6. Offer a 5% discount for payment within 15 days. In Churchman's case, the government has taken him up on his offer. The cash-flow benefits of speedy payment more than make up for the marginal discount.
7. Follow the money, advises Holtz, who has learned to cruise the hallowed halls of government buildings, invoice in hand. "Always learn what the invoice-processing steps of the agency are," he says. When possible, he'll even carry his bill from one office to the next and ask the appropriate staff to approve it while he waits.
8.Speak up. Frustrated, Hopkins asked to meet with his county government clients--who accounted for half of his $100,000 annual revenues--to discuss his angst. The result: the county proposed a one-year contract. Instead of receiving per diem payments that could get held up awaiting board approval, Hopkins now gets immediate approval on invoices of less than $10,000. "Before, I sometimes waited as long as 85 days for payment," Hopkins says. "My last invoice was paid in less than 30 days." -- Mike Hofman
Sign of the cross-training times
When companies are in a start-up frenzy, early-stage staffers tend to wear so many different hats that many entrepreneurial companies forgo job descriptions entirely. Later, as companies grow, employees tend to specialize. But some CEOs argue that it's important for employees to retain a good dose of that start-up flexibility. The better everyone knows everyone else's job, the thinking goes, the better your company runs.
To formalize that flexibility, more companies are cross-training, instructing employees in the essential elements of as many different job functions within the organization as possible--regardless of whether they are likely to be called upon to actually perform those job functions. The tangible benefits of such training, proponents say, are numerous.
Better employee morale, for one. Kurt Bleicken, CEO of Greenpages, an $81-million computer reseller in Kittery, Maine, puts each new employee through two months of intensive training in all the job functions at his company. So customer-support people get sales training, and salespeople learn about purchasing and credit services. That, according to Bleicken, promotes mutual understanding. "When people are familiar with what the rest of the company is doing," he says, "it breaks down the typical 'us versus them' attitude."
Cross-training helps companies ensure that--
- Every employee can help a customer. At the Chip, a $4-million computer technical-support and repair company based in Valencia, Calif., everyone is trained in computer repair--even the receptionist--so that whoever answers the phone is able to address technical problems. According to president Chip Meyer, that way the company phones act as a de facto help desk for clients.
- Every employee knows how to sell. For Nick Nicholson, CEO of the Ecology Group, a $40-million recycling and waste-management company in Columbus, Ohio, it's important that each of his employees understands the sales process. So all of his staff members receive sales training, including classes on good questioning and listening skills. Once, a member of his accounting staff was on the phone with a client who had a huge overbilling problem. In the process of clarifying the problem, the staff member identified an opportunity to extend the Ecology Group's agreement with the client, involving more locations and more business. "I don't think he could have done that if he hadn't had sales training," says Nicholson.
- No employee is indispensable. Kurt Bleicken of Greenpages also uses cross-training to counteract short- and long-term leaves of absence, in particular maternity leaves. So he has two highly cross-trained individuals he calls "Greenpages runners" who can fill just about any position in the company: sales, purchasing, credit services, or accounting. And they can sub for almost any length of time, covering everything from sick days to vacations to extended sabbaticals. Of course, since the runners are by definition generalists, they're not always as effective as the real thing. But especially when you're talking about keeping the sales flow relatively even, says Bleicken, "it's better than starting over from square one." --Christopher Caggiano
My Biggest Mistake
Manuel Fernandez
Chairman and CEO
Gartner Group
Like everybody else, I have made a lot of mistakes. But we all learn from our mistakes--sometimes even more than we do from our successes. I made my biggest mistake when I was starting my first computer company, Gavilan, in the early 1980s. I didn't understand how important it was to have cash--and I learned, the hard way, to regret that.
With Gavilan we had a brilliant business opportunity on our hands. By 1982 we had developed the first true battery-powered laptop computer--years ahead of its time. We received lots of acclaim when we introduced our product, and we were sure of our success.
I hadn't counted on one crucial thing: cash-flow problems. To start Gavilan we had raised $30 million in capital. We had the opportunity to raise as much as $60 million, but my cofounders and I were intent on trying to hold on to the equity of the company. So we stopped at $30 million. Unfortunately, we didn't anticipate how much cash we'd need as we were developing our new product. Things can and do go wrong. For example, the manufacturer of the disk drives for our laptops went out of business. There had been only one company equipped to manufacture the disk drives, so we had to delay production until we could find a second manufacturer. Then, once we did, we had to spend another few months redesigning the disk drive so that the manufacturer could make it.
We literally ran out of money. By April 1983 we were in Chapter 11.
Cash flow isn't an area that many entrepreneurs are thinking about when they start companies. We're obsessed with revenues and profits and trying to hold on to the equity. But since then, I have always insisted that our company be debt free--and that we have prudent cash flow. Now we look at it every single day.
Manuel Fernandez is the chairman and CEO of the Gartner Group, based in Stamford, Conn., a high-tech consulting firm that generated $511 million in revenues last year.
The Quotable Entrepreneur
'I've done between 400 and 500 acquisitions in my career, so I know a lot about entrepreneurs. Entrepreneurs don't march left, right, left. They march left, left, right, right, left, hop, skip.'
--Paul M. Verrochi, chairman and CEO of Provant, a $78-million provider of business-training services, based in Boston
