Who's going to eat your lunch?

Do you ever feel like you have are constantly fighting for your business? Business can be cut-throat sometimes. You have to keep your attention focused on delivering results to your customers while keeping one eye on your competitors. Here are a few suggestions on how to keep your competitors from encroaching on your territory.

Make friends with your enemies.

You know the old saying, "Keep your friends close and your enemies closer." Well, one of the best ways to understand your competitors is to get close to them. The closer the better. Just because you spend time in the boxing ring with someone doesn't mean you can't be friends.

Usually, competitors don't compete in every area of your business. There are often significant areas where your business doesn't overlap. One way to get closer to your competition is to find ways to partner with other companies. Figure out how to address business that neither of you would otherwise be able to address on your own.

Another way to get close is to find a common enemy and work with to overtake that target. You see this happen all the time in business. A recent notable example is Yahoo and Microsoft joining forces to take on Google. There are even more opportunities for smaller businesses.

Trade shows or industry conferences are also great venues to talk about business with your competitors. Don't focus all your energy on your customers or the presenters. Make sure you walk around and meet the competition. Talk to them. Make friends. I guarantee that relationship will come in handy one day.

When you talk to the competition, don't just focus on the things that you can see from afar such as product features or their marketing campaigns. Ask about their partnerships, their sales strategy, their hiring practices, their funding activities. What is working for them? What isn't? They won't tell you everything, but you never know what they might say until you ask.

When you talk to your competition, reciprocate. Share some things about yourself too. Don't share anything that's confidential, but if you get a little, give a little. Sharing ideas can help both of you attack the market more effectively and grow business for both of you. You might have wondered if advertising in a certain publication would be worth it or not. Maybe your competitor can share his insights about it.

Sharing information with the competition is especially helpful in small or emerging markets where everyone is still trying to find their way. Even if the competition behaves like they have it all figured out, many of the same things keep them awake at night.

Make sure you have good peripheral vision.

You can only mitigate risks that you know about. If you're smart, you will think about the risks to your business and plan around those risks as much as possible. Whatch for the things that come out of left field. It's like the Donald Rumsfeld quotation, "there are unknown unknowns." Those are the things that will kill you.

How can you protect yourself from the unpredicatble? You can't. The secret is to constantly learn as much as you can. Minimize those unknowns as much as possible. Don't be afraid to ask questions. Ask your customers and potential customers what other ways they might have thought about solving the problems that you are trying to solve for them. Maybe there is something out there that you didn't know about.

Find others in similar lines of business. Ask what sort of risks they see for your market. Try to learn something new about your market every day.

Figure out what the barrier to entering your market. That can help give you an idea of the types of people or companies who might have the desire and the ability to become a competitor. Keep your eye on those companies too. Just because someone isn't a competitor today, doesn't mean they won't be a competitor tomorrow.

Know your customers.

Risks don't just come from competitors. Things happen inside your customers' companies that create risk for your business with them. Don't ever let yourself get into a situation where a customer move surprises you. Make sure you know your customers intimately.

Don't limit your scope of interest in your customer to just the users of your product or to the problems that your company helps them solve. Try to figure out what other challenges your customers may have. Maybe there is someone else solving a different problem for your customer that will eventually overlap with your business. You should be able to predict what sort of relationship your customers will have with your company at least a year in advance. If you can't see that far out, it's a good sign you don't know that customer well enough.

If your customers are consumers be sure to connect with them too. Encourage feedback. Show them that you listen. Customers are great sources of knowledge about the competition. Talk to them and let them help you find ways to make your product "stickier" and foster loyalty.

How do you figure out who's going to eat your lunch?


photo credit, januszek

Read More...

Tech Friday Cheers

Today I'm going to mention a couple of notable start-ups that have recently received funding. Congrats to them. It's tough out there. I'd love to hear your opinions on these start ups too.

Lijit

Lijit Networks makes a search engine that works within your own social network. You add a Lijit search "wijit" to your web page or blog and give it some feeds from the social networking services that you use, from your blog, from your friends' blogs, or from blogs or other sources of information that you follow. So, when someone searches for something, it returns targeted search results from those selected sources.

Plus, if you do a search using Lijit from my site and then click on a link that takes you to the content on one of the sites in my social network, it does what's called a "research" from the "Lijit wijit" on the target site as well. This is basically an automatic search on the same keyword, but across the target site's social network.

It's sort of like asking a friend a question and having that friend tell you what they think and then point you to other friends who might have more information. And then you ask each of them the same question and you get their answers too. And so on...'

In addition to the nice functionality, the "wijit" itself is highly customizable and fits nicely into just about any website. Installation is also a breeze and they even automate most of the process for popular sites out there. Oh, and did I mention that there are analytics for both site visits and search already built in? Awesome.

Lijit recently received their series C financing of $7.1 million in funding led by the Foundry Group.

Linksify

Linksify is an address book service that can synchronize multiple contact lists including those on some mobile devices (iPhone, BlackBerry, and Windows Mobile device for now). It also has the ability to present different "faces" to different people. You can put people in your contact list into three catagories: acquaintances, personal contacts, and work contacts. These different faces are called "webcards". You can present different information about yourself as well as share different contact lists on each of these "webcards".

In addition to basic contact information, it also can provide links to your presence on to many of the popular social network sites and blogs.

