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Author: jeanneleez

Adding Client Lifetime Value (LTV) to Your Bottom Line

Adding Client Lifetime Value (LTV) to Your Bottom Line - ibuildcompanies.com by Jeanne Heydecker

This is the definition of Client Lifetime Value. It’s not the single meal in the restaurant – it’s the amount of money one customer spends in your restaurant (or any other business) during the life of your business.

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Suggestions for Working with Passive Aggressive Teams

Suggestions for Working with Passive Aggressive Teams

Working cross culturally can be both hilarious and incredibly frustrating. One of the best examples is the way those from Asia interact with each other and how they work with foreigners. I’m typically a hands off manager, empowering my people to do the best work they can while I remove obstacles to their great work. However, passive aggression can rear its ugly head due to many reasons, but more than anything else, I sincerely believe it is because people here are very polite and won’t say no or refuse to accept your business even if they don’t know what you need done.

There is a word for it in India: “juugaad”, which loosely translates to getting something done by any means necessary, and Indians in general are proud of this concept. I once worked at a company that had no products to sell. They had decent schematics of telecom equipment and we used their CAD drawings to build out a set of sales collateral for non-existent equipment, including all the features and attributes of the equipment specified by our tech team. When I asked about this, my boss said, “If we sell it, then we will figure out how to build it.”

Another tech team in a different firm was presented with a Marketing Requirements document that detailed the workings of an interactive widget we wanted to create. I met with the tech lead and discussed the project and asked him when it would be completed so that Marketing could begin to promote it and plan for its launch. He said, “Friday”. This was my first position here in India, so I expected a completed, tested project delivered, ready to launch that coming Friday. When Friday arrived, I contacted the lead to ask where the widget was, and he responded with, “We have a few questions before we start.” START? It was supposed to be done by then.

So here’s my tips for working with passive aggressive coworkers:

  1. Nail down EXACT dates and times for project milestones. When someone says Friday, I now know to ask, “Which Friday? This Friday? What time on Friday?” (This is now a joke to my coworkers who now expect this response from me.) You may need to send friendly reminder emails or visit them occasionally, gently reminding them of the deadlines and asking if they need any assistance or clarification in order to meet the date. You may want to see the work in progress to be sure they’re building to your specifications.
  2. Have team stakeholders sign each date/time they’ve agreed to. People are loathe to put a signature to any commitment and if you have several tasks that require dependencies on other departments delivering their portions of the work to be completed, you can be in project management hell very quickly as milestones slip due to the inaction or poor work delivered by other departments. You can refer to these signed documents when confronting them about missing commitments.
  3. Get Executive/Client buy-in to project milestones. If your reporting head/client does not support your program and and does not understand and agree to the amount of time you anticipate the project will take to execute, you will not have managed the expectations of senior management as best as you could. Ask for feedback on anything they consider unreasonable or if they have suggestions on how to shorten the cycle. The more they know and understand about the project and its complexities, along with your concerns where there may be delays, keeping a timely rhythm of communications with senior management will help escalate issues arising from other departments you are depending on to launch.
  4. Establish consequences for project delays. Make sure everyone understands the consequences. If there are no consequences for not meeting deadlines, and no recognition for actually doing so, what’s the point? I had a marketing assistant who was responsible for ensuring all equipment going to a show left Mumbai for Sao Paulo 120 days before the show dates. She didn’t. We had to pay $32,000 in fees to get our shipment out of customs and shipped to the show after the deadlines. Were there any consequences for losing $32,000 due to lack of planning properly? No. If there are no consequences for shoddy work sent at the last minute (what I call the “send and pray” method) or not completing it at all, this sends a very visible message that competency is not required.
  5. Ping team leaders regularly for status updates. Make them accountable. If people want to be promoted and actually get it, it should also come with more responsibility and accountability. Create a regular rhythm of communications with all team leaders to ensure all components of your project are coming together. Hold them accountable for the dates and milestones and be sure they are aware of the consequences of not working together to get the project completed. They become visible to others when they are held accountable. One thing I’ve found helpful is to ask to see the project so far, even if it’s still just a wire frame or an outline (this is a great way to see how far the project ACTUALLY is and not just what the team reports). The look on their faces, when you ask this question, is priceless when they haven’t accomplished a thing. It’s funny in the telling later, but not in the moment when you realize the project is off-track.
  6. If working across multiple shifts or time zones, meet regularly on all shift times so all involved staff are inconvenienced equally. It’s just fair. You shouldn’t be the only one to have to get up at 3 AM for a regularly scheduled conference call. When setting meetings, check everyone’s schedule to find to most convenient times for everyone involved.
  7. ENFORCE consequences and provide positive feedback for best performing staff. If people are allowed to do poor work or no work, there must be a visible consequence for this. If people have done great work, that needs to be made even more visible. When people come up to you congratulating you on the success, be sure to push it back to those on your team that made it happen. If you do this often, more people will love working with you.
  8. Celebrate all major project milestones and report back to team stakeholders, executives and clients. When this project finally launches, hopefully it will be a resounding success. During the process, especially a long process, keep encouraging your team as they make progress. A little pat on the back or a hand-written note can make all the difference to someone.

It’s probably the toughest aspect of management (and relationships!) — dealing with passive aggressive people. Finding the “bait” that makes a passive aggressive person or team produce takes experimentation, but once you find it, either fear, coercion, baked goods, kudos, whatever… you’ll be much more successful in getting your projects accomplished.

Do you have tips on dealing with passive aggression? Please share in the comments below.

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So You Have a Great Business Idea but No Money. Now What?

Bootstrapping Your Business - ibuildcompanies.com by Jeanne Heydecker

Picture this: you and your buddies are out having drinks in the evening, complaining about working for the man, and discussing if you ran the business, how that business would be different. As you talk, you share business ideas you want to try. Suddenly, everyone gets excited about your idea and you start writing down your business idea on a cocktail napkin. My business started with my best friend, a large jug of cheap white wine and a yellow legal pad. We wanted to start an events business. As we started working through the details, we realized that it was actually a very simple piece of software that consisted of three pages – a category page, a list page, and a details page. We then discovered that this architecture could work for just about anything – memberships, job listings, events, company team pages, etc. We eagerly found ourselves bootstrapping our company to one of Crain’s top 50 web design firms in Chicago in 2001. We never went for funding for this firm, but having done so prior to that and for years after, listening to pitches, here is my advice on how to start once you find that big idea and have figured out what you want to do once you have funding.

1. Validation

Have you validated your business idea with potential customers? Do you know who your target audience is and do you have access to a select number of them in order to ask them what they think about your idea? Does it solve a problem they have? How valuable would it be to have that product or service for them? How much would they be willing to pay for it? How many of their friends/colleagues would also need your product/service?

If all signs point to yes, it may be time to build out a minimally viable prototype (MVP). For software and SaaS, these can be simple sites with the bare minimum of features that work to produce the end result. You may want to look at crowdsourcing or showing up at a local Startup Weekend, BarCamp or Tech Cocktail to find people willing to provide the assistance you need. If your idea is a product, seek out a CAD designer who can assist you in developing your prototype and find a 3D printer near you to create a few different versions to show to your target audience. Ask the the same questions again and add a few more, such as, “What other features/components/colors/options would you like added to convince you to recommend this to others?”, “What differentiates this product/service from others you’ve seen in the market?”, “Who else has a product similar to this and what do you like about it/them?” Hopefully these answers will help you with the rest of this process. You’ll need at least seven people. This will give you approximately 98% of the issues/opinions you would see as trends in a larger sample.

