Thursday, April 28, 2011

Job sharing can work

Job sharing allows you to employ two or more good people to help your company on a part time basis. Between them they offer you the equivalent of one full time person or more.

Yes, I know that you may have to pay benefits for more than one person, but will it help your business more than hiring a full timer who is still coming up to speed on the business?

For example, one of your key staff may have a sick family member, or require paternity or maternity leave. Maybe they just don’t want to work full time anymore and they have skills in an area where there is a shortage of skilled people.

Here are few ideas on how to make job sharing work.

First of all – make sure they coordinate with each other and have a handover everytime they swap. Enforce this if necessary.

Second – are they still available for phone calls during their downtime? Think about it. Do you call colleagues when they are out of the office? Most of us will wait until they come back. Out of sight out of mind.  Break this habit.

Third – can you break the task into pieces, tasks or actions that can be picked up by either and followed through.

Fourth - Do you have a customer relations management system that shows notes on all contacts and conversations? Think of the last time you spoke to your telecommunications provider help desk – it doesn’t matter who you speak to – they can see the record of all previous conversations.

Whatever the reason, if you are compelled to implement job sharing - embrace it.

Wednesday, April 27, 2011

Make your margins on junior staff

You make a margin on every hour your employees and contractors work. The more hours your staff are working, the more income you make. However, the margins change with the experience of your staff.

Keep in mind the following:
  • The market sets the price for your services and products.
  • The first rule of business is to buy low – sell high.
  • There is a higher profit margin to be made from junior staff.

The basic leverage model is to set up the work flow and work processes so that the least experienced staff can do the bulk of the work with supervision and quality control from the most experienced staff.

As a business founder you will probably be tempted to do everything yourself. This makes a lot of sense in the early stages as the only thing that is free is your time.

When you grow – think about how you can use junior staff to do the job.

Tuesday, April 26, 2011

Reef your sails

In the nautical world reefing your sails means reducing the amount of sails exposed to the wind so as to reduce the chance of damage in strong winds. You can go faster in a strong wind, but the chance of catastrophe is a lot higher too.

In the business sense I am talking about risk exposure and your stress levels.

A lot of advisors and friends will be encouraging you to keep going fast. What do you feel though?
Have you taken the time to consolidate your business and processes? Are you still doing too much of the work? Are your employees trained and fully productive? Are you adding new customers? Do you have enough funds to take on extra clients?

On a personal level, are you delegating yet? Can you pay for the wages next week without dipping into your credit cards? What are your cash flows like? Are you eating instant noodles too often? Is your family suffering along with your business?

Who said that you need to become the next Bill Gates? If you are happy to just make a decent income then who is telling you to do more than that?

Give yourself a bit of a break from the relentless pressure and stress -  time to reef the sails. Take a bit of a breather. Reduce your exposure to risks. Spend more time with family. Get the business running more smoothly.

Monday, April 25, 2011

Pride versus profit

In any industry you will find a variety of business models ranging from full service/best practice/customised solutions through to fixed price commoditised solutions with no real customer support.

The market decides which is the best model for it. It may be that there is a good market for both.

Many first time buyers will look for the full service model, but second time buyers may prefer the commodity approach as they have more experience. 

What I want to say is aimed at people starting out with the full service type approach. Listen to your customers!

Don’t be so proud that you refuse to do work because it is beneath you. There is a very good reason for the existence of the other business models – customers want that.

Stay on the right side of the law, keep your ethics, keep your standards of quality – but watch for pride getting in the way of income.

Follow the money – not your ideals.

Sunday, April 24, 2011

Flexible but resilient

I love all the success stories you hear about stubbornness and obsession.

Old John believed there was gold there and after he was fired he spent 20 years in the desert, even though people told him he was mad, and look, he finally found it and is now a millionaire.

I hear variations on this all the time. They are nice bed time stories told by people to share the importance of persistence or stubbornness.

If you want stubbornness in the face of criticism and relentless obsessiveness then get into R&D.

However, the other 99.9999% of us can’t go live in the desert living off lichen and insects, we have mortgages to pay, kids to send to school, employees, rent, and the list goes on.

Flexibility is important. Flexibility means that you realise the path you are taking isn’t working, so you find a different path, keeping the same destination in mind. Flexibility means adaptation and evolution.

Resiliance means the ability to get up and keep going when you get knocked down. You might lose a sale, disappoint a customer, have your friends tell you that you are going to fail, and so on, but you keep going.

Look at those people you admire in business and you may find behind their confident demeanour that they are just as every bit as insecure as you, but they have learned to be flexible and resilient to achieve their goals.

