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"I'm sorry the delivery is late, but...."
"I know this didn't turn out the way you ordered it, but...."
As entrepreneurs, we have all been in situations when we have been unable to meet our customers' expectations.
You may have been counting on suppliers who did not deliver to you on time or with the products you ordered. Maybe your workers did not show up on time or quit in the middle of a job. Or maybe you may have had a sudden influx of business or an unusually big job that you just did not expect and you and your employees just can't keep up.
However, it is important to remember that you are the one who picked those suppliers. You hired and trained those workers. You accepted all of that extra work.
Explaining why you did not meet the expectations of your customers with excuses does not build trust and confidence with customers. While there may be reasons behind your failure to meet their expectations, customers generally do not want to hear about your problems. What they want is for you to do what you have said you would do, and do it when you said you would. If you can't, they expect you to make it right.
Think of it from the customer's perspective. Blaming bad customer service on your supplier or your employees communicates to your customers that you are less than competent. It is your business, so whatever goes on within it ultimately reflects on you.
Even worse, telling a customer that the reason you could not deliver as promised is due to taking care of another customer, communicates that their business is less important to you.
The importance of taking full responsibility and acting with integrity with your customers is important any time, but it has become critical during the ongoing Great Recession.
Recent surveys conducted by the National Federation of Independent Business suggest that weak sales are is the single biggest challenge facing small business owners during the recession. Since the forecasts of most economists call for a continuing sluggish economy for some time to come, taking steps to attract and keep will continue to be a significant challenge for entrepreneurs. Not meeting customers' expectations or telling them that their business is less important certainly is not wise when operating in an economy where customers and the revenues they create are increasingly hard to come by.
Taking full responsibility with customers builds confidence in you and your business. Making each customer feel like their business is always the most important builds loyalty. Building confidence and loyalty in customers is essential for surviving the continuing recession and thriving when the economy finally does recover.
When things go wrong with a customer offer no "but's" and no excuses. Be honest, take full responsibility, and tell what you intend to do to make it right.
"I know this didn't turn out the way you ordered it, but...."
As entrepreneurs, we have all been in situations when we have been unable to meet our customers' expectations.
You may have been counting on suppliers who did not deliver to you on time or with the products you ordered. Maybe your workers did not show up on time or quit in the middle of a job. Or maybe you may have had a sudden influx of business or an unusually big job that you just did not expect and you and your employees just can't keep up.
However, it is important to remember that you are the one who picked those suppliers. You hired and trained those workers. You accepted all of that extra work.
Explaining why you did not meet the expectations of your customers with excuses does not build trust and confidence with customers. While there may be reasons behind your failure to meet their expectations, customers generally do not want to hear about your problems. What they want is for you to do what you have said you would do, and do it when you said you would. If you can't, they expect you to make it right.
Think of it from the customer's perspective. Blaming bad customer service on your supplier or your employees communicates to your customers that you are less than competent. It is your business, so whatever goes on within it ultimately reflects on you.
Even worse, telling a customer that the reason you could not deliver as promised is due to taking care of another customer, communicates that their business is less important to you.
The importance of taking full responsibility and acting with integrity with your customers is important any time, but it has become critical during the ongoing Great Recession.
Recent surveys conducted by the National Federation of Independent Business suggest that weak sales are is the single biggest challenge facing small business owners during the recession. Since the forecasts of most economists call for a continuing sluggish economy for some time to come, taking steps to attract and keep will continue to be a significant challenge for entrepreneurs. Not meeting customers' expectations or telling them that their business is less important certainly is not wise when operating in an economy where customers and the revenues they create are increasingly hard to come by.
Taking full responsibility with customers builds confidence in you and your business. Making each customer feel like their business is always the most important builds loyalty. Building confidence and loyalty in customers is essential for surviving the continuing recession and thriving when the economy finally does recover.
When things go wrong with a customer offer no "but's" and no excuses. Be honest, take full responsibility, and tell what you intend to do to make it right.
Cutting costs continues to be one of the main tools businesses are using to survive the ongoing recession. But it is customer service that most often suffers from this practice.
While people tend to grudgingly accept poorer service from larger companies, small businesses need to remember that their service is what most often sets them apart from the big guys.
