THEsmallCOMPANYBLOG » Strategy

7 Reasons Your Employees Might Hate You

Eric_Rudolf — Tue, 14 Sep 2010 14:44:13 +0000

When you take a moment to list all of the functions involved in running a small company, it is easy to see how overwhelming entrepreneurship can be. Having to perform sales, marketing, accounting, purchasing and shipping (along with two dozen other daily tasks) requires set of skills many people simply don’t have . . . which is why most successful entrepreneurs hire highly qualified teams of creative go-getters to do these things for them.

Unfortunately, small company owners and managers are notoriously oblivious when it comes to the job satisfaction of their employees. In exchange for working horribly long hours to increase the owner’s net worth, employees are subjected a level of non-recognition and office politics that would make Kate Gosselin’s personal assistant turn in her resignation. And their managers often have no one to blame but themselves.

The fact is, as much as entrepreneurs enjoy being portrayed as rainmaking over-achievers, very few of them ever become successful by themselves. And in order to keep their companies growing over the long-term, successful ones not only understand what motivates their employees, but also what de-motivates them. If your small company employees have suddenly become unhappy, unproductive or dis-engaged, you are very likely making one or more of these management mistakes.

#1: You Don’t Let Them Have Any of the Credit

Because you spend years if not decades working alone to build your business, over time it becomes easy to visualize yourself as the person who makes absolutely everything happen. But the minute you begin to hire employees, a team is formed—and for the first time, credit for accomplishments needs to be divided multiple ways. If you are an entrepreneur or manager who struggles to step out of the spotlight (or hand out a “Thank You” once in awhile) look at it from the perspective of your employees: you already earn more money than they do. There is no need to take more of the credit as well.

#2: You Don’t Involve Them in Important Decisions

As mentioned above, the transition from Lone Wolf to Team Leader is one the biggest adjustments any entrepreneur or manager will make, and nowhere is this more evident than in the area of decision-making. Although making decisions on the fly probably allowed your company to grow large enough to actually hire people, continuing to run the company AROUND your employees—instead of WITH them—will eventually chase away any talented people you may have managed to attract. When employees don’t feel included in decisions, they will distance themselves not only from your initiatives, but from your company as a whole. If you’re going to hire smart, qualified and motivated people to take your company to the next level, you can’t be afraid to use them.

#3: You Hold Their Lack of Experience Against Them

No one is going to argue that during the 1980s, Jack Welch and Lee Iacocca made some good things happen at their respective companies (General Electric and Chrysler). But the fact is, the world has changed—and you no longer need to be 60 years old and possess 30 years of work experience to make a significant impact on the business world. Comments like “When I started this company 30 years ago” or “In my years of experience” might sound like conversation to you, but to your younger employees these statements are often interpreted as “I’m older, and I know more than you do.“ Think about this for a minute: when the entrepreneurs who developed Twitter, Facebook, EBay and Google first started working on their ideas, their combined ages were less than 100 years old.

#4: You Don’t Allow them to Challenge Your Ideas

After nearly 20 years of working for rapidly growing small companies, two of which were scooped up by Fortune 500 firms, I can say this with 100% certainty: companies managed by people who realize they don’t know everything ALWAYS outperform those managed by people who think they know it all. The fact is, great leaders don’t simply allow their employees to question them—they DEMAND to be questioned. Unfortunately, the first instinct of many small company owners is to react negatively toward employees who challenge them. Regardless of company size, the courage to stand in front of employees and say “Tell me why my idea won’t work” is something every manager should have, but very few do.

#5: You Add Friends and Relatives to the Payroll

Those of you who are regular readers of my column know this is a common theme with me, but adding friends and relatives to your company—even at non-key positions—always needs to be handled with the utmost care when it comes to maintaining credibility with your employees. As I have mentioned in the past, hiring friends and relatives can be a significant demotivator to existing employees who have spent years trying to earn your respect, a decent raise, or a spot on the management team. Friends and relatives can also be a center of unresolved conflict at small companies (has any manager ever settled a conflict in favor of an employee over a relative?) as well as a long-term management nightmare. The lesson? Sometimes, each degree of happiness you receive by helping out a relative can come at the expense of your employee base.

#6: You Have No Idea How Much Time They Spend Making You Money

We all understand that owning or managing a small company means long hours and short weekends. But you are rarely the only one making this type of time commitment. Unlike their counterparts in the Fortune 500—who show up for work at exactly 8am and check in at Happy Hour promptly at 5:15pm—employees at small companies often work 50, 60 and 70-hour weeks just to keep up. To this day, it surprises me how few small company managers actually take the time to thank, much less compensate, employees who are putting their personal lives on hold to make them wealthy.

#7: You Are Not Up Front With Your Long-Term Intentions

As a career small company executive who has never had an ownership stake outside of stock options, I have spent thousands of hours wondering—and worrying—about the long-term plans of the people I work for. Is he going to sell? Will she transfer power to an in-law? Are they going to retire and walk away? Understanding it is ultimately your investment, as a small company owner or manager you need to understand that the people who work for you have important long-term plans of their own; and being evasive about your future intentions breeds nothing but speculation, mis-interpretation, uncertainty, and a great deal of unnecessary stress among your most loyal employees.

