Unique Selling Proposition

Every company needs a unique selling proposition for their product or service.

The classic example of a unique selling proposition is "When your package absolutely, positively has to get there overnight."  FedEx used to this proposition become the leader in the shipping world.  Dominos Pizza promised “Pizza delivered in 30 minutes or it's free.”  Nyquil was "The nighttime, coughing, achy, sniffling, stuffy head, fever, so you can rest medicine."

FedEx served customers who needed dependable overnight deliveries. Parents too busy to cook wanted food fast for hungry kids looked to Dominos.  Nyquil targets sick people desperate for a good night’s sleep. 

What are your customers problems that your product or service can solve?  What need are you meeting that no one else can? Create your advertising and marketing materials to convince your customers that you are the only or at least their best solution to the problem.

In housing we specialized in in-fill neighborhoods rather than large tracks of land on the edge of sprawl. We advertised “closer to work” and “kids can stay in same little league.”  Our customers wanted new and bigger homes but they did not want to change schools, drive farther to work, find new activities and friends for their kids.

Make a list of the benefits of your product or service.  Which of these benefits can be advertised as the best solution for the customer’s needs or at least wants? Do not over promise. Make sure your product can deliver on the promise.

Unless you are Wal-Mart do not expect to advertise that you are the lowest price in town because there will always be someone willing to cut more corners and work cheaper than you. It is far more likely you cannot afford to be the lowest price in town… and survive for long. And next time you are at one of those big box stores that do advertise the lowest prices take a good look at the quality of the merchandise.

 All Original content (c) Thomas Robinson

Write a Script for Your Customer Interactions

You can call it a script, a sales presentation or and agenda but plan your customer interactions so that you do them the same every time, so you cover everything you want to cover and you can adjust if it does not work.

When we were building houses we had a number of customer planned customer interactions; a sales presentation, a pre-construction meeting, a pre-drywall meeting, a pre-closing meeting and a closing.
We prepared a detailed agenda for each.  Below is our agenda for the pre-construction meeting.

Tell Your Story

You have a company story that you tell employees and customers when asked. Maybe it is on your web page. It likely says when and where you started the company, your experience and even awards. It reads like the resumes you get in the mail from people looking for a job.  Remember how little the resume told you about the person and failed to get you to act.

What does your story say about your values and more important does it captivate your target customer and make them want to know more about you and your company? Does it tell your employees what is important to the company and to you?

Below is the “Story” we wrote for Robinson Development. See if it works better than a resume.

It was only six in the evening when the meeting, one of many that always seem to run long, ended but it was mid December and it was already dark outside.  After the meeting I had intended to drive by a subdivision we had completed several years earlier.  Even though it was after dark, I went anyway.  As I entered the once familiar streets I was greeted not by the houses we had built but by Christmas lights.  Lights strung from bushes and trees; wreathes lit on front doors; Christmas trees showing through picture windows; a Santa Claus on the small roof over a front door; plastic angels in a front yard next door to a reindeer and a sleigh.  

Noted psychologist B. F. Skinner said, “Education is what survives when what has been learned has been forgotten.” As I sat in the car, the heater just catching up with the chill, I discovered what survives when the schedules, work orders, hammering, inspecting, painting and cleaning are forgotten; a neighborhood made up of homes, not houses, where people share, grow, argue, do homework and all the things that make up living.  The windows we selected and installed keep out the weather, the furnace warms them and the stove helps them prepare dinner.

That night I realized the homeowners will never know how we spent days looking at window samples, reading specs and talking to sales people before selecting the windows for the project or the design work that went into selecting the correct furnace for their home.

Quality was our job; not theirs.

Creating quality homes and quality neighborhoods is the joy and responsibility of our calling.   Explaining the building processes to our customers and helping them through and to even enjoy the experience is also our job.  To insure this, we wrote the book on it.  We created the Robinson Homes Homeowners Manual. The Manual, which is given to each customer when they sign the contract, guides the client through the entire process from applying for a loan through the warrantee period and even maintenance on the home and its systems.  The book includes the performance standards we designed into the home and clearly defines our policies and procedures.

