It’s no secret that an interview is a two-way process, at the same time when you are asking your candidate a question and evaluate their performance based on responses the candidate across from you doing exactly the same. Your questions, your reactions and even your body language can tell candidate a lot about you – and shape up his next response.

There are a few things to be aware of. Sometimes you don’t want to pass along anything at all and put on your “poker face”. If your candidate is any good he will immediately realize that and figure you are hiding something. What is it that you are hiding he doesn’t know, but it can make him either too nervous and uncertain if he even gets anywhere near what you are looking for, or too confident that you are trying to hide something bad about the job itself and, as a result, such candidate will pass on your offer even if it is better than your competitor’s.

There are no set rules, of course, but there are few cases that pretty much outline the major mistakes hiring side made during the process. I happened to be interacting with either business that was hiring or coaching the candidates so I have sort of first-hand information on each account.

Case 1: Business advertised a managerial position with some hands on skills required. At the beginning of the interview process candidate was assured that position requires about 30% of actual hands-on process as there are other people who handle it. However, the technical part of the interview was so detailed to one particular aspect of hands-on operations that candidate immediately assumed that this part will be his engagement 100% of the time. As a result, candidate has turned down the job offered to him.

Case 2: During the interview process the hiring manager repeatedly advised candidate on his skills as an interviewee instead of concentrating on actually interviewing the candidate on skills pertaining to the job – according to candidate’s account such comments added up to about 30% of the overall interview time. As a result the candidate has turned down the next round of interviews suggesting picking up someone from the kindergarten so that the hiring manager can fully embrace his father-role in the game.

Case 3: The interview with the hiring manager was immediately followed by two more separate interviews with two members of the team. Questions that two team members were asking, aside from basic concepts, revolved around the same technical problem presented in two slightly varied ways. Candidate decided not to proceed with the interview with third team member on the assumption that the team is looking for a solution to a problem, not another team member, and was using the interviews to extract some fresh ideas from candidates.

Case 4: Business advertised a position that had a split responsibilities between managing outside vendors and hands-on work in house. On the last round of interview he was asked the question of which part of this dual-hat wearing position he would appreciate more, to which he responded that ultimately he would be interested in managing the processes 100% of his time. Business, after very long consideration, decided to go a different route and hire two people to handle both aspects separately. The candidate was not offered a job, since business considered him overqualified for hands-on job and not having enough experience for managerial role.

Case 5: Recruiting company approached a candidate with a consulting position for an undisclosed company that was conducting a “discreet candidate search to replace one of the workers”. The interview, done by one of the consultants, consisted of basic questions on technology as a whole and complaints about the person being replaced. Most notable complaint was “he works like he’s playing chess, sitting there, thinking”. Given that the work required significant amount of mental labor it was very strange that one of the main issues with the worker that was being replaced was that he isn’t typing as fast as the other consultant. Obviously, the candidate turned down the position with words “I don’t want to get fired for needing to stop and think”.

As you can see, there are a few early signs that business is not ready to make a move on hiring a candidate right now or even do not know which qualifications of the candidate are most important. A well prepared candidate can spot these signs and decline a job even though you might want him for your company. Here are a few stop signs that, while not definite red flags, but are taken as “proceed with caution” signs. You might want to avoid them when hiring.

- Hiring manager saying “We will hire when we’ll find the right candidate” – tells the candidate you are not ready to make a move so he can move on.
- Interviewers asking “Have you ever worked with _some tiny little niche of the responsibilities_?” – tells candidate that’s all you really care about.
- Interviewers not asking anything except very basic questions when interviewing for anything above very junior level or asking about minute details without assessing conceptual understanding first – tells candidate someone wrote those questions for you and all he has to do is guess the right answer.
- Interviewers asking for specific area of knowledge or resolution to specific problem while disregarding anything else – tells the candidate you are looking for a solution to an immediate problem and he may not work for you as long as you promised him he would.
- Interviewers asking questions directly from “Worst 100 interview questions” book without even realizing it – tells candidate you simply don’t know what you are doing.

