Ellen answers your tough small-business questions.

This month, I am opening up my mailbag and sharing a few real-world letters and e-mails. These are great - and all-too-common - questions, and I hope my answers will be of service to you, too.

Dear Ellen,
I crunched the numbers. I came up with a selling price that is three times the going rate in my market. My competitors have been in business for a hundred years and they seem to be doing OK. What am I doing wrong?
Yours truly,
Crunchy in Muncie

Dear Crunchy,
Remember the story “The Emperor’s New Clothes”? The punchline is that everyone knew the emperor was naked, but they all thought that the other guys were “smart” enough to see his clothes. Once the brave young lad in the crowd shouted out, “Hey, the ol’ geezer’s naked!” then the crowd was free to say, “Well, he is!”

Don’t assume that the competition, the other guy, knows what he is doing in his business. Don’t copy his selling prices because I bet his prices have no basis in reality. He made them up. He figured the other guy knew what he was doing and copied his pricing.

No wonder so many businesses stink.

The emperor is naked, my friend. Your competitor may have no idea what he is doing.

You can make money. You crunched the numbers. You now have something to aim for - your financial goals. Good for you. Now keep score and run your balance sheet and income statement every week. Compare actual numbers to your budgeted goals. If you are reaching your goals, terrific! If not, raising your prices is an option.

The key is to charge what you must and figure out how to add so much value that your customers say, “He is expensive. But he’s worth it because he (choose all that apply): doesn’t waste time; shows up on time; works without making a mess; knows what he is doing; is the only guy who understands radiant in this market; etc.”

Dear Ellen,
I work with my father. How do I get him to get with the times? I want to move this business forward and he is stuck in the past.
Rocky Rollin in Rochester
(Note: The following advice applies if you replace the word “father” with wife, husband, mom, sister, brother, cousin, close friend or partner.)

Dear Rocky,
Whoever occupies the top box on your organization chart is responsible for setting the course of the company. Is that you? If so, it’s time to lead.

Share your vision for the company in a compelling way. Be sure to let people know how they benefit by helping achieve that vision.

Arrange for a nonfamily member to deliver your message. Someone you both know and respect. That might work. Probably won’t.

Hold your team accountable for playing their parts in your game plan. Reward those who meet and exceed objective expectations. Deliver appropriate consequences to those who don’t - regardless of bloodline.

If you are not in the top box, perhaps you should start a business of your own. Life is too short to wade in the rocky river of resentment. 

Dear Ellen,
I want to grow my business, but I am overwhelmed. What’s the best thing to do first if you don’t know where to start? 
Buried in Birmingham

Dear Buried,
My vote: Clean.

    “‘Clean’ is the No. 1 success word of any business, starting with the place and grounds and extending to the ethics of the operation. When something is clean, it looks and feels good - it’s bright and beautiful and functional.

    “But when you let things pile up, they immediately begin to foul things up and slow things down. Soon you are forced to go around, over, and under it all, and the mess, not your goal, becomes your mentor.

    “Note how almost all of the barnyards and businesses that fail are heaped with junk, litter and clutter, unkempt and unclean.”  ~ Don Aslett, author of “Everything I needed to know about business I learned in the barnyard.”

Dear Ellen,
How do I find a great bookkeeper?
Book-Bound in Bonneville

Dear BB in B,
Great question! First of all, embrace the bookkeeping duties yourself until you find a great bean counter. The more you know about bookkeeping, the less likely it is you will be ripped off or held hostage by a bad bookkeeper.

Put the word out. Let it be known that you are looking. Tell your team members, family, friends, people at church and at the supply house.

Here’s some recruiting ad copy to try:

    Part-Time Bookkeeper
    Are you sick of the hassle of commuting to San Francisco? Do you need flexible hours to manage life at home? Why not work here in Oakland for a progressive company looking to grow?
    If you have skills in accounting and like to be nice to people, we want to talk to you!
    Fax your resume to 123/456-9999.

    Part-Time Bookkeeper
    Would you like a flexible, part-time position at a fast-paced company?
    Would you like to work in Oakland and avoid the city traffic?
    Are you skilled in __________? Would you like the opportunity to flex those skills and help develop our accounting system? Would you like to work for a company where being nice to people is a core value?
    We’d like to talk to you about a really great job!
    Fax your resume to 123/456-9999.

Run the ads where moms of young kids, retired folks and fizzy college kids might see them. These folks could be good prospects for a fun, flexible, part-time job at your company.

Here are a few interviewing tips:

  • Call the top candidates and visit with them on the phone for five or 10 minutes. Make small talk. Listen for a good phone voice, manners, enthusiasm. If you like her, arrange for a meeting at your shop for 20 minutes, 30 minutes tops.
  • At the face-to-face meeting, make sure the shop and property look as clean and nice as possible. Show her around the shop and introduce her to your employees.
  • In your office, tell a short company history. Share your thoughts on where you would like to lead the company. Be candid about your challenges and share your successes. Keep it brief.
  • Then, turn the focus on her - and make sure she does most of the talking. Here are a few good questions to ask.
      1. Why are you considering changing jobs?
      2. What do you feel you could improve on?
      3. What do you like to do best?
      4. What are your least favorite things to do?
      5. How do you feel about drug-testing?
      6. How well do you communicate with customers? Tell me about turning an upset customer or vendor into a happy one.
      7. What motivates you?
      8. What ongoing training would you like to have?
      9. Describe a situation in which you helped someone improve a system at their company.
      10. We need to get current on our invoicing and develop a system for balancing our checking accounts every month. How would you get started on those projects? (Or whatever project you are working on.)
  • Refer to your operations manuals. Arrange to check references, check employers, any other required procedures.
  • Have the applicant take my test in “Where Did The Money Go?”
  • Watch for signs that she smokes! Is that OK at your office?
  • Walk her to her car. Check it out! Is she a slob? Not a good indicator.
  • Do explore personality profiling. Look for high scores in “attention to detail” and “fastidiousness.”
  • Lastly, check your gut feelings. Do you like her? Go for it!

Dear Ellen,
OK. I am ready to go out on my own. How much money will I need to start a business?
Strapped in Strafford

Dear Strapped,
Think bootstraps! Aim for as little money as possible. Even if you have lots of money, money alone won’t create a successful business. It can even be wasteful, because you can go through a boat-load of money before you are forced to actually craft a working plan for creating profits.

Put a budget together. Intend to create cash flow from selling your products and services. Move quick! Sell something and use the money available after expenses to fuel your company’s growth. Your budget will help you figure out how much money you will need to get started, and how much you’ll need to charge - per hour, per job - to pull it off.

Don’t be put off by the B-word. Think of budgeting like goal-setting and the process becomes less stressful.

Dear Ellen,
My best employee is asking for a raise. But our business is barely getting by. How do I explain our financial situation without disclosing too much information?
Close-Lipped in Mississippi

Dear Close-Lipped,
Hey, it’s not a matter of national security. What’s so super-secret about your financials? You know, most folks would rather share details about their sex lives than their checkbooks. My advice: Get over it. Share the information (in your checkbook, not your sex life). Open the books.

Don’t know how to get started? Check out one of my favorite books, “The Great Game of Business,” by Jack Stack. Added bonus: Maybe your best employee will help you play the game better once he knows the score.

Keep your cards, letters and e-mails coming! Reach me at www.barebonesbiz.com.