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Loyal employee engagement shores up company strength more than perhaps any other factor. That’s why it’s constantly on every responsible executive’s mind. Your team must execute your business operations with a purpose or your product and service quality will quickly slide downhill. Following the slide, morale sinks and you’ve got deeper problems.

We all need people to show up each day with an eager willingness to collaborate, do their part and be mutually rewarded by our companies’ success.

You can read a lot about employee engagement in comprehensive HR literature as well as top strategic business books. There’s another kind of human engagement that’s almost as vital to your business as that of your key employees. How are your relationships with suppliers and contractors? How’s your supplier engagement going?

“You didn’t build that!” (LOL)

If your company is like most, you probably don’t manufacture every product component or implement every service you deliver to your clients. At a minimum, you probably rely on parts suppliers or subcontractors, whatever your company does. What if suddenly, a couple of them decided they didn’t really care about your business, maybe ran into some issues and ceased to serve your “account.” What if that’s all you and your team were thought of by critical suppliers, an “account?”

The people who run the businesses you partner with need to be solidly grounded and totally dedicated to their clients’ needs. Simply stated, their people need to care about your people. And your independent contractors need to follow your directions as if you’re the boss. You need strong, trusted relationships with your “vendors.” I try to refer to each of my suppliers as a “business partner” or else simply by their name, and my clients get to know me on a personal level as we work together.

We’re (independently) in this together!

Who can say their business runs smoothly every single day? We all know the answer! Whenever my company has run into production or communication problems, every one of my reliable “business partners” has jumped in with both feet through the thick of the issue until it was solved. I’m extremely grateful for my contractor relationships. If you happen to be one of the men and women contributing your talents to our premium marketing services, thank you!

When you are experiencing challenges together with your solution partners, and you sense real dedication and mutual trust among yourselves, that’s engagement!

Call it vendor engagement, supplier engagement or business partner engagement, it’s priceless, just like earning and keeping the quality work of your best employees. Always remember to nurture your relationships for better engagement – both inside and outside your company.

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Don’t follow the leaders down!

This is how I’m seeing things play out in business news as the year 2018 ends. I hope I’m wrong, but this stuff is predictable and I’ve closely studied economic cycles for more than 30 years. Negative chatter is contagious and creates “headwinds” against continued good economic times. But you can set your sails to tack against headwind and make a lot of forward progress.

I’m sorry to say this, but there are no executives of large American corporations who strike me as inspiring moral and ethical leaders. I cannot think of a single one. But there are numerous small business, independent enterprise and nonprofit leaders to whom I aspire and whose example I would like to follow, some I know personally. They are people bent on serving instead of controlling. These are people who stick with principles no matter what, and I’m talking about moral, ethical and economic principles. They enjoy enduring success.

The small business community needs to coalesce around the idea that the prevailing thoughts and decisions made by the leaders of large corporations and government (silent partners) often go against a stronger economy and the good of our country and society.

Do they still teach real economics?

If you subsidize something, you will enlarge it or encourage more of it. If you tax something, you will diminish it. This is a macroeconomics principle – an immutable law of economics.

If you serve your customer with value, you improve his position and therefore build more demand for your products. If you create more work or complexity for your customer and charge him for it in the process, you will damage him and lose his business. He will tell others about the bad experience as well. This is simple microeconomics which follows the macroeconomics principle.

Be solution oriented!

Why not put these immutable economic laws to work for our own businesses and multiply our numbers by example?

Any strong network of small business and enterprise leaders can work together in the markets and within their own companies to more effectively beat back negative economic forces, including politics and negative chatter aligned against them.

Put your best networking, service, sales and marketing game on, starting now!

Growth in 2019, 2020 and beyond is not only possible but probable if business leaders will get in the trenches with their people and demonstrate how much they care about the future. Leaders in great small businesses always do some heavy lifting with their teams to shore up conditions in the company and better serve customers. The also stay committed to their brand identities and work to build their reputations.

