How many times have you tried so hard to match the skills of a candidate to the demands of the open position that the most important characteristics of a person have been relegated to lesser importance or forgotten entirely?

Finding the “Right Stuff”

The key to a person’s worth (the “right stuff”) is integrity, honesty, intelligence, the ability to communicate, and the ability and willingness to learn. Technical skills are important, but without the key ingredients, the technical skills of the applicant may be irrelevant.

Finding the candidate with the “right stuff” is not an easy task, but then my grandmother, after several years of urging, finally convinced me that anything that is worthwhile is difficult and requires considerable effort.

There are several roads to successful hiring:

Personal knowledge of a candidate.The best candidates are usually not hunting for a job. They may be people employed by one of your customers, people in competing companies, people in the same industry but not in the same line of business, or people in other industries who have exhibited the talents necessary for the job. More important, do you or one of your key associates personally know the candidates? If so, you may begin to pursue them, but with a few admonitions.

If the selected candidate works for a customer, it’s a good plan to contact the customer and let him know that his employee is a candidate for your position. I once hired one of my best customer’s top men, believing that I would lose the customer. I decided it was worth the risk. I did lose the customer, but not forever. The man I hired is now successfully running the business from which I retired. It was well worth it!

People with the “right stuff” are absolutely essential to the future success of your business! A compromise in this area has come back to hurt many businesses: it typically involves terminating the “compromise” and repeating the hiring process. What’s worse is that these “compromises” do poor work, cause internal problems, and end up costing the company in many ways.

Depending upon your relationship with a competitor who has a potential candidate, you may wish to treat that competitor much the same as recommended for your customer. The same may be said for candidates working for one of your suppliers.

A valued friend knows the candidate personally.

This is the next best thing to knowing the candidate yourself. A referral from a friend, a business associate or a present employee whose judgment you respect is a valid basis for pursuing a candidate. Note that your friend must be more than a golfing buddy; you must respect his judgment as you would a trusted associate.

Pay the price.

If the first two approaches don’t provide a candidate, the next best avenue to the “right stuff” is a toll road. A search firm or a highly reputed employment agency is a good but expensive route (often in the area of 30 percent of the employee’s starting annual compensation). Keep in mind, however, the value of an outstanding employee. It far surpasses the fee you may have to pay.

Your agreement with the search firm or agency should include the right to reimbursement if the hired candidate doesn’t work out within a reasonable time period, perhaps six months and sometimes longer. This may be negotiable with each individual firm. This avenue is most often appropriate for higher-level positions and not entry-level jobs.

The search firm or agency should do all preliminary screening, which often includes intelligence, personality, aptitude and skills testing, the cost of which should be included in their fee. (Note: These efforts do not test judgment; you must do this yourself.) In addition, you should expect the firm to provide you with at least three good, qualified candidates who meet the requirements you specify when you contract with the firm.

Hire a temporary employee from an agency.

It’s quite common to contract for a temporary employee only to find that the temp is the right person for the job on a permanent basis and may be available. In this case, you should be prepared to pay a fee to the temp agency. This is a reasonably good way to hire clerical and lower-level technical personnel and it keeps your business moving while you’re continuing your search.

Advertise in the right places.

Although we have not found many “right places to advertise,” they may include trade or industry magazines that you’re reasonably sure are read by the candidates you’re seeking. Sometimes the local newspaper can be a good source for candidates, but be prepared to kiss a lot of toads to find the prince. Likewise, some have reported success with national publications such as The Wall Street Journal and the National Employment Weekly, and others report good results by advertising on the internet. Choose the outlets best for you. Remember: If you hire an out-of-town candidate, you will be expected to pay for moving expenses!

The hiring of a candidate assumes that you have carefully and thoroughly considered your own employees as a source. You must not overlook current employee candidates! Study the background and work history of those who might qualify. You may not be aware or have forgotten that one of them has all of the qualities that you are hunting for in the new position.

Many businesses post job openings on the employee bulletin boards. I believe this is a good practice.

The interview process and application forms, in today’s arena, are landmines waiting to be stepped on! There are more employment laws today than ever before and questions you used to be able to ask are now grounds for discrimination lawsuits. If you aren’t familiar with these laws, you must become so–and the sooner the better.

Contact your legal counsel. Most law firms either have an expert on employee relations or can refer you to a source where appropriate literature can be found. One good document is the SBA’s An Equal Opportunity Guide for Small Business Employers.

