America's Best Business Practices

Tough times usually spell trouble for small businesses, including those in relatively stable industries or geographic locations. When the economy slows down consumers stop spending on anything but essentials and big corporations tighten the purse strings on expenses, put off major purchases, and park new initiatives.

A typical small business usually has limited resources. External factors can easily squeeze margins and profits until well past the breaking point. But, an economic downturn doesn’t have to spell disaster for your small business if you have good business and financial management practices. Good business and financial practices are the ultimate defense against economic storms. And, they can provide the insurance you need to capitalize on new opportunities when good times return.

Here are Ten Top Tips for Tough Times:

1. Focus on fundamentals. No small business can survive even when times are good if they don’t keep good records, develop accurate budgets, monitor cash flow, and manage credit.
2. Establish a good relationship with your banker. Having a good relationship with your banker ensures that you can go to them for advice on how to solve financial issues before they take on crisis proportions. Chances are your banker has experience in helping other small businesses weather the same types of storms you are facing and can provide advice on the best course of action. Plan in advance for potential cash flow gaps by arranging for a line of credit.
3. Treat your creditors well. Avoid falling behind on payments. Creditors are more willing to negotiate terms to small businesses if they consider them to be conscientious and reliable. Take good care of your suppliers so that if you ever need a favor, they will be inclined to grant it.
4. Treat your employees better. When business is down and cash is tight, many business owners begin to feel they are doing employees a favor by not laying them off. This attitude is dangerous because it sets in motion an undercurrent of resentment that undermines the relationship between employees and the company. Then, when the economy turns around, employees who feel underappreciated will leave you just when you need them the most.
5. Manage receivables. Be vigilant with regard to any outstanding debts to your company and pay particular attention to accounts that are consistently delinquent. Consider offering special incentives for prompt remittance. Be willing to negotiate where appropriate.
6. Cut the right costs. Instead of slashing your budget, focus on how you can cut all expenses except those that will positively affect your business.  Then, redirect your resources to those areas that will enhance business performance.
7. Improve financial reporting.  Reviewing financial results weekly or biweekly rather than monthly will put you in a better position to make informed decisions.  Also, a monthly or quarterly review of your business plan can help you adjust your strategy and direction to changing market conditions.
8. Make marketing and sales a priority.  Now is the time to increase your company’s visibility to current customers and potential new markets.  Some of your competitors will not survive economic downturn. So, make sure you expend the effort required to retain current customers and secure new ones. You want to be the company they call when they decide to resume spending.
9. Deliver great customer service. Good customer service is one of the areas most big companies neglect. This is where small businesses can get and keep an edge. Remember, the toughest customer to steal from a competitor is a happy one. Look for ways to make your customer’s lives easier and better. Design your customer service program as if you were the customer.
10. Invest in innovation. The best antidote to a downturn in the economy is innovation. Continually search for ways to improve your products/services. Stay abreast of what is happening in your industry and emerging market trends. Be prepared to take financial risks for the right opportunity.

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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Where’s the line?

When an employer hires workers an important question is whether the compensation they receive is subject to employment taxes. The answer depends on whether the worker is an employee or an independent contractor. This determination of the worker’s status depends on certain facts . . . facts which define the type and terms of the business relationship that exists between the parties at the time the services are rendered.

In this brief article I hope to provide an overview of the issue and provide a link to a more in depth report.  I teamed up with Robert Long (a frequent contributor to this blog) of Coral Springs, Florida to make sure I provided accurate information. Robert is a CPA with his own practice (Robert E. Long MA, CPA, PA) and has been serving small businesses for decades. As the internet and email has made our world more virtual, Robert now serves small business owners in many states across the nation. Be sure to click the link at the bottom for his full report. Here are some of his thoughts on the subject.

Workers who are classified as employees, sometimes referred to as a “common law employees”, are hired by an organization to perform specific work under the direction of the employer. In contrast, workers who are classified as independent contractors are in business for themselves and they perform work for an organization without direction from the party who pays for their services.

Employment taxes apply solely to the remuneration paid to workers classified as employees.  The distinction between employees and independent contractors is important because employers must deduct certain taxes from employee’s checks. For example, employers are obligated to deduct Federal income tax withholding, “match” Social Security and Medicare taxes, and to pay Federal unemployment taxes for their employees. Employers may also be obligated to pay for state income taxes.  In addition, the employer or employee may have to pay state unemployment compensation contributions and state disability insurance. Employers are not typically required to pay these taxes if they employ independent contractors.

