Soft skills the way to qualify the future employee

Hiring staff based on just technical acumen only covers half the basesWhen managers prepare to hire new IT staff, they frequently concentrate on the "hard" skills essential to perform the work, such as five years of experience with Microsoft SQL Server, JavaScript expertise or in-depth knowledge of network security strategies.

Yet as much attention -- if not more -- should be paid to the "soft" skills that are less easy to quantify when evaluating candidates.

Often, the key to a successful hire is how well the individual fits in with the team and company. The way someone interacts with others, explains technical information and relates to broader business issues, for instance, can make all the difference in his or her effectiveness on the job.
What follows are some of the "ideal" qualities you should look for when recruiting IT staff and tips for assessing these abilities during the screening process: Communication Skills

Few IT professionals work entirely on their own. Rather, most are active participants in designing, implementing, managing and supporting technology projects, which means they frequently interact with other employees, clients and outside vendors.

As a result, strong written and verbal communication skills are critical to successfully completing their responsibilities.

A candidate's cover letter and resume can give you an idea of his or her writing abilities. Watch for typos, grammatical errors and misspellings, as these can indicate problems that could arise in documents at work.

To assess verbal skills during interviews, try to use open-ended questions that require detailed explanation, such as, "Describe a situation which you …" or, "Can you explain … ."
Business Acumen

The role technology plays in a company's success is growing, so those driving and supporting IT must understand its role within the organization as a whole.

IT professionals don't need to be experts in healthcare, for instance, but they should know how technology can benefit your firm's dealings in that industry and contribute to business growth.
These questions that can help you gauge business knowledge during an interview include:
What do you think your current/past company could do to be more successful?
Have you ever prepared a budget? If so, what steps did you take in the process?
What do you know about our firm's industry?

Interpersonal Skills

Diplomacy and tact are critical when working on teams to complete technology and business initiatives. IT professionals must be able to build successful relationships with managers and colleagues throughout the organization as well as understand the unique requirements of each end-user group.

Interview questions that can help you evaluate interpersonal skills include:
How would your current/previous coworkers describe you?

Who was your best boss ever and why? Who was the worst, and looking back, what could you have done to make that relationship better?

How do you handle conflict? Can you give me an example of how you dealt with a workplace conflict in the past?

Bottom-Line Success

Technology professionals with a history of accomplishments at work are likely to make lasting contributions in future positions, so be sure to ask candidates about the greatest achievements in their previous jobs and throughout their entire careers.

Some people may equate success with receiving a promotion or special award, while the actual process of setting objectives and accomplishing goals motivates others. Compare responses to how your best employees might answer.

Take a close look at your hiring criteria and make sure you have noted all of the qualities essential to perform the job effectively. By considering not only technical expertise but also a balance of soft skills, you'll find you're making better additions to your IT team.

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Your softskills ability will grow your business through words of mouth

Marketing Herndon & Merry to, the nationwide customer base it would need to support the new business model was Merry's next challenge. "We realized that the only way we were going to get a bigger piece of the pie was to grow the pie so, to speak," he says. "We had to get our message out to high end customers in other parts of the country."

To do that, Herndon & Merry has developed a sales system that combines advertising in national magazines that cater to the high end residential and architectural market, direct mail arid a referral network of contractors and satisfied customers that has grown steadily over the years. Much of the company's work is also repeat business.

"Typically, a customer calls in and says they saw our ad somewhere, and we send them our marketing package," Merry says. Those marketing materials are designed not to sell a prospect on a particular item, but rather to sell them on the idea that Herndon & Merry has the capabilities to do whatever it is they want done. One way the company differentiates itself is by emphasizing its design capabilities. "Almost everything we do is custom made. We produce the icing on the cake for the homes our customers are building," Merry explains. The company meets with the customer, discusses design concepts arid draws up a set of plans for the customer's review. The plans are tweaked to reflect the customer's input before they are finalized. Herndon & Merry charges a design fee for that service, but the clientele it deals with is used to paying such fees for service such as interior design work, Merry points out.

Important business lessons can be learned through many experiences in life.

"Creativity is really integral to the process. That's what allows us to beat out the competition," he says. Garden Park Antiques plays a role in that regard as well. It's not unusual for the company to do a driveway gate and a front porch railing through Herndon & Merry, supply a console or a coffee table to the same customer through Garden Park Antiques, then step out the back door and do a pool fence, Merry says. "The two businesses are married together and let us cover several different categories on the same job."

As Herndon & Merry's story illustrates, marketing should focus on a business's strengths and ability to meet individual customers' needs, not just products and services.

NO GUARANTEES THAT WE CAN REPLICATE THE SUCCESS IN THE PAST

Merry learned an important lesson from his experience, one that every business owner and aspiring business owner should take to heart: Yesterday's success doesn't guarantee tomorrow's. Business owners must be prepared to change, as their markets change even when that means making tough emotional decisions.

Growing up in an entrepreneurial family, Merry got the entrepreneurial bug early. "No doubt about it, even from a very young age I looked at different ways to make money, and I always saw myself in the position of an owner and creator," he says.

After college, however, Merry chose not to go to work for Herndon & Merry. Like most young people, he says, he wanted to make it on his own. He admits that the prospect of spending all his time with family members was not particularly appealing, and he had reservations about how "professionally" the business was being run.

"I had gone to college, and I thought I needed to be in the world of big business," Merry says. He got a job with a big steel warehousing firm that supplied raw materials to companies just like Herndon & Merry. He found being on the supply side of the business a very useful experience.

"I saw a lot of different management styles there, since it was a big company," he says. "I got to see some good selling techniques, and I learned a lot about how a corporation works. I was able to draw on those things when I came to my current position."

Merry also got married and started a family during that period, an experience that has also been useful to him as a manager. "It has helped me learn about patience and about people," he says. Merry has come to accept the fact that "people aren't perfect, as much as we might want them to be sometimes." That has helped him learn to delegate and to make more realistic assessments about what is and is not acceptable.


Learning to delegate and to make more realistic assessments is important in business

As Merry discovered, acquiring business and management skills is a lifetime proposition. What you learn today from many different sources can prove to be useful later.

By the beginning of the 1990's, Herndon & Merry was struggling, a victim of recession and an obsolescent product line. The Merry family was looking to bring some managerial experience into the firm, and at the same time, Bill Merry, Jr. was about ready for a change. The chance to help engineer a turnaround at Herndon & Merry and give something back to his family had a lot of appeal to Merry.

With Bill Merry, Jr., now at the helm, the company made the hard decision to Abandon. its roots in carports metal sheds and other small projects and focus all its resources on driveway gates and more ambitious ornamental and architectural metalwork.
More attention was also given to Garden Park Antiques, a related business venture started by Merry's brother Keith that deals in architectural and ironwork antiques, decorative pieces and furniture. The synergy between the two businesses is strong, since both target the same upper-income market of high-end residential homeowners.

Softskills is crucial in business changing

"We came to the decision that we needed to stop selling some of those products."

"We had to take a hard look at what we were doing. That meant looking at how many of each product we were selling, what the cost was to make those products, the time and effort involved and the profitability or lack of it," Merry says. "We came to the decision that we needed to stop selling some of those products."

Looking at the numbers, the wisdom of that decision was undeniable. Still, emotionally, it was a tough one to make. "Some of those products had put food on my family's table for years. They helped get me through college," Merry recalls. "Sometimes, you become emotionally attached to things that you really shouldn't be doing anymore. But letting that go freed us up to focus on other projects where the long term dollars and profitability were."

Softskills is crucial need in business changing

Starting a business, and gone through many challenges which every one of it giving all degrees of headache, sleepless and at many occasions being push closed to a bankrupt, supposed had made someone realized that there is something not right about his way of doing business. This is where the business owner or the key person really needs to sit back, and jotting every point to track down the system which is not functioning.

It is not the time to scratch the head blaming everyone and everything around for made your life difficult. Complaining will only exhaust you and making the problem even complex. Stop pointing fingers instead ask everyone in the business of their problems. The marketing, sales, suppliers and customers are the best people to ask.

Be on ground, observing the day-to-day management. And get ready with pen and paper to note of anything spot on.

As the business person, you should have the guts to learn and changing the way of doing business by eliminating and replacing the old systems which were not working Ask your workers on what they want to do in making the business even more successful. Forget about yourself being the boss. Forget about giving instruction and hoping everyone will adhere to it. It’s the show time of your business.

As the result of it, the business showed good result, increasing the sales volume and generating more income. and the revenue He never giving a thought of surrendering him self by closing down the business. persistency and hard work with the strong belief to success and profitable, the time for harvesting come at last. Only then people around you realize that you have come to the

With apologies to Thomas WoIfe, sometimes you can go home again. In the case of Bill Merry, Jr., president of Herndon & Merry, Inc., going home meant returning to Nashville, Tennessee, the place of his birth. It also meant joining the family business, leading it through a remarkable sales resurgence and positioning it for the 21st century.