Business Growth Tactics for the New Year

In 2019, a strong leader will:

• Work closely with their salespeople and give them real leads instead of simply demanding more calls.
• Spend considerable time on production floors and job sites performing needed tasks and adding production value as well as developing employee relationships.
• Spend a lot of time with customers, learning what they really need, carefully considering how they or someone in their network can meet those needs.
• Be a committed brand manager, constantly nurturing the brand in the market by continually directing and helping to manage strong marketing campaigns.

If a bad recession in the overall economy does happen, your market share and brand awareness will determine how well you ride it out or even grow right through it.

Top-of-mind brand awareness is priceless. Those who have it usually earn it, and they remain in the market like flashing beacons as their competitors fade from the promotional stage.

I’m going to increase my marketing budget now and step on the gas even more during 2019. I also pledge to follow the sales, production and customer service advice listed above.

Are you with me?

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“Get out and sell!” was the mantra I would hear from the customer service reps I once worked with. They knew that their own job security depended on me and a few other guys hitting the streets every day to find new work for our voracious printing presses. Those were the glory days of the sales profession. We felt like unsung heroes as we rode back into the home office with production orders and requests for quotes. If it was late in the year and we were very busy, the office and production crews would start thinking about how big the Christmas bonus would be. Everyone in the company benefitted from the success of the outside sales force and many of them showed their appreciation for us.

The selling environment has changed a lot since the Internet began to connect everyone in real time. Even while outside sales work is done differently today, it’s still outside work.

This means you!

Everyone in the company benefits from the success of the outside sales force which should always include the CEO and most of the senior management team.  If you’re a company executive, even if sales isn’t expressly part of your job description, you are in a strong position to develop new business as a person who influences or makes decisions in your firm.

Clients want to work with people in authority who can speak with complete expertise and sway things if necessary on their behalf. If they work with a sales rep, they want someone in a senior position who is highly respected by management. When you’re negotiating a deal, you want to work with someone who makes decisions, not a staff member who can only submit requests. Meeting face to face with those decision makers usually happens in the field – at their office, at restaurants, coffee shops, conference centers, golf courses and maybe even on boats.

Working alone in your office, diligently executing a necessary task feels safe and comfortable. You’re getting work done, but are you actually making money? Could spending that time having lunch with a referral partner or giving an expert talk at a trade conference lead to a big new customer whose revenues will make a positive impact on you and your people? Of course!

One thing is certain: Not going to the event will guarantee that the new opportunities happening there will not be happening for you! And remember, those “necessary tasks” can always be delegated or rescheduled.

How do the top “rainmakers” spend most of their time? Making rain, which usually includes some kind of dance. It takes two to tango. Most prospective clients won’t be hanging out at your office waiting for you to finish a necessary task on your computer. You must go to them.

Participate with other business decision makers at various networking and civic events:

• Trade shows
• Chambers of commerce mixers
• Trade conferences
• Non-profit fundraisers
• BNI Groups
• Rotary Clubs
• Church Groups
• Toastmasters
• Your idea here…

The selling environment has changed a lot and unfortunately, it’s not quite as simple as “Get out and sell!” anymore. Walking into a non-retail business without an appointment is shunned these days, so physically canvassing and cold calling an area for prospects doesn’t work very well. That’s why the bullet list above is so vitally important for business developers. You need to get out of the office, develop relationships and become a key player in the various places where business actually happens.

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Without a continuous influx of new clients and customers, every company will go out of business in relatively short order. This is axiomatic because of attrition. You can be the “best in the business” and, unless you replace them, all of your current customers will eventually go away for a myriad of reasons.

Invest in the surest investment of all – your own team!

Why do all the most successful firms – those with top market share – always use sharp, crisp, custom images and elegantly produced written and video content? Why do they pump money into all those creative services when customers just want great service and quality products? After all, beautifying your image doesn’t add any value to your end product but instead adds costs that your customers must ultimately pay for. Why not keep your marketing spending as lean as can be and just focus on better customer experiences?

