Growing a Very Small Business

Would Warren Buffett Buy Your Company?

2011-11-26T19:10:00.001-08:00

He is looking. But is he buying?

"Buy wonderful companies at a fair price, not fair companies at a wonderful price." - W.B.

This is a tough question to answer honestly. The truth is, of course he wouldn't buy my company as it is now, but if it were larger would he look at my company and say that it was a wonderful company he would like to own? He would probably have a few reservations about investing in my company as it stands today.

The moment this question came to me, I could see what needs to improve in my company to make it better. I could see some things we do well, and some things we should do differently.

Power of Video Marketing

2011-11-26T13:04:00.001-08:00

If a picture says 1,000 words, then a video says 10,000; maybe more. My company, H2O Pools, started our video marketing campaign last summer and it has helped bring in new leads, sell new work, and build our brand awareness.

This is just one of the 3 professional videos showing some of our work.

It is possible to spend a tremendous amount of money on a project like this, but it is not necessary. We work with Brendan, the owner of RE Visuals.
He is a one man show, and his work speaks for itself. Plus, he manages to keep the costs down by doing all of his own videography and editing, as well as producing all of the music, which is original. We didn't have to pay any royalty costs.

I have seen videos that were done by large production companies, and they cost around $20K-$40K for a video of this magnitude. There is a difference in the quality, but not enough to warrant a cost that is literally 10x what I paid.

They videos get the points across, in a very short amount of time. The viewers get a sense of what we are capable of doing and this builds an interest in our company. I haven't ever sold a new pool solely from someone watching the videos, but I have gotten in the door because of them. They took some effort and time to make, but the R.O.I. is well worth it.

Whatever your small business is, there is a place for video marketing. It makes a difference to have a pro doing the work, vs. shooting footage with a smart phone. The professionalism translates into higher quality leads, and more profitable work.

Invest...Family and Friends

2011-11-24T18:53:00.001-08:00

Family, Friends, and You:

Daddy's Little Girl

Every business has its busy and slow times. When things slow down, I make a concerted effort to spend time with loved ones and to do things that balance all the hard work.

Home is Where the Heart Is

There are times of the year that I am so busy I barely see my daughter off to bed at night. During the slow times, I try to get home early and spend quality time with my family. It is very important to remember why we work so hard when it is busy. It is critically important to take advantage of the time and do fun stuff with the family. Otherwise, before we know it, our kids are off to college and work and we hardly ever see them. Then they repeat the same patterns we modeled as they grew up.

If you value your family, you will make them a priority. Your business can suck the life and joy out of your home. If you think your wife or children aren't involved with your business, think again. Remember those tough days, when you had to deal with a major monetary loss, or a very difficult client? If you are as human as I am, you probably brought your frustration home and unleashed it on your family. Some people show their emotions and some hold it in. Either way, your family suffers along with you as you fight your way to success with your company. MAKE SURE you allow them the joy of having you home and happy once in awhile.

Lunch With My Wife

Honestly, the last time I brought my wife lunch was three years ago when she was nursing our daughter at work. While it is difficult for me to pull off now, with her new job location, it isn't impossible and I haven't done it. This effort could go a long way in pleasing your wife (or husband), and it can make up for many long days away from home tending to your busy, busy company stuff.

Hi Grandpa!

When I see my grandpa, I always think the same thing…I really need to see him more often. I walked into my mom's house the other day, after work, and my grandpa was sitting on the couch. It was such a pleasure to see him. I know this is a cliche, but the grandparents aren't going to be around forever. The slower times allow us to make an extra visit between holidays. It sounds horrible when I read that last sentence, but that is what it has come to. I usually only see my grandpa on holidays and that just isn't good enough. As an American, I can say that this is fairly normal for many people in our society. Especially, for people who's family is out of state or out of the country.

Old Friends

Do you have old friends that you have known for over 10 or even 20 years? I have a group of friends from high school, and we usually see each other twice a year with ALL of the kids. It is always a blast, but I barely have time to really catch up with any of them one-on-one.

It is so rewarding to meet up with an old friend for lunch or after work, or at their house on a Saturday. One evening I was at a customer's house very close to my friends Jessica and Desmond. Jessica and I have been close friends since high school. I stopped in, unannounced and stayed for an hour or so. It was great! They were delighted to see me and I got to catch up with them and their two kids. It won't always work just dropping in on people, and some people prefer a call, but when it does work, it is reminds us of who are real friends are. In our lives we may have just a few real friends. It is always worth investing a few moments to connect with them.

Time for Fun

Put down the hammer and step away from the ladder. Take a break and get a life! What are you working so hard for if you never take a moment to enjoy your life a little? You know who you are if this rings true. Pause for a moment, and think about the last time you did something fun. If you have at least one child, I can imagine it has been awhile since you did something, just for YOU! At least that is how it can be for my self for periods of time. It is ok to reward your self once in awhile for all the hard work that it takes to build and maintain a small business. In fact, I believe that without some kind of release, the pressure can build inside our selves, and blow!

For me, I try to find small things that take my mind off of work, for short time frames. After all, the business takes most of my time and I need and enjoy spending time with my family, so there is little time left over. Last summer I managed to get a small power boat. I rarely have time to take it out, but when I do, I don't worry about any of my normal daily stressors. I feel the breeze and smell the water.

The Budget

2011-11-21T03:12:00.001-08:00

The Budget

The dreaded BUDGET...I hate doing this kind of work. In fact, I imagine HELL is freezing cold, there are no beaches, the only food is MacDonald's, and all I am allowed to do is budgeting and accounting.

