My Blog is Moving

I recently made a decision to move my blog to a WordPress platform operating on my BriceConsulting.com web site. I have also renamed the Brice Consulting blog the Creating Above-market Value blog.

Why did I do this?
The WordPress platform offered a more dynamic environment in which to develop the Creating Above-Market Value brand. Blogger has provided valuable support for the past 2 plus years. You will find expanded features on the new blog site to support the Creating Above-market Value message.

I decided to separate Brice Consulting, my web site, from my brand concept, Creating Above-market Value.  The web site provides services that apply the Creating Above-market Value concept to solving business problems and developing higher performing organizations.  The blog is developed at expanding the discussion of Creating Above-market Value and resources that are available to readers that can apply the lessons and suggestions to their businesses.

To continue getting feed from the blog under the new name use the following:

Feed Title:  Creating Above-market Value
Original feed:  http://www.briceconsulting.com/blog/feed/

I hope those who have loyally followed me the Brice Consulting blog will now follow the Creating Above-market Value blog.

Let me know if you have any questions.

Limit Your Business Risk & Prepare for the Unexpected

No matter the size of your business – sole proprietor, partnership, LLC, or corporation – you daily face decisions and opportunities that affect your business risk. Many of the choices due to these circumstances are obvious and you will make good decisions guiding your future business operation toward safe territory. However, other choices may appear to be innocuous in their affect on your business but under dynamic market and business conditions can have a significant impact on your business, increasing your risk to grow and perpetuate the business.

At the beginning of the recent recession I was amazed at the number of companies that did not have sufficient cash reserves or line of credit to last more than a few weeks when sales dropped. They did not have enough freeboard in their business to withstand the economic storm and take corrective action to survive. Do you have enough freeboard to deal with the unexpected in your business?

Here are some positive steps that you can take to reduce the impact and risk in dealing with the unexpected?

1. Managing Cash Reserves: Accruing cash to offset unexpected cash (either due to controllable events such as unplanned/ unforecasted expenditures or uncontrollable crisis) demand is difficult to do when you think you are in control. Putting cash on the sidelines may appear to be betting against yourself, that you have a good handle on the future, or that you are convinced that spending the money now versus putting it into an “idle” position is a better business decision. Remember once spent it is not easy to recreate cash when business tightens, squeezing your cash flow from positive to negative. Get counsel from your accountant or trusted advisors on what level of cash to keep in reserve. Rely on outside or objective perspective as your emotional commitment to the business may blur your objectivity.
2. Employee Competence: The competence of key employees or contractors may not be a glaring problem during boom times but can become a critical factor when you least expect or can afford it – particularly during a down market. This may be expressed in what you hear from customers that your employees are promising or how they are servicing the account, which may be retarding additional sales. Employee loyalty is a diminishing characteristic in the work force today, which can result in unexpected turnover, loss of an account relationship or worse loss of a customer if they go with the employee. Choose employees wisely and review their performance regularly to make sure their performance and attitude is consistent with the needs of your business. Owners can become so focused on the tasks of managing the company that they take relationships with key employees for granted and overlook their shortcomings and miss signals indicting their dissatisfaction and potential for leaving.
3. Customers: Customers are obviously important but what risk do they present to your business. Do you have good business agreements in force in case payments are stretched out? Does one customer have more than 10% of your business or margin? Do you have regular contact with customers to measure what is happening to their business and how it will affect your forecast? Good customers can adversely affect your business when you least expect it. Do you have the reserves to see through what ever interruption in normal business occurs, possibly even replacing them, until you are able to recover the loss? If you have customers that represent a significant part of your revenue or margin then you are well served to develop other clients to reduce the potential impact on your business by any unexpected loss of business from major accounts.
4. Key Suppliers: A supplier of critical components or services can also have an adverse impact on your business. Remember you are not just buying a product or service to a specification but you are also dependant upon the quality of the management process to perform sufficiently to protect your interests with timely delivery, at the contracted price, and meeting or exceeding quality expectations. Do you have a strategy to use alternate sources of supply to preserve your ability to deliver to your customers reliably?

Will I avoid all risk if I invest in the areas cited above? No! But it will set a tone for how you and your organization manage the business. It is not a matter of making a mistake but how you respond to those mistakes and reduce them over time, Developing sound business practices and a balanced business strategy that is not only focused at developing the business but also addressing those issues that will impair your ability to deal with the unexpected – and the unexpected will occur!