Merry's father, Bill Merry, Sr., and a partner started Herndon & Merry, Inc. Today the company specializes in the design and production of custom driveway gates, stairway and balcony railings and other architectural metalwork for high end homes and buildings nationwide.

Most of its work is done for individual homeowners, although it also takes some commercial contracts. The company's client list is dazzling: Garth Brooks, Ronnie Milsap, Crystal Gayle and Waylon Jennings, to name a few.

In the early years, however, the company's products and target market were decidedly more downscale. "Through the `60s and `70s and into the early 1980s, most of what we did was carport and patio covers," Merry relates.

Herndon & Merry's bread and butter business took a one two punch in the late `70s and early `80s. Inflation was pricing its carport covers out of reach of its core middle class market, and a wave of cheap, snap together aluminum carport kits began flooding the market from Mexico. Demand for the company's flagship product fell from a high of about 300 carports a year in the 1960s to just 10 or 20 by the end of the 1980s.

The company had already established a reputation for itself as a supplier of ornamental ironwork to the high end architectural market in the Nashville area. The problem was, customers for that kind of work tended to be in the top 3 or 4 percent of the population, income wise, and there just weren't enough of them locally. Herndon & Merry was faced with making two, tough choices: abandoning the flagship product the company had relied on for decades and expanding into a national marketplace.

EFFECTIVE STRATEGIES

Farley's company employs several other strategies to maximize its cash flow position:
· It starts calling accounts 30 days after invoicing if it has not received payment or had any correspondence with the customer. At 60 days it sends a letter of intent to lien, and at 90 days it files a lien. "But it rarely goes that far," Farley says. "Our process not only helps cash flow, it saves us administrative money. I use my legal counsel strictly for writing the letters and if we have to go to court, but the less I have to use that, the better for the company."

· It consistently cross-checks receipts of materials using its sophisticated computer system and contacts vendors immediately if there are discrepancies in pricing or what was shipped.

· It takes all discounts offered by vendors and pays invoices promptly, which Farley says also results in increased vendor responsiveness.

· When disputes arise, it continues to pay its bills while the issue is negotiated to increase its leverage and bargaining position.

· It pre-projects the margins it wants to achieve in each of its five business segments (lumber, doors, millwork, trusses, windows and insulation) and uses those numbers to guide its buying decisions. "One of my partners works with the buyers every day to get the best price, and that is critical," Farley says. "We hit that side of the business as hard as we work customers and contractors on the other end."

Each day that goes by without turning outstanding receivables into cash is lost profit.

Contractors account for 90% to 95% of Farley's business, and almost half of them specialize in building custom homes. When there is a financial dispute between a builder and a customer, it is common industry practice for suppliers to file liens against the property to cover the cost of unpaid bills for materials. However, local law stipulates that only a party that has a direct contract with the owner of a custom home is allowed to file a lien against that property.

To protect its ability to collect on receivables, Farley has all his custom home builders fill out a contractor form. Information required for the form includes the property owner of record, address and/or plat number and location of the property, name of the financial institution that will be financing the deal, name and license number of the general contractor, name of the title company that is handling the property and more.

"We then request what we call a wraparound agreement, which ties us to the owner of record. It has to be signed by the property owner or owners, and we verify everything-including the signatures-against the documentation we've already compiled." Farley explains.

The wraparound agreement states that the general contractor has elected to have Farley's company supply the materials for this project and what its terms are. It also explains the state's lien laws, the ability to file a lien that the agreement gives to Farley and the company's policy of pre-notifying property owners with a 20-day preliminary notice before taking such action. "We have these agreements all completed and signed before we ship out the first stick," Farley says.

This strategy has also helped Farley's company cement its relationships with contractors. "It protects the builder as well as ourselves," he explains. "If there is ever a hiccup with the homeowner, we go ahead and notify them that we plan to file a lien. Because of the wraparound agreement, they almost always come back and sit down with the builder to get the problem solved. A lot of builders don't have the office staff or infrastructure to do this on their own, so not only are we creating leverage to protect our own cash flow position, we're helping out the contractor."

A big stumbling block to cash flow management is lack of financial recordkeeping.

"These findings indicate that small businesses have similar goals as their large-market counterparts-efficiency, integration and information handling-in their cash flow management," says David Cramer, senior vice president, commercial solutions, at Visa USA.

Sluggish cash flow and an inability to accurately estimate the timing of payables and receivables on a consistent basis were cited as major concerns in the survey, and improving efficiency in receiving and collecting payments was identified as a top priority.

One strategy that has helped Farley's company maximize its cash flow is invoicing and billing every day rather than waiting until the end of the month. Now on its fourth generation of computer systems, the company has consistently improved its ability to process that paperwork over the years, Farley says.

That kind of expedited approach to billing could help improve cash flow at just about any type of business, but Farley also employs some strategies unique to his industry and location. One is designed to blunt the impact of uncollectible debt, a persistent obstacle to healthy cash flow for many businesses.

LOST PROFIT

"If you sell 40 cars over a weekend at an average price of $25,000 apiece, you've got a million dollars in unpaid sheet metal rolling across the curb. A big dealership could do 100 cars on a busy weekend. Every day that goes by without turning those CITs into cash is lost profit, straight off the bottom line."

While banks, credit unions and the car manufacturers' financing arms generally pay off CITs quickly, some other lenders are not so forthcoming. Even with good lenders, a mistake in the paperwork can delay payment of a CIT.

"Sometimes your own people screw up the paperwork, missing a signature or something else the lender wants," the dealer says. "If the package is not complete, the lender's going to send it back. It is critically important that your finance department-and anyone involved in this part of the deal-is meticulous about sweating the small stuff. You as the owner have a responsibility to stay on top of them to make sure they do."

While the CIT issue might be unique to car dealerships, the focus on receivables is not. A 2005 Visa USA survey found that both small and large businesses share the same attitudes, opinions and concerns about cash management and cash flow. The issue they find most challenging is receiving and collecting payments, cited by 50% of respondents.

It's almost impossible to overstate the importance of cash flow to a healthy business.

"We use the projections to make decisions on what equipment we're going to buy, what our labor needs will be, what our costs will be like," Farley says. "We build out the model so we can work with our bank and determine what months we anticipate our inventory buying will be highest. We like to practice just-in-time inventory management to the greatest extent possible."

While there are many ways companies can improve their cash flow (some of which are unique to the type of business or industry they are in), most fall into one of three general categories: accelerating cash inflow, delaying cash outflow and reducing cash outflow by minimizing expenses.

"Companies can maximize their cash flow by improving their receivables terms, working to get extended payables terms from vendors and being as restrictive as possible when it comes to spending on capital items," Grace says. "They can subsidize working capital with short-term borrowings, but they have to have cash flow sufficient to amortize or pay back the debt."

A big stumbling block that keeps many companies, especially smaller ones, from being able to maximize their cash flow is lack of appropriate financial recordkeeping, Grace says. "We advise all our clients to get a good accountant to set their books up so they have access to interim financial information throughout the year, not just at tax time," he explains.

The key to maximizing cash flow in the retail automobile business is simple, according to one Michigan entrepreneur who owns multiple car dealerships: "Collect receivables as fast as you can."

One of the biggest factors dictating cash flow in that business is the status of contracts in transit (CITs). "Every sale of a new vehicle that is done with any type of financing-whether it's from the manufacturer, a bank, a credit union or a specialty lender-involves a CIT," he says.

HUGE IMPACT

It calculates that capturing the value of that enormous sum through improved cash flow management would reduce total net debt by 29%, increase net profit by as much as 6.3% and improve return on capital employed from less than 14% to more than 15%.

Volumes have been written on the subject of cash flow management, but the collective body of work boils down to a few key points. Business owners have to understand their cash flow as the first step towards effectively managing it. Analysis can help identify potential problem areas in a company's cash flow cycle, and preparing a cash flow budget can help predict cash flow needs in the future.

Analysis of the components that affect the timing of cash inflows and outflows generally includes accounts receivable, credit terms and policy, inventory and accounts payable. A typical cash flow budget projects anticipated inflows and outflows on a monthly basis, but the process can be applied to virtually any time frame-daily, weekly, semiannually, annually or longer.

"Six months to a year is about the ideal time frame for many businesses," Grace says. "That minimizes the level of uncertainty in the projections but is forward-looking enough to allow companies to take corrective action if needed."

He adds that companies may need to prepare longer-term models, looking several years into the future, when preparing loan applications.

