial lending at National Bank and Trust. Reach him at (937) 382-1441 or email@example.com.
Insights Banking & Finance is brought to you by National Bank and Trust
Family businesses typically enjoy employee loyalty and deep-seated pride because the family and the business are one and the same. However, with those advantages come certain risks.
“I tell people often, family business is the best and the worst form of business,” says Jonathan Theders, president of Clark-Theders Insurance Agency Inc. “You’ll do anything for family. It’s always amazing to me how family businesses aren’t run like typical businesses.”
Theders says 90 percent of the businesses in the U.S. are family businesses — a massive segment of the economy.
Smart Business spoke with Theders about the unique risks these businesses face and how to mitigate them.
What unique risks do family businesses have to consider?
One is an informal or complete lack of company policies or business plans. You should document your responsibilities and expectations for each family member in a family charter, but it is rarely done. It might be called an employee handbook in a typical business. If someone doesn’t perform in a regular business, you remove him or her, but it’s hard to do that with a family member.
At the end of the day in a typical business, the employees go home. But you can’t always separate the family business from the family. On holidays or birthdays, it is still business. You also know more of what’s going on in their personal lives than you would know with regular employees, which can pose challenges.
The majority of a family’s assets are tied up in the family business. Everything links to it, and it’s the source of all good and frustration. Divorce, illness and financial hardship normally create productivity issues for employees, but in a family business, it’s more complicated. You have to consider who owns shares of the company and the valuation of those shares. Maybe the business was worth $100,000 when the founder got married, but now it is worth $1 million and a soon-to-be ex-spouse is entitled to half of it. Where is that half million coming from? It’s probably coming from the sale of the business because the founder doesn’t have half a million in cash to pay off the divorced spouse.
If you have HR policies and procedures for general staff for sick days, absenteeism, behavior and dress and a family member is not adhering to those same standards, it also creates problems.
How do you handle special treatment concerns?
You have to be extremely cognizant of how you treat and compensate family and non-family employees. Make sure you are consistently selecting the most qualified individuals to fill roles in the company. This is a huge problem, because most of the time companies fill holes with family members that are not performing as well and other employees subsidize that. Take the family aspect out of it, and it could be easier to have the right people on the right seat on the bus.
How can you mitigate the risk of unhappy employees who are also family members?
If a normal business’s goals don’t match up with an employee’s personal goals, that employee can find a new job. It’s not as easy in a family business. It’s difficult to tell a parent you’re leaving or tell a child, ‘You’re not right for the business.’
That added family dynamic makes failure much more intense, and why it’s important to devise a plan that balances the family goals and business goals. For example, one family business had 70 employees; 36 were family members. The matriarch mom believed everybody with the same last name should be compensated equally whether they were pushing a broom or the president of company. That causes major problems when you have such differences in roles and responsibilities and abilities. Everybody wants mom’s wish to be true, but it doesn’t make good business sense.
How can you stop family conflicts from bleeding over into the business?
The adage ‘Leave your personal problems at the door’ doesn’t apply in a family business. It’s too difficult to separate family and business conflicts.
There’s a lot of sibling, and even cousin, rivalry. You grew up fighting for the last piece of chicken or the last point on the basketball court, and it continues on when you come into the business.
It’s unrealistic to believe that all family conflict can be removed from business, but you have to work harder at establishing those boundaries. Understand the potential family conflicts that can come up and try to address them ahead of time.
Family decisions are often extremely emotional and irrational. One recommendation is family council meetings that encourage members to get together and talk about where the business is, estate planning and other long-term issues. A third-party moderator often needs to be involved because it is so emotional. Another way is involve your board of directors or advisers, which brings an objective view to company performance and future strategy.
How are the transition risks different in family businesses?
The failure rate of businesses moving to the second generation is very high. Statistics show that 85 percent of family businesses don’t make it to the third generation. That’s often because the first generation has trouble letting go or hasn’t prepared the second generation to take it to the next level.
Often, family business owners do not have succession plans or an exit strategy. At 70 or 80 years old their entire personality, their every breath is related to the company; they’ve put 40 to 50 years in, through hard times and good times. They don’t know how to get out, but they are not the ones to lead it into the future.
