Small Business News
The state of small business is strong, but Congress is a serious drag on the economy in which entrepreneurs operate.
At the heart of a new Inc. special report, the State of Small Business, is a survey: We ask Inc. 5000 CEOs about their outlook, then add our own reporting on the economy. You quickly come to two conclusions: The state of small business is strong; entrepreneurs are as resilient, creative, and unstoppable as ever. But the economy in which they operate is under siege by morons.
That is obvious to any business owner who lived through this fall, when congressional radicals threatened to default on U.S. debt. But in fact, Congress has been a drag on the economy ever since it began its fitful recovery in 2009. Even the fiscally conservative Peter G. Peterson Foundation is dismayed: According to a study commissioned by Peterson, Congress’s obsession with fiscal austerity has cost the economy 0.7 percentage points a year in growth since 2010. Uncertainty--in large part a product of our legislators’ inability to pass a budget or much of anything else, not to mention their habit of threatening default every few months--has trimmed an estimated 0.3 points a year from GDP.
What could possibly justify throwing such obstacles in the path of small businesses? The radicals say federal spending is out of control and must be reined in right now. But that far overstates reality. Discretionary spending is falling as a share of GDP; the Congressional Budget Office says by 2023, it will be lower than it has been in more than 50 years. Meanwhile, the deficit has fallen 60 percent since 2010. “Deficits become a problem when they drive up interest rates,” University of Oregon economist Mark Thoma told me, “but there isn’t a shred of evidence this is happening.”
The far more urgent problem for your business in 2014 is lack of demand. But when members of Congress threaten to devastate your customers’ life savings and paralyze the global economy by defaulting on U.S. debt, are your customers more eager to spend or less?
Inc. has no interest in taking political sides, but we care about small business. And this much is clear: Because of Congress, the state of small business is far more precarious than it needs to be. Another debt-ceiling deadline comes up in February. If Congress chooses to bring the economy to the brink of disaster again, whose interests would be served? Certainly not yours.
We also just named Aaron Levie, co-founder of Box, our Entrepreneur of the Year. Levie is every inch a founder for our times: He’s 28. He launched out of his dorm room. And he got where he is by seeing technology trends sooner and more clearly than anyone else. He also got where he is by working harder than anyone else, and he is beating the skinny jeans off giant rivals in the process. At Inc., we like to see that.
Even a single depressed employee can have a devastating effect on a small business. And entrepreneurs themselves are hardly immune.
Liza and her husband, James (not their real names), own a successful small business. A few years ago they got hit with the perfect storm--a personal crisis, the recession, Liza's undiagnosed thyroid problem and depression.
Liza's depression made it all the more difficult to recover from the personal crisis and the recession. Predictably, the business suffered. Liza, who does the bookkeeping and content writing for the graphic design business said, "During the years I battled depression, a lot of the writing had to be done by a contractor. That meant more money out the door. The bookkeeping suffered tremendously as well. I got more and more behind because I could only do the bare minimum. Sales taxes got filed late, statements didn't get reconciled for months, receipts and expenses stacked up and didn't get entered into the accounting program. A lot of our invoicing was done haphazardly and I'm sure we just didn't bill some of our clients at all."
Depression isn't something that just affects other people. And it's not simply a personal problem that is handled in off-hours. It affects businesses, and it probably affects your business. The Integrated Benefits Institute estimates that for every 100 employees, businesses spend $62,000 because of depression.
For Liza, the exact costs of her depression will never be known. Lost business, lost revenue, late fees, and perhaps clients who would have come on board but didn't due to Liza's inability to respond to things quickly. When depressed, says Liza, "Everything feels bigger than it really is. The drive to the office, the bother to get ready, getting the day's tasks ordered (or even just written down) -- it all just seems impossible. I didn't eat much when I was depressed, and what I did eat was definitely not the most nutritious food. Poor nutrition and sleep just compounded the depression."
Liza says if she weren't a business owner, she surely would have been fired. Patricia (not her real name) also faced depression, an ever-increasing workload, and an unhelpful boss. Unlike Liza, she was fresh out of college and facing her first "real" job. Before she started work, her boss told her that she was his "third or fourth" choice for the position, which meant she started the job feeling less than competent.
The depression plus the micro-managing boss meant that Patricia developed bad habits that were difficult to overcome even when she started receiving treatment for her depression 18 months into the job. By that time she'd decided to resign. When she did, her boss informed her that they had been planning to fire her anyways. When she disclosed her struggles with depression, the very boss who had treated her poorly said, "Well, why didn't you tell me sooner? We could have helped you!"
Patricia doubts that this boss, whom she describes as the biggest thorn in her side, could have helped her if he had known. She's moved on and switched careers altogether and continues to treat her depression with medication.
How to respond
The Americans With Disabilities Act (ADA) requires businesses to make "reasonable" accommodations for people with qualifying depression. That can vary from job to job and person to person, but the person suffering from the depression needs to speak up in order to get help. Patricia's boss may have been able to help her if she'd declared her problem, and if he were aware of the laws around people with disabilities.
For small business owners, a depressed employee may be even more debilitating than he or she would be for a larger business. Whether it's the boss or an employee, the costs to the business can be high. Even small businesses may find it worthwhile to invest in an Employee Assistance Program, which can help people navigate through depression by helping them find appropriate therapists and doctors. According to the Integrated Benefits Institute, medication and psychotherapy can be successful in 70 to 80 percent of cases.
Remember that the law requires "reasonable" accommodations. Even to the extent that some accommodations are not reasonable, most depression, when treated, is temporary. You don't want to lose an otherwise top employee who is suffering from a treatable illness. Proceed with caution and compassion.
It may help to think of your company's sale as a bit like an episode of Dancing With the Stars. Really.
Every week thousands of fans tune in to Dancing with the Stars to watch their favorite celebrities learn, perform new dances, and compete against one another. Every star is partnered with an experienced professional dancer who teaches them the dance steps and moves, and guides them through the complex dance routines. The stars truly depend upon the pros and realize that one misstep could lead to being eliminated from the competition.
Selling a middle market business is a complex and demanding dance. Every business owner needs a pro to explain the steps and guide them through the process. While it may look simple, one misstep could easily cost a business owner millions of dollars or scuttle the deal altogether.
More precisely, selling a business involves three distinct phases and 20 unique steps. I like to refer to this as the M&A 3-20 tango. Like dancing, it may look simple, but you need assistance from a pro to maximize the value of your company, close the deal and end up a winner. Here is a quick overview of the M&A 3-20.
Most dances have three phases: a beginning, middle and end. Selling your business also involves three phases, and each phase is irreversibly linked to and reliant upon the previous phase.
Preparation Phase (2 months)
Comprehensive preparation is the foundation for success. The owners must conduct an introspective and honest internal evaluation of the company, prepare detailed marketing materials for prospective purchasers, and establish a preliminary buyer list. Thorough preparation is the bedrock that will enable the sale to move to a successful closing.
