Five Tips to Motivate Small-Business Workers

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WHEN YOU RUN A lean operation, how do you motivate your work force?

Sure, large corporations with deep pockets can easily dangle bonuses, perks and an array of fancy reward programs (often created by outside consultants) to encourage employees to outperform. Yet, small businesses with limited budgets have a distinct advantage: Chances are, you probably know all your employees. So it's easier to show 'em you care.

In many cases, employees will perform best for a boss who can accommodate their needs, whether that's giving them an afternoon off to take care of a personal situation, re-arranging their work schedule so they can pick up kids from school, or allowing them to telecommute as needed, says John Challenger, head of outplacement firm Challenger, Gray & Christmas in Chicago.

"Small business can be so flexible," he says. "Big companies have policies, and if they make an exception they think the whole world will fall apart."

So when it comes to energizing your staff, being small can be your best advantage. Here are five steps to engage your employees:

1. Communicate your vision

A boss at a small firm should explain the company's missions and goals, preferably right when a new employee starts, says Jeanie Adkins, a rewards consultant at Mercer Human Resource Consulting in Louisville, Ky. Studies at larger corporations show that employees perform better when they understand the company's vision, think the company's mission is worthwhile, and think they can contribute to the success of the organization, she says. "Small businesses have perhaps an easier task than big ones because it's easier to create that line of sight," she says.

2. Acknowledge your limitations

Admit it: You may not be able to provide the same opportunities for promotion that a large company can. But, "what you can do is make sure employees are getting the mentoring, training and development that they need to build a career with you — or someone else," Adkins says. While it sounds counterintuitive, offering an employee valuable (and marketable) work skills can reinforce good performance, she says.

3. Involve workers in special projects

Ask your employees to step away from their routine jobs and come up with creative solutions to customers' problems, suggests Ron Wince, president of Guidon Performance Solutions, a Mesa, Ariz., consulting firm. That sends a message that you value their creativity, which in turns boosts their job satisfaction. "If you go into a company and all people do is punch the clock, you as a customer can almost always tell how the morale is in an organization," he says. Once a month, invite a cross-section of employees to meet for a few hours and work on a particular issue, usually one involving customer service. Not only will you probably get some good ideas, but "the employee feels like they're part of something," he says.

4. Offer "add-ons" in addition to wages

Younger people, in particular, have grown up hearing catch phrases like "work-life balance" and value benefits such as child-care programs, flexible schedules, and even wellness initiatives almost as much as competitive salaries, says Pete Stoddart, a spokesman for Ceridian, a Minneapolis human-resources company. A small-business owner might not have the resources for formal programs, but can promise the flexibility to work with individuals in the event of major life events, such as the birth of a child, the death of a relative or health problems. And consider employee-assistance programs, which have come down in price and can be purchased by small businesses for roughly "a few dollars per employee per month," he says. "It's a very easy thing for a small-business owner to have in place."

5. Get creative with rewards

At trucking company Admiral Merchants Motor Freight in Minneapolis, which has about 60 employees, human-resources manager Augusta Kirk has come up with an original (and relatively low-budget) rewards program called "Run to the Border" to encourage the office staff to exercise. Working under a $2,000 budget, Kirk doles out gift certificates to restaurants and sporting-goods stores to employees who agree to work out for 30 minutes, five days a week, for all of 2007. (Kirk says each work-out session equals about six miles, so by the end of the year, employees who stick to it will log 1,508 miles, roughly the distance between their office and the Mexican border.) "You definitely do have better-performing employees if they are more active," she says. If an exercise routine doesn't work for your staff, Challenger suggests something like an NCAA basketball tournament. "Rather than drive the pools underground, do it for free and give an award out to the winner," he says.
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Keeping Costs Low For an Internet Business

Chris Bliss amazing juggling routine.

Question: I will soon be setting up an e-commerce Web site for my healthful cookie business. What information can you give me about keeping costs low for a site, both start-up costs and continuing costs?

-- Carolyn Crow, Kirkland, Wash.

Answer: Hiring a Web developer to build an e-commerce site from scratch can cost at least $5,000, and often far more. But there are cheap alternatives for those willing to do much of the setup themselves -- many of which don't require much time or technical savvy.

For an e-commerce novice, an all-inclusive service may be most sensible. Yahoo Inc.'s Merchant Solutions, for instance, lets users get a domain name and choose one of 12 predesigned Web-site templates. The service then walks you through the setup, including posting product details and picking a payment processor or merchant account and a shipper. It also includes features to help the sites rank better in search results, a spokeswoman says.

