Egos are a big factor in business. Egos can cost companies a lot of money.
I learned this simple fact a long time ago, and to this day, it amazes me how much time, energy and resources are wasted by individuals unwilling to check their egos at the door and let their companies be successful. Believe me, I have an ego myself, and I have to remind myself that all the time.
We all know the type — the guy or gal who always has to be right and whose questionable judgment in business stems either from a sense of self-importance or is based upon what they feel others expect from them because of their position. This person can even be fairly pleasant and well-meaning. But when they turn out to be someone with whom you have a working relationship, things can go downhill very quickly, especially when they’re pushing ideas and making decisions for all the wrong reasons.
I sell a line of bison meat products, which is marketed as a healthful alternative to beef. One day, the company with which I was partnered hired a new marketing fellow who immediately wanted to change the packaging. It was clear that he wanted to make a big splash with his new bosses, but I was dumbfounded by his decision.
I argued, “We’ve been enjoying tremendous success, and our branding has been very clear. Why in the world would we want to change it when we have a winner?” I’m a pretty agreeable guy, but I also know when to dig in, especially when I’m fighting for something I believe in my heart is right.
After a brief internal debate, my partners agreed with my logic, and we happily continued on with our hit product.
In business, it is paramount that everyone looks for the perfect solution that works for everybody else. This isn’t about getting along with each other just for the sake of it but rather about learning to be successful together.
Ego, when it comes from a place of experience, confidence and wisdom, actually can be a tremendous asset if properly managed by the individual.
I’ve recently started working with a good friend of many years, and I totally respect his ego. He understands exactly what it takes to be successful and has the experience to enable him to accurately size up a situation and make sound business decisions. He also knows how to work with partners like me, creating a complementary relationship, not one in which there is constant bickering.
When you’re around people with healthy egos, they create an aura of chemistry and trust and can provide a nesting ground for others to be their best. These types of individuals don’t make radical changes on a whim, but they try to understand their business environment, then make decisions to either build upon existing success or fix what is not working. People like this aren’t afraid to make wrong decisions because they have the confidence — the ego — of knowing that eventually they will make the right decision.
In dealing with complicated business relationships, the most critical relationship is the one we have with ourselves. Always ask yourself the reasons behind your decisions, especially if you are challenged by peers, partners or others in trusted positions.
There is nothing wrong with standing up for what you truly believe in. But be sure you are guided by wisdom and a clear thought process with the intention of truly solving a problem or building upon previous achievements. If not, allow yourself to hear other voices and have a healthy enough ego to let them contribute to your success. ?
Tony Little is the founder, president and CEO of Health International Corp. and executive chairman of Positive Lifestyle International. Known as “America’s Personal Trainer,” he has been a television icon for more than 20 years. After overcoming a car accident that nearly took his life, Little learned how to turn adversity into victory. Known for his wild enthusiasm, Little is responsible for revolutionizing direct-response marketing and television home shopping. He has sold more than $3 billion in products bearing his name. Reach him at email@example.com.
Roger Andelin believes in the power of storytelling — so much that even an e-commerce business composed of people from the impersonal sales and technology fields can benefit from the skills of a good storyteller.
Andelin had served as the CIO of Internet retailer Buy.com for six years before leaving to take the same position with The Washington Post, one of the most famous and influential newspapers in the country. It was during his stint with the newspaper that Andelin, an executive with a commerce and technology background, discovered how to take good storytelling and apply it in the world of commerce.
“I became a lot more aware of the power of storytelling and the power that can have in a business, especially on the commerce side,” Andelin says. “Commerce was missing that.”
When the opportunity arose for Andelin to return to what had, in the interim, been renamed Rakuten Buy.com, he felt he could utilize the sum total of his experience as an executive, splicing together his e-commerce background with a newfound knowledge and appreciation of storytelling to open new doors for the company.
“When I sat down for the first time and heard about our chairman’s vision, it resonated through and through,” Andelin says. “The idea was [that] we want to give merchants a voice in our marketplace. Let’s connect our merchants with their customers; let’s bring a new shopping experience to the table.
“It was very different from the typical model in our space, which is you come in and search for a product, put it in your cart and check out. It really brought back a lot of the nostalgia in the commerce business, which was missing on the Internet and electronic side. We had a chance to bring that back to the whole process.”
After accepting the president’s role at Rakuten Buy.com — which was rebranded as Rakuten.com Shopping in January — Andelin set out to tell the story of the company’s new vision and how it would be realized. He wanted to get every executive, manager and associate in the Rakuten system to believe in the vision and to feel motivated to carry out the plans that would make the vision a reality.
Define your drivers
Any retail business — whether in the e-commerce space or reliant on a bricks-and-mortar network of stores — will always be driven by the numbers. The number of customers you can get to your site or store will convert to a number of sales, which will convert to a number of repeat customers.
