As Bloomberg Businessweek columnist Karen Klein recently pointed out: “There is a plethora of advice available for new business owners. But it’s wrong to assume that the hard work diminishes once entrepreneurs have established their ventures…When mature companies fail, it is often because they haven’t adapted, particularly during an economic downturn.”

In the newest Best Business Practices Survey, Michigan Business & Professional Association (MBPA) members were asked to share actions they have taken over this past year that have had positive impacts in the areas of finance, working with employees, sales, marketing/advertising, internal procedures/processes, technology, and overall advice to other business owners. This paper summarizes the survey’s most significant findings.

Employee Issues
In this post-recession economy, employer/employee relationships have changed. Workers and bosses have both gone through a lot—reduced pay and benefits, increased workloads and insecure futures. It’s no surprise that:
 

• In a June 2011 report by LeadershipIQ, 69 percent of North American workers said they are either disengaged or “underengaged.” (based on responses from 102,311 employees and managers at 130 organizations)…Leaders, as well as rank-and-file workers, are feeling less motivated…More than half of frontline supervisors report either being disengaged (8 percent) or “underengaged” (44 percent). Fully one-third of middle managers…voiced similar sentiments, as did 30 percent of executives…LeadershipIQ’s study echoes a report in January by BlessingWhite Inc…In North America, where only 33 percent of employees identified themselves as engaged. 

MBPA survey respondents noted the following as the “most important” employee actions they have done to create a “positive impact” on employees:

• Re-invested in our operation and our people.
• “For us, it’s always our vision….to work with our employees to help them achieve their personal, professional and financial goals.”
• Removed barriers to work-life balance. Do not track hours or sick days…employees can attend training during work hours….and we don’t dock them. We only ask that they let us know if they will be away from work. This has created an environment where employees and their families believe they are very important to us.
• Everyone is more flexible….very conscious of doing what it takes to get the job done.
• Monthly meetings, peer recognition, annual bonuses, “sun days” (close early, lunch/theme parties and sales team funded events).
• Providing motivational activities to promote a sense of value to the work performed by staff. In addition to several large employee events, we’ve added smaller activities like bringing in slurpees for the staff on hot days or providing “You Are Appreciated” cards allowing employees to leave work two hours early.
• Implemented a SMILE program, where individuals were rewarded….for smiling. “Happy employees make for happy customers.”
• Promotions given when performance is stellar.
• Added an incentive plan for hourly employees.
• Gave better feedback on employee performance.
• More personal involvement with sales people.
• Eliminated practical road blocks through an employee suggestion program.
• Empowered employees and managers to handle all customer complaints.
• Started new idea generation groups.
• Listen to employees closest to the customer.
• Cross trained employees which saved having to hire additional staff.
• Trained all employees to use their networks to bring in new clients.
• Offered online training as well as having local training events.
• Changed the training program and required all to participate. This created additional positive growth for all and brought encouraged competitiveness to the entire group.
• Additional time is spent on employee meetings to prepare well in advance for the “busy time of the year.” This has helped to provide a sense of company support to all staff and their roles.
• Set a clear vision connected to goals and goal planning.
• Communicate in all aspects of the business cycle.
• Used Skype for more interactive strategy calls between locations. Also videotaped messages from the president to the rest of the company and these have been much better received.
• Initiated pro-active recruiting….we now project out a year in advance of when we think we might need someone and begin recruiting for that position.
• Hire responsible people and don’t micro-manage them.
• Be HONEST!
• Be involved with the business….if you don’t, nobody else will.

Many of these thoughts are summed up well by serial entrepreneur and business author Gary Vaynerchuk, who says:
 

• Any investment you make in your employees will be safe if they believe that you really care about them and their future. Create a culture that rewards people who show they care. Seek the input of people who have shown a tendency to take risks and share big ideas. Prove that you value your employees above all else by giving them the freedom to ask for what they want, to experiment, and to be themselves.

