Tuesday, February 9, 2010

Don’t Quit your Day Job!


Quit your

Day Job!

But if you do, this book is for you.


Leland Stafford Kropp Jr.

“Success is going from failure to failure without a loss of enthusiasm.” Winston Churchill

“I was told by a friend from the Eureka Chamber of Commerce that her biggest criticism of my speaking style was that I give the impression that I know it all. Let me be the first and last to say that I don’t. I have just made a lot of mistakes, most of which I have tried to learn from,” Lee Kropp Jr., straight from the heart.

“Every day I get up and look through the Forbes list of the richest people in America. If I'm not there, I go to work.” Robert Orben

Looking back on my life I now see that I was doomed to be in business for myself. I was never given a specific direction as to what to do with my life when I was a child. I had many role models throughout my life, but none were constant enough to see and direct me into the life of an entrepreneur. So I floated through life until I found my calling. I do not regret anything that has happened in my life and would not change a single thing. My point is to watch your children, directing and encouraging them to think outside the box.

Snow and adolescence are the only problems that disappear if you ignore them long enough.”

Earl Wilson

I was driving one night with my grandson, Andrew, who was 5 years old at the time. I asked him if he wanted to come to work for me when he got older and he said, “No, I’m going to start my own business.” “Really,” I replied, “and what type of business are you going to start?” Andrew proudly replied that he was going to start a “Folding Company.”

I adjusted my rearview mirror so that I could see him eye-to-eye and asked about the nature of this new business idea since I had never heard of a Folding Company. He proceeded to tell me how he wanted to fold sheets, towels, dishrags, and socks, but he mainly wanted to fold wash cloths because he enjoyed folding them the most. So, I asked him if he had done any research on other companies that did the same thing, who his ideal clients would be, how much he would charge for the items that he folded, and where he would base his business. Now these questions were all asked in the spirit of fun and he answered most of them pretty well, but as we drove along he grew so quiet I thought he had fallen asleep. However, when I glanced in the mirror I saw that Andrew was crying. So, I asked him what was wrong. And, he said in a sad little voice, “Papa Lee I don’t know if I am smart enough to run my own business.”

“Don’t worry,” I answered him. “I will be here to help you do anything that you choose to do. Besides you’re only five so you have a couple of years before you have to worry about that stuff.”

“Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.” Howard Aiken

My first attempt at business was the proverbial lemonade stand. When I was 9 years old I had a friend named Brad that had a brand new, crisp $20 bill that he had gotten for his birthday. After seeing some kids run a lemonade stand down the street I thought Brad, his $20 bill and I could do a better job. So I told Brad about the idea and the perfect location for our lemonade stand was at the corner by the YMCA. So, Brad and I became 50/50 equal partners; we walked to the store and bought $4.00 worth of cups and some “Old Time Lemonade,” the good stuff.

Our business venture lasted about three hours and we sold $28.00 worth of lemonade. Brad could not grasp that since we were equal partners in the lemonade stand business—his money, my idea—we were to share in the profits equally. So, he went home looking confused as to why he was going home $6.00 lighter than when he started the day. We remained friends for a few years, but for some reason we never did business again.

“Education is an ornament in prosperity and a refuge in adversity.” Aristotle

My first year in Junior High School was a very profitable time and it all started from a package of “Bubble Yum” chewing gum. I was never a child that liked to share, so when a kid in class asked if he could have a piece of gum I said no, but I would be more than happy to sell him a piece for a dime. Within a few minutes I sold three pieces, which allowed me to buy another package with a nickel profit. Within a month I was the bubble gum king. I was buying packs for a quarter and selling them for fifty cents. By the time the principal put an end to my business venture I had three friends dealing gum for me and I was buying my gum by the case with several flavors to choose from. Imagine what might have been if that principal had not interfered; I could have branched out to other grades, other schools and maybe even other school districts. Looking back, I guess I was lucky that I liked gum and not drugs otherwise I might be writing a different type of book.

