Family businesses often happen by accident. The entrepreneur drives the start-up while the spouse and family chip in. Underpaid and overworked, these people are often willing to  sacrifice to make the dream come true.

Serendipity may bring success to a family business; however, the heads-up business owner builds practical solutions for potential family friction into the business plan.

• Identify the members of the family with potential to perform successfully within a structure. “Family” can mean a married couple, parents and children, or siblings and their spouses. In short, there are family members, and, then, there are family business members. Share that picture with the family.
• Separate family issues from business issues. Share an understanding at the very start about what you bring to the worksite and what stays at home. It may take some practice, but everyone needs to know where to discuss family baggage. Everyone needs to know what the process is to solve issues.
• Budget vacation, holiday, and personal time with the family. Keep business out of those moments. However, remember that children are competitive; the best families suffer some dysfunction. So, clarify an understanding for the handling of dependency issues, hostile behavior, and divisiveness.
• Pay fair competitive wages. If early revenues do not permit this, clarify the value of their sweat equity. Create a compensation plan that will reward their effort later – proportionate to their contribution and talent. Seek advice on framing the plan and communicate it clearly.
• Hold regular “tailgate” meetings, family retreats, or key member meetings. Let members vent simmering complaints– within reason. Approach these as learning opportunities. Collaborate and incorporate fairly offered ideas.
• Plan for succession when it makes sense and you are ready. Build cautions into the plan to discourage challenge to the plan. Communicate it well. A well-structured plan should reduce infighting.

Finally, enlist a third party coach – not a crony or other family member. Retain the advice of a specialist in family business matters to get things right from the start and to bounce things off as you succeed at your goals.

The right Small Business Coach can challenge you to set and achieve bigger goals in 2012, while helping you navigate the obstacles.  Know what you are looking for in order to choose the best candidate.  Read on for some practical advice for choosing the right candidate:

Let’s start with what you don’t need in a Small Business Coach:

• Nice is not a virtue. You want someone to hold you to high expectations. If you think you are a good manager, then, you probably have a skill in holding employees to performance accountability. You will best benefit from the advice of someone who practices the same demands. Expect to be pressed to the edge of your comfort zone.
• Expertise is not a priority. You need someone who is a good coach. What you need is cross-disciplinary skills: communication, planning, training, etc. These are valuable transferable skills that help you see the short and long-term.
• Avoid a therapist. Don’t pay someone just to listen to you and all your problems. Look for someone who will turn your path around. You need someone focused on action, plans, and deliverables. You don’t have the time for the coach to worry about your feelings.

So, what do you need?

• Someone you can afford. Bargain basement coaching is not worth the money. It will cost you time and money, and some outcomes may require additional investment. So, you need to be at a point where all this makes sense: the need, the expectations, and the price. Shop available coaches; seek word of mouth; look for referrals. It’s a big decision, and deserves focused investigation.
• Someone you can listen to. Coaching is partly a matter of style. If – and only if – you are ready to take a close look at what you are doing, you need to find someone with the rapport you need to take a few hits. You are paying to be told things you may not want to hear, to get tough about what you have been doing, and to push your face into some bad decisions you may have made. For this to work, you need someone you can work with.
• Someone with a plan. Demand a schedule and agenda in writing in advance. Expect the coach candidate to demonstrate goal-setting and effective planning. Ask to see models and samples of what the coach has done for other clients, and make him/her connect the dots between plan and results. Ask the candidate to introduce you to previous clients with your intent to seek their story of the relationship. And, be sure you talk to more than just one.
• Someone who knows what you don’t know. Remember, you are looking for someone to bring something new to you. Much of this should be in the form of plans and direction. But, you also want insights, product knowledge, marketing strengths, and fresh perceptions about your business. I am reluctant, for example, to recommend a coach who claims to be “all things to all people.” You’d be better off with someone experienced in your line or business or business sector.

A final caution is that you do want to see the track record or credentials of a coach who does this for a living. I am reluctant to recommend the coach who is an out of work MBA. Interview candidates with their experience in mind.

The increasing importance of credit union financing in small business operations and lending has recently been the topic of an SBA Advocacy report. As of this posting, a million customers have moved their checking and savings plans from banks to credit unions. Coincident to the Occupy Wall Street activity and ostensibly prompted by Bank of America’s ill-advised debit card fee, credit unions are swamped by applicants while major banks don’t even seem to notice. What does this “revolution” mean to small businesses?

As recession-bound banks hold back on loans to small businesses, credit unions are taking the initiative. And, with their sudden growth in deposits, they appear ready to move aggressively when Congress raises their cap on loans.

