Too often, overnight success can quickly become a company’s worst nightmare. A small business that lacks the capital, staff or infrastructure to handle a big order or nationwide publicity can promptly get crushed when its product or service becomes a hit.

Even though every company should have a strategic plan in place before the big day arrives, most small business owners are so busy just trying to survive that planning usually gets put on the back burner. That’s why we’ve have put together this 10-step survival guide to help you think fast and react quickly when you wake up one morning to find the world beating a path to your door.

1. Take a deep breath. Don’t max out your credit cards, splurge on a big bottle of champagne or do anything crazy. While it’s only natural to want to celebrate the good news, remember that a big contract or great press doesn’t mean dollars in your bank account–at least, not today. So hold off on that Ferrari or tropical vacation.
2. Map out a strategy. Make a to-do list, crunch the numbers and marshal your human and production resources. It’s always easier to fight a battle on paper (or a computer spreadsheet) than to shoot first and ask questions later. No matter how much pressure you’re getting from your customers to deliver the goods right now, you need to take the time to sit down with your partner or staff to map out a plan of attack.
3. Get the money. Before you go on a hiring binge or start placing orders overseas, it’s important to figure out how much working capital you’re going to need to meet the market demand. Because employees and manufacturers generally won’t wait until you’ve sold the products and collected the money before you pay them, you’ll need a source of capital that you can tap immediately.
4. Reach out for help. Call on suppliers, personal contacts and the Internet to find extra hands to help you. If you think you can do it alone, think again. No matter how hard you work, there are only 24 hours in a day and you’ve got to sleep during seven or eight of them. That’s why it’s important to reach out to people who can help you.
5. Forge production partnerships. A small business making handcrafted soaps is going to be hard-pressed to fill a million-unit order from a large national chain completely on its own. That’s why it’s important to partner with manufacturers in the United States and overseas who can take your samples or prototypes and produce them in large quantities.
6. Create a distribution network. As news of your product or service spreads, you may start getting orders from consumers and retailers all over the country. If you’re like most businesses, you’re going to need help selling and servicing those accounts. Rather than hiring a national sales manager and opening offices in major cities, a more cost-effective option may be to sell your product through manufacturers’ reps.
7. Communicate with your customers. Communication is the lifeblood of any business relationship, but it’s even more important when your product or service suddenly takes off. The biggest mistake a business owner can make is failing to warn customers of shipping or production delays until it’s too late. This is especially critical in the apparel and toy industries where seasonality is important.
8. Leverage your success. The hardest thing about achieving overnight success is keeping it going. The last thing you want is to get stuck with a warehouse full of pet rocks. Creating line extensions like the Chicken Soup books or the For Dummies series is one way to keep your brand alive. Another is to find new markets for your products and services or new ways to publicize them.
9. Invest for the future. While it may be tempting to reap the profits from your hit product right away, it’s important to re-invest some of those profits to help your business grow. Whether this means paying down debt, buying new equipment, hiring another employee or opening another location, don’t pass up this opportunity to make your money work for you. It’s always cheaper to put your own cash to work in your business than to borrow money from a bank or give up equity to an investor.
10. Learn from your mistakes. After the excitement of the initial sales rush has died down, take a few hours to sit down with your staff to figure out what went right, what went wrong and what you think you could do better in the future. This will help you put a strategy in place for the next time you come out with a hit product–which could be sooner than you think!

More Resources

Got a hit on your hands and don’t know where to turn? Check out the Web links below to get the help you need today.

• craigslist: This is a great place to find freelancers and independent contractors, and it’s free to search and–in most cities–post.
• VendorSeek: This online marketplace helps match companies with vendors of products, services, equipment and staffing.
• Net-Temps: Here you’ll find employment listings for employers and seekers of full-time, part-time and temporary jobs.
• Manufacturers’ Agents National Association: This website offers a searchable directory of manufacturers’ reps and agents in the United States and worldwide.
• Credit-Card-Source.com: Go here to find help navigating your way through the maze of credit card offers so you can pick the best card for you and your business.

