Managing Change

These have been interesting times. I don’t believe that I have ever been with an organization that has seen so much change so quickly. Although it seems that everyone has an opinion on recent events, I am not choosing sides with this column. Rather, I am more interested in the effects these changes have on staff and how any organization experiencing rapid and disruptive change can manage it.

I believe it is the change process as much as the change itself that can become so overwhelming for staff. Frustration, short tempers, and a sense of isolation are all normal reactions to rapid organizational change. Morale can sink to its lowest when people don’t believe they know what is going on. It sinks even further if employees think they have no say or voice in the process.

A good leader understands all of this. A great leader not only understands it, but also understands their role in managing change. One of the biggest tools in the belt for managing change is open and transparent communication. With significant change and the uncertainty that goes with it, leadership cannot provide enough communication.

By staying in touch with employees and providing venues and opportunity for two-way communication, you help ease the uncertainty and create a sense of serenity that might have not existed. Even if the main message that you deliver is that at this time, not much or not much new is known, you still keep your employees in the conversation. Even more important, you derail any rumors or speculations that can become rampant during times of change.

Additionally, make sure that you have provided various avenues for your staff to participate in the conversation. Whether it’s via email, surveys, town hall-style meetings or social network, allowing your employees the opportunity to voice concerns and ask questions creates a safer environment to accept the change. One-way communication does little to adapt your staff to any new changes in your organization.

As you communicate with staff, do not make any assumptions on how you believe they will react. Simply provide enough information, time and space to allow them to react. Some may respond immediately with questions or challenges. Others will need time to process. However they react, be prepared that different people will need different responses and your job will be to help them get to where the organization is going.

Also understand that most of us need to hear a message several times before it is fully processed. As you communicate change, you may have to repeat your vision and your reasons for change several times, at least three or more. Vary your method of delivery as well. Some people are readers, some are talkers. Providing the message in a way that it is best understood will help it be processed.

Don’t Lead Alone

It’s amazing how much business knowledge exists in the head of the business owner. The only problem is that oftentimes that is the only place the knowledge exists. The knowledge and history of vital business decisions and strategies are locked up inside. Now, as long as the owner is around, this approach will work.

However, life doesn’t always work out the way we want. Should an accident, illness or even something as beneficial as some time off, take the owner away from the business, then there are potential catastrophes that are waiting to happen. Or, if not catastrophes, just things that are going to make it that much more difficult for the people looking after things.

Many owners, and department managers too, have contingencies for a variety of probabilities. There are plans in place for inclement weather. Strategies devised for fire and flood. Employees are cross-trained to pick up the slack if one is absent for extended periods of time. And of course, policies aplenty for any and all potential IT failures.

Yet, so much of what the boss is doing is kept top secret. And therein lays the problem.

As a business owner, think about the things that you are doing. On what projects are you working? Are there plans that you are developing that anyone else knows about. If you were to be absent from the business tomorrow for the next fourteen days, would things be able to carry on?

A few things to think about if you have answered no to any of these questions. First, identify who you would like to run the business in your absence, and then make sure that he or she is up-to-date on the major issues within the organization. Also, ensure that you have designated who will be able to make key decisions in your absence, and that they know which the key decisions are.

Communicate what the contingency plan is to trusted staff members regarding prolonged and unexpected absences. Identify those areas that can function well without much assistance from you, and also those that will need tending. Your staff won’t be able to do everything, but if you can focus them on the vital tasks, your absence will be less likely to disrupt your business.

Besides your staff, also think about your customer relationships. Encourage relationships between customers and other staff so that they know that the business is more than just you. Customers might head off to the competition if they think that the company can’t carry on without you. Consider how you can make the transition seamless for customers. You want their trust in your company, not just you.

Don’t keep your organizational knowledge a trade secret. By empowering your employees to continue on in the case of any emergency will strengthen your business and allow you the freedom to take some time off, whether planned or unplanned.