“Anyone who uses the phrase
‘easy as taking candy from a baby’
has never tried taking candy from a baby.” -
R. Hood

Let me start with a personal story. I have an acquaintance who’s freelancing as web developer. More on a creative side, less on programming, but essentially the same web development and web design as we do at Zealus. We’ve known each other for quite some time. This person (let’s call him John) oftentimes asks for my help on projects just to drop me off a few hours or days later. The typical conversation goes the same every time – first a phone call for help, brief description of the project and (almost) begging because John has overestimated his capacity or knowledge. I spend about an hour explaining and pointing out at least two acceptable solutions. John thanks me in the warmest terms. In about 10 – 12 hours (usually early next morning) he’s calling me again to discuss more ideas or ask more questions which takes up another hour. During this conversation John would offer me either to take the project completely off his hands, have me equally involved or make other advances – usually to make me divulge as much thinking as I possibly can regarding my approach to solving his problem. Then, out of nowhere, he would come up with completely different scheme of things that simplifies the problem to one single bare bone and makes my role in a project completely redundant. With elevated cheer and almost theatrical (in a bad sense) happiness he says something about how happy he was to be able to find such a simple solution and how he’s going to nail himself, since it will be so simple. With all that said he hangs up for another year or so.

So why do I always fall for his cries for help. Obviously, I’ve seen this go through time and time again. I know the story inside out and can even predict what his simplified solution would be. How come I keep giving up my time for this schmuck?

Well, first of all, any such story pretty much always ends the same – John has never landed a job from the client he needed someone else’s help with. So I am not the biggest looser here. There are, however, certain takeaways from any such situation that I think are worth spending my time on.

First – it’s a good Q & A practice. You would think you’ve had enough practice answering your other clients’ questions, but you would be wrong. Practice makes perfect, practicing on someone your income doesn’t depend on is saving you money. Think about that for a second – you are getting a free target practice session to polish your Q&A skills topped with fuzzy warm feeling that you are trying to help somebody.

Second – it’s a collective brain storming. Even a way less qualified person that you are is capable of coming up with inventive idea you didn’t think of, twice so – in creative environment. Listen before saying something is the rule of thumb. It’s like digging for diamonds in the rough, but some diamonds are well worth it.

Third – it is good to train your brains on someone else’s problem. Your brain actually functions differently (with a lot less stress) if you don’t have to solve the problem. So you end up with really good ideas and solutions for things you still may encounter in a future – but at least you will be prepared well in advance.

Fourth – I get to hear what other crazy requirements people have for services similar to mine. This way I can think of/create something in advance and beat my competitors by over-delivering before they even start talking. Think about this – if everybody out there wants a forum installed (which actually was the case a few years back) you can do your home work and pair up with great forum developer or designer who specializes in forum skins. When the time comes and you get asked to add a forum to your client’s site – you don’t go on a desperate trip to find someone capable of doing things at any cost, you go to a person you pre-screened for this job already.

Fifth – and the last one for today – is the simple fact that I am selling myself to John every time he asks me something. He may do this for a different reason (to extract information) but what he ultimately hears is that I can do this job for him better than he can do it himself. When the time comes and he gets that big fat client that he would not want to drop at any cost – I’ll be there.

As you can see, even these little things are well worth the trouble, let alone other perks (free coffee?). This is why collaboration – even if you cannot understand or realize its benefits right away – is always better. Once you start collaborating with your peers, you turn them into your agents, instead of head-on competitors. More on that – in the next post, stay tuned.

There is an interesting read on O’Reilly Radar today, called “Why the cloud may finally end the reign of the work computer”. The author, Jonathan Reichental, Ph.D., brings up an interesting topic – what if workers were allowed to bring their own computers to work. This will bring costs of support up. But since the advent of the cloud it won’t matter: “With the application, data, business logic, and security all provisioned in the cloud, the computer really does simply become a portal to information and utility.”

As far as I know (and I have only worked in IT for 15 years) there are two major factors that push companies to provide their own computers to workers: data security and maintenance costs. Somehow it is widely believed that if you scare your users into believing that all those viruses are out there hunting for you only because you are not “doing work” and if you stick to software on the company-issued hardware then you are magically safe. No virus will touch you because you are “doing work”. The company data is safe because we all “doing work”.

Let’s talk about data security first.

Scene 1.
When I work as a consultant at the company bringing my own laptop is either highly encouraged or required. If I am an employee at the same company, bringing my own laptop may result in what they call a “disciplinary action”. Oh, the irony.

Can you steal sensitive company data? Yes, especially if you are a contractor and therefore have less ties with a company. Just copy whatever the hell you want on your very own contractor laptop and do whatever.