One interesting feature of the service is the "passkey". It's a code that you can select and share with individuals or groups which provides a pre-authorization for that user to connect with you on the service.

Linksify recently received $500,000 in funding from an angel investor, Jon Fisher.

Check out these companies. Let me know what you think about them. What other up-and-coming start ups do you see out there?

CrunchBase Information

Lijit

Foundry Group

Linksify

Jon Fisher

Information provided by CrunchBase

Read More...

Size Matters (part 2 - measure your progress)

Metrics are a critical part of any business. For early stage businesses, they are even more critical. In a recent conversation with Reza Hussein (one of the co-founders of the successful startup, Social Gold), he credited good metrics as one of the key factors that was critical to his business receiving its recent funding round.

In part one of this series, I mentioned that you should be measuring your growth in a number of different ways. Today I'll give you some ideas for a few different metrics you should use when measuring your progress.

Think about your metrics in terms of a feedback loop. You want to convert your idea into a product, build it, acquire customers, get feedback and use that feedback to generate more ideas which you then build into a product, etc. You need to conduct measurements at each stage of this cycle. There are tons of different numbers that you can look at, and the right ones to use will be different for each business. So you will have to put some analysis into what you need to track. The concepts I'm outlining here probably apply in many cases though.

Find your market

This is all about attracting potential customers. If you are providing a web-based business, this would be the number of people who visit your site. In this case, you should measure things like how many visitors you get (this is the no-brainer metric) and where they come from (this helps you figure out what channels help drive traffic to your site).

If you sell through more traditional channels, you need to think in terms of how many potential customers you have developed some sort of a connection with. For example, it could be as simple as the people you have met at a trade show. Presumably, those people were there because they were interested in something like what you have to offer and you made some sort of contact with them.

Get a customer

This may seem like an absurdly over simplification of something you know you need to do. But the important thing here is to figure out what your conversion rate from your market to your customer base is. Did your customers come from those people who visited your website? Did they come from people who you met? Some other source? What is the rate of conversion of a potential customer into a customer. How efficient are you at converting? Are there trends in customer acquisition based on the channel from which you acquired customers? (In other words, did 95% of your new customers come from contacts at that recent trade show? Or from clicking on a recent Google adwords campaign?)

This metric helps you determine which marketing campaigns are most lucrative. You can also figure out nifty things like the cost of acquiring a customer.

There is also something that is a little bit in between your market and your customers. These are people who you tried to close a deal with, but for one reason or another, you lost the sale. On a website maybe it's someone who went part way through your registration process, but didn't finish. Maybe its someone who abandoned their shopping cart. Maybe its someone who you sent a proposal to, but you never got that contract. See if you can figure out why. Were your terms and conditions problematic? Was the price too high? What the product not what they thought it would be? This is sort of the opposite to your acquisition rate. I just call it the rate of failed sales. This data is gold.

Keep that customer

Again, this seems like a no-brainer, but you need to measure it. How many customers come back again and again? How many customers buy once and walk away? What makes the ones who return time after time keep coming back? What made your one-timers lose interest? You may not be able to figure out the reasons why each and every customer left, but higher retention rates are, of course, better. (Hint: see if you can correlate this data to the channel you used to acquire your customers.)

Get referrals

If you have a great product that resonates in your market, you will get referrals. See if you can figure out how much of your business came from referrals. Start an affiliate plan. Have customers fill out a survey. Maybe just ask them and keep track. Who referred them? Why?

You should also ask your current customers if they would be willing to be a referral for you to other potential customers. (Hint: If you do ask and a large percentage of your customers say "no", you have a problem.) You can then use these willing referrers to provide feedback to the rest of your market and specifically to the potential customers who are in your current sales pipeline. Think of this as your own personal social network. Use it to your advantage. It's like having people pay you to sell your product.

Make money

Another "duh" item on your corporate task list. But there is probably no more important metric you need to keep track of. Are your revenues growing? At what rate? If you have seen spikes or troughs in your revenue, see what internal or external events you can match those up with. What are the trends? Can you accurately predict your future revenue?

How scalable is your model?

Now that you know how much money you are making, figure out how much it costs you to deliver your product or service. If your model relies on a user paying a subscription fee, you may want to look at things like cost per user and how that metric changes as you acquire more users. How much money will you make when you have 100 users. 1,000? 100,000? How does the rate of return change at each tier?

Use these metrics when looking at your feedback loop. See what you can learn from your metrics. Use them to tweak your processes, your product, your marketing and even your entire business model. The only way to be successful without using metrics is to be lucky. Most banks won't invest money in luck.

What metrics do you use?


photo credit, nkzs

Read More...

The Great Communicator

Different CEOs have different communication styles when talking to their employees. Each style has pros and cons. Which style does your company fit into? What do you think the pros and cons are?

Style 1: The Dick Cheney

Definition: Everything -- and I mean EVERYTHING -- is a secret. Nothing should be shared with anyone unless you have at least two NDAs and a "need to know".

Anything you are told should be kept to yourself. Discussing ANYTHING with ANYONE is immediate grounds for termination (and we're not talking just getting fired here).