Thursday, April 21, 2011

Sell instead of demonstrating

All my friends in startups have the same complaint. People like our idea but they want to see it working before they will buy.

The customers are both annoyingly conservative and also partially correct.

You are asking your customers to take first of a kind (FOAK) risk that will likely entail budget and schedule overruns. You are on a voyage of discovery where your ideas get to meet the reality of design and implementation. Most of them don’t want to take that risk as that is traditionally the role of shareholders.

So, you scrape together the funds for a demonstration – but it’s still not good enough. They want to see a commercial scale product. So then you try and build a full size plant.

This is where the trap lies. It often takes a completely different set of skills to build a full size plant, and once those managers are in place the companies goal then shifts from design and manufacture to full plants.

The world is littered with great technologies that got caught in this trap.

Why on earth would you design a revolutionary product and then sell it to yourself? That’s what demonstrations are – selling to yourself.

Go sell to others instead, and don’t lose sight of your actual purpose.

Wednesday, April 20, 2011

Funding by subscription

Software and web related businesses can use subscriptions to raise funds in lieu of debt or equity.

This is nice for you as sales allow you to pay for staff, servers etc, and it also allows you to add extra functionality as you grow.

As your functionality grows then you can get more sales, and so it goes.

For customers it makes them feel that they are not taking risk with the technology and they aren’t paying for the bill to pay for a service which they know you will be selling to others. It limits their exposure and if others pay for service improvements, then they will also get the benefit. They may even be willing to buy upgrades in the future too.

If you have a worldbeating idea that the venture capitalists will pay you millions for to grow then I couldn’t be happier for you. But for the rest of us in the mundane business world with a good idea, then subscriptions are a great way to raise funds.

Tuesday, April 19, 2011

Same but different

Standing out from the crowd is great, but don’t be so different that no one wants to know you.

It is tempting to be totally different to your competitors but this can go down badly with your buyers.

Think of your buyer's perspective. They are going out to the market to buy something that multiple vendors offer. 
They get in 5 offers that are all roughly similar and one which is totally different. The totally different one is rejected.

If you underprice they will be suspicious of quality, your sustainability as a business, and your ability to deliver.

If you sell services in different bundles to your competitors then they have no reasonable means of comparing bids.

If you are going to be different think about the three main characteristics you can choose from – price, quality and customer service. Pick one as your so called unique selling point and use that to differentiate yourself. Otherwise, at least look like one of the flock.

Monday, April 18, 2011

The five sided deal

In one way business is simple. You work out who has the money to pay for your service and then you go sell to them.  This is 100% true – however, I can guarantee that most of you are only looking at part of the picture.

A couple of years ago a friend of mine in the financial advisory business was looking at potential business in a government asset privatisation. Working with him we soon realised that he had 5 potential customers for his services in the transaction.
  • First was the government agency responsible for organising the sale.
  • Second was the private sector party (investment bank, etc) acting as advisor on the sale
  • Third was the advisors to the advisors (e.g. accounting firms, etc.).
  • Fourth was the potential bidders for the business.
  • Fifth was the service providers to the bidders .

I had another experience helping a friend sell consulting services into mining companies. We got absolutely nowhere for the first few months. I was demoralised and my friend was probably annoyed at the lack of sales but remained polite with me.

We were talking about the problem one day and we realised that while we had been trying to help the mining companies get a better deal out of major suppliers they weren’t interested – basically they didn’t know any better and didn’t understand how we could add value. So my friend suggested that we help some of the under-resourced suppliers sell their services to the miners. We started work with a client the very next day.

So next time you are thinking about who your clients are – try thinking how many sides to the deal there are.

Sunday, April 17, 2011

Passion is overrated

Just about everyone you meet nowadays tells you that you need passion about your career, and that passion is everything.

This is complete and utter nonsense.

By definition passion means you have strong emotions about something.

Think of American Idol auditions, the really emotional ones who spout how good they are and how  singing is their passion are usually the worst singers aren’t they.

As a friend put it – you might be passionate about movies but it doesn’t mean that you have the first clue how to make one.

You need, knowledge and experience to make anything happen.

Having been through the startup experience I would use different descriptors.

Curiosity is important  - you aren’t going to solve problems unless you can work out what the problems are in the first place.

Enthusiasm – means to have an interest in something (which doesn’t have to be passionate)

Persistence – means continuing even when all extrinsic motivations have disappeared and it seems easier to just quit than keep going.

Flexibility – means keeping your eye on the goal, but adjusting the course you take to get there. When your idea of reality doesn’t match the market, you need to change your idea of reality.

Resilience – means the ability to get back up after you’ve been knocked down.

