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December 2010

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Features

The "Zen" of Small

Exploiting the "friction" that makes it hard to do business with larger companies

Practitioners of certain kinds of martial arts know that the key to defeating a larger opponent is using the opponent's greater size against him, most often by leveraging the smaller opponent's speed. The same applies in the business world. By using the speed, nimbleness, flexibility, and other advantages inherent to smaller organizations, small businesses can level the playing field with larger competitors—and often gain a leg up.

Many big companies are vulnerable in areas where their size creates "friction points" with their intended audience. Small businesses can capitalize on those characteristics that make it harder for customers to do business with a larger competitor, such as inconvenient locations, cavernous stores that are difficult to shop, and websites that are tough to navigate.

"Large companies often are sclerotic with meetings and long, complex approval chains," says Dan Markowitz, president of TimeBack Management, a time management and productivity consulting firm. "This causes them to be slow in reacting to market changes." Indeed, because of the multiple organizational layers that often separate decision makers at big companies from the front lines of their customer base, smaller firms often have an opportunity to capitalize on market changes before their larger competitors even realize they are happening.

Smaller businesses are well positioned to provide superior customer service. The ability to respond quickly—not just to new opportunities emerging in the marketplace, but to any issue affecting a customer or potential customer—may be the most powerful weapon in the small business owner's arsenal, says Adrian Miller, a sales training and business performance consultant. "We're used to auto-responders acknowledging our purchases a nanosecond after we make them," she says. "So isn't it just plain wrong to make prospects and clients wait for days before replying to a call or an email?"

An important aspect of the "Zen of small" is the ability to efficiently serve markets that are too small to attract the attention or merit the investment of very large companies. Small businesses' affinity for niche markets is nothing new, but a confluence of factors is making it easier, cheaper, and faster to serve increasingly smaller market niches, according to an Intuit report on factors shaping the next decade.

Intuit predicts that during the coming years three powerful trends will converge to drive the growth of niche markets:

The range of opportunities niche marketing presents to small and medium-size businesses is almost limitless. A niche can be linked to demographics, culture, a particular lifestyle, a specific industrial need, and many other factors. About the only limitation on the scope of opportunities is the extent of the small business owner's imagination.

Keys to Managing a Virtual Workforce

Technology means your workers can be anywhere—but you still have to manage them

The idea of small businesses using remote workers has evolved far beyond the concept stage and is now firmly ensconced in reality. These days, a successful business can be run out of multiple locations, often with no central office at all. For example, OnSite Consulting, a hospitality industry turnaround specialist, still has a physical location where it can receive mail, but that's just a P.O. box in Los Angeles. The company's real headquarters is in the cloud.

"We gave up our offices for a full, virtual environment more than 18 months ago. We have 65 people and no office, and it's been so successful that we've become part of a Microsoft case study on this topic," says James Sinclair, a principal in OnSite Consulting. Technology makes it all possible: OnSite uses Microsoft's Office Communications Server for internet call-routing and integrates with other communication modes, such as email and instant messaging, and Microsoft SharePoint for collaboration.

The virtual organization has been a boon to OnSite, because being able to send all its employees into the field has greatly increased productivity. Some clients initially scratched their heads at the idea of dealing with a company that had no conventional offices of its own, but it didn't take much to convince them of the advantages of having their consultants "on site" almost all the time, Sinclair says. Still, the strategy is not without challenges.

Nothing tests a business owner's management, leadership, and educator abilities like managing a virtual workforce, Sinclair advises. "Out of sight; out of mind, is the pitfall," he says. "If you relax and assume autonomy among your staff, it will implode." Regular calls with teams, groups, and all staff members are important, as is constant verbal, not just electronic, communication. In addition, face-to-face interaction between the owner or manager and individual employees should take place on a regular basis, even if it's just a monthly performance review or a shared cup of coffee.

Eliminating paper has also played a central role in OnSite's success. "Everything is scanned, everything is shared, and everything is organized," he says.

Michael Haaren is co-founder and CEO of Staffcentrix, a company that provides virtual-entrepreneurship training programs to the U.S. State Department and Armed Forces. He offers these tips for successful virtual working relationships:

To learn more about managing virtual workforces from those who do it every day, check out "4 Tips on Managing a Virtual Workforce." In this article, four CEOs share the lessons they've learned about managing remote staffs. For more information about the legal and regulatory issues associated with managing a virtual workforce, read "When Workers Go Mobile, Employers Navigate New Labor Laws."

Avoid Pitfalls When Using Independent Contractors

Misclassifying employees as contractors can create problems with tax agencies

Independent contractors are a great way for small businesses to maximize workforce flexibility and minimize labor, tax, and bookkeeping expenses, but you need to tread carefully. The IRS and individual state revenue departments have very specific definitions of what constitutes a contractor versus an employee, and they come down hard on businesses they believe are flouting their rules.

The IRS uses three characteristics to determine the relationship between a business and its workers: behavioral control, financial control, and the type of relationship. Behavioral control means the business has a right to direct or control how the work is done through instructions, training, or other means. Financial control means the business has a right to direct or control the financial and business aspects of the worker's job. And the type of relationship factor is about how the workers and the business owner perceive their relationship.