Ok, so that definition was a little overkill. I don't really know anyone who is like that. (Well, maybe one person.) But you get the idea. This type of leader doesn't want to share information. It's not that he doesn't have any information to share, it's that he wants to protect ideas and keep people focused on what they are doing. The thought is that information that could be construed as negative might cause employees to leave the company out of fear or that one of the employees might leak that information to an outside source and it could be used against the company by competitors. This CEO also believes that some negative information might cause some customers to lose faith in the company and thus the company could lose business.

Pros: This communication style definitely prevents any information that shouldn't be shared from leaking.

Cons: The biggest problem with this communication style is that misinformation is often more damning than real information. Employees, customers and analysts can all tell when something is wrong. There are usually other signs that can't be kept secret. As soon as anyone starts to notice these signs, they start trying to figure out what the reasons are. If they aren't given the real reason, they will inevitably start thinking about what the reasons might be. Just like nature, information abhors a vacuum, and stories will be made to fill the void. Most of the time, these stories will be much more dramatic than the truth. These fabricated stories will get shared and will often cause more disruption and damage than the real stories.

Style 2: The Fairy Tale Teller

Definition: No matter what this CEO says, it always has a happy ending. Everything is sunshine and clear skies. No matter what the truth is, the CEO tells everyone that the company couldn't be doing better and everyone will probably be millionaires in a couple of years. No matter how bad the news is, there is always some sort of hopeful message presented even when there is no hope. This is the sort of leader whose employees will come in to work one morning and be shocked to learn that the company just went out of business.

Pros: People naturally like to believe good news. It seems to be somehow ingrained into human nature to believe a happy story. It makes people feel good and happy employees are generally productive.

Cons: Often, this communication style comes from a leader who not only wants to keep employees productive, but is also afraid of confronting real problems. If you only give your employees good news, they won't understand what they might be doing wrong as a company. They won't know what to do differently to fix some of the very real problems that might need fixing. Most employees WANT a company to be successful and they want to contribute to that success. But they can't help fix things if they don't know what the problems are.

Style 3: The Under Communicator

Definition: This CEO tries to communicate, but doesn't do an effective job. She will make a statement, but not provide a complete explanation. This person might walk into a room and make a statement such as, "I have to go call our accountant about a problem now." And leave it at that. Everyone else is left wondering if the company is going to be able to meet payroll while the truth might be that she just wanted to make sure that the wads of extra cash in the company's bank account are invested properly.

Pros: At least the employees get SOME information about what's happening.

Cons: This communication style is almost as bad as The Dick Cheney. Information that is left unsaid will be filled in by employees overactive imaginations. It often leads to rumors or unfounded worry. The lesson here is that if you are going to say something, you need to provide sufficient context for everyone in earshot to have a complete understanding. They can't read your mind and often won't know what you mean unless you back up and tell the whole story.

Style 4: The Great Communicator

Definition: There is a reason that Ronald Reagan was called the Great Communicator. A CEO like Reagan will explain his thoughts, provide context, back up statements with facts, won't pull punches and will provide praise when it's due. When times are bad, he will fully explain the problems to his employees and will have confidence that they will help the company do what is needed to surmount those obstacles. When times are good, he will provide praise, celebrate and then challenge the company to achieve even more.

Pros: Good communication is one key to making sure you have engaged, hard working, committed employees who feel like they are a valued and trusted part of the company.

Cons: This communication style does not come naturally to most people. You have to work at it. It means setting aside time that you dedicate to thinking about what you will say to your company and making the effort to communicate with your employees. It means being thoughtful about what you say and how you say it. It means knowing your employees well enough to provide the useful context that will engage and encourage them.

What kind of communicator are you? What will it take for you to become a great communicator? Its never too late to become the kind of communicator you should be. Take some time today to communicate with your staff. They'll appreciate it.

Read More...

Size matters (part 1 -- growing your business)

A common mistake in start ups is not expecting to succeed. I'm sure you want to succeed and that you hope you will succeed. But if you don't plan to succeed, you will -- at the very least -- have some troubles later on. At the worst, your company could suffer irreparable damage to its reputation as you try to scale your company.

It's worth going through the exercise of looking at each functional area in your company as you think about how to scale a start up.

Product Management - Sure, your first idea was great. That's why you started the company, but how do you ensure continued success? How do you know that your next idea or the next version of your product will be as good?

Software Development and Delivery - Your developers created platform that works great when you have 1,000 users, but what happens when you have 100,000? 1,000,000? 10,000,000? Will your platform continue to work? Will you just have to add more hardware? Or will you have to do a wholesale re-write of your system?

Customer Support - You have developed intimate relationships with your first few customers. They love it. You understand them and their needs. When they call you and ask for help, you may even know them by name. How can you make sure that you still provide excellent customer service to all your customers as you grow?

Sales - The first few sales were probably done by the founders. They may even have been to people the founders know personally. What happens when you need to sell more? How can you ensure that every sales person understands the product well enough to sell it effectively? Are they all selling the same thing? Are they selling at the right price?

Marketing - You made a kick-ass website to show the world you are a real company. What else should you do? What do you say to the analyst community? How do you share a complete and consistent message to the world?

The Executive Team - When it was just you and your buddy, everything was very clear. Who else should be on your executive team? How do the executives connect to marketing, sales, development, operations, etc? What contributions should you expect from an executive? Should you still be running the show as your company grows?

