What every Merchant needs to know about Groupon

Groupon can be a great advertising and marketing vehicle to attract more customers.  But Grouponing is not Couponing!  Groupon deals are usually more costly; they keep a 50% commission; and you have less control over them.  Here is an example of a possible Groupon Deal.

A Retail Shop does a Groupon that looks something like this; buy $50.00 worth of product for only $25.00!!!  Such a deal right??  Well, maybe not!

Let’s say the Merchant runs a daily deal that ends up with selling 2000 Groupons.  That’s $25,000.00 coming their way; Yahoo – Happy Days.  Groupon collects the $25.00 from the consumer and then sends the Merchant; the money less a 50% commission.

But don’t forget the customers bought 2000 of $50.00 worth of product.  That’s a $100,000.00; and product costs usually run about 35%.

And guess what….if your product is subjected to sales tax you have to pay the sales tax on the full $100,000.00 not the $25,000.00 you received.  Check out this chart!

As you can see Groupon is going to cost you.  So when venturing into the Groupon market; I would caution you to see it as more of a marketing campaign like a TV or Radio spot and keep your deals low.  It is not a simple couponing campaign.  It will bring you a lot of exposure so be sure your establishment brings it’s “A” Game!

I would be remiss if I didn’t let you know that Groupon has started offering merchants a deal that is less costly in certain cities.  You can read about it here.   Basically they will allow you to use their website to promote your own deals for a 10% commission as oppose to the daily deal which is usually a 50% commission.

How To Overcome Resistance To Change

I spend a lot of time with small business owners.  And more and more I see them being pressured to figure out ways to keep their employees engaged while keeping up with vast amounts of change.  Gone are the performance appraisals and automatic 3% raises.  And job descriptions have become a constant moving target.  Is it any wonder that employees are resisting any more changes?  But change is constant.  So now what?

Take a look at the following diagram:

People do not resist change; they just resist change that they don’t like.  So when introducing changes into your organization you need to understand four aspects of it.

• What will happen that is POSITIVE if I DO this (we call these “Pots of Gold”)
• What will happen that is NEGATIVE if I DO this (we call these “Crutches”)
• What will happen that is POSITIVE if I DON’T make this change (we call these “Mermaids”)
• What will happen that is NEGATIVE if I DO make this change (we call these “Alligators”)

Understanding how these four components will impact your employees and your business will enable you to deal with them before you do anything.  If you have a lot of Pots of Gold and Alligators you are more likely to make the change.  However if your Crutches and Mermaids are high you will probably fail.  So the key here is to find out what the Pots of Gold, Crutches, Mermaids and Alligators are and deal with them.  This will ensure greater chance of success.

Be sure and engage your employees in this process.  This will give them a greater stake in the outcome and help with getting the buy-in you need in order to implement the change.  When your employees don’t believe in the changes you are making they are not going to implement them and you will most certainly take a nosedive.  When they do believe in it…. Well now you have an unstoppable TEAM!

(The Mermaids, Crutches, Alligators & Pots of Gold are based Dr. Eli Goldratt and his Theory of Constraints)

 

What’s Your Story?

In most businesses when things aren’t going as planned the typical path is to apply more analysis, focus more on results and work harder to get those results.   The approach is usually to improve our processes or content and then sit back and expect things to get better.  We send our people to new and improved training programs or the latest and greatest seminar.  We update our manuals and bring in the experts to help us with implementation.

It’s this kind of thinking that has led to business models that we are now finding hard to sustain.  We like to think of life as linear and logical, but it isn’t. Success in these days depends on making the leap from seeing the world how we think it operates to how it really operates.

It isn’t that our content and processes can’t use some improvement.  They probably can.  But doing that alone won’t get us the results we are after.

Behavior produces results and belief changes behavior.

The best way to change or create a new belief system is to craft a compelling story that your employees will rally around.   Humans need drama.  If you have a drama vacuum it will be filled by your people.  Give them the drama story so they don’t make it up.

Take the example of Fred Smith the CEO/Founder of Fedex.  Early on; Fred realized in order for Fedex to remain strong they would need to take market share from their competitor; UPS.  He purposely positioned Fedex as the American choice for shipping.  He did this by convincing his people that UPS was a communist organization.

He told his people that they needed to beat the Brown Shirts in the Brown Trucks! He painted all of the Fedex trucks Red White & Blue! – In no time he had employees showing up early and leaving late.  They were committed to beating the commies!  And by late 1984 they did.  They became the dominate player in the market place surpassing UPS.