Scene 2.
HIPAA-compliant institution, no one (including consultants) is allowed to use anything, but bulk, ugly and oh-so-last-century laptops provided by IT department. Each laptop has a (disabled) hardware encryption chip and a hard drive encrypted by some software. Yep, that’s how clueless the IT department is, but that’s not the point. Every single useful web site is blocked by the firewall – web mail, hosting providers, you name it. What do you think the chance of BYOC there? Zero or less.

Can you steal sensitive company data? Still yes – just take your laptop home a few times and don’t connect to company’s VPN when you hook it up. Even if CD burning or USB writing is disabled – you can still e-mail pretty much anything on your laptop to your own self.

As you can see there is little of what you can do from an IT prospective that would ensure the safety of the data. There is nothing technically sophisticated in each scene. The safety of the data relies not on technology, but on people employing it. Once C-level executives figure that out (in only hundred years or so) – no one would care what is it that you are using to get your job done.

Now, part two, maintenance cost. That’s a real one, boys and girls. It is indeed true that company buys hardware at a special discount, so if you see that brand new Dell for $600 your company may be buying the same exact model for anywhere between $300 and $500 – depending on company size, aggressiveness of Dell’s sales person and myriad of other factors. It is also a big deal to support all this hardware and it’s no joke – with all the in-house applications it becomes a nightmare to test that brand new billing system developed in shiny .NET 4.0 on your Accounting 5-year old clunkers.

Here comes the cloud, as the author of the original material says, and everything is magically working again. I say – it worked a long time ago without any cloud – just recall magic words “remote desktop”, “citrix” or even ancient “application server”. Yep, I remember environment with 50 users running the same DOS program on the server via some sort of remote terminal connection – each got their own instance, of course. Today, with virtualization, it so damn easy to have a truly unified workstation across any number of workers – it’s not even worth discussing. Just do it, back it up each night and fuhgeddaboudit.

See, ma, no hands. I mean – no clouds. Bright and sunny. And, what’s the most important part of it – no data leaves the company, even if you DO take your laptop home. Some added benefit of security, right?

You have probably heard the “If you want something done right – you do it yourself” adagio times and times again. You agree and when you hire help you tend to tell in every little detail how stuff should be done, because that’s exactly how you would do it. You did it thousands of times, so it should be perfect, right? Wrong!

There’s hardly any other way of management as ineffective and destructive as micromanagement. Sometimes a complete absence of management would do better. Imagine you micromanage a group of 3 people, whom you tend to micromanage. That’s basically doing their jobs together with them. So if each one of them has a standard 40 hour work week that alone is going to 120 hours a week. Add your own responsibilities which should add up to another 40 hours per week and you arrive at 160 hours per week. Which leaves you precisely 8 hours per week to sleep, eat and have a life. The math is amazing, isn’t it?

Aside from this obvious exaggeration there are more issues with micromanagement than you might think. Once you’re comfortably sure none of your employees can make a single step without consulting with you, you can be sure you will get nagged every 5 minutes with requests to validate everyone’s output and the inevitable “Done, now what?”. That is, of course, if your employees won’t “forget” to ask than to have a few precious minutes without that authoritarian “What are you working on now?” questioning.

This constant nagging leaves you no chance to concentrate on your own work that you do as their manager or supervisor – acquiring new tasks, planning, measuring risks and so on, every single moment of your time will be devoted to distributing tasks, controlling the process and validating the output. This will also lead to huge waste, justified by “He didn’t tell me what to do, so I’m doing nothing”. True, why do anything at all if all you hear back is “Did I tell you to do that?”

Micromanagement creates no incentive to work efficiently, given the amount of waste obvious to any one with a bit of common sense. It creates a stressful work environment for both the employer and employee. It hurts productivity from multiple angles and creates an almost Orwellian state of mind as you are being watched and told what to do almost every minute. Yet, many of small business owners tend to implement this kind of management style, because they just know how to do it right. They did it a thousand times over, so they should know better. Right?

Having not posted for quite awhile I have accumulated a number of stories to tell. Today is one of them – or rather three similar stories about some decisions that web site owners are making and how it affects their business.

The Good
Imagine an online store that doesn’t sell anything. Yep, there are certain niches that – no matter how hard you try – will not sell as good as you think. This business owner is in one of them, provided he has a show room full of merchandise. The web site is a mere catalog with pricing. However, if you just take out the online checkout option – you suddenly don’t seem credible enough. It reads like “I’ve got all this great stuff from all over the web, but in real life I’ve got one dusty shelf“. So you have to make it look like you’ve got stuff ready to go – only to lure customers to the show room.