In all areas of your company, you can look at growth a few different ways. The first thing you usually think about with growth are the metrics. How should you measure your company's growth? Revenue? Number of subscribers? Number of licenses sold? Number of end users?

Another way to look at growth is bottlenecks. What are the things that will prevent you from growing? Is your company very dependent on people to execute your service? Will the number of employees be a limitation to growth? Will location limit your ability to grow? Is there simply not enough of a market in the type of customers you have been targeting? Do you need to start looking at selling to new industries? Do you need to make tweaks or wholesale sweeping changes to your product to access a larger market? Do you need more funding? If so, what will you use it for?

In future posts in this series, I'll talk about each of these areas and will use as many specific examples of real-life companies as possible. There are companies out there who have done all of these well. There are also some companies who have failed -- and sometimes recovered -- from these mistakes.

Why not spend some time thinking about the growth of your company today? What does growth mean for you? How will you get from where you are today to the next stage in your company's evolution? It's easier to make plans now than to correct mistakes later.


photo credit, monomatt

Read More...

Use the "AND Formula" to Hire the Right People

Your company won't be successful if you don't hire the right people. Sometimes people think that by hiring a bunch of smart people, they will be successful. Or they think that by hiring a lot of people who can simply execute the leader's grand vision, they will be successful. Those may seem like good theories, but in reality they just don't work. You need to have the RIGHT people in your company, not just the smart ones or the ones who have the right skills to execute your vision.

There are a lot of components to hiring the RIGHT person, but today I'm just going to focus on the "BUT formula" vs. the "AND formula" for describing an employee.

I've heard managers make excuses for some employees. Those excuses usually fit the following "BUT formula":

There is this bad trait about this person, BUT there is some redeeming trait.

Usually, managers use the redeeming trait to excuse the bad trait. Or they think that they need the good trait, so they put up with the bad trait.

If there is any doubt about whether a person is someone you want to be a part of your organization, then that person probably doesn't belong in your company. When going through a list of potential hires, if you find yourself describing someone using the "BUT formula," the best thing you can do is NOT hire that person. You will spend so much time managing around those bad traits that you won't be able to focus on actually running your business.

Now for the "AND formula." You should be able to use the following formula to describe everyone in your company:

This person has this good trait, AND he/she provides great value to the company.

You need people who don't just execute your vision or people who are smart. You need people who help you understand the direction your company should be heading and who can help point it in that direction. You don't need a group of followers. Followers don't provide value to a company.

You do need people who will rigorously evaluate every detail of your company and who will take action to correct any mistakes that the company is making. You need people who don't require you to manage them or to lead them. You need people who will manage themselves and will help provide leadership to the company as a team. Those are the people who will provide value to your company.

It's up to you to find the RIGHT people. When hiring someone, make sure you can use the "AND formula" to describe that person. When evaluating your existing employees, if you find yourself using the "BUT formula" to describe someone, don't make excuses. Take action. Replace that person with the RIGHT person.


photo credit, clix

Read More...

When All Else Fails, You Can Fall Back On Perseverance

One of the hardest things to do when starting your own company is to keep going when everything is against you.


No matter how enthusiastic you are, or how dedicated your employees are, there will be times when it seems useless to continue down the path you so enthusiastically started down at the beginning.  If it can be said about gambling that you need to know when to quit, the reverse is true about running a business.  You have to know when NOT to quit.

There are a few things you need to learn to just accept as fact:

1. You can't please everyone.
   
   There will be times when no mater what decision you make, someone will think you are an idiot.  Here's a great example.  You'd think that any employee would be happy to receive a bonus, right? I have literally had the experience of an employee complaining about receiveing a bonus.  (His argument was that we should have put the money back into the business.)  My business partner couldn't understand this.  The advice I gave him was to remember the incident, grow some thick skin and get over it.  Move on.
   
   
2. You will make mistakes.
   
   Everyone makes mistakes.  You will too.  The best thing you can do when you make a mistake is to learn from it and figure out how to prevent yourself from making the same mistake again.  Don't beat yourself up for it.  Don't obsess about it.  You have a business to run.  THAT is what you need to focus on.
   
   
3. Money will be tight.
   
   You will probably never have as much money as you want or need to do things the "right" way.  So figure out a way around this obstacle.  You don't let other obstacles get in your way.  Presumably, you are a smart person.  Figure out an alternative solution.  Focus on your cashflow.  Focus on growth.  Cut your costs.  Do whatever it takes.

Franklin D. Roosevelt said, 

"When you come to the end of your rope, tie a knot and hang on." 

I'd like to add to that, 

"...and then start climbing back up."

Don't quit.




photo credit, BrittneyBush

Read More...

Top 3 Must Read Books for Start Ups

As an entrepreneur, one of the best things you can do is to learn from others.  Here are three books that I have found immensely useful and that I have continually referred back to throughout my career.

1. The Goal by Dr. Eliyahu M. Goldratt
   
   This is not your typical business book with MBA-style case studies.  Don't let your eyes glaze over when I tell you that it's an explanation of the Theory of Constraints model for systems management (which was, incidentally, developed by the author).  The Goal is written as a novel about Alex Rogo who runs a metal working factory with many of the typical problems you might see in any business.  The main plot is about the insights Alex has when pondering these problems, how he overcomes them and how he gets the business running smoothly again.  In typical novel fashion, there are sub-plots dealing with Alex's personal life.  This book is an easy, enjoyable read and would fit easily into a leisurely weekend reading schedule.
   