Our staff, trade contractors and suppliers worked together to prepare this document to reflect their pride in the new homes we build, their professional approach to home building and their collective commitment to the make the process as smooth as possible. Our staff always has the book close at hand to refer to should a question of standards or procedures arise.  We are so confident in the Manual and the standards and procedures it contains that after signing the contract, if the buyer reads the book and disagrees with anything it contains we will refund the deposit with no questions asked.

                Once we are set to begin the home we hold the pre-construction conference, the first of three scheduled meeting, to go over procedures, the plans and options.  Just prior to installing the drywall we schedule a walkthrough of the home with our customers and the project manager to review the mechanical systems, framing and to make sure all options are installed as ordered.  And finally, we have a new home orientation to introduce the buyer to their new home and provide instruction on the features and systems in the home.

                It is not a house we build, but a home.  It is not just construction; it is creation of a family shelter and family center, a sanctuary from the outside world. 

How did you feel when you read the story? Did it keep you interested? Did it make you want to trust this company?

Key Financial Terms

The key to understanding your balance sheet and financial terms it understanding terms used within in the Balance Sheet and by your accountant to describe your financial condition. The following are definitions of many of those terms.

Current Asset: A current asset is an asset that will be used in one year or business cycle such as cash and inventory.

Current Liability: A current liability is a liability that will come due and is expected to be settled for cash within one year or business cycle such as accounts payable or lines of credit used

Fixed Asset:  A Fixed Liability or Long Term Asset is a liability that cannot be quickly converted to cash, is not sold to the public but is rather used by the company in the operations such as autos, buildings, machinery or equipment.  

Fixed Liability: A Fixed Liability is a debt that will not be retired within one year such as mortgage,

Current Ratio: Current Ratio is current assets/current liabilities. It is an indicator of the liquidity of a corporation and reflects on its ability to pay its bills. Generally banks and investors are looking for a current ratio of 2 but this can vary by industry. Companies with inventory that turns over quicker than payable become due can survive with lower ratio.

Working Capital: Working Capital is Current Assets – Current Liabilities.

Cash Flow: Cash flow is incoming cash less out going cash of a fixed period.

Return on Investment or Rate of Return:  Increase in value/initial investment.  In most small businesses calculating this from balance sheet will not tell the whole story.  Small business owners will likely take benefits from the company that reduce the current value but are the result of operating the company such as paycheck, bonuses, auto, life insurance, rent from personal assets rented to company and others.  It is good to calculate this number so you know that your money is working efficiently.  No sense in running your business and risking your investment for a 1% return.

Debit: A debt is an increase in an asset or a decrease in a liability. A credit is the opposite a decrease in an asset or an increase in a liability. Your accountant many have a long textbook definition but in nearly all cases it is easy as this.

Original Material (c) Thomas Robinson 2010

Create a Sick Day Policy

I can still remember the day when my sales manager came into my office, closed the door and sat down. He was rarely in the office so the fact that he was there unannounced and that he closed the door were both unusual signs. “I have lung cancer.” He began without preamble. “But I am going to beat it. I may miss a few days here and there with my treatment but my doctor says I can continue to work.”

I was stunned. I expressed my sympathy for him and his family. My first concern was for him. He was an employee but as with most small companies I thought of my employees as more than just someone who put in eight hours and then went home.    

After he left my office I was able to focus on what I had just learned would mean to the company. His title was Sales Manager but he did nearly all of the sales with only part time help from another employee. What were the company’s legal obligations? What were my moral obligations and how would my actions be viewed by my other employees?

Illness can be an inconvenience at a minimum and a major drain on productivity.  As small business people we hope all our employees are as dedicated as we are and will not take advantage of sick days.  More often than not that hope is a false one. The smaller the business the more critical it is that each employee be available and on the job. Even if they are hourly employees and you do not pay them when they not there they are still hurting your productivity as you have to shift other personal to cover the missing employees work of it does not get done. If they are not missed when they are not there then why do you need them?