There are questions you cannot ask during the interview process. Topics to steer clear of include age, disabilities, pregnancy, marital status, religion, sexual preference, race, ancestry, children and prior arrests. Everyone in your organization who may be in a position to conduct an interview must be aware of these and other limitations. We recommend that you develop a list of questions that are acceptable and provide the interviewers with some guidance that is meaningful.

A typical list of questions that can be asked is presented below. Obviously, if you have found a candidate because of your personal knowledge (or the knowledge of a business associate), you will already know the answers to many of the “illegal” questions. Even so, don’t document such knowledge, even if the candidate is for the number-two position in the company. Have as many key people as possible interview the prospect. More opinions will make for a better hiring decision and the other interviewers may uncover something vital that you overlooked.

Interview Questionnaire
1. What do you like most about your present job?
2. What do you like least about your present job?
3. Describe your responsibilities in detail.
4. Describe your relationship with your supervisor.
5. What do you like most about your supervisor?
6. Why are you considering a different job?
7. Why did you leave the job prior to this one?
8. Do you like most of your fellow employees?
9. Are you aware of the responsibilities of the job for which you are a candidate?
10. Do you have any physical limitations that would prevent you from fulfilling those responsibilities?
11. What do you consider your greatest strength as a candidate for this position?
12. What do you consider your greatest challenge as a candidate for this position?
13. What is your present compensation and benefits package?
14. What was your beginning compensation in your job?
15. What specific training have you had that might increase your ability to perform our job?
16. In which school subjects were you most successful?
17. Which subjects in school did you find the most difficult?
18. Can you provide some references for your technical abilities? What are their positions?
19. What do you know about our company that you find appealing?
20. Are working overtime and travel acceptable to you?
21. Are you willing to receive additional training to improve your ability to perform our job?
22. What is the most important factor to consider about becoming an employee of our company? For example: compensation, benefits, working hours, opportunity to progress.
23. What are the least important factors in your consideration?

Employment Preferences

Another aid in hiring is a listing of employment preferences. The answers can be quite enlightening when studied with the responses to interview questions and a review of an application form. The answers to these questions are important regardless of the level of the position that you are seeking to fill.

Here is a sample employment preferences questionnaire:

Rank the factors listed below, on a scale of 1 through 10, with 10 being the most important and 1 being the least important to you in considering a position with our company.
___ 401(k) plan
___ Health and dental insurance
___ Incentive bonus plan
___ Initial base compensation
___ Job security
___ Opportunity for advancement
___ Retirement plan
___ Vacation time
___ Working conditions
___ Working hours

The Employment Application

Once you have identified legitimate candidates for the position, you must have them complete an employment application. Failure to do so may result in your inability to defend your decision to hire or not hire an individual. There are a number of sources available for securing a sample form that complies with all government regulations and laws. Or, you can develop one of your own and have your legal counsel review and revise it to ensure that it is acceptable in the eyes of the law.

How you approach hiring the right person for a job depends upon the level and type of job. It goes without saying that hiring an entry-level person is substantially different than securing the services of a high-level technical person or a number two or three in the chain of command. In every case, however, reference checking is mandatory.

Despite your prior knowledge (assumed) of a key manager-level applicant, you may be surprised at what you find when checking references and credit. Remember: Some of the biggest names in industry (and in our federal government) have been embezzlers, bankrupts, accused of sexual misconduct and harassment, felons, and convicted of lesser crimes. Check out their education, call prior supervisors, check for felony convictions and verify prior employment. In short, do your homework!

Assuming you’ve identified a good candidate and completed all of the homework with positive results, how do you convince him or her to become a part of your company? There are several employment selling points that you should emphasize.