The smart companies that lead their markets also show the most respect for their industries and represent them the best they can – both internally and publically.

Market leaders don’t skimp on the vital stuff such as how well they communicate. Good business communications do not include kid’s stuff graphic design, even if it’s your own kid’s! Your text must be written clearly and professionally, understood precisely at the first skim of your readers’ eyes. It must come from an experienced perspective. Going amateur on content is a big mistake for your brand and will hurt your selling efforts as well.

An industrial titan once remarked. “Trying to save money by cutting advertising is like trying to save time by stopping the clock.” Time marches on and so do your competitors who agree with this idea. You can go ahead and save some marketing money while the competition woos your prospects and customers away with innovative ideas, compelling value propositions and yes, really sharp looking promotions.

If you’re fighting upstream to gain market share or bigger clients, you can at least look as good as your best competitors with a little investment in the quality of your marketing communications. There’s more instant credibility given to the company or brand that invests in itself to sustain growth. This includes consistent professionalism in all of its communications: websites, social pages, brochures, packaging, brand-product design, email, print, signage… It all has to sing the same quality tune so your potential customers will feel more confident about giving you their business.

What’s the right budget that will give your company the marketing and business development lift it needs to stay competitive and gain market share?

According to a Google furnished statistic, “The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin — after all expenses — is in the 10 percent to 12 percent range.” That number is calculated from an average across a diverse range of business categories, so it’s too simple to assume that it would apply to your small or medium sized business. However, it may be an eye-opening benchmark number indicating that businesses need to spend a significant amount on marketing to keep revenues flowing.

Every business should calculate how much to budget for marketing based on the about of profit each customer brings in and how much of that it’s willing to spend to keep bringing in new ones.

AP Photo/Pat Wellenbach

Forbes offers a great piece on how various kinds of small businesses should calculate their budgets based on their own realities.

Most publically traded companies spend a lot more than 7 or 8 percent on marketing, and the total average for companies in the under $25 million segment is roughly 11 percent according to The CMO Survey published by World Market Watch.

Whatever size your business is and whatever industry you’re in, I hope this article provides you insight on the right budget range for your business. For example, let’s say you have a small business with $2 million in revenues, and you budget something like $50,000 a year for marketing. Can you now see that you’re potentially limiting your growth opportunities?

Most companies in the $2 million revenue range should be spending $150,000 or more annually on marketing. A $5 million company should be spending more than double that. Going in the reverse direction, a $250,000 a year business should budget $20,000 or more for marketing services. Do these figures sound reasonable? If not, it might be important for you to figure out how to tie your spending to sales in a way that covers the expense and continually fuels an effective marketing effort.

Is a limited budget limiting your growth and keeping you from getting better sales opportunities?

For the record, I currently invest the equivalent of about 15% of my business revenue in marketing and sales programs which include my website, blogging, email marketing, social media, networking and a little advertising. It’s been working for over 5 years now and my plan is to increase it next year in order to reach my goals.

If you’re in a competitive market and struggling to figure out how to grow without spending more on generating quality leads, you might need to think differently about what “competition” really means. Maybe you need to double or triple your marketing efforts just to get into the same arena with the top brands in your industry. This will give your competitors’ customers a chance get familiar with your name and consider you a good option when it’s time for them to make a change.

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It’s a searing hot business topic out there as it needs to be. Your business can’t compete without strong competitors on your team and Millennials are of age to work your front lines. They need to outperform or compete head to head with more experienced professionals as well as their peers.

“Anxious” is about the best word I can think of to address the concerns of many 20-somethings now populating the workforce. For many reading this, it includes your children and some of your employees, or maybe you can identify personally.

The anxiety may result from built up fears or uncertainties caused ironically by the over-protection of parents, teachers and even coaches during childhood. These kids were often warned about a “challenging and potentially dangerous world out there,” from which they were so perfectly protected! Perhaps coping, adaptation and survival skills haven’t been sufficiently developed because they were never needed while growing up. Some of them still expect a layer of protection or at least insulation from a truly competitive and sometimes dangerous world.