But to realize the new vision for Rakuten.com Shopping, Andelin needed to promote something else. He needed to promote loyalty. It’s something that can’t be directly quantified on a balance sheet, but Andelin realized, soon after he took over, that it would be an essential ingredient in the success of the vision. It would be, in short, a primary driver of the business moving forward.
“The business really boils down to the number of visitors that come to our site and our conversion rate to how many of those visitors buy from us and what the average value of that order is,” Andelin says. “So once you look at those drivers, those KPIs [key performance indicators], you look into it and see what is it that drives that component. Traffic, or visits, are driven a lot by advertising but also by loyalty.”
As such, Andelin wanted his team at Rakuten.com Shopping to focus on driving customer loyalty and merchant loyalty. Since the staff at the company is, in large part, composed of people with technology backgrounds, it was a different concept.
“What happens is that technology departments often get focused on a feature,” Andelin says. “They’ve been asked to deliver A, B and C, and at the end of the day, they deliver that, but it doesn’t always yield the business value that was expected. So by shifting the emphasis away from the actual feature we’re delivering and getting the teams focused on delivering business value, it fundamentally shifts the whole project pattern in a very meaningful way.”
Andelin and his team began to implement initiatives, such as a reward points program, as a formalized way of building merchant and customer loyalty. But he also wanted to see his team deliver value in more fundamental forms.
“One of our objectives, for instance, is to increase the voice of our merchants online, to help them connect more with their customer base,” he says. “That is one of the main things that is going to separate us in a meaningful way from our competition. That technology stepping in and facilitating that communication is something that would be pretty unique for a merchant.”
Give people a voice
You can craft a well-thought-out vision that aims the company toward new heights of prosperity, but none of it will matter if you can’t achieve buy-in from everyone in your company.
It’s something that Andelin acknowledged early in his tenure, and it’s why he embraced the role of storyteller from his first day on the job. Employees can hear about the vision, they can learn the drivers, but until they see tangible ways that the vision will lead to a better, more profitable company — and by extension, more earning potential and job stability at their level — they won’t completely buy in.
“Alignment can be challenging,” Andelin says. “But I have found the best way to do it is to very clearly articulate the problem or very clearly articulate the vision and then explain why the solution we’re all working toward will resolve that.
“You start to get individuals to understand the vision or the problem by articulating it very clearly. They see it and recognize what you are doing and why you’re doing it. People generally get that. It’s when the communication isn’t there that the team starts to falter and lose the passion for what they’re doing.”
In order to tell a story, you need a means of communication. Authors have books, journalists have mass media and directors have the cinema. At Rakuten.com Shopping, Andelin has, among other things, weekly “asakai” meetings that utilize technology to bring together people from Rakuten’s U.S. operations and beyond.
During the weekly meetings, senior management reinforces the vision and values of the organization to employees throughout Rakuten’s footprint. The meetings are another way Andelin is using technology for storytelling.
“What we say at the weekly asakai meetings goes all the way down to daily huddles, where each department will get together and talk about their departmental issues,” Andelin says. “The thing to remember is the teams you are leading have to get it. The business leader has to be open enough and accessible enough, to the point where if the team has questions, they feel able to ask those questions.
“If they have concerns, they have to get those concerns out on the table and walk through them.
“One of the most powerful ways to reach consensus is not by reducing the conversation but by increasing it. It is through conversation that leaders and managers are able to convey the vision and get individuals to come on board with the direction of the organization. Communication is absolutely key.”
Show your wins
Every story has a beginning, middle and end. In Rakuten.com Shopping’s case, the story is still in progress. If you don’t have final results to show your people, you need to show them progress and trends. Keeping employees in the loop is another essential way to bring them on board with your vision. You have to demonstrate the wins you are tallying and the progress you are making toward realizing your vision.
“As an example, we ran one of our summer sales at the end of August, right after I started,” Andelin says. “We measured the sale based on year-over-year performance — so, how we did on these days versus the same days the prior year? That event ended up giving us a fairly sizeable increase in our number of orders, in visitors coming to the site, all of the key metrics that we’re looking at. Those wins really help focus the team.”
If you’re going to tell a story that it’s going to serve as a motivator for your people, the story has to inspire. That doesn’t mean your people have to leave the meeting or conference call ready to climb Mount Everest, but it does mean that they leave as believers in what the company is doing.
“It’s a fairly basic idea that winning is contagious,” Andelin says. “It builds confidence; it helps you to solidify a repeatable process. It shows us what we need to do to drive sales during a particular event. If we get really good and learn those things, we can repeat it, and we can grow our business to improve step-by-step, by improving those processes. Everybody gets excited, and it really becomes a companywide initiative, because everybody has a little piece of it. So when you start to achieve your vision, everybody feels good.”