Comments? Questions? Feel free to reply to this post. Otherwise a Retweet, Facebook Share, LinkedIn Share or other type of social share (handy buttons provided) would be greatly appreciated. Thank you!

The Key to Catching (and Passing) Your Market Leader

Eric_Rudolf — Tue, 31 Aug 2010 15:14:35 +0000

If there is one thing nearly universal among small company owners and managers, it is the need—and sometimes the outright obsession—to do what the market leader is doing. Whether copying a piece of their business model, matching their prices, advertising in the same places or hiring their ex-employees, the fact is most small companies spend a great deal of time trying to emulate companies they are chasing. And from experience, I can tell you there are three primary (and dangerous) assumptions at work here:

Assumption #1: Every decision the market leader makes is backed by good data.
Assumption #2: Every product the market leader releases will be a success.
Assumption #3: Every initiative the market leader undertakes will increased their revenue and market share.

But just as you cannot pass the car in front of you by driving the same speed, you cannot pass a market leader by doing what they do. Yet small company owners and managers continue to spend portions of every single day monitoring websites, reading newsletters, and scanning press releases for their competitors’ next move. Although keeping close tabs on a market leader is perfectly acceptable as far as most MBA programs are concerned, in the real world we need to set aside our textbooks for a moment and realize something:

In most industries, companies closest to the top of the food chain are the least likely to do anything innovative, creative, or even remotely interesting.

Understanding there are exceptions to this rule, the fact is market-leading companies have no choice but to pursue low-risk strategies designed to help them keep what they already have, with growth being a secondary focus. Recent history is littered with examples of market leaders who played it safe while companies in second place (or worse) gained ground uncontested. Apple Computer spent over a year stealing market share from Microsoft with its Vista-bashing “I’m a Mac, and I’m a PC” campaign before Microsoft was finally goaded into responding. In May of 2008, every Starbucks in the world was shut down for an entire morning to retrain employees how to make good coffee and provide better service—something local coffee shops had never forgotten how to do. And it might surprise you to know that McDonald’s was NOT the first fast-food chain to offer healthy alternatives to French fries OR the “value menu.” The Wendy’s chain began offering both in the mid-1980s—back when it wasn’t anywhere near the Top 10 List of fast-food franchises.

The point to be made here is that keeping a close eye on the market leader can be extremely valuable . . . as long as you have no intention of doing what they do. If the time used to monitor a leading competitor is to be spent wisely, it should be spent looking for opportunities to do the opposite of what they’re doing; i.e. finding weaknesses in their product, service or business model which you can exploit to grow your own business. Market leaders understand that one botched product release, one high-profile customer complaint or one bad marketing campaign can give a competitor the opportunity to leapfrog them. This makes market leaders conservative, predictable and risk averse—all of the characteristics growing companies cannot adopt if they wish to reach the top some day.

So what is my point? That the tendency to give market leaders too much credit can become a problem that eventually stifles internal creativity, and (ironically) neutralizes a small company’s ability to step out of the shadows and claim the leadership position for themselves. Companies who are chasing the market leader need to push forward with new products and services, out-of-the-box marketing initiatives, and bleeding-edge technology investments designed to acquire massive amounts of market share in very short periods of time. With this in mind, a key piece of any small company’s strategy should definitely be to watch the industry leader for opportunities. And when it comes to finding the next great industry innovation, the companies who deserve the most attention are very likely the ones who are chasing you.

Myron Mixon: Business Secrets from a BBQ Entrepreneur

Eric_Rudolf — Tue, 22 Jun 2010 18:03:13 +0000

Being a full-time Marketing guy, part-time blogger and perpetual Historical house renovator doesn’t leave a great deal of room in my life for hobbies. That said, I always manage to set aside at least a few hours each weekend to pursue one of my favorite passions: barbecue. And not the “throw a few hotdogs and burgers on the grill” barbecue I grew up with here in the Midwest, but the type of cooking that requires low heat, lots of wood, and a cast iron cooker capable of surviving a nuclear explosion.

So when I had the opportunity to attend a hands-on, immersive cooking school led by the star of TLC’s latest reality TV endeavor BBQ Pitmasters, I jumped at the chance. During my time in class, 3-time World BBQ Champ Myron Mixon from Jack’s Old South taught me a heck of a lot about barbecue . . . and unexpectedly, a little about being an entrepreneur. In this one-of-a-kind article, I will share a few of Myron’s not-so-subtle small business secrets—but none of his secrets about BBQ. If you want those, you can take the class on your own dime.

Small Business Secret #1: It’s OK to Have an Opinion.

