So you’ve bought a business. Now what?
In this week’s column, I’ll offer some guidance from seasoned entrepreneur Vince Forgione about how to turn a business you’ve purchased into a smashing success. Today’s edition is one in a series of periodic installments that offer Forgione’s guidance on topics such as choosing, buying and — this week — building a business.
Here are five tips that emerged from Forgione’s and my conversation about building a business:
Resist the temptation to skimp on payroll. Penny-pinching owners often want to hire the cheapest employees possible, but they soon find that low-grade workers come at a high cost. “The only contact a person has with your company is talking to this person on the phone. This person should be exciting and make you want to call them again,” Forgione said. It’s hard enough to motivate well-paid employees to reel customers in; getting resentful workers to grow your bottom line would be a real challenge.
Take every opportunity to teach customers about your business. This applies even when a customer calls you after hours: “The phone message system should give the customer some information about the business, like when it was founded, something about your product, historical information, how long it’s been operating, or the fact that it’s certified by the State of New Jersey,” Forgione said. His advice is on-point, and I’ll add that a business’s website — yes, you need one — should also offer visitors a wealth of information about what you do and whom you serve.
Give employees an incentive to sell. Forgione said he’s struggled at times to retain employees who perform well but who have reached the top of his company’s pay scale. He recommends augmenting these employees’ pay with commission-based compensation. For example, Forgione said, a hair salon owner could offer a salaried hairdresser the chance to keep a portion of the proceeds she earns serving the customers she’s attracted.
Get creative about making use of the space you have. Forgione said that when he ran the Amboy Knits textile company, he converted a portion of the company’s factory space into a retail store. Also, he would approach other businesses – florists and photography studios, for example – to sell blankets the company made, giving them the chance to earn money in new ways without increasing their overhead costs.
Don’t chase money. “Deliver the best quality product with a smile and money will follow you. If you focus on making a lot of money, you’re wrong. You’ve got to have the best product at the right price and deliver on time, and the money will follow you. And then you can increase your prices,” Forgione said. He added that this strategy built Amboy Knits a strong customer following. In-fact, he said, he and has partners eventually stopped having to make sales calls.
To hear more of Forgoine’s business insights, join him for a talk at the Intersect Fund office on Thursday, June 21st at 1 p.m. He’ll share his experience and his “10 Commandments of Sales.” You can purchase tickets – which cost only $9 apiece – here. Hope to see you there!
Building blocks photo by Eran Sandler