Interpersonal Business

Vol. XXXIII

Dear Managers,

Taken at face value, this is an example of management exercising its fundamental responsibility to maintain fiscal profitability for the organization. I sincerely support the profitability of the manufacturers associated with our organization with almost the same tireless enthusiasm that I support the need for the profitability of my organization and those associated with it. All parties must first sustain profitability for a relationship to exist. Prior to an evaluation of each of these conclusions, let’s take a look at the premise for the decisions.

The new year is a critical wake-up call for all companies relating to that elusive profitability issue and controlling or reducing ones fixed costs. Profit and loss sheets are complete for the previous year and, for most of us, hidden but very real expenses have eroded our anticipated profits. How do we possibly get these costs under control and, more importantly, how do we do so with the least amount of interruption and impact on future growth? Obviously, reducing overhead at the expense of growth should be our absolute last course of action. In this scenario we have simply exchanged one critical concern for another.

There are many fixed costs that have no relationship whatsoever to future growth potential. The process begins by addressing these areas. The erosion of profits effects all of us on a relative basis. Following are a few examples that should be addressed by all individuals and organizations in a position to impact and enhance the bottom line.

PHASE ONE: OFFICE EXPENDITURES

Historically, this is the area with the greatest opportunity for cost reductions. Often, a full 20% can be shaved off current budgets with a relentless review of all fixed costs. Savings in these areas have little appreciable relationship to the future growth of the organization.

• POSTAGE: When was the last time you reviewed this money pit? Batch mailings to customers and sales agencies, third class mail for catalogs, and re-negotiating air express charges are all areas worthy of your review. I have worked with a manufacturer for a number of years who continues to mail a single page invoice in a 9 x 12 envelope; we receive these envelopes 3 or 4 times a week!

• OFFICE EQUIPMENT: With technology moving forward on what seems like a daily basis, do we truly need the very latest on the market? Will last year’s model adequately meet our needs? Developing strong relationships with individuals who are familiar with secondary markets creates an opportunity to save from 30% to 50%. Computer hardware, telephone systems and copy machines are just a few areas where last year’s introduction will adequately service our needs. We all enjoy the smell of a new car, but how does that smell translate itself into increased sales productivity?

• FINANCING COSTS: Most organizations work with a line of credit through their bank to even out the ebb and flow of cash reserves. Do you anticipate your needs and activate funds prior to actually using them? I recently changed my credit line to only activate upon checking account overdraft. With careful cash flow management, my line of credit use was reduced by 50%. Have you reduced or eliminated excessive credit card interest charges by using a line of credit on occasion? This can add up to a 50% savings on interest rates alone.

• FACILITY COSTS: With interest rates relatively low, is there an opportunity to purchase a facility that can meet your current and foreseeable needs? I recently purchased our office building, which will significantly reduce operating expenses in its third year and beyond. If leasing is your only realistic option, have you taken a proactive role in securing favorable rates for your current and future needs? Simply knowing the current market and the options available will assist in your negotiations.

• PROMOTIONAL EXPENSES: The desire to continually expand our trade show presentations has dramatically increased costs for many of us. As exhibitors, we are very important to these show management companies. I have found them to be willing to assist in managing costs (such as storage fees, lighting and drayage) by negotiating long-term commitments; very few people even ask. By the way, are you charging these fees on a credit card to earn frequent flyer mileage for future business travel awards? Strategic credit card purchasing can make a significant impact on your travel budgets.

By nature, office expenditures have a tendency to compound themselves year after year. The solutions come from asking the question, “Do the systems that were established to meet the needs of a previous time continue to create an advantage in today’s market?” It may be time for some cost-effectiveness house cleaning.

PHASE TWO

This area of review may not return the 20% seen in Phase One, yet even a 10% cost savings in areas with much larger budgets can be very significant to any organization. This review (and the ultimate reductions) will begin to unlock the doors of ones organization. There is the potential risk for an emotional price as compared to Phase One. Approached correctly, the risk is limited and will have no significant impact on the future growth potential for the organization.

• MANUFACTURING COSTS: I have toured many facilities and was amazed to view the varied levels of productivity found acceptable from one facility to another. I saw warehouses full of obsolete product, production lines slowed by little or no departmental management and pride, and little incentive to correct the problems. Certainly these are only surface judgments, yet has corporate management abandoned incentivising the productivity of those at the bottom of the scale for a job done accurately and well? If so, is it time to revisit out-sourcing this critical area of business?

• STAFFING COSTS: As an alternative to increasing staff salaries, have you considered increasing vacation time in alternating years of their review? I have often found this to be very well received. In many cases, and with proper preparation, other staff members can assist with the temporary additional load.

