Are you a small business owner who is struggling to really motivate your employees? Are you irked that none (or some) of your clients or customers are paying you on time? Join hosts Elizabeth Larkin and Gene Marks as they tackle these questions in this episode of the Small Biz Ahead Podcast.

Show Notes

Welcome to another episode of the Small Biz Ahead Podcast. Sign up for the weekly newsletter so you never miss an episode. Do you have a question you’d like Elizabeth and Gene to answer? Submit your question to the Small Biz Ahead Podcast.

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Transcript

Elizabeth: Okay. We’re back with another exciting episode of the Small Biz Ahead podcast. I’m Elizabeth Larkin and with me is Gene Marks. Today we are going to be talking about motivating your employees and getting your clients and customers to pay you on time.

Gene: I like it.

Elizabeth: Which is … of those things is harder?

Gene: Oh, god. Don’t even know. All I know is getting people to pay me on time is what causes me nausea as opposed to motivating our employees.

Elizabeth: Before we get started I’m going to read another one of our iTunes reviews. I really love this one. This was a five-star review, and it goes like this:

“I stumbled on this podcast because I was searching for new business ideas online and I’m so happy I started listening. They give really thoughtful advice to basic questions on owning and running a business. It’s been very helpful to me as I start my new venture, and it makes me feel less alone.”

That is so nice.

Gene: So nice.

Elizabeth: Even though she called us basic.

Gene: Oh my gosh.

Elizabeth: Or me.

Gene: She’s talking about me only, I’m sure.

Elizabeth: That’s what we want to do for people. We want to be the people that you come to for advice and motivation. We’re really happy to provide that for people.

Gene: Good.

Elizabeth: So, remember we are now on iTunes. I know I’ve been saying it for several episodes now, but you can subscribe on iTunes, Stitcher, Google Play, Sound Cloud, we’re out there. Please leave us a review. We’d love to get your feedback. You can also submit questions. If you have a question to be answered write in the “show notes”. We’ll be right back with our first questions about motivating employees after a word from our sponsor.

Gene: I like.

QUESTION 1: How Do I Motivate My Employee Who May Quit?

Elizabeth: And we’re back with Question number 1. This is from Susan in Park City, Utah. Susan writes:

“A few years ago I opened a small accounting firm. It’s really taken off and I’ve been able to bring in more staff. I hired one person last year who’s always done a phenomenal job, but lately he’s been seeming melancholy. He’s still doing a great job. but he doesn’t get excited about his work anymore. I know, accounting. I’m worried that he might leave and at this point I can’t really afford to lose one of my best employees. Is there anything I can do to demotivate or reinvigorate him?”

So, I’m wondering …

Gene: I’m curious to what you’ve got to say about this because I’ve got my opinion about this.

Elizabeth: Well, to take it to the extreme, if someone leaves, they leave. Your business will recover. You’ll find a new person. It will be painful, definitely. Gene, I’m sure you’ve had that happen to you.

Gene: Right.

Elizabeth: But, did this just come out of anywhere? I’m wondering A) He could have problems outside the office that he’s just sad, and you do spend quite a lot of time with your coworkers and at work, so that could be it. Motivating and reinvigorating him … I think a lot of times people think their best employees don’t need motivation because they’re so good, but because they’re so good they might get bored really easily. They might think like, “I’m just not invested in this anymore. I’ve put so much effort into this. I’m doing a great job. I haven’t gotten a raise. I haven’t gotten a promotion. I haven’t gotten any new projects to work on.” So maybe he’s thinking of leaving.

Gene: Yeah. It’s interesting, too when you think about it. Everybody, whether or not they’re your best employees or not, everybody needs to be reminded every once in a while why they’re doing this. You know? Yes, we have jobs and yes, it’s to earn a living so we can raise our families and all that, but as people we all want to feel like we are a part of something. We are doing something.

Elizabeth: Yes.