In fact, the most recent American Express Global Customer Service Barometer finds that 81 percent of Americans say that small businesses place a greater emphasis on service than large companies do. Big firms can almost always compete better when it comes to offering lower prices. And they also have much more to spend on advertising to attract customers.
For small businesses, though, it is most often service to the customer that offers a competitive advantage.
"Getting service right is more than just a nice (thing) to do; it's a must-do," said Jim Bush, executive vice president of World Service American Express. "American consumers are willing to spend more with companies that provide outstanding service, and they will also tell, on average, twice as many people about bad service than they (tell) about good service. Ultimately, great service can drive sales and customer loyalty."
There are three steps that small businesses can take to ensure good service.
First, hire people who are enthusiastic about customer service. Find people who have a history of customer service from their past work experience and who have a personality of wanting to please others.
Look carefully for these traits in employment interviews and use a probationary period of employment to verify that they will do what it takes to make your customers happy.
A strong desire to provide excellent service is not something that can be easily trained, so if an employee is not showing these traits early in his employment with you, be prepared to cut your losses and find someone who does.
Second, communication is an integral part of what leads to a customer's perception of good service. Communication should be frequent. Create expectations of how and when customers should receive updates on work in progress, and develop systems to track communication with them. Quick email updates take very little time to send out but go a long way to develop trust and loyalty.
Finally, there is an ethical dimension to good service. Everyone in your business who interacts with customers should understand that honesty and integrity are paramount when it comes to customer interactions.
There is a pervasive myth that communicating bad news will equate to a perception of poor service in the minds of customers. In most cases, the opposite is true. Most customers would prefer being kept informed, even if it is about a delay or some other problem, than being left in the dark.
So, for small-business owners hoping to survive the recession and thrive once the good times return, quality service and consistent communication with the customer cannot be lost when trying to hunker down and bootstrap through these tough times.
While people tend to grudgingly accept poorer service from larger companies, small businesses need to remember that their service is what most often sets them apart from the big guys.
In fact, the most recent American Express Global Customer Service Barometer finds that 81 percent of Americans say that small businesses place a greater emphasis on service than large companies do. Big firms can almost always compete better when it comes to offering lower prices. And they also have much more to spend on advertising to attract customers.
For small businesses, though, it is most often service to the customer that offers a competitive advantage.
"Getting service right is more than just a nice (thing) to do; it's a must-do," said Jim Bush, executive vice president of World Service American Express. "American consumers are willing to spend more with companies that provide outstanding service, and they will also tell, on average, twice as many people about bad service than they (tell) about good service. Ultimately, great service can drive sales and customer loyalty."
There are three steps that small businesses can take to ensure good service.
First, hire people who are enthusiastic about customer service. Find people who have a history of customer service from their past work experience and who have a personality of wanting to please others.
Look carefully for these traits in employment interviews and use a probationary period of employment to verify that they will do what it takes to make your customers happy.
A strong desire to provide excellent service is not something that can be easily trained, so if an employee is not showing these traits early in his employment with you, be prepared to cut your losses and find someone who does.
Second, communication is an integral part of what leads to a customer's perception of good service. Communication should be frequent. Create expectations of how and when customers should receive updates on work in progress, and develop systems to track communication with them. Quick email updates take very little time to send out but go a long way to develop trust and loyalty.
Finally, there is an ethical dimension to good service. Everyone in your business who interacts with customers should understand that honesty and integrity are paramount when it comes to customer interactions.
There is a pervasive myth that communicating bad news will equate to a perception of poor service in the minds of customers. In most cases, the opposite is true. Most customers would prefer being kept informed, even if it is about a delay or some other problem, than being left in the dark.
So, for small-business owners hoping to survive the recession and thrive once the good times return, quality service and consistent communication with the customer cannot be lost when trying to hunker down and bootstrap through these tough times.
A recent study from The Guardian Life Small Business Research Institute looks at something near and dear to my heart -- Millennial Generation small business
owners as compared to other generations.