In a 2010 advisory publication on this topic, Employee vs. Independent Contractor—Seven Tips for Business Owners, the IRS wrote, "If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees. If you can direct or control only the result of the work done—and not the means and methods of accomplishing the result—then your workers are probably independent contractors."

To learn more, read the entire article. The site also includes links to relevant IRS publications, including Independent Contractor (Self-Employed) or Employee? and regulations on this topic.

Bear in mind that tax specialists consider the test for independent contractor versus employee status to be highly subjective. "The best advice is to record every independent contractor scenario with as much documentation as possible, evidencing each party's intent for an independent contractor relationship," advises attorney Eric Kalnins, a partner in the Chicago law firm of Handler Thayer, LLP.

Creating a Clear Corporate Image

In a market where too many companies are competing for the same customers, it is important for small businesses to find ways of letting people know exactly what they stand for. A clear corporate image does just that, regardless of whether you are in the business-to-consumer or the business-to-business space. Big companies know this, and they are adept at creating and managing images that transmit an impression to their target audience that is more powerful than any ad. Lacking the deep pockets of their larger competitors, can small businesses pull off the same feat? Absolutely, say some experts.

John Tedstrom, managing director of insight and strategy at marketing agency Hawkeye Worldwide, says the key is taking the same steps and disciplined approach as any big brand. Most small businesses think this is too expensive for them, he acknowledges, but with the range of marketing resources available today, it is not. "It starts with a unique selling proposition, a memorable name, and a professional identity, and a small business can get the whole package for as little as $250," says.

The next step is key: applying that identity to every aspect of your business's marketing and communications in a consistent manner, with no exceptions. "Apple wouldn't adjust the color of its logo to match the local high school booster club program, and neither should a small business," Tedstrom insists.

Consultants John Reddish and Andrew Mueller point out that the images nurtured by leading international brands have a prominent visceral or "gut feel" component. "That's powerful because people first make decisions with their gut and then justify them with their mind," Mueller says. Small businesses should follow the same model, incorporating the cumulative effect of customer interactions with the company and its products or services at every touchpoint to create a strong corporate image.

For information about how effective your identity is on the net, read, "Who's Talking about Your Company Online?". You'll learn about the new technology tools available to monitor what's being said about you online.

Profile

Goodcopy: Small Size Big Business

 

Ian Malkin, vice president of sales at Goodcopy Printing & Digital Graphics in New Haven, Connecticut, jokes that he'll have to hire George Clooney as a stand-in if any of his far-flung customers ever show up at the shop to meet him. Goodcopy has clients—many of them large corporations—all over the world, but most have never met him face-to-face. Leveraging its small size and the technology its Comcast Business Class service provides, Goodcopy is able to compete successfully against much larger firms.

Besides traditional printing services, Goodcopy offers design work, online portal and ordering solutions, personalized URLs, and similar services to its customers. "Most of what we do today is integrated marketing, which companies use for everything from customer retention to rewards programs," Malkin says. "This is a very competitive business, and customer service is the make-or-break factor in our industry."

Because it is small, Goodcopy can respond to customer concerns much quicker than a larger company could. "When my clients call and want something, I don't need to get someone else's approval to give them what they need," he explains. "We can change things on the fly, and that kind of flexibility lets us meet and exceed customer expectations."

Central to Goodcopy's focus on superior customer service are the high-speed Internet and high-definition digital voice services it gets from Comcast. "Speed is the big issue with the Internet. People don't like to wait, and I don't like to make them wait," Malkin says. "I can get into all my programs and send and receive big files really fast." When Malkin says "really fast," it's more than hyperbole. For example, with Comcast Business Class Internet's 50 Mbps download speeds, you can download a 500 MB art file in 90 seconds, compared to the 45 minutes it would take with a 1.5 Mbps T1 line.

"And the quality of the phone service is the best I've ever had," he continues. "It has call forwarding; it emails voice messages to me—it's a fantastic productivity booster. Accessibility and customer service are the two biggest issues in my business, and they go hand-in-hand. My Comcast Business Class service helps me on both fronts."

Productivity@Work Tip

How to Exploit the Brand- and Sales-Building Power of Social Media

 

Social media platforms like blogs, Twitter, Facebook, LinkedIn, and YouTube continue to evolve, and each represents a solid place to kick off your social media strategy. But, don't think of social media as just another broadcast channel. Rather, it's a way to listen, to talk, and ultimately to sell. With so much available to you, it may seem a bit overwhelming, but these steps and tools can help you figure it out.

To that end, it's important to have a clear strategy and to employ the right tools for the right targets. LinkedIn, for example, may be a great way to recruit and keep up with professional partners, while Twitter may be the best avenue for quickly offering a product discount for an upcoming week. Starting and maintaining a blog can be a great way to build customer loyalty.

Your effort should not be "all about sales," but rather a way to create real fans that will do word- of-mouth marketing for you. Harnessing the power of true fans that will defend your reputation, promote your product, and drown out any cranks and naysayers over time. It may seem a bit overwhelming, but the following six steps will help you figure it out.

The biggest barriers to better social media engagement for companies is the lack of resources (54 percent) and the lack of knowledge or understanding (50 percent). * Now you can't let that stop you.

*Econsultancy's Social Media and Online PR Report, carried out in association with bigmouthmedia, November 2009.