The Small Business Administration watched bank lending to small business decline by 6% in 2010. It also reports credit union financing increased by a comparable percentage. Still, commercial banks lend 200% more than credit unions, so we will have to see if this trend continues. Nonetheless, it’s worth looking at your local credit unions to see what they can do for your small business.

For starters, credit unions account for only 5% of the total lending pool. However, the Small Business Lending Enhancement Act, introduced to Congress in March, could raise the current lending cap to 25% of their assets. This more than doubles their lending potential. With their lending cap raised and their influx of deposits, credit unions will expand, multiply, and hire.

 It is also likely that, as economic confidence returns, lending underwriting guidelines will loosen allowing businesses to borrow more with less secure experience and collateral. Among other things, credit unions are exempt from federal corporate income taxation. They do not belong to the FDIC; instead, they have a separate deposit insurance system and fund – with lower premiums. Such features help them to provide lower-priced products and services. They are non-profits, and this may reduce performance incentives for management.

 Small businesses have been underserved by banks in recent years – despite a $30 billion commitment by Washington. In addition, only 30% of the nation’s credit union lend to small businesses. But, credit unions are seeing gold in the weaknesses in today’s bank market and are upping their staff training to underwrite and market small business loans.

Give it some thought: look at what your local credit unions can do for you, check their credibility with CUNA, move your money if and when it is in your own interest. Remember, that most credit unions – unlike banks – are local and “behave” like small businesses in your community. You may find you have a lot in common.

Running any business is tough enough, but involving family members can make it even more challenging.   Unfortunately, if family members are drawn in, you greatly increase your risk of failure when you don’t handle it correctly.  Here are a few tips to help you successfully navigate those challenges…

I know of many successful family-run businesses. But, such enterprises have their own set of problems, and success only follows solid management.

• For starters, don’t let a family business happen by accident. As often as not, the business starts; then, you call in your spouse to do the accounting, and/or recruit the children to work on weekends or fill in at the counter or phones. Once you have envisioned your business, decide then and there whether this is going to be family based or not. Then, structure it accordingly.
• Imagine a table of organization with job descriptions. Start to formalize the descriptions with skills, knowledge, and experience. Then, decide which relatives could best serve in those roles. Frankly, you have no obligation to include all members of the family, and this would be a first step in strong management. If your brother-in-law or nephew fits your needs, great; if they do not, you might explain what it is you need and what they need to do to fit your needs. But, you have no obligation to please.
• Form a mission statement. It is your job to keep “your eye on the prize.” Call the family together to share your vision. Invite them to help you with the mission statement, but let them know there job is to defer to your leadership. In doing this, draw a simple but firm chain of command and line of authority. You can do this with authority and still maintain the family magic.
• Confirm how disputes will be handled. Friction occurs among people in any business. Somehow, families make it more intense and longer lasting. In a regular business, the manager can resolve conflicts with authority; in family businesses, dysfunction and grudges can ruin things. With a family business, family matters require different handling.
• Take care of this as much as possible up front. Well before, you “open the doors,” let the family know this is a real concern of yours, and solicit input on structured solutions. Let this happen over several planned meetings, so they appreciate the weight of the problem. And, put as much of this as possible into writing. Let these meetings be the first of regular family meetings.
• Include tough subjects in these early meetings. Present and discuss your succession plan and sharing “the wealth” of sweat equity. These plans can and should evolve with time and experience, but everyone should know where your head is at from the beginning. Of course, these plans are best formed and maintained if you have legitimately secured and integrated the family’s input.
• Finally, formalize a system for conflict resolution. The family can survive arguments over Aunt Sally’s gruffness. But, workloads and salary discrepancies are another matter. Structure a “court” for discussion and resolve, and secure allegiance to the policy and procedure.

Communicating your mission, dreams, and plans early, often, and with reasonably democratic participation goes far towards building the substructure you need for continuity.

Creative leverage can mean profits while debt – what some might call “leverage” –  increases small business risk significantly. You don’t profit by becoming a “debt slave.” So, don’t buy into the concept of leverage as making debt work for you.  Instead try out these ideas for creative leverage and tailor them to work for your business.

• Leverage your time. Time is one asset you can use to your advantage. If your business is a service business, for example, there are only so many hours you can work. So, avoid being paid only for your time.

Instead, price the time to cover the cost of hiring or outsourcing the work. Or, in a family business, factor the time worked by family members against their future benefits from the success of the business.

• Leverage relationships. It is much easier and less costly to keep an existing customer than to find a new one. (In my business, alone, it costs 11 times as much to land a new customer, as it is to keep an existing customer relationship.)