Farley's company routinely models its cash flow to project its needs a full year out. Farley and his two partners start working with the company controller at the end of the current third quarter to make projections for the next fiscal year.

"Just remember, if more money comes in than goes out, we're going to be successful."

The primary inflow of cash for most businesses comes from the sale of goods or services, but inflows can also come from other sources. Proceeds from a bank loan or line of credit and collections on the accounts of customers to whom the business has extended credit are examples of other sources of cash inflow.

Cash outflow, the movement of money out of a business, most often results from paying expenses, such as the purchase of raw materials, finished goods for inventory and fixed assets. Salaries, tax payments and loan repayments are other forms of cash outflow.

Cash flow management is critical to the health of any business and, collectively, to the economy as a whole. U.S. companies forego the use of $460 billion a year as a result of inefficient receivables, payables and inventory practices, according to REL Consultancy Group.

Effective Cash Flow Management Is Essential to Business Success

Brad Farley, president of a $62 million-a-year building supplies business with two locations in the Southwest, got the best-and shortest-cash flow lesson of his life some 30 years ago.

Not long out of college, he was intent on dazzling his new employer, the company's founder, with an intricate, chart-filled presentation of his cash flow projections for the company. The founder sat through the presentation attentively, then offered Farley a succinct bit of advice: "Just remember one thing, son. If more money comes in than goes out, we're going to be successful."

That might be the Occam's Razor approach to cash flow modeling, but as the owner of nine successful businesses, Farley's then-employer is well qualified to wield it. As Farley, now a partner in the business, puts it, "It's a one-liner, but it's the theory we've embraced ever since, and it's paid off."

Business gurus keep trying to outdo each other in coming up with colorful ways to characterize cash flow's importance. The Department of Applied Economics and Management at Cornell University, for example, maintains a Web site called "Cash Flow Is More Important Than Your Mother."

Hyperbole aside, it's almost impossible to overstate the importance of a healthy cash flow to any successful business. "It is the lifeblood of most businesses," says Marty Grace, a senior vice president in loan administration for a leading commercial bank in the South. "Without adequate cash flow, no business can function efficiently."

The cash flow cycle is the process by which money moves into and out of a business. The business expends cash to create goods or generate services which are then sold to customers. In turn, the business collects cash for the sales from its customers and uses it to create more goods or services, starting the cycle all over again.

Choosing the wrong partner in the New Economy can be more damaging than choosing none at all.

Kelly credits the company's corporate culture, which has always emphasized promotion from within, for much of its success in the transition. "How do we maximize human performance in that environment? In lots of ways, including extensive training," he says. "But our drivers are part of our DNA. I heard someone asked a UPS driver that question recently, and she said, 'You get it from each other.' That is a concept and philosophy that is not only effective in the New Economy, it is exportable."

Managing the transition to the New Economy involves making choices about partners, as well. William Nussey, CEO of iXL, an Atlanta-based strategic Internet services firm that advises companies making the transition from bricks to clicks, says that the distribution of power and control is no longer clear in the New Economy. As a result, a CEO's ability to build trust and relationships is a distinguishing competitive advantage.

However, choosing the wrong partner can be even more damaging than choosing none at all. A case in point is the recent fall from grace of Toysmart.com Inc., a one-time high-flyer in crowded and competitive online toy market.

Toysmart had partnered with Walt Disney Co., which invested $50 million and took a 60% stake in the toy retailer. Given Disney's strong position in the U.S. family consumer market-Toys mart's prime target-it seemed a match made in heaven. It turned out to be anything but.

Although the deal was reached in May 1999, it was not announced and Toysmart did not get any cash from its new partner until August. Toysmart had to delay its marketing spending, which meant losing its chance to convert customers in the pre-Christmas buying season, Toysmart CEO David Lord said at an IT industry event in June of this year. Disney also did not approve Toysmart's sale of key products such as Disney books and baby items until after the crucial holiday selling season had ended.

Analysts finger a culture clash between the two companies as the major culprit behind the failed partnership. They say Disney took longer to make decisions and operated much more bureaucratically than its dot-com partner. Toysmart, for its part, was not as focused on issues of major concern to traditional retailers, such as profits and inventory turns. And they expect to see more such culture clashes in the future.

CEO have to particularly careful

CEOs have to be particularly careful in the area of 13213 technology. According to "eMarketplace Hype, Apps Reality," a report from Forrester Research, many 13213 exchanges run on inferior software that fails to support the procurement processes required to make such exchanges truly paperless or hands-free for purchasers or sellers. The most successful 13213 exchanges so far have been those run by buyers to connect themselves with their primary trading partners, and they are mostly private.

That has prompted the Big Three U.S. auto makers and several foreign car companies to join forces in building their own electronic marketplace for buying auto parts. Leading Old Economy companies in industries ranging from chemicals to aviation to consumer products are pursuing similar initiatives. However, the Federal Trade Commission is taking a close look at the auto industry plan with an eye out for anti-competitive overtones, an issue that will likely shadow all such private B2B exchanges for some time to come.

One problem virtually all CEOs managing a transition to technology enabled commerce face is finding, hiring and retaining qualified personnel. According to a new survey from human resources consulting firm Hewitt Associates LLC, nearly two-thirds of traditional companies believe their e-business activities trail those of their nontraditional competitors, such as dot.coms and startups. They cite people issues as one of the main reasons why.

Sixty-one percent of those surveyed in the Hewitt study singled out people issues such as attracting talent, motivating employees and managing people as among their top challenges to achieving e-business success. "It's not just about technology and speed to market," says Bob Gandossy, global practice leader at Hewitt. "Companies are finding that people are a key element to achieving success in today's eworld."

While it takes many things to attract and keep the best talent in the New Economy, Jim Kelly, CEO of United Parcel Service Inc., says that the message emanating from top management is an important and often overlooked factor.

"We have to provide our employees with a challenging and exciting environment, a sense of purpose, a sense of what we as a company are trying to achieve and how they are involved in that effort," Kelly says. "We are very fortunate in that we have very little turnover, and the consistency of our message is one reason why."

UPS has taken one of the largest blue collar work forces in the United. States and transformed it into a technology enabled New Economy powerhouse, with surprisingly little resistance. Forbes magazine said of that transition, "UPS used to be a trucking company with technology. Now it's a technology company with trucks." Equipped with a wireless computerized clipboard called a DIAD (delivery information acquisition vehicle), UPS drivers are playing a key role in the company's New Economy strategy.

Fine tuning the vision is challenging

Fine-tuning the vision can be equally challenging. Technology and e-commerce hold out a 'wide variety of opportunities, from providing new channels for the distribution of goods and services to improving communication internally and externally to removing inefficiencies from transaction processes. Making the call on which opportunities to pursue falls to the CEO.

Last year, George Colony, founder and CEO of Forrester Research described the early Internet economy as "only a small vibration of the changes we will see." The real impact, he predicted, will be seen in companies such as General Electric and General Motors as they "harmonize their channels."

Some of that impact will come on the consumer side, but a greater percentage will take place in the business-to-business (B2B) sector. A new Forrester Research report projects that 13213 e-commerce will hit $1.8 trillion in 2003, versus $144 billion for B2C. At the same time, Internet-enabled technologies hold out the promise of cutting many 13213 transaction costs by 40% or more.
One of the most important issues facing CEOs as they position their companies for the New Economy is making sure they place the right bets on technology. "The road to success is littered with the carcasses of companies that made bad technology decisions," says Thomas H. Sinton, founder, president and CEO of ProBusiness Services Inc., which provides out sourced payroll and human resources services for about 1.2 million employees. "We spend a lot of time aligning our technology direction with the market."

In order to make the right technology choices, CEOs need to have a certain comfort level with new technology, says Jeffrey M. Conklin, founder and chief executive officer of Trade access, a technology company that uses the Internet to facilitate complex negotiations.

"They need to be personally comfortable with the technology choices they are making," he says. "The frameworks and the terminology cannot be foreign to them. Technology is easier to use and understand than ever before, so there is no reason why anyone can't become comfortable with just a little bit of work."

In some cases, the right technology choice is not to invest in a specific technology at all, Sinton argues. "The cost of implementing all the technology required to become efficient at certain processes is astronomical," he says. In those cases, it makes more sense to leverage an outsider's investment in technology, although he adds that approach should never be taken for processes that are a strategic driver or core competency for a company.

In the area of human resources, for example, research suggests that a very large, efficient company spends about $1,500 per employee per year. "About half of that is strategic spending in areas such as issue resolution and employee development and training," Sinton says. The other half is spent on routine transaction processes, many of which ProBusiness has automated through Internet technologies. Sinton estimates that ultimately the Internet can reduce employee related administrative costs by another 20% to 30%.

To implement a successful internet strategy, a company's culture must first be overhauled.