If an individual is working as an independent contractor, the “employer” does not make any Social Security/Medicare deductions. The independent contractor must pay his or her own “self-employment taxes” along with income tax on earnings.

A common problem arises when, perhaps years later, the IRS, Department of Labor or state taxing authorities classifies the independent contractor as an employee, leading to retroactive overtime pay, retirement benefits and medical claims for job-related injuries.  In these cases, the independent contractor’s job-related expense write-offs may be disallowed or subject to the 2% of Adjusted Gross Income rule on the 1040 which can create issues with how the independent contractor’s past tax returns have been filed as well as any taxes paid or refunded..  These issues may not arise until after a substantial period of time has passed.

To avoid this situation, the employer or the independent contractor can make a request to the IRS to seek determination on whether a worker is an employee.   The only requirement for this determination is to have filed a detailed Form SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding).

The Internal Revenue Provides Some Guidance
When determining whether an individual is an employee or an independent contractor, the IRS stresses that ALL evidence of the degree of control and degree of independence must be considered.  The current I.R.S. official guidance, in Publication 15-A, Employer’s Supplemental Tax Guide – Supplement to Circular E, indicates that facts which provide evidence of the degree of control and independence fall into three major categories: behavioral control, financial control, and the type of relationship between the parties, as follows:

I.) Behavioral Control Facts indicate whether the business has the right to direct and control how the worker performs the task for which the worker has been hired. Behavioral control includes instructions and training that the business gives to the worker.

II.) Financial Control Facts indicate whether the business has a right to control the business aspects of the worker’s job. Financial control includes the extent to which the worker has unreimbursed business expenses, the extent of the worker’s investment to perform the services, the extent to which the worker makes services available to other businesses, how regularly the business pays the worker, and the extent to which the worker is able to make a profit or incur a loss.

III.) Type of Relationship Facts indicate the type of relationship that exist between the parties include written contracts describing the type of relationship the parties intended to create, whether the business provides the worker with employee-type benefits such as insurance, a pension plan, vacation pay, or sick pay, the permanency of the relationship, and the extent to which services performed by the worker are a key aspect of the regular business of the company.

Employers can avoid the high cost and inconvenience of having their workers’ classifications changed from independent contractors to employees by vigorously applying 20 common-law factors.

NOTE: For the full report, details on the 20 common-law factors and a list of great resources, click here.

This explanation is distributed with the understanding that we are not rendering legal, accounting or other professional services or advice.  If such advice or assistance s required, an attorney or accountant should be consulted.

Hopefully, this short article has given you enough information to pique your interest in downloading the full report (link above) to reduce the amount of legal risk to which you expose your company. If you would like to contact Robert Long, you can do so by calling him at 954-603-0480, emailing him at rlong33424@aol.com or through his LinkedIn page.

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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A number of readers’ responses to the last Tim Negris articles about social network marketing, “Rules for Attending the Social Media Marketing Party“ and “Using the Right Social Media Tools,” raised questions about whether Facebook can be used effectively for marketing and, if so, how.  Since Tim’s thoughts stimulated several questions, I have asked him to address this and other issues. So, here are some more of Tim’s thoughts and advice on how to get the most out of your social networks.

On the one hand, Facebook is generally more oriented to person-to-person communications between people who already know each other. However, because it is so easy to use, allows you to post all kinds of media as content, and has .4 billion users, it can be  a very effective business marketing tool.

One way to make Facebook more useful for marketing is to use it in conjunction with LinkedIn and/or Twitter, rather than by itself.  You can connect your Twitter and LinkedIn accounts to your Facebook account and then use them together in various ways to improve your visibility and increase traffic to your content.

Facebook Pages
In addition to your standard personal page, Facebook also allows you to set up a public page, called a Facebook Page (FBP) that functions much like a self-contained social network.  You can advertise and promote your FBP on Facebook and you can set it up so that people can find it easily in searches within Facebook and in search engines.  People can connect with you by joining (becoming fans) on their own without you having to ask them (but you can also invite them if you wish), and you can set up a FBP so that any Facebook member can see it, even without becoming a fan.

You can use the FBP to post text, links, pictures, and video, as on your personal page, but FBPs also have tabs for Discussions and Reviews.  And, as is the case with your personal page, you can control whether or not people can post on the FBP wall.    At present, when you add content to your page, your fans will not automatically be notified.  You must also use “update” to let them know about new content.  Nonetheless, FBPs are flexible, easy to use and are an attractive marketing medium for businesses, organizations, professionals and entertainers because any one of the 400 million Facebook users can easily reach them.  And, you can drive even more traffic to your FBP by creating and using connections between your FBP, Twitter and LinkedIn accounts.  Here’s how.