The fastest way to succeed is to look as if you're playing by somebody else's rules, while quietly playing by your own.” Michael Korda

High school brought new challenges and new opportunities in my developing quest into the business world. This time it started in an after school activity called Junior Achievement [JA]. If you have not heard of JA it gives kids the chance to run their own business. Kids met once a week; they sold stock to their parents to raise money to buy supplies to make products that they would then sell back to the same parents who had bought their stock.

The kids would elect officers, some kids would be employees and everyone was in sales. The JA program ran from the start of the new school year and ended just before Christmas. Halfway though my freshmen term my group elected me president after the current president move away.

I was not happy with what we were doing so I switched the product that we were making from cookie sheets to spice ropes. This was very lucrative and our group made record sales.

I was involved in JA for all four years of high school and was president for all four years. With the biggest and most profitable year being my senior year. We named our company “Bears Unlimited.” Our products were embroidery rings with a little bear pattern on them and lace trim and mason jars filled with hard candy and the same bear pattern on the top with a bow. These two products were easy to make and had great profit margins.

We experienced record sales form the beginning and I guess that was where the problem started. You see every cent we made was given back to our stockholders at the end of our session each of the employees’ made a few dollars and the rest of the money went back to JA.

Consequently, I took matters into my own hands and formed a mirror company that met at my parent’s house on Thursday nights. I explained to my parents that we had so much work that JA said we could work on our own as long as it did not effect our school work. Needless to say, we did quite well and when the term ended we folded our company at the same time as JA ended for the year and divided up over $1,500 between the seven of us in the group. That year our JA group won an award for the most profitable business, and I being president was invited to go to a special awards dinner where I received a $1,000 college scholarship.

If you are reading this and you have ties to Junior Achievement I would like to state that what I did was really wrong and I am really sorry and I will never do it again, and if you are a kid reading this and you are involved in JA don’t do what I did because it was wrong.

Well, if there ain’t going to be any rules, let's get the fight started.” Butch Cassidy

The last memory of childhood business that comes to mind was in my senior year at Ritenour High School. I was taking a radio production class with one of my favorite teachers, Mr. Alan Mitchell. He assigned a project that was to last an entire quarter and divided the class into four different business teams. Each team would put together radio commercials for fake clients; we would then have a board of teachers listen to the commercials and vote for the best one. Each team started off with $2,500 in play money. Then the winner would get the “contract” and win a certain dollar amount of play money. Well, the crux to this project was that the first place team with the most money would receive an “A,” second place a “B”, third a “C”, and fourth a “D” for the quarter. There were eleven students in this class with 3 teams of 3 and one of two. Everyone knew the team of two was destined to win; they grew up to be in radio and even in high school everyone knew where their future lay. The team that I expected to get the “D” was made up of three guys who were considered part of the “Stoner” crowd. The “C” team consisted of three girls who were more concerned with looking pretty than getting good grades. Then there was my team. Now, I never really cared about good grades, but I did hate to lose. After the first assignment the winners fell into place just like I called it. However, I knew if I did not come up with a business plan I would lose or as Mr. Mitchell called it I would receive a lower grade.

Therefore, for our second project I took the attitude of “if you can’t beat them join them.” And I hired the “radio guys” to record my commercial. I thought this would give us a chance to win first place. But, after the production of the second round of commercials the “radio guys” won again.

Mr. Mitchell told us just as he did in the beginning that we were to run this just like a business in the real world. So, I did what I thought any good businessperson would do in the same position. I sued the “radio guys” for not putting the same effort into our commercial as they did for theirs. The “radio guys” had a fit and of course they claimed that we could not do this, but Mr. Mitchell agreed with our team and we were given the chance to plead our case to the teachers grading our commercials. We replayed both commercials and the teachers agreed that the “radio guys” did not record our spot with the same passion as they did theirs, and since they took money for the spot they produced for us they should have given it the same effort. We were awarded the money that we paid them and half of what they won for their spot. With several more commercials to go before the end of the quarter, I determined that the “radio guys” were not going to produce anymore commercials for my team. Therefore, I needed a new plan if I wanted to win. There were other ways to make money by doing smaller projects and each of the teams had a fair share but none of us had enough to break out of our grade designation. So with the “radio guys” holding a healthy lead and only one day left in class I met with the “stoners” and the “pretty girls” and proposed a merger. I had figured out that in combining our play money we would have enough to give us all an “A.” They agreed and I wrote out the plan and took it to the judging teachers who approved the idea. The last day of the project was wonderful; the “radio guys” never saw it coming. One of them was on the honor roll and had never gotten anything less than an “A”. He was so mad that he brought his parents in claiming that this was unfair and should not be allowed to happen.

