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A Few Facts on Small Business Loans and More of Your Questions for June

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Is it true that SBA loans take longer than regular bank loans to be approved? I’d expect as much from a government agency.

Actually, the Small Business Administration doesn’t extend loans, it just guarantees them. As for a protracted approval process, that’s another widely held misconception, says Kate Lister, author of Finding Money, The Small Business Guide To Financing. “The information an SBA lender requires, save for a few extra details, is the same as for regular loans,” she says. Keep in mind that if one SBA lender is not interested in doing business with you, that shouldn’t preclude you from visiting others. “Each lender has their own approval criteria,” Lister says. To find an authorized lender, visit sba.gov or visit your local SBA office.

At what point should I cut out of sales?

Working out the value of your time to the business is a fairly straightforward sum, and if your financial goals are bigger than any sales you could close in the dispensary, then you are right to be looking to spend more time strategizing, working on marketing campaigns, meeting with potential partners, taking advanced business courses or whatever. But it’s a mistake to think you can or should ever stop selling. Your staff needs to see you constantly looking to bring in new business. That can be with regular stints on the sales floor, playing a support role, making the odd old-fashioned sales call or by trying to sell the company at a higher level. Once it stops with you, it’s over (from the top to the bottom).

I’m about to promote a staff member to manager. What’s the best way of preparing her for the challenges she’ll face? 

Be sure to give her “The Talk” — the one about how it will be hard to maintain close friendships with her former peers and that while you don’t prohibit fraternizing (at least we hope you don’t) you do recommend she maintain some professional distance from the rest of the staff. Let her know your door is always open to discuss issues because there will be times she’ll need someone to talk to. INVISION’s Real Deal columns (the full archive is available at invmag.us/knowhow) are a great resource to show her the kinds of situations that she is likely to face. Another is George Fuller’s The First-Time Supervisor’s Survival Guide. 

I’m thinking of going open book with my finances as a way of getting staff to understand what’s involved in running a successful business. What do you think?

We’ve read about businesses that do this with great success. But this level of transparency is not for everyone, given the financial literacy required to understand whether a business is healthy. You may just want to reveal your sales figures, though profit margin is a much better indicator of performance. Tell your staff that if net profit margin is under 5 percent, the business is barely surviving. Otherwise, discretion may be wiser. “Know what numbers you can share and defend, or just keep your books closed,” says Greg Crabtree, a CPA and author of Simple Numbers, Straight Talk, Big Profits.

I’m moving my optical store to a new location about 25 miles away. What are some ways to get my customers to follow me? 

Have no fear — this is actually a great marketing opportunity because it gives you a valid reason to communicate with your existing clientele, as well as prospective customers. Start getting out the news months before the move. “It is important to communicate why you are moving — a better location, a bigger location, a more convenient location, you purchased a building,” says James Porte of the Porte Marketing Group. Place a notice in your existing store announcing the move. You can also mention it on your business cards, invoices, and via other media. A direct mail-out is critical, says Porte, adding the more memorable it is, the better. “I once saw a pack of cards imprinted with a business’ name that was packaged in a die-cut paper moving truck as a self-mailer. It was awesome!” Next, get in touch with the local newspaper and tell them about the move, and in particular what you’re bringing to the market. Finally, hit the phones to make personal contact with every one of your customers. Then start planning that grand opening party. 

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This article originally appeared in the June 2017 edition of INVISION.

This article is an online extra for INVISION Online.

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How Much Community Work is Too Much Community Work and and More Questions for June

Also how to deal with (or with being) a helicopter manager.

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I appreciate giving back is a smart way to run a business, and it feels good personally, but community work can also be a distraction. Are there guidelines for ensuring we get the balance right?

In terms of the personal benefits, different studies done in the U.S. and Australia over the last two decades have concluded that about 100 hours of volunteering a year, or two hours a week, yields the optimum return in terms of happiness, satisfaction and self-esteem. The studies found there were no benefits — for the volunteer at least — of doing more than that. As for your business, coming up with a similarly strict “cut-off point” is prudent. The Internet software provider Salesforce.com, for example, uses what it calls its “one percent” formula: one percent of company profits, one percent of company equity, and one percent of employee hours all go to the communities it serves. The clarity of such a cap not only provides a guideline for this expenditure of energy, but makes it easier for you to deal with requests from your community for your time or money: “We wish we could help but for now we are concentrating all our community efforts through …XYZ.” When it comes to helping others, a soft heart and a hard head are often the best combination.