I’m an old X-er or young Boomer, not really sure (born 1963). Three of my kids are in the so-called millennial generation. Based on my own experience as a parent as well as working closely with several Millennials as strategic business associates, I’ll assume some authority and knowledge concerning the perceptions, myths and realities many of us have concerning our future business and community leaders.

Opinions from Experience

This may sound judgmental so please try to keep an open mind here. I’m not out to bash a generation, and if any criticism should be perceived, I am actually taking responsibility for causing the problems as a parent and mentor myself.

Let’s face some cultural facts. This generation has been protected and literally hovered over right from birth through high school. When I suddenly became a parent in the late 1980s, there were all these new devices for babies and kids I had never seen growing up, and there were plenty of babies in my family! Helmets were suddenly required for any kid to ride anything with wheels (or you might be considered a bad parent). To ride in a car, babies and kids suddenly needed special extra safety equipment. Idiot proof warning labels covered all the devices too. And with so much horrifying news of child abduction, we stopped letting our kids out to play in the neighborhood unless we were there – hovering like big nagging drones.

Our children have been extricated from just about every potential hazard we over-protective parents have perceived out there. We feel good about watching them grow up without facing much difficulty or risking any danger. So what are boys and girls to do? They’ve gladly found their amusement in virtual excitement on the screen instead of on the streets or in the woods, park and playground where other kids and nature herself might competitively challenge them.

Sidebar: To illustrate a point, learning about courage and standing up for oneself is out the window today. Bullies used to be no big deal. Now we need a national crisis prevention campaign to protect every child! Before, when the bully was identified and isolated, he was the one who needed protection – usually from his victim’s stronger friends or big brother. My point is that if you’ve never been physically and emotionally challenged growing up, you’ll have no experience dealing with such hardships and won’t know what to do when facing a serious adult struggle (which everybody will at some point). Perhaps young people need to experience more of “the real world” as it actually exists beyond their safe home or fortified caravan.

From their own mouths…

The conference panel members backed up my perceptions of the common millennial stereotype. My youngest business associates have to some degree as well. There is definitely a sense of entitlement among these young people, not for handouts, but for respect and position not necessarily earned. There is also the expectation of a “safety net,” should their own efforts fail. They expect parents or “the system” to bail them out as needed. They lack humility toward older, more experienced coworkers. Authority figures are seen, not as bosses whose directives they should respect, but power figures whom they should impress to gain favor. They are pragmatic in this sense.

By the way, money talks – big time! I may hear argument on this, but money is a very high priority to the millennial generation. Money means security; financial security to fuel a continued safe and comfortable or affluent lifestyle.

Are these generalizations? You will find that every individual is different, so in that sense, yes. It’s no mystery that lots of Millennials are demonstrating brilliance in the workplace every day. I’m fortunate to work with a few of them as they’ve quickly learned to adjust to business realities.

Members of the panel brought to light some of the ways their generation is influencing and improving management styles as well as workplace efficiencies. They were forthright in articulating how businesses can best direct their recruiting and employee engagement initiatives to tap their skills and talents – and of course their growing buying power!

A millennial-age entrepreneur told me why he originally started his business. It was only to avoid having a gap in employment on his resume so he could get the high paying job with all the benefits to fuel the lifestyle his parents gave him growing up. However, having tasted some business success, even though unintentional, he’ll never go back to a “steady job!” All of my experience with numerous Millennials bears out the fact that money is as important to them as any previous generation. This is in spite of all the social cause and “giving back” talk you’ll hear from many of them.

How to Attract Millennials

Knowing how to attract Millennials serves two functions. One is recruitment and the other is selling to them. Of course, if your target demographic is 35 – 50+, selling to Millennials isn’t important right now but branding and recruiting might be. Recruitment was the focus of the recent conference and I’ll channel my insights into the sales and marketing functions as well. The Millennials represent a population boomlet and their buying power will only grow year after year.

