THE REPORT BLOG

How to Lose Business and Alienate Clients (Are You Doing Any of These Things?)

For the past few months I have been speaking with web developers about doing a project for us. I spoke to developers from around the country (actually the world) and most of them were referrals from people I know. Looking back at this process, I am surprised and appalled at how these companies were trying to sell me. Here were some of the mistakes:

- One developer, who built a site that I like a lot, spent 10 minutes on the phone with me and sent a proposal. When I received it I figured that either the developer was a mind reader or they had no idea what I needed. It was the latter.

- I had to constantly chase another developer for calls and a proposal. So I kept wondering how responsive they would be after I gave them a deposit.

- Another developer sent a proposal that was a 30-page technical Power Point.

There were others, but I think you get the point. At the end of the day, none of these developers understood sales basics, such as understanding what your customer really wants, how they make decisions and following up on a timely basis (imagine that).

By the way, the developer that got the gig was someone that I met towards the end of the process. Within seven days of meeting them (in Denver), they set up two calls, sent me a proposal and had a follow-up call to discuss my concerns.

How We Will Do Business: Ready, Fire, Aim, Adjust

One hundred years ago, the businesses with the most capital (think factories, etc.) were the biggest and most valuable. Companies like U.S. Steel and American Sugar dominated the Dow Jones. Towards the last quarter of the 20th century, the economy changed to a "knowledge-based” economy. Employees, processes and intellectual capital, while not reflected on balance sheets, represented the majority of the value of most businesses. In fact, today fixed assets on a balance sheet are barely considered assets of value. The word "fixed" combined with assets bring up thoughts of stodginess and slowness. 

Today, business is all about speed. The pace in which markets are changing and the speed with which a company must react is ever increasing. Customers want products and services faster, and in most cases, cheaper than ever before.

So how can companies compete these days?  Here are a few ideas:

Don’t strive for perfection; that takes too long. Just be better at what you do than everyone else.

Be lean. Outsource as much as possible to reduce overhead as well as the need to eliminate positions that may become irrelevant as you streamline. Just as the capital-based economy evolved to a knowledge-based, we are now moving to an outsource economy. While the book can get a little redundant, Tim Ferris’s The 4-Hour Workweek describes this shift.

To come out on top of this evolving economy, we should be prepared to make quick decisions without all of the facts, and implement them. “Ready, aim, fire” is now “Ready, fire, aim, adjust.” The irony with this is that while most businesses were created because the founder saw an opportunity to outperform a more established company, small businesses often have trouble with change.

In a recent interview with NY Report, Alan Patricof, the grandfather of venture capital, said the main reason a business with potential ends up unsuccessful is that management "is so determined in their original concept that they don’t have the ability to improvise and to change their model to accommodate the realities of the marketplace."

If you are like me, you pretty much know what changes you need to make, but sometimes wait another day to implement them.  If it helps, implement the changes one at time. Just make them quickly and start right now.

Jack Daly: Toughest Sales Job

This morning at breakfast with sales expert Jack Daly, he talked about the toughest sales job in the country: "The toughest sales job in the country is that of military recruiters because they have to sell the parent(s) and the kid." Jack said if he were starting a business today, he would want to hire military recruiters as his sales team. "They are a great source of talent and have a great understanding of mission and culture…and know how to sell that."

Why the Kid Who Works at Your Gym Might Be Your Best Employee

One of my favorite things about my job is getting face time with successful and innovative business men and women and really picking their brains about what they do and how they do it. Yesterday, I moderated a panel discussion for the New York Post’s “NYC Start-Up” event that more than qualified for the “favorite part of my job” category.

On the panel were: Kevin P. Ryan, founding president, Double-Click, chairman and CEO AlleyCorp; Samer Hamadeh, Co-Founder, Vault.com; Joy Bauer, founder, Joy Bauer Nutrition and NBC Today Show Health Expert; and Robert Tuchman, founder and CEO of TSE Sports & Entertainment. I asked the panel how they get the most out of their employees and they all agreed that process begins with the hiring. 

Kevin shared a story about one of his first hires, Mike Walrath (yes, the Right Media founder who sold to Yahoo! for $680 million in 2007). When Kevin was building Double-Click, an Internet marketing technology company, it was 1996 and no one had experience working in the Internet space because the space was so new. Kevin hired Mike when he was working at New York Sports Club selling memberships. At that time, Mike had no experience, but Kevin felt he had a talent level there that was bigger than the company, and he proved to be a leader and an integral part of DoubleClick’s success. “Whether you have 10 employees or 1,000, you should hope that you are surrounded by people on their way up,” said Kevin. “If you are, you can do great things.” 