The good decision – figuring this stuff out and presenting the customers with the choice to buy stuff online, even though almost no one is really buying.

The Bad
This is a diverse category because you can drop pretty much every single major issue with your web site – from non-working contact form to eye-scratching design from 1980s to web sites that never finish to load because your friend’s son who put it together didn’t realize that cute kitten picture on a front page is 15MB BMP file. But rather than talk about these, easily addressable issues, I’d point to a really major one – not having any kind of web site. Imagine – there are businesses out there who decidedly go without web site at all. There are usually two main justifications – “we don’t need one” and “we don’t have money for it”. It’s almost like wishing for a win in a lotto without buying a single ticket. Aside from the fact that people prefer to shop from the convenience of their homes (less clients for you), there are more choices online that you will ever have in your inventory (again – less clients for you), you are also limiting yourself by not pitching to those who actually are interested in what you want to sell to them. With the average rent on any decent store around tens of thousands of dollars per month a budget web site would cost you a lot less than that. And, of course, there is the rationale that you can only save as much as the web site costs, but your earnings are really not limited.

The bad decision – not having a web site for your business. In fact – its the worst decision you can ever make.

The Ugly
One of the worst things you can do to your web site is keep relaunching it every few months on a new domain names. It’s not a secret anymore that your domain name equals your brand – twice true for small businesses. Of course, you can launch a new web site on a new domain name if you used to be GreatWidgetsOnline.com and you have just bought GreatWidgets.com – it’s not a major major change, but rather a welcome convenience. However, if you keep relaunching the site from GreatWidgetsWeSellHere.com to ThingamabobsOnlineRightHere.com to WhatchamacallitSalesForYou.com – it’s not really clear how you are going to attract the customers and keep them around. Even if there were some issues associated with your domain before – it’s easier to fix them than rebuild the whole thing from the scratch. Besides, even if there was some bad press – you can always use it to your advantage.

The ugly decision – keep relaunching business web site on different domain names in order to avoid issues associated with previous domain.

There is an interesting article on Small Business Branding blog – “10 Critical Questions To Ask A Web Designer”. The post is wrong on so many accounts, it’s would have been easier to ignore it altogether. However, being a lead to a Zealus web design studio for so many years I can’t help but notice how irrelevant most of these questions are – and here’s why:

1. What skills do you or your team posses? HTML, CSS, Drupal, WordPress, MySQL, PHP, CGI, Ruby on Rails? – author argues that by listening to the white noise the project lead makes while trying to answer your question you will be able to pick something useful. Wrong – you won’t. If he’s technically savvy he (or she, doesn’t matter) will sink you in the sea of gibberish technology talk, and if he’s not – he will sink you even deeper in semi-technology blabber. Point is – you will leave thinking that you have talked to a smart guy while in reality you have learned nothing.
What you should be asking – what’s the technology called, how widespread is it, how mature is it. These are the things you can understand, remember and cross-check after the conversation. What’s important – you will be able to make a business decision based on things you can comprehend.

2. How quickly can you provide a first draft of the site and how long does a job like this normally take? – author argues that such preliminary estimates can help you manage your schedule. Wrong – before signing the contract all dates are so grossly underestimated that you really have to live outside of the reality to base anything but future negotiations on those dates.
What you should be asking – how long projects like these take typically? What are the pitfalls, what could drag the project, how to prevent dragging from happening.

3. What is your working procedure and how will you communicate your progress? – if you are working with freelancers they most likely have no procedure in place and if you have with some established group they will tell you about project status reports even before you have to ask. The reason being that people who’s been around long enough know that if they fail to communicate properly they fail to get paid. So they will make damn sure their client knows all the hard work they put in, they will create a dashboard with tasks, timelines, heck, you might even see Gantt chart!
What you should be asking – what is the phone number of the person responsible for the project. One single person has to be responsible, if there is more than one – walk away.

4. How much support comes with this package deal? – obvious statement that no one works for free is obvious. Make sure you ask this question before negotiations begin, otherwise you can negotiate that sweet low price only to find out that support costs painfully extra. Unless you’re dealing with “Cheap web sites for r$499 per 5 pages” type of designers – there is no point in asking this question aside from the other negotiations.