Gene: I always use the example the Hartford is providing small business owner’s insurance. You know what I mean? Providing that kind of help to small and large businesses and individuals. It’s a good thing that this company does. Sometimes you get lost in it because you’re busy in your silly day-to-day work. It’s the same thing at your business in an accounting firm is providing that kind of a service to clients.

You’re right. This guy being melancholy might have, he could be going through a divorce, he could have some personal issues, all that kind of stuff. But at the very least talk with him, check in with him, and then also remind him of what a great job he’s doing. Also remind him of what you’re trying to do here and what a big role he plays in that. All of that could really, really help.

Elizabeth: Yeah.

Gene: It really could make a difference. It also might open him up to explain to you why he might be frustrated. In the end, though, if you still walk away from a meeting like that or a dinner like that with your employee that this person still seems like they’re on the fence or whatever. Business owners, I keep talking about smart business owners, I know, but they’re always … None of us like surprises. We’re always prepared for surprises. We’re always planning ahead. If you’ve got a inkling in that somebody might be on the way out you need to be making your plans as to what you’re going to do about it so it does not turn your business upside down.

Elizabeth: Do you ever think it’s a good idea to offer someone more money to stay?

Gene: No, I really don’t. I never think it’s about money. Unless there’s a person comes right out and says it’s about money, and then even then it’s usually not about money because as long as you’re being competitive a few extra dollars is not going to make a difference about them staying with you. The only thing that it cold do is it could be a Band-Aid. So, if I offered to somebody a little bit more money to keep them around knowing in the back of your mind this will probably keep them around for another 6 months or a year.

Elizabeth: I was just going to say that.

Gene: It gives you the opportunity to then find that person’s replacement or make your plans.

Elizabeth: I have seen that happen before where people have one foot out the door, they get offered more money, and then they stay, but then they leave 6 months later.

Gene: Then they leave again, yeah because it’s never about the money. It’s really not. In the end, like I said, you want your people to be happy and enjoy working where you are and things change. People change their minds. People get bored. People get … For all sorts of reasons. You’ve got to accept that. It’s not your business. It’s human nature. Your responsibility to your shareholders, to yourself, to your other employees is to continue your business and continue it profitably. That’s your responsibility.

So, if you have, again, an inkling that you think a key person might be on their way out, you’ve got to be thinking to yourself, “Okay, if he or she walks in my office tomorrow and says they’re quitting, what’s my plan?” Got to have a plan in place for dealing with them.

Elizabeth: Now, how often do you meet with your employees one-on-one?

Gene: I talk with them frequently on the phone and then I meet with them on average 3 or 4 times a year.

Elizabeth: You Skype with them?

Gene: Yeah. We’ll just talk phone-to-phone and then we’ll have meetings where we’ll get together with clients or we’ll go out to lunch or whatever and talk and …

Elizabeth: Do you ever pick that up from someone, like, “Oh, they seem like they might be on their way out,” and it turns out to be something totally different or ….

Gene: Yeah. Different people go in different moods so it’s kind of tough to tell. What’s tough with me is that I’ll see somebody and then I won’t them face-to-face for another 2 months. So, it’s kind of tough to pick up because people can put on a show just for a lunch. You know? So, I find it a little bit more challenging.

Elizabeth: Yeah, definitely. Remote workforce.

Gene: Yep. That’s one of the problems with remote workforce.

Elizabeth: Okay, we will be back with question number 2 after a word from our sponsor.

QUESTION 2: Getting Your Customers to Pay You On Time

Elizabeth: And we’re back with question 2. This is from David from Asheville, North Carolina.

Gene: I love Asheville.

Elizabeth: I would love to visit there.

Gene: You’ve never been there? Oh, it’s a beautiful town. It’s absolutely a beautiful town.

Elizabeth: Yeah, I’ve heard it’s really great.

Gene: Yep.