I was always reluctant to not pay employees for sick days because I did not want them coming to work sick and spreading the disease. I also was reluctant to assign a number of sick days because I was concerned that the employees would then begin to think of them as extra vacation days.

You should make a policy so that you have something on which to base future decisions. Do you want to allow a number of days? Are some of your employees covered by a union agreement upon which you can base you policy? What happens if the employee does not use the sick days; are they added   to vacation, lost, paid?

Is there a time limit after which you can no longer hold a job open? For example, if you have an accountant who is going to be off for an extended period of time what is the threshold for replacing that employee; two weeks, a month, six weeks? In my case I set a policy where the company recognized the importance of each employee but the company reserved the right to replace an employee if the illness extended beyond two week.  The policy only said we could not would.  

In the case of my sales manager I continued to pay him during his illness.  As the illness progressed he missed more time. What began as a day a week in the beginning became almost no work at the end. Not only did it cost the company pay for work that was not being done but the work was not being done. The illness impacted the company and the livelihood of all the employees.

The day came when it became clear he was not only not contributing to the business but it was becoming a risk. I told him he needed to stay home, be with his family and concentrate on his health. I paid him for an additional two weeks. He was dead in three.

It was a difficult and emotional experience.  I never did try and figure out how many “sick days” I paid.

Without a policy my actions created one. A few months later one of my employees announced they needed surgery and would be off six weeks to several months.  This employee assumed because I paid the salesperson with cancer I would pay this employee as well.  The position was critical and could not be vacant for an extended period.

Create a policy that you can live with.

Original Material copyright 2010 Thomas Robinson

What Will You Do When the Wheels Fall Off?

I was at a seminar one day and the speaker suggested that every business person should have a disaster plan. His example was a very successful and profitable company that worked exclusively for an equally successful fortune 500 company.  Unfortunately the Fortune 500 company was Enron.  Overnight the entire workload was gone as was the accounts receivable.

Make a disaster plan. What if your sales drop to 50% or even drop completely? What overhead can you shed quickly? If you rent how long the lease is and how can you break it without personal liability? If you own the building will you be able to sell or rent it quickly? When the financial market collapsed taking the housing market with it many home builders were stuck with too much inventory in residential land but also too much office space that the same financial crises devalued.

Look at your other large overhead items including payroll. What will it cost you to shed payroll? Will you need to pay severance, insurance, back vacation pay or other benefits?

Can the company be quickly moved to other products or services? Should you start to diversify into other areas to limit impact of the collapse of a single industry?  

Can you use vender or investor financing of your inventory? Many home builders had investors hold land until they needed it for construction. They gave up some or all of the profit  on the land but when the housing market collapsed the investors not the building company were stuck with the devalued inventory.

What is your personal liability if the wheels do fall off? Have you signed as personal guarantor on bank loans, vendor credit applications, or other financial documents? Can you remove those personal guarantees when everything is going smoothly? Make a list of all your personal guarantees to banks and venders.  Look into getting those removed if possible.

Plan for disaster before it happens and hope you never need the plan.

Original Material (c) Thomas Robinson

What if you get sick?

What if you have a family or health emergency and need to be away for extended period of time?  Could the company operate without you? Can you take the time to deal with the issue?

Preparing a company for a long tern illness in some ways is more difficult than if you die for two reasons; there is no life insurance to compensate the company for your lost services and you want the company to survive until you can return.

I once had a health emergency. As it turned out it was over in a matter of days but it could have been much worse. As I lay in the hospital bed instead of worrying about the issue at hand I was trying to figure out what was going to happen on Monday when I was not at the office.

Your company will likely perform best under stress if the employees are already accustomed to making day to day decisions. If they need to bring every problem and decision to you then they are not likely to easily slip into the decision mode.  Unfortunately it is more common for small business owners to make all the decisions and deal with all crises personally.

 You need a plan and you need to empower the employees that will need to carry on with the authority to do what needs to be done.