David S. Pottruck, co-CEO of Charles Schwab Corp., has a strong grasp of that concept. Schwab has been an acknowledged leader in the bricks-to-clicks transition in the financial services industry. Over the past four years it has transformed itself into an Internet company-it manages more than 40% of total online assets, more than double that of its closest rival-with a bricks-and-mortar base of more than 350 branches. Yet, even in that environment, there has been resistance to change within the company.

Pottruck chose a dramatic gesture to overcome that resistance. Gathering almost 100 of Schwab's senior managers at one end of San Francisco's Golden Gate Bridge, he gave them all jackets embroidered with "Crossing the Chasm" and led them on a march to the other side. He refers to the symbolic event as "the beginning of the reinvention of our company."

Of course, leading a bricks-and mortar company's transition to the New Economy is not without personal risk for the CEO involved. Julie Wainwright, CEO of Pets.com, has also been CEO of a bricks-and-mortar company. She points out that taking such a company to the Web is "a gutsy move" because CEOs must not only adapt to a new culture, they risk competing with stores and distributors and antagonizing analysts. She adds, however, that good CEOs realize they will always look worse before they look better whenever there is a major shift in their business.

"Most firms, not just the ones actually producing technology, are organizing work around it."

However, this New Economy is about more than high technology and the frenetic action at the cutting edge, says Robert D. Atkinson, director of the PPI project. "Most firms, not just the ones actually producing technology, are organizing work around it. It is also as much about new organizational models as it is about new technologies."

Whether you are a new entrepreneur hoping to grow your company over time or a mom-and-pop operator content to remain a small business, there is no getting away from the fact that you are going to be affected by the New Economy-like it or not. By paying attention to what the heads of some leading large companies are doing 'to prepare for this change, you can pick up some valuable tips on how to get your. own business ready. That's what this article is all about.

Many business leaders argue that differentiating between the New Economy and the Old Economy is virtually meaningless. Eaton Corp. chairman Stephen R. Hardis, who was scheduled to retire in July, points out that as Old Economy companies increasingly rely on technology to grow their businesses and New Economy firms confront the realities of such traditional requirements as turning a profit, differentiating between them becomes pointless.

Embracing technology and capitalizing on the benefits it has to offer is a challenge and an opportunity that virtually all CEOs are facing. The analogy -of "bricks to clicks" has frequently been used to describe this transition, but it's not really accurate. "Bricks and clicks" is more to the point, because New Economy technology is going to enhance, not supplant, Old Economy values.

As chief executives manage the transition to the New Economy in their own companies, they can expect to face challenges in several areas. One of the most important is providing the vision their companies need to succeed in a world now doing business on Internet time.

Corporate culture is still a top down-driven phenomenon at most companies. In making the transition to the New Economy, managers and employees are going to look to the chief executive. In fact, a new study by Mercer Management Consulting Inc. concludes that overhauling a company's culture is the No. 1 requirement for implementing a successful internet strategy, and it's a charge that must be led by the CEO.

Managing the Transition from Bricks to Clicks

The U.S. economy is undergoing a fundamental transformation at the start of the 21st century, one that raises both challenges and opportunities for most companies. According to the Progressive Policy Institute's Technology, Innovation and New Economy Project, some of the most, obvious outward signs of change are, in fact, among the root causes of it: revolutionary technological advances, including powerful personal computers, high speed telecommunications and the Internet.

Education is the great equalizer, capable of opening doors people never even knew existed.

"I think education is truly the great equalizer," he continues. "For people faced with the despair and hopelessness that life sometimes brings, education can open doors for them that they could not even imagine."

Martinez is not just a supporter of education; he is an avid participant. He estimates that he has taken between 30 and 40 masters-level courses in Spanish literature and language over the years, all part of an effort to deepen his understanding and appreciation of the Spanish culture both Hispanic and Iberian.

"This is a country of immigrants. We have all come from somewhere, and it is very important that we learn the English language and understand what we have in the U.S. and why it is important to maintain our system of government," he says. "But the cultures we have come from have a lot to offer, also. I think it is important that we hang on to the best of the old world while we take advantage of the opportunities the new one offers."

PERSONAL GROWTH

Along the way, Martinez has also grown. A long-time supporter of the University of Connecticut, he was named to the school's board of trustees in 1999 by Connecticut Governor John G. Rowland. That is hardly the limit of his civic involvement. He also serves on the boards of directors of the United Way of the (Hartford) Capital Area, the Connecticut Historical Society, the Bushnell Theater and the Science Center of Connecticut. He is a director of Hartford Hospital and chairs its Community Relations Committee.

Committed to the growing small business movement across his state and the nation, Martinez often sponsors seminars to promote and assist the small business community. He co-chair's Governor Rowland's Small Business Advisory Council and has served as a delegate to all three White House Conferences on Small Business.

"I would say a third of my day is spent on activities unrelated to my business," he says. "But these things are very important to me because I feel so blessed to have had the opportunities I have had. Education has always been a high priority in my life - that's a legacy from my family.

You have to play the hand that's dealt you; you are the sum of all your experiences through life.

Martinez and his 13-year-old brother joined 15,000 other young Cubans relocated to the United States as part of Operation Peter Pan, an effort sponsored by a coalition of Catholic organizations. They landed in a refugee camp in Miami.

"I went from being a privileged young kid to finding myself in the Miami airport with no money, no command of the language, no parents to give me advice, and responsible for both myself and my brother. I knew that from that point on I would have to make the choice either to crumble or to survive," he says. "I had to become a man in a matter of minutes."

He made the choice to survive, and it would serve him well. The luck of the draw did not go Martinez' way, and he and his brother were sent to an orphanage in New Orleans. Reluctant to talk about it today, he describes it simply as "not a nice place." He is quick to add, however, that he is not complaining and would not trade the freedom he found in America for the life he would have had in Cuba.

"Those were difficult circumstances and difficult times," he states simply. "Thousands of kids were coming in, and some ended up in nice places. Ours was not quite as good, but I'm not complaining. You have to play the hand that's dealt you, and I believe those experiences are what made me what I am today."

Over the past decade, Martinez Associates has grown from a temporary personnel agency to a full-service IT firm. It offers its clients IT planning services, project management, quality assurance programs, document management, technical writing, custom system development and implementation and Web development.

DON'T GIVE UP

What Martinez has been through should serve as an important lesson for anyone who is serious about succeeding in business. When things don't go your way, it's easy just to give up. Real winners, however, simply will not do that. They make their own breaks - in business and in life.

That Martinez came through such a difficult time in the economy to emerge as the head of a successful, growing business might not have surprised those who knew him well. Although he was born into a life he frankly describes as one of privilege, he had to learn early on to take responsibility for himself and his well-being.

"I was born into a tremendously privileged family, not only in economic terms, but also insofar as the love they provided and the examples they set for me," he relates. "But in 1961, when I had just turned 15, that all came to an abrupt end."

The Martinez family were natives of Havana, Cuba, and the establishment of that country was being turned upside down by the revolution led by Fidel Castro. Martinez recalls his family discussing their options: "We could stay in Cuba and live under a system with no freedoms, or we could seek freedom across the water in the United States. My parents chose to take the risk of sending us children here and hoping they would be able to follow later."

Managerial skills could serve him well in the new world of technology business.

"I was a totally non-technical person - and I'm still very much that way," he admits. However, he realized that just as the manager of a construction company does not need to be skilled in all the crafts of his employees and subcontractors, neither did the head of an IT company need to be a computer geek.

"It was clear that an opportunity existed. Companies had laid off thousands of workers, but they still needed skilled technicians to get certain projects done, often on a temporary basis," he says.
Martinez, who holds an MBA from the University of Hartford New Haven, ventured that the management skills that had served him well in the construction industry could be applied with equal effect in the IT industry. He launched his company as a temporary personnel agency supplying high-tech workers to companies that had downsized their own IT departments.

"I felt it was a creative way to start a business, and I believe I have been proven right," he says. "IT is the industry to be in right now, and it certainly has a great future. We have evolved into one of the preeminent IT firms in the state."

To Succeed in Business, Make Your Own Breaks

Martinez & Associates LLC is a full-service information technology (IT) consulting firm headquartered in Hartford, Conn. Nationally recognized as a small business leader in its industry, the firm counts among its clients dozens of state and municipal government agencies, some Fortune 100 firms and hundreds of small and mid-sized businesses.

The 10-year old company, which employs about 40 people today, is notable for its accomplishments, even in an industry rife with success stories. What makes it even more interesting, however, is the fact that the man whose name the company bears, Michael J. Martinez, knew very little about the IT industry when he launched it.

"I have to say that, looking back, starting this company is probably the most creative thing I ever did -but I did it out of necessity," Martinez recalls. "Times were tough, my construction/real estate development business was foundering, I was in my mid-40s, and I realized I would have to reinvent myself if I were going to continue feeding my family."