1. Stress the positive factors that have influenced the candidate to favorably consider the position. They may include your company’s reputation, a positive environment in which to work, an equity opportunity, the possibility of advancement, the prospect of securing improved monetary rewards for outstanding performance, or simply a “great challenge.” Remember that compensation is not the key incentive for people with the “right stuff.”
2. Do not “buy” their services. Any person who is primarily motivated by an immediate increase in base pay is not looking for the strong, long-term relationship that will contribute to the company’s success. Why wouldn’t he leave your company six months from now for another immediate increase in base pay? This is quite different from a candidate’s desire to be properly rewarded for an outstanding contribution to the company’s objectives. Although you shouldn’t “buy” the candidate, you should be willing to “pay for what you get.” Good people cost more! More about incentive compensation later.
3. Assure the candidate that his contribution to the company’s objective is meaningful. What is more discouraging than being pursued by a company and, once employed, becoming an unnoticed number on the employee roster?
4. Consider involving more than one key manager in the hiring process to reinforce the positive factors. It’s fine to discuss prospective employment with the key manager who is involved; however, if other managers are present, it will give the candidate a stronger feeling of being wanted. If you are hiring your number-two man or prospective successor, the group approach is not appropriate, unless that group involves other owners or directors of the company.
5. Consider an employment contract or offer letter. There may be occasions when a candidate for a high-level management position will be more comfortable seeing all of the conditions of employment in writing. The written document is a permanent record of the covenants between the candidate and the company and lessens the possibility for misunderstanding between the parties.

Getting Acquainted

One of the most common mistakes made by small businesses in the human resources area is believing that a new hire will perform exactly as expected. At the very least, there is an indoctrination phase that should be provided to every new employee. In addition to learning his way around the facility, the new employee must be provided information that will improve his chances of contributing immediately to the company’s performance. This indoctrination phase should consist of the following, at a minimum.

• Presenting the company’s personnel policies. Although the new employee will have learned a good bit about the company’s personnel policies during the hiring process, he should now be provided a personnel handbook (assuming one is available) that explains the more important policies. These policies should include the hiring process just completed, a definition of salaried and hourly personnel (and their differences), salary administration, incentive bonus plan, profit sharing, retirement plan (if any), pay grade structure, time reporting, working hours, overtime pay, shift premium, pay for attending funerals and jury duty, and performance appraisals. Employee benefits should be explained, including vacation time, health and dental insurance, disability compensation and other benefits, such as awards and company automobiles.
• Teaching the company’s safety programs. The Occupational Safety and Health Administration (OSHA) has issued standards and regulations designed to protect employees from safety and health hazards. These standards and regulations involve the communication of information about hazardous or toxic materials, infectious materials, respiratory hazards and safety procedures for the operation of equipment.
• Understanding the company’s business. This may be the most important part of the indoctrination program. The new employee needs to learn about the company’s operations, its objectives and, in broad terms, the plan for achieving the objectives. The new employee should understand product information, competitive position, marketing strategy, manufacturing or service process, and personnel organization.

In some cases, you may have hired a person who has all of the character attributes that you desire but may not be well-versed in some technical area of his responsibility. He may be a good machine operator but not have adequate training in computer numerical controlled (CNC) equipment.

He may be a great salesperson but not understand the required data entry functions required of sales personnel, e.g., use of a point-of-sale device, cash register and so forth. Many times a person with responsibilities in operations may have no background at all in accounting and financial controls. In all of these cases, a training program may be appropriate. There are several ways to provide the needed training.

1. Vocational technical school. Vo-tech schools are quite good in training people in industrial arts, such as machine tool operation, engineering design, computer-assisted design (CAD), computer-assisted manufacturing (CAM), and similar skills. You or the person who is responsible for human resources matters should be well acquainted with any vo-tech schools in your company’s area and the types of skills for which they offer training.
2. Business schools, colleges and universities. These institutions offer excellent training and education in traditional areas of marketing, sales, accounting, computer operation, clerical skills and others. If the school is of sufficient size, it will offer these subjects at night, interfering less with the normal workday.
3. Industry schools and seminars. Depending upon the background of the instructor and his or her teaching skill, industry-sponsored seminars or workshops can be an excellent way to provide “brush-up” training to new employees. The sessions are usually not lengthy and the value of meeting their peers from other companies may be even more valuable than the training itself.
4. In-house training. Many small companies don’t have the facilities or time to offer formal in-house training. However, one-on-one or on-the-job training, focusing on the critical needs of the new employee, is an excellent way to make sure the needed information is learned. Keep in mind that such training may detract from the efficiency of the trainer but the new hire will learn “our preferred methods,” enabling him to contribute more rapidly to the company’s performance.

Motivation and Involvement

Do you really know what motivates your people? Have you thought about what motivates you? We believe the answer can be expressed in this way:

Something or someone you respect has told you, in some way, “You have done well!”