The trusted employee that you count on to take over for you might not be capable or willing if you have not trained this employee in decision making and the general operation of you business.

Begin to set up the company so it runs without you.

·         Clearly define lines of authority. Everyone reports to you will not work if you are not there.

·         Set op processes and systems to perform all functions in the company so everyone knows what to do and how to do it.

·         Bring key employees into the decision process so they are accustomed to making decisions and know how to do it. Empower these employees to make routine and even none routine decisions.

·         Make sure you key customers and suppliers know your key employees so that if they get a call from someone other than you it is not a warning sign.

·          Make sure that key employees have access to all the tools and resources to run the company while you are ill.

If your key employees are accustomed to the company running well on a day to day basis with minimum input from you when you are available then they can rise to the occasion when you are not available.  You will still worry but you will have the “luxury” of being sick and the time to get well.

Original Material (c) Thomas Robinson

Define Your End Game

It is my theory that it is unlikely that anyone can create a company and operate it for years successfully without loving what they do or at least enough of what they do to make it worthwhile.  At some point, however, we will all need to stop what we are doing and let someone else take over or close the company. Preparing long before the day comes will make the endgame easier.  

There are many considerations including is the company worth more as an ongoing entity or is it better to close the business and liquidate the assets.   

If you company is dependent solely on your labor and expertise, a dentist for example then all you may have to sell is the patient list. However, even here there are ways you can create equity in your practice. Most dentists once they build up their practice are married to a location or at least the town for fear that if they relocate too far the patients will lose track of them.  The location has value and a few changes might make the sale of the practice more valuable. Rename the practice so that is not relying solely on you name.  Dr. Jones, Dentist can be changed to Main Street Dentistry.  You can create repeatable systems and processes so that someone buying the practice can step right in without recreating what you have done.

If you have created a valuable company are you going to sell it? Give it to your offspring? If you prepare it to sell then it will also be a condition to give it to you child.

If you are selling it are you selling it to the employees, an employee, a stranger or competitor? Are you willing to finance the sale? If you are accepting payment over time it is even more critical that you create systems to succeed. If giving it to your offspring are they capable? Do they even want it? Will there be friction in the family that make a sale to outside parties more preferable? Second generation businesses often fail because the new operators do not have the ambition and hunger that the previous generation had.  

Begin to think about the end game. How will you get the most for you company and what can you do now to make that happen?

Original Material (c) Thomas Robinson

Give the Monkey Back

You know the situation. “Boss, I have a problem.” With that opening an employee dumps his problem on you. As business owners and take charge people we do what the employee expects we interrupt what we are doing and solve the problem. He has taken the monkey off his back and given it to you.

Next time this happens ask what the employee would do if you were not there. You will more than likely find out the employee had a solution for the problem but was looking for someone else to take the responsibility. You can discuss the issue with the employee and use it as a training moment. If possible log the solution so you can set a policy that will allow employees to solve problems without you. Often just empowering the employee to resolve issues will free up a lot of your time.  You need to be careful that you also do not become critical of reasonable decisions when they make them.

Accepting the monkey and solving the problem not only ties up you time at the moment but makes the employee comfortable so they  bring the next issue to you instead of doing what they know how to do given the chance. Your solution may also not be based on all the facts the employee knows because he has been dealing with the situation. Often our knee jerk reaction is the first solution that comes to mind and may not be the best solution to the problem.

Next time someone tries to give you the monkey off their back give it back or at least use it as a teaching moment so you can give it back next time. 

Original Material (c) Thomas Robinson

The First Week after the Boss Dies

Here is a topic no one wants to consider but just like all life insurance sales people are trained to say “heaven forbid’ you die what happens. You have worked hard to create your company and the equity it holds.  More than likely you have taken time away from your family in the process. You want to make sure that that equity and the income you provide to your family does not disappear if you get hit by the proverbial bus on the way home tonight.