Managing Change

These have been interesting times. I don’t believe that I have ever been with an organization that has seen so much change so quickly. Although it seems that everyone has an opinion on recent events, I am not choosing sides with this column. Rather, I am more interested in the effects these changes have on staff and how any organization experiencing rapid and disruptive change can manage it.

I believe it is the change process as much as the change itself that can become so overwhelming for staff. Frustration, short tempers, and a sense of isolation are all normal reactions to rapid organizational change. Morale can sink to its lowest when people don’t believe they know what is going on. It sinks even further if employees think they have no say or voice in the process.

A good leader understands all of this. A great leader not only understands it, but also understands their role in managing change. One of the biggest tools in the belt for managing change is open and transparent communication. With significant change and the uncertainty that goes with it, leadership cannot provide enough communication.

By staying in touch with employees and providing venues and opportunity for two-way communication, you help ease the uncertainty and create a sense of serenity that might have not existed. Even if the main message that you deliver is that at this time, not much or not much new is known, you still keep your employees in the conversation. Even more important, you derail any rumors or speculations that can become rampant during times of change.

Additionally, make sure that you have provided various avenues for your staff to participate in the conversation. Whether it’s via email, surveys, town hall-style meetings or social network, allowing your employees the opportunity to voice concerns and ask questions creates a safer environment to accept the change. One-way communication does little to adapt your staff to any new changes in your organization.

As you communicate with staff, do not make any assumptions on how you believe they will react. Simply provide enough information, time and space to allow them to react. Some may respond immediately with questions or challenges. Others will need time to process. However they react, be prepared that different people will need different responses and your job will be to help them get to where the organization is going.

Also understand that most of us need to hear a message several times before it is fully processed. As you communicate change, you may have to repeat your vision and your reasons for change several times, at least three or more. Vary your method of delivery as well. Some people are readers, some are talkers. Providing the message in a way that it is best understood will help it be processed.

Five Things to Think About When Writing Your Business Plan

After the beginning of every year, it seems that our office gets quite a bit busier. Perhaps starting a business has become a more popular resolution for the New Year, or perhaps people see it as the right time to get started. Whatever the case, we field more telephone calls and see more new clients in the first three months of the year than any other.

When starting a new business, the number one reason cited by the Small Business Administration is the poor planning. You have heard it often enough from me that preparing a strong business plan is a vital component of new business’ success.

So, to all of you who may also be thinking about entrepreneurship, here are five things to think about when putting your plan together.

First, begin generally. It’s okay to start with rough estimates on things like start-up costs, monthly revenues and monthly revenue expenses. A good exercise is to write a list of one-time start-up costs. Continue with broad estimates of your sales for the first twelve months and then follow with estimates of your monthly expenses. If the numbers seem feasible, then you know you have a base from which to start and will also find renewed interest in pursuing this goal.

Second, don’t complicate things. Many clients put off writing their plan because just the idea of it is daunting enough. But it doesn’t need to be complicated or perfect. As with any other large project, start by breaking it down into smaller, manageable pieces. Remember, there really is no right or wrong way to begin. You don’t do it in any special order. Start wherever you want and work on it as long as it helps you manage.

Third, don’t go it alone. There are numerous resources and experts to help you get started. You can attend a program; work with a mentor; avail yourself of the oftentimes free business advising services through educational, non-profit and government entities; or use one of the many of the online tools. There are plenty of resources at your disposal. Trying to do it all by yourself can just be an exercise in frustration.

Fourth, talk with your banker. Don’t just meet with a banker when you are looking for money. Your commercial banker can be a wealth of knowledge and can help guide you to options you may not have considered. Additionally, you want to ensure you have enough funds to begin with. Using all of your own money, whether it is your savings or personal finances, can have a detrimental effect on the business. It’s hard to get financing once you’ve run out of money. Make sure you have enough capital to withstand any unforeseen challenges or longer periods of time between reaching specific financial goals.

