U.S. Marine Corps Capt. Juan E. Rose III lets his military experience provide perspective when considering the task of balancing work, school and family life.
A student in the Executive MBA program at the UCLA Anderson School of Management, Rose’s leadership qualities earned him a John Wooden Global Leadership Award Fellowship. At the award ceremony, he was asked how he manages his busy schedule.
“When I met Pepsi CEO Indra Nooyi, she said, ‘You’re a Marine on active duty in San Diego, you go to an Executive MBA program in Los Angeles and you have a family in Murrieta, Calif. How do you do this?’ I commute 40,000 miles a year and I’m working hard and learning every single minute. But my Marines and I are not getting shot at, so it’s OK,” Rose says.
Smart Business spoke with Rose about the MBA program and how it’s helped prepare him for entering the business world when he leaves military service.
Why did you enter the MBA program?
After 10 years of active duty, I’m looking to transition to the private sector and I’m using the MBA program to couple the leadership experience I have with more technical knowledge.
I’m a financial management officer in the Marine Corps; however, finance in the private sector is for-profit, levering debt, and managing, maintaining and acquiring assets. As a government-certified defense financial manager (CDFM), I’m more preoccupied with safeguarding and disbursing public funds, while accomplishing the mission with minimal resources. Profit is never a conversation we have.
How does the profit motive change things?
Profit stresses people in completely different ways. I’ve been afforded the opportunity to work as a consultant recently, and I’ve been working with a couple of clients as a student. I am learning every day that people manage risk in order to maximize profit; Marines manage risk in order to save lives. It still seems to me that if you focus on your employees — an invaluable asset — while managing risk, profit maximization will be a result.
To me, profit just changes the perspective. When you’re managing life or death situations, losing money is not as important. As a leader you can then focus on learning from the mistakes to ensure you and your team doesn’t allow that to happen again. The complexity of defense financial management in the military comes from the environment and the mission, not the application of financial assets.
When you start using debt and trying to maximize profit at all costs, there are a lot of strategies and different ways to do that. That’s what I am trying to obtain from the MBA program and so far it’s exceeding all of my initial expectations.
What type of job will you seek after graduation?
I’m leaning toward management consulting. It will give me the opportunity to work in teams and continue to learn about industry as a whole in several different arenas.
It’s important for me to bring value to a company that values its people and affords them the opportunity to be intellectually challenged. My No. 1 priority is to work in a company that gives back somehow.
My long-term goal is to be a professor and to continue to coach, mentor and inspire people. The most important part of what I’ve accomplished over the past 10 years is coaching, mentoring and inspiring Marines to exceed their own expectations.
I look at some of our professors who sacrifice and take time to do that for us. They are able to manage their professional aspirations and personal lives, while also continuing to educate us. That’s what I’m passionate about — paying forward what was done for me.
Juan E. Rose III is a MBA candidate at the UCLA Anderson School of Management. Reach him at (760) 458-7408 or firstname.lastname@example.org.
For information on the MBA Program, Masters in Business Administration, UCLA Anderson School of Management, visit http://www.anderson.ucla.edu/x40700.xml.
Insights Executive Education is brought to you by UCLA Anderson School of Management
In today’s regulatory environment, banks are no longer lending based on collateral; they are focusing more on business history, the owners, their future plans and how they’ll repay the loan.
“A business plan is an excellent way to tell bankers about the story behind the numbers and let them know you have a good handle on the future of your business,” says Betty Uribe, executive vice president for California Bank & Trust.
Smart Business spoke with Uribe about how to develop a business plan to increase your chances of obtaining a business loan.
Why are business plans important?
When presenting a loan package to a lender, an organized, well-thought-out business plan can make the difference between getting and not getting the loan.
A business plan will show the lender if the business has a chance of making a profit and in what time frame. It also provides a well-thought-out estimate of how much the business needs to grow and defines the market, customers and the percentage of the market the business plans to reach, providing a clear revenue estimate. Importantly, a business plan can convince the lender to fund your business and show them potential issues and how they’ll be addressed.
What are the steps involved in creating a good business plan?
Start with an outline and fill in the blanks as you learn more about the process. Your plan should be only as big as necessary for your firm to run smoothly. In fact, the outline alone may suffice, particularly if you are not submitting the plan in a package to obtain financing.