Speaking about great things, Kevin sold DoubleClick Hellman and Friedman LLC for $1.1 billion in 2005. The company was then sold for $3.1 billion to Google Inc. in 2008.

Lunch with Jack Daly

Today, I had the pleasure of having lunch with sales guru Jack Daly. With me were Larry Zogby (who set up the lunch) of RDS and Mardy Sitzer of Bumblebee Design and Marketing. Jack told us that most business owners are more interested in plugging the dikes and selling more today. Jack says that is a mistake; companies should be more focused on picking up the great sales talent that wasn't available to them before. 

The other piece of wisdom Jack shared was that salespeople should not focus on finding new business today. Instead, they should sell to their current clients. I then asked him if sales people often resist going back to current clients and he said, "yes, but that can change once sales people know how to do it right."

Now here is a question for you... Do you want me to try to bring Jack to speak here in NYC?

Get Past Your Fear of Firing

For the July issue, our managing editor interviewed Ben Lerer, co-founder of Thrillist. During the interview, Ben said something I’ve heard countless times from other business owners, including myself: “For a long time we were beholden to the employees...we were scared to let anybody go.”

After running my business for a couple of years, I wised up and adopted the following philosophy: “Hire slow, fire quick.” Recently, CNN’s money.com put out a list of business-killing traps and naïve hiring and fear of firing rank among them. According to the site, a good test of determining if you have a fear of firing is to ask yourself: Would you be relieved if anyone on your team quit tomorrow? If the answer is yes, you've got a problem.

Accounting Isn’t Just for Bean Counters

CNN’s money.com recently published a list of business-killing traps that every entrepreneur must avoid and sloppy accounting topped the list. They provided a tip I found compelling: Understand your ratio of sales to expenses that will result in profitability. You want to be able to say, "This business needs to gross $800K for me to have a $100K profit," as opposed to merely saying, "I hope I can make $100K one day." 

As a recovering accountant, I know how much information about your business can be gleaned from your accounting. In the July issue of NY Report, our experts explain how your accounting can help you improve your sales strategies and lower expenses, among other things.

Spitzer Speaks to EO and the World

Last night, I attended an EO event that featured former New York governor Eliot Spitzer. Fuel Outdoor founder, EO chairman of political affairs, and NY Report "Turn Your Network into Net Worth" event panelist Sergio Fernández de Córdova coordinated the live interview, hosted by Fox Business News anchor Liz Claman.

This was Spitzer's first public appearance since he resigned as governor in the midst of a prostitution scandal in March 2008. A room full of entrepreneurs was an interesting choice for his re-introduction. When Claman asked why he chose to speak to small business owners, Spitzer responded, "I turn down 99.9% of offers to speak, but Sergio was very persistent."

While Claman grilled the "Sheriff of Wall Street" about Troopergate and his credibility in light of client #9, Spitzer did offer his view on how government and private businesses should intersect and how Washington is "flexing the muscle it should have flexed long ago." But, Spitzer didn't give Obama's plan a resounding endorsement, adding that the government is on the path to building the same financial infrastructure that existed before the collapse. 

In addition to being well-attended, the EO event received unprecedented press coverage, with several network news camera crews and reporters from Forbes and Crain's in attendance. Congratulations to all at EO for helping to get more media attention on the role small business is playing in the current economy. 

 

 

Business is Back (Here is how I know)

I have always said the advertising and event sponsorships (how NY Report makes its money today) is sold and not bought. Between that and not being an extremely well known media company among national advertisers, I can tell you that the phone doesn't ring off the hook from advertisers that want to place ads.

Lately I have noticed two things: 1) local and regional advertisers taking our calls much more frequently than two months ago and 2) national advertisers and their agencies calling us for more information. Remember that marketing is a discretionary spend so, trust me, this is a very good sign. It probably doesn't hurt that word is getting out about our August Buyers' Guide.

But it isn't just me. Many owners that I am speaking with are saying things like, "I am getting calls from people saying that they are reviewing the proposals that we sent nine months ago."

You can argue on whether the recession is over. But you can't argue with the fact that people are saying "we have to do something."

Why Stephen Messer Won’t Talk about his New Company

This morning I had breakfast with Stephen Messer, co-founder of LinkShare, an innovative online marketing technology company. He subsequently sold LinkShare for $425 million in 2005 and is starting up a new business. He told me this latest company is in stealth mode. When I asked why he was so secretive about the new business, he said he is staying quiet to avoid assumptions.