The following are some key components that you should consider when crafting your drama:

• Where’s the battlefield?
• Who’s the Enemy?
• How Do We Win – What’s our strategy?
• Inspires Passion & focused action for winning.
• Craft story over time – it should be an act of discovery.  Test, tune, & evolve.

And finally; Success removes the next challenge; so you have to keep creating a new saga that supports the next challenge.  To learn more about Creating a Compelling Story – Read “High Altitude Leadership – What the world’s most forbidding peaks teach us about success” by Chris Warner and Don Schmincke

What if You are a Jerk But Don’t Know It?

(This is an article that was written by my friend Bob Whipple the CEO of Leadergrow, Inc in February.  I think it is brilliant so with his permission I am posting it here.  Enjoy!)

by Robert Whipple: MBA, CPLP

It seems impossible, but you could actually be a jerk. You may think you are a perfectly normal, fun-loving person that other people just love to be around, but you could be dead wrong and not even realize it. People might have low respect for you because of any number of bad habits or insensitive things you do or say.

Let’s have a little fun with this analysis and see where it leads. Let’s suppose there is a great bell-shaped curve in the sky that shows the distribution of official jerks. The center of the bell shaped curve is neither a jerk nor a wonderful person. To the left of the center are increasing levels of jerkiness. Individuals far to the left of the mean would be categorized by most people as jerks. The rest of the population are not necessarily jerks, and the ones to the right of the mean are great people.

Now, we separate out the jerks and put them all in a line. Maybe you’ve seen them at the grocery store in the express line with 20 items in their basket. We bring each person into a room individually and ask the person if he or she is a jerk. Note: At this point I am going to switch to the male pronouns “he” and “him” to avoid awkward construction. Actually, the tendency toward being a jerk is probably gender neutral, but I am not going to get into that!

In a high percentage of the cases, the individual will honestly not believe he is a jerk. Reason: this person knows why he is acting the way he is and believes it is the right thing to do in every case. If he believed something else was right, he would do that. In other words, our friend on the low end of the scale would be deceiving himself that he is not a jerk when he actually is one according to other people.

If a person was at the extreme left on the jerk scale, then he might have a clue that he is really rubbing people the wrong way most of the time. He would know that because of the body language and feedback he gets from others. That still does not stop him from being a jerk; it just means that he knows about it.

Now comes the fun part. We add the element of time. Since we can act like a saint one moment and a devil the next, we may be perceived by others as being a jerk sometimes and not other times. Of course, we normally do not know the difference between these two states, so we figure we are basically OK most of the time. Behind our back, people talk about our “problems” and the fact that very often we act like a jerk. What a conundrum. How can we find out when we are acting like jerks? (Ironically, only those people who aren’t jerks would care!)

Enter Emotional Intelligence (EI). The essence of EI is that people who have high levels of this trait have the ability to see themselves more accurately. These individuals have a special mirror that lets them view their own behaviors as others do. In other words, people with high Emotional Intelligence may act like jerks for some small percentage of the time, but they have the perception to know they are doing it. People with low EI have a huge blind spot and cannot detect when they are acting poorly.

This phenomenon is most easy to see in organizations at the leadership or management levels. Leaders with low Emotional Intelligence believe people are responding to them in a different way from what is actually happening – hence the blind spot. So, one cure for the conundrum is to get a higher level of Emotional Intelligence to eliminate the blind spot. Can you buy that stuff at a drug store? No! So how can you get higher EI?

In my leadership classes, students often ask if EI is basically inherited or if it can be learned. I say EI most definitely can be learned. Why? Well, because teaching EI is my occupation: I see significant results when helping leaders gain higher levels of Emotional Intelligence through training and coaching. One thing anyone can do is read about the science of Emotional Intelligence. Start with Emotional Intelligence by Daniel Goleman. Another highly effective way to gain EI is to obtain a great mentor who is really high on the scale of Emotional Intelligence and is willing to pass on to you what it means and how to interpret the signals coming to you from other people.

Higher EI would mean you become more adept at reading body language and become more openly curious about how people are really reacting to the things you say and do. It would mean building trusting relationships with many people who will do you the great kindness of telling you when you are acting like a jerk. The only way to get people to do that is to reward them when they are honest enough to reflect what you are really doing at any given moment (good or bad). These trusted friends can save you from having a blind spot about your own behavior, which automatically increases your EI. Collectively, they form the surface of the mirror that allows you to see yourself as others do. From that point on, you might still be a jerk for some part of the time, but at least you will know it.