Recruiting the Millennial Generation

Let’s cut right to it. Here’s what Millennials are looking for in an employer:

• Stable, reliable employment
• Collaborative work environment
• Coaching and performance feedback
• Latest technology and tools
• Education on the job – paid skills training & advanced degrees
• Flexible work schedules
• High starting salary or fast track to promotion
• Social responsibility and environmental sustainability policies

Providing all of the above would make for a pretty sweet place to work and these features would appeal to anyone in any generation, right? In fact, the Harvard Business Review reported in April that Millennials are not much different than any other generation when it comes to seeking employment. “They want the same things the rest of us do.” But I’ve discovered a twist.

The nub: What’s all the chatter about if there isn’t much difference among generations in terms of desirable places to work? What exactly do we need to know that separates the Millennials from the rest of the workforce? What are they uniquely looking for in a company? From all of my reading and experience, Millennials want a safety net. They had it growing up and realize it isn’t necessarily going to be there for them. They probably sense that the economy isn’t producing the growth rates and corresponding opportunities it did for the Boomers and Gen-X.

Let younger professionals know that your organization can provide a stable and nurturing work environment where there’s room for them to grow professionally. Instill a sense of belonging and team spirit in your company culture. Provide a framework of support designed to encourage open dialog and problem solving. Additionally, put some fun into the work day on a regular basis. And let them suggest what the fun can be, appropriate for your business of course.

Ignoring sales pitches but loving their brands!

This generation grew up using digital technology and the expectation that it would advance, just as it has. It’s the first generation immersed in computers from grade school and the one now accelerating the advance of computer science.

They’ve been bombarded by big brand messages since toddlerhood, starting with the electronic baby sitter. The brands keep following them on every new device up to today’s smartphones – literally handheld supercomputers by the digital standards of the 1990s.

Often preferring to use technology to communicate, Millennials have learned to effectively screen or block incoming messages, especially sales calls. They don’t like being sold to and will avoid direct sales pitches whenever possible. They do, however love their favorite brands and will consume them loyally when courted on their terms.

When marketing to Millennials, most companies don’t need to change their brand strategy or try to liven up their corporate image. They need to work on their tactical messaging to this audience segment. You’re seeing a few insurance companies attempting this rather poorly in my opinion.

Don’t do this!

Farmers and Allstate are currently trying to convince younger consumers that they are really hip and cool. Their ads are transparently patronizing and completely incongruent with their formerly well-established brand identities. My opinion is the ads suck. I doubt they will move the needle in any significant way to win over Millennials.

Do this!

Stay true to your brand and let Millennials know why your value proposition is right for them. A 20-something married couple expecting a baby wants the same key benefit from their insurance company as anyone else; peace of mind. Insurance providers can gain millennial market share, not by creating phony personalities, but by conveying messages precisely relevant to the needs of the young and upwardly mobile. Pictures and storytelling are very effective ways to do this. Liberty Mutual’s current campaign uses this approach – targeted, tactical, story-based messages within their authentic brand framework.

Brands that stay true to their DNA and speak to the specific concerns and desires of Millennials will do just fine in this market segment. Remember, just as Harvard Business Review points out, “They want the same things the rest of us do.” The major difference is they gravitate more towards predictability, safety and security.

With a network of support under their feet, Millennials are willing to dream and take risks. With coaching and constructive feedback, they will eagerly work to improve situations and usually exceed expectations, having the resourcefulness you might expect of a very tech-savvy generation.

You might be tempted, but the last thing you want to do is try to impress and flatter Millennials like some of the insurance companies are right now. They will not respond to advertising that is just thrown at them. Marketing is a two way street today and Millennials want brands to respond to their feedback, not just in messages but in better service action and improved product development. Get them on your team, support them properly, and they will be eager to help you improve your services and products. They will gladly help you sell more to every generation that does business with you.

The post Marketing to Millennials or Missing the Money? appeared first on Chuck Sink Link.