Obsessiveness isn’t a bad trait either as obsessive people can really get into all the details of something and find new ways of doing things, or find out what is not working.

Passion doesn’t last long and it isn’t really that useful – so don’t be like an American Idol contestant who woke up one day and decided they were the talent the world was truly waiting for. Act with purpose instead.

Thursday, April 14, 2011

Everyone should understand the business

Do your employees understand the business?

Do they understand what is being sold? Do they understand what customers are looking for? Do they understand the pricing? Do they understand the growth stage of your business and the limitations in resources you face? Do they understand that money doesn’t grow on trees and that it has to be made one sale at a time?

When your employees understand the goals of the business and the working and competitive environments then what they need to do to help the business becomes clear in their own minds.

This way you can help turn people who are waiting to be told what to do into people who proactively help the company. Morale can be improved and delegation is easier.

If you are worried about them stealing or sabotaging your business, then you have trust issues to work on. If you treat people well they will generally act for your good too. 

Wednesday, April 13, 2011

Mothers working part-time

‘They need to work 8 to 5.’


‘We can’t possibly allow someone to leave work early’

These and more are the kind of excuses you commonly hear for not employing mothers of young children.

I have yet to see anybody more productive during work hours than mothers. One part time accountant I used to work with said she was so grateful to take a break from being a mother that she looked forward to coming to work.

When you are looking to fill roles at your company, think about the thousands of talented but underemployed women living in the suburbs around you.

Make your workplace a friendly place for them to work. Allow flexible hours. Understand the need to take care of their children when sick. Most of all make them feel welcome. You might be surprised at where this can get you.

Tuesday, April 12, 2011

The price of admission is success

Sick of losing tenders to larger more established companies?

Tired of not being taken seriously?

Always wondering how to get better recognition for your offering?

The answer is you need to show previous success.

If you are selling a commodity style product with little need for follow up service or guarantees then you can get away with being the cheapest on no track record as your relationship is solely transactional. However, as soon as you are offering a more complex service or products which require ongoing support and maintenance, then you need to prove the likely longevity of your company.

Can you bring on board employees or advisors from the industry you are entering? They will understand your client’s needs, the competition and typical costs in your industry. If they have good industry contacts then you can borrow their track record to give your company credibility.

Do you personally have a track record of setting up long standing businesses? If this is your first time out of regular paid employment then buyers will be nervous that you won’t last. The simple answer to this is that for the first 18 months to 3 years you are on probation. Customers will start to take you more seriously after that.
Branding, advertising and media can provide the appearance that you are a long standing company, but this will be seen through by many procurement departments when they have a closer look, so don’t overplay your hand on this.

Persist at your efforts. Do your best. Keep contacting customers. Be prepared to not grow as fast as you planned. Accept that the high growth stage is normally between years 3 & 7, but beat that if you can. Most of all, calmly accept that your customers will be watching for you to succeed before they buy from you.

Monday, April 11, 2011

Panic is a transmissible disease

Panic is insidious. It takes over all your thoughts and actions. Instead of getting on with what you need to, you are running from action to action with little if any thought of whether you need to or not.

The worst thing is that as the company owner if you panic then so will your employees. When you are all panicking then everyone is full of frantic energy which is directed in every direction but that which is useful.

Then the blaming starts. Some people quit. Some people come to work but shut down. Politics can turn nasty. Things can turn sour very quickly

Seeing a company, or even a project team panicking and descending into these behaviours is heartbreaking.

Time to be an actor.

No matter how much you are panicking yourself – don’t show it; don’t share it. Speak calmly. Take time to make decisions. Listen to people’s questions and give them a fair answer. Identify when you are feeling neurotic and emotional and limit contact with others during those times.

Most of all - Don't Panic

Sunday, April 10, 2011

Clients who won’t haggle

There are few worse feelings than having a client who won’t return your calls after you’ve submitted a proposal.

You spent months cultivating your contacts, then you lost a few nights to preparing your initial approach. They liked what they saw and asked you for a proposal, then you haven’t heard back from them for a few weeks.

You are at loose ends and don’t know what to do.

The three main reasons clients won’t call back are:
  • They don’t like your price
  • They don’t have time to deal with you right now – i.e. it’s not urgent
  • They are not the final decision maker and they need to consider the offer too.


You need to call.
Ask how they are proceeding and if there is anything you can do to help. This usually identifies reasons 2 and 3.

If you uncover it is a price issue, then the old rule is to negotiate the scope and not your unit rate. Find out what it is they really want as opposed to the wish list they first gave you. Then you can reduce the scope and scale off the offer, provide the service in stages, etc. See if you can get them to haggle.