Many seasoned entrepreneurs calculate a break-even analysis to predict future viability in their respective fields. This is a formula based on the relationship between revenue, fixed costs, variable costs and profit. The analysis can show you how much money you must bring in to stay solvent.
Another preliminary tool is a feasibility plan, a basic document that features a summary, mission statement, market analysis and required success factors. It also might include an initial cost analysis addressing pricing and potential expenses. This can help you determine whether starting a business can work for you.
What resources are available to help?
An abundance of user-friendly business planning software is available that is designed to help strategize, sort and calculate related financial data.
Also, agencies like the Small Business Administration and SCORE, the Service Corp of Retired Executives, offer detailed information on developing a solid plan.
How do you get started?
Most experts outline 10 key components for a basic business plan. Key components include:
• Cover sheet
• Table of contents
• Executive summary
• Company description
• Product or service description
• Market analysis
• Strategy and implementation
• Management team
• Financial analysis
What should a business owner do with the business plan once it’s written?
Start by recording overall business or long-term goals on a spreadsheet, setting the bar high enough to grow. Make sure your goals are specific, measurable, attainable, relevant and time-bound (SMART). They must be easily identified, quantified and understood by you and your management team or you won’t know when you reach them. Also, set quarterly, monthly, weekly and daily objectives, then record your progress but don’t share or discuss goals with negative individuals who might impede progress. Lastly, keep asking yourself, ‘Does this decision take me closer to my goal?’
Growing a business takes commitment and systematic planning. Educate yourself. The more you learn about your industry, competitors, finances and time management, the greater your chances of success.
Betty Uribe is executive vice president at California Bank & Trust.
For a full scope of tools and information through to help businesses get started, visit www.calbanktrust.com/team. Another valuable source of information for business owners is at www.calbank trust.sbresources.com.
Insights Banking & Finance is brought to you by California Bank & Trust
You write the renewal premium check every year, but did you know that not having your medical malpractice (medmal) policy reviewed could be costing you even more money?
In general, health care costs are increasing, insurance reimbursements are declining and malpractice premiums are constantly changing. This all spells opportunity for health care related businesses to have their policies reviewed by a qualified broker, says Chris Ferraris, a medical malpractice expert at Momentous Insurance.
Another benefit of the policy review is to make sure your business is protected.
“Without proper insurance, you may as well be prepared to reach into your own pocket to pay for legal costs should a lawsuit be brought against you,” he says. “That can drain your business entirely. And that’s just the economic damages.”
Smart Business spoke with Ferraris about reasons to review your policy annually.
How does a review keep you from paying too much?
Medmal insurance carriers often change premium rates. To remain competitive and to increase their market share, carriers may lower rates and/or loosen underwriting guidelines. When a broker who specializes in medical malpractice reviews your policy, he or she knows whether better rates are available and shop the marketplace on your behalf. This analysis drastically reduces the risk of overpaying for the coverage you need.
Why might you be lacking the necessary coverage?
Medical malpractice insurance companies also change policy forms, which can restrict or enhance coverage. Without an advocate it can be difficult to determine whether your policy includes every coverage enhancement for which it is eligible.
Sometimes carriers exclude certain procedures or treatments because of changes in state or federal laws, or at their own discretion. If a claim arose as a result of a procedure excluded from coverage, the carrier could deny the claim. Furthermore, you might be lacking the necessary coverage if your policy was not written properly from the start.
What if your practice profile changed since you applied?
It’s not just carriers that make changes, health care practices are constantly evolving and their insurance needs are evolving as well. Whether getting a new piece of equipment, offering new procedures or adding locations, any change can affect coverage.
It’s the responsibility of the policyholder to notify the carrier of any changes in business practices. If an undisclosed item results in a claim, it could be denied.
How do staff changes affect your insurance?
Changes to the staff, including medical directors, are the reporting responsibility of the policyholder. If a claim is filed as a result of an uncovered employee, independent contractor, volunteer or other health care professional, there could be no coverage.
How does a review improve your chances of getting claims paid?
