Maybe this situation sounds like your business: you have a highly transactional business with lots of customer orders and deliveries. Orders are taken by phone (not online).  Once the orders are taken and entered into a database, a manager (or two) checks them for accuracy. Sometimes the managers are busy and mistakes get through — pricing that’s wrong, items specified that you no longer offer, addresses entered incorrectly. Because of this system, you have an error rate of about 5%. At the volume of business you are doing, that means about 10 customers a week are affected, and are they ever angry about it.

So what’s wrong with this system? A few things:

• The employees taking the phone calls from customers are actually trying to avoid picking up the phone. They are paid an hourly wage; they can see each other in the office. It becomes a game of “it’s your turn to answer the phone.”
• Once they do pick up the the phone and are disturbed by customers, they have no incentive to check and double-check their own work. After all, a manager is going to check it anyway. They make $9 an hour and are watching the clock until it’s lunchtime or time to go home.

This was an actual situation in a sizeable business run by a friend of mine. Here’s what happened next:

He hired an outsider (from the same industry) to head up sales. The New Sales Guy has a reputation for being (can we say this on the Internet?) a ballbuster with employees. Very demanding. Customers love him though–he delivers on his promises with fantastic commitment and quality. Here’s what New Sales Guy did:

• Teams. Reorganized the phone-order takers into teams of three: two salespeople and one to do data entry and quality control. The managers were immediately taken out of the order process.
• Performance Linked to Pay. The teams were given responsibility for checking their own orders. There would be no one else to blame for mistakes, as all orders would be easily tracked back to the team. Most importantly, the team received a commission on each order. If the team did its job well, each team-member could earn up to an extra week’s pay every month. If they made errors, no commission.
• First Ring. When the phone rings, if the customer is new, the salesperson who takes the order now gets that customer for life and a small annuity commission on all orders. That new customer  belongs to their team.

Sometimes salespeople complain to the boss about New Sales Guy. The boss rightly says, “He’s your boss now, not me. Work it out with him.” The boss now has a lot more time to work on boss-type things.

The error rate on orders is down 90%. It took six weeks to make the changes and “re-educate” everyone. The teams don’t mind so much about New Sales Guy being  a ballbuster sometimes, because they have a pocketful of extra cash, which, let’s just say, cushions the blow quite a bit.

Tags: customer service, Entrepreneur, sales management, small business, success

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When my CPA recently sent me an email saying he was raising my monthly fee, what do you think I said when I emailed back?

I said, “Thank you, Mike. You deserve it.  Congratulations! And thanks for being a great accountant and adviser.”

Sometimes, price increases from vendors are justified not just because of the rising cost of doing business, the skyrocketing price of gas, or other factors. Great service providers get to raise prices regularly and their customers could care less about having to pay more. How many of your vendors would you say that about? How many of your clients would say that about you?

Tags: accountant, CPA, Entrepreneur, price increases, small business, success

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I like to think I walk the entrepreneurial talk. In addition to writing about entrepreneurship, I do it. I’ve been doing it for over six years in a national franchise. It’s been a long, sometimes painful, but now increasingly rewarding experience.

The franchisee base of which I am a part is a bell-curve of success–some people are killing it, some are getting killed by it, and most are somewhere in the middle. In the past week there has been an email thread going around from some of the people who are on the left side of the curve. One asks if anyone is interested in initiating a class-action lawsuit against the franchisor for selling them “a bill of goods,” for “disclosure issues,” for lack of support.

Over the years, many prospective franchisees have called me and asked my opinion of the franchise. They want me to tell them whether it’s a good idea for them to become a franchisee. My answer is always the same. I try to discourage people from buying this or any franchise. Not because I don’t like the business–I love it and it’s a big success for me. But people who seek affirmation from strangers to make the biggest financial investment of their lives are getting themselves in too deep. So it’s easier for me to tell people who are interested in this franchise (or others), one or more of the following things:

• Why do you want to buy this franchise? Are you running away from something?
• You’re going to invest $300,000 or more (for those who decide to open a retail store). How long will it take you to make that back, and what percentage return on that investment do you expect? How does that compare to taking the same money and buying a no-risk Treasury bill? Are you just bored? How about getting a job you like better than the one you just took a buyout from?
• Have you ever in your life done anything entrepreneurial? If not, what makes you think you will be successful with a franchise? And if you fail, what happens then? Will you lose your house? Your 401(k)? Your marriage?