2. Positioning

Are you able to articulate the precise positioning of your solution? Now it is time to really double down on your competitor research. You want to know exactly who’s out there, what they offer, what they charge, how they’re paid, how they distribute (if applicable), how they market their product/service, and to whom. Look also at peripheral companies as well.

You need to do a lot of research on your competition. No investor wants to hear, “there’s no one in our space,” because it’s absolutely untrue. You just haven’t found them yet. Maybe they aren’t on line. Maybe they’re regional. Maybe they are in academia or the R&D department of a multinational with deep pockets. But, they may also be looking to expand/commercialize, and are seeking funding to take their financially solid, mature and proven product/service to a larger market. If the investor can name even one company in your space, you haven’t listed, you could easily blow the pitch up right there.

For example, maybe you have a cool new shoelace idea. Don’t look at just shoelace manufacturers, but sneakers and other shoe manufacturers. Another example was when I was advising a client making high end computer-aided design software and hardware for the textile industry, and the price point was way too high for most people making printed fabrics, but I suggested looking at other manufacturers such as vinyl flooring, wallpapers, carpeting and other manufacturers of products that require large repeatable designs. This greatly expanded their market opportunity with large commercial manufacturers with big volumes that were in dire need of more modern design processes.

3. Monetization

How do you generate revenue? For all ideas, understanding what the market will bear is the first step in designing a diversified business model. “Diversified” and “recurring” are very attractive words to investors. Investigate all the ways you can monetize your product/service. Perhaps you have a web site where you can build in banner advertising. If you use Facebook, consider using instant articles and get an additional bit of income. Are you looking at all possible target audiences for your product/service? Have you explored different ways your product/service can be used? Are there add-ons you can create for those who love your basic product to customize or add features? Can you sell through associations or groups to their members with bulk discount rates? Are there companies that could sell your product/service as part of a suite of products they’re already selling? For example, some of the shoe manufacturers might be very interested in your innovative shoelaces to sell as impulse buys on high margins at their store cash registers.

4. Size of Market Opportunity

This determines your financing and go-to-market (GTM) strategy in a significant way. Investors want a big piece of the pie. If your market is defined as the entire US consumer market, that’s a big market. If you state you are confident you can achieve 5% market share within two years, that’s not thinking nearly big enough for most investors. They want to see 55% and your GTM strategy should illustrate that.

Business-to-Consumer (B2C) marketing is much more expensive than Business-to-Business (B2B) due to the heavy use of traditional print advertising and television commercials and infomercials. Reach out to a marketing expert who has experience in launching companies in your industry. They’ll know what it will cost to get you there and understand the pitfalls, the suppliers, the players, and future trends that may threaten your business, as well as consumer habits, pain points, price thresholds and more. That in-depth experience will more than pay for itself. Let’s say you can’t find someone with industry expertise. Find someone who at least has experience launching and growing small startups. Ensure they know how to get the research done internally.

5. Bootstrapping

Have you done enough bootstrapping before approaching investors? I fully and completely recommending bootstrapping for as long as you possibly can. Bootstrapping enables you to keep full control over where your company is going. Investors can pressure you into other options, such as ramping up quickly when the sales aren’t there to support it, significantly increasing your burn rate (amount of money you spend each month). This can lead to start pitching for additional funding and diluting your shares even more. The investors may want you to pivot or agree to be acquired, when you’re not ready or don’t want to. Only go to investors when you have the track record and have a significant need for funding to grow to the next level (it is never a good idea to seek funding when your company is about to close and you’re desperate to keep the doors open). Is your company fundable, or is it one that needs to be funded all the way to solvency? Making the decision to seek funding should not be taken lightly, and only when you see no other alternatives.

The caveat to this is “time”. If you need to ramp up quickly to get ahead of competition with a similar product/service, you’ll need a lot of money and as fast as possible. This is especially true of certain business models, such as jobs, travel, auctions, real estate, and other industries that require marketing for both buyers and sellers in a crowded market with established competition with deep pockets. Carefully consider whether your solution is radically different enough to engage industry media and disrupt the status quo. Your pitch to investors needs to demonstrate this very effectively or investors will pass.

6. Financing

Over 99% of the entrepreneurs who go out to raise money get rejected. So you have decided you really do need to raise money. Do you understand what it takes to raise money and what investors are looking for? Do you know how to assess what is fundable and what is not? Are you getting rejected by investors? Do you need to move to where the money is? Do you know what is the current valuation range for your company? Can you enhance the valuation? What are the levers? What are your different types of financing options and what are the mechanics of those? Before actually pitching investors, you might want to connect with a few through LinkedIn or Angelist that fund companies in your industry and ask for informational interviews to seek advice on how best to pitch investors (keep it generic). Connect with other entrepreneurs for the same advice. Network with entrepreneurs at local business networking events. They may be able to introduce you to investors they’ve pitched and give you advice on how to successfully pitch with them.

Investors are going to want to know why you need the money. It shouldn’t be to pay current outstanding bills but to take your company to the next level. Try to have a minimally viable product or service already launched and a few paying customers. You don’t have to be making a profit, but it helps. What you plan to do with the money is vital since VC’s are responsible for spending other people’s money and need to account for it. Have a clear plan on how the money will be spent and share the vision for what the company will look like once you’ve executed on your plan. Investors are incentivized by the number of positive exits they make, and the higher your pitch’s potential, the higher the likelihood they’ll fund you.

7. Customer Acquisition

What is your customer acquisition strategy, cost, conversion rate, channels, and costs per channel? Your customer acquisition cost can vary widely depending on your business model. You may have a variety of business models in place to diversify your revenue generation (a wise decision). Your go-to-market plan should clearly show your initial costs, but also consider the lifetime value of a client. Do you have mechanisms in place to extend the lifespan of a client beyond their initial purchase?

For example, that would be extremely hard if you were selling residential heating systems which are typically replaced once every 20 years. But you could sell annual preventive maintenance contracts and pre-sale equipment certifications before selling a home. Let’s say you sell HR software. Instead of one standalone software that does everything, porting it to a website as a SaaS software bundle of individual components enables you to sell individual components at lower price points and enables customers to add components as they grow or need additional services. Instead of selling the components once, enable then to rent the software for a small monthly fee based on a fixed set of features (basic, extended and premium) or number of users. This facilitates two things – recurring revenue with customers extending their lifetime value, and increased difficulty and cost to convert to a competitor. Once a customer invests their own time uploading all the information about their company and personnel, the likelihood of them moving elsewhere is significantly diminished. The only reasons they would move would be a significant increase in their costs using your software, poor quality software, or if they feel your customer service experience is poor.

8. Hacking Team Growth

How do you balance between your need to keep costs down and getting things done, as well as presenting a reasonably complete team to potential investors, in case you are soliciting financing? I once worked as a team of two, and to keep costs down, we split the company down the middle. I focused on customer engagement, product development, and marketing. My partner handled sales, HR, and finances. We took turns taking out the trash and vacuuming the carpets. As we grew, we took the least likable parts of our jobs and wrote process documents and job descriptions, then hired for those positions. As we kept expanding, transferring more and more of the operational aspects of the company to other staff, we were able to stop working IN the business, to working ON the business. What were we leaving on the table when pitching clients? Where should we expand? Locations? Services? What could we leverage today to build more tomorrow? Before we started hiring full-time employees, we hired unpaid interns of very high caliber from very good graduate schools that were instrumental in building the business. They were heavily involved in the marketing and product development parts of the business and gained real-world experience launching real products for real customers. It also enabled us to try out potential hires before we brought them on board full time. Investors want to see a team that has the education and experience to make your business achieve its goals, for you and the investor.