There's a $50 setup fee, currently waived in an introductory offer. The service's starter plan costs $39.95 a month plus a 1.5% transaction fee on sales. That price includes Web hosting, a customer "shopping cart" and check-out functionality and technical help by phone. Payment processing costs extra.

You could save money by picking an all-inclusive service without sales-transaction fees. GoDaddy.com, owned by the Go Daddy Group, offers an e-commerce site-building and hosting service called Quick Shopping Cart, which has plans starting at $9.99 a month for sites with up to 20 product listings. The firm charges no setup or transaction fees, though payment processing is extra.

The main drawback with these services in that you don't get the design originality as you would starting from scratch, says Brian Cleveland, an Internet expert at StartupNation.com, which provides tools and advice for entrepreneurs. But many start-up sites just need to be simple and easily found through online search, with attractive photos of the product, he says.

Small businesses desiring more flexibility have other options. Sites like TemplateMonster.com sell hundreds of different Web-site templates. But you then must find a Web-hosting service, which usually costs $6 to $20 a month depending on your storage needs. You also will have to get a shopping cart and checkout system, a payment-processing system and a certificate that verifies the site's security.

You may end up spending less than you would through an all-inclusive service, but it will require more work and technical know-how.

[via startupjournal.com]

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How Do You Franchise THAT?

Jerry Seinfeld's Brilliant Response to a Telemarketer

One of the most frequently asked questions that I hear, especially coming from my more entrepreneurial clients, is, “Why would anyone ever buy this franchise?”

This question is usually followed by a series of observations. “Anyone could do it.” “There’s nothing to this business.” “I don’t think this business can be franchised.” And of course, the final underlying question, “Why wouldn’t someone simply do this themselves?”

Their concern is a valid one. Some concepts are simply not well differentiated. Moreover, some of them have low barriers to entry.

So can a business that is not unique still franchise successfully? And if so, how?

The Mindset of the Entrepreneur
Whenever I hear these questions, my first response is to point to some of the undifferentiated concepts that have achieved high levels of success in the marketplace. “What about janitorial services—why have they been so successful?” Then I go through the list. Maid services. Lawn care. Carpet cleaning. Temporary and permanent placement firms. And of course, the list goes on and on.

The fact of the matter is, a significant number of franchise companies are in industries in which their products or services are not readily differentiated.

What these questioning entrepreneurs fail to understand is that, as entrepreneurs, they are the one group on earth that is perhaps the least suited to understand the mindset of the prospective franchisee.

The typical entrepreneur is, at least by my definition, someone who never saw a rule he or she did not want to break. And, in many respects, the entrepreneur is often the last person you would want to be a franchisee. The best franchisees are not the rule-breakers. And, in fact, the truly entrepreneurial are often the least inclined to buy a franchise.

The best franchisees are motivated adopters—people willing to accept some level of risk, but people who, nonetheless, are willing to follow the rules established by their franchisor.

But if the franchisee isn’t buying your “secret recipe,” what exactly are they buying?

Ultimately, what the franchise prospect is buying is a combination of two things: a strong value proposition plus a unique market position.

Developing the Value Proposition
If you are thinking about franchising a business that you feel isn’t particularly sexy or unique, chances are, you have already watched a number of your competitors come and go. Why did they fail, while you survived with a similar product or service? The answer is the system.

The system is the embodiment of all those things that make the ultimate difference between success or failure. Site selection. Lease negotiation. Advertising. Customer service. Branding. Positioning. Purchasing. Pricing. Merchandising. Hiring. Training. Managing. Quality control. Financial management. It can be found in everything from the products you buy to the way your people answer the phones.

When someone buys a McDonald’s franchise, they aren’t doing it because they want the recipe for the “special sauce” on the Big Mac. In fact, they probably aren’t doing it because they believe that McDonald’s serves the world’s finest hamburgers. But few would argue over the quality of their systems—which are among the best in the world.

The best companies not only have developed their systems, but they use those systems to ensure consistency at the consumer level.

And that is what your franchisees want to buy—a consistent consumer experience that has been proven in the marketplace.

