Should I fire when I’m not sure I can find replacements?

Monday, April 13th, 2009

Dear Norm,
After my mother died, I took over her business. I hired a girl, who brought along a friend, and I reluctantly hired her, too. I’ve been living a nightmare ever since. These women drive me crazy. They abuse my kindness, abuse my phones, misfile, can’t type, mess up my computers, complain constantly, spend all their time talking to one another, and never complete assignments. Yet I’m scared to say anything for fear I won’t be able to replace them. The people I’ve interviewed want benefits, and my business is too small to provide them. What should I do?

Dear Renee,
Fire them both as soon as possible, and do it on your own terms. What kind of life do you have with those people around? You deserve better, and you’ll feel better as soon as you make the decision to let them go. Believe me, you can replace them, even if you can’t afford benefits. Maybe you can offer something else—a flexible work schedule, for example. Find new people, train them over the weekend, and have them start on Monday. When your two current employees come to work, tell them they’re no longer needed. You may have to put in extra hours for a few weeks, but your life will be easier in the long run, and you’ll be happier.
Yours truly, Norm

Permalink  |  Posted in Employees, Hiring

An employee’s position has outgrown them. What do I do?

Monday, April 6th, 2009

Dear Norm,
About two and a half years ago, I hired someone to be the operations manager of my company. He was the perfect fit for my business at the time. Now, however, the company has outgrown his ability to handle the job. He is still an asset to the team but not in his current position. I would like to keep him on the bus and move him to a different seat. It’s a tough situation. He is thirty-three years old and has a family. But I feel I must do something. Any suggestions?

Dear Eric,
We all wind up in your situation sooner or later, and I agree—it’s tough. You feel guilty because it’s your fault for putting him there in the first place. I used to try doing what you’re suggesting, but things seldom worked out well. The issue was compensation. If I cut a guy’s salary, he would be resentful. If I didn’t cut his salary, I would become resentful. You need to think clearly and unemotionally about this situation. If you have another job on the same pay level that the guy is suited for, by all means, move him over. But don’t do it if his new responsibilities won’t justify paying him what he’s been getting up to now. It’s better to let him go. If your conscience bothers you, give him a big severance package.
Yours truly, Norm

Permalink  |  Posted in Employees, Growth

Do I have the resources to take these opportunities?

Monday, March 30th, 2009

Dear Norm,
My sisters and I started a bath-and-body company on a shoestring three years ago. This year we’re on target to hit $4 million in sales. We have great distribution, sell to every major department store in the country, and have been approached by Disney, Warner Bros., and others to create private-label products. We’ll soon be entering the mass market under a different name. The problem is that our opportunities are outstripping our resources. What do you advise?

Dear Sara,
I’ll give you the advice I wish someone had given me before I took my first company to $120 million—and wound up in Chapter 11. Your core business must always come first. No opportunity is worth going after if it jeopardizes your core business even one iota. It’s not just about money. You also have limited time. Ask yourself two questions about each new opportunity: Will it keep me from putting in the time required to build or maintain my core business? And, if the opportunity turns into a financial disaster, will my core business be crippled? If the answer to either question is yes, you probably should rethink whether or not this is a good opportunity.
Yours truly, Norm

Permalink  |  Posted in Business Success, Growth

What do I offer my father for his company?

Monday, March 23rd, 2009

Dear Norm,
Five years ago, my father brought me into his company so that he could spend more time doing outside sales. Lately, he seems to be working less and taking more cash out. Once I was told I’d be given the company; now it turns out I’ll have to buy it. I’m thirty years old. I want to grow the business, but I can’t unless we start reinvesting our profits. So it’s time to make an offer. I don’t want to pay too much, but I also don’t want to insult my father with a low offer. Any advice?

Dear Robert,
Before you offer anything, you need to do some soul-searching and life-planning. Where do you want to be in ten years? What kind of life do you want? Then design an offer that will allow you to attain your life goals. Do some research into the value of comparable businesses, and figure out what you can afford. Your proposal should specify how much you’d pay, when you’d start paying, over what period of time, how much salary your father could continue to draw, and so on. You can’t fault your father for wanting to sell you the company. He built it. He has a right to get something for it. But you don’t necessarily have to buy it. In fact, you may eventually decide it’s better to leave. Just make sure you can leave on good terms. Tell your father, “Here’s my plan. I think I can do it if I buy the company from you under these conditions. I love you. I love the company. I’d like to stay. But I need a plan that’s going to let me achieve my goals.”
Yours truly, Norm

Permalink  |  Posted in Ethics, Family, Growth

Will selling to customers online upset our dealers?

Monday, March 16th, 2009

Dear Norm,
We are a $40-million manufacturer, and we distribute our products through 250 independent dealers in North America and Europe. How can we use the Internet to sell products to the end user without upsetting our loyal dealers?

Dear Chris,
I doubt your dealers will be upset as long as you sell at the same price they charge and give them a commission on any sales in their area. In fact, they’ll probably encourage you. It’s trickier if you’re planning to sell your products for less. You’re going to need the dealers’ permission to do that, and you may have to agree to pay them their normal commission on the sales in their area. In any case, the key here is communication. I’d start by sending out a questionnaire to the dealers. Tell them you want to give them an opportunity to make a lot more money by earning commissions on sales over the Internet. Explain how the system would work, and ask them what they think. As long as you communicate properly, you should be all right. If you don’t, you’ll have a problem no matter what you do.
Yours truly, Norm

Permalink  |  Posted in Customers, Dealers, Ethics, Internet

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