• MANAGEMENT AND MARKETING COSTS: With just a bit more planning, can that four-day trip be condensed into three days? Can the three-day trip be condensed into two with an earlier flight? Have we adequately negotiated the most favorable advertising rates, based on the size and duration of our advertising? Simply by creating an “in-house” advertising agency, you can save 20% off the top!
Have we finely tuned our budgets for the cost of printing sales materials, catalogs and order forms, by getting three to four bids? Printing is a very competitive field, and a great place to leave money on the table.

Have you considered an in-house staff member to manage and monitor these and the many other costs in doing business? You may find their position will pay for itself, again and again and again.

PHASE THREE
(You had to know there was a sacred cow somewhere in our midst)

In my twenty-five years in business I have worked with hundreds of manufacturers. As my experience relates to competent managers and sales professionals, I have never seen one that was being over compensated. I have certainly seen incompetence in sales and management being over paid but, evidently, ownership found this scenario to be acceptable.

The implementation of Phases One and Two have in no way impacted the heart of your organization. This heart is shared between your management and sales staff. I can’t help but ask, “Has ownership thoroughly exhausted all avenues of cost management prior to carving out the heart and source of growth for their organization?”

Without question, there is a time and place to implement Phase Three cost reductions. There is a very real moment when costs exceed revenues and profitability no longer exists. There can be no other alternatives; all Phase One and Two cost analyses have been addressed. Survival becomes ones singular concern and, ultimately, a heart transplant is the only course of action. On this occasion, allow me to be first donor in line to assist in protecting the long-term interests of the ailing organization.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXXII

Dear Managers,

I have consistently promoted the value of management having first-hand experience in the realities of those they manage. Few of us simply woke up one morning to management; we all took those first difficult steps. While the transition is difficult for many of us, we can at least fall back on the values that provided us with confidence in our previous endeavors. In my case, the need to expand sales efforts was obvious, regardless of my personal abilities to do so. In many instances, business can thrust very good sales people into a management role, whether they are prepared for management or not. Having field experience does not automatically guarantee success in management!

Eventually, I realized that I could provide a great asset to my organization by drawing on my past and remembering how to think like a sales representative. The closer I could stay to that thought process and set of values, the stronger my organization would become.

PRACTICAL EXPERIENCE

I have known and worked with several outstanding sales managers who had little or no actual field sales experience. I have known many more, unfortunately, who failed due to their profound inability to relate. I guess it comes down to ones priority in getting on the inside track. Too many managers are distracted by their own course and fail to negotiate the turns. These individuals expect to play the game on their turf and under their rules. Many will fail, never realizing their potential. Those who find a measure of success, yet begin to believe their own press, will never address their shortcomings. From my experience, and without question, this single dynamic consistently robs many managers and their companies of success.

Unfortunately, some managers with field experience choose to forget their lessons and become what they perceive the role of a manager should be. In conversations, it may seem as if these individuals have now arrived at a higher level. With title in hand, a case of amnesia relating to their earlier times sets in. This attitude reflects the very worst in management.

As suggested, I have known managers with no field experience who have, through their own initiative, developed an amazing sense of awareness relating to sales. Fundamentally, these individuals simply want to understand and develop their success on a level playing field with those who can insure their success and whom they consider their peers. These individuals gain high marks for their obvious willingness to learn, experience, and share their desire to develop this understanding.

THINKING LIKE A MANAGER

Having emphasized the value to management in thinking like a rep, I equally believe that the current business climate now require a sales associate to think like a manager! The dynamics of a field sales person are those of independent, individually focused responsibilities. True, their vision is directed towards success. However, given the daily focus on their individual realities, it becomes tunnel vision directed at only one aspect of success: theirs.

In recent years, I have made it a priority in my hiring process to find sales people who also think like a manager. These are the individuals who have stepped out of the singular and often self sustaining perspective of the sales representative, and realized their greatest asset to themselves and their organizations is to assume a management role relating to their sales region.

Those “managing sales” understand and accept a personal responsibility for meeting the growth potential for their sales region. They are the first to know, and are proactive in their willingness to adjust to, the current and future needs of their sales region. They understand their position of strength comes prior to their manager’s inevitable involvement.

There can be huge rewards for individuals who accept this greater ownership. These individuals relate more closely with their managing counterparts. They speak the same language and have a greater understanding of each others needs; conversations reflect on mutual interests relating to “good business decisions,” for their customers as well as their manufacturer. These individuals find a high degree of support from their “fellow managers” relating to their needs and, in more instances than their peers, enjoy the luxury of the benefit of the doubt.

