[Idea Cafe's Help Me Rhonda!]

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Help Me Rhonda

Rhonda gives her advice to entrepreneurs who have business strategy dilemmas.

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Help Me, Rhonda: from Raymond
I am a recovering "work for someone else" workaholic. I'm a former customer support analyst for a large corporation and am now a new business owner. I operate a small to large cargo shipping center in Irvine, CA and have been in business now for about 8 months; talk about scary stuff.

I recently received the PriceCostco Connection magazine and read an article of yours. Though the article was short, it really inspired me, so much so that I wanted to write you. I would like to ask you what I may do to gather the corporate accounts I am seeking to obtain. I have done the sales calls, the mailings & advertising and have had less than adequate results.

The problem I think I face is that I am just not getting to the right people... as hard as I have been trying. What would you suggest I do, or brush up on, to win this highly profitable business.To add - the area in which I reside (Irvine) is predominately corporate type businesses, e.g., Western Digital Corporation, Mazda, Wyle, AT&T,Toshiba, Sony, Century 21, etc. Thank you very much for your help and time.
Raymond of Irvine, California

P.S. I visited the www.ideacafe.com page and I think I will be reading its articles on a regular basis now ... very informative.

Dear Raymond:
Thanks for taking the time to write. It's so rewarding to hear that I've motivated someone.

Large corporate accounts are difficult to secure. As you recognize, it's hard to get to the right person. But even when you do, they often have to have their decisions approved by many people above them. If they are already using a competitor to provide the service or product, they won't change suppliers quickly. And if they haven't used your type of service or product before, they'll be extremely cautious about any innovations, even if it could save them substantial amounts of money. Large corporations work on their own timetables. The time to secure a corporate account is often much, much greater than securing accounts with smaller companies.

Moreover, employees in large corporations frequently have motives other than just saving the company money or getting a job done better, so it's hard to make a rational sales-pitch. Sometimes, they just want to stay out of the boss's way; sometimes they are so overloaded with work, they can't pay attention to new opportunities; and they may not be rewarded for saving money or improving quality, so they have no motivation for going through the hassle to change. And in large corporations, personnel change jobs frequently, so even if you've been working with one contact on your first sale for many months, that contact can be transferred overnight.

What I'd suggest is starting with smaller companies. Although these may not bring you the largest purchases in the short term, small accounts are quicker to secure. Then move up to midsize companies. You can keep marketing to the big corporations -- in fact I would definitely recommend you keep your name in front of them until they think you've been around forever -- but keep the marketing to those activities that take a limited amount of time and money (such as mailing brochures). And in those brochures/mailings, be certain to emphasize your services for large corporate accounts, because your company may seem like it's only for small businesses.

By the way, once you have your first big corporate account, you'll find it much easier to get subsequent accounts. Big companies only feel secure when other big companies are doing the same thing -- a little like lemmings.

Rhonda

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Help Me, Rhonda: from Derek
I've invented a new product that is patented and trademarked. It is a reuseable fax cover sheet called "Reuse A Fax". I was recently a semi-finalist in Hammacher Schlemmer's "Search for Invention" and a recent winner at the Eco Expo in L.A. The sheet has a pocketed area where one can place the business cards of both the sender and recipient. I'm trying to figure out how to really market the item. As of yet, I've had a lot of interest, but would like to perhaps license it out. I've recently changed manufacturers and hope to have new product by mid December. Do you have any suggestions?
Derek

Dear Derek:
It sounds like a useful invention. I'd use one myself. I think the best way to market this item might be to hook up with a company that already distributes office supply products to the business market. You might also approach a company (like Avery or Paper Direct) that makes office supplies. The office supply market is a difficult and expensive market to reach, and you'll have a much better chance if you work with a company that already has distribution to this market. Also, this seems like the kind of product someone would be easily tempted to rip off. So it would be particularly useful for you to hook up with a company with resources to defend your patent in court.

Good luck! Rhonda

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Help Me, Rhonda: from Kevin
Rhonda, I'm the president of a small Canadian technology company. We have installed our product in Florida for field and marketing tests. My problem is that while my equipment works very well 3000 miles away, there are a number of marketing problems that must be handled in Orlando. How do I find someone to assist me who will do a proper job, and not rip me off?
Thanks. Kevin

Dear Kevin:
Kevin, you bring up a problem that affects many growing businesses -- how to expand geographically in a way that brings you profits not pains. Expanding your market to a new area seems enticing -- a whole new crop of customers to pick from, but it's often more difficult than it looks.

First, you have to assess how big you want your company to be and how much delegation of authority you're comfortable with. As you have already realized, having people in a far-flung physical location severely limits your ability to monitor their actions. Some entrepreneurs are comfortable in this kind of situation and they trust their ability to select people who will be loyal and dependable. Others like to keep a tighter control over things or don't have a good track record as a judge of people's characters. In either case, expanding to a new geographical area may not be the right direction for growth.