Connecticut's economy took a severe nose dive in the early 1990s, losing some 175,000 jobs at the start of the decade. The banking, insurance and defense contracting industries - the backbones of the state's economy - all suffered steep downturns. Downsizing was rampant, and Martinez remembers it as "a very-destabilizing situation, economically. A lot of us were hurt badly."

Rather than panic, Martinez stepped back and tried to grasp the "big picture" of where the local economy stood and, more importantly, where it was going. He concluded that the only segment holding out any promise of growth was IT. Here was a technology that was becoming important to businesses in virtually every industry and that promised to evolve into an indispensable business tool. The question was, how could he hitch his wagon to that rising star?

Business owners must be patient with themselves if they are to achieve success.

"New CEOs must be especially sensitive to subtle power struggles and infighting, which may hinder progress," Saporito says. "They must stay tuned to their network of reliable contacts throughout the organization to obtain feedback allowing them to monitor these trends."

Saporito concludes that virtually every new CEO or business owner soon comes to the conclusion that he or she has not been adequately prepared for the position. As new CEOs begin to understand how little they may know about some of the expected activities, they may experience personal confusion, anxiety and self-doubt.

"It is important for new CEOs to honestly accept the difficulty and daunting complexity of the position," he says. "This calls for self-examination and deliberation. Frantic activity will only increase anxiety and degrade outcomes. CEOs must be realistic about their skills and limitations and surround themselves with people whose skill sets are complementary."

You must take a long-term view and may not see results for months or years.

Change, of course, presents a whole new array of challenges to new CEOs, no matter how big or small the business they head might be. Change is ponderous and difficult to implement, and tangible results are often slow to materialize, Saporito notes. Major successes can be few and far between. As a result, heading up a business requires that you take a long-term view of things.

However, taking the long-term view often means that the results of your decisions will not have tangible implications for months or even years to come. As a result, as a new business owner you might wonder if you are having any impact at all. "New CEOs must learn that impact comes by trusting others and making effective use of an organization's talent and assets," Saporito says. "That requires a major effort."

Change at that level is more incremental than transformational, and new CEOs and business owners can be discouraged when their attempts at change do not quickly produce the desired results. Often they find they must compromise their original positions or make even more radical changes in order to achieve success.

For the head of any business organization, sustaining change can be just as challenging as initiating it. Don't be lulled into complacency by short-term success, Saporito warns. That does not necessarily signal the same will occur over the long term. Too many business owners and CEOs underestimate the inherent inertia that exists within an organization.

Changes made but not sustained can have a negative effect on a company, he says. Therefore, it is crucial that the top person in the organization take responsibility--or designate someone else to be explicitly responsible--for sustaining any changes that are enacted.

If your business venture is one that involves employees, you might expect to be able to rely on them as a conduit of useful information. That can be a mistake. Business owners and even senior executives often do not hear bad news because employees are reluctant to tell them, Saporito advises. "The more senior your position, the greater your need for feedback, and the less likely it is that you will receive candid feedback on any issue," he says. "This is known as the leadership paradox. The CEO must be ever mindful of this when making decisions."
If you head up a business that includes other people, one of your major responsibilities is the accurate assessment and deployment of your organization's talent.

"By accurately assessing talent and appropriately deploying it, new CEOs can obtain greater control over the variables leading to organizational success," Saporito says. "Failure to make the right personnel changes in a timely manner can perpetuate organizational damage."
New bosses may also fail to recognize and address the subtleties of the natural competition that often exists between functional areas, especially those outside their own experience and expertise. Failure to understand such territorialism can cause them to address conflict too slowly, too precipitously or not at all.

Being a successful business owner will likely require you to make changes.

However, this "golden boy" lasted less than two years in the top spot. His abrupt departure had a negative impact on the company, and the board decided to look outside for its next CEO. Everyone voiced the same question: What went wrong?

There is a big difference between being an employee, an executive or even a senior executive and being the person in charge--the person ultimately responsible for the success or failure of a business venture, Saporito explains. And there is virtually no way to prepare fully for taking on that responsibility.

Issues are more complex and difficult to grasp. Solutions require greater subtely, increased sophistication and greater involvement from others. The requirements for success are completely different than the requirements for success as an employee or underling, he says.
"New CEOs universally under-estimate the scope of the challenges. They try to respond with the actions that have worked for them in the past, but that generally does not work," Saporito says. "They must consider, instead, how to change the nature of their actions."

If you think you are ready to be th boss, you might be in for a surprise.

The talented men and women who become the heads of organizations have much in common, says Dr. Thomas Saporito, senior vice president of RHR International, the company that pioneered the field of corporate psychology. They are dedicated, hard-working, intelligent and motivated. Those adjectives describe the heads of the smallest start-up companies as well as the chief executive officers of the largest multi-national conglomerates.

Bosses are likely to be tough-minded and unafraid to go against the grain when they believe they are right. However, Saporito points out, no boss comes to the job fully prepared for the numerous challenges it will entail.

"No one accepting the chief executive officer position for the first time is really ready for it," he says. "It is unlike anything they have ever experienced. As hard as they worked to get there, as ready as they think they may be, they have inevitably underestimated the scope of challenges.
"Their natural reaction when they begin to recognize that fact is to intensify the actions that had always made them successful," Saporito continues. "The predictable result is surprise and discouragement when things do not work. They must recognize that it usually requires a change in the nature of their actions to be successful at the CEO level."

This executive had all the right qualities, Saporito says. He was thorough, tough-minded and diligent. He knew the company inside and out, having taken on increasingly responsible positions since joining the organization shortly after completing graduate school 15 years earlier. He was a fast-tracker--the proverbial "golden boy."

His boss, the CEO, had announced plans to retire, and there wasn't much doubt among the corporate staff who would be tapped as successor if the board decided to choose from within. When the company announced his selection to succeed the retiring CEO, analysts voiced their approval and the business press praised the selection.

Boss needs softskills Poses Challenges

For most entrepreneurs, starting your own company caries with it an implicit responsibility: you are now the boss. Even if your venture is a part-time one and you continue to work at a salaried job, the fact of the matter is that responsibility for the success or failure of your new business rests, ultimately, with you. No matter what title you choose--or even if you choose none at all--the buck now truly stops with you.

Soft skills can do and make you to be outstanding in marketing and sales of one product!

Have you learned about marketing? Its tricks and the objective to be achieved! How many of us had studied about marketing and familiar with terminologies like products, pricing, place and promotion. Have you ever thought that you know how to do marketing plan based on what you have learnt? I believe that most of us intent to think that marketing are not much different from sales. In-fact these two fields are having different purpose even having parallel objective to get more clients or customers which at the end benefited the company or organization.

Marketing will include sales in its planning. It will delineate the target market, way of promoting, pricing and positioning the products. However, whether or not it success will be based on how each of the department involve carry on their tasks.

Good marketing plan without the support and committed people from the advertising and design department and most important is the support from the sales department, will let the plan as good as old newspaper. It carries no weight without the sales people who are the real Spartan as they are the one who will be responsible to put the product on the front line. For them to really success and achieved the sales target, which also the marketing target, need not the marketing plan but the human capabilities acclimatize the techniques in selling system created by the company.

Normally or in traditional way of selling, the company will assign group of sales people to carry on the task of selling. They have to learn and fabricate them selves with the products knowledge, carry all sorts of flyers and brochures as way of selling the products. They will provide information to the potential customers and clients about the products. This is their way of persuading the potential buyers to believe, trust and use the products.

These group of people try to be nice by adapting the smiling culture so the public members will notice and seen them as nice and warm people. Smiling as been the silent way building the bonding and rapport. It’s been the normal practice for people doing PR works, politicians and so on. It’s been in the human culture where smiling is the finicky way of showing warmest. Nothing wrong with it and it’s good to have that kind of attitude. Showing smiles, greeting and offer a seat is way of showing respect.

However, this deed is sometimes tempts uneasy kind of feeling. Everybody like to be respected, but depended on the times and places. The mood or feeling of a person involved must be taken into consideration. Otherwise one will find himself facing trouble with the person he tries to be nice to.

One, who are in hurry to get to a place, passing by your booth and you try to be nice with him by smiling, greeting and later on offer him a seat so that you have more time to explain or provide him information about you products, may cause him angry. He doesn’t need that kind of warm from you. He doesn’t expect someone will stand on his way. He doesn’t want to be slowed as he has something urgent at the time.

Stopping him may reverse your warm feeling that day. It will reverse everything. The prospect may turn mad at you for interrupting his day and most importantly for interrupting his most urgent task that he has in mind that particular of time. So, what is the value of being nice?