•Verification of general company information •Review the company’s industry conditions•Review the company’s business strategy •Review the company’s M&A strategy •Complete the company’s M&A planning •Implement the company’s business optimization •Complete financial analysis, preliminary documentation and marketing materials
Marketing and Negotiation Phase (2.5 months)
Professional marketing of the company, as well as persuasive negotiation, come next. Careful marketing and negotiations will employ all the plans developed in the preparation phase. The company should use an experienced investment banker to contact designated buyers and conduct a silent auction. Detailed preparation plans are futile if the marketing and negotiations with buyers are second-rate.
•Implement buyer/investor search and identification•Initiate contact with qualified target acquirers on buyer list
•Create and manage a silent auction to maximize the company’s value
•Coordinate comprehensive due diligence of the company’s business
•Negotiate and refine proposed deal structure
•Determine optimum financing structure and identify potential lenders
•Perform a comprehensive regulatory review
•Obtain required transaction approvals and consents
•Negotiate the final purchase and sale or merger agreement
Closing Phase (5 months)
Efficient deal closing is the result of professional, win-win marketing and negotiations. The closing phase requires intricate mergers and acquisitions technical expertise, as well as a strong dose of psychological analysis, to persuade the buyer to sign a definitive purchase agreement.
•Manage deal closing
•Manage post-closing activities
•Facilitate integration to capitalize on synergies between buyer and seller
•Conduct post-closing meeting with client to ensure objectives were met
Remember: This is a long dance that requires 9 to 12 months to complete. You’ll need an experienced dance partner to keep you focused and avoid costly missteps!
Selling your business is not simple. It is complex and time consuming, and requires a thorough understanding of all phases and steps in the sales process. Like a gracefully performed dance routine, if a professional is leading the way, the process will flow smoothly and conclude to thunderous applause when the deal closes. Before you sell your business, be sure your M&A pro knows the M&A 3-20 Tango.
Responsible. Accountable. Consulted. Informed.
Even a thorough project plan can leave room for confusion about individual duties. A RACI model--or a visual map of everyone's responsibilities--helps to prevent chaos.
RACI stands for responsible, accountable, consulted, and informed. That's four levels of "answerability." A RACI model is a table that lists the members of a team and delineates their level of answerability for every aspect of a project. Creating a RACI model is relatively simple, but there are all sorts of pitfalls that first-timers can fall into.
For guidance on how to avoid them, check out "How to Design a Successful RACI Project Plan" by IT management coach and consultant Bob Kantor. He provides various tips for building a RACI model, including: ensure that every task has at least one stakeholder who's responsible for it and no more than one stakeholder accountable for it; and share, discuss, and agree to the model with your stakeholders at the start of a project.
He also lists potential conflicts or ambiguities that need to be resolved as you look across each row and down each column, such as:
Consultant Maya Townsend provided a few more useful tips. "RACI is most valuable when things are starting to go wrong and people need a concrete, structured way to talk about who's responsible for what," she says. "At the beginning of a project, you can't always anticipate what responsibilities will be fuzzy. In the heat of a project, you can, and RACI helps people talk about the fuzziness without blaming and identify the best way to move forward."
Logistical tricks are great, but if you really want meetings to be effective, you also need to take their emotional toll into account, says a new study.
Stand up, walk around, assign a referee, end with a "closing round," there is no shortage of logistical tips and tricks out there to keep meetings short, focused and productive. But according to a new study, you can implement all these excellent ideas and more and still end up fighting meeting exhaustion if you don’t also tackle the emotional problems that make many meetings such a chore.
One of the most exhausting things about work isn’t the work itself. It’s being nice to everyone and regulating your responses to get along, forge connections and generally keep the office vibe from degenerating into something more like a middle school cafeteria. We usually think of this sort of emotional labor, which psychologists term “surface acting,” in relation to customers, but meetings, because of their semi-public nature, are also a big culprit when it comes to the need to feign the correct emotion.
Linda Shanock, a professor of organization science at the University of North Carolina, Charlotte, and her team recently looked into the cost of all the teeth gritting, insincere laughter, and careful phrasing that goes into keeping the peace during many meetings. They asked 178 study participants to rate their agreement with statements like "I tend to fake a good mood when interacting with others in the meeting" and then looked for a correlation between lots of surface acting and lower ratings of meeting effectiveness.
They found one, as The British Psychological Society Occupational Digest blog reports:
Participants who indicated higher surface acting had higher emotional exhaustion (or burnout) scores. The authors interprets this as consistent with previous findings that surface acting is frustrating and emotionally draining, and also consistent with the subjective feeling referred to as 'meeting recovery syndrome'. In addition, habitual surface actors were more likely to have an intention to quit the organisation entirely. Again this is linked to the harmful effects of surface acting.
For organizations the takeaways from the findings aren’t yet clear -- it could simply be that the type of companies that drive employees to fake happiness (generally not the ones with the healthiest office culture) are the real driver of all the acting and the exhaustion people report after meetings. The researchers are conducting follow-up studies to determine whether acting is directly causing meeting frustration or a symptom of larger, underlying problems at dysfunctional offices.
But the lesson for bosses and small business owners is clearer and more immediate. Faking it burns people out. So whether you’re the one plastering on the inauthentic smile or you sense your employees are playacting their way through your meetings, it’s time to take matters into your own hands and demand (from yourself and others) that everyone get a little more real. Setting a better example of polite but forthright interaction is a simple place to start.
How much acting goes on in meetings at your company?
It's one of the hard facts about leadership: no one ever tells you how to fail. Here's my own checklist, built, I assure you, on the solid ground of much and frequent leadership failure.
You're a good leader, and you don't take the possibility of failure lightly. You realistically assess the possibility of failure in advance of any new initiative. You’ve set clear milestones that will help alert you when something is going off track. You're accountable for evaluating the relevant data accordingly, and you don’t blanch at objectively assessing the situation.
Now, (gulp), something has indeed gone wrong. Your new product launch has flopped, perhaps, or the fire marshal has just handed you a list of code violations that means the hospice won't open on time, or your team of anti-logging activists hasn’t received the visas they need to go on-site in Venezuela.Now what?
Times of crisis, when you face imminent, impending failure -- even, sometimes, when you face certain failure -- are the crucible of leadership. It’s here, at these times, that your true leadership mettle will be tested. And yet, for most leaders, their response at such times is essentially improvised. Unless and until you’ve been through climactic situations multiple times, it's hard to know precisely what to do next in any given situation. And so, absent any clear guidelines, we make it up as we go along.
It’s one of the hard facts about leadership: no one ever tells you how to fail. Here’s my own checklist, built, I assure you, on the solid ground of much and frequent leadership failure:
Don’t procrastinate. In many leadership situations, an approach of benign neglect can be quite useful. Someone pressing you for an answer to something? Let it drift and they may well sort it out for themselves. 58 unanswered emails in your inbox? Mark them all as read and the important ones will come back ‘round again. Let me be clear: this precept doesn’t hold when potential failure looms. Once you’ve spotted the possibility that something might go badly wrong, block off the time you need to make a solid appraisal, and do just that.