Money management is tricky business. In addition to customers, cash flow and managing your accounts properly is what keeps your business humming along. Consequently, getting paid in full and on time, as well as understanding money management, has to become a priority, even if you elect to hire an accountant or bookkeeper to manage the books.

You will still need to familiarize yourself with basic bookkeeping and money management principles and activities such as understanding credit, reading bank statements and tax forms, and making sense of accounts receivable and payable. You also have to give careful consideration to the purchase payment options you offer customers, including cash, checks, debit cards, credit cards and online payment options, as well as establishing payment terms and debt collection in the event of nonpayment.

Opening a Bank Account

Once you’ve chosen a name and registered your business, you will need to open a commercial bank account. Setting up a business bank account is easy. Start by selecting the bank you want to work with–think small-business-friendly–and call to arrange an appointment to open an account. There’s not much more required than that.

However, when you go, make sure you take personal identification as well as your business name registration papers and business license, because these are usually required to open a commercial bank account. The next step will be to deposit funds into your new account (even $100 is okay). If your credit is sound, also ask the bank to attach a line of credit to your account, which can prove very useful when making purchases for the business or during slow sales periods to cover overhead until business increases. Also be sure to ask about a credit card merchant account, debit account, and other small business services.

Bookkeeping

When it comes time to set up your financial books, you have two options–do it yourself or hire an accountant or bookkeeper. You might want to do both by keeping your own books and hiring an accountant to prepare year-end financial statements and tax forms.

If you opt to keep your own books, make sure you invest in accounting software such as Quickbooksor Quickenbecause they’re easy to use and makes bookkeeping almost enjoyable. Most accounting software programs allow you to create invoices, track bank account balances and merchant account information, and keep track of accounts payable and receivable.

If you’re unsure about your bookkeeping abilities even with the aid of accounting software, you may wish to hire a bookkeeper to do your books on a monthly basis and a chartered accountant to audit the books quarterly and prepare year-end business statements and tax returns.

To find an accountant or bookkeeper in your area, you can contact the U.S. Association of Chartered Accountantsor the American Institute of Professional Bookkeepers. In Canada, you can contact the Chartered Accountants of Canadaor the Canadian Bookkeepers Association.

If you’re only washing windows on weekends to earn a few extra bucks, there’s little need for accounting software or accountant services. Simply invest in a basic ledger and record all business costs and sales. Since you are doing it on your own, be sure to use a commonsense approach when calculating how much to invest in your business vs. expected revenues and profits.

Also remember to keep all business and tax records in a dry and secure place for up to seven years. This is the maximum amount of time the IRS and Revenue Canada can request past business revenue and expense information.

In today’s super-competitive business environment, you must provide customers with many ways to pay, including cash, debit card, credit card and electronic cash. There is a cost to provide these payment options–account fees, transaction fees, equipment rental and merchant fees based on a percentage of the total sales value. But these expenses must be viewed as a cost of doing business in the 21st century.

You can, however, reduce fees by shopping for the best service with the best prices. Not all banks, merchant accounts and payment processing services are the same, and fees vary widely. You can also check with small business associations such as the chamber of commerce to see if they offer member discounts; it’s not uncommon to save as much as 2 percent on credit card merchant fees. Just remember, consumers expect choices when it comes time to pay for their purchases, and if you elect not to provide these choices, expect fewer sales.

Cash is the first way to get paid, which is great because it’s liquid and there’s no processing time required. As fast as the cash comes in, you can use it to pay bills and invest in business-building activities to increase revenues and profits. The major downside is that cash is risky because you could get robbed or lose it.

In cases like that, collecting from your insurance company could prove difficult if there’s no paper transaction as proof. Even if you prefer not to receive cash, there are people who will pay in cash, so get in the habit of making daily bank deposits during daylight hours. Also invest in a good-quality safe for cash storage for times when you cannot get to the bank.

If you’re running a service business, one the most popular way people still pay for services is with a check. You have to take a few precautions to ensure you don’t get left holding a rubber check, especially when dealing with new clients. Ask to see a photo ID and write the customer’s driver’s license number on the check.

If the amount of the check exceeds a few hundred dollars, ask the buyer to get the check certified or pay with a bank draft instead, especially if the client is new to your business. Also get in the habit of checking dates and dollar amounts to make sure they are right. I have been caught a few times with wrong dates and dollar amounts and it can be time-consuming to have to get a new check because of a simple error.

Debit cards are another option, but to accept them, you will need to buy or rent a debit card terminal. Most banks and credit unions offer business clients debit card equipment and services. The processing equipment will set you back about $40 per month for a terminal connected to a conventional telephone line and about $100 per month for a cellular terminal, plus the cost of the telephone line or cellular service.

There is also a transaction fee charged by the bank and payable by you every time there is a debit card transaction, which ranges from 10 cents to 50 cents per transaction, based on variables such as dollar value and frequency of use.

Opening a Credit Card Merchant Account

Many consumers have replaced paper money altogether in favor of plastic for buying goods and services. In fact, giving your customers the option to pay for purchases with a credit card is often crucial to success. This is especially true if you plan to do business on the web because credit cards and electronic cash are used to complete almost all web sales and financial transactions.

To offer customers credit card payment options, you will need to open a credit card merchant account. Get started by visiting your bank or credit union or by contacting a merchant account broker such as 1st American Card Service, Cardservice International or Merchant Account Express to inquire about opening an account.

Providing your credit is sound, you will run into few obstacles. If your credit is poor, you may have difficulties opening a merchant account or have to provide a substantial security deposit. If you are still unsuccessful, the next best option is to open an account with an online payment service provider, which is discussed in the next section.

The advantages of opening a credit card merchant account enabling you to accept credit card payments are numerous. In fact, studies have proven that merchants who accept credit cards can increase sales by up to 50 percent. Not to mention that you can accept credit card payments online, over the telephone, by mail and in person, as well as sell services on an installment basis by obtaining permission to charge your customer’s credit card monthly or per agreement.

Of course, all these benefits come at a cost, especially when you consider that you’ll have to pay an application fee, setup fee, purchase or rent processing equipment and software, pay administration and statement fees, and pay processing and transaction fees ranging from 2 to 8 percent on total sales volume. Once again, these fees must be viewed as the cost of doing business.

Online Payment Services

Online payment services allow people and businesses to exchange currency electronically over the internet. These services are very popular with consumers and merchants. PayPalis one of the more popular online payment services with more than 40 million members in 45 countries, offering personal and business account services. Both types of accounts allow funds to be transferred electronically among members, but only the business account enables merchants to accept credit card payments for goods and services.

The advantages of online payment services are that they’re quick, easy and cheap to open, regardless of your credit rating or anticipated sales volumes, and you can receive payment from any customer with an e-mail account. You can have the funds deposited directly into your account, have a check issued and mailed, or leave funds in your account to draw on using your debit card. The only real disadvantage is that most services redirect your customers to their website to complete the transaction. This can confuse people who in some cases will abandon the purchase.

Every small-business owner also needs to establish a payment-terms policy. Although you certainly want to standardize the way you get paid, at the same time you will also have to be flexible enough to meet clients’ needs on an individual basis. Setting payment terms covers deposits, progress payments and extending credit.

It’s important to establish clear, written payment terms with clients prior to providing services or delivering product. Your payment terms should be printed on your estimate forms, included in formal contracts and work orders, and printed on your final invoices and monthly account statements.

Securing Deposits

If you’re run a service business, you have to get in the habit of asking clients for a deposit prior to providing services, especially if the work also involves product sales that have to be paid for by you in advance. In this case, the deposit should be for at least the value of the materials. If you’re supplying labor only, try to secure a deposit of at least one-third to one-half of the total value of the contract in advance of providing any services.

Your order form or contract should have the deposit information clearly stated. Information on canceled orders or contracts and your refund policy should also be on your forms. Securing a deposit is your best way of ensuring that, at minimum, basic out-of-pocket costs are covered should the customer cancel the job or contract.