9. Practice, Anticipate, and Practice Some More

Developing a pitch deck should be simple. Bear in mind though, that if you have ten slides and you are asking for 10 million dollars, each one is worth one million so chose your content carefully.

You need to answer a few basic questions:

  1. Title: Company name, descriptive tag line and perhaps imagery that encapsulates or represents what you do. This slide sets the tone for the entire pitch.
  2. Problem/Opportunity: What problems does your company solve? Who and what size is the market?
  3. Value Proposition: What is your solution?
  4. Technology: One or two images are better than a lot of text.
  5. Business Model(s): What is/are your business model(s)? How are you diversifying your revenue?
  6. Go-to-Market Plan: Explain how you will reach customers and how much it will cost.
  7. Competition: Complete view of the landscape with a lot of detail. What makes your product/service better than your competition? Have their logos come up on the slide and keep a cheat sheet on each one for reference. You should ALWAYS know what they’re up to.
  8. Management Team: What does your team look like and what are their qualifications? Limit this to critical team members and their accomplishments. If your team is weak, try to build a robust board of advisors.
  9. Financial Projections: How much revenue are you generating along with last year’s major clients; include this year’s revenue YTD, current major clients, and those in the pipeline. Try to state your financial outlook for three years and have a way to defend the upcoming years plan. Key metrics should also be included such as number and size of customers, and conversion rates as well. This is the most important slide in your deck.
  10. Summation: Finally, what is your current status, accomplishments, timeline and how you plan to use the investment.

There is always more information that can be added to a slide, but condense it down and leep your pitch to around twenty minutes or less. I know. This is hard. Questions may come up that you don’t have in your deck. Anticipate them. Other sides to have available will come up in practice runs with your team, mentors, advisors, friends, etc. If they’re asking questions that aren’t on your ten slides, either find a way to answer them without cluttering the pitch deck, or keep them separate if you require more detail. For example, financial data may require additional slides, especially if this isn’t your first round. You may need to disclose who owns how many shares and how many are still available. Your team, if not as strong as you like, may need a slide indicating coaches, consultants or advisors you regularly meet with to help grow your business. You may need a slide for partnerships who may be assisting in the sales cycle. Your Go-to-Market plan may require a schedule/calender of events or milestones. Keep these more detailed slides available for if and when the investors ask. No need to waste their time on that level of detail if they’re not interested in it at this point.

10. Finding Your Potential Investors

Once you’ve practiced your deck and feel confident presenting your idea, the hard part is getting in front of the VCs to pitch at all. Start with tech incubators and other pitch days and weekends local to you to get feedback on what’s working and what isn’t. You may end up with an angel investor or two in the audience who may be interested in investing or may be able to introduce you to the right people. Also, don’t look down at LinkedIn and Angelist and other investment portals to start conversations. Make those introductions personal, even if it’s just “I noticed that you’ve been investing in [your industry] and would love some advice on how to get a meeting with investors in my industry. ” After he/she accepts, you can then start asking about what to do, what not to do, etc. when asking for meetings, which people do they think would be interested, would they be interested is seeing your deck to give feedback, etc. After that, it’s really up you! Good luck.

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Types of Strategic Alliances to Build Your Business

Types of Strategic Alliances to Build Your Business

Strategic alliances are great way to rapidly expand your business and generally require less commitment than mergers and acquisitions where changes in ownership are required. The key motivation for alliances is to reduce the risk to both companies through the sharing of resources, access to prospective clients, knowledge sharing, and creating gains in scale and/or productivity.

There are four types of alliances: scale, access, complementary, and collusive.

Scale alliances require partners to work together to achieve advantages they could not easily achieve on their own. It may be better bargaining opportunities to reduce the cost of raw materials, or it could mean using one organization to “white-label” the manufacture of the original company’s products for resale in order to achieve more throughput.

Access alliances typically require one organization that needs the capabilities of the other organization in order to expand their market. For example in many countries, market entry can only be done through a local firm. This local company is exclusively allowed to sell your company’s products and services or you may have a number of companies within the country reselling your products. Local companies in other countries or regions may also want to license your patents, branding, or other intellectual property, expanding your market. Other ways access alliances work are through the ability to share client lists and sell complementary products or services to each other’s client lists.

Complementary alliances are used when one organizations identifies a gap or weakness within their structure or product offering that requires aligning with an organization that has those capabilities and has other weaknesses where the original company is strong. One example of this would be financial services, where one organization is registered for brokerage but not investment banking. A growing investment banking firm would be ideal to partner with in order to better serve each other’s clients with additional services.

Collusive alliances involve any number of companies to combine into cartels, reducing competition in the marketplace, increasing bargaining power with suppliers and price fixing. These types of alliances are more negatively-perceived, especially by regulators. DeBeers Diamonds and OPEC are typical examples of these types of alliances.

There are many potential advantages:

  • Faster speed of access to new product launches or market areas
  • Instant increased market share / increased market power
  • Economies of scale (perhaps by combining production capacity)
  • Securing new or better sales or distribution channels
  • Increased control of supply chain and vendor price negotiations
  • Decreased competition (by taking them over or partnering with them)
  • Acquire intangible assets (brands, patents, trademarks)
  • Overcome barriers to entry to target new markets
  • To take advantage of deregulation in an industry / market

…but they don’t come without risk. Alliances can turn out to be one-sided. Market changes may make alliances less desirable or make your alliance irrelevant. Your partner may go bankrupt, launch competing products, or become a pariah due to scandal or bad press. Growing a company can be done in many different ways. The most used ways are through internal growth or external growth through acquisitions and alliances. But starting out with a Product/Market Expansion Grid is always a great way to begin planning how you will take your company to the next level.

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External Growth Strategies to Build Your Business

Maximize Team Performance - ibuildcompanies.com by Jeanne Heydecker

Last week, we discussed internal growth strategies; today we’ll examine external options.

Inorganic growth is all about increasing productivity or market share through the use of knowledge and experience not internally developed within your company. Instead, this knowledgeable typically comes through consultants, mergers and acquisition, strategic alliances, joint ventures and partnerships.


Consulting firms can provide a number of services to assist an organization, either through advice on cutting costs to increase your net profit and shareholder value, or they can identify growth areas in the market and assess the risks of each option through independent research. They can also advise on change management and provide training for your executives and middle management on how to communicate change within your organization. Because they can look at your company without the legacy, sunk costs, and emotion leaders and employees may deal with, consultants can make recommendations that may be hard for those in the business to execute due to how those ideas will affect the human capital of the organization.

Mergers and Acquisitions

Mergers and Acquisition (M&A) offers a distinct set of advantages to increase your competitive advantage. They include:

  • Business Expansion: M&A is a fast way to enter new markets with established companies that already have the client base and trust in their region or country. Not having to incorporate, not managing the legal issues of market entry can be very appealing. Localization is already embedded within the firm itself.
  • Consolidation: M&A can bring together two or more competitors that will immediately increase market share, increase efficiency by reducing surplus capacity, increase production throughput, and increase bargaining power with vendors and suppliers.
  • Adding New Capabilities: Watch the tech incubators and keep updating your knowledge of what’s new in your industry. You don’t want to be caught sleeping when Airbnb or Uber shows up to disrupt your industry. Instead of creating new technology from scratch, invest in a small startup with promising technology that you can exclusively incorporate within your own firm. You can also use this tactic to eliminate threats to your business. A telecom company had created Computer Telephony Integration (CTI) software that enabled small and medium sized businesses to create a single inbox where voicemail, email and faxes could be stored. It enabled anyone to read their emails, listen to .WAV recordings of their voice mails and see the faxes from anywhere they had access to their email. You could also call in and listen to your voicemails, have text-to-speech speak your emails, and use Optical Character Recognition (OCR) technology to read your faxes to you. It was an amazing product that was also very affordable. As the company was gearing up for a major marketing push, Nokia moved in and bought the company for $56 million, put the technology in a box and put it in a closet, never to be seen again. Nokia had been developing a similar product and this product was clearly a threat to them. When they purchased the company, they also got the employees who were clearly capable of integrating their technical knowledge and experience into products being built within Nokia.
  • Financial Assistance: You may want to put your company on the market if you’re struggling. You may not be able to achieve the profit margins you need in order to sustain your business, but your products or services are solid, your reputation in the market is good and you have a devoted customer base. A larger firm may be able to overlook your financial distress, enabling you to save on interest payments by using the stronger company’s assets to pay off your debt and improve your cash flow. Private equity and investment firms may also be interested in investing in you if you have a solid plan for how you will use those funds to deal with your debt and grow your organization.
  • Taxes: Depending on where you are located, your tax load may be higher than your competition cutting into your net profits. Acquiring a company in a different state or country may enable you to benefit by transferring your profits or tax losses due to more favorable tax structures, subject to any legal restrictions.
  • Asset Stripping: Some companies have assets that are worth more than the company as a whole or employees within the firm that have the technical expertise and capabilities that you need to fulfill your growth strategies. You can purchase the firm and sell off or unbundle business units that can significantly reduce your total cost to purchase the company.

Strategic Alliances, Joint Ventures and Partnerships

While M&As bring together organizations through complete changes in ownership, individual companies can join forces to pursue a common growth strategy without sharing ownership in each other’s companies. There are two main types of alliances:

  • Equity Alliances: The most common form of an equity alliance is a joint venture, where two companies remain independent and incorporate a new firm that is jointly owned by the two companies. When an alliance is formed with multiple partners, they are typically called consortium alliances.
  • Non-Equity Alliances: Non-equity alliances are typically based on contracts. The most common form of non-equity alliances is franchising where one company gives another company the right to sell the first company’s products or services in a particular location in return for a fee or royalty. Licensing is another type of non-equity alliance which allows another company to use your intellectual property, such as your brand or patents, in return for a fee. Long term subtracting agreements also fall under this category, particularly prevalent in the manufacturing sector’s supply chain.

Alliances, joint ventures and partnerships are a far less risky, less complex and inexpensive option compared to mergers and acquisitions. With either, however, you may still want to involve a management consulting firm to assist you in making these decisions and hopefully keep you from making a very expensive mistake.

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Internal Growth Strategies to Build Your Business

Internal Growth Strategies to Build Your Business

There are many ways to build your business, but cleaning house is always the best way to start. Internal growth or organic growth focuses on developing your current workforce, investing in better equipment and expanding the company’s internal resources and capabilities.

One great methodology would be to start with a VRIO Framework to understand what your core competencies are and what assets the company has that can create a sustained competitive advantage in the future.

VIRO Framework - ibuildcompanies by Jeanne Heydecker

VRIO stands for Valuable || Rare || Inimitable || Organized. Let’s examine these values.


How do your customers think you add value? Can you exploit that value by turning it into an opportunity or neutralize your competition? If not, you are at a competitive disadvantage and need to review your core competencies and current offering to uncover what you can offer that would add value. For example, what if you made rubber bands? How could you differentiate your from your competition? Why should someone buy your rubber bands over another? Let’s say that your rubber bands are made of a special rubber that is twice as strong and comes in several colors and widths. You could explore what people use them for and create value for new consumers such as the DIY carpenter using your large bands for clamps. Maybe the colors would attract crafters. Keep looking until you see a way to present your offering that adds value to customers.


Do you have total control over a scarce resource? Do you have very specific capabilities that clients would pay a premium to gain competitive advantage over their competition? For example, in the commodities markets, millions of dollars can be lost in a fraction of a second. Having the software that is just a fraction of a second faster or that can process more orders simultaneously could be extremely valuable. If you have realized your value, but in a crowded market with several competitors selling virtually the same software, your company is in a position called competitive parity. Your software may be valuable, but not more valuable to the customer because there are others who also offer similar products or services.


Would it be easy for your competition to replicate your success? Would your customers have difficulty finding similar products or services in the marketplace? Would they experience pain in transitioning from your service to another? One good example is Software as a Service (SaaS) software. It is by nature, low cost and built into small affordable components to enable small and medium sized businesses to manage their finances, employees, legal matters, etc., expanding services by adding new components as they grow. HR software is a good example of difficulty of conversion. Say you initially purchase the payroll component to manage your employee’s salaries. This takes a lot of work to set up, entering each employee into the system and ensuring all the data is correct. As you add in the leaves management component, the talent acquisition component, and performance reviews component, it becomes increasingly more difficult for the customer to move to another vendor because the work to convert would outweigh any initial advantages the competition can promise. If your product or service easy to replicate and the cost to convert is simple, you only have a temporary competitive advantage.


Most startups are filled with chaos. There’s typically no on-boarding. There’s no paper trail for getting leaves approved, you don’t know how to get a stapler… let alone where your documents are printing because they’re never there at the printer in your department. There’s a pain point in all growing companies where all the organization and structure needs to be formally introduced and the change managed all the way to the top of the organization. Strategic communications needs to be formalized. Without this, your company will suffer from unused competitive advantage. There are specialists out there that focus on this move from startup to the next level. It’s not number of employees, or the amount of revenue you’re making. What you’ll see is employee churn. The grapevine becomes the only way people learn what’s going on within the company and that’s never good. You may start losing customers because your customer service isn’t responsive. Find people with experience that can advise you on creating this structure rebuilding your business without losing your unique corporate culture (or maybe that’s part of the problem). If you manage to set standard operating procedures (SOPs) into place for each department, formal job descriptions, paper-based or electronic employee management, you will have achieved sustained competitive advantage.