Set up a Facebook Page
Start by logging into your Facebook account and setting up a Facebook Page.  The easiest way to do this is to select Help Center from your Account menu and then select Facebook Pages in the Facebook Applications and Features section.  Then, select Admins: Creating, administering and editing your Page.  You should read through the sections shown to familiarize yourself with how FBPs work and then click on the link, How can I create a Page? to set up a page.

Link the Facebook Page to Twitter
On your new or existing FBP, type “twitter” in the search box and in the Applications section of the results page you will see several different Twitter-related applications, the first of which is created by Twitter and is the one you want.  Select it and on the left side of the resulting page, select the choice for adding it to your page.  If you have more than one page created under your account you will be given a choice of which page you want to Twitter-enable.

From here on, any time you update your Facebook Page, it will automatically be posted as a tweet on your Twitter page and be seen by all your Twitter followers, just as if you had posted it there directly.  You can use hash tags and other special, symbol-driven Twitter features in the text of your FBP update.  But, do note, if your FBP update is longer than 140 characters, Twitter will truncate it.

Link Twitter to LinkedIn
Log into your LinkedIn account and click the Settings link in the upper right corner of the page and then select Twitter Settings on the following page and you will see this:

When you click the link, a new browser window will open where you can specify the Twitter account you want to connect to LinkedIn.  Once you have set up this connection, the next time you go to your LinkedIn Home page, you will see a Twitter logo below the Network Updates box with a check-box on one side and a drop-down arrow on the other.  We will return to the check-box later.  When you select Twitter Settings from the drop-down menu you will see a page where you can control which Twitter account is linked to your LinkedIn account, whether or not a link to your Twitter page will be displayed on your Linked In page, and the following:

First, note that when you connect a Facebook page to Twitter, Facebook messages are duplicated on Twitter, but when you connect LinkedIn to Twitter, LinkedIn updates can go to Twitter or Twitter updates can go to LinkedIn. This can result in duplicated messages, so, for our purposes here, we will be going from Twitter to LinkedIn and will also be using the #in hash tag in our messages, so be sure to select the second choice shown above.

Putting It All Together
You will start by posting an update message on your Facebook Page like this:

When you press the Share button, the message will automatically be duplicated on your Twitter page with a link to your FBP added to the text of your original message.  The link is a “tiny url” style of link, so it is smaller than the actual address of your FBP, but since it is included in the character count, your original message will have to be shorter than a normal tweet.  On Twitter, it will look like this:

If you include the hash tag “#in” in your original FBP message, the message will then be forwarded automatically from your Twitter page to your LinkedIn page as well, where it will look like this:

The transit of messages from Facebook to Twitter are virtually instantaneous, but it may take 10 minutes or more for the message to then show up on LinkedIn, so be patient; it will get there eventually.

The one original message from your Facebook Page has now been sent to all of your Facebook Fans, all of your Twitter Followers, and your LinkedIn Connections.  On Twitter and LinkedIn, if someone clicks on the tiny url in the message, they will be directed to your Facebook Page, where you would presumably have content about the sale or a link to your main web page where the content will be shown.  Remember, Facebook pages are searchable, both in Facebook and in search engines, so, messages containing important key words will be found accordingly.

Beware of Circular Message Paths
As promised earlier, we will wrap up with a word about the Twitter check-box on LinkedIn, which appears below the Network Updates text box and looks like this:

The purpose of this check-box is to enable updates you create in LinkedIn to be duplicated on Twitter.

While this can be useful on its own, if you are sending messages as described above, from Facebook to Twitter and LinkedIn, leave this box unchecked.  If you check it, the message will not be delivered to your LinkedIn connections.

Summary
Although Facebook is generally more oriented to communications between people who already know each other, with .4 billion users, it can be an effective tool for marketing. One way to maximize online visibility is by making connections between Facebook, Twitter, and LinkedIn. In other words, network your networks.

If you would like to contact Tim Negris, you can do so through LinkedIn or tnegris@gmail.com.

Those who enjoyed this article also enjoyed:
Rules for Attending the Social Media Marketing Party
Using the Right Social Media Tools

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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Most small business owners and entrepreneurs find themselves overwhelmed with duties ranging from janitor to Chief Executive Officer. With so many duties to perform, small business owners do not have the time to study reams of financial reports in order to effectively manage their business. What I have learned through the years is that I can manage a lot more efficiently and effectively if I manage by “rules of thumb”.