Reviewing your coverage needs regularly with your broker helps avoid potential complications, and ultimately improves your chances of getting a claim paid. Also, having an advocate in your corner means you have someone looking out for your best interests, not the interests of the insurance company.
In summary, the five key reasons to review your policy on an annual basis are:
1. You could be paying too much.
2. You could be lacking needed coverage.
3. Your practice profile could’ve changed since you applied.
4. Your staff could’ve changed.
5. To improve your chances of getting a claim paid.
There’s no time like the present to request an independent review. If you haven’t had a review in over a year, we urge you to take action and contact your broker today. Having proper coverage gives you greater peace of mind and allows you to focus on your patients and business — where your time and energy should be dedicated.
Chris Ferraris is a health care risk management consultant at Momentous Insurance Brokerage, Inc. Reach him at (818) 574-0424 or email@example.com.
Insights Business Insurance is brought to you by Momentous Insurance Brokerage
It’s easy to forget about costs when you’re embroiled in a lawsuit, but you could end up winning the trial and losing the fiscal war if you let the litigation tab spiral out of control.
“Business owners can be bamboozled by a litigation attorney when they’re in the heat of battle,” says Kim Karelis, a partner and expert witness with Ropers Majeski Kohn & Bentley PC. “Avoid disputes by negotiating a reasonable fee schedule in advance.”
Smart Business spoke with Karelis about the best ways to avoid and resolve a legal fee dispute.
What is a legal fee dispute?
Attorneys usually charge a flat fee for routine tasks like reviewing a contract or setting up an LLC, so novice executives may experience sticker shock when they receive a bill from a litigation attorney if they don’t perform adequate due diligence. The lack of a formal fee schedule can sometimes lead to a dispute and additional litigation if the two parties can’t resolve the issue.
What should business owners know about hiring a litigation attorney?
Refuse block billing and question vague descriptions for services when negotiating a retainer agreement so you can compare and determine whether an attorney’s fees are reasonable and customary. Only the senior partner should bill for in-house strategy meetings involving several staff members and you shouldn’t pay bloated fees for photocopies, phone calls and secretary time.
Consider the cost for expert witnesses, court filling fees and depositions, and estimate your true ROI by comparing the total tab to what you may gain or lose by going to trial.
Finally, be wary of an attorney who seems unreasonable or wants to bill for every single second. Lawyers should be willing to negotiate, especially in this market.
What else can business owners do to prevent legal fee disputes?
Hiring a referral from a trusted colleague is probably your best bet, but you still need to get everything in writing and seek an outside opinion before signing an agreement if you’re unfamiliar with litigation costs.
Establish a budget and a goal for the action and consult several attorneys to see if they’re reasonable and attainable.
Lastly, nip potential problems in the bud by reviewing invoices and questioning any unreasonable charges you find in a timely basis.
What happens if a dispute arises?
Clients have the right to seek arbitration by a panel consisting of neutral attorneys and a layperson who will decide the appropriate amount of attorney’s fees through an informal, low cost proceeding administered by the local bar association. The losing party has the right to pursue a court trial. However, they must act quickly and file the paperwork within 30 days of the loss.
What are the legal standards that apply to legal fee disputes?
A signed retainer agreement takes precedent when a fee dispute arises. If none exists, the court will attempt to determine a fair charge for the attorney’s services, in part by assessing whether his fees are unreasonable or unconscionable.
While the courts tend to side with clients, especially when the attorney’s charges are vague, there’s little sense in taking chances when the problem is avoidable.
How are legal fee disputes usually resolved?
Most executives and attorneys don’t want to air their dirty laundry in public, so they try to resolve their disputes through informal, private discussions and by consulting an outside expert.
While few disputes end up going to trial, the chances increase when emotions run high and business owners don’t do their homework.
Kim Karelis is a partner and expert witness with Ropers Majeski Kohn & Bentley PC. Reach him at (213) 312-2012 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Ropers Majeski Kohn & Bentley PC
When KONE Inc., a global leader in the elevator and escalator industry, was looking to find a place to consolidate operations in 2010, the company came to Allen, Texas.
A 24,263-square-foot facility allowed KONE to combine its North American Supply and Technology operations into one location in the Allen Center Park. KONE also moved its central tool storage facility to nearby Twin Creeks Business Center.