Jonathan Theders is president of Clark-Theders Insurance Agency Inc. Reach him at (513) 779-2800 or firstname.lastname@example.org.
Insights Business Insurance is brought to you by Clark-Theders Insurance Agency Inc.
This is Part 2 of two articles addressing the trials and tribulations of a company’s growth and development. Part 1 described how the gun slinger role helps drive growth in the early stage of a company’s evolution. The gun slinger is the person who challenges the status quo, the one who takes risks to blaze new trails. They are often the one who leads the company through challenges or troubled times.
In Part 2 of the story, William F. Hutter, president and CEO of Sequent, describes what happens as a company matures and grows.
“When the original entrepreneurial spirit begins to wane, the gun slinger is no longer welcome,” he says. “Questions emerge that spark a re-evaluation of what led the company to where it is today.”
Smart Business spoke with Hutter about how the trailblazing gun slinger might no longer be welcome in a company leadership role.
How does a company’s growth affect leadership?
After a company’s early-stage success, the leadership often begins to question ‘what got them here.’ This questioning and re-evaluation process usually leads to a revelation: ‘We need to move from an intuitive approach to one that is more prescriptive.’
This shift toward structure requires different skills. As a result, what had been the company’s strength is now seen as its weakness, and the early-stage leaders start to look like a bunch of rookies. So the re-evaluation questions begin to foster a need for change, which in turn produces two separate and distinct outcomes — one that is intended, and one that is not.
What is the intended outcome of the growing company’s re-evaluation?
Committees are formed to bring together seemingly disconnected pockets of knowledge from different functions or different departments around the company. The objective is simple — to create the most efficient operation between each of the moving parts of the company. In order to break down barriers and miscommunication, each function identifies how to best do its job as a way to complement other departments or to help the next stage of the process by making sure its job is complete. The process of identifying the skills, talents, and responsibilities of each person and/or department can be a long-term commitment for any organization. This effort helps document and validate the business systems that have materialized out of necessity. The systems and processes that have allowed the company to get to this point in its growth are now challenged and possibly changed in this reconstruction stage. It is at this point that the following questions could emerge:
- How can we improve?
- Why does this or that happen?
- Do we need more forms?
- Shouldn’t everything be consistent?
- How does this business delivery system meet compliance standards?
- Who can we get to help us?
All the while the business has not stopped, new deals are made, clients are serviced, inventory is delivered and bills are paid. But now there is a group of people from around the company trying to analyze the existing systems and processes while getting the day-to-day work done. It begins to look like a group trying to change a flat tire on a moving car.
So, who participates in the reconstruction process? Certainly not everyone can participate. It is usually just a select group that begins to determine how to improve existing systems and processes, documents the suggested improvement (changes), and communicates the same to the various people and departments impacted by these improvements.
Sounds like a perfect scenario, right? People are coming together working on a common goal to improve the organization. But there can be a dark side. Those who are not included in the reconstruction process begin to question and wonder, ‘What are they talking about? How is it going to impact me? Why is he or she in the meeting?’ Then the unintended outcome happens.
How can creativity unintentionally dwindle with this kind of reconstruction?
The reconstruction process is the intended outcome that companies often see as they transition from the early stages of development. However, there’s an unintended outcome — the death of creativity.
This unintended outcome doesn’t just happen one day, it occurs gradually. Over time, the activity of identifying and defining the systems and processes begins to create structure for the company. Management uses this structure to evaluate employees against a standard of processes and systems. However, in the business environment, especially within the service sector, it is very difficult to establish a standard because the variables are constantly changing. Customers are continually challenging the standards. While this looks great on paper, service providers need to constantly change to meet their customer’s needs, which often results in a continual process of customizing to meet those needs.
With this loss of creativity, how are company gun slingers impacted?
It is nearly impossible to build a system or process for every situation or circumstance. When a company tries to do this, it affects the accountability of the individuals in that culture. This leads to a culture where decisions are oriented around risk, not service. The result is a culture built on ‘do’s and don’ts’ driving decisions rather than a culture that embraces creativity and thought leadership to guide decision-making.
