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Ensure Your Business Is Better Off Today & Tomorrow

5 Dec, 2012 By: Bonnie Harvey, Author & Small Business Pioneer, Michael Houlihan, Author & Small Business Pioneer imageSource

If you’re the owner of a small dealership, company, or your customers are mostly running smaller businesses, here’s a word of advice: Stop fretting about who is running Washington, DC, and direct your energies closer to home. Here are nine proven basics to help your business thrive long term.


No matter who occupies the White House, entrepreneurial small business owners will have to rely on who we’ve always relied on to be successful: ourselves, our employees, and our customers. Whoever heads up our government will hopefully have minimal impact on the small businesses that form the backbone of our nation. We, ourselves, are still the best determinant of how successful our businesses will be. For example, a good business plan that’s followed, regardless of the business you’re in or products you’re selling; toners, printers, paper, staplers…you still need to be consistently good at delivering it, in order to grow and profit.

We’re speaking from experience. We are the founders of Barefoot Cellars, the company that transformed the image of American wine from staid and unimaginative to fun, lighthearted, and hip. We started the Barefoot Wine brand in our laundry room in 1986; made it a nationwide bestseller, and successfully sold the brand to E&J Gallo in 2005. Starting with virtually no money and no (wine) industry experience, we had a plan and employed innovative ideas to overcome obstacles and create new markets. Anything’s possible! What’s more, we did it all while four presidents, each with very different governing styles, held the highest office in the land. From Reagan through Clinton, and through both Bushes, we learned a lot about what makes a small business successful. We learned the hard way and the best way: by experience.
We are convinced that any company that has a good product or service and gets the basics right, will thrive—regardless of the outcome of an election.

What exactly are the basics? Here are 9 of them:

Embrace the advantages of being small. While small companies, especially start-ups, tend to be undercapitalized and (relatively) unknown, they also have some big advantages over larger competitors. They tend to be more nimble and flexible instead of being mired in bureaucracy. Since they don’t have big siloed departments, they can communicate faster. They’re less risk-averse. All of this allows them to turn on a dime in response to market changes and customer demands. Even a shortage of cold hard cash can be an advantage. Why? Because it makes you more innovative.

Because small companies are usually underfinanced, they are always scrambling for inexpensive and effective ideas to stay in business. This apparent hardship forces you to discover and employ unorthodox ideas, strategies, and tactics that the big guys wouldn’t dream of. They don’t have to. In a small company, cost-saving ideas, customer retention, and marketing concepts can come from anywhere. The big guys tend to want ideas to originate from their proper divisions, which can miss or kill some gems in an effort to defend precious turf.

Think creatively about marketing. You don’t have to spend a lot of money. Back in 1986 when Barefoot was founded, we pioneered what we call “worthy cause marketing” (WCM). We partnered with nonprofit organizations (NPOs) that believed in the same causes we believed in—specifically, environmentalism and civil rights. We donated product at fundraising events, we worked festivals, and we got out into the community to talk about causes we were passionate about. In this way, we gained access to lots of potential customers and gave them a “social reason” to buy our product. And in return, the
NPOs received donated product and manpower at events, as well as publicity via our distribution channels.

Find good people. Make great people. Of course you need to hire well. That means finding people who are not only qualified, but who have foundational qualities you can build upon. We looked for enthusiasm, confidence, honesty and integrity, a willingness to learn, and a sense of humor. But we didn’t stop there—we made sure to provide the environment, encouragement, resources, and flexibility for our people to become their best. We made sure to create a positive culture. We caught people doing things right and told our entire staff about it. We allowed them to make mistakes so as not to squelch their creativity. We put a lot of energy into mentoring and training. We gave them plenty of vacation time to rest and recharge. We did everything possible to help them live up to their full potential. To get the best out of your people, find out what they excel at. Then, redesign their jobs to fit those skills. Ask others to pick up the aspects of the former job that still need to be done. You might be surprised at the positive response. Don’t put the square peg in the round hole. Build a square hole.

Use performance-based compensation. Many compensation plans for in house staff are based on an hourly rate, which is paying for attendance, not necessarily production. Consider offering bonuses based on sales, cost reductions, and customer retention. In other words, give them a financial reason to help the team perform. Sales reps on commissions are also worthy of bonuses! With the ideal compensation system, non-producers can’t afford to work for you, and producers can’t afford to leave.

Grow your business by sharing the wealth. Henry Ford used to say he’d rather have 1 percent of what a hundred others made working for him than 100 percent of what he made by himself. Some business owners want to have it all, but in the process, cut off the very folks they need to get what they want. We were chastised for “overpaying” salespeople. True, we had several salespeople who made more than we, the owners, did—yet when we looked at the efficiencies of scale, the value of stability, and the increase in sales, we knew we were doing the right thing. Sharing the wealth allows you to reduce turnover, attract go-getters, and motivate people to produce even more. It’s their production you really want, because that is where your profits come from.

Don’t treat information as currency. Let it flow freely. Some companies, especially big corporations, treat information like a coveted commodity. In fact, it’s often used as a type of currency to buy a lunch, get a promotion, receive kudos, or trade for other information. Some information is downright suppressed because it may threaten some supervisor’s concept of job security. Do not let this happen. Do whatever you can to engage everyone and keep the information free-flowing. Be transparent about challenges and ask the entire staff for solutions. It can also help to link compensation to overall performance. At Barefoot, we made sure all people were getting bonuses on sales, which meant that sharing information and ideas was good for everybody’s paycheck. Respecting the intellect of your human resources, giving them a financial reason to work as a team, and sharing your challenges can avoid hardening of the information arteries.

Listen to your salespeople. Without them, there is no company. Review with your salespeople that which affects your product and its image. Before you allow a change or “improvement” to the product or the package, check with the folks who have to actually make the sale, overcome the objections, and talk directly to the decision makers and the end users. Top-down thinking, when it comes to product, package design, and even promotion, can undermine what has taken years to establish. It’s critical that your non-salespeople appreciate where the money comes from that pays their salaries, bonuses, and benefits. When folks are hired, present them with an info-graphic that follows the money trail backwards from the customer through the distribution system, through the marketing and sales system, through the supply and production system, and winds up in their pockets. It may seem obvious, but it can be forgotten as your company gets larger.

Establish a positive culture. Company culture has a direct bearing on the survival and growth of a company. This starts from the top and permeates throughout an organization. Our culture was based on two overarching principles: generosity and permission. Our use of worthy cause marketing gave employees a level of satisfaction that went far beyond making a sale—they got to make a difference. And by allowing, no, insisting that people use their imagination to experiment, be creative, and even make mistakes, we gave them permission to be or become all that they could be. And importantly, be sure that your employees provide great customer service, which as we know, is an integral part of that culture.




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