Startup: An Insider's Guide to Launching and Running a Business (19 page)

My experience is that these professionals are not going to understand the nuance of what you are doing with your business financially, and will not come near to fully grasping your story—even if you document everything and spell it out for them. These individuals are not close enough to the decisions that you make every day, and have made in past years, to really get everything, unless you press the point and follow up on every detail. A CPA falling off the turnip truck and missing a few details can have tremendous consequences for you—and none of them good.

A CPA that I know provided the following insight into the mindset that comes with a client relationship when handling the books: CPAs will take the path of least resistance, which means erring on the side of safety (and thus higher tax) if they do not explicitly understand any particular detail of your financial story. This means they are primarily interested in avoiding regulatory mistakes, and much less interested in making sure that you get every penny that you could reasonably claim.

This has happened in my businesses repeatedly and has been a drain on finances and time. So what to do?

• Because you are going to have to push your financial folks on certain details, this means that you have to know something about tax law and financial law. You cannot farm out everything to your CPA. Find out about recent changes to tax law and the best strategies to navigate it.
  
• Prepare your documents carefully.
  
• Make a checklist of your assumptions and ask for an initial by each point from your CPA.
  
• Ask questions frequently—I have always ended up saving a lot of money in taxes when I stopped to question my CPA’s assumptions.
  
• After you have asked, if you have any lingering concerns, ask again. If they don’t like your attention to detail (many won’t), then find another firm to represent you.
  

Vendors

Another important group of team members comes in the form of the various vendors and service providers that you will develop relationships with over time. I have found that vendor relationships tend to evolve to into highly valuable (even critical) symbiotic relationships over time. Such types of relationships include those with wholesale distributors, advertising partners, and software and equipment providers.

My advice for this type of relationship is to treat your vendor partners (the people) in a very considerate manner. Treat them with respect, share information with them, and stay on good terms with them even when times are tough. Appropriately, as I write this section of text, I am sitting on the patio of the Sand Hill Resort in Silicon Valley, having just participated in a Google-sponsored networking event. I am here because of the relationship with a vendor (my Google sales rep), and the fact that we just worked through a tough licensing discussion a couple of months ago.

Some years ago, during a period when I was involved in online retail, we developed relationships with our wholesale vendor reps that were critical to our operations. Through strong relationships with the vendors (the
people
, if not the companies in question), we were able to get increased discounts, extended credit, and even information on the buying patterns of competitors. This was a
feature of our personal relationships with our reps. We would even send baskets of chocolate and baked goods to them during the holidays. I remember us discussing how that was always the best $80 we could spend.

Other businesses I have been involved with have gotten early access to new products, marketing exposure, special assistance, advice, and even intercession with unrelated issues where our vendor reps had connections. Vendors are potentially very valuable allies—and they should be because they need your business. Don’t let the fact that you send them money or have options with other competitors find you complacent or dismissive of these folks. Keep your options open, honestly communicate if you have issues or problems, and negotiate hard on price, but keep the human relationship well maintained. It is good karma, it’s the right thing to do,
and
it has the potential to benefit you and your company in ways you may not expect.

Communication Matters

What is the purpose of communication? In business, the desired outcome of communication is to get work done (internal) or to generate revenue (external).

I have a great interest in communication as it pertains to business. A few years ago I conducted a research project on communication in international projects that included nearly 100 engineers and managers from over a dozen companies. The underlying thesis of this study was my belief that
communication is the most critical component for effective management of teams.

If you are an experienced manager, or simply have a good imagination, this should not come to you as a surprise. Of course, communication is vital—it is the glue that brings individuals together into a team. Whether it is communicating a value proposition with customers, a strategy to management, or details of a plan to a team, communication is one linchpin that you must get right. No two ways about it.

Repetition

When communicating an important message to your team or to your customers, it often pays to first decide what the important core of your message is, and then plan ahead of time for ways to repeat that core message again and again to your audience.

When communicating with your customers, plan to tell them the message and repeat it. Repeat. Repeat. Pick the most valuable message and focus on it. Have salespeople tell the customer, have your web site tell your customer, and have printed materials tell your customer the same message. Phone touches should repeat the message. Pick your most important message and repeat it until the customers get it. It may take ten messages before they get it. Keep at it.