I’ve seen this many times — it’s the companies where the people with the strongest voice are the people who follow the system, not those who lead. A fear of voicing an opinion, asking a question or taking leadership fuels an undercurrent of negativity and squelched creativity. And, in the end, it’s the gun slinger, those who aren’t afraid to question the system and challenge the status quo, who pay the ultimate price of this new approach. In the end … the system kills the gun slinger.
William F. Hutter is president and CEO of Sequent. For more information, visit www.sequent.biz. Reach Hutter at (888) 456-3627 or email@example.com.
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James Wendle and EQM Technologies & Energy Inc. are largely reliant upon government spending to drive business. However, with the lack of funds and resources from the government recently, Wendle has had to resort to alternative ways to keep the company flush.
EQM is a $75 million, 240-employee sustainable solutions company that provides consulting and technology to business and government. Wendle became EQM’s president and COO in 2010 after the board brought him in to help grow the business.
“What I bring to the table is accountability and know-how in the construction and the engineering world and growing more on the engineering side and developing that part of the business to get us more diverse,” Wendle says.
That diversity is what Wendle expects will ease EQM’s reliance on government spending. His acquisition strategy is to find companies that will get EQM into different aspects of the environmental and engineering industries. Most recently, EQM, which at the time was Environmental Quality Management Inc., merged with Beacon Energy Holdings Inc. in 2011 to become EQM Technologies & Energy Inc.
“The Beacon merger was a reverse merger,” Wendle says. “Beacon Energy gives EQM an added benefit that wasn’t there before.”
EQM has five different divisions that give the company a wide range of capabilities. Now Wendle is searching for the next company that will bring added value to the business.
Here is how Wendle is diversifying EQM through mergers and acquisitions.
Look for opportunity
EQM was looking to broaden its business and get into an industry that it wasn’t in yet, but one that was similar to the work it did. The company came across Beacon Energy Corp., a biodiesel production business.
“The plant was sitting idle, and we had a strategy that we were going to restart the plant, which we did, and be in the biodiesel business, which we are, and the plant is running now,” Wendle says. “It helped diversify us.”
Wendle and EQM put together an acquisition strategy that focused on finding companies in the engineering business and environmental services business that would help the company grow.
“Growth is an expectation,” he says. “It’s not something that you just do by mistake. Growth of companies is what’s expected, and it’s expected by our board. Growing organically can be difficult, and I think a lot of companies are experiencing that.
“So with our equity partner, we have a company that is an expert at it. They’re on a constant search, and raising the capital to make the acquisitions is something that they do every day and they’re very good at.”
In today’s market, if you’re going to grow, you have to look at growing both through acquisition and organically. If you grow through acquisition, you have to understand the business you’re interested in.
“We set up a model of companies that are in a certain range of what their revenue is, what their margins are, how we can be more of a strategic acquisition and what synergies there are,” he says. “If we merged, how can both firms benefit from it? It is something that we need to know something about. We’re not going to buy a company we have very little knowledge about.”
The other part of acquiring a company is what leadership comes with it.
“That is just as important as the company itself, because we are constantly looking for leaders and leadership,” he says. “When you acquire a company, you also acquire the leadership and you have to look at how those leaders can help you grow in other areas.”
One of the most challenging aspects of the acquisition process is not losing sight of your current business.
“You have to align yourself with a private equity company that can assist you in your search, because it can be very distracting, not only for the buyer but for the seller,” Wendle says. “You have a business to run while you’re doing all this and you want to keep your eye on the ball.
“I’ve seen sellers particularly get so distracted through the process that they don’t watch their business. You have to stay focused and keep your eye on the ball. Don’t get all consumed in an acquisition potential.”
Wendle understands how difficult a merger process can be, so he makes sure he is as helpful to those involved as he can be.
“That’s the way I develop a relationship with the people, because it is a relationship,” he says. “If the process goes well, then the closure is going to go well. It can’t be adversarial. It needs to be very friendly and very professional. Instead of looking at it like you’re out there buying assets, you should look at it as you’re being an advocate of the seller’s and you’re helping them sell their business.”
Integrate the merger
Once a deal is made to move forward with the merger and you’ve gone through and agreed on terms and produced a letter of intent, then you need to go through due diligence.
“We’re really trying to understand more and more about the company and they’re trying to understand more and more about us,” Wendle says.