Many businesses fail because the leaders don't have a good accounting system in place and they don't do a budget. This has been my biggest source of failure in business. I have tried to do my own bookkeeping, and I have tried to hire a friend as my bookkeeper. Neither way worked. I just would not do the work, and my friend didn't seem to know how to organize the accounting for a business my size. And I kept her far too long after I realized she wasn't a good fit for the job, because I didn't want to hurt her feelings. In the end, I did both of us a disservice, and hurt her feelings anyway.

Hire An Accountant

If you are not the nerdy type that gets turned on by crunching numbers and glaring at large spreadsheets all day, just find someone that does. They are out there. I remember my Accounting 101 professor at VA Tech. This man was on fire for accounting. He would jump around, shout and get so excited when he would balance a budget. It was hilarious. He was such a great teacher! I was so inspired by him, I actually tried to major in accounting. That didn't work out, but what I learned was, some people are wired for this type of work, and they should be involved in my business.

I hired a CPA, shortly after my bookkeeper friend graciously and voluntarily left my company. He comes in for a couple hours every couple of weeks and confirms, and reconciles Quickbooks. He charges a very reasonable rate, and the net cost is far less than carrying the salary of a full-time bookkeeper.

Quickbooks online is a great tool for small businesses. I have heard there are other systems, but most I have looked into are more expensive and more cumbersome to use. Quickbooks has a budget tool that is easy to use and modify.

Quickbooks Budget

For me, I have to schedule the appointment with my CPA first, then I get to work on the accounting. The appointment gives me a deadline, and that forces me to do the budget and accounting work.

If you are operating without a budget, then you are sailing in the dark, on the ocean, without a compass. I know because I did it for years. I always thought there would be more time later, but my company continued to grow, and time became less and less available.

You need to know where every dollar is going in your business. If you don't tell your money where to go, it goes wherever it wants, or worse, wherever everyone else wants it. (Dave Ramsey, Financial Peace) It seems to disappear when there is no plan for how you allocate it. A budget is a plan for your money. It takes a ton of energy and time at first, but it gets easier and easier as you get in the habit of creating budgets. Take advantage of the lulls, and work on this stuff.

I have to credit Dave Ramsey for the lessons learned above. Though I am not as articulate as he is, maybe the essence of what I have gleaned from him, will come through.

"A budget is a plan for your money."

Make a List

2011-11-20T18:47:00.001-08:00

Make A List

To counter these useless tasks, it is essential to create a to-do list. For some people this comes naturally, but for people like me, a list is painful for several reasons. I like spontaneity and a list seems to structure and limit my day.

The reality is, a list allows me to narrow my thoughts and focus on important tasks for my life at work and home.

Here is a typical list I would create:

1. Enter completed invoices into Quickbooks

2. Schedule doctor appt.

3. Blog for 1 hour

4. Go through old mail on desk

5. Call active leads

6. Complete proposals

7. Schedule lunch with my Grandfather

8. Go over active projects and update punch list items; Look at cash-flow and figure out when the next draws are due.

9. Look at budget for next month

10. Have employee organize inventory and clean storage shed and basement

11. Find church service for this Sunday

12. Plan Thanksgiving menu

13. Organize materials and videos for consulting gig

The next step to the list is to prioritize. Dave Ramsey wrote about prioritizing a to-do list in his book Entreleadership, and it was the best and simplest method I have ever seen.

First you label the items as "A" or "B". The "A" items are ones that have to be done today, and the "B" items are the ones you would like to do today, but they can be done later. Next, number each item in the "A" group starting with "1", for the top priority item, that has to be done first. Follow with 2, 3, and so on for the rest of the "A" list with the higher priority items being lower numbers and the lower priority with higher numbers. Do the same for the "B" list, by numbering by priority starting with "1".

So your top priority item is A1, second is A2. I personally write a list most mornings of anything that comes to mind as a brainstorming list, then label them "A" and "B", then number each item in the "A" group, and "B" group. I then rewrite the list in 2 separate columns in priority order. My finished prioritized list above would look like this:

1. Complete proposals

2. Call active leads

3. Go through old mail on desk

4. Enter completed invoices into QB

5. Blog for 1 hour

6. Go over active projects

7. Have employee organize inventory and clean storage shed and basement

1. Organize materials and videos for consulting gig

2. Find church service for Sunday

3. Schedule Doctor Appt.

4. Schedule lunch with Grandfather

5. Plan Thanksgiving menu

6. Look at budget for next month

I may never actually complete all the tasks on the lists, but I can see the progress I have made, which gives me a sense of accomplishment. Furthermore, the list helps me move forward on the things that really mater.

Surviving The Lull

2011-11-15T19:09:00.001-08:00

Take it easy...

When I read books by famously successful business people I get inspired, but a part of me also feels lazy. When I read Tony Hsieh (CEO, Zappos), Dave Ramsey, Richard Branson, or Malcolm Gladwell, I get the sense that when I don't make good use of my idle time, I am a loser! These guys are so wildly successful and inspiring, I can't imagine them sitting around watching Brothers and Sisters like I do every night with my wife. I am sure these business icons have some down time and enjoy some form of entertainment, but from reading their books, you'd think wasting time was bread out of their DNA.

In the picture to the left of the infamous Tony Soprano, we are reminded of one of his favorite expressions…"take it easy". This is what he would say to someone that was getting upset as he would smirk cynically. Not the business icon I had originally thought of, but he was a character that embodied the essence of balancing life with work.

In any business I have ever studied or experienced, there are cycles of ups and downs. For my business, the spring season is our craziest time of year. One colleague of mine put it this way: "There is a finite amount of time to do an infinite amount of work." In the pool business, in Northern Virginia, the spring season is when the action happens. The summer and fall seasons are steady, and the winter is a ghost town.

The question everyone asks me when I tell them I am in the pool business is, "So, what do you do in the winter? Do you go on vacation?"