Elizabeth: So David writes:

“I run a small print shop and I’m trying to incentivize my customers to pay on time or even early so that I don’t have to keep chasing them down. Should I tell them that they’ll get a discount if they pay early or that. Or that they’ll be charged a fee if they pay late? The math works out the same, but I can’t decide what phrasing to use.”

Elizabeth: So, I love this researcher named Robert Cialdini.

Gene: Yeah.

Elizabeth: He does all of this research about persuasion.

Gene: Customer service, yep.

Elizabeth: He says that it’s always more effective to motivate people with something that they’ll lose out on rather than something they’ll gain.

Gene: Okay.

Elizabeth: So, in that thinking if these are your only options, either a discount or a late fee, obviously you would just raise your rates and tell people you’re giving them a discount, but I would …

Gene: Boy, you’re getting to know me pretty well, Elizabeth. Aren’t you? Good job.

Elizabeth: I would go … Well I’ve been sitting here for a long time.

Gene: Right.

Elizabeth: I would go with a discount. I think that would persuade me. I’m pretty gullible, but when someone says to me, “I’m going to provide this service if you pay me on the spot. You’ll get a 15 percent discount,” I’m going to pay you on the spot.

Gene: Listen, I think that’s fine, whatever you want to do to get cash in the door. Good for you. I like what you said earlier about building it into your rates so you’re really not giving a discount, but your customer thinks that you are giving them a discount. There are a lot of ways to collect money faster and you don’t want to be in this situation where you provide a service or ship a product and then you’re just sitting around waiting for the customer to pay and then chasing them down. It’s like the worst situation to be in.

A few things, depending on the size of the sale you can consider requiring a half payment upfront and the other half payment when it’s delivered or the service is performed because the half payment up front covers your cost and your overhead and the other half should hopefully be your profit. So, if you have the ability to do that, and that happens all the time in the construction industry if you’re getting a kitchen remodeled or whatever. People always ask for deposits so they’re not out of pocket for the materials that they’re buying. That’s done all the time and something that should be considered.

Elizabeth: Is that done for printing? I know you have a client who does printing.

Gene: Yeah. If you have a large printing job, yeah. Depending on the size of it. If it’s a few thousand bucks you say, “Yeah, we’re happy to do that job, but we’re going to need 50 percent upfront and 50 percent when we deliver the materials.” I see that done in the printing business all the time.

The other thing is I’m a big fan of credit cards. You’re going to say, “Oh, they charge the fees,” and whatever. It’s the same thing as us. Rather than giving a discount you can bake those fees into the price that you charge, but when you use a credit card right away. The other advantage you tell your customer that if they pay by credit card with you they get points on their credit cards so they can use those points for whatever they want to do.

Elizabeth: Oh, yeah.

Gene: Rather than giving a discount they’re actually using it for the credit card.

Elizabeth: Do you take credit cards?

Gene: I do. We take all credit cards. We take it for big amounts. No amount is too big or small for me to take a credit card payment, but again, we don’t … We have those costs built into our overhead so we’re able to absorb a credit card cost.

Elizabeth: So, as a business owner is it more important to get paid immediately or get paid the full …

Gene: Immediately.

Elizabeth: Yeah. Okay.

Gene: Yeah, it’s all about about cash.

Elizabeth: See, that’s why I like the discount because then you’re going to get it at the time of delivery.

Gene: Right. Understood.

Elizabeth: And for that, maybe we should talk about mobile payments because for … I don’t know for a print shop you’re probably doing everything over the phone, but if you have a delivery person delivering the products then maybe you do want to have a mobile payment app on his phone or her phone to get paid immediately.

Gene: True. Mobile payments themselves are definitely a thing it’s just that … You know, Elizabeth, mobile payments are absolutely going to be happening. It’s amazing. We’ve been talking about mobile payments for a year, you and I. I’m still using my phone … I use sometime my Samsung to pay for a taxi ride and even then my heart’s beating fast that it’s going to be accepted. I’m holding it up and waving it around.