One franchisee, who has become a valued business partner of mine doing profitable projects together, saw the email exchange and asked me, “What the hell is going on!?” I told her this: “Ignore stuff like this. Negativity = Failure. Positive attitude + action = Success.”

It is incredibly easy to psych yourself into a tailspin when you own a business. Or to raise yourself up and keep going until you find the formula, the business model, the customer set that works.

I’m a collector of franchising stories, so if you have one, good or bad, feel free to share.

Tags: Entrepreneur, franchise, Maui Wowi, success

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One of my clients, Ken, runs a very successful service business. He has two employees who do administrative tasks. His problem: he hasn’t been able to free up enough time to pursue projects that capture his imagination and will propel the business forward — largely because he is not comfortable with delegating. By inventorying his work habits and style, we found that:

• His default work style is to do things himself rather than delegate to his staff. (For example, he opens his own mail, although his staff does put it in a separate stack for him.)
• He listens to dozens of voicemails every day, of which a third to half are solicitations from salespeople he does not know for items he does not need. Also, he listens to them as soon as the red message light flashes on the phone, which makes it difficult to have uninterrupted time to concentrate.
• He has not trained his staff to handle clients as well as they could. They answer the phone for him and take messages but don’t try to resolve the caller’s issue themselves.

Given that Ken is an ambitious entrepreneur who is eager to launch many more business ventures, he wanted to address these issues as soon as possible. Ken agreed to make some critical changes to the way he does business. Here’s what he has done so far:

• Started a weekly staff meeting to delegate projects and get the staff’s feedback on how they can do more substantive work. His employees were thrilled and look forward to bringing their ideas to the meeting. They are being challenged like never before and have more job satisfaction.
• His staff now screen all voicemails and handle everything that does not absolutely require his attention. Ken has given them a list of clients who are priority and must get a call back from him immediately, but most calls can be handled without his intervention.

These changes seem easy, don’t they? For some they are, for many they are not. I almost didn’t write this post, thinking these points were too basic. Then I thought of a time about 20 years ago when I got into a lot of trouble because I was a miserable delegator. Here’s what happened:

I was editor of weekly business newspaper and one of my functions was writing the headlines for page one. Little did I know I was about to have my own “Dewey Beats Truman” moment. I wrote a particular headline that was really exciting and a bit shocking. Problem was, it had little to do with the story that followed it. Our process for putting out the paper was that every reporter and editor in the newsroom read a copy of page one to look for mistakes. They all saw my headline. They all knew it was wrong. But no one said anything!

Why?

They assumed that since I wrote it, it was the headline I wanted. And since I did so many other things myself in my (then) autocractic style, they didn’t think I’d want my authority questioned. Well, I wish they had challenged me. When the paper came out on Monday I was covering a convention and the CEO of the company I’d written the headline about was the keynote speaker. He held up the paper and railed against the false headline. I wanted to sink into the floor.

It’s not easy to trust other people with your business. When you know you can do it better and faster yourself, it’s so tempting to take that shortcut. Entrepreneurs who learn managed delegation (as opposed to delegating without giving clear direction) gain efficiency and have time to create new opportunities. And avoid potentially embarrassing (or worse) mistakes.

Tags: delegation, efficiency, Entrepreneur, success

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One of my favorite entrepreneurs is Jamey Bennett, founder and CEO of LightWedge. If you read, you know what a LightWedge is. If you read a lot, you have more than one and have one for everyone in your household. I’ve known Jamey for many years. We worked together at LendingTree Inc., where he was the co-founder and head of strategy and I was president in the very early days of the company. Jamey is an entrepreneur’s entrepreneur. LightWedge is just the latest of the companies he’s launched out of an idea in his head. He’s remarkable for his drive, intensity and also his great sense of humor and humanity. Several months ago, I asked him to answer a few questions for this blog. It took him a while (you’ll see why momentarily) and he just emailed his responses to me a few minutes ago. His insights are so good, I wanted to put them up right away.

For me, being an entrepreneur is about the challenge of turning ideas (abstract potential value) into reality (actual tangible value). I have the world’s greatest job.

Tags: delegation, Entrepreneur, Jamey Bennett, LightWedge, success

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