The reality of the pool business is not as glamorous as it may seem in the winter. The first hurdle is making sure we have enough money to pay all the bills in the winter. This requires saving money all year to prepare for the off season. Most years, I have fell short of this principle.

The way I have dealt with an extremely slow off season is to sell winter work. We can do construction work in the winter, that pays for the rent, lights and payroll. I will address my personal strategy for selling work off season in future posts.

If you have ever been self-employed or a business owner, then you have experienced the phenomenon of sitting at your desk wondering what you should do or where you should start. There are some days when the work is caught up and you have followed up on all the current leads. You surf through Youtube, maybe write emails to some friends, or even watch a movie. Some people clean and organize their desk and junk drawer, or clean out old files. All these activities are meant to distract us from our business, or lack of business.

In the next few posts, I will explore different approaches to surviving the lull.

Make a Statement Marketing

2011-11-05T21:52:00.000-07:00

Look Into My Eyes

What Do You See?

The answer is: Beauty

Recently, I listened to the autobiography of Steve Jobs. One thing I learned from him is to make beautiful things, and to make what I do beautiful. The picture of Angelina Jolie above shows how beauty captivates people. When you combine beauty with excellent products and services, you have a winner.

When I first picked up an iPhone 4, I felt the beauty of the design and it was a pleasure to look at it. As a practical matter, I wanted to protect it from getting damaged. So, like most people, I purchased a bumper protector and a screen protector for it. After I put the bumper on it, it wasn't as beautiful. I left it on the iPhone anyway, because I feared I would destroy it. A few weeks ago, my daughter ripped the bumper off. When I picked it up without the bumper, I immediately realized that the bumper ruined the iPhone. It made it bulky and awkward in my hand. It made it feel cheaper. So, I have been living on the wild side, and using my iPhone without protection! The experience is so much nicer and my iPhone fits in my pockets better.

I am no Jobs, but I have constantly tried to improve my marketing and brand. It takes time to develop and it takes making mistakes. It also takes recognizing what works and repeating it. My father taught me long ago that it is essential to send a direct mailer every spring and fall in our industry. I still do it to this day, and I can honestly say, that every time I send out a flyer, it is the most beautiful one I have ever created. I work with a wonderful printer, and together we improve our marketing materials every time. We are never satisfied with what we did last year.

It matters how your marketing materials look. It matters what type and weight of paper you choose. When a customer picks up your business card or flyer, the first thing they take in is how it feels in their hand. It may only hit them on an unconscious level, but believe that it makes a difference. Quality is paramount.

Compare the bulk mailers to a direct flyer. The bulk mailers are packed with the cheapest crap paper ads available, and 99.9% of them end up in the trash. With an average post card, you get at best 2% call backs. With the highest quality flyer possible, with relevant content and attractive design, you can stretch that to 3-4%. More importantly, when they notice your materials, quality jumps out and sets you apart from all the other chumps out there.

Don't be cheap with your marketing materials. Especially if you sell a high-end custom built product like me. Make a statement with everything your clients touch or see, and your efforts will pay off as profits and customer loyalty. If you don't believe me, walk into any Apple store in the United States, and see for your self.

Steve Jobs, may you rest in peace. You changed the universe.

No Matter What, Keep Marketing!

2011-10-19T09:15:00.000-07:00

As many of you have probably heard, one of the biggest mistakes very small businesses make, when revenue is down, is to stop spending money on marketing and advertising. The mistake is obvious to an outsider because of the clear connection between sales and marketing. However, when you are in the trenches of the very small business, and you are running out of cash, you focus on the basic needs of survival: payroll, vendors, rent, and keeping the lights on. However, I propose that marketing IS a basic need for survival.

How are you going to pay for any of the other basic needs if your phone stops ringing? I have referenced Stephen Covey's model called The Management Matrix, from his book First Things First, in other posts, and it applies here as well. Marketing falls in the Important, Not Urgent quadrant, so when we are in crisis mode, it gets cut. I am not suggesting that marketing shifts to the Important/Urgent quadrant, I am suggesting that you focus on Quadrant 2 during a crisis. Marketing takes planning and forethought. You can sometimes get your printer and marketing company to get your flyer out in a few days notice if it is simple and small, but is it going to be effective? It is important to take time to develop your marketing plan, budget and materials.
Find more information at The Business Forum; Cut Anything but your Marketing Budget.

Also, there are a multitude of ways to market your business for free! Here is a link for 10 easy ways to market your company for free. 10 Ways To Market For Free

I won't write about all of them here, you can read them, but I would like to look at how you can use facebook and other social media to promote your business.
I finally got on the bandwagon with Facebook, and within 2 weeks I went from 30 followers to 109! It required just a little effort on my part and it increased my exposure 3 fold. Facebook is nice because it is easy to update with pictures, links, videos, and information for your people to enjoy. I haven't figured out what really grabs people yet, but it seems that people are mostly visual. They like shiny things, like bass fish. They are all looking for that new shiny thing.
A guy walked in my store one day and presented me with his service as a videographer. (Check out REVisuals.com) He was new to the industry, so his prices were very competitive, which made it affordable for me to hire him. We shot 3 videos of our work, and I have posted them on Facebook, and my web site. His videos were very high quality and professionally produced. If you are broke, you probably couldn't afford to do something like this. However, if you have a phone, it most likely has a decent video camera built into it. Your production may not have the quality of a pro, but your personality, information and product or service will be out there for the world to see. Remember, people are visual. There is a reason Youtube is such a mega-success. If something doesn't work, try something else. You never know what people like to see until you experiment. And if you are doing the videos your self, for free, you have nothing to lose but some time. Your time is never wasted on such projects, because you can always learn from your experience.
Here is an example of a video we've done:

Truth Detector

2011-10-16T21:59:00.000-07:00

What is your Truth Detector? Some people call it your gut, some call it instinct, and some call it your heart. I am not sure if they are all the same, but whatever you call it, hopefully, you know what it is.