How to reach: Rakuten.com Shopping,
(949) 389-2000 or www.rakuten.com
The Andelin file
What is the best business lesson you’ve learned? You want to take accountability for when things don’t go smoothly and perfect. At the end of the day, if you screwed up, take responsibility for it, figure out what happened and move forward. That is one of the most relieving principles in business. It’s a liberating principle for all leaders, as opposed to passing blame and making excuses.
What traits or skills are essential for a leader? Having a vision and being able to communicate it on both an individual and group level. Leaders have to be approachable, accept criticism and be able to defend their positions with logical, rational arguments backed by data and facts. Authoritarian leadership doesn’t fly nowadays. You have to win the minds of intelligent people who are used to thinking for themselves, are well-educated and have fabulous opinions.
What is your definition of success? There is a sense of irony around it, because as soon as you start to define success, you limit yourself. If you define success as you see it, you just cut yourself off from other areas where you could be a success. You have to kind of know success when you see it, just like knowing what art is, or knowing what sounds good in music. So many things drive success, to define it is almost impossible.
Tell a great story.
Communicate it to your people.
Show evidence of success.
The old term “putting lipstick on a pig” refers to prettying up a mediocre asset right before you want to sell it. Prior to marketing, the seller makes changes that cause things to look better than they really are under the surface. There is little difference between a cheap paint job on a used car to hide rust or new carpet in a house to cover cracks in the foundation and short-term cosmetic changes at a company justified as “preparing for sale.”
Here are four key mistakes business owners often make when trying to prepare their companies for sale:
? Shallow bench: Sellers often hold off hiring personnel in key management positions such as senior vice president of sales, controller and manager of procurement. They do this to minimize administrative costs in hopes of increasing sale value. Most buyers will evaluate the leadership team and make purchase price adjustments to account for those vacant positions.
The leadership team (both the C-suite and upper management) is a critical value-driver for buyers of businesses. As such, business owners should always maintain the strongest, most complete team whether the business is for sale or intends to remain independent.
? As-is, where-is: Often, sellers neglect making necessary investments in machinery, facilities or IT systems to preserve cash and/or pad the bottom line. Any sophisticated purchaser of your business will take into account the need to remedy inappropriately deferred capital expenditures and a buyer’s perception of these deferred costs could be greater than those if the business had been maintained all along.
Well-run, growing businesses require ongoing investment. Machinery wears out, IT systems require updating and facilities need refurbishment. While every capital expenditure should be highly scrutinized based on cost and overall contribution to efficiency, deferring critical investment in hopes of increasing sale value is a mistake.
? Pump-up the balance sheet: Another mistake sellers make is in the area of working capital. Balance sheet cash can be increased by more aggressively collecting receivables and extending payables in ways that are inconsistent with historical practices.
To detect this, buyers of businesses often include a “working capital adjustment” in their purchase consideration. If the company has been pulling cash out by collecting accounts receivable and/or extending payables, there will likely be a negative working capital adjustment.
Strong businesses have consistent working capital and cash-conversion cycles, and temporarily changing best practices can irreversibly impact vendor and customer relationships. Maintaining consistency will preserve these relationships and be rewarded in the purchase multiple offered by a discerning buyer.
? Run on a shoestring: Some sellers try to operate their businesses with the bare minimum of liquidity in order to increase perceived working capital. This is more difficult to identify, since there is a fine line between capital efficiency and too little operating cushion.
Buyers will again employ a working capital test and closely evaluate the historical monthly fluctuations in receivables and payables. If there are certain months where larger fluctuations necessitate an operating cushion, this will be factored into the purchase value.
Once lost, liquidity can be difficult to regain. It is better to always operate the business leanly but with enough liquidity to provide cushion for seasonal working capital variances and to support ongoing growth.
While the decision to sell your business requires a new perspective, it doesn’t necessitate changes in fundamental operating principles. Making short-term cosmetic changes in an attempt to “prepare the company for sale” will ultimately be visible to the buyer, can create lasting customer and vendor challenges, and won’t be rewarded in increased sale value.
Focus on fundamental operating principles and maximize the value of your business — no lipstick required.
Craig Dupper is managing partner at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif., focused exclusively on lower-middle-market companies.
"Not a day goes by where I don’t read a headline talking about ‘the cloud,’” says Zack Schuler, founder and CEO of Cal Net Technology Group. “The current, overused definition of the cloud is ‘anything that happens on the Web,’ but in the business world, the more accurate definition of cloud computing is leveraging someone else’s hardware/software and services to complete a business task.”
Smart Business spoke with Schuler about the role that cloud computing has played for businesses during the past two decades, and in what ways it can benefit their operations today and in the future.
How are companies using cloud computing?