   
   
2. Good to Great: Why Some Companies Make the Leap... and Others Don't by Jim Collins
   
   Good to Great may be the most thoroughly researched book I have ever seen.  It is the result of years of research on over 1,400 companies by Jim Collins and a team of 21 others.  They looked for companies that made significant and consistent improvement over a long period of time.  After finding 11 companies that met all of their criteria, they compiled extensive research and interviewed numerous people within the companies.
   
   Collins and team found several core concepts that were consistently evident across all of these eleven companies.  He boils down these ideas into easy to understand language with many real-life examples and gives them memorable names such as: "Hedgehog Concept" and "The Flywheel".  (There are also lots of great resources on Jim Collins' website.)
   
   
   
3. Tuned In: Uncover the Extraordinary Opportunities That Lead to Business Breakthroughs by Craig Stull, Phil Myers, and David M. Scott
   
   Tuned in explores why some products (such as the Apple iPod) become great successes while other similar products fall flat.  The book takes you through a six-step process to help tune your company in to the market, establish the trust and loyalty of your customers and build products that resonate with them.  It is based on the Pragmatic Marketing framework.  This book is also a quick read with lots of real-life examples.  Be sure to check out the resources on the Pragmatic Marketing website as well.

Whether you are a founder, a CEO or a summer intern, put these on your reading list.  Let me know what you think about them.  What other books have you found helpful?


photo credit, vierdrie

Read More...

Negotiating a Raise (Part 4 -- What NOT to do.)

In the last few posts, I've been talking about ways to think about your salary and how to determine what you should be paid. Today, I'm going to talk about a few topics to avoid when discussing salary with your boss.

Let's look at some tactics that I've seen employees use and talk about why they aren't effective.

"The cost of living has gone up, so I need more money."

While it is important that you be able to provide a certain standard of living for your family, you have to remember that the value that you provide to your employer isn't necessarily tied to the cost of living. It is common for some employers to give "cost of living raises", but they certainly don't have to. If it has been a number of years and no one in the company has received a salary increase, you certainly could ask for this, but cost of living is something that affects everyone equally and so this is really an argument that your company's standard is too low in general. This may be true, but unless you are voluntering to be the union rep for your co-workers, this argument won't get you a raise.

"It's been years and I haven't gotten a raise, so I deserve one now."

You get paid for the value you bring to your company, not for the number of years of service you have provided. Significant tenure with a company may have helped you learn a number of skills that could add value to the company (as we talked about in part 3 of this series). If that is the case, then stick to those facts. (For example, "Over the last two years, I've learned how to do customer implementations and I often fill in for our implementation staff.") But it's the skills and eperience you've added over those years that your employer will pay for, not the number of years. This is one case where time doesn't equal money.

"I'm the only person in the company who knows how to do X, so you better give me a raise."

First, shame on your employer for creating a single point of failure and letting it be you. Second, shame on you for allowing it to stay this way. Saying this to your boss is basically a threat -- nobody likes to be threatened. It also indicates that you are not a team player and really only looks out for yourself with little regard for the company and your co-workers who must depend on you for the company to continue to function. If it sounds like I'm being harsh, you're right. There is no place for this kind of nonsense in any company.

If you find yourself in this position, you need to point out the issue to your employer and either offer to train someone else, offer to create documentation on this task, or suggest another solution that doesn't depend only on you. Helping your company solve this sort of problem, makes you much more valuable than being an employee who hordes information and won't teach others because they somehow think it adds job security.

"I am the best person in my department, so you should pay me more than everyone else."

This statement breaks a couple of rules. One, its really none of your business what the other people in your department make. Two, your salary isn't determined by comparing how well you perform compared to others. If you really do outperform other people in your department, gather some statistics and use those to cast a positive light on yourself without dumping on everyone else in your group. For example, "Over the last year, I have consistently processed an average of 25 help desk tickets per day. That's 40 percent of all the help desk tickets in our group."

"I work harder than anyone else in my department."

This statement has all the same problems as the last one, plus it focuses on the wrong thing -- how hard you work. Focus on the value you deliver instead of how hard you work.

"So-and-so is making $X, and I should be making at least that much, too."

Whether "so-and-so" is a cousin, friend, or acquaintance, this doesn't really mean anything to your employer. You need to focus on the value that YOU deliver to YOUR company. If you are talking about a coworker, be warned -- it really isn't a good idea to talk salary with your co-workers. Trust me, no good can come of it. Remember, your pay is based on your market value and the value you provide to your company. Using the data from one other person to determine what you should be paid would be like a politician declaring he was going to win an election based on the result of polling a single person. It's just one data point -- and it may be irrelevant anyway.

"If you don't pay me $X, I'm going to quit."

This is equivalent to the classic line of "take this job and shove it..." It's a threat. It's poor business etiquette. And it burns a bridge. If you truly believe you should be paid more, but you can't come to terms with your employer, perhaps it is time to move on to another job. But stating it like this does nothing positive. If you are going to quit, do it politely and if your employer really wants to keep you around, they might offer you more money, but don't count on it.

Remember, when discussing salary with your employer, stick to facts that are relevant to your value and the value you provide to the company. What do you think is the best way for you to express your value to your employer?