The “some way” may be a silent nod, a communication from someone you respect, or your own knowledge (based on parameters you know and honor) that you have “done well.” The more clearly this acknowledgment is perceived, the more effective the motivation.

The premise that “nothing succeeds like success” is illustrated by a research study involving ten adults who were given a puzzle to solve. The puzzle was the same for all ten participants. After they were completed, five of the adults were told that they did quite well, getting seven or more correct out of 10 possibilities (which wasn’t true). The other five (who may have done well) were told that they had done poorly, seven out of 10 wrong (which wasn’t true either).

Then all 10 were given another puzzle, the same for each person. The five who’d been told they had done well on the first puzzle really did do well on the second puzzle. The five who’d been told they had done poorly on the first puzzle did poorly on the second puzzle.

Having coached little league baseball (ages 9 to 18) for 16 years, I can absolutely corroborate the results of the puzzle experiment. We created good teams out of players who were average in technical skills by reinforcing the good things that each player accomplished. We pointed out that poor performances were the result of some technical miscue of which the players simply weren’t aware and we were sure that they would do better now that they were aware. This confidence that we expressed in the players was rewarded!

In my own business, we often hired young people who had just graduated from high school and were known to some of our proven employees. Our on-the-job training program was essential to the success of these new recruits; however, positive recognition of their successful accomplishments played an immense role in their becoming valued and competent employees. We dealt with their mistakes as a learning process as long as their attitude remained good and they did not often repeat the same mistakes. Positive reinforcement is a powerful motivator!

Obviously, motivation is not as simple as a pat on the back or a person knowing that they’ve done well. You must understand the normal desires of people relative to their employment, regardless of the level of their responsibility. Most people desire the following:

• Recognition for their good work
• Meaningful participation in the company’s efforts
• A feeling of belonging in a successful organization
• Opportunities for growth and advancement in their competence and responsibility
• Security in their job if they perform to expectation
• Monetary reward for an expected level of performance
• Benefits that protect them and their families from significant monetary loss

Even top-level management personnel, who are typically self-motivated, desire the same things as those in positions of lesser responsibility. A mutual recognition by their peers for a job well done or a project successfully completed may be sufficient. A brief recognition of their success by the top executive goes even further as a motivator!

Keep Your Employees Happy

There have been many such surveys published, but none that I have found have ever identified what I believe is the most important factor in successful employment:

Enjoying the job . . . enjoying going to work!

How many people do you know that sincerely like to go to work in the morning? How many people do you know who would say they honestly like their job? We all know people who have worked all their lives at jobs that they have not enjoyed. Considering that many men and women spend 35 percent to 50 percent of their waking moments at work, not enjoying that time would be very depressing.

So, how do you make an employee’s work something that he or she enjoys? It is called involvement! Keep your people involved. Consider the following:

1. Communicate with them. Make them aware of company business that might affect them, either directly or indirectly. Make sure they know about new products or services, give them copies of new company brochures, and tell them about negotiations for new health insurance. They have a need to know.
2. Reinforce their contributions to the company’s objective. Informal discussions are needed to bring the employees up to date on their role in the business. Annual performance appraisals offer an excellent chance to involve the employees in company affairs in addition to letting them know how effectively they have been working.
3. Solicit suggestions for positive changes, whether in customer service, new products, manufacturing processes or administration. Often, the employees who are closest to a problem will come up with the best solution. Involve them in problem solving and operational improvements. A lot of good ideas have come from a suggestion box and those ideas should be rewarded with recognition and monetary rewards.
4. Encourage a sense of belonging, a sense of being a part of a successful effort. This is much like being a part of a winning sports team, an experience that is never forgotten.

Sure, there’s more competition online these days, but if online sales are any indication, the number of people who are actively shopping online is also on the rise.

According to Forrester Research, online sales reached a staggering $172 billion in 2005–a number they predict will rise to $329 billion by 2010!

If you want in, you’d better become familiar with the new technologies and new tools that have opened up worlds of opportunity that make it easier–and cheaper–than ever to start an online business and immediately start profiting.

Here’s some of them, and the tremendous opportunities they offer.