A NEW BEGINNING

The old school suggested a “hands on” approach to management. If this is still the case in your organization, you are living in the past. Let’s be honest, most of the rules and parameters of past sales policies were established to meet the needs, yet minimize the risk, of the lowest common denominator. Do these out-dated sales policies still exist? Who are they currently intended to protect you from? Where’s the flex to make the deal?!

In the past ten years I have seen a remarkable improvement in the standards being established by the sales professional. With a much greater involvement of women in the professional field, the standards set by the highest common denominator of this combined work force far exceeds the pool of talent available just a few years ago. I genuinely believe we need to ask more, and these individuals want more to be asked of them. We can do so by first expecting them to manage their territories and then by giving them the opportunity to do so.

GIVE ME YOUR TOP FIVE

Allow me to describe your top five sales associates:

• Totally self motivated; you never give there sense of determination a second thought

• Creative and almost startling in their approach to a sales challenge

• Always thinking in terms of second and third generation relating to their long term objectives, while maintaining high visibility

• As professionals, they are always looking for, and intrigued by, finding a more productive way

• They enjoy a much stronger relationship with the decision makers in the field and with their manufacturer(s)

• Finally, these individuals challenge you as a manager, by a multiple of five, as compared to your other associates

Are these not the qualities of a great manager, in addition to those of a great sales person? Should we not be asking more of those who have not yet seen the value in thinking like a manager? Are we going to maintain standards that meet the needs of the bottom five at the risk of inhibiting our best?

RISING TO THE TOP

The first step is to develop an awareness of the obvious disadvantage many sales associates are willing to accept. Why is it that so few get all the advantages? A manager of sales first challenges all the policies, then seizes every opportunity to work the system. From the outset, these individuals understand how to finesse a policy to their advantage within the rules (as best as possible). They have a consistent dialogue and ask all the right questions.

Managers reward creativity and respond to ingenuity, especially in an individual who thinks and plans like they do! While these individuals challenge management at a much higher level, they can’t help but be admired and respected for their efforts. In most instances, these individuals get exactly what they want. Those who never ask simply never enjoy the advantage. Who currently gets the advantage? Less than 20% of the whole! It must be time to spread the wealth.

Who are the most successful managers? Those who can relate with and think like a sales person.

Who are the most successful sales people? Those who can relate with and think like a manager.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXIII

Dear Manager,

The demands on management’s time can be voracious and unrelenting. What was once our priority must now be delegated to maintain balance and perspective toward the ever-changing needs of our organization. To say the least, this is very difficult. Have you ever completed a day and, in review, been unable to determine if an event occurred on that day or a previous day? As your organization continues to grow, so do the demands and expectations on your time. Everyone seems to want you. Are you effective in disciplining your time for those areas and individuals that can provide the greatest benefit to the organization as a whole?

From a personal perspective, I believe that on a daily basis this is management’s greatest challenge. My expectation to maintain a personal and intimate relationship with all aspects of my business is no longer realistic. What was once my ability to work closely with customers, manufacturers and sales associates must frequently be delegated to qualified assistants.

Certainly, I could make the effort to accomplish it all, and have, but in doing so the quality of my efforts and personal satisfaction diminish, and the greatest asset to my organization, its planning, takes a sabbatical. This chain of events occurs at some point for all managers. A lack of professional purpose and personal satisfaction can best describe this feeling. Conversations seem to become surface in nature, my creative juices dry up; what brought fulfillment in the past is now redundant.

For the manager, fighting these periodic cycles (and we all have them) signals a prime time for reevaluation. If we are unwilling to step back and redefine our personal and organizational objectives, we are destined to continue to accept our current set of circumstances.

In your estimation, have you made time available to focus on the aspects of your business life that can truly make an impact? I have found myself for periods of weeks and months in what can only be described as a “low impact” cycle. I worked as hard as in the past, the company wheels continued to spin and, upon reflection, my greatest achievement was that all disasters were avoided.

Ask yourself: Are any of these low impact cycles fulfilling? Are these periods meeting your long-term organizational needs? Because of a very demanding schedule, have you accepted a cruise control attitude towards your organization’s future? Have you instigated plans and procedures to accommodate all foreseen and potential circumstances? Are you willing to allow your business to simply take its own course?

This is not to suggest that within all organizations there is not daily planning, often low impact in nature, taking place. This month’s Interpersonal is dedicated to the “high impact” responsibilities for a strong business. The high impact aspects of business receive the least amount of our attention, yet without question hold our greatest opportunity. We must develop the resources that will insure our company’s future, energize those around us, sustain our fulfillment, and maintain our personal satisfaction.