After all this, some people just won’t give you any straight answers, including no. They are likely uninterested due to price or for internal political reasons. So don’t hang around waiting to haggle – approach other customers too – and you never know, it may just work out.

Thursday, April 7, 2011

Confusing professionalism for effectiveness

Professionalism helps your career. It draws a clear line between your business and private lives but it can get in the way. Think of the following:
  • Always dress up.
  • Don’t be emotional.
  • Always be polite, you never know what bridges you’ll burn.
  • Don’t upset the customers.
  • Don’t upset your co-workers.
  • Never make personal calls at work.
  • It’s important to work 8-5 every day.

Here’s the antidote:
  • If it’s not important then it’s not worth doing.
  • There is no boundary between work and life. Do what you need to when you need to.
  • You are allowed to work from home, butt-naked. Teleconferences can be especially fun when underdressed.
  • You don’t have to stay in touch with people who have nothing to do with your business outcomes.
  • You can call who you like when you like.
  • Go pick fights occasionally. At least be rambunctious more often – you might be surprised at the outcome.
  • Take time off when you don’t have anything to do. Go to the shops, watch television, go to a park… just do something else.
  • It’s okay to work a 3 hour day.

Wednesday, April 6, 2011

Focus on today

Every day you go to work you should focus on what you can do that day for your business outcomes.

When you only look at the big picture then you fail to do what you need to do.

When you worry about the system you miss the opportunities to make sales now. After all it is up to Government to set regulations, not you.

When you set stretch goals you spend so much time worrying about not reaching them that you can forego more sustained smaller gains.

A wise man I know was in an organisation where for 5 years the operations side had failed to achieve their targets. Workers were on a production bonus and for short periods of time could actually reach production targets but it wasn’t sustained, and the workforce were demoralised and exhausted. This man had a brainwave and at a meeting simply asked – “ what can we do today to make things better for tomorrow.”

This led to hundreds of small changes in the way things were done in the operations and quite rapidly led to sustained increased performance that makes that company now one of the best at what it does in the World.

Starting the day with the question “what can I do today to make tomorrow better” is a great way to improve your business.

Tuesday, April 5, 2011

Either it’ll work out or it won’t

There was a great quote on the Italian Job saying that when someone says that they are fine it means “Freaked out, Insecure, Neurotic & Emotional”. This encapsulates the start up experience perfectly.

While it comes naturally to some, for most of us learning to be calm about uncertainties takes time.

Every high is euphoric. Every obstacle is gut wrenching and soul destroying. It can often feel like the world is so stacked against you that maybe the world or a higher being is trying to tell you to stop.

When you have made the decision to act or take a course of action it can be useful to tell yourself that either it will work out or it won’t.

Put that another way, there is a limit to what is actually in your control. So, keep doing what you need to do to make things work, and if it doesn’t then you hopefully haven’t lost too much and you can learn from it.

You lose far more by not even trying. 

Monday, April 4, 2011

Learn to trust your judgement

Bureaucratisation of the workforce had amazing positive effects on the ability of businesses to stay in control even when they became so big that no one individual could possibly understand the whole business.

This bureaucracy is often implemented through hierarchies, with levels of management responsibility and financial delegations attached. This itself is good for control but is really bad for people’s self initiative.

We are all taught to second- guess all our decisions, to write up business cases, try to persuade time poor and often irrational senior managers of our case, and to justify everything we do.

When you set up your company you and your employees need to learn your own judgement again.

First you need to empower yourself to act on your judgements and not regret mistakes. Likewise, you will get the best out of your co-founders and employees if they can trust their own judgement and experience too.

This seems a trite comment, but it is amazing how little people trust their own judgement. It also seems that the greater the amount of university education the less we trust ourselves. Go figure. 

Sunday, April 3, 2011

There’s no shame in making a profit

Throughout most of history businesses and profits have been thought of as distasteful or an ugly necessity. There are echoes of this in our education system, in politics and in the everyday media.

Most of us work in or for business one way or the other. When you go to buy a new washing machine you accept that the miners had to be paid for the raw materials, the foundry was paid to make the steel, the manufacturer was paid for its R&D, marketing and manufacturing costs, the transport companies were paid for the costs of their ships and trucks plus labour, and the retailer was paid to keep inventory and sales staff in a probably costly retail outlet.

You know all of this and it seems acceptable. It seems acceptable because you recognise the work required of others and that the price benchmarks well against your other choices.

However, when you first start out it can still feel embarrassing to make money from your efforts, and you may also feel the need to buy your sales by charging only cost, not paying yourself a salary, etc. so you can undercut your competitors.

Try benchmarking your price against competitors pricing and offering. Use that as your price and if you are still ashamed your profits give it to a charity.