1. Instantly Boost Your Traffic With Pay-Per-Click Advertising: The search-engine landscape has changed dramatically. We used to recommend getting listed on eight major search engines: Altavista, Excite, HotBot, InfoSeek, Lycos, Northern Light, WebCrawler, and Yahoo!. Today, clear leaders have emerged: Google, Yahoo! and MSN.
   • Yahoo! Search Marketing: Yahoo’s sponsored search lets you advertise your site in the search results of the following search engines: MSN, Yahoo!, AltaVista, InfoSpace, AlltheWeb and NetZero.
   • Google AdWords: With Google AdWords, you can have your ads show up in sponsored search listings for certain keywords–and you can also advertise on other sites that match your audience.
   • MSN AdCenter: MSN has recently entered the arena of paid search with MSN AdCenter. So far, it’s the only PPC engine to offer keyword-based demographic targeting.
2. Make Sure Your E-Mail Gets Delivered:E-mail marketing is still highly profitable. Not only is it a great and inexpensive way to establish relationships with your customers, your promotions and follow-up offers can be completely automated. However, while you used to be able to send e-mail to absolutely everyone, these days you have to be very careful. If you want to take advantage of the profit-boosting power of e-mail marketing, you must make sure your e-mails comply with the CAN-SPAM Act.
3. Promote Your Business With New Internet Marketing Technology: Technology has been furiously advancing, paving the way for new and highly effective ways to promote your e-business. Let’s look at some that have had the biggest impact:
   • Audio and Video: The internet has come a long way since its text-only roots! Programming languages such as JavaScript and programs like Macromedia’s Flash have allowed for web video, audio, slide presentations and other interactive elements.When used right, audio and video as part of your sales process can now have a dramatic impact on your bottom line. Use short audio and video clips of you and your customers to personalize your site and reassure visitors that you’re a credible business.
   • Blogging: Blogs are informal web forums that invite feedback and discussion. They’re free to set up and use, and so simple that they can be created in minutes using sites such as Blogger.com.As a result, blogging has exploded in popularity over the last few years. With a business blog you can reach a wider audience, generate better search engine rankings, boost your revenue, and develop a rapport with your customers.
   • Podcasting: Podcasting (the delivery of audio files–typically MP3 files–via the internet) is one of the hottest new technologies to hit the market. It allows you to publish audio content that interested listeners can subscribe to via RSS “feeds” so they can automatically receive your audio broadcasts without having to go to your website.For more information, read “Using Podcasting to Promote Your Site.”
   • Direct-to-Desktop Technology: Direct-to-desktop technology is a way to deliver information straight to your subscribers’ desktops–without having to wrestle with e-mail filters, bouncebacks, or your competition! Here’s how it works: The sender uses an application that formats and sends the information straight to a “reader” that’s been installed on the recipient’s desktop.

Final Thoughts

The unique benefits of having an online business (low overhead, inexpensive advertising and a global reach) can produce huge profit margins–and for tens of thousands of internet entrepreneurs, a level of personal and financial freedom they could only dream about before.

Sure, there’s more competition online these days, but the opportunities are also growing! So if you you’ve been putting off starting your first online business because you thought you missed the boat–or if you want to ramp up an existing one–there’s never been a better time to take action and start generating life-altering wealth of your own.

With the explosion of technological advances and resources, running an online business is now so accessible that literally anyone can get online very quickly–and immediately start profiting from their own internet business!

The prices you charge for what you sell have an enormous ability to affect your company’s growth. They can lure some customers and drive others away, produce profits from declining products and turn cash cows into money-losing dogs.

These results can be produced by either lowering or raising prices. Results depend not on whether your prices increase or fall, but on your market, your product, your competition, your goals, and the precise mechanism you employ to adjust prices.

Prices fluctuate constantly for some things, such as food and gasoline, and remain about the same for others over years or even decades. Some products seem to have rapidly changing prices, but in reality the prices don’t change much it’s the products that change. For example, look at personal computers.

The price for a midrange personal computer has been about $2,000 for many years, despite the fact that the computer you paid $2,000 for last year can now be bought for less than half that.

Whether you are in an industry with rapidly changing prices or pricing that seems set in concrete, it’s a good idea to evaluate your pricing periodically to see if you could generate some growth by tinkering with it. There are several ways to decide what your prices should be. They include matching the competition, charging whatever the market will bear, and marking up from your own costs.

Competitive pricing seeks to match what others charge for the same product or service. All pricing has to take competitors into account. When you are a small company in a large market, you will almost be forced to follow others’ lead on pricing. That means pricing your product neither very far above or below what others charge.

