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36
STRATEGY

The Year Everything Went Wrong

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What can a small company do when faced with crisis? Where should it turn? What are its priorities? How can similar situations be prevented in the future? I wish I had known the answers to these questions a year ago.

My company, LeapFrog Solutions, is a strategic marketing and digital communications firm with approximately ten employees. It is in smart-growth mode, doubling revenue each year since it was founded in 1996, but has no plans to go public. We were comfortable in our home-based office, but I knew that to accommodate our growth, I would have to move to office space around August 2000. In addition, we were in the process of transitioning from limited-liability company to S-corporation status, so I was working with accountants and lawyers to make this process as smooth as possible.

In March 2000, a disgruntled neighbor sent a County Inspector to notify me that I had 30 days to come into compliance with a law prohibiting more than one non-resident employee in my home. In other words, I needed to move the business or be permanently shut down. This was occurring in a month of record sales, and I had just hired the second employee to help with the increased workload.

Instead of focusing on business, an increasing number of client requests and the added pressure of deadlines, I had to undertake a search for office space in a very tight real-estate market. But, that wasn't all. We were just settling into our new office in May when a client decided that the Web site we had designed and developed, which he had approved six months earlier, was not what he wanted any more. He was going to take legal action against the company.

While this was a difficult time for LeapFrog Solutions, I can now look back on the chaos and see what we did right, what we did wrong and how we can deal with issues like these in the future. Thanks to the following strategies, we managed a successful year despite the hurdles in our path.

Have a Support Group in Place

For almost a month, I was going 24 hours a day? looking for office space, interviewing potential employees, managing projects and meeting with lawyers and accountants. My husband and two daughters, then ages 8 and 5, knew that Mom was on a mission. They all supported me 100 percent, although patience was running a little thin towards the end.

A few years ago I became part of a group of business owners that meets monthly to discuss current business challenges. They did not necessarily have all the answers, but they listened and offered suggestions and resources. The best advice I received from these associates was to evaluate the amount of time I was spending on the lawsuit (80 percent of my work time) against the percentage of total revenue represented by that particular project (2.5 percent). Put that way, it was obviously consuming more of my time and resources than it deserved. Seeing that enabled me to bring it into perspective and under control.

Later I was fortunate to be able to form a Board of Advisors who helped me identify and work on the issues that would further LeapFrog's growth and direction. My board has pushed me to continually remain focused on my goals and on reaching the next level. The very first task they assigned me was to devise a revenue formula for the next year, and to target my sales efforts to a list of prospects that could get us to our 2001 revenue goal.

Maintain Open Communication

It was critical, during this chaotic time, to keep my employees informed of all the situations that occurred and events that were taking place. Communicating openly not only allowed me to get their views, it gave me an opportunity to reassure them about any concerns they had regarding the company's future and guarantee that we were all on the same page. Getting everyone involved gave them a sense of accomplishment because they were helping LeapFrog Solutions get through a rough time. That motivated them to do whatever was necessary to keep the business operating and growing.

Open communication also enabled us to work together to institute processes that we believe will help deter some of these problems in the future. For example, we implemented a once-a-week Strategy Lunch to concentrate entirely on solutions to the challenges facing the company. Outcomes of this weekly meeting included the creation of our own integrated marketing campaign, formalization of a Project Engagement Process, addition of a 401(K) benefit plan and development of an employee manual.

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Last updated: Jul 11, 2001




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