“This new facility will provide KONE’s employees with a high quality work environment and quick access for our colleagues and visitors from around the world to many amenities,” Jeff Montgomery, KONE director of Development-Product and Supply for the Americas, said in announcing the new office space. “By making this move, KONE is showing our commitment to our people and striving to increase productivity and cross-functional collaboration.”
KONE was founded in 1910 in a machine shop in Helsinki, Finland, and now has more than 1,000 offices worldwide, eight global production units and seven global research and development (R&D) centers, including the R&D center in Allen.
KONE has made the Forbes list of the 100 most innovative companies in the world for two consecutive years, ranking 42nd in the 2012 list.
Smart Business spoke with Ron Bagwill, vice president, director of Supply Operations Americas for KONE, about the decision to move to Allen and the benefits of the new site.
What are your operations in Allen?
KONE has two locations in Allen. The first site is in the One Allen Center, 700 Central Expressway South building. On the first floor we have a lab used by our technology group to simulate and test complex elevator control and software systems. On the fourth floor we have our supply chain related functions: engineering, customer service, logistics, human resources, sourcing, quality, and the process owner for our supply chain operations globally. A large part of the global technical team is also housed there (R&D) as well as installation support functions.
The second location is in Allen Twin Creek Business Center on North Watters Road where we maintain and store specialized tools that are important to a safe and efficient elevator installation.
Why was Allen chosen over other location options?
The activities now located in Allen were previously located at a factory site in nearby McKinney, Texas, that had been in operation since the late 1970s. We were looking for a newer building site that offered our employees a great location to work. The Allen location offers our employees easy access to a multitude of nearby shops and restaurants to visit during lunch or after work hours. Since we are near our previous location, our employees have a similar length commute to work. This was important to our decision on where to locate.
One of the most important aspects to our decision to move to the One Allen Center was the capability to house both our office personnel and the lab equipment. The lab equipment required a unique lower floor location with capability to move in and out large pieces of equipment.
Allen is also a great place to live, and we see that as important when trying to recruit new employees to our company.
What role did the Allen Economic Development Corporation play in that decision?
The Allen Economic Development Corporation provided an excellent financial package that definitely was part of the overall decision of why we chose Allen. The AEDC team is very professional and experienced in bringing great businesses to Allen, and KONE is pleased to be one of those companies.
How has the location impacted your success?
The location and environment of an office can have a huge impact on the productivity and morale of an office staff, which has improved since moving to such a great office and city. Having a new and modern office also plays an important role in attracting new employees.
Would you recommend Allen to other companies looking to build or relocate?
Allen is a great place to locate a business. The city has easy access to major highways and the major airports are only 45 minutes away. The number of hotels, restaurants and shops are a great place for housing and entertaining guests or customers. Prospective employees will find Allen a great place to live with the different housing options available, and the great school system. AEDC is a great partner to assist a business when considering Allen.
Ron Bagwill is a vice president, director of Supply Operations Americas, KONE Inc. Reach him at (469) 854-8815 or email@example.com.
Reach the Allen Economic Development Corporation at www.allentx.com or call (972) 727-0250.
Insights Economic Development is brought to you by Allen Economic Development Corporation
As investors in lower middle-market companies, valuation is a fundamental question we grapple with in every transaction. The short answer to the valuation questions is “what the market will bear.”
Then the next question is, “Which market?”
Company valuations typically are discussed in terms of multiples of trailing 12-month EBITDA. The higher the “multiple,” the more the company is worth. While there are exceptions to using trailing EBITDA multiples — for instance, software company valuations often are discussed in terms of multiples of revenue, and companies with predictable contracts going forward may be valued on projected EBITDA — the valuation of the majority of companies will be discussed in terms of multiples of trailing EBITDA.
Cash and debt
Strategic buyers often pay the highest multiples. As they generally are in the same or related businesses as the acquired companies, these buyers often can identify significant synergies that will effectively grow the acquired company’s post-acquisition EBITDA and thereby lower the effective multiple. Another factor currently pushing up valuations paid by strategic buyers is the amount of cash many companies have on their balance sheets.
To the extent that companies are able to deploy this cash in an acquisition with a higher return on their invested dollars, the acquisition then can be considered “accretive” even if the multiple paid for the acquired company is higher than the multiple at which the acquiring company is valued.
