Elie Kochman on Business and Networking

You never know where your next lead will come from.

In any business, there is always the dream client or customer. While the precise details of what constitutes such a customer depend on the exact business, there are a few common factors:

• The profit margin is high
• The value of the contract or purchase is large
• The risk is low (i.e. the customer will pay promptly and the work itself is low-risk)
• The visibility of the work is high  (i.e. you’ll get good PR from it)
• The customer is easy to deal with

Often, such a customer can stimulate the growth of a business. These are the customers you want. The only questions you have are:

• Who will the customer be?
• When will the customer first show up?

Unfortunately for you, there’s no way to know the answer to these questions in advance. That means that any customer or client you work with could be or become your dream client. Or, any of your existing customers could refer your dream client to you.

However, while you might consider a particular customer to be the most important, the truth is, it’s your dream customer that’s the most important to your business. Therefore, you need to treat all of your current customers as though they were the path to your dream customer, because any one of them might be.

Even when you think you’ve determined who your dream customer is, you still need to treat the rest of your customers the same as your perceived dream client. When your dream client has moved on, or you’re ready to expand and grow your business again, you will once more need to rely on the relationships you established by how you treated your clients to facilitate that growth, and to find your next dream client.

Make sure you treat all your customers like gold. It’s possible that one of them is holding the pot at the end of the rainbow.

Look at a typical business, and you will see that they have multiple clients active at any point in time. This is nothing unusual – few jobs allow you the dedication to focus completely on a single client or project for any length of time. When you’re working for yourself, though, you need to be careful that all your clients are getting your attention, while at the same time, ensuring that none of your clients feel they are not getting your undivided attention when you work on another project.

The reality is that if you have 10 clients running simultaneously, (and we’ll assume that the amount of work for each is equal,) then you’ll be spending about 8% of your time on each client. (The balance of 20% is for your overhead of administrative work and locating new clients.) You can’t give any one client more than that percentage.

To handle that, I suggest you adopt some of the following strategies. If you have other ideas, please share in the comments.

1. Keep a list of what needs doing for each client, so that the time you spend on that client isn’t wasted figuring out what to do next. Just select something from that list and do that. This will help you be better organized with your time, which may end up freeing up more of your time.
2. Don’t answer the phone if you can’t give it 100% of your attention. Let the client leave a message, and use that to determine if you should call back immediately, or if it can wait a bit. Book some time in your daily calendar to make that call, when you don’t have something else to keep you busy.
3. With e-mails, split your incoming messages into 2 groups (if you feel it necessary to constantly watch your mail) – one that can be answered in a sentence or two, and the other to be dealt with later. Sending off an e-mail that doesn’t address the questions the client was asking properly can generate negative feedback, which you can easily avoid by taking the time to read the questions slowly.
4. Publish your calendar online so your clients can see when it’s best to get in touch with you. Sure, emergencies crop up, but if you allocate specific times each day for phone calls, you should see the number of calls at other times go down significantly. (I didn’t say your calendar has to be accurate, or even fully published – just a list of times that you have booked for meetings/phone calls and a list of available times would suffice.
5. Block off time to work on each client’s projects to the exclusion of all others. Treat that time as if you were in a meeting, that is, only be disrupted if it really is urgent.

Do you have other suggestions for balancing multiple clients and projects? Please let me know of your ideas in the comments below.

There is  a story which I recall from when I was in day school on the subject of leaders:

There was a rabbi who traveled between towns, staying a few days at each to speak, and then moving on. One town was particularly poor, but they treated him well, offering what they could, and acting respectfully. As he was leaving, he blessed them saying:

“One of you will become a great leader.”

Shortly thereafter, he was visiting a town with many wealthy inhabitants, and yet he was treated like a beggar. As he was leaving, he gave the town a blessing as follows:

Many of you will become great leaders.”

His assistant, who traveled with him, asked for an explanation. The rabbi explained – a small town can only support one leader. Blessing a town with a great leader means that they will be led well. Blessing a town with many leaders means that the town will be subject to political fighting between the various leaders, disrupting the ability of the town to be led at all.