Image you could sit at your desk the day after you die. What would you want to happen? Who do you want to run the company for the next few days while your family deals with your loss; your attorney, an employee, a relative? How will the employees react to your passing? They may go with your short term leader but will they follow that relative, friend or fellow employee you foresee running the company? Is the person you would wish to run your company capable of doing so? Does this person want to run a company and if so are they willing to make the sacrifices that are necessary to run a small business?

What would you tell the person sitting in your chair if you could advise them that first day after you die? Who should they call; banker, attorney, accountant, key customer, key suppliers, key customers? I suggest you make a list of who to call and what to tell them.  You should also draft a suggested conversation with key employees who will naturally be concerned about their own future.

Make a list of key documents that the short term leader will need. Where are the insurance policies? Power of Attorney? Licenses? Bond? Bank account numbers? Passwords and combinations?

When you develop the plan share it with the people you expect to execute the plan and with your spouse. Even if the plan is never used the exercise might be revealing. You may learn a lot about your company. You will also know where all critical documents are when you need them.

Original Material (c) Thomas Robinson

Who Has the Keys?

Too many small business owners develop personal relationships with their employees both good and bad. It is easy to place trust in an employee because of that relationship.

I knew a business owner for whom English was a second language. This owner hired a young man primarily because he spoke a language this owner understood and was comfortable with.

The owner used that trust to steel over a month’s profits from the company using the key to access the facility after hours, access to the cash drawer and using the credit card refund system. It is only because of good cross checks on the credit card account and cash drawer that the thefts were caught.

Another business owner showed up at his facility on a Sunday night to pick up files for a meeting with his accountant the next morning to find an underage drinking party in progress in the back room. This was also unauthorized use of company keys.

Find out who has keys – the keys to the front door and other critical access - and do they all need them?  When are employees in the store alone? Where is the cash drawer and is it locked? Are there good checks and balances in place to catch shortages on cash and inventory? Who has your burglar alarm code and can you set it up so you know who goes in and out and when?

Original Material (c) Thomas Robinson

Employee Reviews/Feedback

Plan a systematic and scheduled employee review for all employees.  Write out a standard agenda and revise it for each individual to make sure you cover all important points.

Reviewing an employee’s performance can be a difficult and uncomfortable task particularly in a small business where we are often friends and colleges with our employees.  First; Call it a Quarterly Employee meeting (a year is too long) instead of an Employee Review.  Make it a discussion and not a judgmental monolog.

Review the job description; is everything getting done to acceptable standards? Are there any tasks that need to be added or moved to another employee?  Review any goals you set at the last meeting. Were the goals accomplished/ were the goals set too high or too low? Set new goals that can be met by the next meeting. If there are long range goals set intermediate goals. Try to judge the job and not the person. It will make it more comfortable and more productive. 

Are there any procedures you can document to produce more consistent results? Are there any current procedures that need to be changed or improved? Make sure you are capturing and owning the employees on the job skills.  

Also include a review of how the company is doing and how the employee fits into the bigger picture.  Often they will have a far different picture of the company and its goals than you. Share your goals so they can work toward them.

I do not recommend making pay and raises part of the quarterly meeting. As it tends to be the only item the employee remembers, good or bad.

Original Material (c) Thomas Robinson

Create a Sexual Harassment Policy

"It is unlawful to harass a person (an applicant or employee) because of that person’s sex. Harassment can include “sexual harassment” or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.

"Harassment does not have to be of a sexual nature, however, and can include offensive remarks about a person’s sex. For example, it is illegal to harass a woman by making offensive comments about women in general.

"Both victim and the harasser can be either a woman or a man, and the victim and harasser can be the same sex.

"Although the law doesn’t prohibit simple teasing, offhand comments, or isolated incidents that are not very serious, harassment is illegal when it is so frequent or severe that it creates a hostile or offensive work environment or when it results in an adverse employment decision (such as the victim being fired or demoted).

"The harasser can be the victim's supervisor, a supervisor in another area, a co-worker, or someone who is not an employee of the employer, such as a client or customer."  (http://www.eeoc.gov/laws/types/sexual_harassment.cfm)

I had an associate who won a sexual harassment suit filed by an employee against her immediate supervisor. He spent nearly $200,000 to win.

