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Thursday, February 14, 2019

Lesson #309: The Risks of Candidates Climbing Back Down the Corporate Ladder

Posted By: George Deeb - 2/14/2019

Our brains have been wired to think about our careers going up the corporate ladder over time.  A manager, becomes a director, becomes a...



Our brains have been wired to think about our careers going up the corporate ladder over time.  A manager, becomes a director, becomes a vice president, becomes a president, etc.  But, if you think about that structure, there are a lot fewer job positions the further you go up the ladder.  An example typical company may have 125 managers, 25 directors, 5 vice presidents and 1 president.  So, the odds of moving up the ladder aren’t really in your favor, with 80% fewer positions at each next level.  But, people need to make a living.  What happens when an employee needs to go back down the ladder, to find more open positions?  Is that a good idea for you to consider that candidate as a hiring manager?  Let’s find out.

DOES THE CANDIDATE HAVE THE RIGHT SKILLS?

In this post, let’s talk about the sales department as an example.  Most “upper ladder” sales managers have been “lower ladder” salespeople at some point in their past careers.  So, it is highly likely and logical that a sales manager most likely has the knowledge and skillsets required to succeed as a salesperson again.  But, to be clear, the job of a sales manager is completely different from a salesperson.  The salesperson maintains client relationships and closes sales all day, and a sales manager manages and mentors the salespersons all day, to make sure they are hitting their agreed upon targets.  So, making that shift back down the ladder, really means taking on a completely different job again.  You just have to be sure that candidate truly has the appetite for that change.

DOES THE CANDIDATE HAVE THE WILLINGNESS TO DO THE JOB REQUIRED?

Continuing this example, once a sales manager gets used to the tasks of being a sales manager (more in the office, less travel, less repetitive tasks, the prestige that comes with the role), for many, it is really hard to get back into a quota hitting sales producer role.  But, that is a more of a general guidance.  There are exceptions to that rule.  Maybe a sales manager got promoted, and realized they don’t like managing people, and actually prefer the “thrill of the hunt” of being a salesperson.  So, it is really important you ask the right questions during the interview process to ensure that candidate will actually be happy doing the work required in that “lower ladder” position.  Understanding that many will say whatever is required to get the job, so buyer beware.

DOES THE CANDIDATE HAVE THE RIGHT COMPENSATION EXPECTATIONS?

In addition to the role changing at lower lowers, the compensation is typically lower at lower levels.  So, let’s say that Vice President was making $150,000 and now they are looking at a Director level job that makes $80,000.  Once a worker gets used to living off a higher salary, it is really hard for them to make ends meet on a much smaller compensation.  The only times that works out is if the role is combined with material other incentives (like an aggressive commission plan or equity upside to make up the difference), or if they are older in their career (having built up a big savings account to live off of, and perhaps are self-aware of their need to reset their target role and compensation expectation to have a better chance of getting employed at their age).

SHOULD I BE WORRIED IF SOMEONE IS WILLING TO TAKE A PAY CUT?

My off the cuff answer is yes, someone willing to take a pay cut could certainly trigger a concern.  But, it doesn’t necessarily mean it is a deal breaker.  As discussed above, if other incentives are in place, or there is a logical “story” with this candidate, you may be perfectly fine.  Remember, what you gain with an “upper ladder” candidate, is all that extra years of experience that comes with that.  So, if you can get comfortable with the situation, it is like getting a Porsche for the price of a Toyota.  But, buyer beware.

DOES THE CANDIDATE PRESENT A FLIGHT RISK, AWAITING A BETTER POSITION?

Based on my experience of hiring people over the years, once somebody gets used to getting paid at a certain level, they are going to try to maintain or exceed those levels in future jobs.  So, if they are taking a job with you at half the compensation, without a matching good “story” or incentives, that opens the door to those candidates continuing to look for new jobs, even after they have accepted yours.  But, again, that is a general rule of thumb.  That may not be the case in all scenarios, so do your due diligence and make a judgement call.  For example, someone approaching retirement looking for their last job before they retire, could be perfectly fine and worth the risk.

WILL THEY HAVE THE RIGHT ENERGY FOR THE JOB?

Generally, a person’s energy declines with their age.  But, that is not always the case.  I have worked with many people in their 60’s whose energy levels exceed that of people in their 20’s.  Another way to think about this:  older “upper ladder” employees are typically more efficient in how they work, so whatever you think they may lack with energy, they should more than offset that risk with efficiencies they have honed with their prior years of experience. 