Most of us are stuck with browser based online meeting tools with often cumbersome and buggy conference call hookups by phone. Screen sharing is good, but only when the Internet speed is keeping up in all locations and synced on the various screens of all meeting attendees. In a recent online meeting, a vendor and I had screens several seconds to a minute apart. We basically had to punt and just have her walk me through several tasks “blind.” The meeting took more time and accomplished less as a result.

Generally speaking, the larger the group, the less productive the conference call. If there are only 3 or 4 people on a call, then everyone can keep track of who’s who and remain engaged in the disussion. Go beyond 6 or 7 attendees and it starts to become a confusing if not embarrassing free for all.

Exhibit A is a dramatization of a typical corporate meeting via conference call. I love this video because I have exprienced every single one of these conference call fails in my career. Roll it…

Okay, so what’s the solution to having more productive remote meetings and conference calls? I would start with scheduling fewer of them and consider intelligent alternatives. A group email by a skilled manager can often accomplish more than an hour of production time spent by a dozen semi-engaged professionals.

Could a project management system accomphish more by allowing each team member focused and transparent collaboration in the cloud? In my experience, yes. I was on a big project team with Xfinity as the client. All of us on the project (about 2 dozen people); agency, contractors and client shared workflows and documentation transparenly, seamlessly and collaboratively – with timely cooperation by every member. We reserved conference calls only for high level discussion with a few key players. The rest was all done on Basecamp. Every communcation and bit of production could be tracked, accounted for and acted on!

Before you schedule your next conference call, consider the technology glitches and communication limitations. Most importantly, consider the experience of the attendees. Will it be meaningful, engaging and productive, or will everyone be relieved when it’s over?

The post The Dreaded Conference Call appeared first on Chuck Sink Link.

According to the SBA, over 70 percent of registered American businesses are sole proprietorships. The vast majority of these businesses have one employee, the sole proprietor himself or herself. They are the self employed. The “one man band” industry is big, and more lucrative than many sales people may realize. It may be more accurate to refer to this group of small businesses as an economic sector, rather than an “industry.”

The variety of services and products this diverse set of entrepreneurs provides puts them in a class of business consumers that’s impossible to define narrowly. They fall into no vertical market category. The only common denominator among this group is the number 1. They work independently but not alone. They have dynamic organizational structure in the form of a network. Their relationships are necessarily strong for them to sustain their businesses.

Successful solopreneurs tend to be trusted advisors to their clients and therefore have significant influence in the market. Some examples:

• An independent management consultant could make recommendations that influence major industrial contract decisions. Winning his approval could be required to land a huge sale.
• A local real estate agent could be the connection you need to sell software to the largest mortgage company in the region.
• The busy carpenter you meet at a Chamber mixer could be your first bookkeeping or CPA client.
• A freelance writer working from home could bring you a couple of your largest website clients.
• The self-employed professional (with no recent pay stubs) could grow to become a solid commercial banking client.

The moral of these bullets is that you just never know who’s who until you find out whom they know and work with. There’s a type of customer referred to in old sales jargon as a “sleeper.” A business person you discover working from home or from a small office with no staff could be assumed to have no real budget behind their humble operation. While there are many struggling start up solopreneurs who seek freebies and might waste your time, you can’t tell by appearances alone whether they offer opportunity or not. You need to have a conversation and hear what they do. Check out their business network and work history before deciding whether it’s worthwhile to engage in business. A real “sleeper” could end up being your best customer or referral connection.

Small Power!

The solopreneur sector is growing out of the necessity of “the new normal” – the economic conditions that have stifled growth and permanently eliminated many corporate jobs. Highly talented and skilled people have, in record numbers, discovered they can put their ambition and talent to work in a newly frugal marketplace that welcomes smallness, simplicity, low overhead, nimbleness, cost effectiveness and independence.