When to Say No to Business!

In a recent article on the Five Principles to Managing Cash Flow Successfully I received a number of comments on the third principle – Importance of No.  As business people we strive for the yes from the customer/account/client, which means an order or a commitment for an engagement.  However, in our drive toward closing the order we can overlook critical signals about the customer or become too aggressive in negotiating away our value that often results in business we wish we had said No to and walked away.

Why is it so hard to say “No?”  We have all been there –more than one, two or three times.  The experience is the same.  We make less money.  We regret the customer relationship.  We loose face or feel people will think less of us if we back away.  We are less motivated and we struggle to deliver a good quality experience despite the circumstances.  Our internal drive to win any and all business is a strong one and difficult to manage.  It becomes personal when we should be objective and recognize that we should let the opportunity pass to someone else who may be a better fit or willing to take the risk with this particular piece of business.

We need to manage and control the fear of loosing business or an account and stand firm on the success principles of our businesses. It doesn’t make sense to compromise your business principles only to put the customer relationship at risk.  If you roll over and walk away from your principles you will move from a position that you can defend to your customer to the slippery slope of compromise that once you start it is difficult to know where to stop.  Some customers (under the guise of good negotiating) will take advantage of you once you start down this path.

Here are key indicators that you should look for that will put you in a “No” position.

1. Balanced agreement/contract – You should have a sound business contract/engagement agreement that protects you and looks out for the interests of the buyer.  Use legal counsel and an insurance professional to look it over to make sure it is sound.  The key terms of the agreement should be reinforced during the sales development process.  If the customer is hesitant to sign the agreement wanting to do a handshake or refers it to his attorney and it comes back with language that clearly favors the buyer – say “No!”
2. Moving goal posts – Too often a customer will want, or appear to want, infinite idea flexibility and each time you meet with them the story changes.  Your job is to contain scope creep and avoid pressure on what you have proposed and what will be agreed to in the beginning but seems to continue to evolve.  Another factor is vagueness or difficulty in agreeing to details that are critical to your performance.
3. Working relationship – If you do not have a reasonable working relationship – keeping scheduled meetings, providing necessary details, reasonable access (returns e-mails, phone calls, etc.), demonstrates appropriate follow up on activities they are responsible for – then you are witnessing what your under-contract working relationship will be like.
4. Outside your core competency – You get jazzed about a great opportunity and then realize that the scope of the work requires experience and competency that is too far from what you are capable of doing.  In this case the opportunity is not a good match for you and you should withdraw gracefully.  Most customers will respect your decision and will consider you for future opportunities due to your honesty.
5. Contact with the key decision maker – Where your success is dependant upon organization cooperation but you do not have access to the decision maker that is responsible to deliver that cooperation then you are at risk. You need to have access to the senior manager that can make things happen if they are not occurring on their own or you will find that you are working uphill, against the flow, and at risk.
6. Absence of commitment – If the customer is unwilling or finds it difficult to commit time or reasonable resources in the development of the project then, like 3 above, the customer is not engaged or committed to not only to their success but yours as well.

Saying “No” should occur as soon as you cross one of the thresholds above where you know it is not going to be a good deal.  Communicating your decision should be in person if possible and also in writing describing the important business factors that you feel need to be present for success.  Do not highlight what you feel are the customer’s shortcomings, as you will want to be considered for future work.  The “No” statement should be used to strengthen the customer’s impression of you and not a basis for breaking a relationship.

So what do I do if I am always saying No?  You will find yourself doing a better job of qualifying customers and investing in those that do not have the characteristics above.  They are out there and as you raise your standards you will find them.  Why are there so many “No” opportunities – possibly because the better companies and professionals have already turned them down! 

Make sure you invest in opportunities where there is a high probability you will want to say, “Yes!”

Character: Cornerstone of Win/Win Success in Business

Steven Covey in his 1990 bestseller “The Seven Habits of Highly Effective People” devotes a number of pages of his book to discussing the 5 Dimensions of Win/Win. His premise is that thinking Win/Win is the habit of interpersonal leadership. This is a key point in that many of us are small business owners or sole proprietors and do not have the luxury of delegating the Win/Win of our business to someone else. We need to be sure we can master the Win/Win philosophy or we will not be able to enjoy the success we aspire to.