IS IT POSSIBLE FOR CANDIDATES GOING DOWN THE LADDER TO RESULT IN A GOOD OUTCOME?

As you have read above, a lot of things have to go right for someone going back down the ladder to result in a good outcome for your business.  But, that does not mean you should close the door on that scenario in all cases.  You need to assess each candidate on their own merits.  What is their “story”?  How do they answer your questions on the above topics?  Do you believe they can live on a smaller compensation and have the energy and appetite to be successful in that “lower ladder” job?  This situation is laden with potential pitfalls, but it most certainly can work out for the best.  Do your homework!


For future posts, please follow me on Twitter at: @georgedeeb.



Friday, February 8, 2019

Lesson #308: Want to Grow? Complete One Material Action Per Day!

Posted By: George Deeb - 2/08/2019

When you are running a small business, it is really easy to get distracted.  Firstly, your own CEO job most likely has a lot of differe...




When you are running a small business, it is really easy to get distracted.  Firstly, your own CEO job most likely has a lot of different tasks, from chief strategist to chief bottle washer.  Secondly, your team often has many demands on your time, to help point them in the right direction on their projects.  And, thirdly, it’s just too easy to get sucked into the random inbound contacts that come into your email box or through social media.  All I can say to you entrepreneurs who are “floating in the wind” of poor time management is: unless you are doing at least one material thing each day to move your business forward, towards new revenue or profit heights, you are never going to grow your business as quickly as you could be.  Allow me to explain.

WHAT IS A MATERIAL ACTION?

To me, a material action is something that has meaningful revenue or profit implications from its output.  On the revenue side, it could be things like launching a new marketing campaign, or making a new sales call, or ideating a new product line, or expanding into a new target-customer or geographic market, or hiring a new salesperson, or negotiating business merger opportunities, etc.  Anything that will drive new revenues.  On the profit side, it could be things like cutting your cost structure, or improving your business efficiency, or improving your company morale and productivity, to name a few.  Anything that will drive higher margins for your business.

WHAT IS NOT A MATERIAL ACTION?

On the flipside, there are a lot of demands on your time that you think may be important, but just are not a material action, as defined above.  This could be things like producing your monthly financial statements, or posting to your social media accounts, or writing a new monthly email newsletter, or managing your ad agency, or doing one-on-one meetings with your direct reports, or running payroll checks, or upgrading your systems, or relocating your home office, etc.  Yes, these are important tasks that need to get done.  But, they are not going to propel your business to the next level.

BUDGET MORE TIME FOR MORE MATERIAL ACTIONS

I bet if you did a critical assessment of how you are spending each of your working hours, most of you are spending the vast majority of your time, if not all of your time, on “less material” actions.  To me, if you are not spending at least 20% of each day on “material actions” you will not have a reasonable chance to grow your revenues and propel your business to the next level.  So, it is important that you actually carve out “material action” time into your daily schedules.  For example, maybe you block out 8am-10am each day for you to think and act strategically and materially about your business.  Note that I intentionally did not suggest 3pm-5pm each day, when you are most likely tired and not doing your best thinking.

CASE STUDY—PART 1 (THE GOOD)

We recently acquired a business in February 2018.  At the time, they were doing around $2.5MM in annual revenues.  Within four months of acquiring the business, our annualized revenue run rate had doubled to over $5MM.  How did we do that?  We focused on material actions to drive the business forward.  We quadrupled our marketing budget, hired a new ad agency, we launched an SEO effort, opened new sales and marketing channels, expanded our sales team, grew our margins, etc.  Our focus was on driving revenues as quickly as we could, and our time was firmly focused on making those material actions happen.

CASE STUDY—PART 2 (THE BAD)

In continuing the above story, with an increase in revenues came an increase in time that was needed on “less material” projects in the months that followed.  We learned our CRM could not handle the extra volume, and we needed to upgrade to a different CRM, which needed to be researched.  We learned our product information on the website was out of date, and needed to be updated.  Our product offering needed to be fine-tuned, to make the business more scalable.  Our ad agency suggested we make some technology changes, which resulted in some unexpected hiccups and fixing time required.  In doubling our staff size, came the review of hundreds of resumes and dozens of interviews.  Sometimes those hires worked out, and other times they did not, spinning our wheels right back to where we started.  Quickly, the time I had to focus on “material” projects, started to get consumed by “less material” projects.  And, guess what happened: sales growth started to slow down!!