Okay, now that you’ve cleaned house and have a better understanding of your internal assets and capabilities, it’s now time to look at plans for organic growth. Let’s say your company is managing a profit margin that’s fairly healthy and you have liquidity to look at new opportunities for expansion. It can be as simple investment in faster, modern equipment or robotics to increase throughput in your current factory. It could be expanding the size of your factory to do the same. It may be starting completely new, symbiotic businesses or entering a greenfield market where this product or service has never been sold before. Organic growth is great for your business because:

1. Deeper Knowledgebase: when investigating new opportunities, your senior employees learn more about the options available and learn more through direct involvement in researching that new market or technology. This knowledge is likely to be internalized within the organization and used to make better, more informed decisions when planning growth strategies for your company.
2. Spreading Investment Over Time: gradual growth minimizes the risk since the upfront costs and commitments to major projects can be intense, making it difficult to adjust your plans later if market conditions change. Gradual growth also enables you to provide just-in-time training for your employees, set up standard operating procedures, and manage change through frequent communications with affected departments.
3. No Issues with Availability: You are not dependent on any outside resources, such as consultants or partners, nor do you need to create strategic alliances or acquire companies, so you can identify opportunities, research their feasibility, create prototypes or MVPs and approach customers based on your own internal timeline. Another aspect to this is not having to wait for a perfectly matched acquisition target to appear on the market for you to get started.
4. Strategic Independence: When setting up strategic alliances or partnership agreements, it usually requires negotiation and compromise because both sides have their own agendas and expectations. Alliances and partnerships may require exclusivity clauses, limiting other future opportunities. There can be performance or quality issues that can reflect badly on your company through no fault of your own. Being independent enables you to chart and manage the growth of your company your way, based on your esoteric knowledge of your industry and your customers.
5. Change Management: organic growth facilitates now processes and activities to be communicated through timely emails, company-wide meetings, departmental training and other communications that are appropriate within your existing corporate culture. Maintaining an “open door” policy will enable employees to share their concerns and ideas for improvement. Take the policy seriously and formalize how you respond to new ideas from employees. Respond in a timely manner. Give credit where it is due. The best ideas will come from the lower levels of the company, so don’t discount the janitor’s idea just because he’s the janitor. He’s more in touch with the daily activities of the company than any manager.

Internal growth does have a few disadvantages. Developing internal capabilities can be slow and time-consuming, expensive, and risky if not managed well. Your managers and top level employees really need to understand and support the plans for growth so selling the idea to them before any money is invested is critical. Without middle management support, there can be passive aggressive delays, critical employees quitting, even sabotage, that can derail even the best of strategies. For example, maybe you’ve decided to invest in robotics to automate some of the more time consuming and repetitive components on your production line. Some employees and managers may fear that they will lose their jobs because of this plan. Being proactive about retraining opportunities, options for reassignment within the company and other options will enable managers to discuss the plan more positively and allay any concerns employees may have about your plan.

So think big. Open your mind by asking yourself, “if I had all the money I needed, all the right staff in place, and all the time I needed, what could I do to create growth in my business?” Ask this of your employees as well.

Thinking big has never been a bad idea. In fact, it is the only thing that has ever disrupted industries.

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Four Simple Options for Hacking Your Company’s Growth

Four Simple Options for Hacking Your Company's Growth

Growing your business can come through many forms. Some companies require individuals to secure leads, close deals and generate revenue for the firm. The number of people generating that revenue could be a benchmark that a company uses to identify growth. Other companies might measure number of clients. Some firms focus on market share, particularly in FMCG and other consumer-based industries. But most companies focus on top line revenue. Top line revenue is your gross profit before subtracting your overhead and expenses. Net profit (after subtracting your costs) can be manipulated in several ways, especially by cutting costs and streamlining processes to move more product within a specified timeframe, thereby improving efficiency.

If your organization has stalled or revenues are falling, you have a number of choices in how to face the future. You can simply not deal with it and either retire or find another job and let somebody else deal with it. But the best method is to get all of your A players into a room and start dealing with the issue. One methodology that allows companies to create potential growth strategies is the Product/Market Expansion Grid.

Product-Market Expansion Grid - ibuildcompanies.com by Jeanne Heydecker

This matrix clearly identifies the options available for growing your organization. NOTE: Clean your house first. This does not address any internal issues that may be causing your growth challenges such as out-of-date equipment, poor execution or quality, poor employee management or morale, etc. Those issues should be clearly identified and addressed prior to moving towards this process.

To get back to the Matrix, it will help your leaders create growth strategies and compare them to the risk involved. As you move from “Existing” quadrants to “New” quadrants your risk will be higher. The four strategies are:

Market Penetration

This quadrant focuses on selling more of your existing products or services to existing markets. To increase market share, you may have to cut pricing or add more features, improve distribution or customer service, or rejuvenate your brand and messaging to attract new clients or develop new sales channels. You may have to streamline your production process to build more products at a time at a lower cost. Upselling to existing customers other products you already produce/other services you offer can be an ideal way to minimize risk while increasing growth. This may require additional training for your sales team or creating new sales collateral that encompasses all of your offerings.

Market Development

This quadrant focuses on selling more of your existing products to new markets. This can be as simple as looking at who else you can sell to. For example, you may be a shoelace manufacturer and you typically sell to large retail companies and department stores. Diversify your market to include shoe manufacturers and standalone shoe retail outlets, thereby adding a more diverse revenue stream. Leaders should use their creativity to brainstorm where other markets may be.

Adding new sales channels requires new messaging, value propositions and collateral. For example, if a telecom company has been traditionally selling to companies that sell phone systems, they may want to create new collateral to attract network systems integrators that show how easily that potential customer base can integrate the telecom company’s products into their suite of services.

Market Development may also mean expansion into other locations, either going national or global. This has higher risk, but it can be minimized by acquiring companies already established in those areas or partnering with established companies that offer symbiotic products or services that could also sell your products and services to their existing customers. It’s a total win-win when negotiated and managed effectively.

Product Development

This quadrant focuses on identifying a new problem your existing clients have that you may be able to solve for them. This may require focus groups or surveys to have conversations with your customers about your current offerings and what they also need. One process that I found extremely powerful was having a feedback loop between sales, marketing and R&D so that whenever clients complained about an issue or wanted features we did not have, those calls were logged and every quarter we revisited all the feature requests and complaints as a team, prioritized them and selected the most critical issues to be worked on in the coming months. With a built-in feedback loop between marketing, sales and R&D, we were able to more quickly respond to our customers and offer new solutions more quickly than our competitors.


This quadrant focuses on understanding your market, your company’s core competencies, and brainstorming new products and/or services that are related or completely unrelated to your current offering. There are many options when looking at diversification:

  • Related Diversification is entering a new market with a new product that is related to your current offering. For example, a milk producer may decide to produce flavored milk, like chocolate, banana, and strawberry to their product offering. The change is simple but expands their market by simply adding flavorings. Not much new equipment is required, a few labeling design changes, but same form factors, so the risk is fairly minimal. Consumers who trust your regular milk would be more willing to try your new flavored milks because there is not much of a change for the consumer.
  • Unrelated Diversification is entering a new market with a new product that is completely unrelated to your current offering. If the same milk producer decided to make yogurt or cheese, the risk would be higher. New machinery would be required. New staff would have to be trained to operate the new machinery. New packaging would have to be developed. Logistics may require different strategies to getting these new products on the shelves. Consumers used to your milk may not see the equity in the brand the same way you do and may be less willing to try your new products when they already trust another brand’s cheese or yogurt.
  • Vertical Diversification is swallowing up part of your supply chain and eliminating outside vendors. For this milk producer, they may look at the feed supply or perhaps the delivery process. They could start growing their own feed and selling it to new customers. They could decide to invest in drone or home delivery and e-commerce to bring milk to your door instead of relying on shelf space in retail stores.