Here are my thoughts on a few of their key findings:
- Millennials are 50% more likely to expand their business compared to prior generations. This one does not surprise me. More and more of today's young entrepreneurs have studied entrepreneurship. There are also many more resources out there for them to draw upon. Part of what drives the interest in expansion is confidence. Understanding what drives successful growth makes seem more attainable. Many of our students talk about how to scale their ventures -- it seems to be part of their basic outlook on starting ventures.
- Millennials reported they are 100% more likely to sell their business. Again, not at all surprising. Exit planning is fundamental to what they learn about entrepreneurship and what they most often hear about it in media stories. It also fits with their limited attention span -- their words, not mine. Almost all of my students admit that they probably will lose interest in a business within a few years. They seem to be born to be serial entrepreneurs.
- Millennials are 120% more likely to be a business owner without other workplace experience. The old common wisdom was that you need to go out and work for someone for years before you strike out on your own. Not any more. We encourage our students to start ventures while in school to use as learning vehicles. Every year we see more and more young graduates walk across the stage with their diploma and a business in hand.
- Only 8% of Millennials inherited their business from their parents. No kidding. The Baby Boomers have not saved enough to retire, so they will be needing those businesses for a long, long time!!
In my last column, we began looking at the "three-legged-stool" -- that is, who small businesses need as supporting advisers. The first leg discussed was a business-minded attorney.
The second leg of the stool is an accountant, which for businesses should always be a Certified Public Accountant whose practice focuses on small businesses.
Accounting tools such as QuickBooks have made day-to-day bookkeeping and accounting much easier for small-business owners. But even though these tools are relatively easy to use, it can take quite a bit of time and a certain level of expertise to get everything set up properly.
"Do-it-yourself accounting tools may provide some assistance, but the entrepreneur will incur a learning curve and have to invest time in these sites when he should be investing time in developing the business," cautions Vic Alexander, chief manager of KraftCPAs here.
Many entrepreneurs try to bootstrap setting up their books by doing it all themselves, but in doing so they may fail to consider important issues that a CPA can help sort out.
"An entrepreneur should involve a CPA in the developmental phase of the business," Alexander said. "When developing the business plan, the CPA may be able identify potential sources of revenue or expenses that have not been considered.
"The CPA should also help the client in evaluating the appropriate entity structure (i.e., C-corporation, S-corporation, LLC, partnership or proprietorship) to accomplish the ultimate goals of the owner. The CPA can also help make introductions to bankers, attorneys, insurance agents, etc."
More than tax help
It is important to keep in mind that a CPA can provide assistance well beyond tax preparation.
"The CPA should be able to assist the client with asset protection, retirement planning, evaluation of systems of control for the business, setting up and maintaining accounting systems, business valuations and identifying key performance indicators that will allow the owner to manage and grow the (company)," Alexander says.
Since a CPA can be an important adviser throughout the life of a business, it is essential to find an accounting firm that's a good fit for the entrepreneur and the business.
"The CPA is the most trusted adviser in many instances, so the entrepreneur needs to feel comfortable with the CPA they intend to use," Alexander said.
"The best way to locate a firm to meet your needs is to first identify what the current and projected needs of the company are.
"Most people then talk with other successful entrepreneurs or professionals to identify firms that could be a fit for them. The entrepreneur can then review firm websites and interview firms they're considering."
So, like a good attorney, a CPA can become a trusted part of the entrepreneur's team who can add value throughout the life of a business.
My next column will look at the final key component of the "three legs of the stool" supporting a small business -- a commercial banker.
Many of us have been warning about inflation, and it apparently is beginning to rear its ugly head.
Large businesses are better able to buffer themselves from the impact of inflation. We are already seeing automobile manufacturers and airlines raise prices to offset higher costs caused by inflation in the areas of energy and raw materials.
Small businesses are generally in a much weaker position to adjust prices when inflation kicks in. Many small businesses are already weakened by the prolonged recession and are hesitant to raise prices right now.
How can small businesses prepare for the onslaught of inflation that seems almost inevitable?
Now that inflation has begun to heat up, it is time to become aggressive with frequent small price increases. This is generally a much better strategy than waiting and trying to catch up at some point with one big jump. For some businesses that post prices, such as restaurants with printed menus, this will create a challenge. But it is worth the effort, as customers are more willing to accept smaller price increases.