© Leadergrow Inc 2011 ALL RIGHTS RESERVED reprinted with permission

Bob Whipple is CEO of Leadergrow, Inc. an organization dedicated to growing leaders. He can be reached at bwhipple@leadergrow.com 585-392-7763. Website www.leadergrow.com BLOG www.thetrustambassador.com He is author of the following books: The Trust Factor: Advanced Leadership for Professionals, Understanding E-Body Language: Building Trust Online, and Leading with Trust is Like Sailing Downwind

4 Signs that you may be a micromanager

# 1– You have a hard time beginning projects.  You procrastinate endlessly.  This could be because you feel that you are the only one that can get it done the way it needs to be done.   And there just aren’t enough of you to go around; so better not begin this particular project right now.

# 2 – You are a perfectionist.   A perfectionist tends to micromanage; because they really believe they are the only ones that can do “It” the way “it” needs to be done.  No two people see things exactly the same; so perfection is a matter of perception; and it can’t be delegated.  So you try and delegate the project but you soon take it back so it can be “perfectly done”.

#3 – You are always tired.  You show up for work but by mid-day you wish you could just take a nap.  Micromanagers are exhausted most of the time.  They have to be everywhere at all times and it just wears them out.  They try and delegate tasks, but when they aren’t taking them back; they are hovering over their employees to make sure it is done exactly the way they would do it.  It’s not just specific results that they need to control; they will also want to control the process by which those results are attained.

#4 – You have a hard time taking vacations.  Micromanagers believe that if they aren’t there everything will fall apart so they don’t go on vacation.  And when they do go somewhere; they are in constant contact with their people and they don’t stay gone for long.

The best way to get over being a micromanager is to make sure you have communicated and completed the following before you delegate:

The What – Have you communicated with your employee WHAT needs to be done?

The Why – Have you communicated WHY is it being done?

The Who – Have you ensured that WHO you delegate the task to; has been trained and is qualified to do the job?

If you have gotten all the above right; the employee you do choose to delegate the task to will take care of “The How”.  To see a Micromanger in action check out the youtube video below:

3 Reasons Employees Leave Small Businesses

35% more likely to leave small business vs 29% of employees working for big business

Open Forum recently shared an info graph that was done by Monster Intelligence Insight of Monster.com in 2011.  It showed employees were much more likely to leave a small business than a big business.  While there isn’t any one list that addresses this problem; here are some of the reasons for job dissatisfaction within the small business employee community:

Lack of Feedback – Small Business people tend to think their employees know how they are doing in the job simply because they haven’t been fired!  Your employees need to know when they score a home run or just a triple!  Constant feedback is crucial and it doesn’t have to be formal.  Be sure and accentuate the wins whenever you can.

Not enough opportunity for growth - This one is very difficult for Small Business to do anything about.  Big business has the resources to offer great career opportunities that small businesses just can’t compete with.  A person with a family and responsibilities may very well want to stay but they just can’t afford to.  Do the best you can here but understand it may just not be in the cards to keep that employee.

Excessive Workload – Doing more with less; sacrificing quality and customer service for the numbers.  This one is not only bad for employee retention it is also bad for customer retention.  Pay close attention to this because if you are guilty of it; you won’t last long in business.

In the end employees want a workplace that encourages them to be the best they can be, rewards their efforts and one that they trust.  In order to instill trust they have to see competence.  You can inspire confidence with a clear vision, a workable plan and the competence to achieve it. And then clearly articulate your vision, provide your employees a workable plan and then execute it.

Procrastination Video – What it is…What it isn’t…. and how to overcome it!

Evaluating your Business

You have spent your entire life building your business and now you have decided to cash out.  According to the SBA there are about 20% of small businesses for sale at any given time; and out of that only 5% actually sell.  So in order for you to have a successful “cash out” you need to get an accurate valuation of your company.  Any number will have to take in account context and subjectivity – a business may be worth different amounts to different people, depending on their preferences and needs.   Good interpretation and judgment will be needed to come up with a final figure that accurately reflects the value of your business.

Some key factors that need to be considered when evaluating your business are:

• The type of business
• What is the general economic outlook for your business industry
• The businesses book value, financial condition, and earning capacity
• How much does your business pay you annually in wages and distributions/dividends
• How many hours a week do you spend working in or on your business.
• How long has your business been in business
• The value of the business in your absence

Here are a few ways to measure the value of the company:

• The “multiples” method, which operates by rules of thumb – This is one of the more rudimentary methods.  Take for an example legal firms; they are commonly valued at 40 to 100 percent of their annual fees, while landscape businesses are estimated at 1.5 times their discretionary earnings, plus the value of their capital assets. Multiples only give a rough, industry-wide ballpark figure for business value, not an exact value.
• The “capitalization of income” method, which places a heavy emphasis on intangible assets like annual profits and goodwill.
• Business value can also be estimated by projecting cash flow over a three- to five-year period, and adjusting that into current dollar amounts.
• Assets less Liabilities – This is called the “balance sheet” approach and is generally considered more accurate.  The “adjusted book value” method is similar, but uses current market value for the assets rather than purchase price or depreciated value.