Technology’s Impact
Technology continues to transform the business world. In fact, some business experts predict that, by 2014, social networking will replace e-mail as the primary form of communication for up to 20 percent of business users. Evidence of the impact of technology was evident in the MBPA survey with respondents noting that they:

• Were able to replace the 10-15 year old computers with a new network compatible system.
• Leveraged the latest technology to centralize data, backup, processing, maintenance and help manage costs.
• Increased server capacity, which improved processing time and was able to create more electronic publications.
• Using web-based programs that allow us to share documents with select employees or customers.
• Now have fillable forms online, signature pads at each checkout and are in the process of going paperless.
• Moved manual logging/filing functions to electronic storage/reports.
• Constantly review CAD and CAM software to make sure it meets needs.
• Created a more user friendly web site.
• Made more product offerings available online.
• Have been more active in inviting prospects to our main warehouse facility and giving them a tour that worked so well they put a video of the tour on the company website. (“This has been a huge success for us!”)
• Did more Internet marketing – Facebook, Weekly eNews, joined other search entities.
• Hired a social media person to help reach a changing demographic segment of our customer base.
• Gotten much more involved in social media to improve brand and name recognition. Updated the website to increase SEO which increased requests for quotes by 100%.
• Integrated smart-phone technology with desktops now used only for heavy research or word processing. (“The freedom, flexibility and speed is amazing.”)
• Added support for more mobile devices, which allows people to stay tighter in touch on time sensitive issues.
• Using more social media and blogs to better educate prospects.
• Skype for interactive calls between offices.
• Have stopped relying on “endpoint” anti-virus solutions that have proven to be ineffective against the latest infections that re-encrypt themselves every 12 hours. Instead, using a network wide hardware “Intrusion Prevention Device.”
• Added testimonial video clips to Facebook and the website.

With 2.1 billion Internet users  and as many as 8 trillion messages  whizzing through the Ethernet, MBPA members are clearly on the right path by keeping up with the technological changes that are transforming the world.

Revamping Operations
“Even a mature company must maintain a startup mentality, invest in innovation, and raise the bar for its products and services,” according to management consultant Mark Stevens. “If that doesn’t happen, it can face a long and painful slide into obscurity.”

MBPA members already practice innovation with financial controls and operational moves like:

• Changing to a four 10-hour day work week that forces a hard look at overtime.
• Empowering employees to find ways to improve efficiencies and the bottom line with some of the best ideas coming from the front line.
• Reviewing all products, pricing and inventory costs, then making vendor changes, product changes and pricing changes.
• Embracing change and regularly trying new/modified approaches.
• Taking Medicare-eligible employees off the company plan and using a stipend so costs are fixed and people can buy their own individual supplement plans.
• Using a business coach to help increase focus on priority items.
• Doing whatever it takes to improve company work flow and throughput.
• Eliminating some supervisory positions to increase the speed of making changes.
• Giving up less profitable client work to better focus on business development and more profitable work.
• Dropping underperforming products.
• Using credit checks on new customers and COD for the first time.
• Holding sales managers accountable for deal-making pace and quality.
• Networking and bartering.

Conclusion
In the end, the 2011 MBPA Best Practices Survey proves the importance of striking “a balance between treating employees as costs and assets…By caring for workers, being careful about how they’re managed, and providing them with a compelling overall purpose, companies are finding they can be good to their employees and to the rest of their stakeholders as well.”

Forty percent of Michigan small business owners say the health of their business improved within the past year, according to a member Economic Pulse Survey conducted by the Michigan Business and Professional Association (MBPA) and the Michigan Food and Beverage Association (MFBA). And 61 percent of the respondents believe that their business’ health will improve in the coming year.

This is an uptick compared to last year’s results, which showed that just 22 percent of those surveyed said their business health improved in the last year and only 50 percent expected it to improve in the coming year. When asked about the changes they made in their business over the past year to cope with the challenging economy, respondents said they invested in new technology, restructured debt, strengthened branding and marketing efforts and added new services and products, according to Jennifer Kluge, President and CEO of both Associations.

“This is good news coming from a major component of our state’s economy – small businesses. They are more positive about the state’s economic future,” said Kluge. “In fact, 34 percent of them said they believe the state’s economy will noticeably improve within the next year. I take this as a sign that our state government and its quick movement to eliminate the Michigan Business Tax and get new business initiatives into the pipeline are giving business owners hope.”

The April/May survey of Association members offered insights into how a cross section of small business owners feel about current business conditions:

• 27 percent increased staff within the past year.
• 34 percent planned to increase staff in the next year.
• 16 percent have considered moving to another state (compared to 19 percent in the 2010 survey).
• 39 percent said they were planning significant changes in the next year, such as increasing office space and expanding into new markets.

While the survey results were generally positive, Kluge said there are still challenges out there. “Members said that increased gas and energy-related prices, the rising cost of health care insurance and increased government regulations are negative factors affecting their business.”

Shannon Hensel
Hensel HR Consulting
With Permission of Hennessey Capital Management

Over the last couple of years US employers have seen more employment law changes than in the last three decades combined. Human Resource professionals nationwide anticipate this trend to continue. What do business owners need to know or should be doing in order to remain compliant and protect their assets?

Many small businesses, especially ones that don’t require a full time HR on staff, don’t realize that 78% of employment legislation is required by employers with as few as 15 employees. Noncompliance is frequently the basis for significant financial risk and not knowing is no longer an excuse. The Society of Human Resource Management (SHRM) reported that the Department of Labor (DOL) recently added 250 new investigators to the DOL’s Wage and Hour division, a staff increase of 1/3.  Most other divisions have increased their staff, some by as much as 28% in 2010. The DOL has shifted emphasis away from compliance assistance and is staffing to increase enforcement and accountability from business owners. The DOL oversees the Wage and Hour Division, Office of Federal Compliance Programs, OSHA, Employee Benefits Security, and more.

Furthermore, the Equal Employment Opportunity Commission (EEOC) has been reporting record high claims for discrimination, harassment and retaliation the past couple of years.  Business Management Daily cited, “the EEOC has historically been known for going after large, big ticket lawsuits, however this has now changed. They are going after anyone who is non-compliant and investigating all claims”. Also, small businesses that don’t have any documented policies and practices, are usually quick and easy targets because they are unable to provide documented practices in defending claims. Do you know the EEOC can still pursue a case even if the complainant drops the case and no longer wants to pursue it? The EEOC is now posting cases on their website, and along with it, the names of the affected companies and any “bad actors” involved. As great as social media is today, do companies really understand the long term impact on their reputation when something like this is continually found forever more on the internet?

Additionally, purchasing employment practice liability insurance may cover your incremental expenditures if a case arises; however, your publicized reputation won’t be protected. Employers can protect themselves by identifying areas of concern that need immediate attention by doing a risk assessment/audit of current business practices. By doing regular audits or reviews of current practices can help employers identify what processes are adequate, legal or ineffective. According to SHRM, most lawsuits can be traced to four distinct stages of the employment relationship:

• Hiring – (job descriptions, application forms, employment contracts, classifications, references)
• Employee Evaluation – (performance appraisals, process, compensation, record keeping and promotions)
• Employee Discipline – (rule infractions, evidence, poor performance, insufficient documentation, leave practices, undefined policies)
• Termination – (situational comparisons, proper warnings, adherence to complaint procedures or lack of them)

In today’s climate, businesses need to engage in constant observation and continuous improvement of the company’s policies, procedures and practices in order to mitigate legal risks. Businesses can’t afford staying abreast of critical changes that keep you compliant with the law. When these changes do arise, employers need to view the changes as opportunities to enhance and align their strategic goals with their policies and practices throughout. One way to do this is to continuously monitor HR systems to ensure they are up-to-date and have built in checks and balances. Another approach is to designate someone on staff (or an outside consultant) to monitor legal developments to ensure HR policies and practices are kept current.

It is also important to keep records of audit findings, internal changes made, turnover, complaints filed, hotline issues, employee survey results, etc. in order to keep a pulse on problematic areas, growth or declining spots. This can help make decisions of what to address first, allocate resources to, and identify where preventative training is required in the future. Staying up-to-date on pending and anticipated regulatory activity is vital to your organization. Being informed about your results can provide the ability to focus on areas for improvement, avoid legal liability, and can help a company internally align practices with their strategic goals. Incorporating a continuous process improvement culture in your organization will also ensure that your company achieves and retains their competitive advantage for today and in the future.

Daron Powers

While the goodwill of American taxpayers have spared Wall Street, the banks and automotive companies, unfortunately there are…

No “Bail Outs” for the Entrepreneur
When times were better, you could make a reletively good living even with an average product or service, minimal sales and marketing. Consumers spent more freely. Now with Michigan’s unemployment rate among the highest in the nation, we all have to work a lot smarter to communicate better and earn the business.

I’ve noticed that some businesses have fallen into kind of a ‘comfort-zone” trap. There are those just not sure how to break out or even know whom to trust to help them market and sell their products and services. Others, I’m guessing, are waiting for the economy to turn around, or Superman or a “bailout.” Don’t hold your breath.

More Cautious Prospects
A client in Tampa lost his key salesperson after housing tool a dive. According to the owner, “She was an awesome sales ace when people were standing in line to buy a home. In good times, she had developed her professional “order taking” skills. However, without actual sales skills to convert the fewer more cautious prospects, when foot traffic slowed, so went her sales production.”

When All You Need is a Cardboard Sign
I was talking with a brilliant attorney who told me, “For 30 years, the business did pretty well.” However, he admitted, “Even with sour economic times, I just kept doing the same things in the same ways.”

Clients slowly dripped away and now he finally has come to the realization that if his business is going to grow, he must do something to market himself. Marketing is not his area of expertise, so he is now reaching out for business counsel.

You see, if you are the only tiolet paper factory in town, all you need is a cardboard sign and people will find you. However, for the rest of us who want to succeed in business, especially in today’s competitive economy, the reality is that you are going to have to market and sell better than before. The good news is, to be effective in marketing it’s…

Not a Complete Secret
I hear some business people saying, “Yeah, but I AM marketing! And, still business is hit and miss. I have a flashy internet web site, a big clear sign, a colorful poster, a glossy brochure, a shiney postcard, and a two-sided business card. In addition, I do the social media, a bit of PR and place ads, I go to trade shows, networking meetings … so what am I missing?”

All things just mentioned are important tactical marketing tools. You must have them to compete. However, when these common tactical tools don’t produce results as expected, it’s time to dig deeper.

There’s a key that can unlock opportunity. While it’s not widely known — it’s not a complete secret. When it comes to letting the world know about you, your products and services, don’t put the cart before the horse. In a nutshell…

Marketing Strategy First … Tactical Marketing and Selling Tools Second
Before you build or update your tactical marketing tools such as web sites, web-video, social media, PR, presentations, brochures, sales training, sales scripts, TV/radio or print ads, etc., here are…

5 Tips to Build or Refine Your Marketing Strategy

1. Make sure all your messaging is unified and consistent. Then be sure all of your marketing does these four things well: 1) Interrupt; 2)Engage; 3) Educate; and 4) Make a low risk offer. More so…
2. Avoid meaningless slogans, platitudes, tired and boring language. Your communication can inadvertantly fuel frustration and skepticism when you sound or appear like every other business out there. Inconsistent messaging confuses prospects.
3. Verify your target market. We all have blind spots. Don’t make assumptions about yout audience’s needs. Create the document all your marketing materials and sales activities around the conversation already going on in your prospect’s mind.
4. Build an “Air-Tight” value proposition to increase real and perceived worth. Think of you and your business as being on trial. Prospects are the judge and jury. Build a case so strong they say, “We’d have to be an absolute fool to do business with anyone else than you.”
5. Educate your audience to make informed buying decisions. give them information that puts them in control of the process. Remember, few people want to be pressured or sold. They’s rather make the decision to buy.