Cash may be a questionable investment during inflation, as its value decreases due to its diminishing buying power as prices go up. However, cash does become a critical asset for small businesses facing inflationary pressures. Cash reserves can serve as a buffer, as costs often increase faster than the entrepreneur can raise prices. "Cash is King," even during inflation, so it is important to build cash reserves to buy time until you are able to pass along higher prices to your customers.
If your business extends credit to customers, stay vigilant in collecting receivables. Don't let customers manage their cash-flow challenges at your expense.
Debt can create risk to small businesses during inflation. The Federal Reserve will begin to use interest rate hikes to battle inflation. Pay down variable-interest loans as soon as possible, as interest rates are likely to increase over the long term and drive up the cost of debt. Be prepared for much higher rates when your other loans need to be renewed.
One way to stay ahead of inflation is to stock up on inventory before prices from your suppliers go up. But be careful not to jeopardize your cash reserves when buying ahead with inventory.
Eventually, inflation will begin to create wage and salary pressures. Smaller businesses can see profits getting pinched as payrolls go up. When this happens, focus on the efficiency and productivity of your work force.
Inflation is a completely new experience to many current business owners, as we have not had high rates of inflation in almost 30 years. Watch your margins carefully. Worry about growing profits, not just your sales.
Be prepared for more difficult times ahead. Expect a continued fragile economy, but with the added pressures of inflation.
Large businesses are better able to buffer themselves from the impact of inflation. We are already seeing automobile manufacturers and airlines raise prices to offset higher costs caused by inflation in the areas of energy and raw materials.
Small businesses are generally in a much weaker position to adjust prices when inflation kicks in. Many small businesses are already weakened by the prolonged recession and are hesitant to raise prices right now.
How can small businesses prepare for the onslaught of inflation that seems almost inevitable?
Now that inflation has begun to heat up, it is time to become aggressive with frequent small price increases. This is generally a much better strategy than waiting and trying to catch up at some point with one big jump. For some businesses that post prices, such as restaurants with printed menus, this will create a challenge. But it is worth the effort, as customers are more willing to accept smaller price increases.
Cash may be a questionable investment during inflation, as its value decreases due to its diminishing buying power as prices go up. However, cash does become a critical asset for small businesses facing inflationary pressures. Cash reserves can serve as a buffer, as costs often increase faster than the entrepreneur can raise prices. "Cash is King," even during inflation, so it is important to build cash reserves to buy time until you are able to pass along higher prices to your customers.
If your business extends credit to customers, stay vigilant in collecting receivables. Don't let customers manage their cash-flow challenges at your expense.
Debt can create risk to small businesses during inflation. The Federal Reserve will begin to use interest rate hikes to battle inflation. Pay down variable-interest loans as soon as possible, as interest rates are likely to increase over the long term and drive up the cost of debt. Be prepared for much higher rates when your other loans need to be renewed.
One way to stay ahead of inflation is to stock up on inventory before prices from your suppliers go up. But be careful not to jeopardize your cash reserves when buying ahead with inventory.
Eventually, inflation will begin to create wage and salary pressures. Smaller businesses can see profits getting pinched as payrolls go up. When this happens, focus on the efficiency and productivity of your work force.
Inflation is a completely new experience to many current business owners, as we have not had high rates of inflation in almost 30 years. Watch your margins carefully. Worry about growing profits, not just your sales.
Be prepared for more difficult times ahead. Expect a continued fragile economy, but with the added pressures of inflation.
Full disclosure -- I am one of those nutty Cheeseheads you have been reading about with the Packers in the Super Bowl.
There is an entrepreneurial angle to the Super Bowl XLV that involves the iconic symbols for both of the teams.
Packers are known for their Cheeseheads. Even our clergy are not immune to displaying their Cheesehead pride. (The Cheesehead label was originally used as a derogatory term by Chicago Bears fans, but was quickly embraced by those of us from the land of the frozen tundra).
As you might suspect, the Packer Cheeseheads are made in Wisconsin. Entrepreneur Ralph Bruno is the man behind the now famous foamy headdress. You can read a great profile and interview with him here.
But here is where the entrepreneurial story of Super Bowl XLV takes an interesting turn.