Wikipedia defines rule of thumb as “a principle with broad application that is not intended to be strictly accurate or reliable for every situation. It is an easily learned and easily applied procedure for approximately calculating or recalling some value, or for making some determination.”

So why would it make sense to manage by a method that “is not intended to be strictly accurate or reliable for every situation”? Well, because it is easily learned, easy to remember and easy to apply. Having certain financial “rules of thumb” can help you identify problems in your business very quickly and show you where you need to focus your attention. Then, you can drill down into the financial reports to pin point where the problem lies and which issues need to be addressed.

One of the major benefits of using a really good accountant is the enormous amount of information they can give you. This is why I always tried to hire the very best. There was a time when, each month, my director of finance would hand me 150-200 pages of numbers in very neat rows and columns. At first, I spent a lot of time studying these numbers so I could manage better. However, I quickly realized that as good as she was, and what she was giving me, as valuable as it was, was totally overwhelming and there was information I needed that was missing. For example, how do these numbers compare to the budget and business plan we created prior to the first of the year?

So, we got together and created a two to three page “Key Factors Report” that took key numbers from the standard reports, converted them to ratios and “rules of thumb”, and then compared them to the budget, month-to-date and year-to-date. It took no time to review these reports. If something was out of line, I saw it immediately rather than having to dig through hundreds of pages to find it. Once an issue was identified, I could then drill down to that area of the report to understand why it was out of line. As a result, I was able to manage more effectively, respond to problems earlier, resolve issues quicker, and move on.

What inspired me to write this article was a website I recently stumbled upon; Rules of Thumb. It lists thousands of rules of thumb. Some are old and may not apply as well as some of the others. Nonetheless, I found them entertaining and would like to share a few with you:

• SELLING A BUSINESS
  The sale price of a small business is between seven and ten times the average profit of the last three years.

• MAKING YOUR IDEAS CLEAR
  A clear idea is one that fits on the back of a business card.

• GETTING WORK DONE
  People do best when they’re working at 80 percent of their capacity. At 50 percent, they get bored. At 100 percent, stress gets them.

• CHOOSING A BIDDER
  Throw out the highest and lowest bids. Average the rest and choose the one closest to the average.

• STARTING A NEW BUSINESS
  Do not start a new business unless you can wait at least one year before realizing a profit.

• THE 80/20/30 RULE
  If you get rid of the 20 percent of your customers who cause 80 percent of your headaches, your profit will increase by 30 percent.

• CONSULTING
  A consultant should spend two-thirds of his or her time consulting with clients and one-third lining up new work and doing PR.

• KEEPING YOUR CUSTOMERS
  Complainers are more likely than dissatisfied non-complainers to do business again with the company that upset them, even if the problem is not satisfactorily resolved.

• KEEPING YOUR CUSTOMERS
  Between 54 percent and 70 percent of customers who complain to a company will do business again with the company if their complaint is resolved. That figure increases to 95 percent if the customer feels the complaint was resolved quickly.

• KEEPING YOUR CUSTOMERS
  The average customer who has had a problem with a company tells nine or ten people about it.

• KEEPING YOUR CUSTOMERS
  Customers who have complained to a company and who had their complaint satisfactorily resolved tell an average of five people about it.

• WORKING WITH A NEW CLIENT
  A job with a new client will take about 25 percent longer than the same job with an established client.

• BALANCING THE BOOKS
  When the books aren’t balancing, if the amount they are out of balance is divisible by 9 then there is a transposition error in your figures.

• STAFF MANAGEMENT
  If you have to call a meeting to tell everyone that you have an open-door policy, you have already failed as a manager.

• GETTING PAID
  When dealing with notorious non-payers, always charge twice as much as the job will actually cost, then get half the money up front.

Okay, you got me. These were not the rules of thumb that made such a big difference in how I managed my businesses. Still, I enjoyed reading them and wanted to share them with you because some of them are quite practical.

The rules of thumb that I am talking about are unique to your business and can only be determined by building a thorough budget/business plan. As I mentioned earlier, you need to think in terms of key factor ratios. Why ratios? Allow me to explain.

Let’s look at marketing expenses as an example. When you budgeted for this expense, the total was probably based upon some variables like commissions (which will be more or less, based upon what is actually sold), and some fixed costs like signage (which will be the same regardless of the actual amount of sales). If there is a substantial amount of fixed costs, marketing becomes more efficient as sales grow. Therefore, a good ratio or rule of thumb to monitor would be “marketing expense as a percentage of revenue.”