Finally, don’t forget about the marketing. The marketing plan tells everyone, including you, how you are going to make money. Revenue generation is the expectations of the marketing plan. By clearly showing how your business will make money and pay its bills, you can assess the success of the organization. It’s an important component that is frequently overlooked and can lead to problems down the road.

Here is one more, a freebie, if you will, as you continue your plan. Don’t let that first “no” stop you. Don’t even let the fifteen after that stop you either. Do not get discouraged if a banker or other investor turns you down. Learn from them and fix what the problems may be. Many things that might lead to a denial — such as incomplete financial information or lack of collateral or even lack of experience – can be fixed.

The Woman-Owned Business

Nearly half (48 percent) of all privately-held firms are at least 50% owned by a woman or women, according to the Center of Women’s Business Research (2005).  As of 2005, there are an estimated 10.6 million majority-owned, privately-held, women-owned firms in the U.S., employing 19.1 million people and generating $2.5 trillion in sales.  

The Center also provides some additional staggering facts.  The number of women-owned firms with employees has expanded by an estimated 28% between 1997 and 2004, three times the growth rate of all firms with employees.  During the same timeframe, the estimated growth rate in the number of women-owned firms was nearly twice that of all firms (17% vs. 9%), employment expanded at twice the rate of all firms (24% vs. 12%), and estimated revenues kept pace with all firms (39% vs. 34%).

What’s changed and why are women embracing entrepreneurship as a new way of life? 

Environment  While this could be a place for a soapbox, it’s not about breaking through the glass ceiling.  The environment has shifted and women are heading into the world with stronger skills and expertise.  An article out of Stanford University computer science class cites the growing trend of women-owned technology companies. 

Instead of trying to break through a male-dominated industry, especially at the executive level, women are more inclined to start at the top and grow their own.  By starting their own companies, they are tapping into a $60 million dollar market aimed at young girls. 

Access  Access to resources, both financial and technical, has become stronger for women thinking of starting a business.  A simple Google search provides a significant number of hits alone. 

Both federal and state governments target women with resources for starting businesses.  The National Association of Women Business Owners provides mentoring, education and resources.  Banks are reaching out to women entrepreneurs as this sector of business continues to grows. 

On regional and local levels, access to resources may be at its strongest.  Municipalities have recognized the important contributions that women-owned businesses make to their towns.  Oftentimes, these businesses provide services that result in a positive impact, such as providing day care to allow more women into the workforce. 

Role Models  What may probably have the strongest impact is seeing women leading large companies.  These women provide a shining example of what can be accomplished.  As more and more women take on the role of President and CEO, future generations accept the new boundaries and look to going further. 

Young girls in business are seeing women lead major companies in both traditional and non-traditional industries.  Indra K. Nooyi is the president and chief financial officer of PepsiCo.  Meg Whitman spent several years leading Ebay.  Shelly Lazarus is the president and CEO of Ogilvy and Mather, one of the nation’s leading advertising companies, just to name a few.   They are also seeing their mothers, aunts, sisters, and friends making the commitment to entrepreneurship and succeeding. 

Becoming a successful entrepreneur does not have anything to do with gender.  Both men and women will start businesses.  Some businesses will succeed and some won’t.  The important lesson here is not that women are breaking through barriers or finally reaching the top.  The importance of increasing women-owned businesses is that they bring strength to the economy while enriching each community’s diversity. 

There are several important websites providing technical resources and information for women who are pursuing entrepreneurship:

http://www.sba.gov/content/women-owned-businesses

www.nawbo.org

www.wisconsinsbdc.net

http://www.score.org/women_resources.html

Another Year of Opportunity

It’s the most wonderful time of the year!  The holidays are past and all that is left is a brand new year, shiny and unmarked like a field of newly fallen snow.  No tracks, no dirt, no grime – just a wide open expanse that is pure and untouched, ready for anything.  That’s how I always think of the New Year. 