Mr. Mitchell approached me just before graduation and told me that in all of the years of teaching this project, ours was the most interesting and most memorable one that he had ever taught.

Education is learning what you didn't even know you didn't know.” Daniel J. Boorstin

Chambers vs. networking groups

Deciding which type of business group to join has always been one of the biggest problems for business people to work out. Let me explain my take on the two. Please remember this is just my opinion drawn from my own business experiences. To me “the chamber is like being in college whereas the BNI (Business Network International) groups are like being in high school.” What this means is that you can join a chamber group and it really doesn’t matter if you attend or not. You pay your dues just like college but it is your decision if you go and make it work. Whereas with most well run networking groups they have rules. Once you join you have to go, just like high school. If you miss a certain number of meetings within a certain period of time they will close your position (in laymen’s terms that means they kick you out). The reason for this is that they believe in the out of sight, out of mind theory. BNI over the course of years has come up with a bulletproof program on running an effective business group that I will talk about later. The chamber should be about networking, but most are about community and a business’s place in it. Networking groups are about helping to make members more successful. My goal in writing this is to help small business people make more money through the knowledge that I have gained though my networking experience.

I have put together some of the important issues that I think every businessperson should know. With these I have also included my personal experiences and stories.

“Common sense in an uncommon degree is what the world calls wisdom.” Samuel Taylor Coleridge

Theatrical Concepts History

My true business story begins when I was 18. I had just graduated from high school and my parents arranged for a summer job at Mallinckrodt medical as a delivery driver. I worked there for two years and on my 20th birthday Mallinckrodt hosted a cost savings program. I was put on a team of sales people that ended up saving the company a lot of money and we were awarded prizes for our effort. This is where my true love for electronics began. I received a big screen TV and sound system along with a lot of other things. Within a couple of months I received a promotion into the nuclear labs. That spring Mallinckrodt hosted another cost savings program. This time my team took seventh in the world. I really won a lot this time around; a refrigerator, stove, microwave, kitchen set, washer and dryer, dining room set, living room set, bedroom set, a lawn mower, a vacuum cleaner, and of course a lot of home theater equipment. I won so much stuff that my parents kicked me out into the world because they no longer had room for me. So when I was 21 I bought my first house in Webster Groves Missouri. It was nice to be able to move into a fully furnished house at that age. I set up my new house with TV’s and speakers throughout the house, along with two home theater systems.

That was when my first personal business challenge began. I started to get calls from friends and family asking if I could help them hook up their VCRs or stereo systems. Helping them really was me working and them sitting there talking to me. I graduated from free help to beer and from there to BBQ, and the people I was helping were no longer friends and family but friends of family and friends. Well, at the time I did not like beer much so I started to charge cash.

In 1993 I met my future wife Donna Nienhaus at Mallinckrodt. Thanksgiving weekend in 1993, I moved into to her home in Eureka and as most people who start to set up a home, I began working on setting up my home theater system—a touch more extensive than most peoples. Donna came home to holes in the drywall from where I had decided to inset the TV and stereo system into the hall closet. A quick side note: do not I mean do not tear apart drywall in a woman’s home while you’re just dating. It wasn’t long before Donna came to love the system that I installed and she began to encourage me to turn my hobby into a business. So in June of 1994 my new wife and I started Theatrical Concepts.