5. What kind of after support do you offer? – same thing. Best thing to do is negotiate a support contract for some period immediately after launch so you will be covered in case something comes out immediately after your web project is live. In addition to that you might want to get a per-incident support after initial support contract is expired.
What to ask – nothing, keep negotiating.

6. What is your normal procedure if the job does not turn out satisfactorily? – author is then ventures on a journey of how everyone is spoiled by generous refund policies. Well, you just go and try to get a refund from anyone, I just want to watch how easy it would be. Speaking of service contracts, I may not live long enough to see the end of it anyway.
What you should be asking – nothing, just get a copy of the contract BEFORE you sign in and show it to your lawyer. It just another one of those things you want to negotiate as hard as you can. We have actually dropped a number of contracts because we could not successfully negotiate this single point. Everything else was set, but because client wanted a full refund or had some other crazy idea about how he gets all of his money back at the end when he tells us he doesn’t like it – it was dropped. It’s cheaper than a lawsuit anyway.

7. What software or technology will you be using to build my site and will I be able to use and update it myself? – the tragic story of a person who was asking for white noise in question #1 and ended up with useless application without anyone around to support it. That’s the illustration right there why pretty much everything that post is telling you is wrong.
What you should be asking – see question number 1: how widespread this technology, how mature is it. Is is Open Source or is it proprietary (former is better than the latter, unless you’re talking about Flash which is a whole another can of worms altogether).

8. Does it cost extra for this software or does anything you recommend to build this site going to require additional license purchased? – this is the only sane question in the whole ten, however, the justification is flawed nonetheless. As with any contractor, he brings his own tools. If your project lead is a geek he will force you into buying the top-notch hardware and software so that he could play with new shiny toys that he otherwise could not afford. If your project lead is a sales agent she will sell you whatever she will make the most of. Either case – you loose.
What you should be asking – is for a detailed chart of costs, including anything and everything your project needs to be completed successfully. Let your future contractors know that you have such and such assets and if anything needs to be purchased – it has to be put on that chart. Time, licenses, hardware, image and sound rights and royalties – everything goes there. This way you can cross-check with other contractors and actual vendors to see who’s charging you and for what. It’s your money, don’t waste it.

9. We would like the domain name administrator to be in our representative’s name and email. Can you arrange that? – unless you trust your contractor sleep in the bed with your husband (or wife) – never ever even mention this to them. Spend as much time as it requires, but BUY THE DOMAIN YOURSELF! Do not give access to your domain to anyone else, if there are any modifications – learn how to do them yourself or register a domain with registrar who has telephone support – like GoDaddy. You can rebuild the site in months, but rebuilding a reputable brand name, replacing domain that all your customers know can take years.
What should I ask – can you develop on test platform and them move the site to our domain? But any decent developer should do that anyway.

10. Can I see a portfolio of previous sites built. Or is there a demo of a site similar to what you will be building us? – this should be first question that you ask a contractor (designer, programmer or whatnot). Why is it #10 – I have no idea, I guess just to reiterate how much wrong is with initial post. In addition to portfolio (if there is any) you should briefly explain what you are trying to do and how does the designer see it solved. That should be the first thing – before you put anything else on the table.

There are hundreds of accounts of fraudsters using various scam methods for credit card stealing, making fraudulent purchases or selling goods that never arrive at their intended destination. So much so that small businesses were literally forced to incorporate those fraud transactions into cost of doing their business online. Here are a few tips that should help a small business sustain some of the most often tried transactions – purchase with fraudulent credit cards. Some small businesses have this reason alone to choose more expensive credit card processor, like PayPal,  in order to not to deal with fraud themselves, potentially loosing thousands of dollars in revenue. These simple steps may help recover that money given that small business processes credit cards through its own merchant account.

1. Verify shipping vs. billing address. Some web sites even refuse to ship to an address that is different from billing, but that is really up to the business owner. If you sell something that could potentially be a gift, so that one relative can order it for another – pass it on, but if you sell something that people mostly order for themselves, like gadgets or novelties, then shipping address way off from billing might suggest something fishy.

2. Ask yourself – does the order make sense? If you are selling expensive merchandise that people are most likely to buy once in a while – would the order for five items make sense? Call the billing phone number to verify the purchase – it will cost you 2 minutes, but potentially can save you hundreds of dollars.