I don’t know if the story is true or not, but it illustrates a key point in running an organization of any kind.

First, the chain of command must be clear to everyone. There must be a known leader, the one who makes decisions.

Second, there can, ultimately, only be one leader. While many people can help arrive at conclusions, only one person can be responsible for making those decisions. Introducing a second leader reduces the ability for the organization to make decisions, and often, decisions that are made are split, trying to appease everyone, instead of consistently presenting clear vision and direction.

Looking back at an earlier article I wrote, regarding the optimal number of founders for a company, I realize that I missed this point. In addition to bringing the various skills required to the business, one of the founders must also be clearly defined as the leader. This is not a question of equity, but of ability to make decisions.

How many people make decisions in your business?

When I first started working at a large corporation, I was fresh out of school, where my life ran on minimal scheduling. I went to class, studied, and worked on my projects. Work was completed in time for when it was due, and I showed up to my classes (most of the time). I followed whatever few rules there were, because there weren’t very many.

Process by Ivan Walsh on Flickr.com

At my company, however, there were rules for everything. Want to make a small change to some text in an error message? Make sure the change was properly requested, documented, signed-off by the appropriate person, and only then can you check it into a test region. Want to put it into Production? Be prepared for a few days of paperwork and waiting for approval. Want to make it simpler to make small, routine changes? There’s a process for making changes to the process too.

I don’t question the need for process in any business – in fact, without any process at all, a business is doomed. Did you get a new client? Make sure you’ve documented that in your financial statements. Did you buy a new computer? Make sure you list it in your expenses, as well as in your company’s assets. Trying a new marketing strategy? Prepare some metrics to assist in determining how successful the strategy is.

On the other hand, as a company grows, it becomes increasingly difficult to remain both flexible and in control. That is, you as the owner are ultimately responsible for the success or failure of the business. You’re responsible for the image your business has. If someone in your company makes a blunder that costs you a customer, you have to absorb that.

At the same time, you want to trust your employees, and to give them the flexibility to get the job done, to take initiative for the benefit of the company. You don’t have the time to micro-manage (a topic of its own that I won’t get into here).

The end result is that your risk increases, because you can’t know everything that’s happening in your business, much as you would like to. As a result, your processes must adapt to changes in how your business operates, but at the same time, not become bloated to the point that your employees are either gaming the process, or ignoring it.

To do so, what I would recommend is that you take a look at the processes you have, and make sure that it is proportionate to the task to which it applies. For example, the same standards should not apply to which brand of coffee is used as applies to making a decision to hire someone.

Look at any process you have in place. The purpose of process is to reduce the risk associated with having multiple decision-makers. If a given process does not reduce that risk, then it should either be replaced, or eliminated. If the decision to be made does not expose your business to a risk, then the process should be dropped.

Time spent on dealing with process is wasteful, and yet, many companies find that they spend more time with the process than they do with actual work. Make sure you’re not one of those companies!

One of the main focuses of my company, Optimal Upgrade Consulting, is to look at the core problem our clients are trying to solve. This may or may not be the same problem as the one the client thinks they have, simply because they are often unaware of available solutions to the real problem they have.

This is not to say that I argue with my clients about what they really want. Quite the opposite – I want my clients to be happy, so I give them what they ask for. However, by understanding the problem I’m being asked to solve, I can ensure that I provide the best service possible.

There’s another benefit as well. If I am asked to do some work for a client, and I understand the nature of their business, then I can possibly find other opportunities to help them. This in turn helps me – it’s what drives my business.

If you're not a part of the solution, there's good money to be made in prolonging the problem.

There’s an expression I liked the first time I saw it, and I’ve seen it come up several times since. It’s best expressed in the poster on the right – If you aren’t part of the solution, there’s good money to be made in prolonging the problem.

Naturally, this is poking fun at consultants, who can often charge exorbitant fees and produce no real results at the end of the day. But there’s truth here as well. As a consultant, you can either solve a problem, or further complicate a problem. One solves the need of the client, the other solves the need of the consultant.