So, ask yourself what other products and services you could bundle together to increase your sales per customer. Adding value to what you’re already doing would be to your advantage as well as the customer’s.

• Leverage your technology. Delegate work to specialized equipment or software. Thoroughly explore MS Office to see if you are using all its tools. Look to Google+ and Google Docs to conduct your business on The Cloud. Look into the use of virtual assistants or other virtual specialists.

Again, if time is your asset, free time up by delegating work and pricing your services to include this cost.

• Leverage underutilized assets. Cash reserves, for example, sit in the bank earning little or no interest. Ask your financial advisor how they might be better invested in property or equipment.

Or, consider your space. You might be able to rent unused space in your building or on your lot. You might even share equipment or personnel.

• Leverage your good credit. Goodwill and good credit are very real – though intangible – assets. The community at large has an interest in your success because of what it brings to the community. (Every dollar spent in the community spawns three dollars spent.) Parlay your presence into a local success story.

And, creditors and vendors – without your incurring any additional debt – have a stake in your success. They survive and grow with you. As a customer, you are fee to move your business, so press for maximum service and continued patronage.

It is my belief that debt is simply money owed, a burden to any business. To increase debt in pursuit of leverage is a mistake – a desperate move. It makes far more sense to leverage aspects of your performance directly linked to profits and your success.

Though the economy is showing signs of strengthening, I hope none of us forget the lessons of the past two years. As a small business owner (and a large corporation), you will always be subject to the whims of the consumer and government. So running a lean business is the best choice you can continually make.

1. Reward employees with something other than money. Money doesn’t work to motivate most employees anyway. What do they value? Time off. And, studies show, if they have a few extra days off with pay (you save because you would have paid them anyway-and no bonus costs), they come back more productive, nearly making up for the time off
2. Go to the cloud. Don’t assume you need a particular software. Check for the open source version on the Web including Mint.com, OpenOffice.org, and PrimoPDF
3. Check your business credit card rates and ask for a reduction. 50% of the time, if you’ve been timely with your payments, you will get the reduced rate.
4. Use reward points, rebates and promotions for office supplies if you use a national retailer OR check with your local office supply store to see what they can do for you
5. At least annually, do research to either renegotiate rates or replace your existing health insurance provider, your workers compensation insurance, your liability insurance and more
6. Though it seems basic, small things can add up: buy each employee their own personalized mug for coffee and get rid of styrofoam or paper
7. Talk to a community bank to see what they can do regarding any loan rates you currently have at other banks. They tend to be safer, provide better service and invest in the local community more
8. Watch for redundancies in your workforce. Take some time to find out what everyone is doing. It is my belief that most small businesses could operate efficiently with fewer, not more, employees because so much time is spent wasted, often by you, in useless activities and meetings
9. If you DO need to hire, look for free ways to advertise that position like craigslist and Facebook. Avoid expense services like Monster, Careerbuilder and your local newspaper.
10. Carefully monitor your marketing budget and educate yourself on affordable ways to advertise your business

Succession planning. Heard of it? Too often it is one of those last minute thoughts or assumptions on the mind of a small business owner. If that’s you and you are, well, getting up in years, I’m hoping you’ve given thought to who will replace you as owner or CEO. Most small business owners have involved, or attempted to involve, their sons and/or daughters through the years in the hopes that one of them will rise to the occasion and be a fitting candidate. However, many a company went down the tubes when a disinterested child or grandchild with a sense of entitlement was placed in charge. Just because they are family doesn’t mean it is in their best interest, or that of your few or many employees, to pass the business down to them. 

Making the decision of who will run the company after you are gone requires a real test of will, a lot of truth seeking and a solid relationship with your attorney and accountant. Depending on your age and how invested in the business your spouse or children already are, start setting the expectation early that the person who is most equipped to lead will be left the responsibility to do so-and that it won’t necessarily be a family member. This is also dependent on whether those under consideration are interested in your leadership role.

But how do you determine who those candidates should be? No less that 5 years before your retirement, start doing the following:

• Identify the key people you are most interested in assuming your role
• Start having conversations with them on whether there is an interest in leading-but that you are making NO promises
• Plan on rotating them into a variety of roles and solicit honest, no- holds-barred input from their direct managers on their performance
• Invite them to higher-level meetings
• Start having them lead meetings that you sit in on
• Give them teams to supervise with the understanding that there will be performance input from those team members
• Be transparent. Let them know where they are failing and succeeding, what your fears are
• Continue to encourage learning and leadership
• Continue to have conversations about their commitment, their vision for the business and stay open-minded to their ideas
• If you choose to leave someone not related to you in charge, consult your attorney and accountant on how to protect your family member’s investment in the business

Don’t wait until the last year to explore possibilities. Succession planning should be part of your small business vision from the beginning. But if it isn’t, don’t wait to catch up!