Separate yourself from ‘it’. We all have egos, and it’s incredibly easy to become primarily concerned about the cost of failure to us personally, when in fact our primary concern should be first to the underlying enterprise or project. If you’re trying to stop abusive logging activity in Venezuela and your team’s visas haven’t come through, the first consideration must be to the campaign, not to your own position or emotions. Set your own emotional reaction aside, at least initially, and focus on the thing you’re trying to achieve as objectively as you can.
Apply triage principles: Is this fatal or not? If you’re a field doctor faced with two injured soldiers, one of whom may recover if you attend to them quickly, and the other with no hope of recovery whatever you do, it’s obvious (if heart-wrenching) which soldier you’re going to attend to immediately. And although most leadership situations are nowhere near as life-or-death (or as immediate), the same principle applies: is the nature of this failure fatal or not?
If your new product launch has flopped and, embarrassingly, barely anyone noticed, that’s one thing, but if in the process it’s hemorrhaging the organization of cash, that’s another situation entirely. If the fire code violations will delay the hospice opening by a month, that’s totally different than if it means the building you had acquired is entirely unfit for use.
Make the deliberation: Fix, rescue or scrap. Once you’ve separated yourself from the issue and swiftly diagnosed the extent of the failure, you’re ready to make the key decision: what next? In my experience, there are really only three options for a failing intuitive:
Fix it - When the issue is obvious and fixable, fix it. Get the money from somewhere, and bring the building up to code; go to the consulate’s office and fast-track the visas. Asking 'how do I fix this?' is usually the most obvious option in times of failure, and the one we subliminally default to - but it isn't the only option.
Rescue something - This option is appropriate if the project isn't fixable as it was initially envisaged, but something can be salvaged in the short- to medium-term. Maybe the new product you launched can’t be made to work in the market you’re in, but can be franchised to others overseas, for example, or perhaps you can sell the patents you developed during the R&D process to recoup some of your investment.
Scrap it - When neither option works, then it’s time to simply scrap the entire project. Because it is so obviously a public failure, this is often the last choice a leader will make, but the reality is, it's often the best decision in the circumstance. Anyone used their Zune recently?
Prepare yourself for what the future may bring. Download a free chapter from the author's WSJ best-seller, "Predictable Success: Getting Your Organization On the Growth Track - and Keeping It There" to learn more about building a world-class culture that will rapidly accelerate the growth of your business.
Use this chart to figure out how your company will navigate health-care reform.
How will Obamacare affect your business? The answer depends on the size of your payroll and the health of your employees. Find where your company falls along the two axes on the chart below. The horizontal axis measures wages; the vertical axis gauges your work force’s health. Find your quadrant, and you will find the strategies that are best for your business.
An ancient philosopher revealed the secret of being healthy and happy at work.
Workplace stress can literally kill you. According to the Mayo Clinic, "stress that's left unchecked can contribute to health problems, such as high blood pressure, heart disease, obesity and diabetes."
Fortunately, there's a time-tested, four-part recipe for stress that's called the Tetrapharmakos, attributed to the philosopher Epicurus. Here it is, with my observations of how it applies to the workplace.
1. Don't fear the gods. Epicurus was referring to people who were terrified that the gods will punish mankind unless constantly placated by sacrifice and prayer. Living in terror of the supernatural is, of course, foolish, but this concept has an additional meaning in the workplace.
Regardless of what you do for a living, there are things you can't control, like the economy and customers. Rather than being afraid of what might happen ("the gods"), be confident that you'll do your best, regardless of what happens.
2. Don't worry about death. Okay, I know that this seems weird to be writing about death in a business article. However, I can't help but point out that if you're reading this, you're still alive. And that's really good news! Congratulations!
It's an undeniable fact that you will someday die. However, what's real is your experience, right now, in the current moment. Rather than pondering your demise, squeeze the happiness and joy from every moment that you are alive.
Yes, work can be a hassle, but as one of my favorite authors once wrote: "Never neglect to appreciate the wonder of conscious existence." Enjoy each day, because it's never going to come again.
3. What's good is easy to get. Never has this been truer. While poverty and homelessness are common enough, if you're reading this, you're probably all set when it comes to food and shelter. And you're probably on a path to improve your life.
So you've already got all kinds of goodness in your life because what you really need (food, shelter and a purpose), you already have!
Look, it's the huge difficult-to-achieve goals that can stress you out...if you let them. Work towards those goal, by all means, but remember that you're already living better than 99% of all the humans who've ever lived on the earth.
4. What's painful is easy to endure. Awful stuff happens to good people, true. However, intense pain is temporary by nature and it's relatively easy to turn chronic pain into "background noise" simply by focusing on something else.
And that's physical pain, which is worse than anything that your workplace can dole out. The pain of losing a big customer, losing money, or even losing your business... in a year you'll barely remember how it felt.
So why stress about it now?
Like this post? If so, sign up for the free Sales Source newsletter.
After a year of uncertainty and cost-cutting, the small business economy is finishing strong.
The holidays will be filled with plenty of Oscar-worthy films, but I suspect the best surprise ending will take place on Main Street.
The trajectory for local Main Street businesses, those with usually only a few employees, is beginning to look like a classic underdog story in 2013. With everything going against them--government inaction, uncertainty over health care, payroll tax increases, sluggish demand--they’ve found a way to persevere.
Now they appear to have a shot at a second victory.
Going into 2013, our small business clients told us their primary goal was to cut costs to increase profitability. Now according to our November 2013 SurePayroll Small Business Scorecard®, 55 percent are offering holiday bonuses, up from just 38 percent last November. Eighty percent of those bonuses will remain the same or larger than last year.
It’s a significant turnaround and an indication that they’ve continued to generate revenue in the face of uncertainty by finding a way to grow without hiring.
Speaking of which, hiring for the year is slightly down--at 1.7 percent--and the average paycheck is flat, meaning small businesses have been able to grow revenue without spending more on either new or existing employees.
Optimism is up to 63 percent from 57 percent at the beginning of the year, and Main Street businesses are reflecting their increased optimism and cash flow with an increased amount of year-end bonuses. They’re spending the extra cash on their employees, which should put more money on Main Street this season.
For all they’ve endured, small businesses with 10 or less employees have somehow found ways to generate consistent performance.
Sam Bacharach, director of the Cornell Institute for Workplace Studies, explains how leaders can encourage both outrageous ideas and practical follow-through.
A framework for evaluating crazy-innovative ideas.
Our question in the headline is probably a nonstarter. Executives at most growing companies are going to answer “yes.” Yet some behavioral scientists believe that you are nonetheless inherently biased against truly creative ideas.
Speaking at a TEDx conference earlier this year, Oral Roberts University instructor David Burkus cites a study which shows that even people who say they value creativity will only embrace an outside-the-box idea when they believe it will pay off. And he recounts some of history’s initially rejected innovative ideas, from Disneyland to Stravinsky’s The Rite of Spring, which later proved wildly successful.
Burkus supports his argument by taking aim at the oft-refrained saying, “If you build a better mousetrap, the world will beat a path to your door.” He notes that of the 400 new trap designs submitted to the U.S. Patent Office since the standard-bearing spring-loaded model was registered in 1899, only 20 have been developed into commercially viable products. “Despite a century of better mousetraps, we’ve yet to depart from a century-old standard.”