You also need to assess what damage expansion will do to your current business. Are you currently stretched to your limits in terms of resources -- money, manufacturing capacity, and most of all,your attention span? If so, you may find yourself losing local customers and profits in exchange for a far riskier distant clientele.

But if you decide that geographical expansion is for you -- you have excess capacity, have exhausted your current market, or see that another market is really ripe for your products/services -- there are a couple of routes to go.

The first option is to hire an area manager or supervisor. This gives you direct control over the person. You have to be especially careful about who you select, you'll want to stay in personal touch frequently (with many trips by you to the locale), and you'll want to have independent auditors monitor the finances. Consider, also, giving the area manager, a percentage of the local profits, so she or he is motivated to do a good job and directly benefits from the growth of the company.

If you have a very trustworthy current employee who would be right for developing new territory, you might transfer him/her down to Florida (I'm assuming there are employees who would be willing to swap Canadian winters for Floridian sunshine.) Such an employee knows your business well and, I assume, you already communicate well with him or her. You might consider giving this person a percentage ownership in the entire company as well as part of the profits of the Florida operation, so they are committed to the overall health of the company and now just their sunny backyard.

Or, you could franchise. In this method, you could "sell" the right to market your products in an area, usually on an exclusive basis. You supply certain kinds of products/materials/marketing the local entrepreneur couldn't provide on their own, and you get a percentage of the profits or an annual fee or both. The advantage here is that the person buying the franchise owns their own business, so is motivated to be a success. The disadvantage is that you have less control over them, you really have to provide something they couldn't get on their own, and you still have to monitor/audit finances to make certain they're not skimming profits.

In any case, carefully check out tax, employment, and other laws. Once you have a presence in another location, you usually find yourself having to file state income taxes and pay state sales taxes.

Rhonda

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Help Me, Rhonda: from Phil
I am retiring in two years as a police officer after 21 years. I am only 41 and have approached an older couple about selling their laundromat business. They will be retiring in two years also. I don't live in the town they are in, but it will be my retirement town. The gentleman seems interested, but as all good entrepreneurs, he is very proud of his business and wants it to flourish. After being in a completely different line of work for the past 20 years I don't want to ruin this chance to get started in something new. I would appreciate any suggestions you have on dealing with this couple and keeping them interested in my interest for the next year or two.
Thanks. "Phil"

Dear "Phil":
First, congratulations--by planning ahead now rather than arriving at retirement day and wondering, "What do I do now?," you can make your new career as a business owner succeed and give you the satisfaction you're seeking. And you're wise enough to know you should take steps to make certain the opportunity that exists today will still be there for you.

Phil, now's the time to develop a "Start-a-Business" Two Year Plan:

First, determine the most important ingredient for your post-retirement business: type of work, amount of income, location, hours, challenge, etc. For you, it sounds like it's location. Perhaps the town is close to your favorite bass fishing lake, and you want to spend a lot of your retirement fishing. Whatever the key issue is, focus your business plans around that.

Second, think about which kinds of work and work situations truly suit your personality. You've been a police officer, which probably entailed a certain amount of excitement and a lot of people-to-people interaction. Running a laundromat may be pretty dull in comparison -- fixing broken washers and emptying coin trays. That may be just fine with you, or it may turn out to be too darn boring, especially in the winter months when the lake is frozen over. Consider whether you really want such a complete change of pace.

Third, develop a financial plan. While your business goals must first meet your personal goals and style, they must also realistically fit your budget. Figure out how much money starting your company will take, then add to that amount because everything costs more than you imagine. Next, project your personal and family financial needs. Here's where planning ahead can really pay off. While you're still employed and have a steady income, you may want to save some money, pay off the mortgage or cut down on expenses so you can have an extra cushion when you start your company. You might also want to consider starting a business that takes relatively little start-up capital, such as private investigating or consulting, so that less of your nest egg is at stake.

Fourth, learn about your future business. Why not start working in your potential business in a part-time capacity while you still have your day job? You could spend vacations at the laundromat to see whether the business is really right for you. Also, you'll have the benefit of learning from the current owners. Many businesses seem ideal from the outside (e.g., running a restaurant), but aren't so glamorous on a day-to-day basis. If you work in the laundromat now, by the time you retire you'll know what you're getting into.

Fifth, take steps. You are worried the current owners will sell before you retire, so you might want to enter into an installment purchase now. That way, you'll lock in the current owners. Part of the purchase agreement can require the current owners to maintain certain standards or level of income so they don't neglect the business before you arrive. Other actions you can take as a prospective business owner include switching to a health plan you can continue once you're self-employed, examining business financing options or personal loans or lines-of-credit that may be more readily available while still earning a salary, or even applying for additional credit cards.

Finally, make certain you have a long, serious talk with all affected family members. You may be ready to move to the lake and run a laundromat, but your wife may not, even if she nods her head when he brings the subject up. "There goes Phil again with another cockeyed notion," she may say to herself, while you're thinking, "My wife agrees totally with my plans." Starting a business is serious stuff -- your income and your expenses will both be dramatically changed -- so it's critical to have the support and understanding of those who will have to live with your decision.