However, often outbidding strategic buyers these days are financial buyers — typically the larger private equity funds.
While these buyers will look at many of the same intrinsic aspects of a target company as strategic buyers (except for synergies), there are other external factors that can move their valuations up or down. The most important of these is the availability of debt.
If lenders are aggressively lending, then the financial buyers will use that leverage to justify and pay higher multiples.
Another factor is the life cycle of fund buyers. Often, fund managers are anxious to deploy their capital before their investment periods expire, and thus, they will pay higher multiples to win transactions.
Your company’s multiple
So, the final question then is what is the multiple for your company? Multiples vary greatly based on company size, industry and specific company characteristics. As for size, there are rough EBITDA breakpoints where companies will be valued at higher multiples merely because of their size. These are at $5 million, $10 million and $20 million.
As for industries, multiples vary greatly. For example, a $5 million EBITDA software company may be valued at an eight multiple, and a nonvalue-added distributor may be valued at a four multiple.
Underlying these multiple variances, however, really is recognition of the predictability and scalability of a company’s EBITDA. A company that produces commodities and is vulnerable to competition and market fluctuations will be valued at the low end of the multiple range.
Conversely, a company that is solving a unique problem, with little or no competition, that is not cyclical and that has a very steep growth trajectory in a very large potential market will be valued at the high end of the multiple range.
Other than these EBITDA considerations, another important factor in the quality of a company is its leaders. Is the company well organized with good processes? Is there a great leadership team that will come with the company? Is there a clear strategic vision? If the answer to those questions is “yes,” the company will be awarded a higher multiple than other companies of the same size in its industry.
Dan Lubeck is founder and managing director of Solis Capital Partners (www.soliscapital.com), a private equity firm headquartered in Newport Beach, Calif. Solis partners to build great business in the lower middle market. Lubeck was previously a transactional attorney, and has lectured at prominent universities and business schools around the world.
Companies typically want to do what’s right for those they serve. Key priorities should be customers, investors, employees and the communities in which the company is located — but not necessarily always in this order. The dilemma, however, is that many times short-term decisions can prove to be long-term problems that cause more pain than the initial gain.
It’s difficult to make all constituents happy every time. As a result, management must prioritize decisions with a clear understanding that each action has ramifications, which could manifest themselves in the short, intermediate or long term. Seldom does a single decision serve all of the same timelines. There are no easy answers and anyone who has spent even a short amount of time running a business has already learned this fact of life. So what’s a leader to do?
It’s a sure bet that investors want a better return, employees want more money and benefits, and customers want better quality products, higher levels of service and, oh yes, lower prices. This simply all goes with the territory and is a part of the game. The problem can be that, most times, it’s hard to give without taking something away from someone else. Here are a couple of examples.
Take the case of deciding to improve employee compensation packages. Ask the auto companies what happened when they added a multitude of perks over the years, as demanded by the unions? The auto titans thought they didn’t have much choice, lest they run the risk of alienating their gigantic workforces. History has shown us the ramifications of their actions as the majority of these manufacturers came close to going belly up, which would have resulted in huge job losses and an economic tsunami.
Basic math caused the problems. The prices charged for cars could not cover all of the legacy costs that accrued over the years, much like barnacles building up on the bottom of a ship to the point where the ship could sink from the weight. Hindsight is 20/20, and, of course, the auto companies should have been more circumspect about creating benefit packages that could not be sustained. Yes, the employees received an increase to their standard of living for a time anyway, but at the end of the day, a company cannot spend more than it takes in and stay in business for long.
Investors in public companies can present a different set of problems because they can have divergent objectives. There are the buy-and-hold investors, albeit a shrinking breed, who understand that for a company to have long-term success, it must invest in the present to build for the future. The term “immediate gratification” is not in their lexicon; they’re in it for the long haul. Another type of investor might know or care little about a company’s future, other than whether its earnings per share beat Wall Street estimates. These investors buy low and sell high, sometimes flipping the stock in hours or days. And, actually, both types are doing what’s right for them. The issue becomes how to serve the needs and goals of both groups. When a company effectively articulates its strategy, it tends to attract the right type of investors who are buying in for the right reason. This will avoid enticing the wrong investors who turn hostile because they want something that the company won’t deliver.