As you grow larger, you will be able to exert more independence in pricing, especially if you can differentiate your offering as exceptionally high in value. You can take the lead in pricing, forcing others to match your low prices, when you gain enough experience and volume to truly become the low-cost producer.

Using the cost-based pricing technique, you calculate what it costs to produce your goods or services including such items as salaries and benefits, materials and supplies, and sales and overhead and then add whatever amount you think is appropriate for your gross profit margin.

Some businesses, such as those that perform repairs, have prices explicitly based on adding a preset profit margin to whatever it costs to do the job. However, customers are generally not concerned about what it costs you to provide a good or a service. So while cost have to be a consideration in your pricing, your costs are rarely justification for higher prices in the marketplace.

The main thing you should be concerned about with pricing is neither what others are charging nor what it costs you to compete. It is maintaining a proper balance of supply and demand. Simply put, if you have more business than you can handle, raise prices.

If you are sitting around with nothing to do, reduce prices. If competitors follow suit, you may have to discount again until you capture enough business to sustain your operation. If you can’t reduce prices enough to make money, you will have to cut costs somehow.

Various tactics can be used within these strategies. Skimming is the practice of charging high prices, usually for new products, to take advantage of the willingness of early adopters to pay more. Skimming can allow you to recoup development costs of new products and services.

Buying market share is what companies call it when they charge initially low prices with the intent of getting people to try their product and, hopefully, like it enough to pay more for it later on.

Managing the competing interests of supply, demand, cost and competition is a lot to ask. But pricing is up to the challenge. Finding the sweet spot between your cost and the highest price customers will tolerate, given existing competition, requires near-constant tinkering with prices, observation of the results, and frequent analysis of what you could do better.

You’re starting your own business. You know what to sell and who your customers are. But how will you decide what your marketing materials should look like or even what you’ll charge for your products or services?

You need to become an amateur sleuth and gather competitive intelligence to create an on-target marketing program and tailor your services or products to position against the competition.

It’s important to complete a competitive analysis during the start-up phase of your new business, about the time you’re putting together your marketing plan. In fact, if you get underway without performing a competitive analysis, you run the risk of creating marketing tools and product or service offerings that are way off the mark.

This can cost you valuable time and money during the critical early months. You should also plan to gather competitive intelligence as your business grows, in order to stay competitive.

Who’s Your Competition?

One of the biggest mistakes new entrepreneurs make is failing to recognize the range of competitors for their businesses. Your new company will have two types of competition-real and perceived. For example, imagine you’re a former college athlete who’s decided to start a personal fitness training business.

Your competitors will fall into two categories: other personal trainers, and gyms and health clubs that offer trainers or advisors on staff. Although you’d directly compete only with the other personal trainers, your prospects-people who want to shape up-would perceive the gyms that offer these services as a viable alternative to hiring you. So to complete your competitive analysis, you need to evaluate the marketing materials and services both types of competitors offer.

Get the Facts

The first step in your competitive analysis is to collect all the marketing materials used by your competitors-both perceived and real. Begin by clipping your competitors’ ads. Then request copies of their brochures and other marketing materials-not so you can copy their ideas, but so you can check out marketing strategies and formats, competitive pricing, special offers, the key benefits (or promises made), and clues to marketing niches that may be underserved.

If possible, you may even want to “mystery shop” your competitors-go out and actually buy their products or services so you can experience the purchasing process with their store personnel or salespeople. If your competitors are large enough, you can gather information about them on the Net.

Use major search engines to look for recent press releases and articles about them. There are even free sites on the Web that allow you to customize your own daily news page, such as NewsPage by NewsEdge Corp. (www.newspage.com).

And don’t forget to check out your competitors’ Web sites. How do your direct and perceived competitors use the Net to attract customers and sell products? This will give you important clues about information a Web site of your own should contain.
Put It All Together

Now you’re ready to draw some conclusions about the types of competitive offers and pricing your new business should use. Best of all, you’ll have clear guidelines for developing your marketing tools. Complete your analysis by answering these questions:

• What size are their materials? Do most of your competitors use standard mailing envelopes, or are they using large folders with inserts?
• Do your competitors use photography or illustrations in their materials?
• Do they have Web sites, and how deep are they? Do they sell products online or just offer information?
• How are your competitors’ products or services similar to yours? How are they different?
• What key benefits do their marketing materials communicate? Can you offer additional benefits that are valuable to prospects?
• What special product, service or pricing offers do your competitors use to stimulate responses to brochures and ads?

