Category Archives: Small Business

Craft of Business

What do I mean by the Craft of Business? Why does Craft come before Art?

If a professional dancer wants to be great, he or she spends endless hours with professional instruction, learning how to move in a very precise way. This may take years. Every muscle in the dancer’s body learns and remembers how to move. Only when the dancer has learned the craft of dance, can he or she combine that craft with creative inspiration to perform with true art. Clearly, the hard work of learning the craft comes before the freedom of the art.

There is craft before art in drawing, painting, architecture, acting, cooking, or any creative endeavor. Why should business be any different? The fact of owning a business in no way qualifies a person to competently and effectively run a business. Small businesses differ from larger organizations in that they are typically run by non-business professionals. Most small business owners are artists, doctors, roofers, or chefs. But nothing in the training in art, medicine, construction or cooking deals with the “nuts and bolts” of the business.

Regardless of the field, the craft of business requires specific skills in finance, marketing, employee management, selling, and planning. In medium and large companies, the organization hires specialists in these areas. But that is not an option in most small businesses. So the small business owner needs to learn enough in each of these areas and to find resources to allow their business to be successful.

If you are a small business owner, what can you do about the craft of business? First, be honest about what you know and do not know. Then get help. Think strategically. No one can do it all themself.  Do not assume for example, that just because you cannot afford expensive advertising, you shouldn’t have a marketing program. There is a lot more to managing employees than just “I’m the boss, do what I say.”

Why Facebook

A year ago, if you had asked me about Facebook for small business, I would have replied that it was a cool waste of time for college kids, but that’s about all.  Since that time, I have completely reversed my opinion.

Now I believe (and tell my clients) that it is an essential tool for most, if not all, small business.  Here is why:

1. It is ubiquitous.  Last year, Facebook passed Google as the most popular Website.  Even the older (50 and above) demographic that you might expect to ignore Facebook has grown rapidly in the last year.

2. It is versatile.  You can easily modify your message, include photos, video and web links, and post it instantly.  How else could you promote a freshly cooked homemade soup for lunch today?

3. It is viral.  If you post interesting stuff, your friends will spread it for you.

4. It is free.

Facebook can still be a colossal waste of time and wasting time is the enemy of any business-person.  Don’t get sucked in.

I recommend much of what David Meerman Scott writes about web marketing.  He is unusually eloquent in his explanations.  His blog ( says it all in 61 words.

Calendar Season

This is what I call “calendar season”.  It doesn’t seem possible, but the middle of summer is when stationery stores put out displays of next year’s business calendars.  If you want the best selection, now is the time to shop.

There are other benefits to getting your calendar now. Many calendars, including the calendar I use from a company called Quo Vadis, have refills which reduce the annual cost by two thirds and waste of having to replace the cover.  Having next year’s calendar now lets me start to record planned events for next year.

It’s a good time to consider “calendar management,” which is what most of us call “time management.”  Manager Tools, a series of podcasts ( devoted to improving management skills, has a two-part series on Calendar Management.  It’s approximately 60 minutes long and is well worth the time.  They recommend, and I agree, that a week-at-a-time calendar is most effective.  A month display is too long and a day at a time does not let you easily plan the week.  For me, week-at-a-time is the most natural.

While we’re on the subject, I also recommend David Allen’s Getting Things Done, available in both paperback and on CD.  I find the abridged CD’s to be an especially effective way to get an overview of his thinking before diving into the very detailed book.

Seamless Problem Solving

I recently drove all the way to San Francisco to buy a bicycle, a major purchase that I had been planning for many months.  The arrangements for the bike and the schedule for the fitting were made via phone with an employee who assured me that the bike I wanted was available and that I could complete the transaction in the time I had.  After driving 4 hours to reach the store, I found that the bike they promised was in fact not my size and the key employee required to do the fitting was not going to be available as promised.

As these problems unfolded, the owner of the store got involved and took over the transaction.  His process not only got me more and better product than I was expecting but delivered it ahead of the original commitment.  He made it seem like there was no problem he couldn’t solve, and in what was a fairly complex transaction, he upgraded components, extended warranties, offered to swap parts that did not fit correctly, even after future weeks of use.  This situation could have turned into a real disappointment with lasting hard feelings and certainly loss of my future business.  Instead, the effect was that problems were solved seamlessly, almost before I was aware that there was anything wrong. I was left feeling like I was their most important customer.

A key business fact to notice is that this situation did not involve giving away anything, it did not require any apologies, it did not involve any disagreements, complaints or confrontations. The exceptional part of this transaction was that the owner realized what the problems were almost before I did and so was able to take care of me before anything became a problem.  In fact, I  felt so well served, I bought several additional products that I had not planned to buy and would recommend this store to anyone.