Assuming you have created a realistic budget that produces the desired results, how does your actual ratio compare to the budged ratio? If it is as expected or better, there is no need to spend a lot of time drilling down to each line item. If results are not as expected, or worse, then this is another story and you can drill down to the appropriate line items to figure out what went wrong. It’s not that important if you went over budget in marketing expenses if the ratio is as expected or better.

You will be surprised at the amount of great information you can put on just two to three pages if it is limited to key factors (totals) and various important ratios and rules of thumb that apply to your business. However, I have found one major problem in utilizing this system when I counsel with many small business owners. They don’t have a budget or business plan! Yikes! How in the world can you manage anything if you don’t even know where you want to go? I believe this is called “managing by the seat of your pants” which is not a method I would recommend to anyone.

Anyway, I hope you have found this article useful and somewhat entertaining. If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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This is the second article of the two part series by Eric Mitchellette, business coach and consultant, reporting on the recent Twin Cities seminar titled, “Reputations” by Chris Brogan, co-author of Trust Agents (New York Times bestseller on social media), speaker, trainer and all around social media guru. See the first part, Social Media – Building Influence, Reputation & Profits.

Chris stresses that to make the best use of social media, businesses and individuals must be helpful to those with whom they interact. That means they must listen, connect, and then publish. We will address each of these key topics individually.

Listening
The Internet and social media offer tools such as Twitter, blogs, Facebook et al, through which businesses can “listen” to what is being said about them. The economic downturn was partially caused by companies not listening to the real needs of customers and just pushing inappropriate home mortgages and related financial products on them.

Make no mistake about it. If you have been in business for any length of time, conversation about you and/or your company is taking place on the internet. But how can you engage and participate if you know nothing about it? There are free monitoring services you can use to help you listen to things related to your company.

Google Alerts will quickly alert you when something is posted about you (your name), your company (company name) and your blog/website (domain name).

TweetBeep will quickly alert you when someone on Twitter tweets about you (name or username), your company (company name) and your blog (blog name).

BackTweets will alert you when someone tweets about something on your blog and/or website using your domain.

Connecting
You can learn about “third-party influencers”, also known as “trust agents” on social networking sites such as LinkedIn. Get to know these people and their interests. When tweeting those with whom you do business, remember that it’s all about “them”, not about selling your products. It is not good social media practice to use Twitter as just another means to dispense coupons. Obvious promotional attempts to sell to followers will not go over well.

When using social media, talk about others first; talk about yourself or business last. A good ratio is 12 to 1 if you want to gain trust and credibility. Use e-mail newsletters and articles to aid in gaining that trust. Additionally, talk up competitors and/or competing products, which will add to your business’s credibility. Talking up competitors/products is not only a courtesy but a reality.

Chris gave the example of the CEO of a Japanese electronics company who, during a public meeting, brought out a competitor’s product and admired it in front of all in attendance. The CEO owned the competitor’s product and used it in addition to the products his own company offered. The reality is that customers in many cases have a complementary mix of products from more than one company of the same product family.

Social media can be used by companies to develop new products by finding out how customers use their existing products to solve problems. No need for assembling customer focus groups. Customers will actually create their own products ahead of a company’s R&D team. When businesses track how customers use their products – through their online order pages or social media sites – new products or uses come into view.

Company blogs for only company business are useless and a turn-off.  Companies MUST go and find where customers and clients are, not where the company wants them to be. Companies must also anticipate where customers and clients will be in the future.

Give-away products and services can attract interest and be very profitable. An example is Red Hat software: they give away their product but sell billions in service offerings.

Publishing
Offer various ways to connect by posting videos and other content. The primary goal is to make sure that you are listening to the customer when offering content in any form.

Companies do not own their reputations. Their customers, current and former employees and interested others own it. However, a company may be able to manage their reputation. Who will your company employ to help manage its online reputation?

Social media will influence the candidates who apply to your company. Know what others are saying about the work environment in the company. A company’s culture is of interest to web influencers. They determine the size and caliber of the candidate pool available to a business.

Traditional and online media can complement each other in order to drive website traffic, build reputation, trust, customer lists, revenue, and profits. The key is finding the right balance of resource commitments using both forms of media.

Last November, Chris spoke for a few minutes at the Web 2.0 Expo in New York and in the previous article of this series I promised you the video.  So enjoy!