Let’s look back at the year that was 2010 and the most indispensable pieces of marketing advice from My Small Business Mentor:

JANUARY: The Key to Success: Be Relentless! 

FEBRUARY: How to Engage Your Customer 

MARCH: Show Your Customers YOU Are the Expert! 

APRIL: Start Your Daily Marketing Habit 

MAY: The Basics of Mobile Advertising 

JUNE: Newsletters That Get Opened 

JULY: Affiliate Marketing for Small Business 

AUGUST: Cut Marketing Costs and Increase Revenue 

SEPTEMBER: Using An Elevator Pitch 

OCTOBER: Referrals Do the Marketing for You 

NOVEMBER: Paid Search: Yes or No? 

DECEMBER: Geo-Local: Help Your Customers Find You

My family and I wish you and your’s a safe, happy, prosperous New Year! Take a moment and let us know what your pressing small business needs are for 2011 in the comments section below. Thank you for visiting!

Social media has been a common topic on this website, primarily because when I started here it was still pretty new in terms of being used for business. A lot has changed and I’ve got some new advice.

First, yes. Some social media is worth your time and it can be time-consuming if you let it. But to use it well, it doesn’t have to be.

Don’t invest a great deal of time in anything but Facebook. You can still easily and quickly do status updates on other social networks and I recommend Hootsuite (there’s an app for that!) for this. One status update can hit Facebook, Twitter, LinkedIn, Foursquare (watch for a post about this), MySpace and others. I recommend it for the first four (no need to bother with MySpace).

A plus about Hootsuite, in addition to it being an award winning application, is that you can schedule status updates in advance. This saves a ton of time!

What types of updates should small businesses be adding to the online social sphere, especially when they are new? Here are some ideas:

• Restaurants can post their daily specials. One I know of posts a “secret word” in status updates. Patrons who know it get a discount on their meal.
• A realtor posts a short blurb and a link to a property on Facebook
• Bricks and mortar retail establishments publish updates about sales, staff and product lines
• Service providers like HVAC send out reminders that it’s time to check filters or get maintenance done due to weather changes
• If you have a blog, make sure you are setting up your posts to go onto Facebook (there are ways to make this happen automatically or you can add a link)

In addition to doing status updates, be involved in the online community by spreading other users’ information (charities, local events, sports…) via the “share” feature on Facebook. Add photos of your team or store and event dates on the Event tab.

Another effective way to use social media is to consider it for advertising. Facebook advertising works very similar to Google Adwords. It is pay-per-click and you can set demographic details so that your ad shows up just for particular users. Given that there are 500 million out there who are truly engaged in the site, its worth taking for a trial spin.

Summary: use your social media time wisely with a good application like Hootsuite and if you don’t want to, just focus on Facebook. It is still (perhaps even more so) worth your time.

Did you know that 90% of Google’s huge revenue (they just gave all 23,000 of their employees a $1000 bonus AND a 10% raise so they are clearly doing ok) comes from Google Adwords? Clearly plenty of businesses are investing in paid search advertising.

When we talk about search engine results, we are talking about two distinctly different things: organic vs. paid search efforts. Organic happens because you optimized your site to rank high in searches and someone did a Google search and found you. Paid is because you bought ad space to the side of those searches. Both are important (let’s not even talk about pay-per-click advertising on sites like Facebook. That’s a whole other topic!) and both require tinkering for improvements.

For organic searches, to rank more highly on Google, Yahoo and Bing (primarily), your website will need to be “optimized”. I’ve written about this before but suffice to say, you will want meta tags that drive traffic to your site. You can’t always know what these are without changing them from time to time and watching Google Analytics to determine if your organic search traffic has changed. Google keyword search will help you determine some of these.

A blog that has additional content can be helpful as well because it expands the number of search terms that Google can find from a traditional website. WordPress developed blogs draw more traffic than most blog software/sites so consider it can be a better choice.

Pay-per-click paid searches on Google can be confusing. Start small with Google pay-per-click. You have a tiny little window of words so write several different ads. Start with one, watch your results, monitor weekly and then try a  new ad. Track results. Larger budgets for ads don’t always produce results so you will want to monitor and switch that up as well until you have your budget and your ads performing at their peak.

Finally, don’t let anyone tell you definitively that they can perfectly optimize your site. They can’t. Most of what a search engine specialist can do, you can do as well-for free-with similar results.