It is worth creating a strategy for avoiding having to win a suit. I found a short booklet that I copied and asked each employee to read regarding being sensitive to the issue. The booklet had a page that the employees could sign and tear out for me to retain in their employee file.  It defined sexual harassment, and gave examples of unacceptable behavior. There are a number on the internet. Find one that fits your company.

Booklet or training seminar unfortunately you need some way to address the issue and share your concern with your employees. You also need a written policy on what actions an employee should take if they feel uncomfortable including how the employee can report.

For more information visit http://www.eeoc.gov/eeoc/publications/fs-sex.cfm

Original Content copyright Thomas Robinson 2010

Key Person Life insurance

…"key person insurance"…can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy.( http://en.wikipedia.org/wiki/Key_person_insurance)

Most small businesses carry life insurance on the principals. This insurance can have a number of uses including providing for the principle’s family, to buy out deceased partners, help collateralize business loans and others.

Talk with your trusted insurance professional and accountant to make sure you have the ownership correct to minimize tax impact on you or the company. If you own the policy personally and the company pays the bill you will likely need to report the premium as income but will save your family taxes should they need the proceeds. If you have the company pay the bill and do not pay income tax on the premiums then if you die the proceeds to your family will be taxable. If it is your intent that the company use the proceeds from the life insurance to replace you and survive it is likely that you will want the beneficiary be the company.

It gets tricky if your bank requires you have insurance to pay off company debts in the event of your death. If you hold a bank pay off policy personally then the company may have to pay taxes on the money used to pay off the loan. Ownership of policies used to fund partner or fellow stockholder buy out agreements can also be tricky and you will need to make sure the buyout agreement and the policy ownership work together.  Bottom lines is get good advice and structure the ownership and beneficiaries on the policies so they accomplish what you intended and minimize tax impact.   

If you are considering Key Man life insurance on employees that would be costly or difficult to replace first consider what would happen if they leave for some other reason such as joining a competitor or to pursue their own entrepreneurial venture. If they are key and not tied to the company then you need to make other plans to reduce the impact of their leaving including capturing their knowledge and abilities in systems and written procedures.   

Original Content (c) Thomas Robinson

Develop a Pregnancy/Family Leave Policy

The Family and Medical Leave Act (see Department of Labor web page for details) provides specific requirements for employer with more than fifty employees. There are also similar state laws that may apply.  Even if they do not apply to you you can use these regulations as guides.

Family and Medical Leave Act

Overview

http://www.dol.gov/whd/fmla/index.htm

Covered employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for one or more of the following reasons:

·         for the birth and care of the newborn child of the employee;

·         for placement with the employee of a son or daughter for adoption or foster care;

·         to care for an immediate family member (spouse, child, or parent) with a serious health condition; or

·         to take medical leave when the employee is unable to work because of a serious health condition.

If you are not covered by one of these acts it would be best to set policies of your own:

·         Does the leave apply to both men and women employees?

·         What is the length that you can or will hold open the position? The Act sets 12 weeks as the length of leave.

·         Will you pay the employee in full or in part? Will you pay their health benefits if applicable or will you allow them to stay on your plan if they pay the premium.

Think through what you can do and what you want to do.  Make a policy that lets you be consistent.

Original content (c) Thomas Robinson 2010

Establish a Written Dress Code

How do you expect your employees to dress? More than likely you will have a different answer for employees who meet the public than employee who work in a shop and never see the public.

 One of the most uncomfortable conversations I can remember having was with an otherwise excellent female employee who would wear dresses more appropriate for Saturday night dates than for the office.   

It is unlikely that you can cover all contingencies but think through your various types of employees and put in writing how you expect them to dress. Do you require suits, sport coats, dresses or business casual? Do you have uniforms, company shirts or other job appropriate apparel: safety equipment such as steel toed shoes?

