Does a startup need a board of advisers?

Monday, May 18th, 2009

Dear Norm:
My husband and I own a consulting business that we’ve run successfully for fifteen years. Now we’re planning to start a retail wine business, and we think we need a board of advisers. What do you think?

Dear Leslie,
If you’re talking about an official group that meets regularly, I doubt you need one. A board is useful when you want to take an established business to the next level and you don’t have a management team with the experience to guide you. You might also need a board at some point to enhance your credibility with investors or important customers. For the majority of start-ups, however, a formal board of advisers just gets in the way. On the other hand, it’s always smart to get advice from experienced businesspeople. I’d talk to as many people as I could find with experience in wine retailing and similar businesses. You don’t need a board to do that.
Yours truly, Norm

Permalink  |  Posted in Startups

How should I determine raises for salaried salespeople?

Monday, May 11th, 2009

Dear Norm,
I know that you pay salespeople by salary, rather than commission. My question is, how do you decide on raises? I suspect you must use subjective criteria. If you based raises only on objective sales results, it seems as though you’d undermine the team concept you’re striving for.

Dear Robert,
You’re right. Part of it is subjective. I look at overall company results and at individual performance, but most important to me is the way they work as members of a team. I want to see people helping each other, not competing. I’ll give you an example. One of our salespeople, Patti, had to go out of town and asked another salesperson, David, to attend a meeting with a big account she’d been trying to land for months. When David showed up, there were six people waiting who said they were making the final decision that day. He closed the account, and I give him full credit for that, but I also give three stars to Patti for being able to say, “Okay, I trust the people I work with to cover for me.”
Yours truly, Norm

Permalink  |  Posted in Employees, Salary

How do I stop my salespeople from taking my customers?

Monday, May 4th, 2009

Dear Norm:
I’ve heard you say that—if you run your business right—departing employees shouldn’t be able to take your customers with them. So what am I doing wrong? I give our project managers and salespeople a lot of freedom to serve customers. After a year or two, the employees walk off with the account. Each time, I get the same feeling as when I receive a letter from the IRS.

Dear Charles,
Start by looking at your hiring practices. It sounds as though you could do a better job of spotting salespeople who want to be around for the long term. You also need to be proactive. You’re asking for trouble if you and your operations people don’t have regular contact with customers. That’s the only way to make sure a customer belongs to the company, not to the salesperson. I’m careful not to step on the toes of our salespeople, and they’re happy I’m so visible. My presence gives them a competitive advantage. They’d have only one reason to object: if they didn’t really have the company’s interests at heart.
Yours truly, Norm

Permalink  |  Posted in Customers, Employees, Ethics

What about non-compete agreements?

Monday, April 27th, 2009

Dear Norm,
How enforceable are non-compete agreements, and what’s your opinion of them? I’m an engineer for a converting company and have thought many times about going out on my own.

Dear Victor,
I don’t believe in non-competes, and I don’t have them. They’re difficult and expensive to enforce, and I don’t think you need them if you run your business properly. That said, I think people should live by the contracts they sign if the contracts are legal. In the case of non-competes, that’s a fairly big “if.” Courts tend to interpret these contracts in favor of the employee because they don’t want to prevent a person from earning a living. Obviously, you should get an opinion about your own non-compete from a lawyer.
Yours truly, Norm

Permalink  |  Posted in Uncategorized

Should spouses run a company together?

Monday, April 20th, 2009

Dear Norm,
My wife and I have been married eight years, and I love her to death. A couple of years ago, we started a consulting company, which is doing well, but the challenge of living, working, eating, playing, raising children, and sleeping together is taking a toll on both of us. It’s hard to keep business and personal considerations separate. How can spouses run a company and still maintain a great relationship?

Dear Rich,
I also work with my wife, Elaine, who is our vice-president of human resources. We tried working together shortly after we were married. She quit after one day. Twenty years later, she decided to give it another shot, and things have gone extremely well. “You have to establish guidelines,” she says. “There has to be a clear division between work life and married life. You have to figure out what you can talk about and when; how you’re going to function in each role; what’s acceptable behavior and what isn’t. But that type of arrangement won’t work for everyone. I’m not sure you’ve been married long enough to pull it off. Eight years into our marriage, we would never have been able to do it. If you can’t set down clear guidelines both at work and at home and stick with them, maybe you should think about having separate businesses.”
Yours truly, Norm

Permalink  |  Posted in Family

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