As a business owner or manager, beyond all the individual needs and responsibilities of our associates and employees, what is the single priority for yourself and these individuals? There is only one: the continued profitability of your company. If our companies are no longer viable and profitable in the marketplace, all of the peripheral concerns become meaningless. Similarly, I have always stated my absolute and sincere desire for our manufacturers’ profitability, for in the absence of their profitability, my position no longer exists! If we are unwilling to commit the time to those resources that will insure our own financial health, our organization’s collective future is in jeopardy. Find and develop these resources; create a Circle of Influence.

A CIRCLE OF PEERS

Whether you are the company’s owner or manager, I believe all of us have peers to whom we truly listen; people with whom we have a primary relationship. When we are involved in conversations with these people, their words ring true. They have a much deeper understanding of our daily lives and offer an objective, non-emotional viewpoint of our current direction. High impact management is a product of strong primary relationships.

There are two very distinct qualities in a primary relationship. These individuals have earned our highest regard for their opinions and approach to their profession. Their words and examples challenge us; their thought process is fundamentally sound and their judgment and integrity consistent with our own.

The second quality these individuals provide is the courage to be honest. Their objective opinions can address a very specific, immediate topic or offer a general assessment of our current direction. These individuals have the rare quality to almost feel our pain, and to enjoy our success as if it were their own. And yet, their greatest influence is in their ability and willingness to tell us when we are off track, and we listen. As we mature in our career, these are the individuals within our industry who will assist in illuminating our path. These are the peers who should make up our Circle of Influence.

THE PERSONAL CIRCLE

There are individuals who, from a personal health and financial perspective, can often individually or collectively impact your life and business at an even higher level than yourself! Unlike a circle of peers, your personal circle includes professionals outside your specific industry for whose time and guidance you most likely pay. Building and maintaining an ongoing relationship with your personal lawyer, accountant, banker, clergy or physician can hold keys to your ultimate success. Depending on your position within your organization, it is not uncommon for many of your personal/professional relationships to impact your company as well.

You will note I used the word “personal” to describe each of these professionals. Have you personally chosen these advisors? It is more common than we are willing to admit that these relationships are not chosen, but are developed purely by chance. NOW is the time to analyze your existing primary relationships. Are these the individuals whose advice you would trust? On a daily basis, are these the individuals who are capable of assisting you in making the very best possible decisions for you personally and for your organization? Unfortunately, it is human nature to make use of their services only in times of need or personal crisis.

We all know individuals who have suffered the effects of bad advice. In times of crisis your options are reduced, yet decisions must be made. I would be willing to guess that most of us decide to proceed with what is familiar, hoping that what is familiar is good enough! Establishing confidence in your circle is essential.

SCHEDULE TIME TO MEET WITH AT LEAST
ONE MEMBER OF YOUR CIRCLE ON A WEEKLY BASIS

Now that we have discussed both the personal and professional influence in your circle, take the next step by writing down their names on a piece of paper. With your current list complete, resolve to make it a priority to meet with these individuals on a consistent basis. Outside of your family, are there relationships more important than these?

Your Circle of Influence will reward you, strengthen you and, when given the chance, lead you. There is so much opportunity for the low impact aspects of our lives. Resolve to give equal billing to the high impact and influential aspects. What greater priority can we bring to ourselves individually, or to our company, than to surround ourselves with a group of personal and professional advisors who will strengthen the whole? There is never enough time to meet all of the expectations in our day. Now could be the time to change our priorities, making time for the obvious impact that only these types of advisors can provide.

So much of our lives seem to be left up to fate (and often default!). There is huge benefit in maximizing the strengths of this group towards one single purpose: our future. One of the greatest values in these relationships is inspiration. We can all become so involved in our life and business that a new perspective will be both enlightening and refreshing. These individuals should challenge you and, by doing so, will bring you personal satisfaction for having made an impact on your personal and professional lives.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXI

Dear Manager,

One of the most difficult aspects of management is objectively reviewing your sales regions. Without the luxury of day-to-day personal involvement in each territory you must rely on intuition, comparative sales analyses, and instinct. When is it time to reward a salesperson’s efforts by expanding their territory, and when has a territory matured to a level that it can no longer effectively be serviced by one associate?

These are emotionally charged issues for any organization. Only in very rare circumstances can you reduce a territory and continue to maintain an effective and productive relationship with the sales associate involved. Even less likely to occur is a scenario in which a sales associate will suggest to you that an additional associate be added to their region because they can no longer adequately service it alone.