As those of you who have watched five minutes of his show already know, Myron Mixon is a remarkably honest individual. To him, there is no point in sugar coating the truth, regardless of who is within earshot. In Myron’s world, bad ideas are not “good ideas that need work,” lies are not “slight mis-statements of fact,” and his food isn’t “award-winning”—it’s the best there is. Period. Unlike entrepreneurs struggling to find an identity and pay their bills each month, Myron figured out customers don’t pay him to ride the fence, spend his life being politically correct, or say what they want to hear. They pay him for his knowledge, and for displaying it with confidence and conviction.

Small Business Secret #2: Don’t Be Afraid to Stay in Your Niche.

Over the past 20 years, people who prepare meat for a living have had plenty of opportunities to put their skills to other uses. But instead of applying his talents to the smoking of vegetables or cheeses or turkeys made out of tofu, Myron stuck to the carnivore path—even as popular diets, lifestyles and organizations looked down their noses at him. And because of the dedication to his niche, today his following is as loyal and passionate as any cooking show star on network or cable TV.

Small Business Secret #3: Don’t Involve Your Family . . . Unless They WANT to Be Involved.

During my 18 years working with small organizations, I’ve seen plenty of entrepreneurs put their companies at risk by taking on relatives who don’t want to, or shouldn’t, be involved. That said, there are times when involving relatives can make a small business stronger, and Jack’s Old South (Myron’s company) is a prime example. Over the course of my weekend at the Mixon home I had the pleasure of meeting Myron’s wife, daughter, and one of his sons—and each of them was thrilled to be involved, and immensely proud of Myron and his accomplishments. Family unity on this level is something most entrepreneurs want, but very few will ever have.

Small Business Secret #4: If You Offer Something Unique and Valuable, People will Find It—No Matter Where it Is.

Does anyone reading this article know where Unadilla, Georgia is? If so, consider yourself one of only a handful of people who do. From where I live the outbound half of the journey covered nearly 10 hours end-to-end, and included one long airplane ride and two different cars. Did I mind spending all of this time and money to attend a 3-day cooking class? Not for one second. Why? Because Myron Mixon and Jack’s Old South offered me something I couldn’t get anywhere else—a chance to see a World Champion do what he does best. The point is, today’s entrepreneurs are so busy making sure they’re represented on Twitter and Facebook and Linked In and Google, they completely forget the key tenant of running a successful small business: offering something uniquely valuable.

Small Business Secret #5: Don’t Forget . . . It’s ALWAYS About the Money.

After all of the world titles, grand championships and hand-carved awards Jack’s Old South has hauled in over the years, Myron Mixon has never lost focus on the goal of running a small business: to earn a living. While small companies across the globe waste months of time and effort applying for awards like “Fastest-Growing,” “Hottest Executive” and “Best Place to Work,” Myron understands that accolades simply don’t pay the bills. During the very first day of class, Myron drove that point home loud and clear with the best piece of small business advice I’ve heard so far this year: “I ain’t seen a bank yet that will let you cash a trophy.”

Small Business Secret #6: Be Gracious with Your Time.

Of equal importance to achieving success is how you act one you actually have it. While many successful entrepreneurs convince themselves they are “too experienced” to waste their time working with beginners and amateurs, Myron embraces every opportunity to pass on his knowledge, his experience and his secrets to people who know less than he does. And not only does Myron demand that students in his class learn something, he will continue to teach and answer questions on breaks, and long after class has concluded. Being a successful entrepreneur involves not only being a professional, but being a passionate advocate for what you do—to anyone who will listen.

Comments? Questions? Feel free to reply to this post. Otherwise a Retweet (button at the beginning of the article), Stumble, Digg or Facebook mention (button bar below) would be greatly appreciated. And for the foodies who are reading this article, I have included a picture of Myron’s award-winning beef brisket, which I made this past weekend using his secret recipe–easily the best thing that’s ever come come out of my backyard.

Also, if you have any questions or would like some information regarding the Jack’s Old South Cooking School run by Myron Mixon, please feel free to either email me directly at eric@thesmallcompanyblog.com, or post your question here. I look forward to hearing from you!

5 Ways to Immediately Improve Your Small Company Operation

Robert_Rogers — Tue, 27 Apr 2010 15:39:25 +0000

Regardless of why it was initially founded, the goal of any small company is to generate more money. But once our businesses are off and running, most of us become too preoccupied with running them to make the constant improvements necessary for increased efficiency, increased sales, and ultimately more money in our pockets. But there are some operational ways we can make an immediate impact on our companies’ bottom lines—if we take a few minutes to actually implement them.

Improvement #1: Research the Rest of the Industry

I understand most of you already have a pretty good handle on what your company is doing . . . but do you know what your competitors are up to? What are they doing to be successful under current business conditions? Why are they doing it? And most importantly, is it working? Also, be sure to take a good hard look at businesses in your industry that have recently failed. Do you understand why failure occurred? Were there any red flags or strategic moves that lead to failure? Does what the company did prior to failure match in any way what your company is doing now? A little strategic introspection can go a very long way.