Photo credit, Lara604

Read More...

Negotiating a Raise (Part 3 -- Your Value to the Company)

At the risk of sounding like Lumbergh from Office Space, today we're going to talk about the value you can add to your company above and beyond the things listed in your job description and how you can use this to add dollars to your paycheck.

In a recent post on project management, I talked about how start-ups usually have a small number of very focused people who all pitch in to make sure that everything gets done. As a company grows, jobs tend to get more specialized. Everyone doesn't do everything any longer. This is a necessary evolution in the life of a company, but sometimes employees go a little too far in this direction. The last thing any manager ever wants to hear from an employee are the words, "That's not in my job description."

Often, there are tasks that need to be done or tasks that should be done that aren't really part of any job description at a company. One great way to make yourself more valuable to a company is to make those tasks part of your job description. Of course you need to make sure you get all of your regular work done too. But if you see something that needs to be done, and you can do it, pitching in to get things done makes you that much more valuable.

If you are one of those underemployed people I talked about in part two of this series, adding value is a great way to help make your replacement value closer to your market value. (Read part one to learn about your market value.)

Another factor to added value is the amount of experience that you may have at a particular task or piece of technology. Most companies have some sort of esoteric process or technology that really isn't used anywhere else. The people who know this technology very well are more valuable to a company than anyone else out there who has an otherwise similar skill set.

One thing to beware of here is the temptation to horde knowledge. Being the only person who knows how to do some specific task or run some certain piece of technology constitutes a huge risk for a company. If you think that not training anyone else or making management aware of this problem means you have greater job security, you're wrong. From a manager's point of view, you look like someone who is not a team player and someone who can't be bothered to help the company manage a serious risk. The best thing you can do is help your company manage this risk by offering to train others, create documentation others can follow or suggest an alternative solution that doesn't require such specific knowledge.

Another great way to add value is to learn a new skill that can be used at your job immediately. Learning a new skill that makes your more marketable and adds to your market value, but doesn't necessarily make you more valuable to your current employer.

Here's a great example. One company I worked for, needed a back-up person to handle some implementation tasks, but we couldn't quite justify the cost of hiring a new employee. Another employee volunteered to get the training needed and be the backup until we had enough business to justify hiring a new person. That added value.

As a manager, I have always thought about added value when determining salary increases. It's not something you start thinking about the day before you ask for a raise though. It's something you need to think about every day of your career.

In the next post, I'll talk about some things not to say when asking for a raise and then I'll wrap it all up in one final post on the subject.

In the mean time, I want to hear about how you add value to your company as an employee. I'd also like to hear how managers think about added value in their employees. What's the best example you have seen of added value in your career?

photo credit, Karyn Rachtman

Read More...

Negotiating a Raise (Part 2 -- Your Replacement Cost)

Yesterday I wrote a fairly lengthy post which touched on a few ways to determine your market value -- the first part in this series on negotiating a raise. Today's post will be a bit shorter, though the topic is no less important: What would it cost your boss to replace you?

We all like to think of ourselves as unique individuals who are utterly irreplaceable. In business, however, everyone is replaceable. Everyone. The only question is how much would it cost in terms of hiring a replacement, training that replacement, the opportunity cost of pulling in another resource to fill in until the replacement is ready, the potential cost of any customer or revenue impact, etc.

Most employers will try to minimize those costs as much as possible by having employees with redundant skills and not allowing revenue or customers to become too tied to a specific person. The main issues to focus on are the salary of a potential replacement and the cost of training that replacement.

Hiring a replacement is going to cost the company the market value of a person with the right skill set. This is sort the reverse of my last post on determining Your Market Value. In this case, you want to determine the market value of someone else who can do your job.

Determining this figure can be a bit tricky, but you can use many of the same techniques from Part 1 of this series. You just have to factor out any special skills that may increase your value, but which aren't required for your job. For example, if you are bilingual, many employers will pay a premium for this which increases your market value. But if your current job doesn't require that skill, then you can't factor it into your replacement cost.

As much as you may want your market value to be really high, its actually in your best interest to have the market value of your replacement be about the same as your market value.

Think about it this way. If you are paid much more than your potential replacement, this means that you are underemployed. You aren't using all of your skills in your current position and should probably be doing a different job. You are getting paid too much and your employer could probably replace you with someone who makes less. Your prospects of getting a raise are probably not very good.

If you are earning drastically less than your potential replacement, this means that your employer is taking advantage of you whether they know it or not. You could be earning more at another job. Maybe it's time to think about a promotion.

People tend to find themselves in this scenario early in their careers, especially in technical fields. Straight out of college, you are unproven and an unknown quantity. This equals risk to an employer. After a very few years of hard work and proving yourself to your employer, your market value tends to go up fairly quickly.

Sometimes employers count on this, and hire young people with the intent of training and nurturing them in their careers knowing that their pay will increase dramatically over the next few years, but also counting on getting increasingly more and more work and expertise out of that person.

If you find yourself in this scenario, you probably should be asking for a raise. Your replacement cost is high.

That covers the salary of hiring your replacement, but what about training? In high tech companies -- especially ones that use highly specialized technology -- it often takes three to six months for a new hire to become effective. In cases like this, an employer has to count on shelling out up to half a year's salary with little or no return on that money when hiring a new employee. That's a pretty big incentive for your employer to try to keep you from leaving the company.