I’ll admit I’m a helicopter manager, but if I didn’t keep a close eye on everything and intervene constantly nothing would get done properly. How can I get my staff to show more initiative and responsibility?

It sounds as if you’ve micromanaged your staff into drones. Basically, you’ve got two options: Go big picture, where you give them ownership of their responsibilities on a day-to-day basis, or go small, where every procedure and system is mapped out in detail. The first requires employees with the right personality and experience who will know what do when you say, “OK, our goal is to wow every person who comes in the store. Go to it!” The second requires a lot of work from you in putting systems in place and providing the necessary training. In such cases, one approach is to imagine that you’re planning to open another business 3,000 miles away and putting in writing everything you’d want the remote employees to know about managing the practice, from how to run the point-of-sale system to how to make deposits to who to call if there’s a problem with the building. With such a reference, you’d be able to step aside and in theory, be confident your staff would be equipped to tackle most situations. Keep in mind though that these situations often reflect as much about the manager as the staff. Taking action is how micromanagers deal with anxiety – just as surrendering control is how under-functioning staff deal with challenges. Breaking the pattern is tough, because the manager needs to step back and do less, which means potentially letting bad things happen and tolerating the resulting anxiety. Can you handle that?

I know I should focus on my business, but I get a warped glee out of competing with the unethical rival up the road. There’s nothing wrong with having such an enemy, is there?

Research testifies to the fact that humans partly enjoy having enemies; they clarify the world for us and bolster our sense of righteousness. So, sure, why not channel this sometimes less-than-admirable truth to good ends? And it’s certainly easier to keep an eye on what your rivals are up to in the Internet era. The only thing we’d say is that you don’t lose sight of who your real enemy is. Is it the guy so bad at business he’s cutting legal corners, or is it Amazon, or something else — like your own complacency, inertia, or fear of change that poses an existential threat to your business? Enjoy your day-to-day skirmishes with the schmuck around the corner, use it to motivate yourself, but channel your energies into evolving and growing your business.

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How to Get the Best Employees and More Questions for May

Plus, how to get that chatty, great employee to actually close the sale.

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What’s a good way to sell our company to prospective employees — particularly top salespeople?

Just about the most valuable skill a businessperson can have is the ability to recruit and retain good people and yes, it all starts with that job posting. “When the right people read your ad, their hearts will whisper, ‘These people are like me, and I am like them,’ says Roy H. Williams, author of the business bestseller The Wizard of Ads. Bullet point what the job entails, what kind of inventory they will be handling, and the benefits, but the core message should be about who you are as a company, your reputation and your goals. The best salespeople often don’t have a sales background so go easy on the requirements. Your message should be more about culture than qualifications.

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Is it legal for retailers to say they are selling at wholesale prices?

In short, no — unless they really are. Many states including Arkansas, Georgia, North Carolina, Kentucky, Texas, California, New York, and Michigan have strict laws prohibiting the use of the word “wholesale” in retail advertisements. In some states, this is a criminal offense, due to the word’s ability to mislead consumers. Basically, if you advertise you are selling at wholesale prices it must be “the real wholesale price.” Some states define this as the price paid for the item from the supplier. Other states and the federal government say the price must be lower than the average price retailers would pay in the area.

We have a small store that is growing quite nicely. In fact, juggling rosters to avoid paying overtime is increasingly becoming an issue. I understand it can be tricky, but can we just move several employees to salaried positions? No more messy rosters. No more overtime. Right?

Likely very wrong. This is a strategy that “has been used so often to avoid paying rightful overtime, that it is written into the law through the Fair Labor Standards Act,” says Scott Clark, a lawyer and founder of the HTC Group. Yes, there are salaried positions for which there are exemptions from overtime rules, but they tend to be “true” management roles and jobs that require a college degree or technical training. They must also pay more than a minimum of $455 per week, and the salary must be the same every week (so if your employee wants time off to see the doctor you still have to pay his full weekly salary — no more docking wages for hours not worked). If it seems that the government is uncharacteristically protective of lower-income workers in this instance, never fear, it really isn’t. On the contrary, the government is very particular about all the taxes and Social Security that get paid on overtime. We’d say a better approach is to view your employees as an asset who make you money, not as an expense. Invest in your employees to make them more efficient, and they’ll make you even more money. Or hire the staff you actually need.