I believe it is critical in the very early stages of your working relationships to establish fundamental expectations and responsibilities for your sales regions. The first fundamental is the assumption that all the manufacturers you represent anticipate, and have the right to expect, growth in your sales regions. All manufacturers develop their organizations with a single objective: growth. With the absence of growth, neither the manufacturer nor the sales force will survive.

The second fundamental is the assurance to all associates that as long as a territory continues to grow at a level consistent with the needs of your manufacturers and those of their peers, you would never consider a change or reduction in their territory. This is a very strong statement, and it should be. Why would an organization initiate change, risk valuable relationships, and send the signal to others that there is a penalty for strong performance?

Managers have the responsibility to meet not only the needs of individual territories, but also those of the whole. This third fundamental is the reality that allowing an individual territory to languish brings risk to those territories that have shown strong performance. How would an individual in a strong territory reflect on my performance as their manager if they were to lose a valued manufacturer because I failed to respond to the poor sales performance of another sales region? There are no limits to the number of other organizations more than willing to prove they could out-perform our organization.

Sooner or later, many territories will grow to the point where one individual can no longer effectively meet the needs of their customers and manufacturers. As much as we like to deny it, no matter how talented we are or how effective we are with our time, we must accept our human limitations. This in no way reflects on our ability; it is simply a reflection of our reality.

In 1980 I reached one of these moments of truth. While covering two states for a group of manufacturers, it became increasingly evident that I could no longer service my customers at a level consistent with their needs. There was simply not enough time, and I felt that I was always two to three weeks behind schedule. With my days “maxxed,” I was inclined to cut corners, serviced only the larger customers and forgot altogether about the option of new account development. Obviously, I couldn’t properly service the ones I had!

There are numerous options to assist your mature sales regions in continuing to grow and meet the needs of the organization. The key factor is to reward your associates a first, second and third (if necessary) opportunity to continue to grow their region. One of the first steps is to maximize the hours actually spent in customer presentations, as there are a very limited number of effective hours in front of our customers.

Suggest to your associates the option of hiring a part-time assistant to handle customer service, appointment scheduling, order follow up and problem solving. There are qualified individuals willing to work a few hours in an associate’s office, or out of their own home, in this capacity.

Not only can an assistant increase an associate’s productivity in the field, but also be a tremendous source of relief for a busy sales executive. Scheduling and problem solving are a very essential, yet time consuming aspect of a sales career. It is the time for account development and pure selling that truly impact our sales region’s ability to succeed.

Another approach to expanding the potential of a territory is by an individual, or group of associates combining their resources to hire a field sales assistant or service person. Many customers no longer require the hands-on, routine support provided by a sales professional. Why not use a well-informed sales or service assistant to establish consistent reorder cycles? A strong sales professional knows what their time is worth. With additional time in the field devoted to account development and selling (generating income!), a service assistant can effectively and efficiently meet a sales region’s needs for continued expansion.

It is critical to ask your associates to continue to meet the needs of their customers, manufacturers and the organization. No one enjoys the process of giving something up or taking something away; this should only be considered as a last resort. Give your associates options that will effectively meet your and their responsibilities. Expect them to step up to the challenge. If they choose not to, they must certainly be willing to accept the alternative.

The obvious time for management to make territorial adjustments is when a territory is vacant. At this time there are no emotional ties, or legitimate (or perceived) responsibilities to impact your decision. When a territory becomes vacant, it is your single opportunity to review its needs objectively. All options and innovations are now available to you.

Some questions to ask yourself may include:

• What are the current market conditions in this region?
• Was the previous associate adequately compensated for their performance?
• Is the current line presentation on an upward or downward curve?
• Will this territory effectively support more than one associate?
• Is there the option of adding additional opportunity to the region?

Look at the region based on the needs of today. The reasons behind a very good decision made years ago often no longer exist, while what may have been a very poor decision at the time continues to exist! What changes would you make if the slate were clean? This is a very valuable thought process, even though you may never have the opportunity to bring it to implementation.

Just as there are market conditions that warrant territory division, there are times that warrant existing territory expansion. Do each of your sales regions have the legitimate capacity to provide a reasonable income for their associates? If not, is this a direct reflection on the capacity of the sales region, or the capacity of the individual? Does the opportunity exist to both challenge and reward a sales individual’s efforts, strengthening their position into the future?

Formulate current and long-term objectives for each of your sales regions and discuss these plans with your associates. Establish an understanding of the region’s requirements prior to a time of concern when emotions are calm. Be creative. Offer options. Re-think your current territory divisions or line packages as market conditions change. Territory management and its many ensuing decisions “define” our organization and us, individually, as managers.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM