Want to spend your day getting things done instead of putting out fires? Here are some ways to do just that.

Technology

Streamlining your business technology can make life less of a headache for everyone. Entrepreneurs often “don’t realize they can make things easier,” says Kevin McElligott, founder of iTech Developers, a Nevada City, California, technology consulting firm and hosting provider. Here are a few ideas to get your technology in tip-top shape:

1. Serve it up. A server can act as a digital filing cabinet for your growing piles of documentation. Compared to daisy chaining several PCs, “Servers give you a lot more reliability and improve your business,” says Mike Beltrano, supervisor of product management for servers at CDW Corp., a Vernon Hills, Illinois, server company. Another bonus: By keeping important documents on a central server, it’s easier to back up all your important documents daily.
2. Phone it in. Are you wasting time running between voice mail on your cell and office phones? VoIP systems offer a great deal of personalization and features for a rock-bottom price. In fact, VoIP can be up to 40 percent cheaper than a traditional small-office phone system, and it offers useful features for any small business.
3. Take it online. If you’ve taken the leap of setting up an accounting package to handle your bills, take the extra step of automating the process. See if your accounting software can automatically generate invoices as well as e-mail reminders for late payments.
4. Hit the web. Your website is a potential client’s main access point to your business. Don’t worry as much about fancy graphics as making sure visitors can get the information they need. An online FAQ list can cut down on the time clients spend calling with basic questions and prevent a frustrated client from going elsewhere.

Money

Money might not be the root of all evil, but it is the cause of many headaches for business owners. Here are five tips for managing your money better:

1. Bank on it. “One of the assets business owners have is their cash,” says Manny Calzon, vice president and finance manager for the central district of Merrill Lynch in Tampa, Florida. But many entrepreneurs don’t understand how much they’re paying in service charges to their banks every month. Request a bank analysis statement that breaks down the generic service charges found in your monthly statement.
2. File taxes electronically. Companies with $10 million or more in total assets that file 250 or more returns a year are now required to file their 2006 taxes electronically. “Small businesses are going to be scrambling,” says Bradford Hall, managing director of Hall & Company CPAsin Irvine, California. “They’re going to [need] an automated payroll service that files electronically for them.” So get a head start now to make life easier later on.
3. Pay now, not later. Can you pay smaller bills in advance? If you have a monthly bill for $15 but opt to pay $90 for six months of service, you’ll save $1.95 in stamps and you won’t incur late fees. Best of all, you’re not wasting time paying bills.
4. Upgrade your accounting systems. “A business that’s projecting $10 million-plus [in sales] should be on a sophisticated system,” Hall says. Software packages such as BusinessWorks, Enterprise, Great Plains (which was recently acquired by Microsoft) and MAS 90 offer increased sophistication for a growing company and will make life much easier come tax time or, heaven forbid, an audit.
5. Make your (bench) mark. It’s common for growing companies to do business without understanding how they stack up against similar companies in their industry. Most likely, your accountant has industry profit and overhead statistics at the ready–data you can keep on file for future strategy sessions without having to do your own legwork. Says Hall, “Businesses aren’t taking advantage of it.”
6. Obey the urge to merge. You might pay slightly more, but renewing all your insurance policies on the same date with the same agent lets you sit down once a year to review insurance for the entire business instead of having different renewals pop up three or four times a year.

Management

Day-to-day management of employees and processes is probably the single toughest job for any entrepreneur. Want to simplify? Here’s how:

1. Hire strategically. Create an online application form, and have elimination criteria related to scheduling, salary and educational level. “Select out vs. select in,” says Suzanne Zuniga, COO of CorVirtus, a Colorado Springs, Colorado, HR consulting firm. Being more selective means you’ll hire sooner and get back to work.
2. Stay on schedule. Creating a schedule for employees is a time-consuming nightmare for every employer, especially in retail. But there are software packages–Asgard System’s Time Tracker, TimeClock Schedulerand TimeCurve Scheduler, to name a few–that let you scan for scheduling errors and track employee hours and earnings in real time. Some, like TimeCurve Scheduler, also integrate with QuickBooks to make payroll easier.
3. Rent a CFO. At some point, a bookkeeper won’t be able to keep up with your burgeoning bottom line. “One of the biggest mistakes business owners make is they don’t realize they need the sophistication of a CFO,” Hall says. Today, there are employment agencies that specialize in hiring out CFOs.
4. Tighten your supply chain. “Strong partnerships with suppliers and service providers [are] critical in the supply-chain excellence area,” says John DuBiel, managing partner of Raleigh, North Carolina-based Supply Chain Edge, a firm that helps companies identify, develop and execute their supply-chain strategies. Keep relationships strong by leveraging your buying power with as few service providers as possible. Says DuBiel, “Simplify and leverage all the volume you can.”
5. Outsource your HR function. Entrepreneurs spend up to one-third of their time doing payroll and benefits administration. They’re also risking penalties if tax payment deadlines aren’t met or filings are incorrect. “When you pay a company that you outsource to, you’re paying for the benefit of their mistakes on their dime, not yours,” Zuniga says. So outsource HR, and make your time count.
6. Have fewer staff meetings. Do you really need a staff meeting every week when an e-mail update might do? Fewer staff meetings mean less talk and more action. Workers will thank you for your brevity: In one survey, 60 percent of executives complained about the time they waste in meetings, and 74 percent doubted the meetings they attended were effective.

Marketing

Catching consumers’ attention is only getting harder. Here’s some advice for revving up your marketing efforts:

1. Do some data mining. What do customers think about your company? “You don’t build your brand by yourself anymore; your customers are equally involved,” says Michael LeBeau, CEO of Byte Interactive, a South Norwalk, Connecticut, digital marketing company. Simple customer comment cards or web-based survey forms can save market research costs.
2. Leverage partnerships. Strategic partnerships with local businesses will help you rise above the noise. Picking the right partner, however, can be very time-consuming. Simplify the process by looking to your own customers, vendors and suppliers first. You already know each other’s strengths in terms of services, products and marketing, which will let you move more quickly to develop effective cross-promotions and sponsorships.
3. Go directly to the consumer. Are you spending all your time knocking on big retailers’ doors and saving for TV ads when half of U.S. consumers have lightning-fast broadband connections? “I’m seeing more entrepreneurs starting to market their products directly to the consumer,” says Peter Koeppel, founder and president of Koeppel Direct, a Dallas direct-response TV media buying agency that works with clients including Cigna, Columbia House and DirecTV.
4. Get the message. It’s easy to lose brand focus in a world of in-person, over-the-phone, online, catalog and direct-mail sales. To simplify, divide your business into five main channels (website, catalog, direct mail, employees and customer service) and have one main marketing message every week (a sale, a new product, a new partnership and so on) that you communicate and track for consistency across all channels. You’ll see fewer customer-service hassles and less turnover from frustrated employees who can’t read your mind.
5. Consolidate your advertising legwork. Most business owners invite random interruptions from advertising representatives throughout the week. Instead, set aside a block of time–Monday afternoon, for example–when advertising people know they can reach you. Everyone will save time, and you won’t have to hide anymore.

Personal Time

“It’s very easy to let work consume you,” says Bo Short, president of the American Leadership Foundation, a Charlottesville, Virginia, nonprofit organization that offers leadership conferences and seminars. “But if you do, will it eat you alive?” Here are ways to create a more balanced life:

1. Decide what to outsource. You don’t need to have your hand in every single pie anymore; let someone else carry part of the load. Outsourcing a few tasks gives you time to focus on something else–even if it’s a round of golf now and then. Plus, “You’re the customer, and they’ll treat you better,” Short says. Learn to delegate to employees, too.
2. Create boundaries. Set aside 10 minutes after lunch to make and return personal calls. Set a time for leaving the office every day, no matter how busy you are. And spend at least two hours doing something fun before you burn some late-night oil. Your family will thank you.
3. Shorten your to-do list. “A to-do list is nothing but a wish list,” says Barry Izsak, president of Arranging It All, an Austin, Texas, firm that helps companies get organized. A long to-do list leaves less time to focus on revenue-generating ideas. Instead, focus on the top three urgent tasks for the day. The rest can wait.
4. Love your inner Luddite. Entrepreneurs who become slaves to gadgets “are running reactive businesses and being reactive with their time,” Izsak says. Try working unplugged–this means no internet connection and absolutely no phone calls–for one hour every morning. It will give you a sense of accomplishment that lasts all day.

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.

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.

It’s easy to neglect the area of purchasing in your business. If you fail to devote enough attention to it, your cost of doing business could rise to an unnecessarily high level. As operating expenses increase, profit margins shrink, you would either have to live with lower profits or raise your prices, and neither of these choices is appealing.

By keeping your costs under control, you’ll be able to keep your prices at competitive levels and maintain a desirable profit.

Purchasing Policies

To purchase wisely, you need to buy the right quality and quantity of materials or products at the best possible price and at the appropriate time from the best vendor.

The purchasing process is much more streamlined in small companies than in larger businesses, especially when the businesses are still fairly new. The owner usually decides what to buy, when to buy, where to buy, and how much to buy. As the business grows, however, the owner may no longer be able to handle this task and will have to delegate it to others.

While a small business probably won’t need to create an entire purchasing department, it will need to have a purchasing manager. By selecting one person to manage all of the business’s purchasing activities, you will decrease the risk of duplicating orders for the same materials.

Purchasing need not be the purchasing manager’s sole duty; in fact, your business may not do enough purchasing to require a full-time purchasing manager. You should select an employee who can handle purchasing, as well as the other duties he or she my already have. This individual should be able to communicate clearly with your business’s suppliers.

Although purchasing duties probably won’t occupy all of this individual’s time, there is more to purchasing than placing orders. The purchasing manager will have to gather orders, make sure they are complete, and stay within any limits the company may have set on spending, select an appropriate vendor, order the goods, check their condition upon receipt, make sure the invoice is correct, and speed payment of the invoice by forwarding it to the accounting department.

Before you delegate the purchasing function to another employee, you should write out a purchasing policy for your business. You may even want to create such a policy while you are still responsible for purchasing, as a guide for yourself.

The purchasing policy, according to the SBA, should answer the following questions:

• Who has the authority to purchase items for the company? What items can that person purchase? Are there any spending limitations?
• What are the business’s requirements for adequate supplier competition and what criteria will be used to select possible vendors?
• What is the company’s position on the acceptance of gifts?
• Which types of contracts can the business enter into with successful bidders or vendors?
• What is the company’s position on conflict of interest and personal loans from suppliers?
• What kinds of information does the company consider confidential?
• What is the procedure for dealing with legal questions?

The Ordering System

The steps your employees and purchasing manager will follow to request, order, receive and pay for goods and materials make up your ordering system. A good ordering system will help maintain satisfactory supplier relations, improve cash management, aid in inventory control, and increase the overall profitability of your company.

The Purchase Order

Once the purchasing manager has received a requisition, her or she will need to select a supplier and check the price of the items ordered. After agreeing on a price, the purchasing manager will send a purchase order to the supplier.

This order is a formal request to the supplier to deliver materials or supplies according to the terms and prices agreed upon. Purchase orders, like requisition forms, can help small businesses keep track of their purchasing activities.

Firms can refer to their purchase orders to see if suppliers have shipped the correct goods in the correct quantity. They can also see if suppliers are delivering goods on time. Purchase orders can also serve as support in any legal disputes if they arise between you and the supplier.

Although you can write out purchase orders by hand, you would give a better impression if you used standard multi-part forms that you can purchase at any stationery store. They should include information such as the type of product or service you are ordering, the quantity desired, price and delivery terms.

The orders should also have an area for any additional information. Purchase orders should also include your company name, address, telephone and fax numbers, and logo. You can simply write in this information, stamp this information on your purchase orders with a rubber stamp, or design and print your own purchase order forms. Purchase orders should have at least three parts: a vendor copy, an internal file copy, and an accounting copy.

In addition to the standard purchase order, you might choose to use two other types: blanket purchase orders and annual contracts. If you routinely order fairly inexpensive items from a single vendor, you might want to place a blanket order for those items with the vendor. The blanket order covers specific items to be delivered over a specific period of time, such as six months or one year.

This type of purchase order lets you take advantage of quantity discounts and saves you the time and trouble of reordering small items you need often. You will also receive a monthly invoice covering your purchases for a given month, instead of several small invoices covering each individual purchase.

Annual contracts cover the purchase of a specific product from a vendor over a period of 12 months. An annual contract will usually let you fix the price for buying a specific quantity of a given item over a year. You can also arrange to have goods delivered as needed, either monthly, weekly, or on another specific schedule.

Receiving Records

A packing list will accompany orders you receive. Make sure that the items shipped match the items indicated on the packing list. Inspect all of the items shipped carefully, paying special attention to items that appear damaged. Initial the packing list to verify receipt and file it in a folder until you receive the invoice for the shipment.

In many cases, you won’t have to send payment with your order; your suppliers will either include an invoice with the shipment or send the invoice to you separately soon after sending your order. When the invoice arrives, check it against the packing list and the purchase order. Write a check for the appropriate amount, note the check number on a copy of the invoice, and file the invoice and packing list.

If you receive any damaged items, or if a vendor sends you items you did not order, let the vendor know as soon as possible. The vendor will tell you the best way to return the items and to receive the ones you actually ordered.

Fill out an internal receiving report and distribute it to those who need to know when shipments come in, such as the person in charge of inventory control, the buyer, the employee requisitioning the items, and the person in charge of accounts payable in accounting.

Although purchasing is certainly an important task and deserved careful attention, you will not be able to spend the same amount of time on all of your purchases, nor should you. More expensive items, for instance, deserve more careful attention and consideration than less expensive ones. The following four considerations will help you decide what items deserve the most attention, according to the SBA:

1. Unit cost. The SBA recommends that you give more attention to costly items than to less expensive ones. The more money you have tied up in a given type of inventory product, the more attention you need to give to that product in your purchasing, even if you sell few of these expensive items.
2. Extended cost. The SBA points out that some items may have a low cost, but you may buy and sell them in high volume. In this case, you may need to give a higher priority to these items, although their unit cost is fairly low.
3. Lead time. You need to consider the time to allow between ordering an item and receiving it. If a low-cost item has a long lead time, for instance, you would need to make regular checks on its delivery status. In that case, the SBA says, you may need priority.
4. Shipment rejection. If there is a high possibility you will reject an item because of technical problems or deficiencies in quality, the SBA suggests assigning it a high priority.

The Costs of Buying

In addition to the cost of goods you buy, you also have to pay and account for the costs of acquiring and carrying inventory.

Inventory acquisition costs are costs associated with generating and processing orders, and include the following:

• Portions of employee salaries and operating expenses directly pertaining to purchasing, inventory control, receiving, inspection and accounts payable.
• Costs of supplies such as forms, envelopes and stationery.
• Costs of placing orders (telephone, fax, postage, etc.)

Inventory carrying costs usually consist of the following elements:

• Interest charged on your financial investment into inventory.
• Cost of insurance covering your inventory.
• Property taxes paid on inventory.
• Cost of storing inventory.
• Obsolescence and deterioration of items in inventory.

Buy Wisely

Prices for the goods and materials you buy may fluctuate. If you find that the price for a given item is rising, do not buy large quantities of this item thinking that the price will rise even higher if you wait. Instead, the SBA advises that you buy smaller quantities of this item, but buy them more often.

You can quickly sell off the items you bought at high prices, instead of tying up money in overpriced inventory. Keep buying small quantities as prices return to their normal level. You will save money on your purchases, as well as reduce demand for the item, “encouraging” prices to drop. Once prices have stabilized at their normal level, you can resume buying in larger quantities.

Comparison Shopping

While you might purchase many items from catalogs that list specific prices on specific quantities, you may need to contact suppliers for price quotes on other items. Before you buy an item, you should contact a number of suppliers and compare prices, delivery options and expenses, and so on. You can do this by visiting suppliers’ websites or requesting quotes in writing.

Discounts

Suppliers extend a variety of different discounts to their customers. Many vendors offer quantity discounts: the more units you buy, the less you pay per unity. These discounts can apply to individual purchases or to a specific group of purchases made over time, as you would make under a blanket order.

Suppliers also offer seasonal discounts that apply to merchandise being sold out of season. The danger with buying off-season goods is that they may go out of style or become obsolete, and never go back “in-season.” Vendors also offer cash discounts that you earn by paying the entire invoice within a specified time period. If you received an invoice with the notation “1/10, Net 30,” it would mean that you could take a one-percent discount from the net amount of the invoice if you paid within ten days. You would otherwise have to pay for the entire amount of the invoice within 30 days.

Dealing With Vendors

Once you have compared prices from a group of suppliers, you can then select your vendors. Before you place an order with a vendor, you not only need to compare prices, but you also need to compare credit terms, emphasis on customer service, standing in the industry, and other related factors.

If you buy a number of different kinds of products, you may have to use a variety of vendors. If, on the other hand, a single vendor can meet all of your needs at reasonable prices, you may want to give that vendor the bulk of your business. Do not, however, rely solely on this vendor.

You should keep in contact with other vendors, and watch for new ones. It’s a good idea to be on good terms with more than one supplier. If your primary supplier ever fails to ship goods on time, suspends operations because of some natural disaster, or starts offering poor service, you will have other sources to use as back-up.

By using a few different sources of supply, furthermore, you will build more credit than you would if you used only one. Your primary supplier may also offer you better discounts or otherwise try to win all of your business.

Evaluating Suppliers

You not only need to evaluate suppliers before you place an order, but you also need to evaluate their performance constantly. Consider the following points when you evaluate a supplier’s performance:

• Timeliness of deliveries
• Completeness of orders shipped
• Quality of items shipped
• Quality of customer service
• Competitiveness of price
• Previous performance with similar orders
• Strength of financial condition
• Ability to meet design specifications
• Expertise of sales representatives and technical staff

Locating Suppliers

Before you can approach a supplier, you need to know where to find them. You need to be aware of where you can find suppliers both before you begin business and after you have started. Keep looking for new suppliers.

To look for suppliers in your area, search online and consult the Business-to-Business Yellow Pages and your local Chamber of Commerce. To broaden your search, consult websites, publications and associations pertaining to your industry; these sources should be able to give you a number of leads.

Many trade associations and publications publish directories listing suppliers to their industries. If you require industrial or mechanical equipment, consult manufacturers’ directories such as the Thomas Register of American Manufacturers. Finally, talk to your employees. They may know of excellent suppliers you might use.

In the beginning, it’s natural to try to do as much as possible yourself. It’s the most cost-effective, comfortable, sensible way to do things. As your enterprise grows, you’ll find yourself stretched thinner and thinner.

Eventually, you’ll find you just can’t continue to oversee operations and sales and accounting and fulfillment and marketing–and hope to continue to grow your business.

When you reach this point, it’s time to think about bringing other high-level managers on board to help you out. You need to build a senior team that’s able to manage all the critical areas of your business to take it to the next level.

Building your team demands matching jobs to people’s strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality.

That includes you as well–don’t give yourself an impressive title and job unless you’re right for the job. The fact is, many smart entrepreneurs hire their own boss when they realize their skills lie elsewhere in the company.

When it comes time to hire an executive team, you’ll need to find people to fill the following roles:

• Chief Executive Officer (CEO). The fact of the matter is, the CEO is the boss of everyone and is responsible for everything. They determine the company’s strategy. They hire and build the senior team. They make the final call on how resources (read: money) get divvied up, and they’re the one whose face appears on the cover of BusinessWeek.

  The CEO’s skills must include strategic thinking, the ability to rise above the daily details and decide where the industry and business are headed. They must then be able to decide the company’s best route for navigating the future market conditions. They have to be able to make good bets.

  The CEO’s key skill, however, is in hiring and firing. The right management team can cover a CEO’s shortcomings. A CEO may be able to set strategy, predict the future and control the budget, but if they don’t hire the right team, they have to master it all themselves. So they need to be able to identify and hire the best, fire the ones who don’t work out, and run the show in between.

  You know you need a professional CEO when you’re mired in the details for way too long and can’t pull yourself out. CEOs think about where the organization is going, the people and processes needed to get there, and how they’ll work in the current market. If you like details rather than strategy, either shift your thinking or hire a CEO to do the job for you.

• Chief Operating Officer (COO). A COO handles a company’s complex operational details. Think about UPS moving three billion packages in the two weeks before Christmas: The company’s COO insures the business can deliver day after day.

  He figures out just what needs to be measured so he can tell if things are going well. Then his team creates the systems to track the measurements and takes action when the company isn’t delivering.

  In a one-location retail business, the store manager is effectively the COO. When you expand to multiple locations or when ensuring smooth operations becomes a big part of your business, it’s time to hire someone who revels in measurements, operations and details.

• President. No one knows just what a president does. I’ve asked dozens of executives, and everyone’s answer is different. Some say a president oversees staff functions–human resources, finance and strategy–while the COO oversees daily operations. Others proclaim that the president is a synonym for COO, especially in smaller companies.
• Chief Financial Officer (CFO). Plain and simple, your CFO handles the money. They create budgets and financing strategies. They figure out if it’s better for your business to lease or buy. Then they build the control systems that monitor your company’s financial health. The CFO is the “bad guy” who won’t let you buy that really cool videoconferencing equipment and makes you pay down a commercial loan instead.
• Chief Marketing Officer (CMO). Recently, companies have been bringing in a marketing expert at the C-level rather than as just a vice president. The reason is simple: Many current business battles are battles of marketing, so corporate strategy often hinges on marketing strategy. The CMO owns the marketing strategy–and that often includes the sales strategy–and oversees its implementation.
• Chief Technology Officer (CTO). I’m a techie from way back, so I’m pretty opinionated about CTOs: Many of them just don’t belong in the C-suite. A CTO should keep up with technology trends, integrate those trends into the company’s strategy, and make sure the company keeps current when it’s necessary. They should not be buying new toys and leading-edge technology just because it’s the latest, greatest thing out there.

Finding Your Team Members

Unfortunately, good executives don’t grow on trees (and you wouldn’t want to hire the ones that do). Since their decisions can make or break your business, you want the best. Newspapers, classified ads and internet bulletin boards are not the way to go.

Mass-market ads will attract exactly that–the mass market, people who have no other job prospects. (A skillful, former executive rarely lists themselves in the same newspaper section as used backyard grills and heavy farm machinery.)

If you have the funds available, executive search firms are a good way to go. Although they charge through the nose to find candidates, they do due diligence and present you with pre-screened candidates, so when you’re running around handling the emergency of the day, they can be a huge time-saver.

They also monitor the pool of executive talent and can likely reach candidates you couldn’t approach on your own. Search firms may specialize by industry, function, geography and level of job, so if you decide to hire one, make sure you know what you’re getting.

Networking is a time-honored way to find new hires. Let your professional and personal networks know what kind of person you’re looking for. Then get one-on-one introductions, and take the candidate to lunch to test the chemistry.

When networking, avoid specific “networking forums.” Go straight for what you want. If you want a law firm CMO, spend a weekend at the Legal Sales and Service Organization’s Raindance conference, which attracts senior marketing folk from law firms. Network, network, network–but make sure it’s targeted.

Once you’ve got a potential candidate, how will you know for sure they can do the job? Executives have great impact–on employees, on systems, on profits–so it’s worth your time to check them out thoroughly. Call each of their references, and listen between the lines (with lawsuits today, recommendations always glow).

A CFO may have embezzled from his last company, but the employer still says “They did a good job” (I swear–this is a true story). This grade inflation means you need to listen for less-than-glowing opinions. “Fred showed up and sat at his desk like a real trooper” is a sure sign that Fred enjoys taking every Wednesday off to go golfing with the boys.

Interviewing Tips

When it comes time to sit down with your potential C-suite candidate, there are a few things to know that will make your job a little easier:

• Make sure your candidate really knows the job. If your CMO-to-be doesn’t know the difference between marketing and sales or your CFO can’t tell you the difference between LIFO and FIFO, pass ‘em by.
• Interview for chemistry. Do you trust this candidate? Do you want to spend time with them? Believe me when I say, you don’t want an abrasive team member, no matter how talented they may be. One COO I know, scared to make the hard decision, reorganized his entire company around a highly talented, incredibly obnoxious executive that everyone despised. The exec’s talent got to shine–but everyone within 100 yards quietly subdued theirs.
• Talk to people from your candidate’s former company. Are the candidate’s claims of divine brilliance reflected in what their former peers and subordinates have to say about them? Find out if they got the work done and also how they contributed to the company’s culture. In a small business, cultural issues can be every bit as important as getting things done.
• Always hire really smart people. Here’s a good guideline to follow: Every new hire should increase your company’s average IQ. That means they should all be smarter than you. Get used to it.
• Look for evidence of learning ability. Will your candidate repeat mistakes they’ve made in the past? Or will they learn from those errors and adapt that knowledge to your company?
• Use “behavior description interviewing” techniques. Don’t ask about principles, knowledge or “what if” stories. Instead, ask your potential executive team member to share specific past events. Their stories will reveal their values, skills and abilities. For example, you might ask a CFO to describe a budget they set up and how they handled it when a manager exceeded their budget and asked for more.

One word of caution: Be wary of hiring friends or family members. They’ll expect you to trust them and just assume they have a high skill level. What’s worse, you may trust them and assume they have a high skill level without any evidence to the contrary until after you’ve hired them. And unless you take care to be very clear about the boundaries between friendship and work, you may find your friendship in ruins over workplace disagreements.

Making The Deal

Once you’ve found the executive you’d like to hire, you have to entice them to join your team. There are no standard rules for the best deal to offer them. Hourly workers may be thrilled to get cash, but executives aren’t so easily satisfied. They often want stock options, exorbitant pay and an annual–or even quarterly–bonus.

Since their job is to make the entire company succeed, use stock options and a bonus plan to link their income to the company’s overall performance. Stock options should be aligned with long-term performance, while bonuses and profit sharing should be based on the past year’s results.

Of course, not all executives crave stock. Ideally, you’d love someone capable who’s happy with a challenging job and modest salary. And they’re out there! Some well-qualified people care much more about family time, a fun culture, a challenging job, or being part of a world-changing effort.

The more you understand each person’s drivers, the more you can craft deals that satisfy them in ways that transcend mere dollars.

But no matter what you decide to offer, keep it simple. If your bonus formula requires a PhD in higher math to understand, it won’t motivate anyone.

Delegating to Your New Executives

Once the new members of your team are on board, it’s time for the truly hard part: trusting them. Your gut will fight you every step of the way. You’ll assume your instructions are clear and misunderstandings are their fault.

You’ll assume when you disagree that you’re right and they’re wrong. But you’ll sometimes be wrong. The key to successful executive relationships is changing what your gut tells you.

Remember how you interviewed for trust? That’s important because once you hire an executive team, you must let them take their responsibilities and run with them. That means agreeing with them about what their roles are, what deliverables they’re responsible for and on what time frame.

It’s also worth deciding in advance how you’ll handle disagreements. You hired this person assuming their judgment was better than yours. So when you disagree, if you did your job right, chances are that they’re right and you’re wrong. Discuss early on about how you’ll make the call, so you get the most benefit from constructive conflict.

Just remember: If you agree on everything, one of you is redundant.

Entrepreneurship is about going for the things that are much bigger than what you could do alone. Your job isn’t to reach the goal; it’s to build a team that will reach the goal. If you really want to reach your goals, you’ll need to bring on others to help.

Creating a good executive team means knowing what you need them to do, finding good candidates, and giving them what they need to do their jobs. If you choose well, they’ll be successful and make you successful as well.