When I started Cal Net Technology Group 15 years ago, we didn’t host our own email server. We used an outside company (Earthlink) to host our email, which, in essence, meant that Earthlink was providing ‘cloud services’ for us.
We also have been using an online payroll service for eight years now, whereby we enter our payroll data into a website, and our employee paychecks are processed. Many other businesses might be doing the same. This is truly a ‘cloud service’ that has been around for close to a decade.
Some companies use an Internet-based product called Postini, which has been around since 1999, to scrub their email for spam. I bring this up to point out that all of us have been leveraging the cloud for quite some time, and we probably didn’t even think about it; in actuality, it really isn’t a very new phenomenon.
What are some examples of how businesses can move functions to the cloud?
There is a definite shift in moving some computing resources into another company’s data center in order to save you some headaches and, in some cases, time and money. I use the word some with emphasis here, because if you think that your entire business is moving to the cloud anytime soon, you are probably mistaken — unless your business consists of only a handful of computer users.
The most prominent shift to cloud computing is the migration of email back into the hands of hosted providers, similar to how it was 15 years ago. Microsoft is now in the hosting business with its Office 365 product. It consists of Microsoft Exchange (email server), SharePoint (an intranet product), and Microsoft Lync (instant messaging) in the cloud, with the ability to ‘rent’ Microsoft Office on a per-user, per-month basis, with Office still being installed locally on your desktop.
In moving from an on-premise email solution, such as Microsoft’s Exchange Server, over to Exchange Online, the migration has been very time-consuming, and thus very costly. These migrations have proven to be more costly than moving from one on-premise solution to another. That being said, there can be some significant savings in hardware and software costs, reducing capital expenditure spending for many companies. Additionally, after the solution is running, the ongoing maintenance of on-premise solutions will be gone, which should equate to a cost savings in the long run.
Google has made a significant impact in cloud computing with Google Apps software. From what I’ve seen of the software, it is a good solution for individual use, and for the use of ‘micro-businesses,’ but it reminds me of Office 95 from a functionality standpoint. So, I couldn’t recommend this to any business that relies heavily on word processing.
Perhaps the most successful case study, and a company that has truly made its mark by delivering software over the Internet, is Salesforce.com. It has a very robust feature set within its application, and it was remarkable what it was able to do early on in the cloud-based customer relationship management space.
There are some other line-of-business applications that are cloud-based, as well, and truly deliver a rich user experience, but these are few and far between today, but will be the norm in the next five years.
How can businesses determine what to take to the cloud?
The wise approach is to hire an IT firm with expertise in this area to evaluate your systems, determine the applications that may be ready for the cloud and take a hard look at the overall ROI in moving them.
Zack Schuler is founder and CEO of Cal Net Technology Group. Reach him at firstname.lastname@example.org.
Insights Technology is brought to you by Cal Net Technology Group
California passed more than 800 new laws in 2012, and Shane P. Criqui, litigation attorney at Stradling Yocca Carlson & Rauth, says, “It’s virtually impossible for any business person to keep track.”
He says among those of interest to businesses are new laws that govern social media in the context of an employee and employer relationship, and broad legislative changes regarding California LLCs.
“That’s why it’s important to have a discussion with your counsel and make sure you understand how these laws may affect your business,” Criqui says.
Smart Business spoke with Criqui to better understand two of California’s law changes.
What is changing regarding social media?
California has added protections for employees using social media to the state’s labor code, which establishes privacy protections for individuals and limits what employers can lawfully demand of employees. It helps avoid situations where employers demand private social media passwords and take adverse actions against an employee based on the content of his or her account. The law also applies to job applicants.
Specifically, an employer can’t require an employee to disclose username or password information for personal social media accounts; require an employee to access his or her social media accounts in the presence of the employer; or otherwise divulge personal social media information. Further, employers can’t discharge, discipline or retaliate against employees for not complying with such requests.
There are, however, exceptions. An employer can go after information on a social media account that’s reasonably believed to be relevant to investigations of employee misconduct or a violation of law. Employers also may require employee disclosure of passwords necessary for accessing an employer-issued electronic device.
What constitutes social media?
The definition of social media as it applies to this law is very broad and can include any electronic service, account or content such as videos, photos, blogs, podcasts, text and instant messages, and websites.
Further, while the law applies to accessing ‘personal social media,’ the term ‘personal’ is not further defined, which may create ambiguity. For example, an employee’s LinkedIn account could be used to promote his or her employer’s business but is also ‘personal’ to the employee.
What changes are coming for limited liability companies?
A 2012 bill that becomes effective Jan. 1, 2014, repeals California’s Beverly-Killea Limited Liability Company Act and replaces it with the California Revised Uniform Limited Liability Company Act. It will apply to all California LLCs existing on Jan. 1, 2014, and no LLC can opt out.