Theatrical concepts started as a part-time business, mainly after work and weekends. During the first months I was fortunate enough to meet my first mentor, the manager of the Speaker & Stereo Store in Kirkwood Missouri and I still remember the first advice he ever gave me.

“A lot of guys go into to this business and most fail. If you survive your first year, don’t quit your day job. If you are doing well your second year, don’t quit your day job.” And, on and on until he finally said, “If you are still around at year five you may think about quitting your day job, but I wouldn’t” Well, I followed his advice almost to the day, and at year five I quit my day job.

As well as we did in our first five years I soon learned that by quitting my day job I also quit getting a steady paycheck. The phone, which always seemed to be ringing off the hook when I was fully employed, now seemed unusually quiet. Now that I had time to take care of all of my customers there were no customers to take care of.

Now what do I do, I thought, how do I get customers? I didn’t have a clue. So I started going to Chamber of Commerce meetings around St. Louis and everyone that I met wanted my business, but did not want to give me any. Things were so tight that I had to cash out my pension and 401k plans to pay bills. I was desperate for business. I started placing business cards on gas pumps, grocery carts at super markets, and anywhere that had a bulletin board. I even splurged on a $35 one-inch by two-inch ad in the Suburban Journal. Then I sat at home waiting for the phone to ring. However it did not occur to me at that time that most people do not buy high end products from a guy with a business card taped to a gas pump.

During this time I hurt my back moving a large screen TV. In talking to my neighbor about my injury, she told me about Dr. Pat Feder a local chiropractor. As bad as my back felt, it actually hurt more to pay the $20 that I did not have for a co-pay. Well I went and Dr. Pat adjusted my spine, and after my adjustment we sat and talked. He told me about this business group he belonged to and encouraged me to visit. He told me that they met every Thursday at 7:00 a.m. I checked my schedule and it appeared that I was free every Thursday morning for at least the next year or so. So I visited his meeting and met eight very nice business people from Eureka.

After a great meeting they gave me an application, which included a $240 membership fee and a non refundable $50 application fee. My heart sank, that was a lot of money and there was no way I wanted to lose $50 if they did not accept me and I told them that. They assured me that I was in and so began my adventure with BNI.

Within the first two months I got my first referral from Dr. Pat. It was a $9,000 job that went a long way toward keeping my family afloat. At this time I still had no networking skills, I would literally break out in a sweat during my one-minute infomercial. Infomercials were 60-second presentations each member used each week to tell the other members about their business.

Like most people who are new to a group, I wanted to sit on the sidelines to watch and learn but I was forced into becoming involved. One day, while I was waiting outside for a visitor to show up, the group held a vote without my knowledge. Upon my return to the meeting I was informed that I was going to be the new president as of April 1st. And to think I was nervous about talking for one minute, now I had to figure out how to fill 90 minutes.

BNI has leadership training, but nothing really prepares you for talking to a group and running a meeting. The date of my first meeting sums up my first day, April 1st. The day began feeling felt like a big April fools joke and snowballed from there. Being nervous was an understatement; I had to run a meeting plus it was to be my first 10 presentation. Each week one member gets to give a 10 minute in depth talk about their business. As if that was not enough, our waitress informed me during the meeting that the owner of the Legends Country Club (our meeting place in Eureka, Missouri) wanted to see me after the meeting was over.

After the meeting I met an older gentleman by the name of Carm Natoli, who informed me that the former leadership team had already been told that they could no longer meet at the country club, because according to the club’s rules we needed to have one of our members join the club in order to continue meeting there. I pointed out to] Mr. Natoli that we were all small business owners that could not afford at this time to join his country club and I thanked him for having us for as long as he had. However, I informed him that one day I would be back to join when I finally made it.

Carm told me that he liked me and that I was much more professional than the former leadership team. He told me he wanted people like me as members of his country club and offered me a membership for half the cost. I politely declined but thanked him anyway, besides I could barely afford to join BNI let alone an exclusive country club. To make a long story short I left owning a free membership with junior dues for life and a locker to boot; all this for just being polite and understanding his position.

Our BNI group continued to meet at the Legends Country Club for the next few years and during this time I continued to receive referrals, which soon allowed me to open my first store at #15 North 5th street in Eureka.

The coolest thing about this country club was the fact that my father-in-law and brother-in-law were both members. So for fun my wife and I called her parents and invited them out for dinner. They asked where we were going and we told them it was a surprise. When we pulled up to the Legends my father in-law quickly pulled me aside and proceeded to educate me about the etiquette of belonging to a country club.

“You cannot take someone to dinner at a country club if you are not a member,” he said. Just at the moment those words left my father-in-law’s mouth the maitre d’ said, “Mr. Kropp your table is ready.”

My father-in-law was surprised, but happy that we were members, even though he was not too happy that he had paid $25,000 for his membership.

“All lasting business is built on friendship.” Alfred A. Montapert

Involve others

During my first year in BNI, my chapter went from ten members down to three. I came close to closing the chapter but my not wanting to lose attitude made me decide not to quit, and I decided to make it work; I wanted to make this work so I started to invite everyone that I met who was in business. Over the next year I personally brought my chapter up to 30 members. Now, this networking group rewards members who sponsor six members with a special black and gold badge. In the BNI organization less than 5% of all the members achieve this award.

BNISTL saw that I had a knack for recruiting new members so they hired me to be one of their first directors. The lesson that I taught was to invite every business person that you know to every meeting, because every business person can turn into a client. Every client that I talked to and found out that they were in business I’d bring to a meeting. The hardest thing to get people to understand was the “why.” Why would I go out of my way to bring people to a networking meeting? The reason is that if I can make them money, they may spend it with me. When you help make someone make money you make them happy. Give freely and don’t expect anything in return. The BNI philosophy is “GIVERS GAIN.”

If it looks too Good to Be True, It Is!

Beware the MLM (Multi Level Marketing)

You may call me a snob, but the only business people that I do not like are the ones that fall into the MLM trap. Not to say that they are bad people, but my experience with the MLMs has been nothing but trouble. Most MLMs have the ambition to be good business owners, but they lack a business. For those of you who do not know what Multi Level Marketing is I will tell you. MLM’s are people who claim to have a product to sell but when push comes to shove all they want to do is to get you to buy into their group under them and then have you get your friends and family to buy in under you. These MLM’s are pyramid schemes that offer the promise of money; the only ones to get rich are the ones at the top. I met one lady we were working for who told me that she sold cell phones. Her company was called Excel Communications. I invited her to my BNI chapter; she loved it and said she would join my chapter if I visited one of her Excel meetings. I agreed to go and to my surprise it was far worse than I expected. These meetings made The Jerry Springer show look sophisticated.

The room had over 100 people in attendance, the announcer turned on a giant boom box, some choice people stood and started clapping and before long everyone except me was standing and clapping. The lady who had invited me whispered in my ear “you have to stand up and clap.” Reluctantly I stood, but there was no way in hell that I was going to clap. The announcer started yelling over the music, telling the crowd how he had made over a million dollars with Excel. Another man shouted that he wanted some of that money, someone else yelled out in agreement. “Who wants to make a million?” more people started yelling in agreement. At this time I realized that I should have driven myself, this was going to be a very long night.

As the night rolled along I was trapped by two of the top hustlers. They told me how I would do great in their program and that they could make me rich. I told them the only thing that I wanted to sell was home theater. “That’s OK with us, just give us the name of all your clients and we will do the rest. We will make you so much money you won’t have to do a thing.” I left that meeting feeling like a rape victim, all I wanted to do was go home and wash.