3. Have the payment cleared yet? Institute shipping and handling policies that will cover your bases while you wait for payment to clear. Sometimes it may take a day or two for payment to go through all the hoops of your payment system, be patient and wait out the whole thing. It may bounce off for a number of reasons, first of which is stolen credit card.

4. Verify the IP address‘s geographic location vs. both shipping and billing. It sounds a bit nerdy at first, but any online shopping cart can be tweaked to display originating IP address along with the order information. The task is to see if the IP address belongs to the same region as the two addresses. An order originating from Eastern Europe’s IP address that has billing address in Connecticut and shipping destination in California is hardly legit. In some cases you won’t be able to tell if the IP address is or is not located where the billing or shipping addresses are, in these cases just move on to #5.

5. Never hesitate to call the bank that have issued credit card. Have your clients enter the 800 number on the back of the credit card along with their billing information. In any doubt – call the bank and have them verify that name, billing and shipping addresses are legit. Some banks even have that option on their initial menu.

Quite often I see the same issue repeating itself over and over again. There’s a small business which operates almost on a shoestring budget. Then there’s a business owner who, out of all things, afraid to move in either direction because it is quite clear to him – one wrong move and he’s out of the money and out of the business. Then employees come into picture and start pressuring business owner for raise, more perks or simply new equipment.

If he concedes – he’s back to the same issue of money shortage. If he refuses – employees become less and less motivated, until it gets to the point where no work is done. Then the business owner has to go through a whole round of cycling the workforce which is as expensive as it is exhausting.

Every small business, once in a while, hits this rock. Almost every business addresses the issue – one way or another. Some survive. Some – not so much. However, the question remains the same – how to keep employees motivated to work on a lower wage than they could have gotten if they looked hard and long enough? How to deter the motivation degradation, that eventually becomes sand in the gears, fifth wheel in the cart and whatever else you can think of that doesn’t help business moving forward.

First thing any business owner should understand is that no matter what is said and done in the company, unless the employee is a managing partner – he would never care about the business as much as the owner. Even more so, any small business that treats its workers with little respect is doomed to have a low motivation problem. Whatever can be stolen – will be stolen. Whatever can be neglected (even at the risk of having an argument with the boss) will be neglected. Employees will constantly be late, leave early, or, if that’s somehow restricted, will slack off during the day.

As an example I will tell the story about one IT department I used to work for some years ago. The company had pretty much any internet activity restricted and forbidden. There were no Facebook back then, but there were chat rooms, dating sites, discussion forums and other perfect methods of spending a day at work without doing any actual work. As any strong medicine this had its side effects. People were unable to find the information they needed. There were no blogs, but there was some technical documentation, newsgroups and forums, where actual meaningful discussion ensued. Ah, those were the good old days. It turned out, IT people spent enormous amounts of time carving multiple workarounds to access the sites they needed. Sites they needed to do their work, mind you, but once you’re breathing the freedom – you want to fully explore it. Having those boundaries not be in place – any worker could have the information he or she needs in minutes and would go back to work. But creating walls around people to make them work harder achieves only one thing – making sure these people will try to traverse these walls as hard as possible – work or no work.

So what does this has to do with motivation? Everything! Given the right motivation people would be willing to sacrifice other things. As an example – the organization above had one of the fastest internet connections at that time, so for any IT geek it was obviously a better place to work. I know, sounds funny, but that was the case.

Many small business owners are too afraid to look deep into their employees. Everybody’s got their reasons, of course, but generally they’re afraid to be met with ignorance. However the case may be, business owners should still try and understand – what drives this person? Why did they choose to work for me? What’s in it for them? Maybe it sounds like a too much of a job – to look into that $10/hour kid, but it may bring back a lot more value. Maybe your business could become a major stepping stone in this kid’s career, so he will be willing to go an extra mile or two for a good reference and valuable experience.

An extra mile or two from every employee in a company totals for a good deal of distance these people are willing to carry your business for free. It isn’t something a business owner should easily overlook – especially one with strained budget.

Since I have covered this business in three posts already it would have been worth it to post an update as events unfold. If you’ve missed it here’s the required reading – Part 1, Part 2 and Part 3 respectively.