So, You know it’s going to happen, but I still say for the next 6 to 12 months I don’t … Mobile payment has still not yet hit that tipping point.

Elizabeth: But I’ve been using my credit card to pay for stuff, for goods and services and a customer service person is using their cell phone or their smart phone to take the payment. That’s happening.

Gene: Yeah, okay. That is. They usually have the square reader or something.

Elizabeth: Yeah.

Gene: Yeah, that’s fine. That’s just accepting credit cards on your mobile device. You have the ability to do that. Again, some people … Getting back to the old discussion about discounts, if you’re going to give a 2 percent discount or you’re going to pay that 2 percent to the credit card company, it’s still costing you the 2 percent. Do you know what I mean?

Elizabeth: Yeah.

Gene: It’s a bigger … It’s up to how you want to position it and sell it to your customer, but I just hate discounting the price of my services. I’d almost rather pay the credit card the fee and know that the customer doesn’t think that I’ve devalued my credit, my service, or my product.

Elizabeth: I think you could just raise your rates, the 2 percent.

Gene: You could do that to to cover …

Elizabeth: I’ve also seen small business owners … I’ll get an email from a business and they’ll say, “My rates are going up. They’re going up on November first.”

Gene: Right.

Elizabeth: “If you book now you can still use the current rate.”

Gene: That’s fine. That’s fair enough.

Elizabeth: And that actually gets me to take some action because then I feel like I’m getting a discount. Well, I’m not getting a discount …

Gene: The thing that drives me nuts, though is that when people say, “You can pay by cash for this amount, but if you pay by credit it will cost you more.”

Elizabeth: Oh, I can’t stand that.

Gene: Can’t stand that. I find that to be like, “Why is that? You’re making me” …

Elizabeth: It’s super cheesy.

Gene: Yeah. And a lot of companies do that. It should just be the price. I don’t like discounting. I don’t like discounting.

Elizabeth: Because you think just psychologically people think that that’s a worse service.

Gene: Yeah, I do. I just think that if you’re that easy that you can just take some dollars off your price then the customers thinking, “Oh, I should’ve asked for more.”

Elizabeth: So, for David then, maybe what he could do is say, “If you pay on time of delivery, pay it time of delivery it’s this price. It goes up by this percentage after a certain amount of time.”

Gene: I think what David could do if I was in his business, and you learn this as you’re in business for a while, you get to know your customers. There are some customers that just pay on time. You don’t have to worry about them and they’re good customers. So, you don’t have to monkey around. Fine, you ship them the goods. You send them an invoice. There’s no discounts, no nothing. They pay. They’re good payers and that’s good.

You’re going to get to know over time those customers that don’t pay very well. So, sure for those customers you should be saying, “Listen, we’re going to need payment by credit card upfront,” or that’s what the option is. For new customers where you don’t know the answer at all, until you get to know them, my recommendation is you either get a deposit up front for a bigger job or you take a credit card.

Elizabeth: Okay. All right, good advice. We’re going to be right back with Gene’s word of brilliance. Do you know what your word of brilliance is?

Gene: It’s poop.

Elizabeth: Oh, right. This will be interesting.

Gene: What will it be.

WORD OF BRILLIANCE

Elizabeth: Okay, we’re back with our word of brilliance …

Gene: Poop. It’s poop. The word of brilliance is poop. Yes, you heard right. It’s poop. P-O-O-P. I’m going to do everything I can to get The Hartford’s attorney’s to edit this out from this podcast. It’s poop …

Elizabeth: They’re going to edit that part out.

Gene: Yeah, okay, that’s fine. Well anyways, the word of brilliance really is poop and there’s a reason why I use this word and use it over and over again. I wrote about this in Entrepreneurial Magazine about my dog walker. We seem to talk about pets a lot on this show. So, okay it’s my dog walker and I have a good story about him.