I said earlier that you should get all of your A players in a room to discuss the situation. These employees should come from all levels and departments within your firm. Develop a formal process to quickly brainstorm a number of ideas in each of these quadrants and then prioritize them for further evaluation. Set up small teams to present on each idea and their recommendation on whether to move forward with it, scrap it, or reserve it for a later date. Select the best of the ideas and move forward by investing in a small prototype or Minimally Viable Product (MVP) to test with your customer base.

Generally speaking, all companies should do this on a regular basis and most don’t. They are typically surprised when they suddenly find themselves irrelevant. There’s a saying by Harry Emerson Fosdick who said,

“The world is moving so fast these days that the man who says it can’t be done is generally interrupted by someone doing it.”

Don’t be the interrupted; be the disruptor.

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How NOT to Effectively Transform Your Company Through Technology

How Not to Digitally Transform Your Business - ibuildcompanies.com by Jeanne Heydecker

CEOs in all industry sectors are now beginning to believe that software and other technical automation processes are a methodology for quickly surpassing your competition. It is not without risks however. I once worked with a CEO who, seriously, refused to buy a server or a database to run a company of 500 people. Instead, everyone’s computers were connected to one other computer of the same size, with only free firewall software that came with the computer. Everything from HR, payroll, accounts receivable and payable, to employee performance and office maintenance was controlled on Excel spreadsheets. And these spreadsheets, in some cases, were over ten years old and were simply moved from one person to the next who took over the job. People did not do backups. It was a pretty scary setup, but it worked. Until it didn’t. People lost or had corrupted files. People would then have to go back through the paper records to recreate the spreadsheets which caused a lot of inaccuracies, errors and just plain missing megabytes of old data because the paper records had gone missing. This was not a way to work and not a way to stay competitive in an increasingly high set of competitors that were SaaS-enabled, or built proprietary software to provide 24/7 service to clients.

These are the Seven Deadly Sins of what not to do when you finally decide that you need to digitally transform your organization:

1. Not Understanding What Digital Transformation Entails

There are four parts to digital transformation. They are the internet, analytics, embedded objects such as RFID tags or barcodes, and mobility. The internet is a vital part of your information delivery system, as simple as a web site and social media pages, but it also can be a very important part of your supply chain in ERP systems. Without analytics, you cannot establish a benchmark of where you started and monitor how much change you have accomplished. RFID tags, bar codes and other embedded systems can significantly automate manufacturing, warehousing, logistics and delivery. Without mobility, you don’t have access to monitoring tools that can facilitate critical decision making 24/7 from anywhere in the world, especially during a crisis.

2. Not Understanding How Technology Transforms Businesses

Everyone has heard at least one story of a tech project that went way over budget and was delivered very late and did not work as expected. That’s typically due to changes in scope, market conditions, changes in leadership, poor project management… the list goes on and on. There are three different ways technology transforms a business:

  1. Substitution: the technology just substitutes for, or replaces, and existing process.
  2. Extension: the technology’s main impact extends the company’s brand or product line into a new platform, such as the internet or mobile.
  3. Transformation: the company begins doing business differently.

Transformation eliminates the issues that can be automated, monitored, measured, produced, etc., in order for leaders and managers to work “on” the business rather than “in” it. They are more able to spend time innovating and creating more value for customers. Both substitution and extension are worthwhile efforts, they will not have the same impact as a complete transformation.

Let’s look at desktop publishing. When I was in college learning about graphic design, we used tables, and wax and photostat cameras. We cut and pasted all the components on a board. We spec’d type which would have to go to someone at a different company to be printed for “camera ready artwork”. We rubbed down Letraset display typefaces and added registration, and trim marks to the board and then sent the camera ready artwork to the printer. The printer would then produce a negative and the designer would go back over the negative marking with red ink anything to be removed before printing. Then the final artwork would be created and secured to the printing press, and then paper went through and your project was printed.

Once the computer came out and desktop publishing software became available, all of a sudden those printing houses had a real dilemma. Most printers invested in their own hideously expensive computers to do the work of the graphic designers and some actually hired a few, but there was a lot of really awful stuff out there in the late 80’s and early 90’s. If they did not invest in transformation at that time, they would either sell or close shop. Most closed. Others invested in more computers and digital printers, eliminating the photostat cameras and all the rest of the printing press equipment, which meant they had to find people who could operate the computers and digital printers and many jobs were lost in the process. And they are never coming back. I once visited the Boston Globe in the early 80’s and marveled at the metal type they created in slugs that would then be laid in a wooden frame for printing. That’s never coming back either. The industry was forced to transform in order to survive. There was no going back.

3. Senior Management Doesn’t Lead from the Front

You need your top level executives and board members publicly endorsing the projects as they start. They need to unilaterally understand and effectively communicate the vision of what will change, by when, by who, and how that transformation will affect each employee.When managers and leaders don’t communicate, the gossip will go nuts with crazy stories about how “everyone will lose their jobs”, or “the company is going to close down”, and even crazier comments.

They don’t need to manage the projects themselves; indeed, they are most likely incompetent at dealing with all the details and moving parts of a complex technology project and it most likely isn’t their area of expertise. Let’s say you’re an insurance company and the end goal is to make decisions more quickly for increased sales, shorten the amount of time to pay out on claims, and reduce the amount of paper in the process. Your board members may know a lot about the insurance industry but nothing about responsive software and mobile app development. But they need to stand behind and support the team making and managing the change in the organization.

4. Transformation Doesn’t Happen Overnight

For significant transformation, it may take years to find the right employees to lead the project, plan the structure, set the requirements and define the scope. Then you need to manage the change in incremental steps. Small enough for your managers to communicate the changes and keep everyone involved. Each milestone can and should be celebrated and the team publicly thanked for their efforts. Keeping everyone aware of the work is easier for employees to handle than sudden shifts with no warning. No one likes those kinds of surprises.

It’s also a good idea to involve representatives from each department in the company as their buy-in is important, and the feedback they share may be critical in all phases of the development process. Software developers may not understand how payments are made or what the accounting department wants to prioritize. Your sales people may want a way to create orders in the field while still at the customer’s office. Your logistics people may want ways to follow the supply chain in more detail. These meetings should go on throughout the planning process and also during your prototype process for user testing, and as you move towards BETA where the public may be exposed to your new technology, they may have feedback from customers, vendors, industry opinion leaders that the tech team don’t have access to. Putting a feedback loop in between sales, marketing, and R&D is the best thing you can do as a standard operating procedure with quarterly or monthly meetings to assess feedback and adjust priorities for future development. For this purpose having an online forum for all employees to provide feedback will significantly help your tech team assess and prioritize their work in progress. The kiss of death in this process is called “scope creep”. You start with one set of requirements, then marketing gets a call from a client with a cool feature they want and marketing rushes down to the CEO saying, “we’ll lose the client if we don’t add this feature!” Then the tech team is advised and it may require a complete overhaul of the entire project, essentially starting over due to the way the database was structured, or the feature would require a six month delay. Managing scope creep is your tech team lead’s super power. You need someone who can manage this effectively.

5. Senior Management isn’t Flexible Enough to Make Decisions as Technology and Market Conditions Change

The opposite can also happen. There may be a time when midway through your development, a competitor or a disruptor from outside the industry launches a new widget that essentially makes your project redundant. Think about the music industry and how they were more focused on piracy than on what consumers wanted. When Steve Jobs introduced the iPod and iTunes, the music industry had to find new ways to monetize their industry, and they have never been proactive enough to effectively transform to face this disruption.