The way thing were unfolding the business was supposed to crumble in 6 to 7 months. At least that was the term I have predicted based on all the issues I had uncovered back in March. So overall-  from my point of view at the moment – this company has got until about August to shut its doors. When I communicated this to the business’ manager he, obviously, didn’t quite trust me. We haven’t built that trust yet, as I was only doing initial assessment. Turned out I should have been paying more attention to the depth of the problems. But before we get to the conclusion – here’s issue #4 – problems with sales and marketing.

Although I’ve covered marketing somewhat in previous posts, I completely skipped on the way the pricing was made. As you may already know (and if you don’t – read on with more attention) the initial pricing is build based upon your cost of running business plus the margin. In other words, if the cost of doing business (CODB) per client is $100 and your margin is 20% (all numbers are not real and are just for example’s sake) then your minimum price of service per client should be $120. If you go lower than that then there is no point to be in business at all. You may slightly deviate in one way or another, based on market conditions, your own value proposition and competitive advantages you possess, but that’s how you determine the initial pricing. Once you’re ON the market – you can (and you must) take steps to reduce CODB and increase margins. Market won’t let you go far off the median – unless, of course, you’re government-mandated monopoly, like AT&T or cable companies.

So for this company in question the pricing structure was determined at the whim of the managing partner. Employees’ salaries tied in directly as a percentage of the price of service and, therefore, are also at the same whim. Having heard about so many promotions and sales event but having absolutely zero knowledge of how these things worked this partner distributed flyers and promo cards with 10, 20, 30 or – the latest – a 50% discount. Funny part is that his two employees who actually performed the services and collected the money found out about promotions from clients who showed up with promo materials. Of course with rates already lowest on the market their salaries were discounted into ranges of minimum wages or less. From previous experience I can attest that sometimes expensive places do these kinds of promotions for a very limited time to get new clients in. Experienced sales people pitch more expensive services that span longer periods of time, so overall this tactic is very successful. But just discounting your service by 50% out of nowhere is a message to the employees “we’re going out of business, grab what have left before we close our doors“. To the clients it reads like “we’re so cheap that McDonald’s looks like 5-star restaurant compared to us“.

As you may have imagined already the employees’ outrage resulting from latest 50% pricing cut was on par with recent volcano eruption. Both employees have quit on the spot. There wasn’t much of quitting involved though – the volume of clients only allowed for one and a half day of work per week.

Having said all that I must admin – I was (again!) being overly optimistic about those 6 to 7 months, it all fell down in less than three. In my defense I can only say that I based those assumptions on brief initial analysis.

The small business owners just don’t get it. We, the technical types, can hype ourselves about HTML5, Flash, patterns, interactivity, social features, geolocation and other cool buzzwords, but regular small shop owner couldn’t care less. They have enough on their hands to worry about, so why should they care about brand new web site if they already have “a web site”? Just because you want their money it doesn’t mean they are willing to give it to you.

Here’s what you can you, as a small business owner, should know about the web site and his business. First of all – even though you may not realize it, people are talking about your business. With the proliferation of the web sites like Yelp, Kirtsy and omnipresent Craigslist, there’s always somebody talking. As an example, let me tell you a little story of one of my remote relatives who owns a shoe repair business in Williamsburg.

One day he came back from work and told his family that one of his clients told him that someone somewhere on the internet posted that his business has closed. Family council have decided to take immediate measures and my number was dialed. I was told to fix the internet or whatever was saying that his business is closed. As you can imagine – I was thrilled at the task of fixing the whole internet on such a short notice. As it turned out – it was nothing more than some weird check box on Yelp’s web site that anyone can tick signifying that business has closed. Of course, there’s no way for Yelp to verify that, so they have just gladly accepted it – just like they did accept my correction of this. In just a click of the mouse the internet was repaired and continued to go on as usual.

As I have read, with much amusement, the business already had quite a few reviews. Most of them discussed the pricing structure – or rather a lack of one. A few more things here and there that I thought my relative should have known about – and I was ready to bring the happy news back to him.

What this boils down to is this – now matter how small your business are, in this day and age, there’s something online about your business. If it’s not your web site – then it’s someone else’s rant about your business (not necessarily a happy one). If, after such a rant, your potential client will see a web site that was designed by an 8-year old, that potential client will never become a real one. A few years ago you only competed for customers’ attention amongst your competition, but you always were. Now you’re competing against a number of sites that hold numerous reviews and ratings, people’s blogs and tweets and whatever else. Keeping up with all that flow of information with old and antiquated web site is just impossible.