In conclusion, social media requires a thick skin. However, it is an opportunity to address issues and fix problems publicly. Many companies fail in the eyes of reputation builders (customers or interested others) because they take too long to correct problems by simply being too slow and reactionary. Companies must have plans in place to respond quickly to publicity and news events, whether good or bad. Correcting problems publicly online demonstrates to the web community that a company is engaged and cares.

Thank you Eric for bringing us this two part series. If you would like to contact Eric, you can do so by emailing him at emitchellette@comcast.net or visiting his LinkedIn page.

Those who enjoyed this article also enjoyed:
Social Media – Building Influence, Reputation & Profits

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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The Small Business Administration (SBA), Office of Advocacy, just reported that the U.S. economy rebounded in the fourth quarter, with real GDP growing by an annualized 5.7 percent.  Meanwhile, unemployment remained high, and small business owners and the public were cautiously optimistic.

Here are the trends that they are reporting:

• The U.S. economy rebounded in the fourth quarter; real GDP grew by an annualized 5.7 percent. Much of this growth stemmed from inventory replacement. Other contributing factors were growth in real personal consumption (2 percent) and real exports (18.1 percent) and slowing growth of imports (10.5 percent, all at annualized rates).  Both the Federal Reserve’s industrial production index and the Institute for Supply Management’s manufacturing composite index reflected strong growth during the quarter.
• Unemployment remained high, ending the year at 10 percent. The economy lost 310,000 net jobs during the quarter and 4.8 million during 2009. The overall pace of net job loss slowed somewhat, and the service sector showed signs of a turnaround. Net job gains occurred in professional and business services, education and health services, and natural resources and mining. Nonfarm labor productivity rose an annualized 6.2 percent, suggesting that those who were employed were working harder. Self-employment for 2009 was down slightly from recent years.
• Small business owners and the public were cautiously optimistic. Both the University of Michigan’s consumer sentiment survey and the National Federation of Independent Business’s small business optimism index ended the year at higher levels than their 2009 averages, reflecting stronger confidence in the economy. However, small business owners remained tentative about business expansion and hiring, with lingering concerns about poor sales, access to credit, and other issues.
• Interest rates stayed historically low, while small business credit issues persisted. The Senior Loan Officers’ survey reported continued weakness in small firm demand for commercial and industrial loans. Meanwhile, small businesses cited a lack of credit as one of their chief problems. SBA-guaranteed lending remained a bright spot, with the average 7(a) lending in the fourth quarter up 144 percent over the dollar value of loans in the first quarter; for 504 loans, the increase was 87.8 percent. (The end-of-year volatility shown in full report stems from very high monthly totals in September and November.) The number of venture capital deals rose steadily throughout 2009, but the overall volume was significantly off the 2008 level.
• Consumer prices rose modestly. The consumer price index rose at a 3.3 percent annual rate; when food and energy costs are omitted, consumer prices increased an annualized 1.3 percent. Producer prices rose at a much faster rate (an annualized 8.3 percent), suggesting that firms have been unable to pass along higher costs to their customers. Employers increased wages, salaries, and benefits modestly between fourth quarter 2008 and 2009. Oil prices rose $5 a barrel in the quarter and $33 in 2009.

Those interested in detailed descriptions of small business indicators can visit the SBA Website for a full report (pdf format).

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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Chris Brogan, Reputations

Since this blog’s inception, part of its focus has been on Web 2.0 marketing, including social media and its growing impact on businesses. Regardless of a business’s desire or lack of desire to commit resources to social media, the impact is already being felt by all companies, for better or worse.

Recently Chris Brogan, co-author of Trust Agents, speaker, trainer and all around social media guru, visited Minneapolis and held a seminar he titled “Reputations.” Although I really wanted to attend the seminar, I had a conflict in my schedule, so I convinced a friend of mine, Eric Mitchellette, business coach and consultant, to attend and write an article for this blog that I could share with you.

In this two-part series (part two available next week), Eric shares the key points of the seminar – how to tap into the power of social networks to build your brand’s influence, reputation and, of course, profits.

Businesses must choose now to commit significant resources to leverage social media; now means before it is too late to manage a business’s online reputation or even to profit from it. Businesses must develop a plan to understand social media and create action steps that are implemented in a timely manner.  Waiting to commit resources will create an environment in which a business must respond to problems in a crisis mode; with much higher stakes at risk.

As Warren Buffett famously stated, “It takes a lifetime to build a reputation and only 15 minutes to destroy it.” Social media can help build or enhance a business’s reputation, but also has the potential to damage or perhaps even destroy a business in a matter of seconds online.

Chris Brogan’s message in this recent seminar covers several key concepts that were laid out in his book, Trust Agents. Chris does understand the need to profit from social media, although profiting from social media does not often have a direct correlation.