As a business, you want to be solving the problem of the client. I prefer to be known as someone who solves problems, not as someone who makes a killing developing complicated solutions to problems that didn’t exist before I first showed up.

How about you? Whose problems are you solving?

There are few, if any, situations in life which do not have rules. Sometimes the rules are vague, others are very specific. But there are always rules, although a new inductee into the field may not be able to discern them.

Business has its own set of rules. Some govern how we advertise our business – what we can and cannot say (for example, you aren’t allowed to make false claims about yourself). Others govern how we earn money – records that must be kept, files that must be submitted. Still others deal with the environment in which we can act – as a sole proprietor, a partnership, or a corporation.

What is common to all of these rules is that as new inductees to the field, we are not familiar with all the rules. We are, however, liable for failing to follow them. If you don’t file your taxes correctly, you can face significant fines, for example, despite the fact that you were not aware of the error in your filing at the time of reporting.

As a small business owner, we face significant risk on a daily basis. We have expenses to pay, clients to talk to, prospects to woo. Often, especially at the early stages, we’re worried about the success or failure of our business as a whole, and just how long and hard the crash and burn might be.

For this reason, we need to mitigate risk as much as possible, especially for the things we know we don’t know about. So, if you’re starting a business, make sure you have the following resources available to you:

1. Lawyer: Every business has paperwork that needs to be drafted, filings that need to be made, and, if you’re successful, complex negotiations with investors. You need someone who knows and understands the law as it relates to your business, and who works with other businesses of your size and type. (Divorce lawyers are out unless your business deals with breaking up relationships.)
2. Accountant: You will have to file income returns every year. You will have to pay taxes – certainly income taxes, but if you have employees, you may be required to withhold tax, or you may have to submit sales tax at regular intervals. You will want to structure your revenue and expenses in such a way to keep your taxes down.

Ideally, your accountant and lawyer should be in touch with one another, to set up your company in the most strategic way possible. Naturally, they both have fees which may make such coordination prohibitively expensive, but you should certainly dedicate part of your budget to planning with both. At a minimum, you should have their phone numbers available when you need them – and they should know who you are when you call.

When working on a large project, there are generally two ways to bill for the project – by the hour, or by the project. In an earlier article, I discussed the system I use to determine a price for a project. My hourly rate is determined based on how much I want to earn, and how much I can charge and still get a sufficient quantity of work.

Ideally, as a contractor, I would prefer to work by the hour. While I need to keep track of exactly how much time I spend on the project, I can also earn significantly more at the end of the project, since all time spent working on the project is billable.

On the other hand, billing by the project allows me to budget going forward – I know that I will be paid $1,000 per month by a given client for each of the next 6 months.

From the perspective of a client, there are pros and cons to each system as well. When billed by the project, the price tends to be inflated because the contractor is absorbing the risk of overruns, so the project could end up costing more than it needs to. On the other hand, when billing by the hour, it’s close to impossible to budget accurately for the cost of the project.

The other factor to consider is changes to scope, and how that’s handled. With hourly billing, it’s not relevant to the contractor, and the client saves times discussing whether a change request is required and if the price is going to change. The contractor simply bills for another hour (or 10, or 100). With project based billing, this can be an endless source of frustration as various items are declared to be out of scope (and therefore not covered by the original quote).

As a small business owner, I am in general willing to absorb more risk  on each project in terms of scope and price. Giving a larger bid for a project helps alleviate the risk, and with changes to scope, I can choose if it’s worth negotiating the point or not. I suspect, however, that as the size of the projects I work on grows, I will become less willing to bill a flat rate, since it will become harder to estimate the real cost of the project.

Perhaps not, though, and that can help other businesses save their money to grow their business instead of their IT bill.

In businesses of all size, keeping your customers happy is important, but measuring that can be quite difficult for some businesses. In past articles, I’ve discussed the handling of negative image incidents, such as how the Toronto Transit Commission handled the picture of a sleeping collector agent, and how Toyota handled the safety flaw in the design of the accelerator on some of their cars. In both cases, however, the companies are responding, while in truth, they need to be proactive.