Bottom-line, if you choose to run a profitable business in this town — just being in business is not enough. You have to run a better company. Learn to communicate value and do it in a way that separates you from competitors. Remember, knowing what to do and actually doing it is what separates the pack. Do that by developing or refining your marketing strategy first — tactical tools second.

Daron Powers is a sales and marketing expert specializing in helping businesses and professionals to streamline marketing, messaging, branding, online and offline. You can email him at marketing@daronpowers.com.

Lynn Drake
Compass Commercial

As any commercial real estate realtor or broker can tell you, leasing a commercial space is complicated. The leases are long and full of tiny clauses meant to give the landlord as much of your hard-earned dollar as possible. If you don’t speak lease, you’re likely to hit a series of road bumps as you evaluate what your potential landlord has put in front of you.

Most commercial real estate leases are 40 pages and more – which means that there’s bound to be a few things in there that you don’t expect. Before you sign on the dotted line, make sure you know what you’re signing – and what your lease could mean for you and your company. Remember that your landlord isn’t out to save you money; they’re out to make money for themselves. Commercial real estate leases are specifically designed to trip the tenants up.

One thing to consider, when leasing space, is that landlords operate via the rentable/usable method. That is, they calculate a tenant’s rent by determining the amount of space the tenant is using in their specific suite (i.e., rentable space), and then adding a percentage of the common areas in the building (i.e., usable space). In most leases, the rent is based upon the usable space or usable square footage, which tends to run from 12-14%. Confused? Wondering what this has to do with you? A client of mine from Denver, Colorado and I were looking at the headcount versus the square footage to be leased, and something seemed off. We knew the size was way too big, so as part of the request for proposal we asked the landlord to provide the rentable/usable figure in the building. The figure came back at 25%! That is, my client was going to be paying for 15% of space that was nonexistent.

Business risk in a lease is very important for example, I once reviewed a lease for a prospective client who was located in an industrial setting. Generally, in these types of leases, it is written into the lease that the tenant pays for most, if not all of the improvements to both their space and the building. In this specific case, the landlord had also written a clause into the lease that stated that they had the right to, at any time, relocate the tenant to another space in any of their other properties – without reimbursing the tenant for improvements or moving costs! That is, the landlord could tell the tenant, “You move in 2 weeks to X building. It’s required, and we’re not going to pay a dime to help you get there.” Imagine if you hadn’t budgeted for this kind of expense! It could be devastating to your business. Not to mention that such a clause meant that the landlord could move the tenant from a great, stable, well-run building to a rundown building in their portfolio or even a building in another city!

Bottom line? You’ve got to read your lease – every single word of it. Your landlord will try to work in extra clauses, and if you’re not keeping your eye out for them, you can get hurt. Another example of these extraneous, dangerous clauses? These days, many leases have a clause that allows the landlord to sue the tenant at any time – for anything – while recouping their legal fees from the tenant. I once had a tenant who didn’t want to renew her lease because her landlord had let the building fall into disrepair. The landlord sued her for not renewing and took her to court. While he didn’t ultimately win the court case, it was the tenant who was responsible for paying all the legal fees. A huge waste of time and a huge waste of money!

As you can see, it’s extremely important that as a tenant, you’re well informed and that you understand all the costs associated with your potential new location and your new lease. There are business risks involved with signing a new lease, and if you’re not careful to read through your entire lease before you sign on the dotted line, you could be sorry later.