True False

It is that inner nudge that tells you when something is right or wrong. Sometimes your truth detector tells you when something is just slightly off.

There is a type of therapy called Cranial Sacral Therapy. In this practice the practitioner uses a very gentle touch (less than 5 grams, approximate weight of a nickel) to manipulate the cranial sacral system in the patient. (Upledger Institute Int'l. website, FAQ page, http://www.upledger.com/content.asp?id=61) To give an analogy of how gentle the touch is, imagine you are holding a 36"x12" sheet of cellophane with a dime resting somewhere on the plastic sheet. Your eyes are closed and you pull on the plastic with your finger tips. Without looking you would gain a sense of where the dime is resting. If you pull too hard you will drag the plastic too fast and you won't feel the dime. But if you pull very gently, you can sense the relative location of the dime. Try it!

In the practice of cranial sacral therapy, the practitioner manipulates connective tissue in this very gentle, sensitive way, relying on an inner sense of feeling, rather than an overt tactile sensation. The more experienced practitioner trusts this feeling and uses it to heal their patients.

The connection between the very sensitive touch of the human hand and the intuition is the closest analogy I have found to demonstrate the physical manifestation of the human intuition.

This evening, just before I started writing this post, I treated my wife for a major headache, using cranial sacral techniques. In the middle of the treatment she said, "You aren't doing anything." I replied, "How does your head feel?" She said, "It doesn't hurt anymore, but you aren't doing anything. Aren't you going to massage my neck or something?"

I am no master of cranial sacral therapy. I only know the basics of the protocol, and I am not certified to practice massage professionally. But with my wife and family as my patients, I manage to stay out of trouble, and I help elevate pain in their lives.

What does this have to do with a very small business? It has to do with several layers:

1. Your inner feeling is the guide to healing. In business terms, your inner feeling is your guide to making decisions that help your business grow and prosper.

2. Your inner feeling is private and unseen by others. This is something that others may not recognize. It is difficult to describe to people what you are sensing. This makes it tough to convince others around you that your ideas are valid and based in reality.

3. Your inner feeling senses what is wrong. When our warning signals go off, we often ignore them, until we learn to trust our instincts and act boldly and courageously, against the status quo. As I was cradling my wife's head, I could feel (sense) the pressure behind her frontal lobe. She claimed I was doing nothing, yet her headache disappeared in 10 minutes.

Guide to Healing

In July of 2008, I was driving around the Great Falls Village near Wachovia Bank, when I noticed a "For Rent" sign. It was the corner leather shop, Tricks of the Trade. He was leaving. For years I had declared that I would never open a retail store, but when I saw that sign, I saw my future.

It was like seeing ten years or more into the future, like looking through a magic portal. I was My self occupying the space and being a regular fixture in Great Falls.

I will take a moment and describe Great Falls for those of you that don't know it so well. This is where the median income is over $350,000 per household annually. Average prices for homes are over $1m and there is a concentration of pools in the area. It is a wealthy wonderland. There are politicians, lobbyists, big financial investors, owners of major I.T. firms, and owners of banks. Now how rich do you have to be to own a bank?

Great Falls has always been the base of my business, because that is where the action is. Every pool company worth its salt does business in Great Falls. I have grown to know and love the area, and the people. Rich people can be great for business. I am just being honest. They can afford to do the right things to keep their stuff in great condition. I am in the service and construction business and so, we have a symbiotic relationship. I tell them what I think they need, and they, for the most part, tell me to go ahead. Of course it has taken years to establish the relationships and trust with my clients.

Back to the story…I rented the store with my bright future ahead and then the bottom dropped out of the market. Fortunately, the current tenant, the leather guy, asked to stay another year, because his business picked up in the recession. People started fixing there shoes again. I struggled through the next year, having a drop in sales from $1.3m in 2008, to $300,000 in 2009. February of 2010 rolled around and I had to take occupancy of the new store. The previous tenant asked if he could stay again, but I felt my gut telling me to move in and assume my lease.

This move went against all logic and everyone's advice. My father told me that if I had an out I should take it. He said I couldn't afford the store. He was right! I had no money! What was I thinking? All I had was my instincts and my vision I saw in that crystal ball. I was going to be successful here. It was like a beacon for pool owners. I was the local pool guy now.

I walked into my new store after the leather guy had cleared out. It still smelled like the leather and the chemicals he used in his shop. The wood floors were black and the walls were stained a dingy brown color. It was difficult to breath in there. It was the year of snowmagedon. We had the worst snow storm in 100 years. Multiple feet of snow dumped on the Washington D.C. area. With no money or motivation, I did very little with the store in February. I would walk in there, look around for 15 minutes, then walk out. I was overwhelmed and I didn't know where to start. On March 1, I realized I needed to get started if I was going to be able to open on April 1. I sketched a plan for the counters and shelves. I enlisted a close friend to help me and we started planning. I sold some work so I had just enough cash to pay for the build out. Plus, since the previous tenant had been there for 32 years and did basically no repairs to the place, the landlord agreed to pay for most of the work.

We replaced ceilings, added recessed lighting, cabinets, granite counter tops, shelves and decorations. We managed to open the doors on April 10, 2010. As luck would have it, there was a new farmers' market held in the parking lot right in front of the store. People stopped in after they shopped at the market, and bought their pool stuff. We sold more service and construction work than supplies actually. To make the situation even more sweet, the other local company had to move out of their location! The fire department was getting a new fire house and the county purchased the land where the other pool company was located, so they could put in their new septic field. What can I say, God was on my side. To this day I am the only locally based swimming pool company with a storefront, in one of the most affluent areas in Northern Virginia. I would like to say it was stroke of genius that caused me to move into the store, but it was pure instinct and divine intervention. I did no research before I rented the store, it just seemed like a no-brainer.