Progress Payments

Progress payments are also a way to ensure that you do not leave yourself open to financial risk. The key to successfully securing progress payments is to prearrange your contract and payment terms. Agree on the amount that will be due at various stages of the project. You can use percentages to calculate the progress payments, such as 25 percent deposit, 25 percent upon delivery of any materials, 25 percent upon substantial completion, and the balance at completion or within 30 days of substantial completion.

Or you may arrange for more concrete progress payments based on indicators that are relevant to the specific scope of work, the job or the services provided. Regardless of the system you use, progress payments on larger jobs can dramatically lessen your exposure to financial risk.

Extending Credit

In most cases there’s no need to extend credit to consumers unless you deliver a service such as pest control that’s billed monthly or a major contract that is completed in stages. As a general rule, when a transaction is complete you should be paid in full. However, in the case of business-to-business sales, commercial clients will generally want some type of credit on a revolving-account basis, such as 30, 60, 90 or sometimes 120 days after delivery of the product or completion of the service.

Ideally, you want to be paid as quickly as possible, so you might want to offer a 2-percent discount if invoices are paid within one week. And if you do extend credit, make sure to conduct a credit check first, especially when large sums of money are at stake. There are three major credit-reporting agencies serving the United States and Canada: Trans Union, Equifaxand Experian. All three credit bureaus compile and maintain credit files on just about every person, business and organization that has ever applied for credit.

Debt Collection

No matter how careful you are when it comes to extending credit privileges to customers, once in a while you will not be paid on time or at all. What can you do to get paid? The first rule of getting paid is to keep the lines of communication open with your delinquent client, and keep the pressure on to get paid through the use of nonthreatening telephone calls, letters and personal visits.

You cannot legally intimidate clients into paying you, but you can explain why it is in their best interest to pay you–namely, to keep your business relationship intact, that nonpayment can hurt their credit rating or that you may sue them if they do not pay.

Another option is to hire a collection agency to collect the outstanding debt. Collection agencies generally charge a percentage of the total amount owed as their fee, which can range up to as much as 50 percent. The Association of Credit and Collection Professionals is a good starting point for finding a collection agency to work with.

Your final option is to take the delinquent account to small-claims court, but remember that small-claims courts have limits as to how much you can sue for in your state or province, ranging from $1,500 to $25,000. Filing fees vary by state and province as well, and these must be paid upfront. But if you win, the fees are added to your award.

As a rule of thumb, small-business owners that take people to court for nonpayment generally represent themselves, as the amount of the potential award is usually small and doesn’t justify lawyers’ fees and expenses. Even if you win, you will not necessarily be paid the amount you’re awarded. You may win a judgment, but still have to chase the defendant through garnishment of income or seizure of assets to get paid. You can learn more about the small-claims court process and filing fees by contacting your local courthouse.

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.

Not all ads are created equal. Just because a certain pitch worked for one business, doesn’t mean it’ll work for yours. How to choose?

The key to choosing a good advertisement begins with deciding what you want your ad to highlight. Are you trying to sell a specific product or are you trying to sell your business as a whole through your brand image? To answer that, you need to understand what the four main types of advertisements are:

1. Category-specific ads are written broadly enough to fit every advertiser in a category. A transparent fabric of smoothly woven cliches, a category-specific ad is a generalized template into which one merely inserts a store name and address. All you have to do is fill in the blanks. Ads that fit everyone don’t work very well for anyone. These were once called institutional ads. Don’t use them.
2. Franchise ads build the master brand.
   The hope of every franchisee is that the ads provided by the franchisor will generate enough brand attraction to pull customers into their store. Due to the fact that a franchisor can afford to create a higher quality of ad campaign than the typical local merchant, this strategy often succeeds.
3. Product-specific ads benefit every retailer who sells the product, but they aren’t really about the retailer at all; they’re only about the product. Product-specific ads almost always make good advertisements. The only problem small business owners run into is when they’re selling another manufacturer’s product and are offered co-op advertising.
4. Store-specific ads are the foundation of local branding, but to write them requires intimate, detailed research on the part of an expert ad writer. Rarely will a good, store-specific ad fit another advertiser in the same category. Store-specific ads are also guaranteed to make good advertising and I highly recommend them.