That doesn't mean that you should ask for a raise of up to half a year's salary. But it does mean that you should be paid at the top end -- or maybe just a little over -- the market value of your potential replacement. If on the other hand, your job requires little or no training, then you can probably only command a salary in the lower or middle range of your potential replacement's value.

In the next post, I'll explore one last topic that can add dollars to your next raise -- your value to the company. After that, I'll give you a few topics to avoid and wrap it all up.

Until then, spend some time thinking about your replacement cost. Just like your market value, your replacement cost is an important factor any discussion about salary.

What does your replacement cost tell you about your salary? About your career?

photo credit, kevinzhengli

Read More...

Negotiating a Raise (Part 1 -- Your Market Value)

Negotiating a raise is often stressful and confusing. It shouldn't be. In this series on salaries and raises, I'm going to talk about some tips on how to view your salary, what you should be paid, and how to talk to your employer about it. And if you are an employer, you should be using the same criteria to evaluate the salaries of your employees.

In this post, I'm going to explore the concept of your personal market value. This is the first thing you should think about when negotiating your salary. Your market value is what you could realistically get paid if you switched jobs today.

One sure-fire way to find out your market value is to go on a few interviews. Just going on an interview doesn't mean that you have to take a job. It can, however, give you a good idea of what types of jobs are available and what the salary ranges are.

When you go on an interview to help you determine your market value, you should keep a few things in mind. One, it's probably unethical and unproductive to talk to direct competitors of your current employer. They may just want interview you to try to extract information about your current company anyway. Two, make sure you talk about specific job duties and responsibilities. This is an important consideration when comparing one job to another. Three, when asked for your salary requirements, you should tell your interviewer what you want, but then ask if your figure is in the right ball-park and have an honest discussion about it. Don't argue. Listen to what they say and try to understand their reasoning about it.

Going on an interview periodically can give you valuable information. This practice should not be viewed as disloyal by either you or your employer. In fact, you should discuss what you learned with your employer. If your boss is smart, he or she will welcome the discussion or at the very least approach it with and open mind.

If its not practical for you to go on an interview, some other things you can do are: call a recruiter, a job placement agency, or the career counseling department of a local college. Any of those them can give you an idea of what people like you, with your experience, can make in your region of the country.

It's also a great idea to foster a mentor relationship with someone outside of your company. Salaries and raises are great topics to discuss with a good mentor. There are a lot of people out there who have been around the block a few times and who are interested in helping younger or less experienced people become more successful in their field. If nothing else, try to find someone in your field who you respect and who is willing to discuss your career with you periodically over coffee. Ask around. You will be surprised at how many people would love to give you advice.

There are also a few things that are NOT effective when trying to determine your market value. These generally include taking shortcuts. Just like most things in life, the value of the information you get corresponds to the amount of effort you put into getting it. If you try to take a shortcut and just read a website or ask a few friends, the information you get will likely not be nearly as helpful as the knowledge you gain by doing the footwork on your own.

If you have good friends and a loving family, they probably think very highly of you and are pre-disposed to tell you that you deserve more money, that you are the greatest thing since sliced bread, and that if your boss doesn't give you more money then you should tell him to take this job and shove it where the sun don't shine.

While they may be right, that really doesn't give you any helpful or specific information to use when talking to your employer. Talking about salaries with friends can also sometimes lead to hurt feelings.

Another common short-cut is doing salary research on the web. A lot of websites publish minimum, maximum, and average or median salaries for different jobs. These sites are not a bad place to start your research, but they aren't always the best way to determine YOUR market value. They often take their data from a region of the country that overlaps, but doesn't exactly correspond with the region you are searching in. It's also difficult to make sure that your job title means the same thing as the title listed on those websites. In other words, just because you have a certain title, doesn't mean that you do the same job as someone else who is getting paid more at another company.

A few final words on asking for raises in general. You also have to take the financial state of your company into account when talking about raises. It may not be financially feasible for your boss to give you more money right now. If you can help your boss understand your market value, but there is no more money to be had at the moment, you then have to make a decision about whether to stay or whether to move on. You shouldn't wait forever, but patience and loyalty are often rewarded.

Part of your job is to help your employer understand your value to the company and what you should be paid. If you have done this well and continue to deliver value to your company, any good boss will fight to pay you what you deserve.

In upcoming posts on this subject, I'll explore some other things to think about when negotiating a raise:

• Your Replacement Cost
• Your Value to the Company
• Things NOT to Say When Negotiating a Raise

In the mean time, tell me what you think. How do you determine your market value?

Photo credit, AMagill

Read More...

Plan it, Janet

An early stage technology company usually consists of a small number of like-minded people who have probably known each other for a while, who share some common vision and who came together in order to accomplish a common goal. At this point in a company's evolution, there is often little thought put into long-term planning. The only goals are short term and everyone is focused on the same thing.

If a company is able to actually produce a product that resonates with their intended audience enough to make it past this early stage, things start to get more complicated.

These companies now find themselves challenged with serving multiple customers' needs, fixing issues from the first generation of the product, providing new enhancements, closing new deals, making partnerships and so on.

The original founders can no longer do all of the work themselves and they rush out and hire more people to help with the ever growing list of important tasks to keep the company running.