I have said before that the true test of an organization is not that they never make mistakes, but how they handle the mistakes when they do happen.  I will add to that basic principle that in the continuum of ways to effectively solve a customer’s problem, having such a keen awareness of the customer and their needs that the problems are solved without drawing attention, before the customer needs to voice dissatisfaction, is the ultimate level of this great customer service.

By the way, the shop is The Bike Nut at 2221 Filbert Street, San Francisco.  I would recommend them to anyone considering a bicycle.  Their slogan, ”Yes Can Do,” is printed right on their business card and they truly live up to it.

Suggestions for a Business Dealing with a Slow Economy

To listen to an interview with Michael Carroll on this topic, click this link. This interview was broadcast July 2, 2008 on KZYX, Mendocino County Public Broadcasting.

A slow economy to a business is like winter to a farmer. It is part of a normal cycle. Things may be dormant, but there is still lots to do. And winter is always followed by spring. Unfortunately, economic cycles are far less predictable, and the slow periods may be years long. But here are a few things to think about.

1. Lower interest rates Interest rates are at historic lows. It may be possible to refinance your debt and lower your monthly expense. It is not necessarily a good idea to borrow against losses just to maintain lifestyle. Rather it is more appropriate to tighten belts and spend less.

2. Slow economy weeds out your weaker competition If the slower economy is hard on a strong, well-run business, it will be much harder on businesses that were just barely making it in the good times.

3. Sometimes easier to find new employees Recruiting good employees is always a challenge, but when the economy slows down, more people are out of work, and it is often easier to find new employees.

4. May be cheaper to have new construction done When the construction industry is down, there are more out-of-work construction trades people, and it might be possible to get construction work done sooner or more inexpensively.

5. Be frugal This is not a time to spend extravagantly and even to continue to spend as you have been. This is a time to be extremely careful with your expenses. If you need to cut, cut owner’s salary first. For a while, live on less.

6. Watch the business expenses even more closely Use your P&L and cash flow. If you do not have these essential tools, get them and learn how to use them. Costs are going up in spite of what they government is announcing about low inflation. Your suppliers may not notify you when they increase prices. Stay on top of it.

7. Revise your cash flow forecast regularly This tool is important anytime, but in questionable economic times, it is essential. If you have a sales forecast and cash flow forecast, review and revise it more often. If you don’t, get urgent about getting one.

8. Increase, not decrease marketing A common mistake is to cut marketing. It is often the only way to reduce expenses without reducing owner draw or payroll. Other expenses like rent are usually fixed. But if you are doing effective marketing, reducing the effort will guarantee your sales decrease. Rather, find other ways to cut, and spend more effort on marketing.

9. Avoid fear-it’s corrosive Watching Fox News or CNN on TV will convince you we are in trouble even if we are not. Fear is good for keeping you from going over a cliff, but staying in the state of fear over a long period is unhealthy and unproductive. The antidote to fear is action. Ask yourself what can you do differently – then do it.

10. Might be a good time to start a new venture This doesn’t seem to make any sense. However, if you use the time during a slow economy to do the groundwork for the new business–make a good plan, perhaps raise money, hire key employees–you might struggle some in the beginning, but you’ll have a year’s head start on a competitor who’s just thinking about getting started in the same business. The enterprise can follow the growth of the economy when it does turnaround. Think about the difference between starting an internet company in 1993 verses 2000.

Don’t misunderstand me. Things are tough and may get tougher. It may not be as much fun as boom times. But usually a well-run business can survive, even thrive, during an economic downturn.


We recently stayed at a small hotel that featured, among other amenities, a full breakfast. On Saturday morning, a hoard of hungry guests descended on the dining room. The only wait-person was a friendly woman who was moving very fast. In spite of her energy and efficiency, trying to get 25 hungry guests their food was a challenge.

As you might expect, some of the guests were less than happy. No matter how rude or unhappy the diners were, the wait person always seemed to be smiling and happy. This “service with a smile” did wonders at calming the clients.

From a management perspective, one server for 25 guests was a little unrealistic and unfair to the employee. But I was impressed at how well she handled the situation and how much of a difference the smile made in the response of the guests.

I have said before that great customer service is more than just being friendly, but friendliness and a genuine smile are still essential tools for anyone dealing with the public. How often do we forget to smile when dealing with our customers?

“They Test Us Every Month…”

Last Saturday night, Margaret took me out to her favorite San Francisco restaurant for a belated birthday dinner. Since her own restaurant was famous for both great food and wonderful service, I am always intrigued by a restaurant that impresses her.