How do you expect your sales people, your office personal or your production employees to dress; professional or casual?

Are there job specific requirements? If you have an employee running manufacturing equipment you may not want them to wear loose clothing that can get caught in the machine or to wear jewelry while working on electrical systems.  You may be amazed at the reluctance to sacrifice fashion to safety on the part of some employees.

I am not suggesting you go into such detail as length of skirts and color of shoes but describe what you expect in terms that are meaningful to you and they will likely be meaningful to your employees. If an employee pushes limits you have a basis to make corrections.

Your dress code may also include other personal grooming standards; hair neatly combed, no facial piercings, no visible tattoos for example if these thing are appropriate to the job. If a production worker has a tattoo on their face it may not impact their job. If a sales person that sells to the public has a nose ring it may indeed impact their job. Just be careful. In the politically correct society we live in that the requirements are job and not culturally related.

Original content (c) Thomas Robinson 2010

Look at the Boss

Look at yourself in the mirror. Are you projecting the image you want? Jeans might be comfortable but if you own a financial consulting firm it is likely your customers want you in a conservative suit. If you own a car repair shop you will likely be better off without the suit but whoever deals directly with the customer should be neatly dressed and not covered with grease. Would you turn your beautiful new car over to someone covered in grease?

The key is dress appropriate and the way your customers and your employees expect a successful business person in your profession should dress.  It might be help to take keys from larger businesses in your industry. If you are an accountant dress as the employees at large successful accountant firms dress.  If you are selling tools to mechanics out of your mobile tool truck you will not want to wear a suit. You can dress more casually like your customers but you still need to be neat and clean. If you run a car repair shop, look at the people who accept cars and write up orders at the big dealers. The major car companies have done very expensive studies on what their employee should look like. You can take advantage of these studies by observing how they greet their customers. Remember those dealer often charge far about the local going rate at other shops because they know how to establish trust but what they say and do.  

I you think dressing the part is not necessary think about your own hiring decisions and buying decision. Did you hire the guy who did not come in dressed appropriately? Would you want a lawyer dressed in a suit or torn jeans?

Even if you never see the public your employees will take clues from you. You can make all the dress codes you want but if you do not follow them, neither will your employees when you are not watching.

Original content (c) Thomas Robinson 2010

What if a Key Employee Quits? Dies?

No one likes to think about losing key employees especially those you have trained, mentored and allowed to become critical members of your team. Think about it now before it happens so you can put a plan in place so when it happens you are prepared.

Start with the person’s job description; what do they do and what do they do that is critical that no one else in the company can do? Is this skill or knowledge transferable to your competitor or can the employee become your competitor?

If this person is a salesperson or has critical contact with your customers can he take customers with him if he or she decides to leave?

If the person runs manufacturing or operations is there proprietary information that can be protected?

No compete agreements can be put in place but if not done at time of hiring can cause ill will and sometimes can force the very problem you are worried about.  They are also often unenforceable for legal or practical reasons.  

Begin putting in place a plan to capture the skill and knowledge. Make sure customer information is kept at a central location and not only on the employee’s laptop computer. If the employee has critical manufacturing knowledge set up a plan to have the person begin training others.  It is best to capture the knowledge in writing so it becomes you property instead of the employees.

Whatever it takes make sure you are less dependent on employees and more reliant of process and procedure so you can change employees without either a costly back step or needing to overpay to keep a dissatisfied or disloyal employee.  

Create a Jury Duty Policy

According to the US Department of Labor there is no requirement to pay for time not worked including jury duty. However, according to the Departments Employee Benefit Survey 87% of employee pay employees while they serve jury duty. (Labor) State laws vary on employer’s obligations in this area so you will need to check on the law in your state.

If it is a day or two it will likely have little impact on your business even if the employee is a key employee. If a key person had been selected to sit on the O.J. Simpson trial that took months the impact could be substantial. What if you need to replace that employee? Do you want to pay the employee for a certain number of days as some state laws require?