These dimensions include: Character, Relationships, Agreements, Supportive Systems and Process. Thinking Win/Win begins with character and this will be the focus of this article and I will leave you to get the book and read about the remaining four dimensions. Why is character of interest to me? It is what I can control or influence the most. It is the foundation and cornerstone of Win/Win.

Covey defines character as having three traits essential to a Win/Win paradigm. These are Integrity, Maturity and what he calls Abundance Mentality (there is plenty for everyone). We know these traits and often recognize them in others that we find are easy to work with, are trustworthy and provide a sense of satisfaction and accomplishment when a project is completed – Win/Win.

A penetrating question is do they have the same feeling toward us? How do we score ourselves in the fundamental character traits for Win/Win.

Character Traits

Integrity: Integrity is the value we place on ourselves. A primary measure of integrity is how good are we at honoring promises and commitments not only to ourselves but also to others? Is this trait important to you? Do you find it easy to work with someone who cannot fulfill what they have promised others? Do you find it easier to work with someone who you know will go the extra mile to make sure they deliver and support you?

Maturity: Maturity covers a lot of ground but deals with our ability to express our feelings and convictions with consideration for the feelings and convictions of others. We often find ourselves in urgent (confrontive) situations where it is necessary to communicate a difficult subject and we have choices in how we accomplish it. Are we overbearing and inconsiderate in our goal of completing the task or do we address the feelings of the other person and help them see our point of view. How do we react when we are taken to task on a matter and the other person tramples all over our feelings and convictions? Are we motivated to work toward a winning relationship? Are we more motivated by someone dealing with confrontation emotionally or in a mature manner that balances nice and tough? Do you deal with others in this type of circumstance as adults or as children?

Abundance Mentality: How do we share credit or recognition, power or profit? We all know what it is like to work with someone who “steals” the credit or “grabs” the power in order to make them look good. These people tend to be insecure and have low personal wealth. On the other hand people who have high self worth and security tend to be very interested in the welfare of those around them. It is much easier to work with someone that is not always looking for ways to make them look good and willing to share the credit and recognition with you and others.

Character is the cornerstone of the 5 dimensions of Win/Win. Some of us come by the three traits of character naturally. Others of us need to consistently work at it to overcome negative behavior.

So . . . how did you score yourself? What are you going to work on? If you are not sure of how you are really doing seek out a mentor (someone with integrity, maturity and an abundance mentality) who can offer you perspective on your character. You may this difficult and tough to do to be transparent and vulnerable but it is better getting feedback from someone you trust than through lost business or lost accounts. Seek out those in your workplace that seem to have the Win/Win profile and go to school on them on how they develop their positive character work traits. You might be surprised at how hard they work at it.

Remember Win/Win begins with your character!

5 Principles to Managing Cash Flow Successfully

Managing cash flow is a simple concept – but hard to do it successfully in practice. Why? Business is dynamic and balancing the timing of unpredictable revenue against the predictable consumption of cash by fixed expenses coupled with unpredictable variable expenses can create a cash flow crisis. An easy solution is to just borrow more money (sound familiar – US Gov?) but that only provides a short-term solution to what might be a chronic problem of reigning in expenses to the revenue that your business is producing.

I have outlined 5 basic principles that can help you establish good business practices that will allow you to keep abreast of your cash flow position and enable you to take necessary action and managed your cash successfully.