The new law presumes an LLC is member managed, unless the company’s articles of incorporation and operating agreement specifically provide otherwise. In member-managed agreements, all members can act as agents of the LLC, where in manager managed arrangements, it’s only the managers.
Other provisions are specific to fiduciary duties. Expressly, the law says managers can’t eliminate the duty of loyalty, which a manager typically owes to the LLC along with the duty of care. However, duties of care and loyalty can be modified ‘in a written operating agreement with the informed written consent of the members.’ For instance, the duty of care can be lowered, although not ‘unreasonably reduced.’
The new act also states that while an operating agreement may ‘eliminate or limit’ a member or manager’s liability for monetary damages with respect to a breach of the duty of care, it cannot do so with respect to a breach of the duty of loyalty.
What should affected companies do?
While prior operating agreements will remain in effect after Jan. 1, 2014, the new act will apply to ‘acts,’ ‘transactions’ and ‘contracts’ entered into on or after that date. Accordingly, it makes sense for LLCs to talk with counsel to make sure the new default rules don’t change an LLC’s understanding of its existing rights and obligations.
Shane P. Criqui is a litigation attorney at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4226 or email@example.com.
Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth
Engaged employees know your company’s expectations and work hard to meet and exceed them. They use their talents to excel, drive innovation and move their companies forward.
To learn more about transforming employee engagement levels in the workplace, Smart Business spoke with Barry Arbuckle, Ph.D., president and CEO of MemorialCare Health System, recognized as one of only 32 companies worldwide to receive the 2013 Gallup Great Workplace award.
What do engaged employees do to improve the workplace?
Imagine a candy wrapper lying on the floor of your business’s lobby. An engaged employee picks it up and puts it in the trash. They are 100 percent invested in helping your organization succeed. A disengaged employee ignores it and walks by. An actively disengaged employee was the one who threw it there to begin with.
According to Gallup, the average ratio of engaged to disengaged employees in their database of health care organizations is 4-to-1. Engaged employees are more productive, customer-centric, safe and successful. They are 3.5 times more likely to be thriving in their lives, experience better days and have fewer unhealthy days. We see a direct correlation between high employee engagement and the service satisfaction scores we receive from our patients and their families.
How do you improve employee engagement?
Creating a work environment that values people and aims to ensure each employee has an emotional connection to the company’s growth or mission is at the heart of sustaining employee engagement.
Become an active partner with your employees to maintain or improve their health and wellness. Create an environment that makes being healthy easier, with nutritious on-site food options, walking challenges, weight reduction programs, gyms, smoke-free campuses, activity days, health information and more. Encourage teams to take walking rather than sitting meetings, take activity breaks and make walking workstations available. In MemorialCare’s case, implementing these core aspects of a wellness program resulted in 77 percent of our employees reporting that their organization makes an effort to help them improve their health.
How do you become a partner in your employees’ wellness?
Once you’ve got the basics of a wellness program in place, help provide your employees with the knowledge they need to impact their risk factors for chronic disease. Understanding the key biometric numbers of blood pressure, blood sugar, cholesterol and body mass index, and their connection to heart disease and diabetes can help individuals to lower their risk. Chronic diseases like hypertension, high blood pressure, diabetes, asthma and depression are responsible for two-thirds of the total increase in health care spending. Reducing these can help lower health care expenses.
Actively partner with employees who need the most help managing chronic conditions. The latest evidence shows that the support of a team including a wellness coach, nurse, dietician and physician can give individuals with chronic conditions what they need to make important changes. MemorialCare partners with our employees with chronic conditions to make long-lasting lifestyle changes, lessen complications, improve outcomes, and lower medical and pharmaceutical costs through our program, The Good Life – In Balance. With 93 percent participant retention, the program has led to significant improvements in their blood glucose and blood pressure.
How can employers improve the workplace?
Participate in a survey, like those initiated by Gallup, to help identify key factors in moving the dial on your employees’ engagement. These surveys compare your results with other companies, so you can learn where you excel or need improvement.
There is a direct connection between investing in employees’ wellness and achieving internationally recognized employee engagement levels. By creating a culture where well-being is valued, you can improve health, morale and productivity, while reducing absenteeism, and the costs of health benefits and workers’ compensation.
Barry Arbuckle, Ph.D., is president and CEO of MemorialCare Health System. Reach him at firstname.lastname@example.org.
Website: See more health and wellness information, podcasts and videos.
Insights Health Care is brought to you by MemorialCare Health System
California small business owners rely on banks for traditional financial services, of course, but also for valuable knowledge and advice on navigating today’s challenging economy.
That’s why California Bank & Trust periodically conducts surveys of small business owners as part of the bank’s commitment to understanding small business owners’ challenges and needs.
