Old ane new: Employee (and employer) accountability and communication

Last night, I reviewed the departing memo from our former administrative employee. She described the woeful inadequacies of our computer systems and the horrible state of our office. She also had a few less-than-enthusiastic words about my own behaviour. Ouch.

Her complaints are well taken, and I appreciate the initiative of another of the company's senior employees in co-ordinating the exit interview/report (to be given to me only after the departing employee left). After all, as company president/owner, I am truly accountable and responsible for everything that happens here, and it is important for me to learn what is really happening, not what people simply tell me because I am signing their paycheques. (Spelling here is Canadian.)

Nevertheless, what should I do with this information, and why do we have these problems?

Part of the issue of course is the recession's lingering austerity. Systems/office maintenance and upgrading are expenses that can be deferred, at least short term, and when cash is in short supply, they are. Another issue is the communications dynamics between me and the former employee; our business operates on a fairly loose and entrepreneurial manner, employees are encouraged to speak their mind, advocate for change where appropriate, and then, where possible, to take action themselves to solve problems.

(In earlier years, I interpreted this philosophy far too loosely, causing employees to act from self interest rather than the company's best interests -- now, these are aligned through the business planning and meeting system.)

I've forwarded memos and discussion papers to the new employee and explained straightforwardly the negative reviews of the previous employee (though of course respect confidentiality and haven't sent the actual review to anyone else). My goal is to allow the new employee to know exactly what she is taking on and give her time, as she works out her notice at her current employer's place, to think about strategies she might want to implement to solve the problems.

Next week will be interesting, in that word's bigger sense. As we wait for our new administrative employee to arrive, we are evaluating a new sales candidate in the office, and a temporary employee must fill the administrator's desk -- as we conclude production of our January issues in time for the Christmas deadline. I hope things won't be too chaotic. On the other hand, I'm excited about the energy this change brings to the business, allowing us to set the stage for a dynamic New Year with much growth and progress.

Read More

The challenge of change: Breaking free of your marketing conventions

Toby Henderson's question asking how someone who has been successful with online marketing can succeed in the offline world raises some important additional challenges. The question is: If we are successful with one model of marketing, how to we expand or change our approach?

The parallel example, and these days a much more common one, would be: "I've built my business on word-of-mouth and referrals: How can I succeed at marketing outside this approach."

Change, virtually any kind of change, is difficult, for good reason. You must leave your comfort zone, and you must go away from the place where you've developed expertise, confidence and insights, into a new world. And change in approach requires you to fight against one of the four RIMC marketing pillars (Relationships, Intensity, Money and Consistency, with the C for "Consistency" the key here.)

When you change course you must battle fear, lack of knowledge, and often throw piles of money at an unproven answer. (Henderson says he dumped $20,000 into the Yellow Pages with poor results -- which, again, says some not very good things about the Yellow Pages, of course.)

As I noted in my earlier RIMC posting, you can succeed at marketing if you have three of the four elements in place. So if you take "consistency" out of the equation (at least in the short term), until you find another stable and reliable model for marketing), you will need to use the other three resources, while being cautious about how these forces are working on you.

Adding to the mix, when you put money into the equation, you also find, yes, the dreaded "salesperson". Some sales representatives are more ethical than others, and some will play your "relationship" need (which is higher when things are stable or you are entering new places) to get your, you guessed it, Money.

I think you need to turn this process on its head. Use your relationships to find your alternative media and new marketing strategies.

This will be especially effective if you have relied on referral and word of mouth. Simply spend some time with your existing clients and learn more about which media they read/view, which associations they are members of, and which marketing messages get through to them. Then you can call the appropriate media and brave the enticements of their sales representatives.

Your other approach is to check with non-competitive peers in other markets similar to yours. You will likely find these colleagues through your industry associations. Note you will also find salespeople with various marketing solutions at association events. They can be helpful, as they at least know your industry, but make your decision through real connections with true peers first.

Undoubtedly, when you enter the new space, you will make mistakes and throw seemingly good money after bad. I certainly advocate ensuring you have solid measuring tools and resources. You need to know how many leads you are acquiring from the new marketing methods, their conversion rate, and the value of business you achieve.

This will allow you to assess your cost per lead and your revenue per lead -- and whether the marketing is profitable. (Undoubtedly, outside of referrals, online marketing and successful media/community relations initiatives -- our specialty -- , you'll find your lead acquisition costs are higher than you've experienced before; the challenge is whether the incremental gain in leads and sales can help you sustain and grow your business.)

P.S. I've raised this question on the remodelcrazy.com forum, which you can follow to see what others think.