Improvement #2: Re-evaluate Your Original Intentions

Back when you first started your small company, there were very likely a few things you wanted to accomplish. Looking back now, are those goals still in place, or has your motivation or reason for running this business changed? Taking the time to revisit your original business plan can be extremely helpful in trying to figure out which circumstances have changed, what you can do to improve, what is working, and what parts of your original plan need to be discontinued. Being willing to make adjustments and improve your business on the fly is the sign of a real entrepreneur—as long as the changes you make have a legitimate reason behind them The fact is, after a period as short as six months, small businesses can look markedly different than what you intended . . . and this can be a good thing.

Improvement #3: Delegate the Things You’re Not Good At

One of the biggest mistakes small company owners make is believing they are good at EVERYTHING the company does—even though this is never the case. As much as it is practical within your business, always work to make sure the person assigned to each important task is also the best resource for the job. Managing in this way requires a strong knowledge of the individual talents of your employees, as well as the vision to (on occasion) give an employee a task or role he or she might not know they’re good at. The point is this: the more you can maximize everyone’s efforts by matching strengths with roles, the better your operation will be for it.

Improvement #4: Establish a Plan—in Writing

Once you perform the first three tasks, the key to actually making any any sort of real and measurable improvement is to lay out a plan—the kind of plan that a) is in writing, and b) clearly spells out the improvements you wish to make. A plan can be as short as one page or as long as an entire magazine, but the point is you need to have SOMETHING to look at for guidance.

Improvement #5: Measure Everything You Do

For any plan to truly be deemed “successful,” there must be a way to measure success. With this in mind, step #4 above cannot really be complete without also including information on EXACTLY how you plan to measure success. Which metrics are most important for tracking progress? How will these metrics be collected? Who will be collecting them? What will be done if certain metrics are hit or missed? Any plan that does not include a method of measurement is not a plan—it’s an idea.

33 Changes for the Small Company Manager

Eric_Rudolf — Wed, 06 Jan 2010 19:41:12 +0000

Looking back on this past year as a manager in a small company, I see a mix of both good and bad. Sure, my company was one of the few in its industry to NOT lose ground over the last 12 months (as my buddy Mike says, ”Flat is the new hypergrowth—right?”), but my performance, my decision-making and my execution were definitely far from perfect.

In an effort to help my company continue the double-digit annual revenue growth it became accustomed to earlier in the century, I need to make some fundamental changes in the way I act, the way I work, and the way I manage. With this in mind, during the upcoming year I resolve to do as many of the following as I possibly can:

Not worry about what my competitors are doing.
Hire smart people who care.
Measure everything I do.
Look for new customers for my products and services.
Regularly share my goals with my team.
Reward employees who deserve it.
Take a multi-vitamin.
Become an industry expert.
Lead by example.
Take advantage of mobile technology.
Get more out of people who work for me.
Attend fewer trade shows.
Come up withe new product and service ideas.
Buy a more versatile cell phone.
Stop accepting mediocre work from my peers.
Work smarter.
Use more vacation days.
Try a few things that seem impossible.
Use fewer curse words.
Run a leaner department.
Talk to more customers.
Get up from my desk once in awhile.
Diversify my marketing dollars.
Take walks over lunch.
Attend fewer meetings.
Schedule fewer meetings.
Say what I think, exactly when I think it.
Buy a nicer pen . . . and hang onto it.
Waste less time arguing with people who are wrong.
Keep a tidier desk.
Maintain a list of good ideas.
Bring more functions in-house.
Think bigger.

Would you like to add your own change or resolution? Please feel free to reply to this post, and be sure to include a link back to your own website or blog (linkbacks are SEO gold, people). Otherwise a Retweet, Facebook Share, LinkedIn Share or other type of social share (handy buttons provided) would be greatly appreciated. Thank you!

5 More Unbreakable Rules for Using Twitter as a Business Tool

Eric_Rudolf — Wed, 18 Nov 2009 12:00:16 +0000

More than any other social networking site in worldwide use today, Twitter owes a significant portion of its growth to pyramid schemes, egocentric celebrities, get-rich-quick gurus, and kids from Amsterdam with nothing better to do than collect thousands of new followers per week. While these people continue to tie up Twitter’s bandwidth by posting 140-character brain farts in rapid succession, there are also tens of thousands of actual companies—entities with things like employees and balance sheets and health insurance plans—trying to figure out how to use Twitter to gain an advantage over their competitors.

With this in mind, a few months back I wrote and posted an article titled 5 Unbreakable Rules for Using Twitter as a Business Tool. Surprisingly, this article is still the most popular 700 words I have ever typed into a computer. Not because using Twitter is overly-complicated, but because using it effectively within a business context isn’t nearly as easy as it looks. For example, Tweeting from a mobile device after draining your seventh beer might get you a laugh or two from your friends, but it has a markedly different effect among your customer base. Twitter’s lack of a rulebook (or any real standards, for that matter) makes it tempting for us as corporate marketers to do whatever the heck we want. But things like ethics, discipline, planning and strategy are what separate us from our neighbor who sells cleaning products out of her car. And a few rules never hurt anybody.

After investing close to 500 more hours in the research and use of Twitter, I have come up with five additional rules that should never be broken when attempting to use Twitter as a business tool.