And your job, as the franchisor of an undifferentiated concept, is to show the franchisee how to replicate your success. Through some combination of services and support, you need to teach your franchisee how to achieve what you have achieved. That will likely mean the development of training programs, operations manuals, site selection criteria, advertising guidelines and other elements of “the system” that will allow your franchisees to take advantage of the intellectual property you have developed over the years. Moreover, you will want to provide your franchisees with the benefits of your labor and your relationships—the brand, your purchasing power, etc.—that you have developed over the years. Combined, these elements constitute the value proposition that your franchisee will pay you for.

But the value proposition alone is not enough.

Positioning your Concept
Even the most mundane concept can work as a franchise if it can be replicated. But if your system does not have that special “sizzle,” you may have to work hard to sell it.

For those few concepts that are fortunate enough to be “first movers,” their first position in the market can be enough—assuming, of course, that they grow fast enough to maintain brand dominance. But for the rest of the franchisors out there, a value proposition alone will not be enough. The concept will need to be differentiated from others in the marketplace if it hopes to achieve any significant level of success.

Let’s take another look at McDonald’s. On its surface, especially in the early years, it was a simple concept—basically, hamburgers and fries with drinks. And for years after they started franchising, dozens of franchised competitors came and went. All, that is, except for a select few.

Burger King realized McDonald’s had staked out the “fast burger” segment in the market and knew if it were to compete with McDonald’s, it had to differentiate itself in the eyes of the consumer. So it adopted a position that McDonald’s could not attack: “Have it your way, at Burger King.”

The genius of this position was that Burger King had staked out a position to which McDonald’s could not competitively respond. Burger King’s operating system differentiated it from McDonald’s, and McDonald’s was not in a position to revamp its operating system to respond to this new threat. And Burger King prospered.

Over the years, more competitors came and went.

More than a decade later, Wendy’s was able to crack the “Big Two” using a different form of differentiation: marketing. At that time, both McDonald’s and Burger King were heavily promoting themselves to children. Wendy’s succeeded where others had failed by offering “old-fashioned” made-to-order hamburgers and promoting itself to an older audience, using an octogenarian spokesperson asking “Where’s the Beef?” and an offer that included “plenty of napkins”—which is not what the person feeding children may want to hear.

In order to succeed in franchising—especially if you are in a commodity-type market—you simply have to differentiate your concept from those of your established franchised competitors.

That differentiation can come at the operational level (as in the cases of Burger King), in the form of marketing (Wendy’s) or in a number of other forms. Some concepts differentiate themselves in the eyes of their franchisees by offering a lower investment franchise package (a double-drive thru hamburger operation is less expensive to build and operate than is a Burger King).

Others differentiate based on services: both high and low. Some franchisors tout their high levels of service. Some janitorial service franchisors, for example, will actually procure their franchisee’s customers—so all the franchisee has to do is to service the account.

Interestingly, others have taken just the opposite approach. Some carpet cleaning and postal service franchises got their start by promoting themselves as “the un-franchise,” touting minimal fees and minimal intrusion into the franchisee’s day-to-day operations.

Contractually, franchisors can differentiate themselves through a more liberal contract, through reduced fees or royalties (not a particularly good strategy, in most instances), through a bigger territory, or through different support services.

Be Best at Something
In fact, there are numerous ways for franchisors to differentiate themselves in the marketplace, even if they have a relatively undifferentiated consumer offering. But if you want to capture a long-term market position, you need to be perceived as being the best at something.

Retail consultant McMillan|Doolittle, in their groundbreaking work on the EST model for retail success, propose that a retailer needs to be the best at something in order to survive in today’s competitive marketplace.

The model, in grossly oversimplified terms, states that a retailer has to be best in one of five essential areas in order to “win” in the retail game:

• Biggest: a dominant assortment
• Cheapest: lowest prices
• Easiest: high-service orientation
• Quickest: fast-service orientation
• Hottest: fashion orientation

Moreover, the theory states that while retailers can choose to be two of these at once (biggest and cheapest, a la Wal-Mart), they will make a big mistake if they try to be more than two. They hold that the strategy of trying to be everything to everybody leads to a lack of position and a downward spiral in the market.

In franchising, especially when it comes to commodity-oriented concepts, many of these same principles apply. Over and above the need for a strong value proposition, the best franchisors will actively seek to command their desired position in the marketplace. You may find other things to differentiate your concept—or perhaps new ESTs where you can command the high ground.

One thing is for sure: If you don’t know how you want to be positioned in the marketplace, your prospects may end up being educated on your position by your competitors. And that is generally not a good strategy for sales success. For even more information on positioning, read "The Importance of Brand 'Sizzle.'"

[Mark Siebert Via Entrepreneur Magazine]

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