Read More

Balance and change

Construction marketing, I believe, is both a science and an art. You defy all probabilities of success if you fail to observe some basic rules (or laws), but if you think that just following the rules will solve your marketing challenge, you will most likely be disappointed.

Consider, for example, the challenge in stretching or ignoring industry norms. In the non-residential community, general contractors will rarely select their subtrades without inviting competitive bids. You might be lucky (or experienced) enough to be consistently invited to be a member of a reasonably small short list, but, even then, if you wish the job, you have to have sharp pencils. But if you are not on the "inside", how do you win your place on the short list?

Government work, meanwhile, is supposed to be fair and open, at least for larger projects. (For smaller projects, at least in Canada, the work is subbed out to a large private organization and you need to pay their game.) Then you run smack in the U.S. into the Brooks Act -- which allows bureaucrats to use qualitative criteria to keep their friends and previous suppliers in business regardless of price.

The residential (homeowner) space observes more traditional marketing principals, meaning if you play the game right, you can follow the rules, advertise, develop simple strategies and measure your results. I won't easily forget my meeting with Mike Feazel at Feazel Roofing in Columbus just before Thanksgiving, when he said he stays away from most non-residential work because price competition makes the potential profit for work in the non-retail marketplace hardly worth the risk.

But you can't just jump from the commercial (or residential wholesale, business-to-business) market to the consumer market at the drop of a hat. Your business operating systems, pricing, and strategies simply won't match. You'll flounder.

I share these points because most likely you feel a need to change your market, practices, or systems when things aren't working quite right. In some degree of desperation, you cast about for a quick fix -- only to find you've dug yourself into deeper problems. Or you might try doing more of the same, to more dismal results.

For example, a contractor in the U.S. called me last week to ask whether he should sign up for Dodge (McGraw-Hill). I told him it wouldn't hurt, and Dodge is a reputable leads service, but to be wary of chasing bids for jobs where he doesn't have a previous relationship. I referred him to a posting in Bobby Darnell's Building New Business Blog (November, 2008):

If you subscribe to F.W. Dodge, Reed Construction Data, DEC International, CDC News or any of the other construction lead services you need to make sure you milk each lead for useful information. Remember, you are not the only company purchasing those leads so you have to know how to leverage each one beyond its primary purpose.

One of the profound incidences that led to me this business is when I was working at Construction Market Data (Now called Reed Construction Data) and would see companies paying up to hundreds of thousands of dollars for leads and using the information to just a small degree of their worth. My analogy is they were purchasing a new set of woods and irons (golf clubs for the non-golfers out there) and when it was time to play; they would grab just three clubs and leave the rest in the bag.

In essence, Darnell is saying the value of the leads service is not so much in the ability to bid on (and hopefully win) current jobs, but in the market intelligence you can uncover to develop relationships for future work.

Fair enough. Where is the balance, and when should you change? Here are three clues:

1. Your current and previous satisfied clients are your most valuable marketing resource. You'll win the greatest marketing points by doing something extra for them without expecting anything in return.
2. Your greatest potential new markets are in places where clients can connect, appreciate and refer back to your current clients. That in part is why I like associations so much for non-residential marketing. You are putting yourself in the perfect environment to work within and in support these relationships.
3. If you move into the residential (non commercial) space you can practice a whole stack of advanced marketing principals which will work wonderfully, if you dare, because only a few contractors use these methods.
   

However, should you jump between residential and commercial, or between traditional and new practices? Remember, sometimes you need to dive off the deep end but also remember you must be balanced in your understanding and awareness as you take the leap.

Read More

Changing course: When to pull the plug on a construction marketing initiative or business

Today, we are preparing to change course on a significant construction industry marketing project that has consumed close to $10,000, many hours of effort, and many assumptions.

Just two weeks ago, I thought we were on track. In fact, it looked much more likely that other projects and initiatives would fail while this one would proceed with incredible vitality. But, as we approach our bi-annual planning meeting and review on Monday, I knew something had gone really wrong with the original idea, which could not be corrected by pouring more resources into the existing model.

I decided to pull the plug. (I'll wait a little while before telling readers who cannot guess which plug I'm pulling.)

These developments raise some important questions. With your business plan in place, your budgets set, and your commitments made, when do you stop calling, prospecting, trying, selling, even running the business?

The questioning process itself is the key to decision-making here. You need to ask yourself several questions, and assess your observations in a thought matrix, before making your decisions.

Here are some questions and answers that shaped my most recent decision and could be appropriate in your situation, especially if you are determining your course of action during the recession.

Is the initiative following the budget and expectations of your plan?
Obviously, you have reason to smile if things are working out better than you had planned. But if your expenses are running much higher and/or revenue much lower, then you know something isn't quite right.