Now that you understand the four main types of ads, you need to choose the one that’ll work for you–not the one that worked for ABC Company down the road. The story you’re about to read is a a true tale.

You’ll see why the type of ad you choose can totally change the way your customers perceive you–and also why the same ad probably won’t work for someone else. The name of the store, the town and the vegetable have been changed to protect the innocent:

Heisenberg’s Jewelers had been in the same building on Main Street in Cabbage Valley for 105 years. A facelift seven years earlier had given the store white carpet, walnut paneling and a huge chandelier in a high, domed ceiling.

Heisenberg’s was the Sistine Chapel of jewelry stores. Not a problem, except that Cabbage Valley is a little farming community of about 45,000 people. Even the wealthiest of Cabbage Valley’s farmers felt they weren’t dressed well enough to enter that store. Heisenberg’s was truly an intimidating place.

“You need to understand who our customer is,” said the owner. She’s a 40 year-old female. Upscale. Very upscale. Well-dressed. Always buys the best. That’s our customer. That’s who you need to target.”

This was in mid-October. They were trying to get help saving their Christmas sales season, because if they had another season as bad as the previous six, they were going to have to close their doors in January.

“Let’s get something straight. There’s no handle that can be cranked that will spit out 40 year-old rich women. You’ll need ads that appeal to men or you’re going to have to find another way to make a living.”

This is the radio ad that saved Heisenberg’s:

“Ladies, many of you will be fortunate enough this Christmas to find a small, but beautifully wrapped package under your tree bearing a simple gold seal that says ‘Heisenberg’s.’ Now you and I both know there’s jewelry in the box. But the thing you need to know is this: The man who put it there for you is trying desperately to tell you that you are more precious than diamonds, more valuable than gold, and very, very special.

You see, he could have gone to a department store and bought department store jewelry, or picked up something at the mall like all the other husbands. But the men who come to Heisenberg’s aren’t trying to get off cheap or easy. Men who come to Heisenberg’s believe their wives deserve the best. And whether they spend $99 or $9,900, the message is the same: Men who come to Heisenberg’s are still very much in love. We just thought you should know.”

That radio ad was delivered slowly and thoughtfully with style and grace. No hurry. No street address. No store hours. No phone number. We simply told listeners what they already knew about Heisenberg’s, but made them feel differently about it. What we said in essence was, “If your husband voluntarily came to this scarily expensive store, he must really be in love with you.” It worked like magic.

Throughout the month of December, men wedged themselves into Heisenberg’s, waved stacks of cash at the register and shouted, “I don’t care what you put in the box, but make sure it’s got that damn gold sticker.” Heisenberg’s made a blistering fortune that year and reversed their downward trend.

Like every great store-specific ad, the Heisenberg’s gold seal campaign would never have worked if Heisenberg’s hadn’t already had the reputation of being extremely intimidating and expensive. That same ad could just as easily have been delivered by newspaper, direct mail or television and it would have worked just as well. It was the message, not the media, that delivered the miracle.

So in summary, remember the four main types of ads:

• Category-specific “institutional” ads are a waste of money
• Franchise ads are for team players who want to help build a strong collective brand
• Product-specific ads are for special promotions
• Store-specific ads are for local branding

What kind of ads are you running?

It’s not enough to build a business worth a fortune; you have to make sure you have an exit strategy, a way to get the money back out. For entrepreneurs who like to plan ahead and for those of you who don’t but should, here are the five primary exit strategies available to you:

1. The Modified Nike Maneuver: Just Take It. One favorite exit strategy of some forward-thinking business owners is simply to bleed the company dry on a daily basis. I don’t mean run it in the red–I mean pay yourself a huge salary, reward yourself with a gigantic bonus regardless of actual company performance, and issue a special class of shares that only you own that gives you ten times the dividends the other shareholders receive. Although we frown upon these practices in public companies, in private companies, this actually isn’t such a bad idea. It’s called a “lifestyle company.”

