The 4 Worst Investment Decisions I Made for My Company

When you build a company, you have to make investment decisions on where to put your money to achieve the highest growth. Here are the 4 worst investments I’ve made and my lessons learned:

  1. B and C quality staff members. An average performer costs twice as much as a top performer. A below average performer costs you many times that. This is hands down one of the worst investment decisions I have ever made. I used to think that some people were too expensive for me to hire and so I would hire a lesser qualified person whose salary was more within my self-allocated budget. Bad move. Hiring anything but an A player for your team spells trouble. A players may appear to cost more initially, but their productivity level far exceeds anything a B or C player can do. A players spot opportunities, B and C players just get by or look for the status quo. To infuse innovation in your company that will fuel your growth, invest in the top performers. A really good A player will do more for your company than hiring two B and C players.
  2. Products we built without sufficient market research. Ugh, the money I lost not thinking through our products and feature sets gives me a twitch. We built some of our products based on instinct thinking “of course people would love this, we’ll save them so much money and it’s faster, too.” Had we just asked potential clients whether they would buy such a product, we could have saved an immense amount of time, money and lost opportunity costs. The worst investment decisions ignore basic market research.
  3. Print advertising. I’ve had a lot of sales people from publications call on me and several of them were so polished that I succumbed to their pitch and bought print advertising. While this type of advertising might work for some companies, I have never seen it work for any of mine. Maybe it’s my price points which require a lower cost for customer acquisition. I just don’t think as many people respond to print advertising these days. It is certainly not an easy metric to measure compared to online advertising. Whatever the reason, I have found print advertising to be one of the worst investment decisions for my businesses. I should have put that money into public relations.
  4. Consultants hired without setting extremely concrete goals and expectations. Consultants are valuable. We finally got the hang of hiring them – after losing a lot of money to ones who were better at selling their services than doing the work. When we analyzed what went wrong with previous contracts, we found that we never really set extremely clear expectations. It was our fault. Had we outlined in detail what we wanted out of the project, we would have had a much better chance of success. We goofed up like this with technical consultants, marketing consultants and even business advisers. Lesson learned. We now list out specific goals with absolute clarity on the results we expect. If a consultant isn’t on track, we terminate the contract quickly to cut our losses.
In the end, each one of these so called investments turned into an expense and, in some cases, a burden. This list doesn’t include the investment opportunities I missed – there are plenty of those, too. In terms of allocating existing dollars with the intent of earning more dollars, these are by far the worst investment decisions I have ever made. What are some of yours?

The Fastest Way to Build Business Relationships

To succeed in your career, you have to build business relationships. There is one thing you can give your business acquaintances that they will value immediately, positioning you in their minds as a source to watch.

What your prospects and clients value most of all, more than your sage consulting advice, has to do with them, not you. It goes right to the heart of their success. You likely encounter this relationship-building element all the time, but since you are not tuned into it you may not notice.

Give Prospects What They Really Want

What is this magical element? Business business relationships

Every company needs new and repeat business to grow. Finding leads and converting them into sales is always the top thought of the CEO — always.

You might be thinking, “I’ve got enough trouble finding leads for myself, how am I going to find them for my prospects and clients, too?”  The reason you don’t see those “other” leads is because you are not looking for them. Yet sources of leads are all around you and you can use them to build business relationships quickly.

Example: I subscribe to a weekly email alert from my local government. They send out solicitation notices for projects set aside for local small businesses. They buy just about every type of product or service you can imagine: janitorial services, printing, paper clips, advertising, computer services, everything.

I saw an announcement for web design services. My company doesn’t provide this service so usually I would delete that message. But some of my target market does web design. So, I forwarded that announcement along with a simple note that read “Hi Steve, I thought you might be interested in this lead.”

Tune In To What They Need

The amount of goodwill I created from that simple message, one that I would have otherwise deleted, went a long way in building a business relationship. People might not reply to other messages you send to them, but they never ignore a business lead. They will always appreciate your gesture.

There are sources of leads all around you. The next time you are at a networking event and talk to someone who might be a good fit for another person in your network – or even someone else you just met – let them know. Build business relationships by connecting two people who may have synergies. You will create goodwill for everyone.

Every time I share a business lead, I receive a reply thanking me even if the lead isn’t a good fit. My message shows that I am looking out for them, not trying to sell my services. And that builds business relationships faster than anything else.

5 Successful Executives and Their Work Habits

Inc. Magazine has a section that profiles entrepreneurs’ work habits, The Way I Work. Every person they highlight shares a common theme: all of them spend a large amount of time looking at issues at a high level. They want to make sure that the activities they and their staff work on are aligned with overall goals.  In other words, their habits allow them to work on their business, not just in it.

Here are 5 good work habits from successful entrepreneurs:

1. Always keep your biggest dream in focus. Inc’s piece about social media celebrity Gary Vaynerchuck highlights his obsession for one-to-one engagement and how everything he does is directed at achieving his ultimate goal: acquiring the New York Jets.

2. Use email filters and folders for screening. Your Inbox is probably flooded. David Karp, founder of Tumblr, had trouble managing his emails. He let emails pile up, forgot to reply to important messages and got overwhelmed. Now, filters route messages into folders so he stays organized.