Well, from our pitiful existence in 2009, at $300K in gross sales, we grew to $1.8m in 2010. It was the biggest year by far, since I started my company in 2004. The store proved its value, and it continues to be a beacon for all pool owners in Great Falls, VA.

Our Inner World Is Private

Understand that your gut feelings or instincts are a private sensation. They are invisible to others around you. As a leader, it is your choice to share your inner experience with those around you, or keep them to your self. For me, I question my motives for doing either of the two.

If and when I chose to share my inner revelations, what is the purpose of my disclosure? Am I trying to change the way they conduct business within my organization? Or am I simply sharing by thoughts out loud to get another perspective?

In one of our morning staff meetings last Spring, I decided to share some appreciative comments with my team. I was up late the night before, writing the characteristics I valued in each of the individuals. It was a practice I learned in grad school at GMU. It is called Appreciative Feedback. The idea is to recognize the things people do well, and enable them to do those things more. (Appreciative Intelligence, Tojo Thatchenkery and Carol Metzker) I also shared with my employees my process for coming up with their feedback. The night before I couldn't fall asleep, and so I took an Ambien to help me sleep. I then realized I hadn't prepared for our staff meeting, and I got up to write some notes before the medicine kicked in. Well, if you have ever tried to stay awake after taking Ambien, it is an experience reminiscent of foggy college party days. It made for interesting content for the staff meeting to say the least.

I shared that entire experience with my staff. They thought it was funny, and I wasn't worried about them judging me for taking a sleeping aid, but I wonder if it diminished the appreciative feedback I gave them. I made sure the feedback was appropriate the morning of the meeting, so the content and data was good, but mixed with the story of my strange process the night before, it is possible that the focus was diffused. The point is, a) I don't recommend working after taking a strong sleeping aid like Ambien, and b) your process for preparation and inspiration is private and potentially taken out of context when you share it with others. I have always believed in being open as possible with co-workers, but I also know that it is important to consider the impact on others as I share my inner voice. Are my inner thoughts relevant and necessary? Do they support my desired impact?

In Simon Sinek's book, Start With Why, he illustrates his concept of the Golden Circle. The inner circle is your Why, the next circle is your How, and the outer circle is the What.

The Why is your vision or the dream, the How is the mission or how the organization does its work, and the What is what the organization does; what products and services it offers.

Your inner voice, is what I consider your "Why" or your dream. In order to translate your dreams into reality, it is helpful to have clarity of vision. Once you can clearly articulate your vision, others can understand and and be inspired by you, if their values are similar to your own. I recommend reading Sinek's book, Start With Why, if this is something that interests you. It changed my life.

Our Inner Voice Warns Us

There have been multiple times when I went to bid a job, and my gut told me to walk away. Until recently, I would ignore this message because I thought I needed to sell every bid that came my way. In every case, when my gut told me to bail, the job and the customer went sour. It usually starts when a potential client tries to over negotiate the price with me. It has happened when I have been in desperate situations and I decided to lower my margins to get the job. The job starts well, but then somewhere in the course of the job, I run out of cash-flow, because I underbid the work. I am a small outfit and so I cannot take advantage of economies of scale. Like all other companies I too have a payroll to worry about, not to mention that store we maintain.

Recently I bid a job, and I sensed that scenario where a customer wanted me to do the job for way less than my bid. I liked the potential client, so I took a hard look at the numbers to see if I could make it happen. I managed to bring down a few items, but overall I was nowhere near his price point. Resolving my self to the real possibility that I was probably not going to get the job, because I was not going to lower my price enough, I sent the following email:

"I have done my best to reduce the price of the pool while including the options you want.

The bottom line in the bid is my absolute lowest price. I have crunched the numbers over and over again, trying to get to your price point, and it is not possible for me to get there without reducing the scope of work. Because of my personal involvement, every project I build requires much of my personal time. So, I have a limit to the amount I am able to discount projects.

I want you to know that I would very much like to build your pool, and if you decide to sign with me, you will be delighted with my commitment to our relationship and to your project."

The email was received well, and I am still not sure what will come of this. After talking to them last Friday, I actually believe they will go with me, even though I did not lower my price.

There have been times in the past year when I have abruptly turned down a bid, or been non-compliant with a potential client's requests for lower and lower bids. There are some people that I can now tell early on in the process, that just aren't a good fit with us, and we aren't with them. Now that I write this, I am not sure if I am listening to my instincts, or if I am simply basing my choices on my past experience. It is probably both.

Take It To The Bank

Your truth detector may be your best asset as a business owner. It can protect you, help you make good decisions, and repair major damage. Malcolm Gladwell wrote about making snap decisions in Blink. He proposed that our snap judgements are often very accurate and they are based on our experiences and observations throughout our lifetime. Whether you believe this inner nudge is instinctual or learned, the outcome is the same. Maybe there is a combination of things happening.

What I know is, it works and it is impossible to run a business without it. Trust your gut and act accordingly. I promise you two things: 1. You will make some great decisions based on your instincts. 2. You will make some horrific mistakes because you thought you were following your instincts. So I will leave you with a version of a short story you may have heard before.