When Stephen was starting LinkShare, people automatically wanted to compare it to a model that already existed. But LinkShare was so game changing, that there truly wasn’t anything else like it. To avoid the same incorrect assumptions being made about his new business, which he believes will be as game changing as LinkShare, he’s keeping it close to the vest.   

Last month I moderated a New York City Entrepreneur Week discussion for which Stephen was a panelist. To read highlights of the event, click here. 

Know Thy Neighbor

Someone in my building just handed me a post card for Stackd, a new project based on the idea that the people around you should be part of your social network. This is quite a novel concept – an online community that connects you with people you may meet in the elevator rather than on Facebook. The goal of the online business directory is to help businesses tap the resources that may exist right under their nose. At the very least, you can get to know your neighbors – an all too foreign concept today.

Our building is the first in Manhattan to join the project. If you want to get your building involved, visit stackd.biz. 

My Meeting with Senator Gillibrand

This morning, I attended a breakfast meeting with Kirsten Gillibrand, a US Senator for New York at the Friar's Club. There were 20 other professionals in attendance at the meeting set up by Mike Zeldes, senior vice president of Hub International Northeast and Fred Klein, managing partner of Klein Zelman Rothermel LLP and founder of Gotham City Networking. The Senator, who spent about 35 minutes with us, walked around the table and introduced herself to each attendee. She also took out a notebook, which impressed me.

After introductions, the Senator took a few questions. I was eager to get some insight into an issue that has been on the minds of most business owners – including myself – since the current administration took office. I asked how the proposed tax increase on the "rich" (anyone making over $250k/year) would affect small businesses in the NYC-area given the high cost of living and the fact that most small businesses are pass through entities for tax purposes? As small business is expected to generate jobs that will help reduce the unemployment rate, I also asked how legislators see the tax increase affecting SMB hiring?

 

Senator Gillibrand was very informed of the issue and said she wants to be an SMB advocate for the Obama administration. Her solution was to propose carve outs for small businesses with respect to the proposed tax increases. She also wants small businesses carved out of the estate tax (if I understood her correctly). 

In general, I found her to be very knowledgeable and sincere. She did close the discussion by stating that she needs to raise $20 million to get re-elected (I can't believe how much money it takes to run a campaign in NY). Campaigning, after all, is one of the few recession-proof industries.

     

What to Say to a Greedy (and Ungrateful) Salesperson

This morning I was at a CEO breakfast with approximately 70 other business leaders. One person asked the group, “My salespeople keep telling me they are upset that they are not making the money they did last year because sales are down. How should I handle that discussion?” One woman in the audience who manages 1,500 sales people had a compelling answer: “Tell them to leave the company.” Her reasons for not entertaining the discussion are simple. She said that these salespeople were lucky to be in a position where, not only did they have a job, but they can control how much they make. Finally, I got the sense that she didn’t want to waste time with people who are complaining inappropriately.

I speak with entrepreneurs from diverse industries and company sizes; however, I consistently hear one of the hardest lessons they have learned as a business owner was not to be afraid to let employees go. The sales manager at this morning’s breakfast has mastered that lesson. For more information on this topic, read "How to Fire a Salesperson.”

Why Your Inexpensive Marketing Isn’t Working

In my June letter from the editor, I wrote about “Levin’s Law on Cheap and Easy Marketing.” The law addresses the inverse relationship between the price of a marketing medium and the effectiveness of that vehicle as a whole. Basically, if the medium is cheap, then everyone uses it and your customers and prospects get bombarded. How can you rise above Levin’s Law? Click here.

Andy Dunn Just Checked Out My Butt

I just arrived at the Warrillow Summit 2009 in Las Vegas. Imagine my surprise when I opened the program agenda and read that one panel discussion featured Sarah Beatty of Green Depot and Andy Dunn of Bonobos. Big coincidence as they are both featured in the June issue.

I met Andy for the first time after the panel discussion and we talked about his product ‑ online retail of custom-ordered men’s pants ‑ and how his company has grown. At some point, Andy moved behind me and checked out my butt. Of course he was just checking the fit. According to Andy, the pants, which I got at Rothman's, were a great fit.

Attending a national conference where business owners from the NY Report community spoke as experts advising on best practices reaffirmed my belief that the tri-state area is a breeding ground for innovative small business owners. And running into Andy reaffirmed that my butt does, in fact, look good in those pants.