Major digital transformation initiatives are centered on re-envisioning the customer experience, operational processes and business models. The music industry never examined the phenomena of mixed tapes – custom cassettes recorded one song at a time and never realized that the album concept was out of date with consumers. Listening to your customer complaints, providing feedback loops that include senior management on decisions that will significantly delay the project or increase the budget is important, because ultimately they are responsible for the company’s fortunes.

Successful digital transformation comes not from creating a new organization, but from reshaping the organization to take advantage of the valuable existing strategic assets in new ways.  They need to envision radically new ways of thinking.

6. Sunk Cost Fallacy

Companies are loathe to quit a project even if it’s going in the wrong direction. You may have hired the wrong consulting firm to manage this process. You may have already experienced delays and cost overruns. Many business leaders think, “We’ve already spent $18 million on this. We have to finish it.” No you don’t. You need to stop and seek alternatives. Throwing money at a broken wheel doesn’t fix the wheel.

7. Not Examining All the Building Blocks of Transformation

Most executives are digitally transforming three key areas of their enterprises: customer experience, operational processes and business models. Within each of the three pillars, different elements are changing. These nine elements form a set of building blocks for digital transformation. The tenth element– digital capabilities – is an essential enabler for transformation in all these areas.

Business Transformation - ibuildcompanies.com by Jeanne Heydecker

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The Tale of a “Failed” Entrepreneur

The Tale of a "Failed" Entrepreneur

When I moved to India 11 years ago, I had been (somewhat) active on the startup/entrepreneur circuit, engaging with people who wanted to become entrepreneurs. The reason I say “somewhat” is because it seriously disturbs me that people think it’s a big cake walk. That someone gives you money, you start a company, and then magically, you’re a rich man. That couldn’t be farther from the truth. Now that I am in Myanmar, I’ve worked with entrepreneurs in three countries. I love risk takers. I love risk takers that bootstrap their companies, because the gamble is far more personal. This post describes one of these high-risk ventures that happened while I was still in India.

For seven months, I had been working deep in the trenches getting a new e-commerce business going. For those of you who want to be an entrepreneur, here’s my take on what is involved.

As a new initiative for the company, it was essentially a startup within an established firm. We had a very small development budget and an even more limited marketing budget.

What started as a nice idea for serving U.S. small business owners who needed help recruiting candidates, during the planning phase it morphed into something unique in the industry. Many staffing firms use outsourcing firms to provide cheap candidate sourcing and screening and we worked with many of the best of them. These staffing firms were too expensive for U.S. small businesses, so we decided that we could offer a similar service at a price point that was affordable to small companies. To make this successful, we were intent on providing a simple and easy user experience, and the site had to be intuitive – make it clear where to submit an order, feature an easy payment process and a dead simple, affordable and fast delivery process.

We started with a different name. When we went to research our service mark and domain name, many of the options we were looking for were already taken, but our favorite was still available. Within the next 30 days, we tried to register it, only to find out some company in Arizona registered it a few days after Christmas. Blurg.

LESSON #1: If you have a great domain name, register it right away. Before anyone else gets the same idea. This is good for SEO. The longer you’ve owned the URL, the higher its rankings.

We decided to hire a local development firm who insisted that they managed their development iteratively, but that did not happen. They did not have the right people in their organization like designers and UI/UX specialists. The project cost us twice as much and took twice as long as expected, even though the bulk of the interface had already been designed by me. Most of the content on the site was created using WordPress and a gorgeous and affordable theme that I installed and created myself. I only needed them to do the backend magic. They did not develop use cases, document their work, nor provide any ability to do design reviews because everything was programmed by them before the process flow had been agreed upon. A number of times. But at least we launched. And the site was pretty decently bug-free for a BETA site. Seriously. I’ve dealt with plenty of Indian developers who do ABSOLUTELY NO testing before launching.

LESSON #2: Sit on the developers. Meet with them regularly. If they’re not meeting milestones, meet them more often, even if that means daily. I didn’t do this faithfully due to other pending projects.

We did not have staff in place to market effectively. We needed people who could manage social media, connecting with Americans and speaking authentically. It took a lot of training and exposure, but our staff were working at similar delivery levels to Americans doing the same work. I was very proud of that.

LESSON #3: Train, train and train again. Monitor and provide feedback regularly. Ask them to evaluate each other’s work, mentor each other and share information. Make them feel safe in testing new ideas, even if they fail. Learning it does NOT work is just as important as learning what DOES.

Forecasting staffing levels is always a challenge when launching a site. Some sites take forever to gain traction, others never do, others ramp up so quickly that service suffers. Our pricing structure depended on volume. Our staff had been exposed to “P&L Lite”, also known as “justifying our salaries”, which gave them insight into how startups work and what you need to be mindful of when making business decisions. I demonstrated how much traffic was required in order to convert a small percentage of visitors into sales. We had tough targets to reach. Our traffic had to get to 800,000 unique visitors a month to predict enough orders to cover costs.

LESSON #4: Be as transparent as possible with your staff. If they know what metrics you are following as a business owner, this will be translated into their priorities (hopefully). Explain why each metric is important and what is required to meet your business goals.

At the beginning, our staffing was all over the place. We had a set of dedicated staff, plus additional employees on the bench waiting for job orders. While in BETA, this was okay, but we still needed to start generating revenue. The way to get revenue was to drive qualified traffic to our site.

I provided them with tools, training, and templates and sent them off into the “interwebs” to drive traffic back to our site. We found shortened Google URLs or bit.ly’s to be great at tracking each individual’s contribution and sharing these insights with the staff to increase their own effectiveness and make a contest out of it. (Google’s URLs, however, were automatically tracked in Google Analytics, so we preferred them at the time.)

LESSON #5: If you have staff on the bench, train them to do marketing and sales activities. Everyone should be able to express who you are as a company. If they can’t, you have failed them and your business. Many mindless tasks can be assigned to people, like directory submissions, article submissions, link building, etc. Other disciplines, like social media, take more training. Expect it to take six months to see any success.

Life is challenging when launching a startup. My life was all about the new business venture for those months, from the moment I woke up and checked my emails, to the moment just before I went to sleep after checking my emails and traffic reports. I’d wake up in the middle of the night to send emails to myself about ideas on tweaking the web site, blog post ideas, etc. I skipped meals to accommodate yet another training meeting, or to visit my developers. I could not find a decent illustrator, so I created the images on the site myself. The entire user interface was designed by me, because I simply could not identify anyone, nor could our developer, nor anyone in our online networks, that was good enough to do the work. I wrote the bulk of the content myself, with feedback from the CEO.

I checked the quality of the backend code along with my fearless Operations Manager, who was leading the operations for this initiative. She spent weeks testing countless job orders, and broke the system many times, identifying lots of work for our developers. The Marketing Manager and the Social Media team were working night and day, establishing the right connections on social media. Every single person involved with this project dedicated themselves more than full time employees. I feel confident in saying that they were partnering with me to build this business. I was not merely trading a paycheck for their completion of certain tasks. They were with me. They knew the mission. They understood the excitement of launching a business and I shared with them throughout the process how I went about doing this. It wasn’t the first time I’d launched a business, in Myanmar, in India or in the U.S., so I hoped my background could help them learn the best practices I’ve learned, lo, these many years.