Rule #6: Allow Your Twitter Account to Develop a Personality. By virtue of being a social technology, Twitter is a wonderful place to show your customers and prospects a different and more personal side of your business. Does this mean employees should be allowed to Tweet about upcoming vacations and family milestones? Of course not. But Tweeting in a more informal voice can go a long way in building loyalty among Twitter followers. This is especially important at virtual companies, where customers and prospects need to be constantly reminded that there are real people behind all of the webinars, mass emails and online newsletters.

Rule #7: Follow Your Industry’s Support System. Not surprisingly, a critical component of building a successful Twitter presence for business is the actual ‘networking’ part—extending your company’s reach by finding people to follow, and identifying potential customers who are interested in following your company. Most marketers do a great job of choosing Twitter members who have a high probability of being customers some day. But experienced Twitter marketers will also follow people and organizations who keep their customers educated and employed. Does your industry landscape include professional associations, educational portals, consulting companies and placement firms? If so, you might want to follow them. Not only will they be tempted to promote you to their followers, but they will also Retweet your news, offers and white papers once in awhile.

Rule #8: Automate the Day-to-Day Account Management. I obviously have no idea how much your company pays its marketing people. But if it’s anything over $30 per month, an automated Twitter marketing tool might save your company a significant amount of time and money. After just a few hours of setup time, subscription-based services like SocialOoomph (formerly TweetLater) can help your company find followers, send Tweets, and track chatter about your products and services—on multiple Twitter accounts and from a single user-interface. In fact, some automated tools even go out of their way to appeal to marketing geeks like me by offering features such as Clout Calculations (to determine which of your followers have the most Twitter influence), customizable Friend Filters, and various other types of advanced analytics. Most automated Twitter tools have free trials, and several allow companies to join month-to-month and cancel any time they wish.

Rule #9: Don’t Forget . . . Your Compeptitors Are ALWAYS Watching. True story: several months ago I heard through the industry grapevine that one of my company’s competitors was working on a new product. The product was going to be positioned head-to-head with my company’s cash cow, and was expected to take a significant percentage of our market share. After making a few phone calls and learning nothing, I decided to check the Internet. Within a few short minutes I was able to not only confirm the rumor, but assemble most of the company’s initial rollout plan and marketing strategy. The surprise here is not how I found this information, but where—in the Twitter account of the company’s CEO. Over the course of several months, the CEO of my closest competitor had been giving his followers blow-by-blow strategic planning updates. The point here? That social networking sites come with an implied barrier of confidentiality that really doesn’t exist. And if your people can’t keep a secret, they need to lock their profiles.

Rule #10: Build a Community

Contrary to the belief of most companies, the best way to monetize your business-related Twitter account has nothing to do with selling. The key, which might be counter-intuitive to many, is making your followers feel involved. Building a community among your followers through the sharing of knowledge and general communication will lead to more traffic, more activity, and eventually more sales than any 140-character ’special offer’ you could ever hope to distribute. Tweeting links to free white papers and Webinars, using your follower base to test market products, and leveraging Twitter’s @reply function to host open debates are three great ways to jump-start your community-building efforts. Not only will initiatives like this directly involve your followers, but it will keep them coming back . . . so you can sell them something later.

The 4 Critical Differences Between Large and Small Companies

Eric_Rudolf — Fri, 05 Jun 2009 14:58:11 +0000

Over the last three years writing about small companies, many of my friends, colleagues and fellow bloggers have questioned my decision to draw such a hard distinction between small companies and their larger counterparts. I regularly receive emails like “Is working for a small company really that different?” and “Aren’t good management techniques the same for all companies?” but have not bothered to prepare a response. Until today.

With the above in mind, the following post will outline the four (4) most critical differences between big companies and small ones. Please be warned: this article not based on any sort of worldwide study or market survey. It is based on more than 17 years of first-hand experience working for companies from $2 million in annual revenue to $25 billion (that’s billion with a ‘b‘). No matter what size of company you work for or hope to work for some day, I believe you will find some value here.

Difference #1: The People

Far and away, the most significant difference between a small company and a large one lies within the mix and variety of people who work there. At a small company, the employee mix is both diverse and inconsistent. Small companies are home to people who are always happy, people who are always mad, and people who ride the emotional roller coaster. There are people who never talk, people who always talk, and people who spend most of the day with at least one foot firmly planted in their mouth. Small companies are loaded with unattached twenty-somethings, divorced grandparents, and middle-aged people with kids—all with unique needs, unique motivations and personal lives that ultimately spill over into work.

Contrast this to the employee mix at a larger firm. As an organization grows, employees begin to homogenize to the point where any outward ‘personality’ that exists among individuals is eventually eliminated. Cultural expectations are set, groups begin to form, and people who no longer fit the big company ‘mold’ are forced out. In fact, by the time a company breaks the billion dollar revenue mark, it actually becomes difficult to tell people apart as individuality is replaced with company-enforced conformity. Employees buy the same clothes at the same stores, watch the same TV shows, and play in the same company-sponsored sports leagues as the people they work with.