Where can I get hold of a good employee evaluation form?

As you’ve no doubt discovered, there are scores you can download to use as a model or template. Some, like those from educational institutions, are really quite detailed and cover every possible aspect of a job, while others are very basic. Our only advice when it comes to employee evaluations is that you not spend too much time on the whole process. While you may want the paper trail to protect yourself against lawsuits from former employees, there’s a growing view that reviews don’t really achieve much. Mary Jenkins, a co-author of Abolishing Performance Appraisals: Why They Backfire and What to Do Instead, advocates designing a system in which employees can seek feedback from people they work with, then draw up a skills-development plan with their manager — or you.

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How to Attract Top Salespeople and More Questions for April

Also, how to structure their compensation to remain competitive.

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We have a very young-looking salesperson who worries people don’t take her seriously. We’ve styled her in planos but what more can we do to make her look more professional?

“Professionalism is really about projecting confidence,” says Anne Sowden, managing director of image consultancy Here’s Looking at You. “And confidence is reflected in clothing and body language. As a general guideline, dark colors — black, navy and charcoal — convey authority.

A jacket automatically makes someone appear more professional. Pair it with a light-colored blouse (conservative neckline), knee-length skirt and she’ll look professional but approachable. And ensure the clothing fits properly, is not wrinkled and she will feel comfortable in it.

“If you’re comfortable, you’ll automatically be more confident,” Sowden notes.

When it comes to greeting customers, remind her of Mom’s dictum: Stand up straight and don’t slouch. “This will indicate that confidence and approachability. Add to that eye contact and most importantly, a smile and she’ll make a dynamite first impression,” Sowden says.

I have an employee at my high-end eyewear store who makes $16 an hour and commission based on gross profit. She earns close to $60,000 a year but feels underpaid and that paying commission on gross profit is contrary to the industry standard. How can I convince her she has it pretty good?

She does indeed have it pretty good, says industry consultant Andrea Hill, owner of Hill Management Group, noting that her hourly rate is almost 50 percent higher than the average for retail sales people of $11.50 and even more than the average of $15 paid by very high-end luxury retailers.

As for the commission, Hill says you are very much on the right track and your employee will probably have to get used to it wherever she decides to work; “wise” businesses are increasingly moving away from a commission based on the retail price to a portion of the gross margin. “In this way, sales professionals are challenged to balance the need to get the highest price possible with the need to close the sale,” Hill says.

“When commissions are paid out on total sales only, then it becomes very easy for the salesperson to sacrifice profits for the easy close,” she says.

While exposure to such numbers should mollify your associate, what you really want to do is excite her about the potential of earning as much as $100,000 a year — which is what top luxury salespeople make — although that requires building a “strong book” of customers through active networking, clienteling and prospecting work.

Keep in mind, however, that even the most generous commission rate won’t help if you’re not on top of your game, meaning advertising intelligently, keeping up with changing retail trends, providing the right technology for how consumers today want to shop, and maintaining an exciting inventory that reflects current tastes, says Hill.

“If the retail business owner does not ensure that they are running a strong merchandising and marketing operation, then even the best sales person in the world will not be able to turn the promise of commission into actual earnings.”

I still can’t get my head around kelvins and color temperatures. Can you help?

It probably helps to think of the original theoretical model that underlies the index — that of a black metal radiator, whose color changes as it is heated, from black to orange to red to blue to white hot.

Similar to Celsius and Fahrenheit, the Kelvin scale marks different degrees of thermodynamic temperature, but it is the association with color change that makes it useful as a way to designate light bulbs.

Where it gets confusing is how at the lower end of the scale, from 2000K to 3000K, the light produced is called “warm white” and ranges from orange to yellow-white in appearance. Meanwhile, color temperatures further up the scale, between 3100K and 4500K, are referred to as “cool white” but the bulbs are emitting a brighter, hotter light.

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