LESSON #6: Do as much as you can in-house. Use external contractors only when you don’t have internal people willing to try. If they try, and complete the task well, it’s cost you far less than a contractor would charge and your employee also gains confidence and learns new skills.

We had very little traffic in spite of our marketing efforts and I am convinced that it had everything to do with the backend tech. We were at one time blacklisted by our web host because the software was autogenerating PDFs and we had hundreds of thousands of documents on our web site. They were sure we were spammers. The load times were very high due to the number of plugins and scripts they had loading on the home page. Many times, the payment process would time out and the user would not only lose their payment information, but their job description and the entire order would be lost as well, requiring them to start all over. We had a bounce rate of 36%, which wasn’t bad, many reading the blog posts and starting orders, but the “built-from-scratch” cart coded by the tech company was killing us. Our abandoned cart rate was over 88%.

Our backend tech required entering resumes line by line by line into database forms because we couldn’t parse documents and have it identify correctly what field the data should go to. (Like I said, we had a crappy tech company working on this project). Whenever we had five or more orders in one day, it was all hands on deck, including me, entering resume data to ensure we got 15 resumes to the consumer for each order. Essentially, we lost money on every order. We investigated looking at Google ads and if we had actually had a click-through and a sale, our profit disappeared. We could have rebuilt the technology and we explored that opportunity. It would have cost an additional $150,000 to completely rebuild the service to the original specifications. We could have increased the price, but the staffing firms using our service were already asking for bulk discounts and complaining about the existing price, saying it was already too high. We did not see a clear way to move forward, and after a year, we decided to close to service. The “Sunk Cost” fallacy would have convinced us to reinvest and rebuild, but the prototype did not prove the concept was worth it.

LESSON #7: “Fish or Cut Bait” or learning when to pull the plug.

So would I do it again? Yes. In a heart beat. We all learned a lot. I would hire the right development firm. Use a tested e-commerce back end. I would not create a custom database backend with 50+ fields per resume. I would automate the resume entry process and the Resume Book PDF generation process. My staff worked really hard to make this a success and they knew the orders were just not coming. They knew it was just a matter of time before we closed it down. They were concerned they would lose their jobs. However, that turned out to be a turning point for the organization. We kept those staff who were doing well at marketing and created a marketing plan to promote our existing services. The operations staff went back into operations at the same level they’d been before. No one lost their jobs, although some left on their own.

Was it a failure? Absolutely. Did we learn a lot? Absolutely. But not taking the risk would have been far, far worse.

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Why HR is Critical to Employee Morale, Productivity, and Innovation

Why HR is Critical to Employee Morale, Productivity, and Innovation - ibuildcompanies by Jeanne Heydecker

In a company I worked with in India, we had a town meeting in the office and the CEO updated everyone on the status on the growth and successes of the group of companies we all worked for and congratulated everyone on the great job we’d done moving them forward that year. He did a great job, then opened the floor for questions or issues. Everything seemed to center on the HR person, who frankly, had been pretty useless during my tenure there. She was one of those people who did exactly what the CEO asked and nothing more.

People complained about pretty simple things like when sending emails telling us to register ourselves for our health insurance by a certain deadline, she would never put links to the site in the emails or ways to remember your password. She was also chastised for never answering her emails. She was also put to task for never following up on requests – one woman had been waiting nine months for a decision on her transportation issue.

Another gent questioned why training was not available for all staff. She replied that the training room could only hold ten people and he replied that he worked in a team of six, and that certain people were getting trained on preference, which was a mistake. She had no answer for it because it was definitely a political issue and she couldn’t respond honestly. Everyone knew this. It was obvious.

Lots of people complained about never having formal appraisals with their department head. Very true, I never had an appraisal in all four years I’d worked there. She muttered something about talking to your department heads, but she, as the head of HR, was personally responsible for ensuring this activity takes place.

Other people complained about the Employee of the Month program, a simple recognition with an emailed Powerpoint certificate (that you have to print out yourself) with no public email or ceremony that was useless. I agree. It was so obviously political. The people that got them were never the ones bringing in 70% of the sales revenue, or the person who built four trade show booths in the span of six weeks, because they were the ones who were not the friends of HR and not political. They were focused on getting their jobs done well. It was a joke to all the employees.

Another person brought up the birthday parties, saying they were a waste of their time that could be better spent working instead of sitting in a windowless room drinking soda and eating sweets, just staring at each other. Most people went, because they felt they had to go, but spent their time focused on their cellphones.

Someone else brought up the issue of holiday parties (with mandatory attendance) that were announced then cancelled at the last minute. People had to make individual arrangements to travel to these parties, including their family members, etc., causing not only additional personal time canceling their travel, but caused a feeling that the company didn’t really care about them.

HR is supposed to not only enforce the policies of the company, and recruit new staff, but they need to establish a positive working environment for people to get their jobs done effectively. They should be enabling hiring managers and providing the training and tools required for managers to bring out the best in their teams. Most companies don’t understand how vital a role HR is in moving a company forward. They are not only required, but they should be instrumental in providing a work environment that allows staff members to do the best work possible, meeting deadlines, while keeping under budget.

There is a lot of work to do, and HR professionals need to start doing their jobs and advocating for the people they work for: the company AND the staff. The company is nothing without its employees, and companies that don’t care about them, get that feeling reciprocated. It develops into a strictly transactional relationship where you only get what you demand from each employee and they leave exactly at closing time, investing no more in the company than the company invests in them.

At another company in India, from the CEO down, they focused on being fair and treating all employees equally. Senior management was genuinely liked by the rest of of the team because we were open and honest with them, enforcing an open door policy for folks to share their ideas and suggestions for improving processes, or making sales. When senior management advocates for all employees, demanding respect for everyone and the services they individually contribute to the company, employees feel a part of something and genuinely want to come to work, be productive, and feel good at the end of the day, having taken pride in a job well done. This happens through genuine and authentic care about your employees. You can’t fake this. You can quickly see the difference when you visit different organizations.

HR requires support from senior management in order to be effective. That said, HR needs to understand its value and market that value upward. HR needs to report on their activities regularly and identify programs that cut costs, increase productivity and innovation, and create a work environment where employees actually look forward to coming to work. HR should also review their online reputation on web sites such as glassdoor.com where employees can post reviews, salaries and other information anonymously. They should take to heart any negative comments and attempt to fix them. They should respond to all reviews, good and bad. One good thing for HR to do is to set up a Google Alert with their company name and its C-Level employee names, just to monitor what people may be saying across the internet. They can research, plan, and negotiate interesting benefits and other perks such as work-from-home policies. (We had a 24-hour massage center in one company I worked with, plus a concierge service to pick up your dry cleaning, pay your bills, etc., along with a financial advisor on-call to help you manage your bonuses and other incentives. This enabled us to decrease our monthly night shift resignations from 6% a month to less than .01%.)

HR shouldn’t be seen just as a service that hires people and plans parties. They have a serious job to do. They need to focus on getting a seat in the boardroom because what they do affects every person in the company, how much they look forward to coming to work, how productive they are, how innovative they will be, and how long they will stay. Happy employees will also tell their friends about their job and can act as advocates by recommending their friends to become new employees.

Finding the best quality people requires putting in the work to create the best quality work environment for them to find meaning and feel proud to tell people they work at your company. Only then is HR’s job complete.

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