HAND OFF LESS MATERIAL WORK TO OTHERS

I get it, small businesses are typically under-capitalized and don’t necessarily have the luxury of large teams of staff to help leverage your workload.  But, even in small businesses, you need to figure out how to keep yourself moving the business forward with “material” projects.  Where you can, hand off the “less material” work.  Let your bookkeeper produce monthly financial statements.  Let your head of marketing manage your ad agency.  Let your head of technology review various systems needed.  And, take yourself out of that process, at least until the busy work is done and you can review the final output of that work.  Don’t let the “less material” work get in the way of you having the time required to drive the business forward by completing "material" work.

CONCLUDING THOUGHTS

Executives in small businesses are typically very busy people, wearing many different hats at the same time.  The real challenge you will have is making sure that 100% of your time is not consumed by “less material” projects.  You need the discipline of: (i) knowing what projects have the highest odds of moving your revenue or profit growth to the next level (which is an art of its own); and (ii) making sure that slotted time to work on “material” projects is actually getting reserved to make sure that work gets done.  Remember the scene in the Pixar movie “Up”, where the dog kept getting distracted by the squirrels running by?  The “less material” work you doing are “the squirrels”, distracting you from where your focus needs to be.


For future posts, please follow me on Twitter at: @georgedeeb.


Saturday, February 2, 2019

Don't Let Short-Term Thinking Undermine Long-Term Success

Posted By: George Deeb - 2/02/2019

I recently met a business owner who made 100 percent of her decisions based on how it impacts the immediate cash flow of the business. A...



I recently met a business owner who made 100 percent of her decisions based on how it impacts the immediate cash flow of the business. And I mean every decision -- from which accountant or lawyer to advise the business, what marketing could drive revenue this minute, all the way down to minute things like figuring out which credit card would yield immediate cash back rewards on expenses. Some of this is admirable, but mostly it is completely short-sighted and hurting her business long term. I get it. Most entrepreneurs are cash starved and looking to save every penny they can. But, in this case study post, you are going to learn that cutting pennies today, could be costing you millions of dollars tomorrow. Allow me to explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.



Sunday, January 27, 2019

[NEWS] 2019 Triangle Tweeners List Announced--Features Restaurant Furniture Plus

Posted By: George Deeb - 1/27/2019

For the last few years, Scot Wingo , the serial successful entrepreneur in the Raleigh-Durham area who founded Channel Advisor and Spif...




For the last few years, Scot Wingo, the serial successful entrepreneur in the Raleigh-Durham area who founded Channel Advisor and Spiffy, has been keeping his finger on the pulse of all the great startup activity taking place in the growing Triangle-area startup community.  He maintains an annual list of "Triangle Tweeners" that are growing startups with revenues between $1MM and $80MM that are "off to the races" and the local Triangle-area ecosystem should support.  The word "tweeners" means the listed companies are in between early seed-stage startups that have not yet achieved their proof-of-concept, and later stage businesses that have grown beyond venture capital stage and into private equity stage.

Scot published the 2019 Triangle Tweeners List last week.  So, if you are curious which companies to keep an eye on, in terms of future potential investment returns in the Triangle area, this is your go-to list of up-and-comers.

And, as a pleasant surprise, Red Rocket's portfolio company, Restaurant Furniture Plus has made this year's list and was honored at the first annual Triangle Tweeners Awards event last week (see George Deeb accepting this award on behalf of the Restaurant Furniture Plus team in the photo below).



No pressure now, Scot!!  We'll do our best not to let you and the local community down.  Thanks Scot for all the effort you put into maintaining your annual Triangle Tweeners list.  It is a tremendous service to the local community, and helps investors and executives outside the region know all the great startup activity that is happening in town.


For future posts, please follow us on Twitter at: @RedRocketVC.  And, be sure to follow Scot Wingo at @scotwingo for future years' updates to his annual Triangle Tweeners list.


Friday, January 25, 2019

[VIDEO] George Deeb Discusses Business Coaches and Mentors on ASBN

Posted By: George Deeb - 1/25/2019

I was recently interviewed by the  Atlanta Small Business Network  (ASBN), an online "television network" serving the small bu...



I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about business coaches and mentors, and how they can help your business.  I thought this video turned out great, and I wanted to share it all with you, to help you determine if engaging a business coach (like Red Rocket) is right for you.  I hope you like!!



The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.


For future posts, please follow me on Twitter at: @georgedeeb.


Wednesday, January 23, 2019

Lesson #307: Marketing Wisdom from Seth Godin

Posted By: George Deeb - 1/23/2019

I recently attended the annual Internet Summit in Raleigh and had the pleasure of hearing their keynote speaker,  Seth Godin , share his...