For one to Spot one’s most urgent need is not as easy as you have read in the book. It does because, human has different characters, behaviors and degree of patience is also vary from one person to another. So trapping in this kind of situation just proved that the system and techniques you have gained through your training is not helping you much.

What count is a human skill. Not the scripted techniques. The hard skills that you have learnt can only fabricate you the technical competency but not on the emotional competency. So that selling techniques not really based on your product knowledge which we call technical knowledge, but how you go with the people. It needs you to know about softskills.

To know more, please contact: bitisampongou@gmail.com

Soft skills essential for success in today’s workplace

Reading Datuk Clement Hi (The Star, 23 September 2007 –pg. N12) articles on soft skills even reinforce my belief of the essential of soft skills Despite the fact that what he had mentioned is nothing new, but most of us seem unaware about it.

As mentioned, our educational system has been always rather skewered towards academic excellence. Nowadays, however, having straight ‘As’ is no longer enough to help secure a job or give one a competitive lead in career advancement.

What carries more weight appears to be soft skills rather than brain power or technical skills. Academic and technical knowledge is referring to as hard skills. While the three areas of character, inter-personal skills, critical and creative thinking is known as soft skills, which all of them are essential to survive and secured in the workplace.

The soft skills enable one to perform better as he or she can communicate effectively, mange relationship, lead a team, solve problem and so on. Research by Stanford Research Institute and Cernegie Mellon Foundation involving Fortune 500 CEOs found that 75% of long-term job success depended on people skills and only 25% on technical knowledge.

The Federation of Malaysian Manufacturers (FMM) in its survey on ICT workers in manufacturing companies in 2004, as reported in the third Industrial Master Plan, found that employees are weak in English unable to perform despite having an academic grades and are poor in problem solving.

Research also done in Malaysia and the finding was also point to one core problem which is lack of soft skills. As a result, there exist employment gap where there is an excess of jobless graduates and a vacuum of unfilled job vacancies.

Government comes to the rescue by being noble to retrain the graduates, where it main objective is to help the graduates secure job. The question is what is the purpose of our universities? Why can’t the professors and the lecturers teach our students about soft skills? Or these groups of so-called stylish and luminous people in-term of academic had forgotten about the necessity to acquire soft skills.
Soft skill is about people behavior. It is more on the mind set. It means one need to understand the fundamental of it. It is about daily life and the experience that one is through. It is about the creativity of one to solve the existing problem. It’s about on how to formulate simple yet effective technique to communicate well, so that the person can inspire the others. It’s the apogee of one character to make him or her out standing. And now, it’s time for us to learn and fabricate ourselves with soft skills.

To be a great sales person is not about mastering the products, but know how to appreciate others.

Talking about future and benefits of a product is something like one have on cosmetic. She executes so in order to catch other people’s attention. However, she might be judged wrongly for behaving like that, if the execution was on the wrong place. Being at the place of where we were not belong to, will plunge us to the judgment of showing off for no purpose

Everyone knows that spotting someone behaving unscrupulous will only invite annoying comments and this is not a good sign for one who engrosses with the act. Things will not be going well and the denunciation may put one through a trial situation.

For us to be well accepted in a place, we need to dance and go as the others. We need to be part of their way of life. It means we need to act, speak and doing things like the rest of the people on the streets. It does not mean that we need not to do something extra-ordinary things to catch their attention. We need only to show our concern and most importantly is our genuinely in mixing up with them.

In relation with a product, one needs not to talk too much about the future and benefits of it. What we need is to know the real need of the customer. Let’s say, that you are selling the latest scientific calculator. It has all sorts of futures. It has all the mathematical signs and formula on it. It has the future package, and we assume based on its future, the sales will be booming.

Typical salesman! Anywhere at anytime will persuade the potential customers by telling the future and benefits that the calculator has. He think by doing so, will impress and later on the potential will be buying it.

What the sales person fails to realize is he provide information that might not be necessary for the customers. He fails to realize the real need and wants of the customer. The customer may not look for the scientific kind of calculator. He may need a simple calculator for his kid who is studying at primary school. He has the budget for that kind of calculator. Not for the latest scientific calculator which cost more.

The sales person ended up failing in his presentation. Yet, he fails to realize his mistake, and keep doing the same process again. Try to persuade potential customers by telling the future and benefits of the products. Worse still, as he doing the process, he manage to sell one or two of the units. He fails to realize why he manages to sell the product! Let alone learn or realize on why he fails to sell previously.

How to find the truth behind it? Ask! That is the only thing as the sales person that you need to do. Instead of saying, what do you want sir? Switch to, anything that I can help you sir? Instead of saying this calculator is good sir, because it has all sorts of latest technologies, which…., switch to what kind of calculator you want? Or who will use the calculator? Or you may say, what is the purpose of the calculator for the user?

The buyer knows best of what he or she wants. Not you as the sales person. Heed this in mind that not everyone will be your clients. There is something more important than selling. Bonding and rapport! This is the most important thing, which leads you to the greater market and benefits. Befriend with anyone. They might be your future customers.

'Nice profit equals smart business person, low profit equals dumb business person.'

Selling stock is a more involved process and is most commonly done at three points in a business's life: at start-up to provide launch capital, when extra money is needed to expand an established business, and when a company becomes so successful that there is a strong public demand to buy shares in it.

Other possibilities include loan brokers and venture capital markets. A good loan broker can raise both short- and long-term financing for a qualified business in a number of ways. However, this financing may be more expensive than conventional bank financing because the broker gets paid a fee or commission. Venture capitalists invest in companies in exchange for a percentage of ownership. The obvious downside ther involves giving up some control.

MONEY MAKES MONEY

Bankers like to lend money when they are convinced that your use of their cash will generate more cash to you. Unless you can demonstrate that these borrowed funds will ultimately sow the seeds of additional funds in the form of company profit, don't bother your banker with a loan request. He or she will want to save the bank's money for customers who can put it to best use. And best use from a banker's point of view is always money making more money.

Pro formas use income, balance and cash flow statements to demonstrate your future financial performance. By being able to tie all these numbers together, you can build a future that shows the bank that you are in command of your business.

The bank probably has no question about your skill in making you particular product or providing your particular service. What the bankers are concerned about is your financial skills. All they know about you in this area of your life is what you show them in your loan application. By presenting a professional-looking package that answers their questions before they have a chance to ask them, you clearly demonstrate that you know what you are doing. You are speaking their language. You have told you story the best possible way. If a bank still refuses to bite, only then should you consider other sources of funding. There are many alternatives to bank financing, including personal financing, selling stock and other options. Which represents the best alternative for any business will depend on the specific circumstances of that business at the time financing is needed.

Among the options in personal financing are the owner's personal savings, taking out a personal rather than a business loan with a bank, borrowing against the cash value of life insurance, taking out a second mortgage on your home or other property you own.

Banks don't want non-financial issues to cloud anybody's judgement.

That is a big mistake. Bankers want to know specifically what you are going to do with additional funds. Here you have another opportunity to set yourself apart from the competition--and you are literally competing with other borrowers for the bank's funds-- by showing the bank exactly how you are going to use its money. You are going to use its money to make more money. All bankers are capitalists or they would not be in banking. They want to see their capital grow and make more capital. Show the bank why your use of the money makes good business sense.

To do this, you need to develop a pro forma that projects your financial statements out over the next three to five years, depending on the term of the loan you are requesting. Lenders want to see a documented, believable future that puts their money to good use and shows them how they are going to be paid back. Show the banker how you are going to use his or her money to increase profits by opening up new global markets where there is a demand for your product or to introduce new products. Whatever it is, be specific.

Lenders speak a language that is foreign to the average company owner.

No matter what bankers say, the first thing bankers look at is the annual profit shown on your financial statements. This is the benchmark of your success in their mind. In the mind of the typical banker, "Nice profit equals smart business person, low profit equals dumb business person." No amount of explaining can undo the damage a poor profit figure does to you image as a successful company-builder. Get your profit as high as you can before you meet with the bank.
For example, you are taking home a salary of $125,000 when $75,000 is more in line with what other owners of similar-size companies in you industry are making. More power to you, but if you add this $50,000 of "excess" compensation back into profits, your bottom line is going to look a whole lot better.

If all this sounds suspiciously like keeping two sets of books or like a lot of work, relax. It's perfectly legal since all your income is being reported. You are just showing what happens if you move income and expenses around on paper. As for the work involved, all that is usually required is making a few adjustments on the expense side of the ledger.

After you have recast your earnings to put your historical financials in the best possible light, it's time to look to the future. What are you giving your banker that show him or her what is going to happen to the company's finances over the next three to five years? What are you giving the bank to show how you are going to use their money, other than vague references to needing working capital? Probably nothing, if you are like the majority of company owners.