   Pros

   • Who doesn’t like seven figures of take-home pay?
   • Private jets are fun.
   • There’s no need to think hard about getting out: Just pull out the money when you need it.

   Cons

   • The way you pull the money out may have negative tax implications. For example, a high salary is taxed as ordinary income, while an acquisition could bring money in the form of capital gains.
   • Without careful long-term planning, you may end up pulling out money now you’ll need later.
2. The Liquidation. Even lifestyle entrepreneurs can decide that enough is enough. One often-overlooked exit strategy is simply to call it quits, close the business doors, and call it a day. I don’t know anyone who’s founded a business planning to liquidate it someday, but it happens all the time.

   Pros

   • It’s easy and it’s natural. Everything comes to an end.
   • There’s no negotiations involved.
   • There’s no worrying about transfer of control.

   Cons

   • Get real; it’s a waste! At most, you get the market value of your company’s assets.
   • Things like client lists, your reputation, and your business relationships may be very valuable, and liquidation just destroys them without an opportunity to recover their value.
   • Other shareholders may be less than thrilled at how much you’re leaving on the table.

   My favorite piano bar in Boston simply vanished one day when the owner decided he was tired of show tunes. His regular patrons were crushed, but then, he didn’t consult with us first.

3. Selling to a Friendly Buyer. If my neighborhood piano bar owner had asked, we might have wanted to buy the business ourselves. You see, if you’ve become emotionally attached to what you’ve built, even easier than liquidating your business is the option of passing ownership to another true believer who will preserve your legacy. Interested parties might include customers, employees, children or other family members.

   Pros

   • You know them. They know you. There’s less due diligence required.
   • Your buyer will most likely preserve what’s important to you about the business.
   • If management buys the business, they have a commitment to making it work.
   • Selling to family makes good on that regrettable offhand promise made 30 years ago, “Someday, son/daughter, all this will be yours.”

   Cons

   • You can get so attached to being bought by someone nice that you leave too much money on the table.
   • If you sell to a friend, they’ll be peeved when they discover they just bought the liability for that decade’s worth of taxes you forgot to pay.
   • Selling to family can tear the company apart with jealousies and promotions that put emotion way ahead of business needs.
4. The Acquisition. The acquisition was invented so you can sell your business and leave the kids money, still spoiling them rotten, but at least sparing the business from second-generation ruin. Acquisition is one of the most common exit strategies: You find another business that wants to buy yours and sell, sell, sell.
   Pros
   • If you have strategic value to an acquirer, they may pay far more than you’re worth to anyone else.
   • If you get multiple acquirers involved in a bidding war, you can ratchet your price to the stratosphere.

   Cons

   • If you organize your company around a specific be-acquired target, that may prevent you from becoming attractive to other acquirers.
   • Acquisitions are messy and often difficult when cultures and systems clash in the merged company.
   • Acquisitions can come with noncompete agreements and other strings that can make you rich, but make your life unpleasant for a time.
5. The IPO. I’ve saved IPOs for last, because they’re sexy, they’re flashy, and they get all the press. Too bad they make the lottery look good by comparison. There are millions of companies in the U.S., and only about 7,000 of those are public.

   Pros

   • You’ll be on the cover of Newsweek.
   • Your stock will be worth in the tens–or maybe even hundreds–of millions of dollars.
   • Your VCs will finally stop bugging you as they frantically try to insure their shares will retain value even when the lockout period expires (Warning: they won’t necessarily be looking out for your shares, too.)

   Cons

   • Only a very few number of small businesses actually have this option available to them since there are very few IPOs completed annually in the United States.
   • You need financial and accounting rigor from day one far above what many entrepreneurs generally put in place.
   • Some forms of corporation–S-corps, for example–will require a reorganization before they can be taken public.
   • You’ll spend your time selling the company, not running it.
   • Investment bankers take 6 percent off the top, and the transaction costs on an IPO can run in the millions.
   • When your lockout restrictions expire, your stock will be worth as much as a third world hovel.