“Knowledgeable banking professionals who take the time to understand your business objectives and your industry will often provide valuable suggestions on how to significantly improve your finances,” says Tory Nixon, Executive vice president at California Bank & Trust.
In support of Small Business Month, Smart Business spoke with Nixon about the most recent survey the bank conducted and what it revealed about the challenges small business owners face as the state’s economy continues to recover.
What challenges do California small business owners face?
Laws and regulations seem to be the biggest hurdle for business owners, with nearly 38 percent of survey responders citing that as a major issue. There’s also concern over cash flow and money management, access to capital and finding top quality employees.
Nearly half of those who responded describe California’s economic climate as worsening. While that might appear bleak, about half of all respondents also cited a need for additional capital in 2013 to expand or increase staffing.
What tools can owners use to overcome these challenges and succeed?
As noted, access to capital continues to be a challenge for smaller businesses, but small businesses can and do get financing — especially when maintaining a good working relationship with their business banker, who can help in arranging loans and lines of credit.
One key advantage that small business owners have over their larger counterparts is access to Small Business Administration financing. Look for a bank that’s a preferred SBA lender. That’s a sign that there are knowledgeable bankers who can help you navigate the complexities of both SBA 504 and SBA 7(a) loans, or provide you with traditional small business financing options.
Small business owners also should stay focused on their cash flow. Your business banker can provide expertise in cash management and access to accounts and technologies that can keep idle cash working as hard as possible.
How do business owners feel about their banking relationship?
Again, small business owners seem to be extremely concerned with cash flow management and access to capital, but a significant number are also looking for more expert knowledge and advice from bankers.
The bank’s survey found that about 80 percent of business owners feel their bank doesn’t do enough to inform them of state, federal or local programs that could help their business. That’s why many local and community banks are extending services to provide access to highly informative resource centers, digital magazines and newsletters, which provide exactly that kind of information and are easily accessible online. Banks also are providing valuable information through social media channels and via email marketing programs.
How can you improve your banking relationship and increase business growth?
In most cases, all you have to do is ask for help — and your business banker will follow up as often as necessary. Knowledgeable banking professionals who take the time to understand your business objectives and industry will often provide valuable suggestions for improving your finances.
Getting the most from your banking relationship means keeping the lines of communication open and scheduling regular meetings. Don’t be shy about sharing your business vision; it will inspire your banker to suggest the best solutions, technologies and financing to help your business grow in the months and years ahead.
Tory Nixon is executive vice president at California Bank & Trust.
Website: May is Small Business Month in California. Learn more.
Insights Banking & Finance is brought to you by California Bank & Trust
Ronald Reagan was well known for not only his confidence but also his positive outlook and sense of humor. He had a way of never taking himself seriously and always found a way to find humor even during the direst times.
In fact, following the assassination attempt, he told his wife, “Honey, I forgot to duck.”
His constant positive outlook made him appealing to voters and is one of the reasons he continues to score high in polls ranking presidents.
Do we approach life and leadership the same way that Reagan did? Do we always take a positive outlook into the start of each day?
Some CEOs act as if being in charge makes them a victim and complain of the burden. Leadership is a privilege that all of us should learn to enjoy. We have to train ourselves to enjoy the process, not just the end result.
Let’s take some time to reflect on the victories, no matter how small, and celebrate them. Learn to reflect on the great clients we have and the great people who work for us instead of focusing on the one unhappy customer or an employee with a bad attitude. But most importantly, we shouldn’t take ourselves too seriously.
Each day that passes is a day that we do not get back. We have to look at each day as a series of moments and find the happy things that put joy in our life.
These can be simple things — a funny comment from your child, something silly you heard on the radio or a bright, sunny day. When we start focusing on these small joys in life and start stringing them together, we’ll find that an entire day has become joyous. Enjoy the time you are in now and don’t spend so much time fretting about tomorrow. Be intentional: Start by writing down four little things a day at work that bring you joy on a daily basis and build from there. This can even be a conversation around the watercooler that makes you laugh. String together a few days like this, and we are well on our way to a more joyous life.
By developing this habit, we will be more inclined to treat people better, and they, in turn, will treat others better, which will increase the overall positive culture of our workforce. The work environment is a bigger factor in why employees leave than money is, so focusing on providing a more joyful environment will also help your business in the end.
Whether in business or in life, it all comes down to being joyful. Happiness is fleeting based on circumstances, but joy becomes permanent once we have cultivated it. Start by focusing on the little joys and build from there. Remember, people won’t remember what you said, but they will remember how you treated them.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
The more there is available of something, the less it costs. Conversely, when there’s a limited quantity of that same something, the more it’s coveted and the more expensive it is. This is a rudimentary concept, but few companies know how to effectively manage the process to ensure they balance supply with demand in order to maintain or improve the profitability of a product or service. Of course, before you can maximize profitability, you must have something customers want, sometimes even before they know they need it.