When interviewing and before hiring employees, it is imperative that candidates know where the company wants to go and how it plans to get there. Many times, this means telling the prospective newbie that the short-term compensation and benefits may not be as good as the competitors’ down the street, but in the longer term, the company anticipates being able to significantly enhance employee packages, with the objective of eventually outmatching the best payers because of the investments in equipment being made today.
The key to satisfying employees (present and prospective), investors, et al, is communicating the types of decisions a company will make over a specific period of time. Communication from the get-go is integral to the rules of engagement and can alleviate huge problems that can otherwise lead to dissatisfaction.
Knowing what is right for your company, based on your stated plan that has been well-communicated, will help ensure that you do the right thing, at the right time, for the right reasons.
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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In our world of quick text missives, sharing the daily joke via inner office email, and generally more relaxed workplaces, informality can become a workplace hazard. Studies show that employers and managers often assess an employee’s career potential based on how that employee carries himself or herself in the workplace. None of us wants to be judged by the externals, but our respective “book covers” matter.
Poor manners at work – however unintentional - can lead to workplace conflict because they distract fellow employees from working or, in the worst cases, offend co-workers who have differing viewpoints and cause potential legal liability for the employer.
Therefore, it’s ideal to avoid these 8 bad work habits:
- Talking loudly on telephones and in person in common areas.
- Interjecting comments into conversations between other employees, unless your opinion is solicited.
- Taking supplies – even if they were bought by the office – from other employee’s work areas without getting prior approval.
- Wearing perfume that can be smelled even after you leave an area.
- Gossiping about co-workers or people outside the workplace.
- Sharing racial, religious or sexual jokes in any format.
- Arriving late to meetings.
- Regularly using large chunks of work time to resolve personal and family matters.
Most employees want to be viewed as valuable, contributing members of the company team. Thus, it’s worthwhile to periodically assess our workplace demeanor and, perhaps, adjust our behaviors, to help convey that image. Your future with your employer likely depends on it.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.
One of the signs of a boom — or at least a boomlet — is that companies start wanting to drive their competition crazy. This occurs when “survival” is no longer an issue and optimization or maximization can become a goal. However, the desire to do things to the competition can lead a company astray — or drive it to even greater heights.
Companies go astray when defeating the competition becomes more important than taking care of customers. When companies become obsessed with the pursuit of excellence, by contrast, they often reach new levels of greatness. Here’s how to avoid the former and achieve the latter.
1. Know thyself. Before you can drive your competition crazy, you have to understand what your company stands for. Otherwise, you’ll succeed only in driving yourself crazy. For example, Apple stands for cool technology. It will never represent a CIO’s safe bet, an “enterprise software company,” or service and support. If it decided it wanted to drive Microsoft crazy by sucking up to CIOs, it would drive itself crazy — that is, if it didn’t perish trying.
2. Know thy customer. The second step is to truly understand what your customer wants from you — and, for that matter, what it doesn’t want from you. One thing that your customer seldom wants to do is to help you drive your competition crazy. That’s in your head, not your customer’s. One more thing: A good company listens to what a customer says it wants. A great company anticipates what a customer needs — even before the customer knows it wants it.
3. Know thy enemy. You cannot drive your competition crazy unless you understand your competition’s strengths and weaknesses. You should become your competition’s customer by buying its products and services. I never truly understood what it was like to be a customer of Microsoft until I bought a Sony Vaio and used Windows. Sure, I had read many comparisons and competitive analyses, but they were nothing compared with hands-on usage.
4. Focus on the customer. Here’s what most people find surprising: The best way to drive your competition crazy is to succeed because your success, more than any action, will drive your competition crazy. And the way you become successful is not by figuring out what you can do to the competition but for the customer. You succeed at doing things for the customer by using the knowledge that you’ve gained in the first three steps: understanding what you do, what your customer wants and needs and what your competition doesn’t do. At the intersection of these three factors lies the holy grail of driving your competition crazy. For most companies, the key to driving the competition crazy is out-innovating, out-servicing or out-pricing it.