It’s time to set our goals and expectations.  What will be accomplished in 2011?  Last year at this time, we consistently heard the phrase, “cautiously optimistic.”  Truly, I think we were more cautious than optimistic.  Times were tough, news was bad and business was slow.  So much had changed so quickly, that I’m not even sure we had caught our breath by the time the ball had dropped in the Big Apple.

Are we further along this time?  Economists predict slow growth yet in 2011 and are certain that we won’t see growth increase to pre-recession figures until at least 2013.  In fact, much of the information coming out of Washington these days is that the worst is behind us. 

As a state and as a region, I believe that there is much in the way of good news that will allow us to move forward, more optimistically and less cautiously.  At the heart of this optimism is the focus business, government and education have on job creation.  Getting people back to work is job number one and there are resources committed to ensuring we do this.

As an example, the Jobs Bill passed this fall, a bill intended to spur employment by providing businesses with incentives to hire new workers.  The bill will result in more direct assistance for small businesses through the national network of Small Business Development Centers (SBDCs).  Additionally, the bill also provides capital for community banks to help spur lending. 

A survey of more than 70 Wisconsin Chamber of Commerce executives has found more of them believing the number of jobs will increase next year.  The annual economic outlook, conducted by Wisconsin Manufacturers and Commerce, found almost half of the Chamber of Commerce executives surveyed throughout the state are optimistic that there will be more jobs available in their communities next year. That’s well above 34 percent in the last survey. Also, 40 percent in the current survey are expecting moderate income growth in 2011. That’s up from 28 percent from last year.

Another reason for optimism is what we have seen in our own Center.  In the past fiscal year (October 09 to September  10,) twenty-three of our clients opened their doors for the first time.  Our clients were able to secure almost four million dollars in capital infusion, through loans, SBA-guaranteed loans, and venture capital.  According to our clients, almost thirty new jobs were created and over 750 jobs were retained. 

Is it time for optimism?  I think so.  The opportunity is there.  It is up to us as to how we plan to take advantage of it.  I hope as you make your plans and set your goals for this brand new year, that you reach out to the resources that are available.  The SBDC and our partners are here to serve.  Together, there is so much we can do.

Think back to that clean, unbroken field of snow.  As a child, was there a more magical moment than being the first one to trample through it and relishing the tracks you made?  2011 is our opportunity.  Go ahead and plow forward!

Defining the Entrepreneur

Who are good entrepreneurs?  Are there different personality traits in entrepreneurs and non-entrepreneurs?  The topic has been researched, studied and debated. 

The importance of entrepreneurship increased since the discovery by economists that small firms contribute considerably to economic growth and vitality. Moreover, many people have chosen entrepreneurial careers because doing so seems to offer greater economic and psychological rewards.

However, despite all of the attention paid to this issue, there seems to be no absolute answer.  Do certain personality traits inherently make better entrepreneurs?  The following list includes five traits that successful entrepreneurs have had in common.

It should be noted that the following traits do not guarantee entrepreneurial success.  Also, entrepreneurs must change as their businesses change.  The same set of traits that helped the entrepreneur get started may not be enough to help the entrepreneur grow the business.

Risk-taking   

Entrepreneurship is a gamble, sometimes based on strong numbers and other times based on hunches.  Either way, entrepreneurs are betting that their new product or new way of doing business will part customers from their wallets.  In the biggest risk of all, most successful entrepreneurs leave secure jobs and paychecks to strike out on their own.  It can be one of the most courageous acts of all.

Committed

Entrepreneurs believe in what they are doing one hundred percent.  That is why they are able to work twelve to fourteen hours a day, seven days a week.  These men and women believe so strongly in what they are accomplishing, that often the achievement is through their own sweat.  This single-mindedness is an important part of reaching their goals.

Visionary

If you ask most successful entrepreneurs, the money that was made in their business was almost secondary.  They had a vision of what could be accomplished, what their business could be, and that was the most important incentive for going forward.