Perhaps this is because human beings, by nature, favor the status quo and fail to recognize great new ideas. Or maybe Burkus is wrong about “better” mousetraps; maybe it’s because sometimes the old idea is simply the best one.
With that in mind, here is a list of questions from LetsGrowLeaders.com designed to help you identify the good and the bad when entertaining “crazy” new ideas. Whether you’re pitching an idea or evaluating that pitch, make sure it answers the following:
• Why this?
• What is the bigger issue?
• Why is this approach best?
• Who is involved so far?
• Who should be?
• What resources are required?
• What are the potential side effects?
You may think to yourself, “These questions aren’t just for ‘crazy’ ideas; they can be applied to any idea.” Right you are! And that’s our point. These questions help level the playing field for outside-the-box thinkers by mitigating biases against creativity.
And on the HBR Blog Network, business researcher Michael Schrage provides three signs that it’s time to kill an innovative idea after you’ve given it the green light. Pull the plug, he says, if the process isn’t generating any pleasant surprises, any deeper insights, or any customer excitement.
How a diversity of industry helped some of Boston's most successful businesses grow so quickly.
Last week, I used Aileen Lee's excellent TechCrunch article on Unicorns as a jumping off point to analyze the role of the MBA in creating these unusually valuable companies. This week, I want to take a local lens and analyze these special companies that have been created in Boston. As was the case last week, I was ably assisted by Harvard Business School second year MBA student Juan Leung Li.
In order to have a reasonable population of companies to assess, we tweaked Aileen's definition. We looked at the companies in New England (call them "Boston and surrounding") that had exited in the last 10 years (2003-2013) with greater than $500 million in market valuation. Some of these companies had been around for a few years, but we felt this slice would allow us to assess companies that had recently created extraordinary value in a relatively short period of time. In the case of M&A situations, we value the company at the time of the M&A. In the case of public companies, we valued the companies at the market close of 11/15/13.
We found 43 such companies. That is, 43 companies in the Boston and surrounding area that had achieved more than $500 million in value during the last ten years. 19 of these had achieved more than $1 billion in value (Aileen's cut off, although she had constrained the founding date to the last ten years rather than the exit date, which obviously yields a broader population). A chart showing these 19 companies can be seen here:
A few interesting observations about the full set of 43 companies:
- Lack of Massive Winners. The perception that Boston has not recently generated massive wins appears to be only somewhat accurate, depending on which sector you focus on. Of the 19 companies that were more than $1 billion in value, seven were greater than $2 billion (TripAdvisor, athenahealth, IPG Photonics, Alnylam Pharma, Starent, Boston Biomedical, Acme Packet). That said, only three of these companies are software technology companies -- TripAdvisor ($12.5B), athenahealth ($5.0B) and Starent ($2.8B) -- and they were founded in 2000, 1997 and 2000, respectively. In other words, there have been no multi-billion dollar valued tech companies founded in Boston in the last 13 years. There are three companies that have achieved more than $1 billion in value in the tech sector founded in the last 10 years: Demandware ($1.9B/2004), Kayak ($1.8B/2004) and Fleetmatics ($1.4B/2004), although the latter was founded in Dublin.
- Essential Role of Immigrants. Here was a statistic that blew me away: Over half of these companies (51%) had an immigrant founder. In my research related to my Senate testimony on immigration reform, I noted that 40% of Fortune 500 companies had an immigrant founder. Apparently, successful Boston-based startups have an even greater concentration of immigrant influence.
- Strong Diversity. The breadth of the Unicorns is impressive, reinforcing the view that Boston's startup ecosystem is one of the most diverse in the world. Of the 43 companies that achieved more than $500M in value, 22 were life sciences (plus materials science), 16 enterprise technology and 5 consumer technology. To see the companies in their various segments laid out, see the chart below:
Much of this data refutes the belief that all the major startup winners have been created in Silicon Valley. In fact, the vibrant life science sector is now arguably more heavily concentrated in Boston than in any other cluster at any other time in history. That said, Boston has definitely come up short in the race to build massively valuable tech companies. And if you want to build a consumer Internet company, there are few role models.
However, I am quite optimistic about the future. As evidenced by this review of the Boston startup ecosystem, the quality and robustness of the environment has improved greatly in the last few years. As for big winners, the pipeline looks pretty good. Globoforce and Care.com have filed to go public and companies like Acquia, Actifio, DataXu, Dyn, Hubspot and Wayfair and are all reputed to be on a similar path in the next year or two.
If you want to see the entire spreadsheet with the underlying data, you can click here.
This article was originally published on Jeff Bussgang's Seeing Both Sides blog.
Your Human Resources Department is supposed to protect you and help you make people your top priority. These HR departments failed in their jobs.
You hire an HR department to keep you from making stupid decisions regarding employees, right?
Well, there are some companies that need to do a little bit better job with the the Human part of Human Resources. Here are the top HR Fails of 2013.9. Publishing a picture of your paycheck? You're fired!
Lacoste fired employee Wade Good after he published a picture of his paycheck on Instagram. Their HR department forgot that talking about pay is a fundamental right of your employees. And today's employees? They talk on the internet. Lacoste appeared to be concerned that he revealed confidential information, although the only thing confidential about it was information that belonged to Good. Federal law allows employees to discuss their salary with their coworkers, so as long as Good had at least one coworker as a follower on his Instagram account, the discussion was protected speech.8. Intern lawsuits.
Many HR departments have been violating the law regarding interns for years, and 2013 was the year they finally got busted--in a big way. Fox Search Light lost a case in which interns said they were illegally unpaid. (The suit is currently under appeal.) Publishing Giant Conde Nast announced it was ending its internship program in 2014, in response to lawsuits from former interns who claimed Conde Nast paid them less than minimum wage. For all the HR departments in a panic because of these new lawsuits, they should have gotten their heads out of the sand a long time ago. The rules for interns aren't new. If someone works for you, and you're a for profit company, you have to pay them unless you meet a list of very strict exceptions.7. Abercrombie & Fitch look policy: No muslims or fat people.
Apparently, only cool people should shop at Abercrombie & Fitch according to CEO Mike Jeffries. Cool means not fat, at least according to a 2006 interview that resurfaced this year thanks to the eternal memory of the Internet. This is not an HR fail, as HR reports into the CEO, not the other way around, but it sets the stage as to why HR thought it was appropriate to fire and not hire Muslim women whose religious beliefs included wearing a head scarf, or hijab--they must not think it's cool enough. It violated their look policy, they said. Policies cannot supersede federal law on religious discrimination. To A&F's credit, they changed the policy in 2013, but only after lawsuits.6. AOL/Patch layoffs with a surprise firing.
AOL laid off a bunch of people the best way you can when it's a large group--telling everyone at once rather than dragging it out painfully. So why the HR fail? Because someone else got fired on the spot and in public and individually. CEO Tim Armstrong reportedly lost it and fired Creative Director Abel Lenz for taking pictures during a sensitive meeting. HR should have known what was going down and someone should have been responsible for telling Lenz, who normally took pictures during meetings, that there would be no photography in this meeting. Layoffs are serious business and they should have page long checklists to make sure every "i" is dotted and "t" is crossed in order to prevent exactly this type of CEO meltdown.5. HMV firings are live tweeted.