Rhonda

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Help Me, Rhonda: from Toni
I work at home as a travel consultant and I need to generate more business. I've tried passing out business cards to the general public but I have received little results. Most of my clients come from word of mouth. I guess that's working somewhat, but I would like volume business.What do you suggest?
Thanks. "Toni"

Dear "Toni":
Many people think that word of mouth comes naturally just from doing a good job in your business. It's the old saying, "If you build a better mousetrap, the world will beat a path to your door." Unfortunately, if the world doesn't know about your mousetrap, you'll be sitting there waiting for the knock on the door that never comes.

The fact of the matter is that word of mouth is built by effective marketing as well as having a good product or service. Your few efforts at marketing -- passing out business cards to the general public -- are ineffective because they are too few and not focused on your best prospects.

You need to sit down and come up with a brief marketing plan. Start with understanding who you think your most likely customers are, what groups, organization, or activities they are associated with, and what publications they read or media they listen to or watch. Then look at how much money you have to spend to reach these customers.

If you need to, you may want to take out an ad (on a regular basis, one or two ads don't work well unless you have a very special offer) in a publication your customers read. Often the best publications are small ones -- neighborhood newspapers, local trade associations, etc. Otherwise, find activities where you can meet your customers and be visible in those. You might also try writing a travel column for a neighborhood or organizational paper.

Remember, target your potential customers and put your efforts where those customers are likely to be found. Good luck and bon voyage!

Rhonda

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Help Me, Rhonda: from Dale
I've seen your articles in the Costco magazine and have visited your site on the web. Could you please tell me where to get advice to get rid of an employee without firing? I've already demoted her, reduced her compensation, just started reducing her work week and she is still oblivious to the hint to leave. There must be some advice somewhere. I run a business with 5 people including myself. Our office is about 500 sq. feet. Any direction would be great.
Thanks. "Dale"

Dear "Dale":
Ouch! You're in a pretty tight spot -- 500 sq.feet and an employee who must have a pretty sour attitude by now, and three other employees who must hate going to work.

Am I missing something here? The obvious answer to your question is "Fire her." Why haven't you? Is she the daughter of your biggest investor? Are you afraid of the unemployment insurance costs? Could it be you don't really have any good reason to fire her, you'd just like to get rid of her,and you're afraid she'll sue?

But what I'm guessing is that this is the first person you've ever had to fire, and you're uncomfortable with the idea. You assume only mean people fire people. But unfortunately, firing people is an almost inevitable part of being a business owner. It's never pleasant, but it doesn't have to be awful for either you or the employee. The important thing is to be fair, to let people clearly know what is expected of them, give them an opportunity to meet your expectations, to clean up their act when they don't, and then to keep their dignity when you have to let them go. (And to keep good records of each of these steps in case you are sued.)

Every time I've ever fired someone, I've agonized over it. After all, you are dealing with another human being who has feelings and responsibilities. So you have to learn how to fire, as well as hire, well. But if you're going to be the boss, sometimes you're going to have to make the tough decisions. This is one of them.

Rhonda

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Help Me Rhonda: from "Chad"
I'm an independent information systems consultant who is having a difficult time drumming up business. I have a fair number of contacts in my local area but business hasn't rolled in like I expected it to.

I'm a talented professional, but because of my age (25) I find it's difficult to get people to take me seriously. I always dress the part (suit and tie), have professional business cards, stationary, etc.,and commmunicate well with other people.

I have made contacts with other area computer consultants, in an effort to form business partnerships, as well as get additional contacts. These are not competing firms, but firms whose focus is different enough from mine for there to be potential overlap. Yet few are biting from what I perceive as a lucrative relationship for both parties. I attribute some of this to my age, but I have more real-world experience than most of the people I'm dealing with. Any pointers?
"Chad"

Dear Chad:

First, the bad news: Starting a new business is always hard, regardless of your age, and it usually takes longer than expected to get the client base you need (and probably deserve). While some potential clients may not hire you because they perceive you to be too young, others probably only choose to do business with companies established for at least two or three years.

Next, the good news: You're in a field where being young is often seen as an advantage. Popular culture lionizes thirteen-year-old computer hackers, and I've met people in charge of Internet sites for Fortune 500 companies who are only twenty or twenty-five years old. Young is good.

I suspect clients want to be confident that you have the business skills as well as the computer skills to get the job done professionally. You've started on the right foot by looking the part and making certain all your promotional materials (stationary, brochures, etc.) are similarly professional. Any other steps you can take to make your self seem established in business terms will be particularly helpful.

Some suggestions:

Finally, don't give up -- it takes time to build a business. Use your money wisely and stick with it. Time will likely help you get more clients, and it will certainly make you older.

Rhonda

Copyright Rhonda M. Abrams 1995, 96. All rights reserved.

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