“The integration actually starts in the due diligence process. You want them to learn as much about you as you learn about them. You want them to learn about what your benefits program is. The key for owners selling is how are my employees that I hired going to be treated.”
EQM gets its HR department involved to look through the merging company’s benefits program and matches it up with theirs.
“Typically ours is going to be overall in a better position, so the new employees are going to benefit from it,” he says. “Then it’s integrating the financial packages or the business systems. How do we communicate financially? Rarely do the new companies coming in have the same types of systems that we have.
“From there, we really try not to make changes. Any changes we have to make we want them to go slowly. What’s working obviously has been working and the last thing you want to do is keep it from working. You want the leaders and the employees to keep on doing what they’re doing.”
In a merger process, there are two sides: a legal side and an emotional side. The due diligence process focuses primarily on the emotional side.
“The legal side is pretty cut and dry,” Wendle says. “The emotional side is more cultural. What kind of culture are they coming into and how comfortable do they feel with it? I start explaining that once I first meet a potential acquisition candidate.
“For someone who’s going to sell their business, it’s a very emotional process and they have to be very comfortable with it. You have to pay attention to how you get the cultures to integrate and whether they feel they still have autonomy.
“That’s the one thing about running your own business that’s good, but now they’re part of a much larger organization and they have more potential for growth.”
Making this transition successful relies on strong communication between the two companies, specifically among leadership.
“You cannot communicate enough,” he says. “We have town-hall meetings. We have staff meetings every week. Each business unit has staff meetings every week and you’re just trying to keep the lines of communication open. It really comes down to employee engagement and whether the employees feel that they have a say and whether they’re being listened to.”
While cultural alignment is a big part of making a merger successful, there still has to be a good fit in other aspects of the business.
“Cultural alignment isn’t necessarily more important, but it is as important,” he says. “There still has to be intrinsic value and what the company brings to the table as far as net income. There has to be value-added services that customers want to buy. What I find is if employees have the right attitude and they’re happy, then they have a pretty good customer base. They walk hand in hand.
“If the employees are not happy, customers are going to hear about it because there are close relationships between the employees and the clients. And vice versa, if our client’s employees aren’t happy, we hear about it.”
EQM’s strategy is to leave the incoming company alone to continue the work it was already doing. You have to make a judgment call whether or not to make any changes to a company you’ve acquired.
“There are two aspects of it,” Wendle says. “When we look at a company we look at the brand. Most the time the companies that we acquire have a good brand and we want them to keep that name and that brand and operate it as a subsidiary, unless it is parallel to one of our business units and our brand may be stronger than theirs.”
Develop a strategy
The key to being successful at acquisitions and mergers and with the growth of your business in general is to have a strategy with goals that you hope to achieve.
“I think the business changes so fast that you can have a five-year plan, but to really put tactics behind that strategy is very difficult to do because it changes so fast,” Wendle says. “It’s been my experience that if you look in two to three years, you’re going to have a better chance of meeting your goals and putting more realistic goals out there. We’re in a different climate now than we were in four or five years ago. We’ve all managed downturns and now we’re trying to grow.”
Wendle is looking to keep EQM doing more of the same it did with Beacon Energy Corp. He is focusing on the private side more so than the public side.
“My belief system is that private industry is not investing in itself right now so there is a pent-up demand for capital improvement and industries are hoarding cash,” he says. “And I don’t think it’s going to matter who the president is, companies will start spending money on capital and start investing in themselves again. The first companies that private owners spend money on are environmental and engineering companies. We are going to be positioned to be there when companies start spending on themselves again.”
One of the biggest aspects of laying out any kind of growth strategy is the need to constantly change to stay ahead of competition.
“Presidents and CEOs have to constantly be looking to reinvent themselves and reinvent their companies,” Wendle says. “I think that the business moves so fast in the world we are in that you cannot restrict yourself geographically and you really have to reinvent yourself every three years.”
Part of that reinvention is attracting entrepreneurial people to your business to keep ideas fresh.
“To really look at new services, one of the keys is hiring entrepreneurial leaders in your company and creating a culture and environment that allows people to think freely and say their mind and be able to put strategies together without being frowned upon,” he says. “You have to create that kind of culture of growth … and have the right kind of people to create that culture.” <<
How to Reach: EQM Technologies & Energy Inc.,
(800) 229-7495 or www.eqm.com
- Acquire companies that will allow you to grow.