When people suddenly get laid off without another job lined up, most of them file for unemployment compensation and start looking for a new job. There is a perceived dependency on steady income, healthcare benefits, vacation time and a regular work schedule. The organization feels like a safe and comfortable place to work and becomes almost like a parent provider for the family. The prospects of starting a business with no immediate income and predictable stream of paying customers is horrifying to most people with a mortgage, college loans and car payments. I know this feeling intimately because I’ve been there. The aspiring entrepreneur with high family expenses and no start up capital needs to believe it can be done. They need faith in something bigger than themselves because no unaided person can build an organization by himself.

Economic modesty is privately disparaged by some in the professional community. Nobody wants to admit they can’t afford to replace an old car or take a trip whenever they feel like it. It’s a cultural thing. Some people with means may perceive that those who haven’t yet turned the success corner probably never will and should be avoided as time wasters. Body language often conveys this attitude. Thankfully for entrepreneurs, there is usually a curious person with an open mind somewhere in just about any crowd.

An Untapped Niche?

I’ve personally seen distressed individuals lose jobs and take the leap to start a business. They came across as a bit needy at first. They persevered through the startup struggles during the first few years and now operate vibrant, growing businesses, buying all kinds of products and business services to keep running. A few of my compatriots fit this profile and we can tell you our stories.

For the start-up solopreneur, there is nothing more empowering than other solopreneurs or small businesses willing to mentor and provide affordable needed services. Here, relationships are better than cash. Money, once spent, can’t keep providing anything. Strong relationships and mutual collaboration are the wellsprings of business sustainability and growth.

Every bootstrap business founder in the world can look back to the early relationships that saved his butt and provided springboards to profitability; profitability that today is reinvested through the purchase of capital assets as well as operational supplies and services. Many of these business owners like to remain small, nimble and independent. They don’t usually have the visible trappings of other businesses but they do have money to spend and colleagues to recommend.

In some cases, it’s a good idea to help support the one-person startup business that has a need for your services by loosening firm prices, waiving tight credit terms or spending a little more time with him or her. As their company grows, so will your business as they remember who their real friends are.

The post Tapping the Business Network of One appeared first on Chuck Sink Link.

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Good chemistry can sometimes spread a blind over terms & conditions in a formal business contract that would otherwise be negotiated out. Mutual goodwill and good vibes all around bring out a CEO’s pen and the potentially onerous contract terms are overlooked for a prompt authorization signature. “Let’s just do this” is the consensus feeling among both teams.

The length of the honeymoon period can vary but it usually has something to do with a transition of focus – from newness to the anticipated results of the new product/service. When things are working well and money is being made, the contract is irrelevant and forgotten. When product or service performance fails to meet expectations, that piece of paper is pulled and reviewed. Then those onerous terms begin to glare.

If poor performance continues, the client executives begin to think about ways to end the relationship early and learn from the experience. Goodwill may still remain at this point but a serious discussion must ensue. The vendor’s terms include stiff financial penalties for the client to pull out before the end date. Essentially, the client is required to pay good money and receive nothing, only because both parties could not anticipate or recognize a no-fit situation. Some companies try to protect themselves with contracts that assure they will receive every last penny, even if paid reluctantly under strict contract enforcement.

Onerous contact terms are often in the form of financial penalties for early termination. They can also be in the form of “technological handcuffs;” purposefully making it costly and tedious to make a change. Large home security companies and other technology based firms are known for this. It may work out for them in the short to medium term but eventually people will migrate to suppliers who perform well and allow them to pay as they go.

While contracts are necessary to formalize business relationships and set terms of agreement, there needs to be a fair and non-burdensome escape route for both parties. My opinion is that companies attempting to protect profitability through enforcement rather than value performance are aware of their own potential deficiencies and may be hiding them.

If you’re a client willing to pay good money for products & services, the implied contract of value for payment is what’s important. The last thing you want is a resentment stemming from being locked into bad deal.

Here’s the kicker. Customers very often come back to the “old girlfriend” (or boyfriend) after checking out the “bar scene” of the marketplace and finding it wanting. Make sure your last date ended on an amicable note! In business, we can still be friends while seeing other people.

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