3. Obsess over metrics. LivingSocial CEO Tim O’Shaughnessy checks his company’s aggregate revenue, number of units sold and other data every morning before getting out of bed – that’s at 5:00 a.m. He is constantly looking for patterns in numbers. They give insight into what to improve and where new opportunities exist.

4. Don’t obsess over work hours. Jason Fried, CEO of 37Signals, reports that he has no idea how many hours his staff works. He just knows that they get the work done. And isn’t that the most important part? Stop clocking yourself. It’s irrelevant.

5. Feel okay about making mistakes. “Don’t overthink” is Rashmi Sinha‘s matra. The CEO of SlideShare makes a good point when she says that if you spend too much time thinking about something before you execute it, you still might make a mistake. It’s better to roll out software faster than to overthink it worrying that something isn’t quite right.

When and How to Follow Up with Leads

About three weeks ago, I was looking for a certain type of service. I clicked on an ad on Google and filled out a contact form for the advertiser to reach me. It was during the week so I figured a sales person would call me or at least follow up by email the next day.

No response.

Three weeks later, I got a very generic email. If you take out the type of service, which I blurred in the picture below, you could apply this email to virtually any service. Plus, the odd part is that their response was about me reselling their service, which is not what I inquired about at all.

This is a sad story. The company had paid Google for the click on their ad, gotten a qualified sales lead and then effectively threw it away because they didn’t follow up in a timely manner or with relevant material.  (Pssst… the letter was for concierge services. Would you have guessed that?)

Their lead generation campaign is generating sales leads. Yet nobody is following up the right way. They are wasting their money.

Follow Up the Right Way

Create a poster board on your wall with this reminder.  When someone contacts you:

  1. Reply within 1 business day (same day if possible) by phone.
  2. If you don’t reach them, try again the next day.
  3. If you still don’t reach them, send an email.
  4. If you haven’t gotten in touch with them in a week, send a follow up letter by email – or better yet record and send a personalized video – using this sample text:

John, thanks again for reaching out to us last week about our services. I’ve been unable to reach you via phone or email. I know you’re busy and I appreciate your interest in finding out whether our services would be a good fit for your company.

To help you make an informed decision about [your type of services], I will periodically send you our email newsletter. It contains a wealth of material that you might find useful for your business. When you are ready to connect, reach me at [phone number or email]. All the best, [signature].

If they haven’t followed up with you after several initial attempts, they may not be a qualified lead. By sending them your company email newsletter filled with educational – not sales – material, you stay on their minds so that when they are “sales ready,” they think of you first and reach out.  By then, you will have solidified your position as a trusted source so they will very likely take your call.

5 New Years Resolutions That Will Grow Your Business

You can bring a tremendous amount of luck to your life and business in 2012. The new year is an excellent opportunity to align your tactical and strategic priorities. Here are 5 new years resolutions that every small business owner should make:

1. Increase revenue by 20%. new years resolutions

If you are not planning for growth, outside forces will drive your company to shrink. You should strive for at least 15% growth each year. This can come in the form of new clients or additional business from current clients. This level of revenue increase can usually accommodate fluctuations in the market place, pricing pressures, and new expenses such as higher salaries due to giving raises, changes in payroll or unemployment taxes and increases in healthcare premiums.

2. Reduce fixed expenses by 5%.

To grow, you often need to re-invest your profits.  This can result in increased variable expenses.  That said, you can usually trim a bit off of your fixed expenses.  Start by evaluating your technology since most companies can become more efficient just by computerizing some processes. Renegotiate your lease to take advantage of lower rates. Look at cheaper options for your phone or Internet services.  You can find efficiencies in many places. Find out how other firms in your industry manage their operations. Evaluate the cost/benefit of outsourcing some of your activities. What might seem like a large investment up front may end up saving you a significant amount of cash over time.

3. Communicate with all of your customers at least once a month.

To get more business, stay in touch regularly. The adage “out of sight, out of mind” holds true. Your competition is trying to steal your clients away from you. Don’t get blindsided. Send your customers educational information that can help them with their business. Things like case studies, trends, mistakes to avoid and information about what you have done for other clients will position you as a trusted source and make you top of mind. The goal of this strategy is to become the first company your clients think of when they need to solve a problem that you can help with. For most businesses, a monthly touch will work wonders towards building stronger client relations.

4. Identify at least one opportunity for innovation.

Brainstorm with your team, your spouse, your friends to come up with a new product or service idea, a new way to streamline a process including collecting receivables or scheduling payables, a better way to manage inventory, a clever way to attract customers or be unique in your clients’ eyes. Dedicate time on your calendar to look for ways that your company can do something that hasn’t been done before or do something common in an uncommon way. Companies that do not innovate often get left behind by those who do.

5. Delegate at least one of your tasks.

As a business owner, your time is the most precious in your company. if you spend it doing tasks that other, less expensive workers can do, then you are actually losing money. It prevents you from working on more profitable activities that will have a much stronger impact on your bottom line. Choose your personal work wisely. Let others do the work that you don’t have to do or like to do.

Making these resolutions will help you see how to expand your business and achieve the growth you envisioned the day you decided to start your company. Here’s to an amazingly successful 2012!