Difference #2: The Environment

When you hear the phrase “big company,” the one word that immediately comes to mind is structure. Structure in the form of policy manuals, comprehensive job descriptions, HR handbooks, management hierarchies and jam-packed meeting schedules. By the same token, hearing the phrase “small company” almost always invokes the opposite impression: a complete lack of structure.

In contrast to a large firm, at a small company it is rare that a new employee will start on Day 1 with an accurate job description; and if they do, the description is almost always outdated after the first month. There are a distinct lack of policy manuals and work instructions, and formal meetings are only held in emergencies or for issues related to long-term planning. Also at small companies, the most effective employees are the ones who take risks, and learn to circumvent the management hierarchy to get things done; whereas at a larger firm, more value is given to employees who complete their tasks within the rules and without exposing the company to unnecessary risks.

Difference #3: The Money

To cut right to the chase, the critical difference in the way money is treated at big companies versus small ones can be summed up in one sentence:

***Spending money that comes directly out of someone else’s pocket changes* *everything. And not in a good way.***

Big companies might have stockholders, but small companies have OWNERS. Owners, by the way, who have no problem chastising an employee for spending an extra $10 per night on a hotel during their last business trip. Knowing that every dollar you spend comes out of an owner’s bank account makes working at a small company unnecessarily stressful—especially for departments like Marketing and Sales. Also, small companies are full of opportunities for employees to become upset and disillusioned about finances. Have you ever been asked to tell your employees about a company-wide wage freeze, only to have the owner drive to work a few weeks later in a new Mercedes? Small company managers have.

Difference #4: The Politics

At a big company, you usually don’t have to worry about working for multiple bosses or married couples. You are also rarely forced to deal with relatives of the CEO, ownership teams who have been friends since college, and spouses of executives who ask for your help with a side business. But at small companies, these things are both commonplace and expected. The relationships, social circles and histories at small companies often make them a nightmare to navigate politically—making the shelf-life of even the best managers a mere four or five years at the most.

6 Reasons to Stop Using Direct Mail

Eric_Rudolf — Fri, 15 May 2009 15:32:22 +0000

This past summer I spent three days at DMA 2008, the world’s largest annual marketing conference. Due to the expense involved in attending (a $2,000 registration fee + air and three nights of hotel) this was actually my first DMA conference. Being a professional marketer since the early 1990s I have seen a great deal of change within my profession, and expected the nearly three-hour opening session to be filled with teasers for new and exciting marketing-related concepts and technologies. However, I was surprised—if not completely disappointed—to find that DMA’s primary focus, even today, is their long and storied history with direct mail.

As an aside . . . shortly before I posted this article, I paid a visit to Google to do some testing. For each of the search phrases direct mail, direct mail marketing, direct mailing, mail marketing and direct mail marketing help, the DMA website came up on the first page of organic results. However, the site showed up on page 3 for search engine marketing, page 9 for email marketing, page 13 for Internet marketing, and nowhere in the first 20 pages for the phrase social network marketing.

I will be the first to admit there are still a few pieces of mail I look forward to: the rebate checks, the Restoration Hardware catalogs, our monthly township newsletter, and my quarterly Social Security statement . . . which unfortunately details exactly how little money I have made during my life so far. But other than these few items, anything I receive via mail—no matter how colorful or attractive—is dropped directly into my paper recycling bin. As a professional marketer I don’t believe I am alone in my aversion to direct mail, and have come up with six reasons why direct mail should assume its rightful place in the Marketing Museum next to the fax machine, the printed coupon, and the trade show.

Reason #1: Mail Pieces Cost Money to Design. With all of the advancements in software and technology, anyone with a computer can lay out an effective email, write a Twitter post, or upload a web page. But only a graphic designer with a $1,000 piece of software and a $4,000 Mac can design a direct mail piece. . . . and charge $50 an hour to do it.

Reason #2: There is No Opt-In or Spam Law for Direct Mail. The lack of any sort of direct mail legislation allows direct mailers to not only bombard people on their lists, but also sell their lists to other companies who do the exact same thing. What is The Direct Marketing Association doing in response? Fighting like hell to make sure ideas like the ‘Do Not Mail List’ never see the light of day. If you have some extra money, DMA will even let you chip in for their Congressional lobbyists.

Reason #3: Stamps are Expensive. Targeted e-newsletters can be sponsored for ten cents per name. Email houses can send mass blasts for less than two cents per name. Twitter and social networking posts are free, and so are blog entries. And the price of postage stamps just went up. Again.

Reason #4: Direct Mail Campaign Stats Aren’t Real Stats. Direct mailers throw around numbers like Response Rate, ROI, Shelf Life and Pass-Along Rate as if they were cold hard facts. But in reality most are nothing more than educated guesses, based on industry-wide surveys of other companies who do direct mail. Or maybe, just maybe, the catalog I threw in the garbage WAS actually read by 3.6 other people between my kitchen counter and the trash bin?