Just like the AOL layoffs, someone in HR left a very important things off the layoff checklist: Either change social media passwords or make the company "tweeter" part of the layoff team. "We're tweeting live from HR where we're all being fired! Exciting!!" is not something you want appearing on your company Twitter feed. Your social media person should never be surprised by anything negative. Especially not anything negative that affects his job, or that of his coworkers.4. Hooters forces bald waitress out.
Waitress Sandra Lupo had a brain tumor removed, which meant her head lacked hair. Rather than allowing her to work with a hat (as, she claims, she was promised prior to the surgery), her manager said she had to wear a wig. Since Hooter's claims their restaurant sells not only food but "sexuality" they argue that a waitress's appearance is critical to the restaurant's mission. She's suing the restaurant for disability discrimination, which Employment Attorney Jon Hyman says is, actually, a long shot: "Just because Hooters acted insensitively, however, does not mean that it acted illegally. Because Ms. Lupo's tumor was benign and she doesn't appear to have ongoing problems, it may not be counted as a disability." Regardless, this is another firing the HR department should have put a stop to. It lacks compassion and it makes the restaurant look bad.3. Lady Gaga ignores federal overtime laws.
Turns out that being rich and famous doesn't exempt you from having to pay the little people time and a half for overtime. Former Lady Gaga assistant Jennifer O'Neill sued, claiming she was not paid overtime for her 24/7 job. Lady Gaga (real name Stefani Germanotta ) settled out of court rather than face a judge and jury who would surely find her liable for violating federal overtime laws.2. Time Warner grants paid paternity leave but--not to biological fathers.
Josh Levs, a reporter for CNN filed suit with the Equal Opportunity Employment Commission (EEOC) because, he states Time Warner allows paid leave for biological and adoptive mothers, but only provides paid leave for adoptive fathers. No laws require companies to give paid leave to anyone, male or female for the birth or adoption of a child, but they are required to give up to 12 weeks off, unpaid, under FMLA. I'm not sure what the courts will ultimately say about this (my non-legal opinion is that it's probably a legal policy), but it sure is an example of a backwards thinking HR department.1. Yahoo cancels telecommuting and gives everyone a rating.
Marissa Mayer's changes at Yahoo have hit the news several times in 2013. In February, the telecommuting ban got lots of bad press, and then in November, they announced that employees would be forced into a bell curve for annual performance ratings. The latter makes sense when you have management that has trouble identifying poor performers, but is not a favorite of employees and often brings problems.
Jeffrey Hollender found success building a mainstream cleaning brand that was eco-friendly and safe to use. For his next act, he's taking on Trojan.
Parents almost universally dread talking to their kids about the birds and the bees. Kids, definitely universally, dread it even more. Jeffrey and Meika Hollender, the father-daughter team behind a new fair trade condom start-up, are the exception.
You may know Jeffrey Hollender as the co-founder and former CEO of the eco-friendly cleaning product and personal care brand, Seventh Generation. Founded in 1988, Seventh Generation grew into a $150 million company under Hollender's watch. But in 2010, after stepping down as CEO to become Seventh Generation's chief inspiration officer, Hollender was, quite unceremoniously, fired by the board of directors and removed from the board altogether.
For Hollender, being ousted from the company he founded was the shock of a lifetime. "At first, I could see no good in the situation," he told me back in 2011. But within a few weeks it was Meika who opened his eyes to the upside of the ordeal. "Meika started talking about how this might open up new possibilities for me," he said at the time. "I couldn't see it, but I might spend 15 minutes a day thinking about something positive. After a month, it might be an hour. By the time four months had passed, I was spending more time thinking about exciting opportunities than feeling bad for myself."
The Second Act
Now, with Meika by his side, Jeffrey is on to his second act as an entrepreneur. With his new brand, Sustain, he wants to rid the condom industry of toxic chemicals, child labor, and male-dominated marketing, and create a new, eco-friendly, fair-trade brand of condoms marketed, first and foremost, to women. It's a tall order in a market as entrenched and taboo as condoms. If it's successful, Hollender, forever a socially conscious entrepreneur, believes Sustain could do even more good for the world than Seventh Generation did and serve as a model for other socially responsible companies around the world.
"Rather than creating products that are less bad," Hollender says, "we're thinking about how to create a model for business that does net good."
Building a Truly Responsible Business
Twenty long years ago, when Hollender was still running Seventh Generation, he trademarked the name Rainforest Rubbers, with the intention of someday creating a condom that was sustainably harvested in the Amazon. For years the idea lay dormant. It wasn't until Hollender recovered from his post-Seventh Generation slump that he revisited the concept and began thinking about how he could build a business with an even deeper social impact than Seventh Generation had.
"Even with all the progress corporate social responsibility has made, we're still heading in the wrong direction as a society by many metrics. Whether it's social inequality or climate change, things are still getting worse," he says. He wanted, instead, to create a "net positive" business. Hollender explains, "The goal is when you add everything up that the company does, it makes a net positive contribution to society."
Fair trade condoms fit the bill. Not only do they serve a social purpose by preventing sexually transmitted diseases and unwanted pregnancies, but these condoms target an industry that's rife with questionable business practices. Some research has shown that most condom brands currently contain nitrosamines, which are carcinogenic chemicals. Child labor is also frequently used on rubber plantations throughout the world.
"We looked at all of this and thought, 'This is really an opportunity to model what a net positive company looks like,'" Hollender says.
Now, Sustain condoms will be both sourced from and manufactured in a fair-trade facility in South India, which pays workers a living wage and provides them and their children with free education and free healthcare. Hollender says the team has also figured out a way to make the condoms nitrosamine-free, so they'll be less toxic than existing brands. Finally, Sustain will round out its social mission by donating 10 percent of its profits to improving female reproductive care in low-income communities around the country.
"We want people to think more broadly about how they choose a product and how companies make a product," Hollender says. "You have to think about the entire lifecycle and supply chain. Go to the source of where it starts and follow it all the way through."
Mastering the Marketing
Making a dent in an industry dominated by Trojan and Durex will be no easy feat, however. That's why Hollender brought his daughter on board to run Sustain's marketing. Having just earned her MBA from New York University, Meika Hollender, 26, cut her teeth as a brand strategist for Fortune 500 companies. Now, she's helping her father figure out how to talk about and market safe sex to women like her. Needless to say, maintaining clear boundaries in a family business as unique as this is critical.
"One of the first things one of my advisors told me was you should never call your parents mom and dad in meetings," Meika, who referred to her dad as Jeffrey throughout our interview, says. "Another thing we've struggled with is knowing that even though in our personal lives we've become friends, in business, he's still my boss. Sometimes I think I'm right, but at the end of the day, I have to concede."