- Integrate the acquisition by developing a relationship.
- Develop a growth strategy with two- and three-year goals.
The Wendle File
President and COO
EQM Technologies & Energy Inc.
Born: Alton, Ill.
Education: AAS degree in architectural engineering and a B.S. degree in construction management from Southern Illinois University.
What was your first job and what did you learn from that experience?
When I was 10, I swept hair in a barber shop and I also had a paper route. I was raised by parents who were born in the Depression. I was taught that if you worked hard everything would be fine. So I always had a job and I always had money. It’s about the work ethic. I knew I could get a job if I could prove I could work hard. People would want to hire me.
Who is somebody you look up to in leadership?
Abraham Lincoln. The man failed so many times. He had no way of becoming president of this country because of all his failures, but he did and he was the right president at the right time. Another man that had so much against him at the time was Winston Churchill.
What is the best advice that someone has given you?
I was taught by the CEO of the first professional job that I had to be friendly and be professional, but don’t be abused. Don’t let anyone treat you poorly. Stand up to it no matter what.
If you could do something dangerous one time without consequence, what would want to do?
I would ride my Harley through the Alps.
I recently received a very pleasant note from one of Cincom’s new customers who spoke of the software buying cycle he had just helped lead his company through and offered some words of thanks to the team of Cincom employees with which he had worked.
This customer had read a portion of my writing, which focused on a sales process as a “buy cycle” and being a “servant seller,” which I’ve discussed in previous columns. He also let me know that he saw the main values that I hope every Cincomer embodies — character, competence and commitment — in the employees with which he worked.
We have framed the following value statement at several places at Cincom, and we want all Cincomers to exhibit it:
“Character to act on our beliefs, competence to achieve our goals and the commitment to see them through.”
These core values drive productivity, resulting in profitability and sustainability for the benefit of Cincom and our customers. As an employee or an employer, they are essential minimums. But what do they really mean?
Character includes trust, honesty
Character is embodied by the behaviors and values that elicit trust and commitment. It is doing the “right thing” in a professional manner.
We make these demands of each Cincomer as it promotes an emphasis on seeking solutions instead of casting blame. It leads to a culture of saying “yes” instead of “no” when working toward a solution.
Hiring people with a good character allows you to foster an environment where honest communication is encouraged and differences of opinion are allowed. This is great for internal employees, but it also helps your customers because your dedication to seeking solutions will allow you to provide a high level of service.
Competence is business acumen
Competence is the business acumen and the knowledge required to manage the various functions of any organization.
A truly disciplined organization will continuously learn and consistently apply the best methods to achieve its goals. I’ve strived to make Cincom one such organization over the past 44 years by encouraging entrepreneurial ventures and allowing people to have the opportunity to grow and learn both in their positions and in other areas of the company in which they may be interested.
It is important to allow employees the freedom to fail. To truly have an initiative of self-growth in an organization and live up to the value of competence, employees must feel safe when proposing new ideas or attempting new skills.
You drive with commitment
Commitment may be the most important of the three core values. While it alone cannot be a measure of success, committing to a goal or idea provides the drive or force that will compel a company forward.
I’ve always looked at the value of commitment as a promise to do what has been asked and provide whatever assistance is required to meet a shared commitment.
This commitment can be a pledge to fellow co-workers, the community in which your company is located, or your customers and prospects. It is part of the character of saying “yes” first and always seeking a solution through competent business acumen.
As you can see, each of these three core values is a great trait to possess on its own, but the three work best together. A truly successful organization will be composed of committed individuals who have the competence to continuously seek to learn and the ethical integrity to work in an honest way.
I have been lucky enough throughout my career to employ hundreds of amazing people who embody these values to the fullest. And their importance cannot be summed up by more than that customer who wrote to me: Products don’t win sales cycles, people do.
Do you have the right people on your team? <<
Thomas M. Nies is the founder and CEO of Cincom Systems Inc. Since its founding in 1968, Cincom has matured into one of the largest international, independent software companies in the world. Cincom’s client base spans communications, financial services, education, government, manufacturing, retail, healthcare and insurance. Website: tomnies.cincom.com/about/