MAXIMUM EARNING POWER

Recasting earnings simply means redoing your financial statements to show what your business could have earned--its maximum earning power--in any given year. As a private business you try to minimize taxes. Taxes are based on income, so it's only natural that you tried to keep your income reasonably low. Great. But low income is not exactly what you banker wants to see.
Adjust your income statement to show what your profit could have been if the company hadn't paid for your car and insurance.

Adjust for the money you spent to sponsor your son's Little League team. Adjust for the money you contributed to your spouse's favorite charity that benefited a good cause (and also helped maintain harmony at home). Adjust for the bonuses you paid to your key managers that were not required to be paid. In other words, adjust for everything that was not an absolutely necessary business expense. Look for expenses that could be eliminated, even though you might not choose to eliminate them, and still allow you to run your company successfully.

In particular, look very carefully at your own salary and the salary of any relatives on your payroll. As the owner you can take as much cash as you want out of the company. But if what you are taking in salary and bonuses exceeds normal standards for your industry, your company is showing less profit then it is actually making. This may make sense from a personal standpoint, but, again, this is not what you want to show your banker.

Most entrepreneurs view visiting a bank as a necessary but unpleasant task.

The biggest reason most otherwise successful business people fail in their dealings with banks is that they are just not speaking in a language banks understand. Lenders speak a language that is foreign to the average company owner. This language is based on numbers and it uses these numbers to tell a story.

You can have the greatest story in the world, but if you are telling it to me in German and I speak only English, I am just not going to get it, much less be excited about it. Talk to the banker in language he or she understands and, most importantly, recognizes and respects.

When you put your financial information together what kind of story did it tell? You or your accountant probably rounded up the company's annual financial statements for the past few years along with an interim statement and submitted these to the bank. Unless you are in an exceptionally strong financial position (and if you are, you would not be applying for a loan), the information you give the bank is probably not enough to tip the scales in your favor as far as the loan committee is concerned.

Have you ever thought of why you never get a chance to meet with the loan committee? It's not because they are too busy. It's because the bank doesn't want non-financial issues such as people and personalities to cloud anybody's judgement. Your financial information has to stand alone. You are judged on your financial performance as you have given it to the bank. Period.
You can legitimately make the story you tell the bank substantially stronger by doing two things. The first is "recasting" your previous years' earnings; the second is including pro formas in your loan submittal package.

GET BANKERS "EXCITED"

There are specific steps you can take to dramatically increase your chances of success in dealing with banks and other lenders. This may sound like an oxymoron, but you have to get your banker "excited" about your company. (An excited banker?) Only if he or she is truly excited and committed to your loan proposal can he or she sell it to the loan company. And it is a rare bank today that doesn't require committee approval on a business loan. Now, excitement for bankers is not your usual jumping up and down for joy excitement. It's something a lot more subtle.

Bankers are always on the lookout for solid companies to lend money to. That's their job. Bankers get excited about companies that stand out from the ordinary. You have to sell your banker on you and your company. Look at selling the bank as similar to the process you use to sell your products. You don't expect potential customers automatically to recognize the benefits of what you are selling without some education. Treat your banker the same way. Don't expect your banker automatically to see the gold hidden in your vision of the company's future.

Most loan proposals that come across bankers desks have a uniform similarity that reeks of lack of preparation and appear to shout "reject me, reject me! Reject me for lack of documented financial information, reject me for lack of a specific plan to pay you back. Reject me for not demonstrating how use of the bank's money can actually help my business earn additional profit."

When Your Banker Says "No"

Your company is growing, entering new markets, developing and supporting new products. As the owner you have to face a truth you have been avoiding. Your company needs money. Where do you find it?

While there are numerous financing choices for small and medium sized owner-managed businesses ranging from asset-based financing to factoring to the SBA (Small Business Administration), most company owners are going to see a local bank first.

For most business people a visit with their banker is in the same category as a trip to the dentist--necessary, but not something they look forward to. Even though you have exactly the kind of company the bank advertises it supports, i.e., a successful, locally owned small business, you are wary and unsure of the bank's commitment to your company. Banks still possess a forbidding mystique that can intimidate even the most experienced business person.

Your meeting with Mr. or Mrs. Banker seems to go well. Three days later you get a call from the bank. The loan committee has denied your request. What do you do? Turn immediately to another source of funds? Shrug it off and figure that you will find a way to grow without outside money? No. Go back to a bank, a different bank this time, and go prepared.

You can try your original bank again, but first impressions are hard to overcome. (You never get a second chance to make a first impression.) The loan committee will be placed in the awkward position of overturning their initial decision. Better to make a fresh start unless you have compelling reasons to stay with your original bank. By turning you down the bank was making a pretty strong statement. Listen to it. That bank doesn't particularly want your business.

Bankers turn down thousands of company owners just like you every business day. Unfortunately, it's a case of what can best be described as "professional" lender meets "amateur" borrower. You probably see a banker a few times a year, if that. Your banker meets with potential borrowers every day of his or her career. That does not exactly make for a level playing field. Your meeting was a mismatch from the start.

Keep review

Review the numbers at least once a month to determine what's moving and what's not

Boccio tries to minimize the expense side of the ledger by keeping inventory low, which he says translates to stronger cash flow. "I don't keep a lot of inventory on hand. Instead, I buy as I need," he explains.

One area where he has chosen not to scrimp, however, is on equipment. "I try to buy new equipment as opposed to used equipment whenever possible," he says. "That reduces the likelihood of repair costs, downtime and the associated lost revenue."

Boccio has invested in a digital printer for Extreme Graphics, and while he has been doing just a small volume of sales with it so far, digital printing, especially of marketing materials, is one area where he hopes to grow his business.

Shopping for the best rates on medical and liability insurance can help keep costs down.

A recently implemented strategy is a pick-up and delivery service. "This seems to have increased revenues, but with increased fuel and labor costs, it may be a wash," Vegas acknowledges.

Another revenue-boosting strategy the company has adopted is converting from a cash-only business to one that accepts credit cards, a move initiated a little more than a year ago, with beneficial results.

It also makes weekly cold-call sales calls to prospective customers, and that has proved to be its most productive method of increasing sales, Stout says. An in-house development project to build a Web site is currently underway as well.

Long-term goals at Piston Parts are to maintain market share and to achieve annual sales growth of 5% to 10%, which Vegas describes as "modest." Going forward, the company will continue to rely on its financial information to help determine if it is remaining on track with its plan.

"We try to provide services and products for our customers that are the best anywhere," Vegas says. Keeping a close watch on the numbers helps the company deliver on that promise.

Healthcare providers differ from other types of businesses in certain ways, but the same basic guidelines apply when it comes to keeping track of a practice's financial health. Revenue, expenses and productivity are the key areas that must be tracked, and that can be done by monitoring a variety of performance areas, such as total gross charges or net revenue per practitioner.

"The numbers I pay most attention to are monthly and daily receivables compared to the same year-earlier periods," says Dr. Dan Duffy, who owns a dental practice with two locations.

"I always keep a close eye on the ebb and flow of assets, liabilities and equity, and I use that information to make important long-term decisions."

No matter how big or small a business might be or what stage of development it's in, paying attention to the right financials and metrics can help improve its performance. For Gary Boccio, who started Extreme Graphics, a total printing solutions business, about three years ago, outlays for expenses top the list.

"I use QuickBooks for my accounting, and it's very useful having the numbers right there in front of me," Boccio says. "Besides paying attention to my outgoing spending, I also look at the sales summary, which shows me which areas are generating most of my revenues. It presents everything in a nice pie chart, which makes it easier for me to grasp."

Graphics work for business cards, letterhead and other stationery is Boccio's largest sales silo and, fortunately, his most profitable. At least once a month he reviews the numbers to determine what's moving and what's not. "It also gives me a handle on cyclicality," he says.

Although Extreme Graphics is still a fairly new business, Boccio is already identifying some patterns. For example, October through January appears to be a period of consistently strong revenue and good cash flow, with performance tailing off a bit in the subsequent months. "I look at the full-year numbers because it's important for me to keep track of where I'm headed," he says.

Financial numbers and performance metrics are powerful tools for business owners.

As companies grow larger and more complex, they find more metrics are needed, says Gary Apanaschik, a business advisory services partner with PCW.

"But when establishing criteria for measuring a company's performance, it is important to stay focused on the right things, so less time is spent compiling and more can be devoted to analyzing and taking action," he says. "A focused approach allows management to react more quickly and possibly redirect strategy or operational planning."

Manuel Vegas, business manager at Piston Power, a custom engine shop, applies a laser-like focus on the bottom line. "That's the first number I look at," he says. "Then I look at cost of goods sold, gross profit and the comparative analysis of previous periods."