Meika says the key to competing with such major brands is not taking them on head first. Instead, Sustain is deliberately targeting women, a neglected demographic among condom brands, despite the fact that women make nearly 40 percent of condom purchases in this country. To reach women, packaging will be more discreet than mainstream brands--"No woman wants a bright orange box of condoms in her purse," she says. And though Sustain doesn't have retail partnerships yet, the Hollenders are targeting distributors like Sephora and Whole Foods, instead of CVS and Walgreens.
"These are stores that women trust will do the homework for them," Meika says.
And while it's rare to turn on the TV without seeing a Trojan commercial, the Hollenders have decided not to invest in traditional advertising and to focus on public relations and social media instead.
"We built Seventh Generation into a $150 million brand without doing much advertising at all," Hollender says.
Learning a Lesson
This time around, Hollender is being extra cautious about the company's governance, careful not to lose control of his company ever again. Rather than taking venture capital or private equity money, Hollender raised funding for Sustain on CircleUp, a crowdfunding platform. The company also has an unusual governance structure, in which the founders will control the board in perpetuity. Employees will also be entitled to elect their own representatives to the board. "We did a lot of things that would make professional investors uncomfortable," says Hollender. "We wanted individuals who could make a commitment to this on a long term basis."
Going forward, Hollender knows that educating consumers and convincing them to trust this new brand will be Sustain's biggest hurdle. While Hollender is, undoubtedly, hoping for another major success with this company, he says his bigger goal is to ignite a paradigm shift in the industry as a whole.
"Our hope is that in five years, all condoms will be fair trade," he says. "If the goal is to make a better, safer product for women, we have to change the industry, because we can't do it alone."
Though Thanksgiving weekend was a bit of a disappointment for retailers, according to data released on Sunday, online sales rocketed.
Heavy discounting took a toll on U.S. retail sales during the Thanksgiving weekend as shoppers spent almost 3 percent less than they did a year earlier, according to data released Sunday by an industry group.
That could be an indication of a more difficult season for many retailers. One bright spot this weekend, according to the data, was e-commerce as online sales soared.
The National Retail Federation estimated the average shopper spent $407.02 over the weekend, or 3.9 percent less than during the same weekend last year, because of lower prices it said would persist through the rest of the season.
"Retailers will continue to aggressively promote their in-store and online offerings, looking to entice today's very budget-conscious and value-focused shopper," said NRF Chief Executive Matthew Shay.
The NRF said 141 million people went shopping at least once during the holiday weekend, up from 139 million last year. But total spending was expected to reach $57.4 billion for the four-day period - which includes Black Friday, the biggest shopping day of the year - down 2.8 percent from $59.1 billion over the same weekend in 2012.
The big deals will also dent profit margins, analysts said.
"Sales will go up, but gross margins are going to be down. Doorbusters were what people were shopping for, more than the regular-priced stuff," said Ron Friedman, retail practice leader at the consulting firm Marcum LLP.
The Thanksgiving weekend is an early gauge of consumer mood and intentions in a season that generates about 30 percent of sales and nearly 40 percent of profit for retailers. But many have given modest forecasts for the quarter. Wal-Mart Stores Inc said it expects no growth in its U.S. comparable sales, and Macy's Inc didn't raise its full-year sales forecast despite strong numbers last quarter.
The shorter holiday period this year - there are six fewer days between Thanksgiving and Christmas compared with 2012 - prompted retailers to begin offering bargains on Monday, earlier than usual, something Shay said likely pulled some sales forward to the first part of the week.
The NRF stuck to its forecast for retail sales to rise 3.9 percent for the whole season.
Chad Hastings, the general manager of Town East Mall in Mesquite, Texas, near Dallas, said shoppers were even more focused this year on specials, noting a higher correlation between the timing of doorbusters and the rise in shopper traffic at his mall over the weekend.
"Retailers are doing whatever they can to get that wallet share earlier," Hastings said. Town East Mall's anchor tenants include J.C. Penney, Macy's and Sears.
ComScore Inc, an analytics firm, said U.S. online sales rose 17.3 percent on Thanksgiving and Black Friday, outpacing sales growth at brick-and-mortar stores. ComScore has forecast a 16 percent jump in online sales for the season, helped by greater use of mobile devices.
The most visited e-commerce sites in order were those of Amazon.com Inc, eBay Inc, Walmart, Best Buy Co Inc and Target Corp, comScore said.
Retailers are also being aggressive online as they look to benefit from Cyber Monday, which falls on December 2 this year. Cyber Monday is the biggest sales day of the year for e-commerce. J.C. Penney Co Inc and Macy's were among retailers that had already begun their "Cyber Monday" sales on Sunday, looking to keep the momentum going. Target was calling the occasion "Cyber Week."
The NRF predicted 131 million Americans would shop online on Cyber Monday, compared with 129 million last year. RetailNext, an analytics firm, found overall shopper traffic between Wednesday and Friday fell 5.2 percent and that customers went to fewer different stores, doing more online research beforehand.
But shoppers spent more money in the stores they did go to, and Shelley Kohan, vice president, retail consulting at RetailNext, said that a website good enough to make shoppers want to visit a store is more crucial now than ever. "Shoppers have more options," Kohan said.
Traveling in general always seems to come with headaches but during the winter months, everything is exacerbated. Hopefully this list can help you figure which airports you should--and should not--fly out of.
The miserable weather and hundreds of airline delays at Thanksgiving capped off a tough year for air travelers. One in five domestic flights this year has arrived behind schedule, the highest since 2008.
If you’re on a tight vacation timeline this winter - say, getting a plane to meet a departing cruise or make it to a one-day family gathering - you’re probably looking at individual airlines’ on-time performance. But picking the right airport will also boost your odds of getting where you’re going on schedule.
A combination of weather and airport traffic largely determines airports’ performance in the cold-weather months. When even a small storm hits the busiest airports, they have little leeway: Takeoffs and landing schedules are packed so tight that if something goes wrong, the effects cascade onto subsequent flights, says Alek Vernitsky of travel site GetGoing.com.
Plus, some airports handle winter weather better than others. Boston’s Logan Airport, for example, has won awards two of the last three years for its efficient snow and ice removal.
Travelers have more choice of hubs than in the past because of airline consolidation, says George Hobica of travel site Airfarewatchdog. In general, smaller warm-weather airports perform better. Travel sites like Kayak.com now offer tools that let you remove delay-prone airports from your itinerary when you’re picking a flight.
Other common-sense guidelines can help you avoid winter delays. Early-morning flights - anything before 11 a.m. - are more likely to get off the ground on time, says Rick Seaney of the air travel planning website FareCompare. Vernitsky suggests flying nonstop in the cold months. You can also check which routes chronically arrive late before you book.
Beyond those general rules, travelers also can use data to make informed airport choices this season. We crunched the government’s numbers to find the five least-delayed and most-delayed airports in the cold-weather months, calculating average on-time performance during the last three winters for the 29 major airports tracked by the government.
The 5 Best
- On-time departure average: 85.8%
- Rank: 1st
- Sure, it rains in Seattle - 5 inches a month from December through February. But unlike San Francisco, the city doesn’t get snowstorms or fog, says Hobica. And for a major airport, its traffic is light at 137,000 domestic departures a year, two-thirds fewer than Atlanta International, the country’s busiest airport.