1. Revenue/Expense Budget: Develop a budget that time phases your cash (expense) needs. This may need to be down to the day (i.e. cash for payroll) and not just bucketed by month. This then helps you determine how much revenue you need to sell and then collect payment on in time to make payments. Review your budget with other business professionals to get their feedback as to its believability. Their initial comments may hurt but your still working on paper and not spending money. Stress your plan for corner conditions (low sales, unexpected expenses, delays in receivables) and understand how your budget may or may not respond under those conditions.
2. Collection of Receivables: The critical element in managing cash is to understand what collection obstacles may occur that would delay the arrival of cash to pay for necessary expenses. A common mistake is not recognizing that a (valuable) client may choose at their discretion to extend and delay payment. Having an effective collection process that is prepared to contact clients “prior” to the payment date to make sure that the client organization is scheduled to make payment and that nothing is amiss. Do not let this become a conflict avoidance issue. Remember you are in business and the collection process, done professionally, can be painless – most of the time!
3. Importance of No: Too often we are hungry for business or excited about a new client and make allowances, become too aggressive in pricing or scheduling a project, or committing to a poorly defined project. The end result is that you devalue the value that you offer the customer. What you rationalize as a good concession at the time to get the order makes it a costly product/project to deliver. Because of the over commitment you consume opportunity and delivery time on a low margin piece of business that may end up becoming a collection problem when other business was available that would have come in with full margin and paid on time.
4. Negotiate Expenses: A number one priority is to minimize your expenses by effective purchasing. When you need something in your business remember that there are all kinds of ways of purchasing it – at different prices. Online auction sites can be very effective in reducing the cost of a business item by over half the local street price. Used equipment is also a great way to conserve cash. That approach may be a problem for you or a few of your employees using something that is refurbished or shows signs of wear but still has a useful life left but it protects cash. Tough negotiating on recurring costs (rent, advertising, etc.) is basic to containing cost and relieving pressure on cash flow.
5. Cash Flow Dashboard: Doing all of the above does not get you to a point where you are through. Managing cash flow is a daily discipline. How severe your cash flow situation is determines the intensity in which you monitor key performance indicators (KPI’s) or metrics. If you are in good shape then it may be as simple as monitoring incoming orders, shipments and deposits. If you are on a roller coaster then you may need to include watching each receivable, bank balance, when you pay payroll (even yourself), what your payable situation is, etc. Keep a dashboard active so that you can always dial it up or down when you need it. Creating it during a crisis is not easy to do.

I have listed 5 principles to managing cash flow successfully. These steps are tactical measures that require solid execution. Bottom line is your basic cash attitude toward managing your business.

• Good attitude: Keep your spending inline with your actual revenue and don’t spend assuming you will get the revenue.
• Dangerous attitude: Convincing yourself that by spending more the revenue will come.

You may feel “crippled” by a tight spend/cash policy but that is an easier problem to handle than when you are over extended with no way to meet your financial obligations. Many successful individuals and companies started out using an austere money management approach and made it work for them. Make it work for you!

Style: Is it Important?

Is your professional style important? Style is defined as the way you make decisions or solve problems, resolve conflict and relate to others – peers, subordinates, superiors, customers, etc. Your style can be a make-or-break factor to your success. It is the primary factor that influences the experience someone has when they come in contact with you. In these days of customer experience awareness, style has never been more important.

During the late 80’s and into the ‘90’s through Y2K the technology industry was in high demand for technology professionals and in many cases a pulse was a primary condition of employment. This resulted in organizations with a diverse mix of individuals who expected everyone to accept them as they were – appearance, working habits, attitude, etc. Since the technology feeding frenzy was so great companies and customers overlooked the idiosyncrasies of many of these “professionals” as the price to achieve an objective in a crisis.

As the demand/supply curve came into balance it became necessary for technology professionals to consider how they influenced the customer experience by not just delivering a successful project on time and with in budget but to also successfully demonstrate interpersonal behavior that was harmonious with management and employees. We went so far as to publish a style guide for our on site consultants as to how to deal with key style factors. The following is a few of the more dramatic style factors:

• Improving appearance (including of all things personal hygiene).
• How they initiated proactive contact and communication with customer management and team members.
• Improving their listening skills to detect customer concern or misunderstandings.
• Resolve conflict in a timely manner without becoming personally involved.
• Taking responsibility for customer satisfaction.

The results of this effort were impressive as we saw increased customer satisfaction, trust and confidence in our consulting team, extended project work, engaging with more sophisticated and higher value accounts from referrals and most significantly, increased work satisfaction on the part of the technology consultants.

I have applied this experience in a number of companies that I have consulted with. One of the more significant examples of how style affected an organization was with a private school, which was concerned about the ability of the school to have a consistent interaction with parents – the customer – particularly by the younger generation teachers. The problem was more complex than just a couple of teachers as the communication to the parent that impacted their expectations of what was to happen in the classroom was affected by the formal literature provided the parent, the teacher manual for the teachers and daily communication – teacher-to-student, teacher-to-parent, admin-to-teacher and admin-to-parent.

It was easy for the parent to become confused over the “style” of the school particularly when it came to problem resolution whether it started with the teacher or admin. This was compounded when the teacher (often a younger generation teacher) would receive the parent concern in a defensive way, which escalated the attitude of the parent to a crisis level. The bottom line result was a poor customer experience for the parent, which reflected on the school reputation and brand.

