Would you agree that past behavior is a good predictor of future behavior?  And if so, how do we as small business employers guide candidates to share those past behaviors that are applicable to the position we are working to fill?  Might I suggest a cleverly designed one-on-one interview (but only when you are satisfied as to the “advertised” details about your applicant)…

A resume and a qualifying phone interview usually can determine the facts about an applicant’s work history. Likewise, you should have all the material you’ll need to run a background check on the employee’s claims to schooling and job chronology. No matter how big or small your business is, make sure you get this done before moving forward with a hire.

Too many small business owners, though, pressed by their needs and calendar, fail to bring importance to the interview that investigates past behavior. Too many tell me that they know a good employee “when they see one,” or they’ll say, “my gut tells me this is the right guy/gal.” Often,  these are the same folks who complain about employee turnover and the work ethic of today’s generation.

Experience tells me that 90% of the bad hires made are made because of poor interviews – by the employer. If you want to fix this, prepare an interview that seeks to uncover past behavior trends:

• List the questions you are going to ask.
• List the questions that you might ask if the conversation takes you there.
• Include space for your notes after each question.
• Include a scale of 1 – 5 regarding the quality of the response.
• Use a checklist to verify the issues, facts, and behaviors covered.

Do not intimidate the applicant. Present a positive and welcoming personality. But do start the questions immediately.

Ask Open Questions up front: “Did you have trouble finding the office?” “Have you met any of our people, and what was your impression?” “Take a look around and tell me if you would have trouble working in the environment you have noticed so far?” Such questions require more than “yes” or “no” answers.

Revert to Closed Questions: “I see by your resume you graduated from High School. Is that correct?” “You’re here to interview for the customer service position?” “You wrote on your application that you are available to start immediately. Is that right?”  By now, you have like established a bit of a comfort level with the candidate and can be more confident in the honesty of the behavioral questions to follow.

Push on to Behavioral Questions:  Behavioral Questions expect the applicant to reply at length. I suggest you tell them up front that you are interested in the action they took to fix a problem and in the result their action achieved.

Pose a Problem:  “We had been receiving complaints that a customer service rep was losing his temper on the phone with customers. The complaints were reported to me by one of his co-workers. Our workers are encouraged to solve such problems on the floor. Have you been in a position where you were concerned about the behavior of a co-worker?”

Listen:  You want to listen with your script and evaluation survey in hand. You are interested in the applicant’s answer and the results of his action. But, you are also interested in the way the applicant answers. For examples, does he take time to frame his answer? does his answer reflect an understanding of the question? and do his “results” match the behavioral need?

Prepare your questions with the job description in mind: “Tell me about a time when you . . . ?” “Imagine that you find yourself in the following situation . . . “ How would you fix a situation like . . . ?” Establish metrics and a point system for each question. If there is more than one person on the hiring team, put the script in each of their hands and discuss the scores and any variances.

Then – and only then – having followed a process such as this, if you have two candidates with equal scores, then, by all means, please go with your instinct – this time backed up with preparation and investigation.

Becoming a Federal government contractor – while not always simple – often results in contracts that are lucrative and long lasting. For small business, such government contracts can easily be a path to growth and longevity, particularly in a depressed economy.

Small business owners would be mistaken to think that they are too small to matter. Departments of Defense, Energy, Health and Human Services, Treasury, etc. all have needs of products and services. They are particularly interested in innovation and promise, virtues that are usually cornered by entrepreneurs.

Thankfully, doing business with the Federal Government is pretty transparent. While the directions and resources may be overwhelming in sheer volume, the information is readily available to assist you in your bid for becoming a government contractor.

Departmental size, bureaucracy, and decision-making can also be barriers to your success. Still, if your business provides a product or service useful to government needs, you shouldn’t be deterred.