Confident

A strong sense of self-confidence helps entrepreneurs sail through dangerous territory.  It also helps them continue when things are at their bleakest.  This almost egotistical belief in themselves provides a strong foundation to keep moving forward, in the face of any odds.

Leadership

Not every good leader is an entrepreneur, but every good entrepreneur is a good leader.  Entrepreneurship includes having the authority and influence over employees and customers.  Knowing how to work with all of types of people and earning their respect is a cornerstone of successful entrepreneurs.

If you believe that you have some of these traits and would like to take that first step to entrepreneurship, visit our www.uwgb.edu/sbdc to find the resources and programs available to help you get started.  WriteNow Business Plans is our online, self-paced business plan writing course and is currently accepting new participants.

Hiring a Leader

Several months ago, I served on a committee that worked on finding a replacement for my boss.  It was an eye-opening experience.  I have served on these committees before and I have certainly hired people before, but I have never participated in hiring someone above me on the proverbial food chain. 

When hiring an employee, there are the usual skill and education requirements for the position.  But these requirements are more tactical, allowing you to assess whether or not the candidate can perform the necessary job duties.  Additionally, you might look for a certain fit within the organization or additional abilities that may allow him/her to grow with the job. Yet, it is somehow easier to quantify the potential for success based on specific questions and assessments for these positions.

But how do you assess candidates when what you are seeking is a leader?  How can you quantify skills and abilities of candidates to assess their ability to move an organization forward?  Can you judge candidates on their ability to communicate vision, empower teams and support collaboration?  Trust me folks, it’s harder than it sounds.

I think it is easier when there are challenges within the organization and you need someone to come in and fix things.  Then, you have a basis for measuring the qualities for potential candidates, even if it is only a history of being able to fix things in other organizations.  But when a department, division or company is doing well, then at the very least what you want is someone who won’t mess it up! 

At the most, you want someone who can continue your success and find new opportunities for growth.  And that is where you find the challenge.  Not only do you begin assessing skill sets and experience levels, but you also begin assessing personality, charisma and presentation.  During this process, conversations quickly focused around a candidate’s fit within the organization, the ability to work and support staff, and the ability to build relationships and collaborations. 

Personality and enthusiasm and warmth became hot topics.  It was no longer an issue of whether or not a candidate could do the job, but could he do it well enough and within the culture we had created.  A critical checkpoint was the reaction of all staff.  The committee recognized that for a candidate to succeed as a leader, she or he would need immediate buy-in and support from staff.  Without it, s/he wouldn’t have a chance.

Again, I’ve learned an enormous amount through this process – not only what it takes to lead but also how leaders are assessed.  While competent and capable may be enough when you are hiring an employee, they fall short when hiring a leader.  There is no magic litmus test and my guess is that if there were, it would be different for every organization. 

I never would have thought this, but actually, one of the hardest questions I’ve ever been asked is, “who would you want to work for?”  If you don’t believe me, try answering it yourself.

Finding the Ever-Elusive Profit

I’ve been working with several clients lately on understanding the difference  between making money and making a profit.  Truly understanding the difference between the two can mean keeping your doors open or walking away from the business.

To be honest, it’s easy to make money.  I think that anyone can.  But making a profit is much more difficult.  See, I could probably make half a million in sales, but it would probably take me a million dollars to do it.  Profit, on the other hand, is the money left over once all of the expenses, both variable and fixed, are paid.  So spending a million to make a half million leaves me with a half-million loss, not exactly good profit finding skills.

It seems simple, but we see people making money instead of profit every day in their businesses.  To increase or find better profit, there are only two things you can do; raise your prices or cut your costs. 

Strategically, I only use raising prices as a last resort.  Everyone has to raise their prices at some point and some industries and products raise their prices for other reasons besides increasing profit.  Price can also reflect value, status, luxury or other marketing brands.

Normally, when I find profit shrinking or not meeting goals, I look at the costs.  Cutting costs can sometimes be a much simpler solution to your profit woes. Additionally, there are some pretty obvious places to look for cost-cutting measures that won’t affect either quality or service for your customers.