The Pittsburgh Steelers are known for their terrible towels.
There is an entrepreneurial angle to the Super Bowl XLV that involves the iconic symbols for both of the teams.
Packers are known for their Cheeseheads. Even our clergy are not immune to displaying their Cheesehead pride. (The Cheesehead label was originally used as a derogatory term by Chicago Bears fans, but was quickly embraced by those of us from the land of the frozen tundra).
As you might suspect, the Packer Cheeseheads are made in Wisconsin. Entrepreneur Ralph Bruno is the man behind the now famous foamy headdress. You can read a great profile and interview with him here.
But here is where the entrepreneurial story of Super Bowl XLV takes an interesting turn.
The Pittsburgh Steelers are known for their terrible towels.
But like the Packer Cheeseheads, the Terrible Towels are also made in Wisconsin! While entrepreneur Gregg McArthur has made a lot of money from Steeler fans making the terrible towels in his factory in Baraboo, Wisconsin, he is true to his roots and will be rooting for the Packers this Sunday.
"In the end, I think it will be a good game, but Aaron Rodgers has it," said McArthur in an interview with AOL Small Business. "The Packers will win by a touchdown."
This Cheesehead now living in Tennessee hopes he is right!
"In the end, I think it will be a good game, but Aaron Rodgers has it," said McArthur in an interview with AOL Small Business. "The Packers will win by a touchdown."
This Cheesehead now living in Tennessee hopes he is right!
Lee Rainie, Director of Pew Research Center's Internet and
American Life Project, gave an intriguing talk on their research into the current use of the Internet in the US at our USASBE conference this past week.
The trends they are finding on the use of wireless, social networking, the types of technology we are using to access information, and the types of information we are seeking is really eye-opening. Anyone who is working on ventures related to the Internet or that rely on it for marketing (I guess that pretty much includes almost every business today) should read their reports.
One of the interesting conversations that came out of their data was about the changing norms and social expectations that are developing due to technology and the Internet.
Most of us have experienced a situation where we are talking to a young adult who in the middle of the conversation begins to answer a text message. Those of us who are Baby Boomers find this behavior to be socially rude. But to younger people, this is absolutely socially acceptable.
An extension of this is the need to compete with our marketing to an increasing amount of "noise" out there. People receive multiple messages, often simultaneously.
Such multiple, simultaneous flows of information are becoming the norm in our culture.
If you try to fight it, you will likely lose. When culture shifts this way it is impossible to reverse or even slow down the changes.
The conversation reminded me of an interview I heard with Brad Faxon, who is a professional golfer. Faxon had tried his hand at television broadcasting with NBC sports this past year. He is getting to the age where he is not very competitive on the PGA tour, but not quite old enough for the senior tour.
He said that his contract was not renewed with NBC. He shared that one of the most difficult things about the job was being able to listen to five different voices at once coming through his head phones offering information about what was happening in the golf tournament. He had to discern which of the voices were relevant for his commentary, while at the same time carrying on a conversation with other announcers or making comments about what was going on in the tournament.
I think all of us may soon experience something similar in our daily lives. More and more information is coming to us through more and more media and sources. And it is coming to us faster and faster. It is not slowing down and it is not going to let up.
We will all need to learn to adapt to this new social/cultural reality of "five voices at once" both as consumers of information and producers of information to the marketplace.
Winning Workplaces is collaborating with Inc. to recognize "Top Small Company Workplaces" that have built corporate cultures that foster a productive work environment and satisfied employees. The winners will be featured in the June 2011 issue of Inc. Magazine. In addition winners will be featured on Inc.'s and Winning Workplaces' websites and will gain additional exposure through a nationally distributed press release.
To get more information and to see if your company qualifies for the award visit their website.
The deadline for application is January 14, 2011.
To get more information and to see if your company qualifies for the award visit their website.
The deadline for application is January 14, 2011.
Even the optimists are saying that we have at least two more years of economic stagnation. Other experts are warning of a possible double-dip recession.
There is even growing talk in some circles of America experiencing a "lost decade" in its economy. That refers to the 10-plus dismal years of economic doldrums suffered by Japan in the 1990s.