Training and management are the same way. Managing thought and understanding in teams will find you needing to repeat and reaffirm those things that are important in your organization again and again.

Here are some examples:

• In an engineering project, I verbally repeat the objectives every time we meet. The team has heard the objectives 25 times by now, and we are just getting started.
  
• For marketing, there are mantra-like objectives that the team has heard from me repeatedly, such as “provide value” and “don’t bury the lead.”
  
• For management, the repeated patterns include “What is the specific intention?” and “How will we make money with this?”
  

It is not enough to simply tell somebody something. If it is important, repeat it until they get it. (Even once they have gotten it, it is still advisable to repeat it as long as it continues to be important, just to make sure.)

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Multiple Layers

In doing research on how effective international engineering teams work together to produce highly complicated products, one of the most important lessons I learned was the idea of using multiple layers for communicating. That is to say that if you’re going to focus on important details in a meeting, you should follow up afterward with another layer of communication that reinforces the same message. Usually this would be in an e-mail or a printed handout that lists and summarizes the most important takeaways from the meeting. For the most complicated subjects, the meeting should also be preceded with
the distribution of materials outlining what is scheduled to be discussed in the meeting, so people can prepare a mental context and do research if required beforehand.

The concept of providing multiple layers and chances for an interested (or even disinterested) audience to get the message you are trying to communicate applies both in and out of the office. Let me explain: when putting together a marketing campaign, it is very common to provide multiple layers of the same message. For instance, a sales e-mail might be followed up with a phone call and a request for a potential customer to see a web site that has PDF documents and video on it. By providing multiple types of information, you increase your chance of communicating successfully with interested parties—those people that really want to know what you are talking about. You also increase the chance of getting at least some of your message through to people that originally did not want to know what it is that you are trying to communicate. If you provide multiple types of messaging, you will find that some customers are predisposed to prefer one type of message over another, and your chances of getting through increase when you provide multiple layers of communication. An example of this multimodal communication is as follows: start by sending an e-mail (text) that includes a link to a video (visual plus sound), followed by a phone call (verbal) and then printed materials (text plus graphics).

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Never Assume

In business you should never assume anything.

If you are not sure, then find out how to become sure. Get in the habit of double-checking your facts. If I hear anyone on my team say “I assume . . .” I ask them politely but firmly to delve into the matter with a purpose and find out the
definitive answer
to the assumption, and promote it to a known and verified fact.

I have repeated this sentiment to my team so many times that, mercifully, I don’t have to say it any more. If someone utters an assumption, I can just give them the look—you know, where the eyebrows go up a bit and the eyes seem
to say “really?” They immediately recognize that what they have to do—go and make sure.

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“I Don’t Know” Is a Powerful Statement

If you don’t know, just say so. It is not a sign of weakness. On the contrary, for a competent team member to say “I don’t know,” it is a sign of confidence from my perspective.

Don’t waste time by lying to yourself or others if you don’t have an answer. If you don’t know, say so and then go find somebody that does—and learn.

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Communications Case Study: Valerie

Way back in the 1990s, we were operating a social networking business, and in time we had nearly 1 million users and a staff of less than 10 people. We learned the hard way that customer support is a serious responsibility. What started out as a few letters sent by e-mail to our inboxes became a torrent of requests and required more than a full-time job to handle it all. And in less than a year from opening for business. As we built up our user base, we naturally needed to help people with technical problems, refunds, photo uploads not working, forgotten passwords, and the like. There was a problem though: people would get pissed off. Frequently. The accompanying screenshot gives an example of the type of communication we would receive from customers.

Ouch. It was an interesting window into human psychology, and a real wake-up call for my staff to have to deal with this kind of problem. And it was happening all the time. What to do?

We used a fancy strategic nugget that fixed the problem immediately. It was simple, cost nothing to implement, made us smile to ourselves, and made the customers respond in a more constructive manner. All of which saved us untold thousands of dollars. Drum roll please …