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.

Whether or not to register a TLD – or Top-Level-Domain – is the newest challenge in front of small business owners. It’s not an easy decision and requires some thought.

Internet domain names are registered with the Internet Corporation for Assigned Names and Numbers (ICANN). They have filed 100+ million names which do not admit duplication. So, for example, if the name www.maria’srestaurant.com is already taken, you can’t call your restaurant Maria’s or you need to find an alternative for your domain name. Top-level-domain names will open wider categories and optional choices. A new TLD choice allows you to distinguish your business from others with similar names, others in the alphabet, others without your performance standards. It is a marketing boost. If you are registered, licensed realtor, you can separate yourself from the pack; yours will be an exclusive address in an exclusive directory. And, ICANN will be there to police the exclusivity.

But, clearly, there are critics and those who don’t see the need. There is a short and long-term expense. The cost to apply for the TLD is no big issue, but there are immediate and subsequent costs in marketing materials in advance of, during, and following the re-naming. This involves planning, marketing materials, and stationery and billing. Owners have to decide on the timing for this – and the subsequent value. In addition, apparent changes in direction threaten customer goodwill. Customers establish relationships with websites; they learn to navigate them, know where to find information, know how to contact you through the site. You may not want to jeopardize this.

In a poll offered by The Wall Street Journal, 53% of respondents think the idea of a TLD is a good move while 46% do not. That split indicates some lack of clarity on this issue. Small business owners haven’t had very specific labels in the past. The web address usually ends with a .com, .biz. .net., or .org. TLDs offer very specific identifications, such as, .realtor, .contractor, .restaurant, .florist, and the like.  

Every small business has been or will be approached sooner or later to purchase new domain names. There are aggressive and numerous campaigns to sign you up with wildly contrived IDs. They layer on costs for international addresses and renewal fees. The ICANN reputation is singularly positive. It’s history and processes are transparent, and not a bad place to place your trust. The small business owner’s decision is individual:  investigate the options, the process, the expense, and the value to your business at this time.

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.

Franchise opportunities bring many entrepreneurs into the world of small business. Many people hunger for the success of many franchise owners - and overlook the failure of many who try.

By definition, a franchise is “a business system in which private entrepreneurs purchase the rights to open and run a location of a larger company.” McDonald’s, Burger King, Jack ‘n the Box, right? Yes, but the franchise world is bigger than fast food restaurants. It includes convenience stores like 7-Eleven, hotels like Hampton Inn, hair stylists like Cost Cutters, and plumbers like Roto Rooter.

Depending on the franchisor’s requirements, the franchisee boards the brand name ‘success train’ in exchange for upfront money and a percentage of revenues thereafter. The business owner (franchisee) receives training, supplies, product, advertising, and a range of support systems – just about everything to make the franchise work. Yet, there are downsides.  Among them, the franchisee surrenders independence. The franchisor has invested big bucks in development and is not about to let a first time entrepreneur run it into the ground. Again, depending on the franchisor, the franchisee can expect a complicated, multi-faceted contractual relationship.

Interestingly, there are a number of franchises available for start-up at reasonably accessible costs. For example, Entrepreneur lists 50 “low-cost” franchise opportunities. Among the 50 companies listed, there is a wide range of franchise fees, royalty fees, length of agreement, and so on. Additionally, there is a variety of expectations, cash on hand demands, and net worth demands. You would be well advised to work with an attorney specializing in this arena and to examine the nature of support and training in meticulous detail.

One thing I should bring to your attention to is the nature of the franchises on the list. Almost all of the 50 are service franchises, some of which can be run from home. Almost all of them address lifestyle issues: home/office cleaning services, tax preparers, exercise classes, training lessons, carpet cleaners, travel agencies, landscape maintenance, and pet care. In fact, seven of the top 10 are commercial or residential cleaners. These choices reflect an economy that assumes a future where consumers will be employed. These future consumers will look to keep up their homes and businesses.  These are conservative spenders who are less likely to eat out or sleep over at a franchise, but who are more likely to spend on home improvement and self-development.

Such opportunities are loaded with concerns that are subtle and not apparently part of the upfront costs. For example, your research has to determine the reputation for support from the home office; such support is part of your purchase, and if it isn’t there, you have been scammed. Upfront costs and royalties are intangible until you run the numbers, so get a fix on how this rolls out. Franchise contracts are usually unilateral and favor the franchiser; make sure you can live with those implications. Also, make sure you can meet and exceed the high productivity requirements. Finally, only you can figure out how long you are willing to owe your royalties and loyalties – to “the company store” – without resentment. If you don’t like the arrangement now, your sentiment is unlikely to change in the future.

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.