Getting an accurate valuation will ensure that all the hard work you’ve put into it will be taken into account and included in the price.  A valuation is also important when seeking capital, or taking on a partner, or selling shares.   While many business owners have an idea of what their business is worth, that idea can quickly wither in the face of challenges. Therefore, getting an accurate substantiated business valuation is crucial so hire a professional.

A professional valuation expert will want to review and analyze recent financial history, projections, agreements, compensation, employees, major customers and competitors, and the viability of the business without the current ownership.

There are many reasons business owners may want to sell and not the least of these is retirement.  So do this right and you can relax in your next phase of life knowing that you got the best deal that you could get for your business and be among the 5% that got it done.  You can read more about getting your business ready for sale here “The Do’s and Don’ts of getting your business ready for sale” by Mike Michalowicz Author of the “Toilet Paper Entrepreneur”

What Does Labor Day Mean To You?

I’m not talking about why it was created to begin with.   I’m talking about what it means now; back to school sales, a day off, parades, etc.   I can tell you what it means for me, a “Kick Ass” work ethic!  I grew up in a small town in a large family.  Lots of cousins and competition!   We learned early on when it came to getting a good job; that smarts might get you in the door but a kick ass work ethic would keep you there.  We didn’t work for job satisfaction then we worked for money.  And you did what the boss said because he signed your check. 

Now don’t misinterpret what I’m saying here.  I’m not waxing nostalgic.  I don’t miss the whole “do it or lose it” scenario.  But I do recognize those values that were instilled in me then have lead to much of my success today.

Showing up on time, doing what I said I would do, and always trying to find a way to do it better; are great qualities to have even if they aren’t necessarily monetarily rewarded.  When I interview a potential new employee one of the first questions I ask them is “Tell me about the last time you were late for something; anything”.  On the surface this seems like a pretty harmless question.  But the answer isn’t what I am paying attention to.  How they answer the question is what I am after.  If they say “I’m never late” my next question will be something to gauge their honesty.  If they take a long time to answer the question because they are trying to think about a time; I will feel assured that they are usually prompt.  This exercise helps me determine what kind of work ethic they have.

So while you are enjoying your Labor Day; keep in mind; all of those people who are working that day so you can have a good time.  Be nice to them; because they are working hard so you don’t have to and that; my friends; is a Kick Ass Work Ethic”

3 Things I HATE about being self-employed

In a bad economy with a high unemployment rate; some people think now is the time to follow their passion and throw up their own shingle. 

I love this idea in general and have been in business for myself since 1997; but it wasn’t all roses and there were plenty of times I had second thoughts.  And because I believe that knowing is always better than not; I would like to share 3 things that if they hadn’t existed; being in business for myself would have been Pure Nirvana!

1. The Buck Stops Here – No matter what happens or how many people you hire; when things go wrong; it’s your problem.  If the money isn’t in the bank on payday and your credit line is fully utilized, you’re the one that has to come up with the extra cash.   When an employee makes a mistake and you have an irate customer; you’re the one who has to make things right.  Dealing with problems and conflict is one thing; but when the solution rests on your shoulders alone; it can be a little overwhelming.
2. Employee Problems – Even if you have the best hiring practices in the business; you will inevitably hire someone who isn’t the right person for the job.  Whether it is aptitude or attitude; it is up to you to move them into something else, pay for additional training or move them out all together.  None of those choices are what you had in mind when you hired them to begin with.  It is one of those additional hassles that you will have to deal with.
3. Networking Pressure – Bringing in new businesses is tough enough for small businesses in a thriving economy; but it is a virtual nightmare in a bad one.  You have to get creative with your sales resources.  Status quo is not an option.  Referrals, Social media and a good ad can help with new business; but nothing replaces a good network.  Networking requires your time; and a lot of networking means a lot of time.  You need to show up for anything and everything that can get your message out there.  It cuts into what little personal and family time you have left at the end of the day. 

Remember; these are my negatives; not necessary yours.   And for the most part overtime I have implemented strategies that have improved them.  You will have some of your own to deal with.  

So get real and honest and make your own plus and minus list.  And if your passion and pluses out weight your minuses you will be ok.  Because at the end of the day; I wouldn’t want to be doing anything else!

If you would like more information on starting your own business; the SBA has a great site.