There is a young man, Harold, working for a cattle driver at the early age of 14 in the western U.S. He is responsible for taking the food and extra horses to the next camp site, while the cowboys drive the cattle across the plains. One night he is very tired and he wonders whether or not he will have to hobble the horses to keep them from wondering off. (For those of you that don't know, hobbling a horse means shackling their feet so they can't take full strides, thus limiting their ability to run away.) The horses seemed to be settling into the routine, and it was a serious hassle to hobble all 12 horses. He remembered a story he heard once about a man riding across the desert on his camel.

"There was a man happened upon a wise spiritual man and asked, "Sir, should I tie up my camel at night, or just trust in God that it won't wonder away?" The wise man answered, "Trust in God AND tie up your camel."

So Harold decided he'd better hobble the horses for the night. After struggling for an hour, he had all the horses hobbled and they were peacefully eating grass. He rolled out his mat and sleeping gear and went to sleep. Harold woke up at the crack of dawn and found only 11 horses. One of the horses got away, in the hobbles. It took him nearly 6 hours to find the horse. The horse managed to scurry way taking little shuffle steps, 14 miles from the camp site.

You can trust in God, trust your instincts, AND tie up your horse, and the bugger will still get away. But, you improve your chances of being a success and achieving all you desire in this life, when you use all your faculties to the best of your ability. 11 horses stayed put, only 1 got away.

The Importance of a Bumper

2011-10-07T04:08:00.000-07:00

An automobile's bumper is the front-most or rear-most part, ostensibly designed to allow the car to sustain an impact without damage to the vehicle's safety systems. They are not capable of reducing injury to vehicle occupants in high-speed impacts, but are increasingly being designed to mitigate injury to pedestrians struck by cars. (Wikipedia.org)

I thought a literal description for a bumper was a perfect metaphor for how one works in a business. On the BMW you see in the picture above, the red bumper is designed to protect the operator and passengers of the vehicle from harm, in the event they run into something. It also protects the vital parts of the engine, and frame, for low speed impact. If the vehicle taps another vehicle, in a parking lot for example, there may only be a minor scratch to the bumper and no damage to the vital parts of the vehicle, therefore minimizing damage and cost for the repair.

In a business, a "bumper" has the same function, except it is for financial accidents, not physical ones. In my business it could be financial accident related to a physical one, since I am a building contractor.

What is a bumper for your business? It is cash, saved in an account you don't touch. Accountants and the IRS call this retained earnings. This is what you can do with your profits if you don't spend them. This cash savings protects businesses against all kinds of accidents, and it facilitates good decision-making practices for the owners and executives. It is like a reserve energy tank that supplements the life of your business and makes it stronger every day, and it gives companies the freedom to experiment with new products, services, and marketing strategies.

Accidents Happen

It was the Spring of 2010, and we were very busy opening pools, repairing pumps and filters, and building new pools. I needed a truck for the new mechanic I hired, so I found one on Ebay and drove to New Jersey from Virginia to pick it up. I paid $2,500 cash (major bargain at 90,000mi) for the little Dodge van and towed it home on a trailer. I test drove it around the block for 5 minutes. For those of you who see what's coming, I now know better than to buy a truck that I haven't thoroughly checked out, but this isn't a blog about buying used vehicles. We put it into the fleet immediately with my new mechanic at the helm.

I got the call at 10AM the same morning we put tags on it from Jake, my mechanic. He said, "Joe, I hate to tell you this, bud, but there is something very wrong with this van. I can't get out of 2nd gear and I am on 495 (major messed up beltway around DC). "GREAT!!", I thought. I felt like such an idiot. I made a big deal with everyone about finding a great bargain, then I spent an entire day picking the lemon of a van up from NJ. Jake managed to get it to a local mechanic, and he diagnosed the van as needing a new transmission. Well, this is a surprise. Suddenly my $2,500 bargain, turned into a $4,200 lemon. The transmission was $1,700.

At the time, I had the money to pay for the transmission, but just enough. I had to use some of the money I set aside for payroll that week to pay for the van's transmission. I thought I could somehow make enough money by Friday to cover payroll. And if I couldn't, I would definitely be able to cover payroll by Saturday or Monday. The guys would just have to wait a couple of days to get paid. They were use to this scenario, and they understood what I was going through.

Side note: My core employees are incredible people. They have stuck with me through the worst economy since the Great Depression. They have worked hard and never complained. There were times when they waited for me to pay them, for weeks and months. They never missed work or showed the least bit of contempt for me for not being paid the money I owed them. I would do anything for these guys. They are family to me.

Today, they are paid-in-full, and they are all working for more money than they have ever made in their life. If you are reading this, boys, I love you all. Thank you for your service and friendship.

I was operating without a bumper. My company was broke and we were living from pay period to pay period. We have always been busy, though. In fact, our gross revenue grew by 15-25% per year for 4 years, until the recession in 2009. I just never saved any money for my bumper (retained earnings). Would you drive a car without a bumper? I certainly wouldn't be legal if you did. When a little $1,700 transmission needed replacement on a newly purchased van, it was a disaster to my company. For those of you who have never had the experience of not being able to make payroll, believe me, it is a disaster. People work hard all week, and they expect to get paid. Most of them live paycheck to paycheck, and when they don't get their's, they go hungry. Just like if you drove a car without a bumper, and you hit some one at slow speed, it would do major damage to the vehicle, and possibly your self.

Another time that was nearly catastrophic, was when I was hit with a building code violation. I built a swimming pool without getting the proper plans created for the county. In the end, I had to pay $20,000 cash, all at once, to the homeowner, in order for the county to dismiss the case. Luckily I managed to pay this money on time. Otherwise I was looking at a criminal charge, possibly loosing my contractor's license, and ultimately going out of business. After paying the $20,000, I was left broke again, unable to pay vendors for products and services we needed to complete jobs. Consequently, we had upset customers, and incomplete jobs, and we were unable to collect more money because we could not meet certain milestones. It was a compounded problem.