5. Turn customers into evangelists. There are few things that drive a competitor more crazy than unpaid customers who are evangelists for a company. Create a great product or service, put it out there (“let a hundred flowers blossom”), see who falls in love with it, open up your arms to them (they will come running to you), and then take care of them. It’s that simple.
6. Make good by doing good. Doing good has its own, very sufficient rewards, but sometimes you can make good and do good at the same time. For example, if you own a chain of hardware stores, you can help rebuild a community after a natural disaster. You’re bound to get a lot of publicity and create bonds with the community — this will drive your competition crazy. And you’ll be doing something good!
7. Turn the competition into allies. One way to get rid of your competition is to drive it out of business. I suppose this might be attractive to you, but a better way is to turn your competition into allies. My favorite author of children’s books is Tomie DePaola. My favorite DePaola book is “The Knight and the Dragon.” This is the story of a knight and a dragon that train to slay each other. They are smashingly unsuccessful at doing battle and eventually decide to go into business together. Using the dragon’s fire-breathing ability and the knight’s salesmanship, they create the K & D Bar-B-Q. For example, if a Home Depot opens up next to your hardware store, let it sell the gas barbecues, and you refill people’s propane tanks.
8. Play with their minds. If you’re doing all this positive, good stuff, then it’s OK to have some fun with your competition — that is, to intentionally play with their minds. Here are some examples to inspire you:
- Hannibal once had his soldiers tie bundles of brush to the horns of cattle. At night, his soldiers lit the brushwood on fire, and Hannibal’s Roman enemies thought that thousands of soldiers were marching towards them.
- A pizza company that was entering the Denver market for the first time ran a promotion offering two pizzas for the price of one if customers brought in the torn-out phone directory ad of its competition.
- A national hardware store chain opened up right next to a longtime community hardware store. After a period of depression and panic, the store owner came up with a very clever ploy. He put up a sign on the front of his store that said, “Main Entrance.”
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.
While attending an event we put on with a local charity, I was impressed with the difference that seemingly minor things can make in someone’s life. I was proud of the contribution and effort that our employees put into the event and the dedication the nonprofit showed for its mission.
The event made me think about the business community and all of the wonderful things companies do for those in need. Take the recent destruction from Hurricane Sandy as an example. Businesses have pledged more than $90 million in assistance, two-thirds of which was monetary donations to organizations like the American Red Cross.
While companies give back in as many ways as possible, even during these difficult economic times, I was wondering if there wasn’t more that could be done in our local communities. Not every effort has to always include a financial component.
Here are some nonfinancial ways to give back in addition to what you already do for the community:
- Give more time. Some organizations have a greater need for man-hours in addition to financial backing. Your business may already give generously on the financial side, but maybe your favorite charity could use a labor boost as well. Nationally, about 35 percent of companies have some sort of formal volunteer program. Consider donating employee time to help out with a big project or basic cleaning and organizing.
- Offer advice. You probably already serve on one or more boards for a nonprofit, but there is always another charity out there that could use your help. You don’t have to become a full-fledged board member, but you can offer advice as needed to help the existing members navigate through a problem that plays to your strengths. If the nonprofit is looking for a board member and you don’t have the time, help it find the right person by making a recommendation or referral.
- Hire nontraditional employees. One way of giving back to the community is helping others help themselves. There are many skilled employees with either physical or mental disabilities that could be a great addition to your company if given the chance. When you have a job opening, make sure you are considering all candidates, including those from nontraditional backgrounds.
- Do pro bono work. If you can provide a service that a nonprofit needs, consider donating it. Marketing, printing, IT services — basically anything an office needs is probably something a charity could use. Find out what the nonprofit could use, then figure out a way to help out. Even if your company can’t help, maybe you know someone else who can.
In this season of giving, it’s not hard to find a worthy cause. There’s also no question that you and your company have most likely already given a lot, assuming you are in a position to do so. But there’s an old question that asks, “How much charity is enough?” The answer is easy: Just a little more.
Take the time to evaluate whether you can do just a little more than what you are already doing to make an even bigger difference.
If you are in search of a worthy cause, consider donating to The Pillar Fund, a donor-advised fund administered through the Cleveland Foundation. For more information, contact Dustin Klein at firstname.lastname@example.org.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.