Keep the following tips in mind when considering or pursuing government contracts:

• Time is not your friend. Give your plans 12 to 14 months to mature. The current contractor doesn’t always get a renewal. Sometimes, they have failed the agency; other times, you can beat the competitor’s bid.
• Put your hat in the ring. List your business on the Central Contractor Registration. This is a database agencies can search for info that appears to suit their current needs.
• Put the plan in motion. Check FedBizOpps.gov where all government interests must be posted. Reviewing their needs locates potential targets for you; it also tells you what they are looking for, so you can adapt to their needs.
• Do deep and wide research. For example, the Department of Defense has an Office of Small Business Programs which includes a Guide to Marketing to the DoD.
• Explore resources such as your local Procurement Technical Assistance Center, set up to assist small businesses, especially those that are veteran, disadvantaged, or women-owned business, in their application processes with assigned Small Business Specialists.
• Secure the “solicitation for the requirement.” Study it in detail, seek advice, and do what you can to meet the specifics required.
• Turn information on the competition inside and out. Explore available databases on current contractors, subcontractors, and earlier contractors. It’s all available to you – if you take the time.

Now, be advised:  Federal contracts represent a significant undertaking in time, and time is expensive. So, clearly – if there is no felt return for this investment, stay away. But, if you see potential here, set goals, staff to the need, and secure qualified advice. It can re-shape your business future! 

Despite the resources we have gathered here, our American Heroes – service men and women – often find it difficult to find placement upon their return (in fact, NBC reports 12% unemployment in this group).  Small business owners are not positioned to solve all of the problems, but as job creators, you can help.

Included here is a list of various campaigns and efforts aimed at helping our Heroes re-join the workforce.  As you review the list, ask yourself how returning vets can address your business needs. The vast majority of these Heroes are clerks, drivers, cooks, nurses, equipment operators, etc. They have demonstrable skills and extensive training. They are – in their experience and training – alert, dependable, reliable, and accountable. They work with focus, and they finish assignments as instructed and on time. They work collaboratively and without ego.

If you hire this year, give them first crack. But, if you are concerned about erratic behavior, dependency issues, and post-traumatic stress disorders, think again. The great majority of vets return without these problems, and most serve with honor in and out of the military. Still, you can form a pro-active alliance with the designated Vet Rep at your local unemployment office. Develop a relationship that is clear and honest. Let the rep know what you need and what limits you put on variance from the “normal.” Where there is difficulty in the match, the rep can anticipate your needs, smooth the transition, and coach the candidate. Check out the resources below and make a vet your next hire!

Hire Heroes USA is a campaign orchestrated by a non-profit with partners including The US Chamber of Commerce, Anheuser Busch, Ryder Trucks, and others. With distinguished Boards of Directors and Advisors, it presents a professional venue to assist returning veterans in finding worthy employment.

Hiring Our Heroes is an initiative of The US Chamber of Commerce to provide job opportunities for 500,000 veterans in alliance with Capital One and The National Chamber Foundation (NCF). Since their start in 2011, they have sponsored 130 job fairs and hired 9,000 vets or military spouses.

Heroes Hiring Heroes encourages veterans to hire returning military. A project of the Employer Support Group of the Guard and Reserve, it is significant federal to support the hiring of vets into national and state employment opportunities.

Hire a Hero is a Monster-like employment search engine where vets can post resumes and research job opportunities. Employers can post jobs here for a focused attention. The site includes alliances with UCLA and Discover credit cards.

The Hiring Heroes Act of 2011 offers incentives attractive to small business owners. This bi-partisan legislation enables veterans to return to the civilian job market through the Department of Defense’s Transition Assistance Program (TAP). TAP offers job search information, cover letter and resume writing training, and interview practice. The Hiring Heroes Act fast tracks veterans into federal employment opportunities by eliminating the wait for their veteran preference. It removes barriers in transitioning returning vets to jobs requiring skills they have demonstrated: medical practitioners, drivers, heavy equipment operators, etc. And, finally, employers are promised $5,000 in benefits for every veteran hired and $9,000 for hiring those with disabilities.

Before the Business Plan:  For those of you that know me, you know that I’m a firm believer in making sure you have a marketable product or service long before you start your business plan.  So for those of you who already know there is a demand for your product and/or service, please sharpen your pencil.   Determine your purpose, and identify your target audience. Then, write, write, and re-write.