Chris points out that, in social situations, we greet each other in a non-threatening manner; showing that we intend no harm. Likewise, social media opens an informational door that provides interested individuals a friendly, non-threatening and even helpful “greeting.” The greeting is delivered from online third-party influencers, also known as “trust agents.” Trust agents are actively engaged “web natives” who trade in trust, reputation and relationships. They use social media to accrue the influence that builds up or brings down businesses online.

Chris uses an example of a hotel that responded quickly to him via Twitter. He wanted to find a hotel for the Web 2.0 Expo in New York and twittered his followers.  Shortly after he submitted his inquiry, two followers recommended the Roger Smith Hotel. When he received the recommendation from two of his Twitter friends, the Roger Smith Hotel saw the recommendation tweets through free monitoring services (see a video and learn about these monitoring services in part two of this series) and twittered him offering a deal for “bloggers.” He not only stayed there but twittered other bloggers about where he was staying and that the hotel was offering free drinks in their very quiet bar. Soon after his tweet, both the bar and the hotel were filled up with paying guests — it proved to be very profitable for the hotel.

Chris also points out specific pitfalls that can seriously damage a business’s reputation when using social media. A case in point involved an airline that lost his luggage for a period of time. He then received a very unhelpful tweet from either a person or an automated system. Needless to say he did not feel “good” about their attempt at one-on-one communication. His frustration was compounded by an equally unhelpful automated phone call he received later about the status of his luggage.

When businesses try to use old methods of mass communication to reach customers, they risk angering the very people they are trying to reach. Social media is about authentic one-on-one communications.

Both Chris and the seminar panel addressed how online social tools create “networks of influence” that can help build reputations slowly and conversely damage them quickly. There is no instant method for building an online reputation, as stated earlier, and there is no way to salvage it quickly once it has been lost.

Here are some observations by Chris and the panel on social media:

• Humanize and create your own media, which social media allows you to do; individuals’ opinions now really do matter.
• The web and social media do make better, informed customers.
• Customers in the near future will expect real-time tweets of their concerns about a business. Quality of communication will improve as platforms consolidate.
• Do not be a social media ‘apps’ chaser – focus on the customer and follow his or her lead.
• Planting good articles and stories online, with some thought, will help spread your reputation around the web quickly.
• You can use social media to build networks in order to positively impact your business.
• Use social media to build trust because trust is the key to building online reputations. Trust agents are important people that your business needs on its side.
• Social media’s tools allow businesses to stop, collaborate and listen if they are engaged.
• ROI metrics can be created, tracked and measured from social media, including prospects, leads, phone call volume changes, prospect conversions into bookings, plus the more typical measures of sales and profits.
• Define your social media strategy and the business results and impacts you expect.
• Ask customers how they would like to use social media to connect with you and the type of relationship they want.
• Some companies think in terms of “digital influence;” that is, all aspects of the Internet – social media, e-mail, web site, display ads – and its impact on the business.
• Social media needs a purpose, a definition and an action.
• Customers will expect some businesses to respond on Twitter 24/7, 365 days a year to meet their needs.
• Make sure your social media communications are authentic, timely, and helpful

Chris believes a primary objective for a business is to be helpful. Try to be helpful to the online community; equip them to do better things. Study communities and offer to sponsor them. Be open and flexible in selecting communities to sponsor – a community does not have to be directly related to one’s business when building a relationship.

If you would like to contact Eric, you can do so by emailing him at emitchellette@comcast.net or visiting his LinkedIn page.

Now that you know what Chris thinks, what do you think? How do you feel about his message.  Look for the second article in this two part series next week.  Please feel free to subscribe to receive email updates by clicking here.

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Social Media – Listening, Connecting & Publishing

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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At some point in their lives everyone has some experience with bad customer service. Whether it is an impatient flight attendant, an inattentive waiter or a computer generated voice that keeps repeating, “I’m sorry, I didn’t understand you.” The downside for a business is that one negative experience can shape long-term perceptions of customers who share that perception with friends, family, and colleagues through social networks at the speed of light. .

For customers, the odds of experiencing good customer experience shouldn’t be as unlikely as winning the lottery – it should be expected and routinely delivered. However, I know from personal experience that it’s not always an easy aspect of business operations to manage. Only a few firms get it right. Many large companies have implemented automated voice attendants when their customers would be better served with live operators.  This unfortunate trend inevitably leads to customer service experiences characterized by impersonal conversations and frustrated customers.