You also need to make sure you are consistent. A policy drafted before the issue comes up will reduce hard feelings when you say you cannot pay an employee to be gone for an extended time.

Original Content copyright 2010 Thomas Robinson

Look at Your Inventory

Take a look at your inventory. Raw and finished materials are likely a large part of your expenses. What is the value of this asset to you if used in production and what is the value of the asset if you cannot use it and need to sell it as is.

Just in Time (JIT); A strategy for inventory management in which raw materials and components are delivered from the vendor or supplier immediately before they are needed in the manufacturing process.

Just in time inventory management where you have the materials delivered as they are needed and complete the finished product just before it is shipped can work if your work flow is steady and you do not do a great deal of customization.

In housing the nature of our construction side of the business made just in time deliveries a necessity because there was very little on site storage to accommodate storage. The drywall for example was delivered and installed the next day. Inventory and storage were in this case someone else’s problem…. until the construction boom 1990’s when material shortages became a problem.

If you are receiving material only as you need it you will not be able to take advantage of fluctuations in seasonal prices or special close out or inventory reduction opportunities.  In the construction business we would often get off season lumber specials but storage fees offset the cost savings.

If you are receiving materials in bulk how quickly can you liquidate it in a crisis and what would be the cost.   How much of your working capital is tied up?  Are there other ways to get access to inventory such as multiple local suppliers?  Multiple sources may be possible if your raw material is a commodity such a lumber where one supplier is about as good as the next. It will not work if raw material is design or quality specific to a single supplier.

Look at your inventory system. Do not assume that because it is working it is the best it can be. Can it be better?

How Fast Can You Cut Overhead?

Get a list of all your overhead expenses for the last quarter and the last year, the more data the better.  List the items from largest expense to smallest. Look at the list and ask yourself what would happen if something happened - the economy goes bad, you lose your biggest customers, you lose your source of raw materials, or a competitor comes up with a unique product that destroys your sales – how fast can you cut overhead while you regroup or reposition your company.

Usually payroll and the related expenses are the largest. What is the cost of cutting the payroll not only the costs associated with terminating employees but also the lost experience and training?

There are a number of things to consider.

·         Can you hire employees with the same skills after you deal with the downturn? What would be to cost and perhaps benefit of training a new employee.

·         If you keep the employees that are working below capacity will they willing and able to ramp it up in the difficult times?  I kept a very expensive employee who I considered a key part of my operation through a very slow time between projects. Once the new project started I had to shed this employee because this person had become too comfortable working part time for full time pay.  I also discovered that some I had shed in the slow times were more than willing to return when I asked.

·         Can you outsource some of the required operations such as bookkeeping to your accountant so you are only paying for work when it is being performed? If you do outsource will you get the same results as you do with the in-house personal?

Some other items that often lead the list of overhead expenses are insurance, rent, and utilities.  What can you do if anything to reduce these costs in slow times?

Write a Cell Phone Policy

To do business today cell phones are no longer a luxury.  If you supply cell phones to your employees you need to understand the cost both the business cost and the cost of allowing your employees to use the cell phone for personal use as a perk.

Look at your bills. Most cell phone bills will list the calls per phone and record the numbers called. Usually a simple review of the bill will reveal patterns. You may be able to save money by restructuring the cell phone plan you have with your provider. You may also see if the phone is being used for business or personal use. We had one employee whose bills were always larger than the other employees. When we reviewed the bills it became evident that the bulk of the calls were outside the work hours and personal.  If you allow the personal use of cell phones make sure you take it into consideration when talking with employees about increases in pay and benefits.


You may want to offer a cell phone allowance to each employee and have them use their personal phone. This gives you the advantage of predictability and you do not need to monitor the bills. The disadvantage is you will not own the number and should a key employee leave they take the phone number with them.  If, for example, you have a lead sales person leave the sales person may be receiving calls on his or her cell phone intended for your business while they are now working for your competitor.


There is no solution that works for everyone. Establish a policy and adjust as needed until it fit your needs.

Original content copyright 2010 Thomas Robinson