Unless you are trying to secure millions in venture capital, you can do it on your own with a considerable level of comfort if you remember a few things.  It’s not necessary to trust your Business Plan to an online template, so keep the following in mind:

• On-line or textbook templates are cookie cutter devices and, therefore, descriptive at best, a jack-of-all-trades and master of none. There simply is no master plan.
• One plan does not suit every need or audience. For example, I am a big advocate of sharing your small business’ plans with your partners, officers, and staff. Such transparency is a proven link to success. But, I think you need a more private plan that self-accesses, forecasts, and self-corrects. The language of the former plan, for example, would be motivational, but the language of the latter would include more specific and current data.
• Not every plan tries to raise money. Some sell product or service, and others solicit business alliances. If you plan is meant to position your product, the stress is going to be on performance, markets, and competition. If your plan is to form alliances with like businesses or complementary services, you want to stress all the elements that you and the solicited partner bring to the table and its future.
• Seeking funds and investors requires its own form. When applying for loans or capital, you need to provide data, experience, and forecasting. It requires appended records, incenses, contracts, etc. Still, I find many such plans to be unoriginal, ineffectively standardized, and overwritten.

Accept templates for what they are: descriptions of what goes where. Avoid templates or lessons that encourage you to fill in the blanks. Try to position yourself as the lender. Typically, a committee makes the lender’s decision, and the committee pretty much thinks it has seen it all. In fact, it has seen every template that MS Word offers.

The Plan is a leave-behind. As such, it should be very neat and clean, and it would be worth the buck to get designer advice on laying out your plan: margins, type size and style, logo/color, and data displays.

It’s my policy to keep the language at a minimum. Clarity, logic, and specifics match lender needs and mind-set. Avoid contractions, first and second person pronouns, and passive voice. Pay for support and coaching in preparing the covering letter and introduction. You may need the help in creating the first impression.

Some lending opportunities require a verbal or visual presentation. Do not confuse these needs with the business plan itself. They serve different purposes. For example, the live presentation offers you the chance to present yourself, your energy, and business savvy. Do not burden the presentation with the data and research that the plan includes.

Of the many advisors out there, I would suggest a review of the following sites for additional perspectives and tips: the Small Business Administration roadmap, a simple approach by Entrepreneur, and a detailed presentation by VetBiz/gov.

If we are going to make room for small business ambition, strategy, value, and success in the future, we have to find a new vocabulary - not to mention a new lens with which to view the world.  Try these different perspectives on for size…

Downside:  Unemployment will hover around 9%.

Upside:  Unemployment is not likely to increase until returning military are processed into the workforce. However, this represents a real plus if you see this as a pool of dependable, accountable employees. Form an alliance now with the designated veterans’ rep at your local unemployment office. Meet with him/her and make clear what you are looking for in terms of character and skills set. This will prove an invaluable partnership.

Downside:  Inflation will increase slightly.

Upside:  Inflation reduces the impact of debt. More important, it is a sign of the availability of money. You need to position yourself to land the part of that money that is discretionary spending. With fuel prices declining or at least returning to 2010 levels, you have cash flow you didn’t have throughout 2011. Plan now to make use of it.

Downside:  Housing starts are still down and repossessions have not bottomed out.

Upside:  Construction has resumed on unfinished developments in many places, and many cities are seeing an uptick in denser residential development and delayed retail construction. These are all signs that someone has faith in the direction of the economy.

Downside:  2012 is an election year.

Upside:  Issues of importance to small business owners and to your customers will be argued 24/7. Efforts will likely be made to please the middle class, but nothing material is likely to take effect until after the next inauguration. If the payroll tax break is extended, small businesses are likely to benefit directly.

Downside:  World economies will remain volatile.

Upside:  Economies in Greece, Italy, Spain, etc. are worrisome. Hysterics in their markets affect investments in ours. Nonetheless, American markets remain relatively steady and consistent. Inflation in China and political unrest in Russia favor US currency, and emerging Middle Eastern nations are creating potentially loyal markets.

Downside:  “Quality” is not the buzzword it once was.

Upside:  Quality has become a given in US manufacturing, and global markets demand it. But, as Time Magazine reported recently, perceived value is the deal breaker. US software, pharmaceuticals, aviation, and other manufacturing sectors are succeeding in new ways. I’d like to believe this is the tip of a resurgence.

Downside:  Small business owners remain discouraged.

Upside:  Their level of discouragement has dropped, and their pessimism has lessened in key indexes, such as accessibility of funding, capital investment, and expansion of labor force.