When it comes to customer loyalty and retention nothing is more important than customer service. Therefore, I decided to team up with LaVon Dennistoun, former Vice President of Customer Operations at Integra Telecom, now Vice Chairperson of the Minneapolis Chapter of SCORE, to help small business owners set their company apart through superior customer service. Here is LaVon’s advice:

In order to win in today’s fiercely competitive economy it is absolutely critical to create a customer service program that transcends standards and puts the personal element back into customer relations. If small businesses spend the time and the money to create a customer service program that knocks their customer’s socks off it will prove to be worth every penny.

Customer Service Begins With Employees
Customer-facing employees can only deliver great customer service if it is woven into the fabric of the company culture, reinforced in job descriptions, taught in training and development programs, and measured through performance evaluations and customer feedback. Building a strong culture of customer service that leaves customers talking in positive ways is one of the most powerful strategies small and midsized companies can use to beat competitors in industries where big businesses seemingly dominate.

In order to create a customer service program worth talking about, it is critical that a business identifies and develops the values and goals for the program, trains their customer service representatives well and then implements tools to measure the success of the program. Hiring and training employees with the right skills, personal characteristics, and experience is an essential step in building a foundation for the future of your business. It’s the first, and quite possibly, the most critical step. This is especially true for a customer service program.

When hiring customer service employees with previous experience it’s important to remember that while the knowledge and skills required may not be new, your company is.  Make sure your customer service employees have the knowledge required to resolve issues, find pertinent information when customers need it, and are empowered to solve as many problems as they can without checking with a higher authority.

If you develop a comprehensive customer service training program, the transition for new employees and your customers will be a smooth one. If employees do not receive adequate training and motivational incentives, or feel they are not being treated well, outstanding customer service will be very difficult to achieve. This last part is worth emphasizing: Only employees who are treated with respect will treat their customers that way.

Try seeing it their way
All things being equal, the company who offers the best customer experience will retain those customers. The question is how to audit the current customer experience. The key is to try and get inside your customers’ heads to find out their real quality needs and wants. After you discover the good and the bad, share it with your employees.

An effective and sustainable customer service plan can only be created after you’ve received feedback from your customers. No one’s opinion matters more than those of your customers. Obtaining honest feedback can be done by surveying customers directly or through an independent, third-party firm. The best time to measure customer service levels is within two weeks of setting up a new account or service. While it may seem too soon to gauge the long-term success of the relationship, it’s never too early to start measuring how well you are doing relative to customer satisfaction.

Obtaining customer feedback further along into the relationship is just as critical.  It is a good idea to follow up with a survey annually to see how well you’re meeting the needs of your clients. You should also make sure your customers are thoroughly trained and educated about your products and services. Help your customers understand how your products and/or services work. Walk them through all service options. Share information on how to read your invoices. And, when customers need attention, especially when a problem arises, give them your immediate attention.

No matter what your business is, make sure your customers have the option of connecting with a live, local voice. It will go a long ways towards demonstrating your commitment to exceptional customer service and can actually have a dramatically positive impact on your business’s bottom line.

Anyone who thinks they will save money by automating as much of their customer service function as possible should reconsider. This single area is so neglected by so many organizations, that those companies that employ people to answer phones really stand out.

Inspect What You Expect
Once you have your customer service program has been in place, it’s a good idea to evaluate it periodically.  There are several questions that should be asked about your program that reveal its strengths and weaknesses. How accessible are your customer service representatives to customers? How quickly are customer’s calls answered? Are issues resolved on the first call? If not, when? How promptly do you deliver your products/services after they are ordered? How many errors are made in the process? How quickly do your customers receive invoices for your products/services? How adept are you at resolving customer service issues? These are some of the key questions your customer service measurement system should answer.

Of course, there are other ways to determine the success of your program beyond quantitative measures. One way is to appoint a dedicated customer service representative to make scheduled visits or phone calls throughout the year, not to sell them anything, but simply to build a relationship and gather feedback.

Customer Service 101
A well designed and executed customer service program can set your company apart from the competition. Why not invest in making your program the best in the industry? You may be surprised to learn that customers are willing to pay more for great service, especially after receiving less than satisfactory service from previous vendors. A customer-centric program is a priceless component of all successful businesses. No company can afford to operate without one.

If you would like to contact LaVon, you can do so by emailing her at lavden@comcast.net or visiting her LinkedIn page.

After reading LaVon’s advice, what can your company do to differentiate your business from all of your competitors? What ideas do you have that you can share with our readers?

If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.

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