Once you discover the answers to these questions, create the marketing tools that will work harder than you do.

The ring of the cash register has long been the sound of music. But today the cash register of even the smallest business may be attached to a computer via “point-of-sale” (POS) systems. These systems have grown in popularity over conventional cash registers because they don’t just ring up sales. They amass vital, real-time information about your inventory and customers.

At the core of these systems are a standard-issue computers running specialized POS software, usually with a cash drawer and receipt printer, and often with a bar code scanner and credit card reader. Vendors often sell these systems pre-configured, or you can add these peripherals on as your requirements grow. The typical cost can be less than $1,500.

What do you get for your investment? Without a doubt, the biggest advantage is the ability to get an immediate, up-to-the-minute, accurate assessment of your inventory. Each time you check out a customer, the goods you ring up are immediately subtracted from your inventory list, which is maintained on the system’s hard drive.

That inventory may be surprisingly large. Many boutique clothing stores, for example, will stock SKUs numbering in the thousands, with actual counts exceeding 10,000 items. The same is true for shops selling everything from bicycles to cameras to cosmetics.

Keeping track of the thousands of items that make up a small business can be a real chore. However, consistently keeping hard-to-find items in stock can add up to a competitive advantage over much larger competitors. How to strike the balance?

A good POS system can help, allowing you to set an alert that lets you know when a given item is at the re-order point. When it’s time to re-order, some POS systems tell you both the most recent price you paid, as well as the average price you’ve paid in the past. Both can help you strike the best deal with your suppliers.

Off-hours, you can run a report that gives you inventory activity for the day, week or month. To get the big picture, some POS systems allow you to track your inventory year to year, allowing you to compare this year’s orders with those from last year. Doing so can help you anticipate where you want to head in the coming months.

Taking inventory is one of the most time-consuming and labor-intensive tasks every store owner faces. It is also one of the most crucial. Having too much stock, or too little, is costly. According to the National Retail Federation, U.S. retailers lose $224 billion due to excess inventory and $45 billion from not having inventory in stock.

While having a POS system track your inventory does not substitute for a physical inventory count, many shopkeepers find they can reduce the number of times each year they must conduct this time-consuming task. And when the time comes, the use of a wireless portable scanner in conjunction with a POS system can greatly reduce your footsteps, saving hours in the process.

In addition to tracking inventory, a good POS system will help you know who your best customers are and what they like. With the customer’s purchase history visible right at the cash register, a nursery owner might alert a tea rose lover to a new shipment of those flowers.

A camera store owner could tell a wildlife photographer about a new high-speed 35mm film ideal for capturing images of raptors in flight. Conversely, an auto parts store owner could query the POS system with a quick barcode scan to answer a customer’s inquiry about the availability of a spare part.

What it comes down to is this: In a well-run business, the point of sale is more than just the place where the money comes in. With the right equipment, it becomes your strategic service center, the place that will help you grow your business and keep your customers coming back.

And the ka-ching keeps on coming. According to Intuit market research, by using an affordable, integrated POS system, an independent retailer with revenue of $300,000 can cut costs by close to 10 percent, saving an average $30,000 a year. That’s a substantial return on a $1,500 investment. The question then becomes, How can you not afford a POS system?
Shopping for the Right POS System

In looking for a POS system, the choices are many, the price can range from hundreds to tens of thousands of dollars, and the final decision can be difficult. Here are some guidelines to help.

• Three words of advice: inventory, inventory, inventory. All POS systems ring up sales and track inventory. But a good one will let you assess your inventory easily and thoroughly. You should be able to set alerts for items running low, readily add new items when they come in, account for back-orders, and even generate purchase orders to send to vendors.
• Weigh ease-of-use against functionality. Generally speaking, the more complex your orders are, the more features you’ll need. But consider as well the time needed to bring new employees up to speed and the time you’ll invest training them. The best systems offer a balance of both.
• Look for a system that can start small and grow with your needs. If you are on a tight budget, you can begin with a basic setup: POS software running on a PC with just a drawer and receipt printer.

  Later on, you can add on as your needs dictate, perhaps a bar code scanner and credit card reader to begin with, then add an inventory tag printer, pole display, or PIN debit pad. Also, you should pick a system, based on your needs, that doesn’t require having someone set it up for you.