This may not be a terribly optimistic view of 2012, but it marks positive steps. In most sizable cities, the major bank hosts a yearly event in which an economic expert paints a picture of the coming year. Make sure you get an invite or pick up the report. It can provide strong and layered direction for your 2012 planning.

This is the third in a series devoted to building business on value and redesigning your business to maximize customer perceived value.

Value is not just in the eye of the beholder. It has a feel to it. Customers know what value feels like as they run it through their fingers. If you, the small business owner, don’t feel it the same way, you are going to lose customers.

Suppose there are burger joints on each corner at a traffic light near home. Time in and time out, you always go to the same one because of taste, ambiance, convenience, discount coupons, a playscape or senior bargains. What would make you change your buying habits? A restaurant-borne disease, advertising, change in the drive-in access, an upgrade in the store design? A customer changes a purchasing habit because of customer perceived value.

Why don’t more small businesses market this way? Well, too many businesses cannot think themselves outside traditional costing methods, i.e. adding the desired profit percentage to the cost of doing business. Nothing in that concept, math, or need interests your customer, and the only value in it is the value to you.

Moreover, some types of business find it hard to turn this ship around. Corporate complicity and trade regulation freeze Real Estate and Insurance prices. Professional standards and insurance legislation drive the price of Dental and Medical services. Lawyers, accountants, and consultants have their sacred billable hours.

For example, ask yourself why people like the Chinese Restaurant’s menu. The value lies in being able to order one from Column A and two from Column B – at will. Or, speaking of restaurants, when you order a Philly steak sandwich in a Philadelphia steak joint, they will ask if you want your sandwich “wit” or “witout.” (Translation: do you want it with or without cheese and onions?) The trick is you pay the same price “wit” or “witout.” Suppose the joint across the street charges $.50 less “witout,” would you switch to the other place? And, though it may date me, I remember Jack Nicholson, in Five Easy Pieces, trying to order toast in a diner only to be told that he had to order a chicken sandwich to get the bread. He couldn’t see customer value in that.

Admittedly, this may be simpler than customizing obstetric services or tax advice, but these business climates would benefit from offering more flexibility – and marketing it! Admitting that some industry standardization brings stability to real estate and insurance marketing, there are known price variances that could be extended to a larger customer public. If, for example, you bundle your services at one price, consider unbundling them to suit the customer’s needs. If you offer one item from Column A with Item 2 and 3 from Column B, nothing stops you from allowing the customer to move the pieces around. Or, if you do not bundle services, consider price reductions to those who want a bundle.

If you are not in one of these hunters’ blinds that makes it hard to see the customers’ future, take action now to realign your services and products so you can offer a “Chinese menu,” allowing the customer can see your flexibility and responsiveness. If you are stuck in the blind, do what you can within the wiggle room you are allowed. And, work from the inside to shift the thinking of your trade or professional group.

After all, you are a small business operator, and flexibility and agility are your strength. This is not a movement you want to fall behind.

Woman-owned businesses are fast becoming their own industry sector. 2010 Census figures rollout, reports from Forbes, National Association of Woman Business Owners (NAWBO), the Small Business Administration’s Office of Woman Owned Business, and others are emphatic about their expectations.  

Allow me to summarize the statistics.  Currently, woman-owned businesses account for less than 18% of the U.S. employment force.  By 2018, women owned businesses will be the source of one-third of the 15+ million jobs the Department of Labor expects to book. The very same numbers tell us that the new workplace will be more diversified, inclusive, and horizontally structured. 

Why the increase in numbers? For one thing, more college-educated women are making the move towards business ownership. For another, women have traditionally dominated the industry sectors that expect growth – healthcare, service industries, and the like. And finally, woman-owned businesses are less likely to depend on restrictive bank financing.  

How are female business owners different?

 Workplace.  While it may be stereotypically dismissive to label women as nurturing, evidence shows that women build business by creating a positive working environment for workers and customers.  They seek to:

• Value life/work balance and share it with others.
• Take pleasure to creating opportunities.
• Provide better pay and benefits to employees.
• Help employees feel better about themselves.

Customers.  Additionally, because they often have more to risk financially and emotionally than their male counterparts, women owners tend to:

• Focus on customers more directly and personally.
• Keep and cultivate appreciative customers.
• More strongly differentiate their business from the competitor.
• Stay ahead of what their rivals are doing.