This whole situation could have been avoided. In the first place, had I obtained the proper plans for the county, this case wouldn't be an example. Secondly, if we had a bumper, I could have paid the $20,000 without effecting the operating cash for the business, and then built up our savings again, over time.

Good Decision-Making

A good friend of mine, Bill (not his real name) once said to me, "Owners make bad decisions when they operate without cash in the bank." What this meant to me was that when a company has little or no money in the bank, the owners don't do the best things possible for the company, rather they do what they have to do. They have limited choices. Bill's wife, Gina, owns a business, and she started the business with a solid business plan. Gina's plan had her company at a break-even point, two years after she started. During that first two years, the business income fluctuated, and she rarely made enough money to pay all of the expenses every month. So, Gina and Bill had to inject money out of their personal savings to keep the business on track. About 18 months after Gina's business started, Bill told me he was putting another $50K into his wife's company. This is when he told me that companies make bad decisions when they don't have money.

Gina had an aggressive advertising and marketing plan. She was consistent with her approach and she modified and adapted her marketing as time went on. She did all the right things with a new business. Gina watched the numbers closely, she listened to her client base, and she kept thinking of new ways to promote her business. If she did not have money in the bank, she would not have been able to pay for the marketing and advertising. Not to mention, paying of the upkeep on her high-end facility. The appearance and condition of her place of business was essential to her success.

After two years, she met her goal, and the business paid for all of it's own expenses, as well as turning a modest profit. After the third year, she has solidified her position in her market, reimbursed her and her husband's savings, and she is looking to expand her business by opening another facility.

Freedom to Risk

There is a business principle called diminishing returns.

diminishing returns

noun
1.
any rate of profit, production, benefits, etc., that beyond acertain point fails to increase proportionately with added investment, effort, or skill.
2.
Also called law of diminishing returns. Economics . the fact, often stated as a law or principle, that when any factorof production, as labor, is increased while other factors, ascapital and land, are held constant in amount, the output per unit of the variable factor will eventually diminish. (Dictionary.com)

This is a reality of doing business. As businesses grow they receive less reward for their effort, and it becomes increasingly difficult to maintain a profitable business. In order to continue growing and ever renewing your company, it is necessary to invest money in advertising, marketing, and training. In Stephen Covey's book, The Seven Habits of Highly Effective People, he illustrates

how in quadrant 2, you build capabilities, maximize opportunities, and manage risk. In quadrant 1 you see things that need immediate attention. In his book, he talks about how we spend our time and in what quadrant. I am equating time, energy and money to the quadrants, which others of done as well.

If we spend all our time and money dealing with crises, payroll, buying materials for jobs, paying fines and fees, we may feel like the hamster in the wheel, never getting anywhere. If we dedicate some of our resources to quadrant 2, we develop new business, learn new skills, and develop new services to offer. Here we spend money on marketing, and experimenting on new ideas. Some work and some do not, but we don't find the ones that do until we try.

When a business has a healthy amount of savings, it can afford to take calculated risk in order to grow. You never want to risk the money you have for payroll, or operating expenses on a new idea that may or may not work. If it does not work, your employees won't eat this weekend.

Companies with a bumper have the freedom to do things to make them more completive in their market. They can train their employees, thereby making them more knowledgable and desirable to the customers. Companies can try new marketing strategies, and new advertising. They can invest in assets that make them more valuable and possibly produce new lines of income.

Recently, I have taken on some new projects to promote my business. I try to find projects that are relatively inexpensive, in order to minimize my risk. One of the projects was a marketing/educational video for homeowners that want to learn more about building a pool at their house. In our video, we show the process of building a pool from start to finish. It is very professional, high quality production. My thought was that it would be an introduction to potential clients, and it set their expectations for the process of building a new pool in their backyard. It also is an online marketing tool. People can find us by Googling "pool construction video virginia". Our video is always in the top 10 results.

My investment was around $2,000. If I did not have a bumper, I could not have afforded to produce such a beautiful video. I was able to be creative and think of new ways to expand my brand, expand my online exposure, and ultimately increase my market share. Since the video was released 6 week ago, I have sold one new pool, and gone on over 10 leads. Would I have had the sale and leads without the video? Maybe, but I see that the video has added credibility by allowing customers to see me and my company in action. While I cannot contribute the leads and sale 100% to the video, I believe it has helped tremendously.

With a bumper I have the freedom to create and experiment with new ideas. Consequently, I have the ability to continue to be relevant and prosper in my market. For years I survived without a bumper, but it is a lot more fun with one, and we are much more successful with one.

Growing Pains

2011-10-05T03:27:00.002-07:00

We have been trying to change the program with our level of service. I have decided to try to maintain the size of my company, (not grow) over the next 2 years, and really improve our level of service for the customers we have. My strategy for the last two years has been to increase my market share. I learned a difficult lesson, that in order to grow and be successful, one must be prepared and staffed properly. This lesson is taught early on in business school, but in the real world, it is tricky to apply. There is a fine line between greed and ambition.

Moving forward, I am doing what many businesses do to improve in customer service. I am going back to my original mission for why I am in the swimming pool business. It is not just to make money. God knows there are easier ways to make money than running a pool business. My original vision was to build long-term relationships with my customers. Actually, I wanted to make friends with the people I serve and I wanted to be the best in the service business. My vision was for customers to think of my company and, without hesitation, recommend us to anyone that had a pool. I saw them smiling when they heard the name of my company, or when they saw me or my employees approach the driveway. I never saw us having the largest number of customers in the business. I never saw us having the largest company. I saw us being the best in the business for providing excellent customer service, in the pool industry. I saw our customers being delighted with our construction process and with our final product - their new custom built pool.