Think about precious metals, fine diamonds and even stocks. The beauty and a portion of the intrinsic value of these things are effectively in the eyes of the beholder. In reality, much of their value or price is determined by the ease or difficulty of obtaining them.
As for equities, as soon as everyone who can own a given stock has bought it, then, in many cases, the only direction that stock can take is down because there are simply more sellers than buyers. On the flip side, when few people own a stock but everybody decides they want it, for whatever the reason, that stock may take a precipitous upward trajectory.
A case in point is Apple. At one time, when its per-share price was more than $400, $500 and even $600, everyone thought the sky was the limit and the majority of institutional funds and many home gamers, aka small individual investors, jumped on the bandwagon. The stock reached $705 a share in the fall of 2012, and just when all of the market prognosticators were screaming, “Buy, buy, buy,” there were too few buyers left (because everyone already owned it) and the stock fell out of bed. In many respects, Apple was still the same great company with world-class products, but there were simply more sellers than buyers and — poof — the share price evaporated, sending this once high-flying growth stock to the woodshed for a real thrashing.
The question for your business is how can you manage the availability of your goods or services to maximize profit margins? The oversimplified answer is once you have something of value, make sure that you create the appropriate amount of tension, be it requiring a waiting list to obtain the product or service or underproducing the item to create a backlog. However, this is a delicate balancing act, because if it’s too hard to get, then customers will quickly find an alternative, and your product will become yesterday’s news.
Some very high-end fashion houses, such as Chanel, have it down to a science. It can be very difficult to walk into a marquis retailer today and obtain one of its satchels without being made to jump through waiting-game hoops, just for the privilege of giving the store your money in exchange for the fancy schmancy bag. That stimulates demand and keeps the price up because customers tend to want something they can’t seem to 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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Every company has its baby photos. Monoprice Inc. is no exception.
A decade ago, the Internet electronics retailer was a small start-up. The company’s owners wore many hats, dictating almost every aspect of the company’s culture, strategy, systems and processes.
That was then. The “now” for Monoprice is the company that CEO Ajay Kumar has fronted for the last two years. It’s a $121 million player in its space, growing at a rate of 25 to 30 percent every year. With rapid growth and a workforce of 250, Kumar can’t possibly dictate every angle and nuance of the company’s day-to-day operations.
“When you start a small company and grow it, you can manage every aspect of it,” Kumar says. “You can be hands-on, making every decision, involving yourself in every detail.
“But now, we have to have all the appropriate controls in place to manage the company. We have to have the right organization, accountability, reports, metrics, all that stuff, so that it’s not just the top person running the whole thing. You need the structure and controls in place to make it all work.”
By the time Kumar took over, the CEO’s role had evolved into a global-view position. Instead of laboring in the trenches, Monoprice needed its CEO to define a vision, work with his leadership team to put goals and processes in place to achieve the vision, create metrics to measure progress against the goals, and build a team that could achieve and exceed the goals.
“My leadership style is that I am hands-on but not a micromanager,” Kumar says. “I want people who are capable of executing what I need done in each functional area. In addition to the goals and metrics, we need the right people in the right places throughout the organization.”
At its heart, Kumar’s biggest challenge has been to harness the ability to look ahead and anticipate what his company will need in the coming years.
Create a vision
Vision equals direction. Without a well-defined vision, a company is operating without a compass or a rudder. That’s a recipe for turning growth into stagnation and eventually into mere survival.
That’s why Kumar’s first job upon taking the CEO’s role was to define a vision and ensure that the vision and the reasoning behind it could be adequately explained to the Monoprice team.
“I was able to have a vision for the company coming in, since I had a lot of experience in this industry,” Kumar says. “I had a lot of experience in terms of sourcing products from Asia, getting products made rapidly. The consumer electronics business is something I’ve been in for a long time, so I had a good idea of what the vision needed to be for the type of company we are.”
Kumar’s vision was to produce products equal to or better than big-name brands in terms of quality and compete on price.
“We didn’t want to get into selling any product line if we didn’t feel we could generate at least a 30 to 70 percent advantage over the retail selling price,” he says. “That creates a certain amount of discipline as far as launching products. We don’t want to be randomly launching products.
“We want to launch products where we have a price advantage. The way we do that is we don’t sell other brands. A lot of Internet retailers are selling other brands. We don’t do that, so we are eliminating a whole layer of markup.”
By not carrying outside brands, Kumar and his team also attempted to make a statement about their belief in the quality of their products — a move made, in part, to bolster consumer confidence in the product lines.
“If we sell other brands, we’re, in effect, saying their brands are as good as ours, but they are much pricier, so why are we selling them?” Kumar says. “It’s like saying their products are a step up from ours. That is a key part of our vision: The products we make need to be as good as the famous brands. If the quality is the same but the price is lower, people aren’t going to go anywhere else.”