At this point, it is very easy for a company to devolve into a fire-fighting mode in which large numbers of resources are pulled from one really important project to another without really finishing any of them.

At some point, this leads to one of two things, inevitable collapse into chaos because none of the customers are happy. In some cases it can lead some of the smart people in the company figuring out how to organize themselves and pull the company up by its bootstraps through the chaos into a real business that provides real value to its customers.

At the core of this process is a dedication to some sort of project management. I'm not talking about some rigid whip cracking micro manager who seeks to control everything and runs around with a clipboard and checklists.

I am talking about a project manager who makes the effort to plan out projects and takes a realistic look at the time and resources that will be required to deliver a quality product.

It is important to have a single person in charge of the project management. This person needs to understand the entire list of tasks that need to be accomplished in order to reach a goal. They also have to have a way to monitor the status of each of these tasks so that everyone knows how far along a project is and whether it is ahead of schedule or behind schedule.

The information that having a real plan provides is invaluable. It helps you understand whether you need to hire additional people or if you already have enough people to take on the next big project.

It allows you to tell your customers when you will be able to deliver your next set of new features.

It can also tell you if the project you are working on it too ambitious and should be scaled back.

One important thing to remember is that project plans can change. If you find yourself running behind schedule, you have a choice. You can reduce the scope of the project or you can add resources. Don't be afraid to change your plan. Just be sure that the changes are given as much thought as the original plan.

Plans are worthless. Planning is essential.

- Dwight D. Eisenhower

You may also find that a project is much more complex that you originally thought once you get into the details of it. At this point, you can go back, amend the task list and reset the schedule and resources.

Everyone has a plan -- until they get punched in the face.

- Mike Tyson

I've said it before and I'll say it again, a good project manager is worth her weight in gold. The information they provide helps you understand your ability to execute, allows you to provide more accurate information to your customers, and gives everyone in the company an understanding of their common priorities and goals.

There are a lot of great project management resources out there. In future posts, I'll be taking a closer look at some of them.

I'd love to hear your experiences with project management and what works and what doesn't.

Read More...

Support Matters

I've worked with many different companies throughout my career. Mostly smaller start ups, but a few larger ones too. One common mistake I've seen is the lack of thought and effort that is put into customer support.

Support is the one department in a company where customers have a low tolerance for flaws. Many people will forgive some issues with your sales team, your product feature set, even your product itself, but one area that many people simply won't tolerate flaws in is customer support.

In the software industry, especially software-as-a-service (SaaS) applications that are delivered through the browser, its important for users to be able to reach a knowledgeable support tech since there is very little that the end user or their corporate IT staff can do to help in such situations.

So, here are my cardinal rules for customer support analysts in software companies:

Be polite.

You wouldn't think that this is the kind of thing that actually needs to be specified, but it does. Even if a support analyst has to give a customer bad news (for example, that they have encountered a bug that they will have to wait to have fixed), a spoonful of sugar makes that bad medicine go down much easier.

Know the product.

Again, you might think that this goes without saying, but too many companies use their level one support analysts as answering machines who just take messages and log issues for another tier of support to resolve. Having a support agent who knows an application like the back of his hand and can help a customer better understand the product or troubleshoot issues is a huge benefit.

Taking the time and effort to train your support agents to drive as much first-call resolution as possible provides a lot of benefit for your company and the customer. You don't have to manage a list of customers who need callbacks. And your customers don't have to re-explain their issue to yet another support analyst because the call notes are unclear or incomplete.

Provide clear and real information.

Too many times, support analysts don't give you enough information or the information they do give you isn't complete.

During a consulting job, I once e-mailed a company to ask about a proprietary communication protocol that a particular piece of hardware used. All I got back was a one line message saying, "I can't give you that." That left me wondering whether it was somehow against company policy or whether the analyst just didn't have the information.

In order for your support staff to provide information they need to have the information. And I'm talking about information from all other departments of the company: marketing, sales, developers, QA, finance, etc. Of course, there need to be rules about what information is company confidential and what information can be shared, but in general, I find that if you can explain the reasoning behind an answer that a customer may not otherwise like, at least they will understand your position and may even sympathize with you.

Be patient.

Very often, when someone has a need to call support, something has gone very wrong and that creates stress and flared tempers. Sometimes you have to let a customer vent before getting to the root of the real problem. While it's not nice, it is human nature to want to vent your frustrations when you are stressed or upset. Sometimes the best way a support analyst can help a customer is to listen and sympathize.

Listen.

Everyone has probably heard someone say to them, "You hear me, but you aren't listening." We are too often guilty of trying to deliver what a customer asks for without truly understanding what they need. Once, I was asked by a customer if we were ever going to make a certain feature easier to use. After asking a few questions about what the customer was using the feature for, it turned out that there was already a different feature designed to do exactly what the customer needed, they just didn't know about it and the support analyst they talked to previously hadn't taken the time to understand their need, but only helped them with exactly what they asked for.

Support analysts are the face of the company to the customer after a sale is made. They can help make a new customer a recurring customer. They can make the difference between a customer and a reference. Yes, it takes time and effort to find the right people for this job. Yes, it costs more to train and constantly reinforce best practices in your support organization, but the benefits are well worth it.

What works for your company? What is the best support experience you have had?

Read More...