When ordering wine, the waitress was very knowledgeable about some esoteric Italian regional wines. And all three wines we ordered were everything she promised. As we expected, everything about the food and the service was exceptional.

At the end of the meal, I asked the waitress how she knew so much about the wines. What she answered is as close to a secret of success as one will ever get in any restaurant. She enthusiastically answered, “I drink the wines, they are always teaching us about the wines and they test us every month.” She said this with a confident pride and enthusiasm.

In a restaurant, your servers are your sales force. They need to be trained. Not just once, but regularly. They need try all of your offerings so that they know and believe enthusiastically in your product. I guess you small business owners both restaurant and others are saying to yourself, “I cannot afford to regualrly train and test my employees.” I say that you cannot afford not to.

Making Sense of the Numbers

Like most of my clients, I am not an accountant and have had to learn a simple method of looking at all those numbers. As I mentioned last post, many small business owners do not use their financial statements because they do not know how. In this post, I will suggest a simple method of looking at financial statements for non-accountants.

Step one. Get a monthly profit and loss statement, also called an income statement, and don’t panic.

Step two. Look at the left hand column of accounts and pick the three or four that you have any control over. They will be unique to your business, but there are usually only three or four. These are typically Total Income, Cost of Goods Sold, Payroll Expense, and Profit. For now, ignore the rest.

Step three. Compare each of these four numbers to what you expect them to be. For example, with the income in a seasonal business, compare the number to last year’s sales for the same month. If the sales are up and that is what you expected, great. If they are off, why and what can you do about it. For the rest of the numbers, it sometimes helps to look at the number as a percentage of the total sales. So for example, if your Cost of Goods Sold usually runs 32% of total sales, and this month it was 40%, there is something wrong. Find out what. Do the same for the other two numbers.

You are done. Well, not really. Now the real work begins. If the labor costs are up significantly, what can you do about it? If sales are flat, do you reconsider that next order?

The key to using the financial statement as a management tool is focusing on the numbers that you can do something about. For most businesses, most months, that means that you can ignore most of the numbers on the financial statement. That does not mean that you do not care about the cost of insurance or the cost of your rent, but as a practical matter, you can’t do anything about it. But you can and should stay on top of those three or four things that you can do something about.

Driving Blindfolded

Running your business without financial feedback is like driving on the freeway wearing a blindfold. This comparison may be a little extreme, but one of the most common problems I encounter in small businesses is not using financial tools. By this I mean that the business owner either does not have current accurate financial statements or, if they do, they are not using the information to run their business.

In fact, most of clients who come to me with a business that is losing money are also not keeping or using their financial feedback. Considering most small businesses are not started or run by financial managers, but by roofers, physical therapists, chefs and artists, this problem is understandable. That does not make it OK. I can not tell you how many times I ask a new client for their profit and loss statement and get a rather sheepish look. It is the same look I give my dental hygienist when she brings up flossing.

So here is the upside of learning to use financial statements: Many of the clients I see who learn to read and use current accurate financial statements become profitable very quickly. Why? It is just like the last time you took your eyes of the road and wound up driving on the shoulder. Then looking back to the road, you correct without even thinking about it. If you are a builder or a restaurant owner, I can understand why you pay more attention to blueprints or menus, but if you want to have enough to pay yourself at the end of the month, learn to use your financial statements.

I’ll give you my easy method in next week’s blog.


We are all motivated by “free.” But free is more than just a low price. In a new book Predictably Irrational , behavioral economist Dan Ariely of MIT tests how humans respond to free. In discussing free, he uses the example of how Amazon’s sales really took off when they began offering free shipping for orders over a certain level. Everywhere but France. On investigation, Amazon management found that in France, the country manager decided to do the promotion a little differently by offering shipping for one franc (in the US, it might be the same as offering shipping for 50 cents. ) But one franc did not elicit the same irrational response as free. When they changed the offer to free, they had the same response as everywhere else – spectacular sales growth. The bulk of the book is actual experiments that he performs with different age groups to understand how we all behave.

Responding to free is only one of several irrational behaviors he investigates. He looks at how honest we all are, how we react to irrelevant environmental clues, even how adolescent boys change their behavior when they are excited and many others.

This is my new favorite book. It defies categorization. The bookstore where I found it had it categorized in Self Help. For me, it belongs in the Business, except that many books in this section are (forgive me) boring. This book is anything but boring. It is an easy read. The author has a dry sense of humor and playfulness that makes the science of his investigations seem like fun. I think it is really a science book … the science of Behavioral Economics. I suspect most bookstores do not have a section for behavioral economics, so you might have to ask.

I believe any small business owner who reads this book will find plenty of ides for their business. This is a must read.