Portland (Oregon) International
- On-time departure average: 85.2%
- Rank: 2nd
- Like Seattle it rains a lot, but when it does, rain in Portland is not accompanied by high winds, says Seaney. The Portland Airport is also small and well-run - at 83,000 domestic departures per year, it handles even less traffic than Sea-Tac.
Charlotte Douglas International
- On-time departure average: 84.8%
- Rank: 3rd (tie)
- Though this is the fifth-busiest airport in the country at 245,000 departures yearly, it still outperforms other major warm-weather airports like those in Houston and Los Angeles. Seaney says its performance is helped by being a key hub for U.S. Airways, which because of its “roots” as a low-cost airline, has a history of turning its planes around quickly. It doesn’t hurt that a lot of its flights go to the Caribbean; winter weather isn’t an issue.
- On-time departure average: 84.8%
- Rank: 3rd (tie)
- Tampa’s airport has the best of all worlds: average winter temperatures of about 65 degrees, little rain, and low traffic (at 75,000 departures a year, it ranks 32nd in the country). It also has a lot of low-cost airlines flying to it, which generally tend to pay more attention to staying on time, Seaney says.
Reagan National (Washington, D.C.)
- On-time departure average: 83.8%
- Rank: 5th (tie)
- Splitting traffic with Dulles International means that the major airport for the nation’s capital has less traffic than you’d expect. It’s only the 18th-busiest airport, at 136,000 departures. And there’s this, says Seaney: “When you’re carrying a senator, you must take off.” Is that true? “Let’s just say that every time a senator gets charged a bag fee, there’s new legislation,” he says.
Salt Lake City International
- On-time departure average: 83.8%
- Rank: 5th (tie)
- This isn’t exactly a warm-weather destination: Average temperatures of about 31 degrees from December through February, and average snowfall amounts higher than those of Denver. But this airport was recognized this year for snow and ice removal, and it’s relatively small, ranking only 21st in the country for domestic departures.
The 5 Worst
JFK International (New York)
- On-time departure average: 78.0%
- Rank: 25th
- One of the world’s busiest airports, JFK is “slot-controlled,” meaning the Federal Aviation Administration strictly limits the number of takeoffs and landings here to manage congestion. That also may mean less flexibility in responding to delays, according to a report last year from the GAO. It also gets an average of 19 inches of snow from December to February.
San Francisco International
- On-time departure average: 77.2%
- Rank: 26th
- One word: fog, says Hobica. There’s also limited runway access, overcrowding, and not enough air traffic control. “You’re much better off flying out of San Jose or Oakland,” says Hobica.
- On-time departure average: 75.6%
- Rank: 27th
- If you can avoid the city’s once- or twice-yearly mega-snowstorms, you’ll actually do all right flying to or through Denver, says Seaney. Those events shut everything for 2 or 3 days each time. When they happen, they’re a big deal since this is the 4th-busiest airport in the country.
Newark Liberty International
- On-time departure average: 72.7%
- Rank: 27th
- In addition to being slot-controlled, Newark has many international flights. Those complicate matters, since takeoff and landing schedules are beholden to the caprices of the jet stream coming in and out of Europe, Seaney notes. This airport also is dominated by United Airlines and has few of the low-cost carriers that do better with on-time performance, he says.
Chicago O’Hare International and Chicago Midway International
- On-time departure averages: 72.6% and 70.1%
- Rank: 28th and 29th
- The city’s snowstorms and sometimes 30- to 40-mph winds make camping out in Chicago’s airports almost inevitable. “It’s almost like Groundhog Day,” says Hobica of how predictable it is for passengers to be stranded here by winter storms. He thinks some place other than the Windy City - say, St. Louis - would make more sense as a major hub.
Is your business eligible for a small business health-care tax credit? Read on and find out.
This article is part of an eight-part series on how to cope with the implementation of Obamacare.
If you have 25 or fewer full-time equivalent employees, pay average annual wages below $50,000, and pay at least half of the premium cost for employee-only health insurance, the government wants to help you. Really. The Small Business Health Care Tax Credit has been available since 2010, but in 2014, the maximum credit is increasing, from 35 percent of employer-paid premiums to 50 percent. Qualifying businesses will be able to claim the expanded credit for up to two consecutive years.
The amount of the tax credit varies on the basis of the size and wages of your work force. The credit can be used only to offset taxable income, so if you have no net corporate income in the current year, you can carry the credit forward or apply it up to one year back.
If your plan starts in January 2014 or later, you will have to buy coverage through your state’s SHOP exchange to qualify for the credit. Under a transitional rule, though, plans purchased outside the exchange that have a 2013 start date but roll over into 2014 will also be eligible for the credit in the 2014 tax year, as long as you buy through the exchange on your next renewal.
The Small Business Guide to Obamacare
Part One: How to Notify Your Employees
Part Two: Get an Accurate Head Count
Part Three: Determine Whether You Should Offer Coverage At All
Part Four: Decide Where to Shop for a Plan
Part Five: Explore a Self-Funded Plan
Part Six: Ponder a Skinny Strategy
Part Seven: Launch a Wellness Program
Part Eight: Claim Your Tax Credit
Your customers want status. Build a system that provides it and you'll reap the rewards (in real dollars).
Having just heard the "Winklevii" twins try to explain to a very skeptical Dealbook audience the rationale for their Bitcoin investment and what an exciting new form of currency it has become (nothing less than "Gold 2.0," so they say), I still had trouble figuring out exactly how Bitcoins are likely to change the financial instruments and payments world as we know it. But maybe that's just me.
As far as new "currencies" go, I'd rather bet on the best/worst tendencies and reliably consistent behaviors of ordinary people. Some things I know for sure: we all revere status, we all love to keep score, and, most of all, we love to compete with each other (especially with our friends and family). In fact, in many cases, winning isn’t enough; it’s just as important to know that your friends lost.
So I'm staking my claim on "status" in all its forms and flavors as the next great "currency." More important, I see it as the most cost-effective and accessible influencer of change in consumer behavior, and it’s available to smart businesses of every size. Broad-scale, brute force marketing costs too much and returns too little, but status abides. Now is the time for you to learn how to incorporate that fact into your relationships with customers and prospects.
The fact is, we always knew that status mattered. But it’s only with the comprehensive hyper-personalization of the web (thanks principally to Facebook)that we actually have to be who we are, because the days of Internet anonymity are long gone. As a result, it's become possible for any business to:
1. Confer upon and award status to others (particularly its customers).
2. Reliably create, measure and track status, achievements, accomplishments, etc. on a massive scale.
3. Distribute and publish the results in real time to audiences large and small that matter to each and every one of us.
Lists of all kinds, leader boards, badges, rankings, etc. are some of the most obvious incarnations of the status tracking/measurement syndrome now being supercharged by social media. These trends aren’t limited to consumer forums; they’re impacting and sweeping through the business environment as well.
Early aggregations were generally enabled by a set of activities ("friends," "likes," etc.) that consumers could manage and partially influence. If you spent the time, you could up your game and change your position. But today that’s much less true, especially when you compare the old systems to today's tools, like Klout and Kred, which are largely beyond the control of individuals.