Networking.  For women, networking is a more shared experience and less exploitive. They are more likely to co-exist creatively than to divide and conquer. Consequently, they are more likely to:

• Seek and take advice from others, including their consultants and advisor team.
• Listen to their employees on a whole range of issues from process to customer satisfaction.

Planning.  Women business owners, behaviorally speaking, are apt to have a broader and longer-term vision. They write thorough business plans and work hard to stick to the plan. They think about retirement more and toys and trophies less.

Support.  Such women are also quick to seek assistance from an increasingly large number of agencies, groups, and sites that study and respond to their increasingly articulate needs. The SBA Women’s Advocacy, National Association of Women Business Owners, and Count-Me-In are just a few of the hugely supportive info centers.

We make big mistakes when we confuse customer service with friendliness, goodwill, and personal warmth. “Cheerful” and “upbeat” are personality traits – not skills. Until you figure this out, you will go through a lot of customer service turnover – and risk loss of customers.

When thinking about what you need in customer service help, write and re-write the job description. There are templates on line that you can easily adapt to your business type. Take the opportunity – before you frame your advertisement – to differentiate between experience, skills, and aptitudes.

For example, identify the length and relevance of the experience you want. Most small businesses are not in a position to train people on the job, so plan on paying the wage that two years’ experience would expect. Customer service skills are not easily universally transferable. A customer rep experienced in tech responses is not suitable for a realtor’s office or a construction outfit. So, narrow your search.

Skills are specific to your business and include demonstrated ability with your business office machines and software. Whether it is handling your phones, cash register, fax machines, databases, or whatever, you need a new hire to hit the ground running. Prepare a test for outcomes you want to see.

But, customer service attitude is the bigger challenge. You need to test and interview for the customer service “mindset” that is going to profit you. Again, charming, spunky, charismatic, etc. are nice qualities to have in your staff. Still, they do not guarantee a good fit, comfort in the work, or productive customer retention for you. You need interview questions that assure the applicant’s self-possession, independence, accountability, patience, and emotional balance.

When you schedule the interview, let them know you will test their experience, and, following the testing, you will ask about their knowledge of your products and services. A heads-up candidate will do the homework.

Here’s the key questions you’ll want to ask: 

• What do you enjoy about working in customer service? 
• What aspect of customer service are you particularly strong at?
• When I talk to your previous employer, will s/he confirm that?
• How do you start communication with a client?
• What steps do you take to identify the customer’s problem and level of displeasure?
• What have you done at your present/last company to increase revenues, reduce costs, or save time?
• Tell me about a time that you helped resolve a particularly difficult customer issue. 
• Talk about a time when you were unable to help the customer with their problem – what was the issue and how did you handle the situation? 
• What have you done to be a better customer service representative?  
• What would you do if your replacement did not appear for work?
• Some customers are rude – in addition to being dissatisfied. How do you manage customer rudeness?

In each of these questions, look for responses that report a behavioral process. If the candidate can report a behavior, a process from beginning to end, then, s/he has studied the matter. A candidate with a process manages a customer situation instead of merely responding. You can rely on thought and follow-through instead of unthinking emotional stress. And, finally, you have someone used to being measured. This is a win-win customer service rep.

As the end of the 1^st quarter approaches, it’s time to use your small business outcomes to draw your benchmarks for the rest of your business year. Is your small business where you thought it would be?  Where you want to be?

If you’ll indulge me, I’d like to share a few statistics as a basis for further discussion.  SMB Perspectives found the small business owners surveyed had settled nicely into a statistical curve. About 45% were worried about keeping their customers, 20% are worried about local competitors, and almost 30% are basically worried about staying in business. Most had hired employees in the past year, but few planned to hire this year, hoping to keep their employees in place. Starting 2012, 40% were optimistic, 30% were neutral, and 25+% were pessimistic about succeeding this year.

This sort of stodgy centered statistic tells me things are sluggish at best, but interestingly, it does not necessarily reflect my experience. For starters, this survey calls a business “small” if it has less than 500 employees and $25 million in revenues. These business execs say they are worried about meddling from Washington and uncertainty about the impact of election year politics and policies.