As I write this, I realize it may sound like we have failed completely, but the truth is somewhere in the middle. After 7 long years of ups and downs, I feel that we are right in the middle of where my vision had us, and a lynch mob. Do we have customers that are delighted with us? Yes! Absolutely we do. Are all of our customers delighted with us? No way. Anyone that has been in the service business knows that you can't please everyone, but you can please most. You can also please more than you are currently. If I had a dime for every time I avoided a difficult conversation with a customer that had a complaint, I could buy a new truck today.

Communication Lesson

2011-10-05T03:27:00.001-07:00

By far, my biggest opportunity for growth is communication. By the way, my greatest skill, is communication. If you ask my customers that know me well, they will tell you that I am a great communicator. They will also tell you that it is impossible to get in touch with me. This is my paradox. My greatest asset is my greatest liability. The underlying problem is that I avoid conflict. the truth of conflict is most of the time the problem is usually not as bad as it seems. In every case, when I have finally called my customer back and dealt with the conflict, it was never as bad as I thought it was going to be.

In the most difficult situations, facing the problem head on, and communicating early is always the best approach. There was a time when I owed a vendor $30,000, and it was going over 30 days. For the first week over 30 days I talked to him and reassured him that I would be receiving a payment and I would be able to pay him some of what I owed. When the payment I was expecting didn't come, I was embarrassed and didn't know what to do. So, I decided to avoid my vendor and hope that the payment would come in soon. He started calling me every day 3 times a day. What did I do? I ignored the calls. I felt horrible because I was friends with this guy and he was a good person. I owed him the money and I was unable to pay.

One day I was sitting in my office and he pulled up unannounced. When I saw him my heart dropped. I thought he was going to gear me apart, both verbally and maybe physically. He got out of his truck and said, "Why are you avoiding me?" I replied, "I am sorry, I just don't have any money to pay you." He said, "That's ok, just talk to me, so I know what's going on. I am your friend, you never have to avoid me, Joey. If you don't have it, you don't have it. Do you know when you'll have it?" I said, "It might be another 2 weeks, but I am not sure." He said, "No problem. Just keep in touch and we will work it out."

This taught me a very important lesson: Never avoid your problems. Talk to your customers and vendors regularly when there is a problem. They appreciate knowing what is going on, even if they can't get what they want from you.

Hiring the Right People

2011-10-02T20:09:00.000-07:00

As a grad student at George Mason University, I studied Organizational Development. In our program we were taught that organizations are made up of people, relationships, systems, and knowledge. Through my experience running my own business, I realize how true that is. Moreover, the impact people have on the organization is paramount to the culture and success of the business. The reality is, organizations are the people, just as we are what we eat.

Of course we are what we eat, literally, but the synthesis of the chemical compounds add up to more than the sum of the parts, just as an organization does with its people and systems. If you eat fast food every day and live on soft drinks and candy, the likelihood of you being overweight and unhealthy is high. If you eat a balanced diet, whole foods, and moderate the intake of junk food, the likelihood of being healthy is higher. This is not rocket diet science, this is just common sense.

The same common sense applies to organizations, but people are much harder to categorize than food. It is much more difficult to judge and discern how good a person is for your organization at a first or second glance.

Recently, I attended a seminar called Entreleadership, by Dave Ramsey. He talked about talking more time when hiring people. Meet with them half a dozen times, meet their spouse, and wear them out during the interview process. You can never tell who a person really is from a resume or references. People don't show who they really are on an interview; at least not on the first or second interview. Aside from the obvious signs of appearance, it is difficult to see something real about a person. That is why it is important to give them a chance to show you who they really are on a personal, real level. Plus, they can see who you really are and what type of organization they are getting into.

For my company, I have decided to increase my interview process to a 3-6 month process. I will look for people in the fall to hire in the Spring. I will have them interview initially for 30 minutes, just a drive-by, then ask them to come back if they feel interested in the position. I will invite them to lunch, but not with their spouse. Dave Ramsey's organization is hiring for higher positions than I am, and so, I will not be applying that particular part of his process to mine. I will administer a personality test, and I will exhaust them with interviews. Plus, I require free, a half-day tryout. I do this just to see if they know how to work, in general.

The beginning of my story

2011-09-22T16:56:00.000-07:00

I have been struggling with my company for 6 years. I have survived the worst economic recession since the Great Depression, a failed partnership, new business growing pains, defaulted loans and debts, employees steeling from me, and general bad luck. Having said that, I have also experienced some wonderful blessings and I have had the pleasure to meet and work with extraordinary people.

In the beginning, I did what I did best...SELL! I did not focus on bookkeeping or employee retention, or customer satisfaction. I just sold to anyone that would sign a check. This is important for starting a business. Most businesses fail because they don't have the cashflow to sustain life.

Afer six years, I now realize that I have been missing some very key elements. While I have a great ability to connect with people and develop long-term relationships with my customers, my lack of attention to detail has been a real liability.

Last night I was going down my list of customers to ask them to post a review on Google for my company. As I passed each name, I recalled my experience with them. With a vast majority of them, I recalled a negative experience. They weren't the kind of experiences that caused them to fire me, but they were enough to make me question whether or not they would give me a great review. This brought to light a very important principle to live by. The negative experiences I have with customers reflects on my business for a very long time. The positive experiences reflect for a short time. So, in order to keep a customer happy, I have to produce positive experiences over and over again, and eliminate the negative ones.

Bad things happen, that is a fact of life in business. How we handle those events can make the difference between a negative customer experience and a positive one. Just because something bad happens, doesn't necessarily mean that the customer will automatically be upset or negative about the company. If we attack the issue quickly and resolve their complaints, it can have a very positive affect on the customer's perception of the company.