The first place I always go to is inventory and/or supplies.  Are we heavy on items that aren’t really necessary?  Are we spending money on things that we either don’t need or rarely use?  Is there a better model, such as just-in-time inventory or rent/lease items that we don’t use often? 

An unfortunate example comes to mind.  One company was struggling with paying bills and meeting its other financial obligations, although their sales weren’t all that poor.  But a quick look at their operations saw that they had bought a lifetime supply of office stuff, including envelopes, paper clips, pencils, you name it!  Their rationale was sincere.  They got everything so much cheaper buying in bulk, but they used up so much of their money in doing so and cut into their overall profit. 

There are other areas to review if you find you are having problems with finding profit.  Look for strategies and operations where you can be more efficient, thereby saving dollars and increasing profit.  Oftentimes, technology can be a large one-time cost that will pay for itself and decrease overall costs in the long run.

Wherever you look, the more you do to cut your costs, the more you do to find the profit in your company.

The Business of Social Networking

During the past few months, I have been at several meetings for various organizations where the impact and importance of social networking was debated.  The consensus is clear.  Organizations and the people that lead them believe that there is power in social networking.  Yet, no one has been able to really tell me the quantifiable impact of social networking.  Until now.

Stephen Woessner, my colleague at the UW-La Crosse SBDC and author of “The Small Business Owner Handbook to Search Engine Optimization” has done scads of research on this, enough to work on a new book, “Increase Online Sales through Viral Social Networking.”  

According to Stephen, “Social networking, if done correctly, can represent over 20 percent of a Web site’s traffic. Plus, the Web site’s conversion rate of online sales from traffic referred from social networking sites can be as high as 22 percent versus the typical 2 to 4 percent, which translates into a 500 percent increase!” Bottom line: social networking can deliver significant business benefits.

Stephen has provided me with several tips to help you work through the process of building your networking strategies.  There are three keys to using social networking effectively. They are: 1) creating Conversation, 2) building Community, and 3) generating Commerce. These are the three Cs of social networking.

Getting involved in the Conversation is the first step to effective social networking. The way to begin is set-up your free Facebook, LinkedIn, and Twitter accounts. There are over 900 social networks to choose from but Facebook, LinkedIn, and Twitter offer the fastest growing memberships and represent the greatest opportunities for businesspeople to be the most efficient with their time.

Begin experimenting by filling out your profile(s), send some friend requests, chat with some people, and write some Wall posts to get used to the technology. And yes, you will likely make some mistakes as you get started. However, you will probably be pleasantly surprised at how easy it is to get involved in the social networking conversation.

As you invite more people into your social network, you actually begin to create a Community that revolves around you or your business. A community is simply a collection of people who share common interests and communities can absolutely exist 100 percent online. As you send out friend requests, and accept the ones you receive from others, your community grows.

As you contribute to the conversation among the members of your community, a wonderful thing happens — your participation creates engagement between you and your members. However, it is critically important to always remain genuine and never disingenuous in your conversations with community members. Being fake with ulterior motives is very easy to spot.

Once community is established, it is time to generate Commerce. Provide some of the products or services you offer, or recommend other products you are passionate about. Then watch the conversations among community members develop. Follow this by placing a link to your Web site within a status update and watch your site traffic increase. And you will likely notice an increase in online sales assuming you have a product or service that you are already selling online. Use this simple ratio: make six personal or life-related posts or status updates for every one product or service-related post. By following the 6:1 ratio, you will keep your conversations genuine and avoid the temptation to turn your community into a selling free-for-all, which would be a major mistake.

In closing, social networking represents an opportunity to increase Web site traffic and online sales, but communications must be genuine and not overdone. Most SBDCs provide advising or training on optimizing search engine and strengthening social networking.  Check out the SBDC website (www.wisconsinsbdc.org) to find one in your area.