But, employers of this size are not the real job builders. The small business owner who works from home through sub-contractors, the construction company with 200 employees, the medial practice with 25 employees, and so on, are the ones who tell me they are committed to securing and building on their 2011 gains. They are going to spend time and money on customer retention and market building. They expect these moves to require more focus on product offering, tech needs, and staffing to make, sell, and delver.

This trust in the status quo restrains spending, and if small business creates jobs, it sparks the rest of the economy with its risk taking. If your forward motion is on hold this quarter, it is not a good sign. Now, there are some valid concerns. If your business depends on Department of Defense contracts or Defense or Military personnel spending in your neighborhood, you may have some real problems down the road. If you were expecting spending related to looming infrastructure improvements, you may want to wait. If your customers’ spending is related to expansion in your local school system, shift your focus.

However, the investment markets have recently returned to 2008 highs, and, while election year and international uncertainties are always a concern, it seems to me this is the depth and breadth of news we have been looking for. Home sales are picking up, apartment construction is soaring, and retail sales are steady. This brings customers out of doors, spending on home improvement, eating out, getting back to work.

So, what’s in your numbers? Review daily sales revenues and expenses. Extrapolate these “habits” over the rest of the year to chart some indication of where you trend. Adjust the roll out for known seasonal impacts, and mark each week to come. If what you see for the second quarter, based on what is fact in the first quarter, is what you want, stick to the plan. If it isn’t, do what you can now to make it happen. Debrief yourself, your team, and your advisors on what is not working and what can be done to fix October by changing April. Don’t let it sneak up on you!

No graduate business school fully prepares you for the real work of entrepreneurship and small business ownership.  Studying theory, managing numbers, and examining quality processes can only give you the background necessary for what the real world dishes out.

So, while there are good arguments for continuing education, most business and management schools do not have a small business focus. They neither appreciate nor share the daily pressures that we know as small business life.   Here are three areas many business and management schools fall short:

1. Your skill set must be broad and deep.

Despite what you read and have been told, it takes more than hard work. Think about it: when you are an employee, you are responsible for one area of thought and operation, but as a business owner, you have to know about each and every corner and aspect of the company and its operation.

You must have practical skills, like the operating of office machines, phones, word processing, and spreadsheets. You need to know software, such as office, accounting, and tax software. You must master the ins and outs of your production, shipping/receiving, and customer service. You have to be on top of purchasing, supply chains, and billing. You’ll want to know personnel and payroll laws as well as risk management. Even if you delegate some functions, you need to know costs, overhead, compliance, accounting, and so on.

Solution: Be your own best critic. Know what you can do and can’t. Hire the advice you need and study as you grow. The “need-to-knows” can be daunting, but you are better off going into the business with a full awareness of what you don’t know.

2.  The marketplace is not friendly.

The free enterprise system puts you into market competition. You’re entering a world where other businesses want your customers and may not be friendly about it. It may be one thing if you are the only candy store on the county square, but most businesses competitors would rather you were not in the picture.

Be prepared for price wars, false claims, and downright personal attacks. With some stamina and character, you can weather shady practices. You are well advised to avoid the dogfights and foul play, and to focus on your quality and customer service.

Solution: Customers can be selfish. They will shop for price and move their business at a whim. You need to determine their purchasing motivation and be there to meet them with what they want. Structure customer loyalty by frequent contact, promotion advantage, and response to feedback. Build partnerships with your customers, so that their self-interest is in your interest as well.

3. Small businesses cannot afford debt.

Income does not begin the day you open the doors. From before the doors open to well after, money is scarce and start-up costs are high. You have to pay to get it running, and you have to expense the search for new customers. So, you find yourself hurting more than your competition all the while you are bringing in less.

Add, as I would suspect, the necessary costs of supporting your family and household, and debt can be tempting. Trouble is that debt is another expense – interest as well as principal payments. In fact, debt is usually collateralized with something you cannot afford to lose.

Solution: Don’t borrow to start a business – without fully understanding the implications. The more you borrow, the more you reduce your chance for success.

Now, you may find such things discouraging, but I hope not. I am more anxious to see people enter into business ownership with their eyes wide open. Too many small businesses fail despite the hard work of their owners. Proceed with eyes wide open:  hard work is not enough!