Recent employment and bank lending rate data seem to support a prolonged recession for small businesses.
So what does this "new normal" in our economy mean for entrepreneurs?
For startup entrepreneurs it means you need to be lean. There will still be new businesses forming, even if the economy takes a turn for the worse. Some of these new businesses will be opportunistic entrepreneurs who see ways to meet the needs created out of the dramatic changes taking place in our economy and society.
Others will be among the growing army of accidental entrepreneurs who are finding that starting something on their own has become the only viable way to make a living during these challenging times.
Whichever path leads you to start a new business, a successful launch will require bootstrapping.
There is very little money being invested in or lent to new small businesses right now, so be prepared to find creative ways to get your business off the ground without a lot of funding.
If you are already a business owner and have survived the past two years of economic turmoil, let me be the first to offer congratulations. Clearly you have found a way to continue to offer value to the market. You must have also been an effective manager.
Some businesses that have survived are hanging on by a thread. If that is the case for your business, continue to pay attention to the basics. Keep cutting overhead, pay down debts and take good care of the customers you have so you don't lose any more of them to stronger competitors.
Every small-business owner should continue to run his or her business cautiously and prudently. There will be more tough times ahead.
Look for growth opportunity
Over the coming months, more of your competitors will probably fail, and that presents an opportunity to attract new customers to your shop.
This can be an excellent time to expand and take advantage of a larger market share. If you do expand, continue to bootstrap and try to keep your use of debt to a minimum.
This is no time for excessive leverage because of the uncertainty of the economic outlook.
Whether you are a new entrepreneur or a seasoned business owner, more than ever before remember, cash is king. Given the uncertainty of the economy, entrepreneurs should try to keep enough cash on hand to cover at least 30 days of monthly expenses -- and up to 90 days of cash on hand is not a bad idea, either.
It's also important to keep one eye on the future. Eventually things will improve. And those who survive the Great Recession have a good chance of emerging in a stronger position. The survivors of today will become the market leaders during the recovery.
(This post was my column in today's Tennessean).
There is even growing talk in some circles of America experiencing a "lost decade" in its economy. That refers to the 10-plus dismal years of economic doldrums suffered by Japan in the 1990s.
Recent employment and bank lending rate data seem to support a prolonged recession for small businesses.
So what does this "new normal" in our economy mean for entrepreneurs?
For startup entrepreneurs it means you need to be lean. There will still be new businesses forming, even if the economy takes a turn for the worse. Some of these new businesses will be opportunistic entrepreneurs who see ways to meet the needs created out of the dramatic changes taking place in our economy and society.
Others will be among the growing army of accidental entrepreneurs who are finding that starting something on their own has become the only viable way to make a living during these challenging times.
Whichever path leads you to start a new business, a successful launch will require bootstrapping.
There is very little money being invested in or lent to new small businesses right now, so be prepared to find creative ways to get your business off the ground without a lot of funding.
If you are already a business owner and have survived the past two years of economic turmoil, let me be the first to offer congratulations. Clearly you have found a way to continue to offer value to the market. You must have also been an effective manager.
Some businesses that have survived are hanging on by a thread. If that is the case for your business, continue to pay attention to the basics. Keep cutting overhead, pay down debts and take good care of the customers you have so you don't lose any more of them to stronger competitors.
Every small-business owner should continue to run his or her business cautiously and prudently. There will be more tough times ahead.
Look for growth opportunity
Over the coming months, more of your competitors will probably fail, and that presents an opportunity to attract new customers to your shop.
This can be an excellent time to expand and take advantage of a larger market share. If you do expand, continue to bootstrap and try to keep your use of debt to a minimum.
This is no time for excessive leverage because of the uncertainty of the economic outlook.
Whether you are a new entrepreneur or a seasoned business owner, more than ever before remember, cash is king. Given the uncertainty of the economy, entrepreneurs should try to keep enough cash on hand to cover at least 30 days of monthly expenses -- and up to 90 days of cash on hand is not a bad idea, either.
It's also important to keep one eye on the future. Eventually things will improve. And those who survive the Great Recession have a good chance of emerging in a stronger position. The survivors of today will become the market leaders during the recovery.
(This post was my column in today's Tennessean).