Reason #5: Direct Mail Leaves No Room for Changes. Depending upon the industry your company is in, a direct mail piece can be outdated within days of being sent. Publishing a price, description or sales promotion on a direct mail piece means you’re stuck with it for months, unless you want to bear the expense of re-sending a corrected version to the exact same audience. On the other hand, web pages and downloadable PDF files can be changed and published in real-time, and updated emails can be sent—and only to the people who actually opened your first email—for pennies.

Reason #6: Our Immediate Gratification Society. 80% of the responses to an email campaign will be received within the first 24 hours. At the end of that same period of time, your direct mail piece will still be in a bag somewhere, waiting to be sorted and placed on a stagecoach, or donkey, or mail truck, or whatever they use to deliver mail these days.

After extended discussions with a number of people who frequent this blog, I get the impression most professional marketers (if given the choice) would abandon direct mail entirely—if their companies would let them. It frightens me to think how many of my friends and colleagues are still being pushed toward direct mail by their organizations, when cheaper and more effective channels like email, search engine optimization, blogging and social networking are readily available. But eventually, the slumping economy will force most of them to drop direct mail as a marketing vehicle, whether they want to or not.

Small Company Survey: 5 Signs of a Healthy Organization

Eric_Rudolf — Fri, 10 Apr 2009 13:34:51 +0000

Whether you are an employee, manager, or owner of a small company, the question ”How is my company REALLY doing?” is often asked, but rarely answered. Sure, there are basic metrics like Total Revenue, Profit Margin and Employee Turnover which can paint at least part of the picture. However, all of these measures have one inherent flaw: they measure things which have already happened. So is there a way to measure the real-time ’health’ of a small company? This five-question survey should provide you with a good start.

Question #1: Does Your Company Have a Diverse Product Line?

Most small companies get their start by offering a single product or service, and increasing the sales of that product or service over time. Companies that have long-term success eventually branch out into related areas, while the rest stand pat and leave themselves exposed to things like climate changes, economic downturns, and attacks by aggressive competitors. Why do bike shops sell skiing equipment, health clubs host their own triathlons, and Universities offer mini-MBAs for working adults? Because if their primary business slows down, these organizations will have a revenue stream to fall back on. Do you have a backup plan if demand for your company’s core product or service declines by 50% next year?

Question #2: Does Your Company Have a Diverse Customer Base?

Much like having a diverse product line, it is critical that small companies have a diverse customer base as well. Are a significant portion of your company’s marketing dollars targeting the same customer demographic? Healthy small companies market their products and services to a wide range of ages, races, income levels, job functions and geographic locations. In the IT training area, I have seen first-hand the impact a change in demographics (a rapid influx of female customers into a traditionally male-dominated market) can have on an industry. Companies who had previously ignored this demographic in their marketing are now years behind those who have been marketing directly to women since early in the decade.

Question #3: Are Your Middle Managers Happy?

I am in the minority of business writers that believes employees leave small companies not because of things like ownership or benefits or pay. Rather, I believe employees leave small companies because of the effectiveness (or lack thereof) of the company’s middle managers. Middle managers are the rarely-noticed ‘go to’ people within the organization that can always be counted on to make something happen when a quick decision needs to be made. And good middle managers know EVERYTHING about their organization—the inter-personal relationships among staff, the information back-channels, the political ramifications of executive decisions, and the job satisfaction level of every employee in the building. If your middle managers are not happy with their jobs, it is likely that no one is.

Question #4: Does Your Company Have Low ‘Drama’ Levels?

Well-run small companies are conspicuously void of petty bitching and moaning—employee in-fighting, constant complaining to HR, minor power struggles and various other items that can only be classified as office ‘drama.’ Employees working in healthy small companies are always willing to jump across a departmental line to help out, and are given freedom by their managers to work outside the chain of command when the best interest of the organization is behind served. If your managers spend more than 15 minutes per day putting out employee-related fires, something needs to change.

Question #5: Do Your Employees Have a High Company IQ?

Unlike their big company counterparts, successful executives at small companies understand one key principle: the more employees know about your company, the more successful your company will be. As I discussed at length in a previous post titled Small Company Mistake #3: Not Building a Shared Corporate Vision, employees need to know not only what they are doing, but WHY they are doing it. If small company executives make the best decisions when they can determine the impact of their decisions on the organization as a whole, why can’t this same philosophy be applied to Shipping or Customer Service or at the Reception Desk? The most progressive and successful small companies are willing to share strategy, performance, and financial-related information with any employee who will listen.

The Dangers of Not Building a Shared Corporate Vision

Eric_Rudolf — Wed, 04 Feb 2009 00:24:06 +0000

In the early 2000s I managed the marketing department for a venture funded software development company, run by two on-site owners and a non-owner CEO. As you can imagine, the culture was hard working, fast paced, and energetic. Upon hire, all employees were given a ’starter kit’ of stock options, with the opportunity to earn additional options over time for various special achievements.