I recently attended the annual Internet Summit in Raleigh and had the pleasure of hearing their keynote speaker, Seth Godin, share his marketing wisdom with the hundreds of eager listeners in attendance.  If you don't know Seth, he is an entrepreneur (founded Squidoo and Yoyodyne), blogger, best-selling author of 18 books and a member of the Marketing Hall of Fame.  So, when it comes to marketing, you can rest assured Seth knows what he is talking about and you need to listen.

His presentation at the Internet Summit was more of a Q&A format with the audience.  So, it was a little random in terms of the topics discussed.  But, there were some juicy nuggets worth sharing with all of you.  Here were the highlights, paraphrased as best as I could remember it.

BUILD A PRODUCT THAT PEOPLE HAVE TO TALK ABOUT

You want to be building a business that people are talking about at the water cooler; a business that offers the customer "status" for being associated with it and "satisfaction" for solving a real pain point.  He gave the example of people taking out their mobile phones, opening their Uber app for the first time and telling the person next to them to "watch this", as the app summons a car on demand.  The more people that are positively talking about your product, the more free word-of-mouth marketing support you will get.

FIND YOUR NICHE AUDIENCE AND OWN IT--IGNORE THE MASS

The mistake that many companies make is trying to be all things to all people, going after as large a mass audience as possible with their marketing message.  Seth thinks that is a huge mistake, especially for early-stage businesses. You need to focus on one niche, smallest-viable audience and "own it".  Serve it better than all others in that space, while "shunning the non-believers".  And, make sure you are preaching your gospel to the right audience, where your message will most resonate.  Seth gave the example of an English speaking comedian would have little success telling jokes to a room full of Italian speaking attendees that wouldn't understand the jokes.

TELL A BETTER STORY THAN YOUR COMPETITORS--CREATE TRUST

The best way to close a sale is to create trust.  And trust is often a major hurdle in low-trust industries.  Seth gave an example of him personally hiring an HVAC firm to repair his home, having to decides between dozens of options, unclear on who is the best at their trade.  He didn't care that a vendor may have had a higher price, when he saw the names and phone numbers of all his nearby neighbors (that he trusted), listed is references for the business.  That is all he needed to see; if his neighbors were happy with the service, there are high odds he will also be happy with the service.  So, you want to give great service, to get all your customers singing your praises, and serving as references for others.

REMOVE THE TENSION FROM THE SALE PROCESS

Most sales processes create "tension" for the buyer.  Maybe your product will create work for them, or is a risky proposition for their business, or will make them look bad to their boss, or whatever.  And, the bigger the company is, the more tension there will be, with many more decision makers involved in the process and higher levels of bureaucracy.  You need to remove that tension right from the beginning.  You need to share insights and case studies that will calm them, and instill confidence in them that they are making the right decision to move forward with you, despite all the potential perceived hurdles.

INTEGRATE SALES AND MARKETING

Many companies have their marketing teams managed separately from their sales teams, oftentimes pointing fingers at each other when things go wrong, or when there is work to be done.  Seth believes this is a huge mistake.  Marketing and sales needs to be managed together in one department, as they truly feed each other as one well-oiled machine that feeds and learns from each other.

HIRE THE BEST TEAM POSSIBLE

The quality of your team is everything, and you want to hire the best team possible.  Which isn't always easy in a tight job market like today.   Seth gave the example of Intel empowering their employees to hire every smart person they met while doing business with other companies, with the message "you are hired with a 10% raise over your current salary" on the spot--no need to interview, no need to worry about compensation, we love you that much.  Seth also gave the example of him putting a $40,000 full page recruiting ad in the New York Times, where people thought he was crazy.  But, the ad stood out from the clutter of normal job postings, was talked about in the media, and attracted tons of great talent that made the investment entirely worth it.  So, think out of the box in your hiring methods.

MEASURE AND OPTIMIZE EVERYTHING

In most marketing departments, the team believe they can measure and optimize their direct response marketing activities, but they can't and don't measure their branding activities. Seth believes that all efforts inside the marketing department need to be measured and optimized, including branding.  So, refuse to believe branding is unmeasurable, and create the right metrics to ensure your branding efforts are hitting your desired targets.  In today's digitally-centric marketing world, everything can be measured and optimized.


Hopefully, you agree there were some great insights here that can be applied to all of your businesses.  Thanks to the Internet Summit and to Seth Godin for your inspiration to me in writing this post.


For future posts, please follow me on Twitter at: @georgedeeb.


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