Vegas pores over those numbers on a monthly basis, and he uses the information he collects to identify trends and spot anomalies, both good and bad. While some of the options available to the nine-year-old company as responsive strategies are limited because of its size and the specialized nature of its business, Vegas believes it's important to translate analysis into action and pursues whatever avenues are available.

"In areas such as expense control, unfortunately, we don't have a lot of options outside of the usual method of shopping for the best price," he says.

"We look for suppliers that can provide us with comparable quality but are less expensive than other suppliers. We also shop for the best rates on medical and general liability insurance," he adds, "and we are diligent about performing routine maintenance on equipment to minimize breakdowns and energy usage."

Keeping the bottom line healthy starts with taking care of the top line, and Piston Power seeks to maximize revenues through additional sales and maintaining its current customer base.

Its core business is rebuilding automobile engines. It offers a full line of machine shop services for the automotive industry and for individuals who want to rebuild their own engines, including grinding crankshafts, boring and honing engine blocks, re-sleeving cylinders and refinishing cylinder heads. It also sells a complete line of engine repair, customization and modification parts.

The custom engines that Piston Power builds for the hot rod and race car segment have brought home the gold in many races, and that translates to positive marketing buzz for the company.
Service is the cornerstone of the company's revenue-growing efforts. "We provide excellent customer service," he says. "We survey new customers to make sure they are satisfied with our products and service, and we closely monitor quality control to minimize warranty claims and customer dissatisfaction."

Paying Attention to the Numbers Is Critical to Running a Business

Paying Attention to the Numbers Is Critical to Running a Business

In a line made famous by the movie Jerry Maguire, Rod Tidwell, the football player portrayed by Cuba Gooding, Jr., exhorts his manager, played by Tom Cruise: "Show me the money!"

Savvy business owners intent on success know that they have to keep an eye not only on the money, but also on the when, where, why and how of the manner in which money flows into and out of their operations.

Whether they come from profit-and-loss reports, balance sheets, income statements or other sources, financial numbers and performance metrics are some of the most powerful weapons available to business owners in their battle to stay on top of their companies' financial condition and operational capabilities.

According to Trendsetter Barometer, a periodic PricewaterhouseCoopers (PCW) survey of CEOs at 383 of the fastest-growing private companies in the nation, 78% of fast-growth companies use five or more metrics to track their business performance. Chief among them is operating income, rated as "very important" for managing their business by 88% of fast-growth CEOs.

Others include revenue growth, rated "very important" by 81%, on-time performance for customers (67%), product/service line profitability (66%), product reliability (59%) and customer response time (54%).

The survey also found a direct correlation between the number of performance metrics used regularly and the average size and growth of the companies polled. Those using 10 or more metrics were larger than average and had been growing at a pace 5% faster than average over the previous five years, despite their greater size.

Paying attention to little details plays an important part in a company's growth.

And when it comes to defining success, he is steadfast in his priorities: "The most important things to me are having a successful marriage and improving the quality of life for myself and my family."

Still, Croft finds a different kind of fulfillment in his business life. "Self-employment is the hardest, most time-consuming, stressful, draining job anyone will ever have," Croft admits. "But at the same time, it is also the most self-rewarding, self-motivating job, because we are responsible for whether or not we succeed."

CUTTING EXPOSURE

Croft developed the mobile service division into an operation offering service and repairs for home air conditioning systems, heating and ventilation systems and major appliances, as well as outdoor power equipment. The mobile unit also installs and repairs home generator systems and uninterruptible power supplies

Not only has the move broadened Croft Power Equipment's existing and potential customer base, but by expanding into areas outside traditional boundaries of the OPE business model, the company also has lessened its exposure and reduced its vulnerability to some of the negative trends afflicting the independent sector.

Croft's efforts to overcome industry-wide challenges have not come without some obstacles of their own. Chief among them have been getting the word out to customers and potential customers about the new services being offered by the mobile division and trying to manage two separate businesses while keeping them integrated and working together as part of a single company.

Even with his focus on the new aspects of his operation, Croft stresses that he has not lost sight of the fundamentals on which he has built his company.

"In a service-oriented business like ours, the concepts of quality and service are everything," he says. "When customers are treated well, not only will they keep coming back, they'll also recommend us to their family and friends."

Along with keeping an eye on the big picture, Croft has always paid attention to the small details, and he credits that steadfast approach with playing an important part in the company's growth.
"Keeping a clean store, having nice, eye-pleasing displays and, of course, providing quality, friendly services-these are the things that keep your customers coming back and your business growing," he says

As committed as he is to keeping Croft Power Equipment ahead of the industry curve, Croft keeps both feet on the ground and all things in their proper perspective. Without humor, he says, life would be "dull and boring," so he tries to make work a fun environment.

The thing that consumers love about independent operators is service after the sale.

Being "creative enough to come up with ideas that the big-box stores can't duplicate," as he puts it, could not remain a hypothetical exercise. It had to become a top priority for Croft Power Equipment, and it did.

As an early 17th century proverb avers, "If the mountain will not come to Mahomet, Mahomet must go to the mountain." Croft has applied just that concept to his equipment repair business

"As an outdoor power equipment repair business that started out with on-site repairs, we saw an opportunity to provide a mobile service division that would bring our business to our customers rather than wait for them to come to us," Croft says.

"We originally came up with the idea for the mobile service division as a way to bring in additional revenue during the winter, when we have four months of very little business. But we soon realized the opportunities that existed were much broader," he adds.

CHANGE AGENTS

Some forces OPEAA singles out as being among the most significant drivers of change in the OPE industry over the next five years include:

Consolidation among retail dealers leading to a split in the industry, with a few large, well-managed dealerships on one side and many small, one-person operations surviving on low overheads on the other. OPEAA projects a 50 percent reduction in the number of current dealers over the next five years or so.

Consolidation by original equipment manufacturer (OEM) organizations, a trend that to date has manifested itself in OEM companies buying down the distribution channel. "OEM organizations are re-thinking their distribution strategy and the value of aftermarket companies," the OPEAA strategic plan states. "As OEMs buy up family-owned businesses in the industry, they bring a corporate mentality toward money, market share and control, which is changing the face of the industry."

Big-box retailers are continuing to expand, forcing OEMs to build to price points, increasingly offering the high-volume parts to their customers and generally shaping the retail environment.
Throw-away values in society appear to be increasing, leading to a preference for replacement instead of repair. This is being fostered by OEM designs for products that cannot be repaired at costs low enough to make replacement unattractive.

While that seems to paint a pretty dismal picture for small operators in the OPE industry, they do have at least one factor weighing in their favor, and it's a critical one.

"The one big factor that consumers love about independent operators is service after the sale," says a spokeswoman for the Service Dealers Association, a trade organization for companies such as Croft's.

"Anyone who has bought equipment from a large retailer or discount chain knows that most do not service the equipment, even if it is under warranty," she points out.

"Local service dealers, however, not only provide service on the equipment they sell, they also provide the tune-ups and off-season maintenance that add years to the life of outdoor power equipment."

That positioning represents a key competitive advantage for independent OPE dealers. Croft has relied on it since he started his business, and for a number of years it was enough to keep his company afloat.

However, the trends identified in the OPEAA strategic plan are only going to intensify. Indeed, several of them have already become markedly more pronounced, leading Croft to conclude that just sitting on the status quo was no longer a viable formula for success.

Navigating a Business Through a Sea of Change

The outdoor power equipment industry has been doing quite well of late, thanks in no small part to booming home sales, according to the Outdoor Power Equipment Institute (OPEI), the industry's international trade association.

Low interest rates have also played a role, leaving many consumers who have refinanced their mortgages or taken out home equity loans awash in spendable cash.

That's all good news to entrepreneurs such as Marc Croft, founder and owner of Croft Power Equipment LLC in Woods Cross, Utah-but not quite as good one might expect.

Sure, sales of walk-behind mowers, riding mowers, lawn tractors and other outdoor power equipment were up this year, and additional gains are forecast for 2005, according to OPEI. However, the greatest beneficiaries of those gains have been big-box retailers such as Wal-Mart Stores and Home Depot, not small businesses like Croft Power Equipment.

For just about anyone involved in the business of selling products and/or services to the general public these days, competition from big-box chains is a brutal fact of life. "It's the 800-pound gorilla sitting smack-dab in the middle of the small business owner's showroom," is how one veteran retail analyst puts it. "You couldn't ignore it even if you wanted to."

Certainly, it's a challenge that Croft faces on a daily basis. "A small business like ours does not have nearly the amount of money the large chains have available to throw at a new concept," he says.

"In order to compete in that environment, we have to be creative enough to come up with ideas that the big-box stores can't duplicate. That's what keeps customers coming back to us."