Within one week of my first day, both owners stopped by my office to explain in detail their long-term visions for the company. As part of the company’s employee orientation all new hires were required to attended an off site lunch with the CEO, and spend an hour one-on-one with each of the company’s five Vice Presidents during their first month of employment—again to discuss company vision. Monthly all-employee meetings were a unique combination of pep rally and stand up comedy show, where it was not uncommon to cheer small line items in the company Income Statement and mock a competitor’s recent advertising campaign in the same 10-minute time period. And at every major financial milestone, the company would host some sort of organization-wide event to celebrate. The goal of the company was simple, and everyone knew what it was: grow the revenues enough to go public.

As a result of this openness and shared vision, employees of the company were extremely dedicated and fiercely loyal. People in many departments were happily working 60 to 80 hours per week (I once spent 26 straight hours in the same chair). Employees with families were traveling for weeks at a time without complaint, and nearly everyone on the payroll had willingly forgone at least two annual salary increases in the name of keeping expenses to a minimum. This dedication and loyalty on behalf of the employees resulted in an exponential growth period, where over the course of about six years, and in the middle of the dot com bust, the company miraculously grew from a $10 million annual business to almost $50 million. Before the company had a chance to even think about filing its IPO paperwork with the SEC, however, a member of the Fortune 500 came along and scooped up the company for just under $100 million. And to the delight of employees, all stock options vested immediately.

To its credit, once the acquisition was final the Fortune 500 firm left the smaller company’s business model and management structure completely in tact. But instead of retaining the open culture, the larger company worked diligently to assimilate the 200+ new employees. Monthly pep rallies were replaced with mandatory company meetings, which were always kicked off with a viewing of a generic corporate video. Sharing of the financial statements during meetings was no longer allowed, and neither was laughing. On-site owners were replaced with slow moving middle managers wearing matching corporate sweaters, and all new hire training was delivered online. Not surprisingly, within one year of the acquisition many of the most dedicated and valuable employees left for other opportunities. And four years after purchasing the small company, the Fortune 500 firm sold off my former employer for what was rumored to be a $50 million loss.

I still keep in touch with a number of co-workers from that company, and the consensus is the problem was a culture issue. I happen to agree, but I believe there was a bit more to it. Although the additional rules, processes and red tape created some stress for many of us, the Fortune 500 firm overlooked the fact that for 10+ years, employees had been working toward a shared goal (to go public) and desperately wanted the company to achieve it. When that goal was no longer an option, no replacement vision was put in place, and it was only a matter of time before the whole thing fell apart at the seams.

Not creating a shared vision among employees is one of the most common mistakes small companies make . . . and based on the above, one that larger firms are capable of making as well. Take a hard look around your company: is everyone in the building working toward the same goal? And is that goal something other than “collecting a paycheck?” The most progressive and successful small businesses understand they can make significantly more money when employees WANT them to make more money. And building a shared vision is the best way to ensure both.

In future posts I will discuss various tools small companies use to build a shared vision—including stock options, employee ownership plans, structured profit sharing, discretionary bonuses, and several others.

Why Do I Work for a Small Company?

Eric_Rudolf — Wed, 12 Nov 2008 18:54:14 +0000

For those of you who are regular visitors to this blog, you no doubt have noticed two points I often go out of my way to make: 1) that the keys to success in a small company are markedly different than in a large one; and 2) that working at a small company is more fun, more challenging, and ultimately more financially lucrative than working for a Fortune 1000 firm. By now, the first point should require no further elaboration or commentary. But I still get dozens of emails in debate of the second point (specifically the part about the money), so in response to all of you who disagree, I offer the following true story.

A few years back I worked with a guy named Chris. While Chris was in college, he landed a job as a marketing intern at a small, three-owner software company, and parlayed his internship into a full-time marketing job after graduation. Over the course of the next 13 years or so, Chris worked his way through the ranks and eventually became Vice-President of Marketing.

Then one day, the owners of the company stepped aside and decided to make Chris the CEO—at the ripe old age of 37. Over the next five years Chris was instrumental in transforming the company from a sub-$10 million per year entity into a $40 million industry powerhouse, which caught the attention of a multi-billion dollar Fortune 500 company. The Fortune 500 firm eventually purchased the software company for what was rumored to be $85 million and change, and at the age of 42 Chris and his employers retired, and rode off into the sunset with multi-million dollar bankrolls and absolutely nothing to do with their time.

Although the owners have remained out of the spotlight, about every three months or so I see Chris’ face on the front page of the Business Section, in an article featuring his new venture capital firm and their acquisition of yet another local technology company. Predictably, he is always smiling.

This is a great story—not only because it actually happened, but because as small company managers and owners we now have proof there are options to grinding out a middle-management career at a multi-billion dollar firm. With risk and unpredictability come great rewards for some; rewards that include millions of dollars, financial independence and early retirement. How many mid-level managers at Intel, Oracle and Walmart can realistically look forward to that?

THEsmallCOMPANYBLOG » Strategy

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***Spending money that comes directly out of someone else’s pocket changes* *everything. And not in a good way.***