He is … We have a dog walking, little business in our neighborhood that we pay, I think it’s 10 bucks each time they walk the dog.

Elizabeth: Yeah, that’s about what I pay.

Gene: And the woman that owns the business has a guy … She has a few people that work for her. She has a guy that comes in, and he would come in and his name is Charley. He would come in and he would walk our dogs. Anyway, Charley started up his own dog walking business on the other side of the city. So, he left this woman and he started up that business from scratch.

Elizabeth: What are your dogs’ names?

Gene: Well, Fudge passed away in February, but our other dog is Penelope. So, don’t laugh, Charley would come and walk both the dogs, and now Charley’s walking Penelope, and he eventually left and started up his own dog walking business. That’s what he does. He picks up poop. But he did it the right way. We talked about this briefly in a previous podcast, but I want to kind of reemphasize it with Charley’s story.

He worked in this dog walking business for 5 years, he walked dogs. He was a really good employee. Worked very well with the woman who ran the business. Got to know the business backwards and forwards. Learned everything there was to know about the dog walking … It was a young kid. The guy’s like in his mid 20’s now, and he just didn’t want to be in the corporate life. So, he learned the dog walking business and he said to himself, “This is great. There are a lot of things I’m going to do just like the woman. There’s a few things I’m going to do differently myself.” And he went out and started up his own business on the other side of town.

By the way, did it amicably, as well. He’s still friends with his former employer. They sometimes trade off work if they need each other because people in the business are that way. Believe me, in Philadelphia it’s a big dog city so there’s a lot of work that’s out there for the guy. The point that what I want to make is that whether you’re picking up poop or you’re going into the restaurant business or you’re going to be your own web design firm or whatever, before you just have this bright idea and just jump into it and start a business, you’ve got to take 3 to 5 years out of your life and learn the business.

Elizabeth: An apprenticeship.

Gene: You’ve got to be an apprenticeship. That’s exactly right. You know, you go 150 years ago in 19 century England, you used to pay the blacksmith. Pay him so that you could apprentice for him for 10 years before you took over the business. He wasn’t paying you. All these internships now-a-days where they’re paying the interns, it’s the other way around. An apprenticeship is very, very important for you to learn what to do with your business. So, if you have a great business idea and you want to start up a company or you love to walk dogs and want to start up a dog walking business, take a few years out, work for another dog walker, learn, copy, do things better, figure out how you’re going to provide value in your own business. Learn how the business works. How they collect cash. How they pay their bills. How they get new customers. All the good, the bad … For all you know, you might work for 3 years in a dog walking business and be like, “I’ve must’ve been nuts even thinking I want to do this for a living.”

Elizabeth: “I hate dogs.”

Gene: Yeah, “I hate dogs and this business is crazy.” So, you learn and then once you’ve learned you go in and start your own business with experience. That’s when I’ve seen business owner’s start-ups succeed because they’re not just starting with nothing and no experience, they actually have something behind them.

Elizabeth: Speaking of dog walking and pets in general, that is another huge growing industry.

Gene: It is.

Elizabeth: People love bringing their dogs to doggy daycare. They want someone coming in and playing with their cats during the day, so that’s another kind of new business area to look at. If you were an animal lover …

Gene: Correct.

Elizabeth: It’s a big one. Now-a-days most people do have dog walkers.

Gene: Yeah.

Elizabeth: They don’t just leave the dog home alone for 10 hours a day.

Gene: Yeah. Well, we do, too. It’s definitely a big business. Then, of course, all the pet accessories. The beds and the cookies and the whatever. It’s a great business.

Elizabeth: My dog has 3 beds.

Gene: My goodness. Now that’s spoiling your dog, Elizabeth. My goodness.

Elizabeth: And 2 jackets.

Gene: Oh, no.

Elizabeth: Okay, that’s it for another edition of the Small Biz Ahead podcast. We’ll be back with you next week.

Gene: Poop.