The correction to this style conflict:

• School administration needed to reconcile the inconsistencies in the communication of expectations to parent, teacher and student.
• Administration and teachers needed to visit this subject on a regular basis so that all knew what to do when an incident occurred so that they could execute in a predictable and consistent manner.
• The teacher was often the first to receive the parent concern and they need to hear the parent out (listen) before coming (or jumping) to a conclusion as to what action to take to resolve the problem.
• The teachers needed to accept that resolving parent concern was part of their job and to not take it negatively or personally that the parent was complaining to them and to handle it as part of what they did as a teacher.

The results were reduced parental conflict and improved relations with their customer and improved teacher morale. The style of the organization and individuals was adjusted so that communication was consistent and problem resolution was dealt with in a low to no conflict manner.

Take a look at your style, the style of your organization to see if you have areas that can be improved to enhance customer experience, improve morale and lead you to higher value business. Style is important!

Leadership: You Know It When You See It!

There is a continuous dialog on the internet and in management publications as to what defines leadership. Leaders are often contrasted with managers since a manager heads an organization and therefore must, by definition, be a leader. This is not necessarily the case.

Managers normally have a defined position in the organization and generally operate on the conservative side of the guidelines of their job description. They are comfortable directing activities and addressing problems within a narrow range and when that range is exceeded they seek direction from higher ups or pass it over to peers (HR, Accounting, etc.) in the organization. To vary from this "narrow path" raises the risk component of their job as they are then "on their own", have "stuck their neck out" or have become "independent."

Most managers are out of their comfort zone when they move too far into the risk zone. They are generally risk averse and withdraw to defined areas of responsibility where they are licensed to operate. Unfortunately unpredictable and uncertain business conditions occur at inconvenient times that require someone in the organization to step forward and deal with the exceptional condition that is outside the anticipated management guidelines. Leaders rise up and "lead" either his direct reports or others in the organization to successfully confront, over come obstacles and resolve the business challenge. This is leadership!

A leader is capable of performing as a manager but is also gifted with the innate ability to recognize when they should step out and wrestle a risky situation down into a controllable event. This often exposes the leader to criticism by others who are threatened by their confidence to exceed their management responsibilities and successfully perform outside of the box. This person is a valued asset to the company providing that senior management (primarily the owner in a small company) is not threatened by them and know how to mentor and develop them to greater levels of leadership and contribution to the success of the company.

A leader possesses certain critical skills that will enable them to be effective in operating outside manager guidelines. This skill set often includes the following:

• Vision - They have a good sense of the long range view of how things are supposed to operate.
• High Energy & Positive Attitude - Inspiring a group to move in a critical direction over a short period of time requires energy and a positive attitude to overcome objections and obstacles that will stop and defeat others.
• Anticipation - Able to assimilate and translate various events into a condition that if addressed early eliminates a serious problem from developing.
• Assertiveness - Has strong convictions on why their objectives are important and will pursue them even if they are unpopular.
• Observer of People - They realize that the strength of the team is dependant upon each individual and the leader will mentor team members where they are weak and, where possible, recruit people with key strategic skills that complement the group.
• Accountable - Take ownership and commit to what is the right thing to do and what needs to be done.
• Influencer - Can successfully present the need for others to respond and perform in a manner they might not have done otherwise.

This combination of skills enables a leader to see what needs to be done, energize and inspire people, lead people to focus on “I can!” and not “I can’t!”, draw the right people together into an effective team that results in above expectation performance, and place the recognition for the successful outcome on those who worked the problem and not themselves. It is truly an exceptional experience to be lead by a leader.

As a company owner are you recognized as a leader? This can be a challenge for an owner where their “power” can be mistaken for leadership. You may be termed the leader but do you demonstrate the leadership characteristics that result in empowerment and positive motivation for the organization. This may be difficult to measure by yourself and you may need to rely on an outside resource – professional associate, board member, or consultant – to give you independent perspective. Take the initiative and evaluate your leadership strengths and weakness. Experienced management professionals often struggle with the definition of what makes a leader – but – they are pretty agreed that they can recognize it in someone when they observe how they operate on a daily basis and under special (and stressful) circumstances.

They know it when they see it!