Enter Adele Berenstein, a Customer Satisfaction Executive with almost 20 years of experience with IBM. Now she’s the author of Satisfaction Secrets, a blog which discusses ways in which you can keep your customers happy. She brings her experience and insight to current problems facing companies looking to keep their customers happy. Additionally, she discusses changes that are happening in this field, for example, looking at the same TTC incident I mentioned above.

Customer satisfaction has been increasing in importance over the last few years, as consumers have found it easier to get and share information. Considering that such information may or may not be accurate, it is incredibly important to ensure that your consumers have accurate information, and you don’t give them reason to be unhappy with your company.

But how do you know when a customer isn’t happy, if they aren’t telling you, or don’t realize it yet?

You need someone like Adele to look at your business, and help you figure out how to get feedback from your customers. You need to be listening, and you need to know what you’re listening for. And when your customers start talking, you need to be ready to answer.

I came to a realization last night that my various commitments will eventually cause time to run out if I’m not careful, and I suspect that I am not alone in this situation. In fact, anyone who is working a full-time job alongside some moon-lighting, factor in a family, and some time for friends, not to mention some relaxation time, and your day becomes filled up pretty quickly.

This is nothing new, and in truth, I’ve discussed this issue in the past several times. However, last night some parts of my personal schedule slipped, and in hindsight, there was no reason for it.

When relaxation takes priority over responsibility, trouble is in the making.

If you find yourself spending time relaxing when you could be completing a chore, and find this habit repeating, you need to take a step back and evaluate your behavior. When you find yourself spending time that could be spent with family with your nose stuck in a book, or eyes glued to a screen, you need to stop and think about what you’re doing, about what opportunities are being wasted.

Success is more than just making money. Success is when you achieve happiness in your life as a whole (and yes, money might be  a part of that). The best way to be happy is to be around happy people, and to interact with them. If that means that other aspects of your day need to be compromised, then so be it.

The sooner you come to this realization, the sooner you can re-evaluate your days. How much time do you spend doing each of your daily tasks? Is your time being used as effectively as possible? Could you possibly save some time by being better organized?

For this reason, no matter how simple your day is, try to keep an agenda of what you need to do. Include tasks such as spend time with your family, or spend time relaxing by watching TV or reading a book. But try to stick to your schedule, or you may find that it’s those things which are most valuable in the long run which suffer the most in the short term.

As I’ve mentioned a few times in the past, I spend a significant amount of time on various Q & A sites, mostly on either LinkedIn, or on Answers on Startups. Recently, I’ve noticed a few questions come up where the answers all came down to a very simple point – what is the ideal balance of skills in a set of founders?

Before I can even get into the answer to that, however, there is another question that needs to be answered – what is the ideal number of founders for a company?

Unfortunately, the answer is not simple, and depends heavily on the nature of the business.

As an example, if you make custom jewelery and sell it online, then the ideal number might be one. As an example, my friend Rachel does this, and, as far as I am aware, she is truly a sole proprietor. The limiting factor in her business would be the amount of jewelery she can personally produce or maintain, so adding a second person would only be useful if she had more demand for her jewelery than she could keep up with.

On the other hand, if you’re looking to build a complex piece of electronic equipment, you might need a wide variety of distinct skills just to produce the product. You would also need someone to help you market it, and so your minimum number might be 10.

However, looking at a variety of businesses which have grown to be well-known companies, many of them started off with just 2 or 3 people, and that worked really well for them. Here’s how to determine what those people need to bring into the room:

• A thinker – someone needs to be thinking about what the product is, what it should do, who might use it.
• An implementer – someone who can turn the idea into a real product or service, something that actually works.
• A seller – someone who can take the constructed product or service and find people who will pay for it.

That’s it. There are only three basic components to starting a business – thinking of an idea, converting it to something that can be sold, and selling it. Everything else can wait until you have sales and revenue.

When looking for co-founders, make sure that each one is bringing one of those skills into the company. At the same time, make sure that each person is bringing a skill that you don’t already have. If you think of an idea, and know how to sell it, then the next co-founder needs to be able to implement the idea. Until you have someone who can implement, there’s no need for another salesman.