I realize that Kred has certain self-reporting activities ("uploadable moments") that give its participants some sway over their rankings and ratings, but essentially these new systems profess to be independent and objective (even while they entice and encourage us to engage in activities that influence their calculation and evaluation processes). Millions of people are taking the bait and changing their behavior in the (most likely vain) hope that their actions will improve their stature and standing.
What does all this have to do with you and your business? Simply this: If you want to keep your customers and, in fact, deepen and extend your connections and relationships with them, you need to understand how these new notions of shared notoriety, and the concept of manufactured addictions (where we repeatedly engage in activities for no real economic benefit or actual purpose other than improving our rankings or status on some utterly arbitrary listing or leader board), can be used to increase customers’ commitment and loyalty to your products and services.
There are basically 3 elements to the status equation that almost any business can implement at little or no cost. The goal is to create levels, tiers, and plateaus (almost as if you were building a typical computer game) that will generate the kind of quasi-competitive environment that triggers and spurs on this kind of compulsive/obsessive behavior and creates Power Users. These Power Users will quickly become not only your most lucrative customers but, far more important, your strongest, most authentic, and most aggressive advocates and promoters.
Here’s a basic outline of what you need to think about and construct:
1. Provide increased recognition for your Power Users.
Develop a simple system to provide, document, and publish the increased status and recognition that you are affording your most important customers. There are several companies already in this space who provide various programs with levels, award schemes, badges, etc. that can be easily adapted to your requirements. Just make sure that you take the time to personalize the offerings so that they don’t seem like a canned incentive program that some consultant sold you.
2. Provide expanded access for your Power Users.
As every restaurant, nightclub, airline, and sports team learned long ago, there’s always a "best" seat in the house, and there are people who will do whatever it takes to sit in it. Depending on your business this could take the form of special service lines, extended hours, credit considerations, concierge services, accelerated processing, etc. The incremental resources required to deliver these kinds of programs are trivial compared to the long-term lifetime value of retaining these high-end and often hyperactive customers.
3. Promote "ownership" by letting Power Users influence the business (or at least let them think they do).
To a very real extent, the smartest companies today are designing programs and incentives that basically "hire" their customers to work for them and encourage them to do significant amounts of work in the name of influence and ownership. Insurance companies are increasingly creating more self-service options, positioning them as conveniences and time-savers for customers rather than as cost savers for the company (which, of course, they are as well). Obviously, Wikipedia’s 70,000 "editors" believe (and rightly so) that they are influencing the end product on a daily basis. And they will continue to do so without any thought of compensation so long as their efforts are acknowledged and they don’t feel anyone is making a buck off their hard work and good will. User groups have been around for a long time, but the difference is the immediacy with which, and the concrete ways in which, the influence of Power Users is leveraged by companies in virtually real time.
Frankly, this approach is just a new riff on the old Tom Sawyer fence-painting scam. As Tom says to Ben: "Does a boy get a chance to whitewash a fence every day?" A bit later, Ben takes the bait: "Say, Tom, let me whitewash a little." And the rest, as they say, is literature. Some things never change.
Motown had one of the longest hot streaks of any company ever. Here's what your business can learn from their success.
Who doesn’t love Motown? Their songs are known by people around the world and their superstar artists have helped to define American pop culture. Motown is one of those rare record labels whose entire output is almost universally adored by fans and critics alike. What many people don’t realize, however, is that Motown’s founder Berry Gordy ran the label more like a Ford assembly line than a Center For The Arts. He prized efficiency, scalability, and packaging above all else. The product just so happened to be some of the best music of all time. With access to more communications channels than ever before, businesses have unparalleled opportunity to make themselves famous. Fortunately there are plenty of lessons to be learned on this front by studying Motown and its visionary founder.
The Temptations. Stevie Wonder. The Supremes. Marvin Gaye. The Jackson Five. All totally different artists with totally different sounds, right? Not exactly. If you go back and take a closer listen, the basic template for a lot of their songs is almost exactly the same. In fact, the blueprint was so effective that a whole bunch of artists on the grittier Stax label (Aretha Franklin, Sam & Dave, Otis Redding.) borrowed it for their own songs. Yet no two artists from either label were ever in danger of being confused with one another. Whether you’re blogging, speaking, or publishing articles, don’t try to start from scratch every single time. There are plenty of people and companies who have already made themselves famous by putting their messages out there in just the right way. Look at what they’re doing and steal the bones. You can always fill in the details with your own stuff later.
Test Even the Best
Even though Berry Gordy knew he had developed a monster success formula, he never stopped testing. Every time Motown cut a demo for a new single, he would gather a panel of handpicked staff members together to vote on whether or not it was a hit. It didn’t matter whether he thought they had crafted the best piece of music since Beethoven’s Fifth - if it didn’t pass the test, it didn’t get released. We live in a world the likes of which the young Berry Gordy never could have dreamed. These days you can get market data on everything, from how long people spend looking at your material to the specific actions they take after seeing something you’ve produced. No matter how confident you are about the brilliance of what you’re putting out there, don’t skimp on testing. It’s what will make the difference between whether you become a Hit Factory or a Hit-and-Miss.
Keep What Works, Trash the Rest
Not everything recorded at Motown was a smash hit. A major secret of their success was that it didn’t have to be. Because they were process-oriented, they knew they could always produce another great record. And because they were willing to ruthlessly evaluate their work, they made sure their public never heard anything subpar.
As a result, Motown not only became famous, they became great. What would you give to be able to say the same about your business?
Small U.S. companies talk about what they need to grow their business and what's standing in their way.
Growth. It's your goal. It's everybody's goal. It's good for you, for your business, for your employees, for the economy.
So, uh, how do you get there?
Participating in a survey, 854 U.S. small businesses--all business-to-consumer companies--answered these questions for Massachusetts-based online marketing firm Constant Contact.
The survey also asked these companies what they see as the keys and roadblocks to growth. As for what they thought might help achieve growth, 82 percent answered "loyal customers." Other popular options included:
- Marketing tools (66 percent)
- A stronger economy (50 percent)
- Skilled employees (47 percent)
The results for what's standing in the way of growth were a bit more divided. They were:
- Finding new customers (30 percent)
- Lack of time (23 percent)
- The overall economy (16 percent)
- Funding (10 percent)
As it happens, Inc. has its own survey of companies that have already achieved sustained growth--that is, growth for five consecutive years. This survey is the basis of the Build 100, the premiere list of America's midmarket sustained-growth firms to publish in March.
The growth companies were asked to rank 14 areas as either a "major challenge," a "minor challenge," or "not really an issue" in their quests toward growth.
The big winner: training future supervisors and managers, with 73.4 percent of the growth companies surveyed recognizing it as either a major or minor challenge.
Other common answers included:
- Attracting new customers (65.3 percent)
- Using data to inform decisions (60.5 percent)
- Attracting top talent (also 60.5 percent)
Only 31.3 percent of companies said accessing growth capital had been a challenge, making it the least common problem.