Related to that, Kumar incorporated a sense of focus into the vision. Monoprice would compete on price and quality but would also compete by becoming an expert retailer in a focused space, as opposed to carrying a broad spectrum of seemingly unrelated offerings.
“A lot of Internet retailers carry tons and tons of products that all seem kind of random,” he says. “It doesn’t feel like a portfolio.
“Our goal is to pick product lines that we want to be in. If we want to be in the Apple accessory area, we need to come up with the right mix of products in the portfolio. Not too many, not too few, because our goal is to become a destination for each product line that we want to be in.”
With the vision focused on those three factors, Kumar then had to roll it out to the company at large — complete with a compelling set of processes and incentives aimed at motivating people throughout the company.
Make them follow
To drive the entire company toward realization of the vision, Kumar had to give all 250 people a reason to get on board. He had to show everyone in the company how their performance related to the company’s ability to achieve its overarching goals and turn the vision into something concrete.
Kumar and his leadership team started by rolling out the vision with a companywide presentation, with an opportunity for dialogue and feedback. That planted the seed, but Kumar says the seed sprouted thanks, in large part, to the company’s bonus plan.
With a bonus plan anchored in corporate-level metrics, Kumar steered every person in the organization, regardless of department, toward the goals that would help Monoprice realize his vision.
“I think a bonus program is always tricky,” Kumar says. “Do you measure people based on department results or overall company results? Some companies go down one path and some go down the other.
“Early on, I decided our path should be aligned along one set of metrics at the corporate level. We decided to focus everyone on three metrics that drive our bonus program: sales, profit and cash flow. Some people in some functions might not be able to directly impact all three of those, but we wanted everyone thinking about all three.
“The thing I like about having the metrics at the corporate level is that everyone in the company is focused on the same thing. It’s the same bonus program whether you are a warehouse worker, customer service person, IT or even myself. It keeps everyone working in the same direction.”
The disadvantage to developing a bonus plan driven by corporate-level metrics is that some people in certain areas of the company might not feel a high level of urgency to meet the company’s goals.
To avoid coasting, Kumar and his team have devised department-level metrics. Since those metrics don’t directly impact the bonus program, Kumar relies on a culture of accountability to enforce them.
“They’re producing against those department-level metrics, they’re showing plan versus actual against those metrics, so there is a little bit of accountability and professionalism at stake when you’re executing on that plan in front of your peers,” Kumar says. “That, in and of itself, will drive a certain level of motivation.”
Find the talent
You can have a well-defined vision, and you can develop metrics and incentives that ensure people are working toward realizing that vision. But your people provide the momentum that will really power your company toward the goals you have set. Without competent employees, nothing gets done.
Kumar believes in attracting top-notch talent but not without first understanding the roles that he needs to fill. He wants talent, but he doesn’t want to simply stockpile talent for talent’s sake, without a plan for utilizing it.
“One of the key things before you go recruit people is making sure you have an understanding of what, exactly, you want from a particular role,” Kumar says. “Some folks may go out there and hire a generic person for a generic role. What I try to do is figure out exactly what I want to get from a particular role.”
Then, when you bring a candidate to the office for an interview, make sure your line of questioning aims to ascertain whether the candidate is a match for the criteria you have established.
“One of the things I like to do is get into the details of what they did at their past job and how they did it,” Kumar says. “When you look at resumes, sometimes it will say a person saved 30 percent or grew sales by $50 million, but you start digging, and they didn’t do it all themselves. They didn’t drive it. I’m looking for people who generated benefits at their previous jobs, and I want to know if they can do the same thing at this company.”
How to reach: Monoprice Inc., (877) 271-2592 or www.monoprice.com
The Kumar file
Name: Ajay Kumar
Company: Monoprice Inc.
What is the best business lesson you’ve learned?
I am a big believer that what you don’t work on is as important as what you do work on. It’s important to know when you should pass on an opportunity. In most companies, it is too easy to get bogged down on doing too many things. It is the nature of a high-performance person. You want to get things done, but you can’t do everything.
What traits or skills are essential for a business leader?
Having a vision that makes sense, creating a sense of buy-in, recruiting the right people, drive, performance, being a good two-way communicator, facilitating teamwork, and providing a coaching and mentoring approach to growth. One of the primary things people want to get out of a job is what they learn from their boss.
What is your definition of success?
For me, it is setting goals and then achieving them. That might seem very metrics-oriented, but if you don’t achieve goals, it won’t be a fun place to work. People won’t feel like the company is successful. If you set goals and don’t make them happen, you don’t get that sense of accomplishment. People start to feel like you’re wishy-washy.
Develop a strong vision.
Create buy-in on the vision.
Hire the right people.