Are you missing or likely to miss key benchmark deadlines where measurable results should be apparent?
Say your projected sales are $10,000 and you only have $2,000 in sales three weeks before deadline, and you know from experience that you should normally receive a certain number of calls and inquiries to reach the goal, but you haven't gotten there yet. Do you continue?

Have you extend your deadlines once; taken remedial actions to bring things back on track,but are still not achieving results?
In other words, have you provided a second chance already? You are now entering the world of diminishing returns. Sure, the project may be saved by a third chance, but your chances of success have dropped by now from your initial expectations of 75 per cent to perhaps 10 per cent. How much more money will you pour into the initiative?

Do you have the resources to continue?
This is one of the most challenging qualifications for continuing or pulling the plug. The reason is that if your business is thriving elsewhere, your temptation is to continue the effort -- just a little (or lot) more "perseverance" will get you there, you rationalize. I've seen how little projects continue, on and on, by businesses flush with cash. Of course they should have been killed long ago, but the expense and risk seemed so small. Do you remember the heady pre-recession days?

Do you have alternative plans or strategies?
Can you do something else that will retrieve some if not all of the value of your original initiative -- a spin-off concept or idea that actually looks better than the original concept, for example? In other words, do you have a "Plan B"?

Does your failing project underpin other key business activities?
This is a really tough one. Say you have a project under way that isn't working, but it provides key resources and capacities for urgent and important initiatives, or may reflect your underlying business structure. Changes here may seem very risky -- and they can be -- but you still need to recognize the real problems and solve them, fast, or your overall business could be in real and imminent danger.

Do you have legal or contractual obligations?
You may have set your original project in motion with contractual or legal commitments. You need to consider the costs of breaking these commitments before stopping. Your onward costs may be just as great if you stop rather than proceed. (If this is the case, you should at least attempt to renegotiate your agreements or redeploy your resources more effectively within the contractual guidelines.)

In asking and answering these questions, you'll draw on your experience, resources, and often the counsel of your colleagues and employees. The power of Open Book Management cannot be understated here. It helps everyone, including the participants and proponents of the project you may need to cancel, access and participation in real-time and historical facts and figures backing the decision, and removes mystery or doubt from the process.

Read More

Crisis, change and opportunity

Mel Lester's description in his blog entry, Success, for a Change, of how a company successfully changed its business model to make safety a high priority is an enlightening reminder that sometimes really good things can happen when you push through and do things differently.

But change is hard. In Lester's story, the change occurred when his company's major client made it clear that safety must be a priority or it would lose business. Few things can motivate executives and employees to 'get it' than to realize they are about to lose their client (or job) if they don't shape up, and quickly.

My own business is seeing some changes now, as I recover from one of my more expensive blunders of recent years. Thinking we had successfully overcome the last major crisis and were on the way to rebuilding a massively successful company, I let go of key cash and business management controls, relying on inadequate financial reporting and measuring resources.

Costs skyrocketed just as the recession began tearing into our sales volume; and (worse), I pushed forward with business expansion plans thinking that "one bad month" would not thwart our success.

Well, the four-letter-word indeed hit the fan, and we suddenly faced an immediate business crisis. The solutions are still under-way, but we learned some important lessons which you may find helpful in your own business.

Little things count. Not because you are nit-picking, but because tackling the little things (quickly and without much time/effort) allows you to see and resolve the big picture. On Monday, for example, I cancelled a bill for a cell phone number I hadn't used in two years. We are especially careful in monitoring the credit card billing statements, checking them online every day, for charges which need explaining.

Decisiveness is vital. I've had to make hard, tough decisions, which impact on individual employees. In one case, I asked someone who joined us after a lengthy selection process to leave within two weeks of joining the company (fortunately, we had not lured the person from a better-paying job, so didn't harm the individual.)

Fairness and respect are essential. One of our employees combines income from hourly pay and contract work, with the understanding (at the outset) that his hours would be variable. Alas, he felt the immediate brunt of the cost controls, but we've worked to feed him additional freelance work (at lower cost than we are paying other suppliers) to help him maintain some degree of income stability.

Openness is crucial. Our previous accounting and reporting system clearly didn't do the job, but we have maintained it because employees, in receiving the reports before and during the crisis, can see the numbers and that the problems (and solutions) are real. Through Open Book Management, employees also are receiving the new, much more detailed and forward-looking reports. This openness has helped us to maintain trust and respect and proven to the employees that superficial cost cutting measures are not enough.

I can't say all of the decisions we've had to make have been easy, and some of the toughest choices are imminent. But I'm now optimistic we'll pull through. You can, too, if you take charge and do what you need to do, while working openly and forthrightly with your employees to solve the problems.

Read More