Mrs. Excel joined my BNI group, and every time I saw her she would ask me if I was sure that I did not want to join. She even went as far at to call me to service her home theater system just to ambush me with the ringleaders from Excel. The last straw was when I gave her a referral to one of my big clients; he needed a cell phone so I told him about Mrs. Excel, besides what was the worst that could happen

The client called me up and proceeded to tell me about Mrs. Excel (most of the words he used to describe her were of the four letter variety). All he wanted was a phone; all she wanted to do was to get him to sell the idea of selling phones to his friends and family. After hearing this I asked her to step down from the group, which she did. I later found out that the members from my group were happy to see her leave because she had done the same thing to each of them.

http://www.mlm-beobachter.de/mlm/albania_org.htm has an article that goes into detail on how the MLM’s almost destroyed the economy of Albania. Some pyramids are even compared to Ponzi Schemes.

The Ponzi scheme

In the summer of 1920, Charles Ponzi had collected $9.5 million from 10,000 investors by selling promissory notes with the pledge of paying a 50 percent profit in 45 days. He based this promise on his postal coupon enterprise in Boston. As Ponzi paid the matured notes held by early investors, word of enormous profits spread throughout the community, whipping greedy and credulous investors into a frenzy. But there was no profit-earlier notes were paid at maturity from the proceeds of later ones. That scheme linked Ponzi's name with this particular form of fraud. A swindle of this nature is referred to as a "Ponzi scheme."

If you are reading this, and you belong to one of the groups please do not take offense, I am sure your MLM is different. Just do not ask me to join.

“Society has always seemed to demand a little more from human beings than it will get in practice.” George Orwell

Talk to the new people, they don’t bite

During my time as a director in BNI, I sponsored over 300 members when I stopped counting. At the time I started several new chapters and oversaw 12 BNI groups. The biggest problem that I found with these groups was that the members would develop little clicks that would sit and talk together, and forget why they were there. Visitors would come to the meeting and the members would be too busy talking amongst themselves that the visitors felt unwelcome.

I always felt that I can talk to the members of my group any time or any day I want, but if I don’t make new visitors feel welcome, why would they want to join and why would they spend money with you or me?

Think about it this way, you have two meetings. Meeting number one, you know that any time you go someplace alone you are usually nervous and it’s even worse when no one talks to you then at the end of the meeting you’re asked to spend hundreds of dollars to come back. Whereas when you go to meeting number two, and a visitor host meets you, introduces you to members and members talk to you about their experiences with the group, and then leadership introduces you during the meeting and you’re asked to tell the group about yourself aren’t you more likely to want to spend the hundreds of dollars they ask for to come back? .

Members become complacent and forget why they are at these meetings and why you, the visitor, are here. You’re here to make money and business contacts, not friends. With that said if you make friends great, but keep the friendship and non-business relationships on hold until after the meeting.

“Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you.” Carl Sandburg

What time is it?

Every member should show up at least 15 minutes early. Since visitors always shows up early. Visitors who show up late generally will not come into a meeting that is in progress. They show up early because they don’t want to get lost. This is the best time to make a first impression. I’ve picked up more clients by being early and having one-on-one time with new visitors.

Being a director, I would watch my group to see how they were performing so I would show up about 30 minutes early at every meeting. Sometimes even finding visitors already there, which gave me the opportunity to talk to them about their business and how becoming a BNI member could really help their business.

“Hell, there are no rules here - we're trying to accomplish something.” Thomas A. Edison

Take ownership

You have invested lots time and money to join a group; it is your responsibility to learn as much as you can, and make sure that the members and leadership are maximizing your investment. I have seen too many people sit back and watch bad leadership and poor members destroy a group because they were afraid to say something. You paid for it, make it work. Get involved, ask questions, and just like anything in life, if it does not seem right it is probably wrong. You are vested from the time you write your check, so if things are not going well take charge of your investment. It just like advertising, if your ad is wrong and you know it, then it is no ones fault up your own.

“Because there's money in it, I don't work on it; I sit and think about something else.” Whitfield Diffie

What to do when you receive a referral

That seems like a no brainer, but you would be surprised, in the ten plus years that I’ve been involved in networking I have literally seen millions of dollars left on the table. For some strange reason there are a lot of people that will not follow up on a referral. The reason that I found this to be is that most people give leads and not qualified referrals.

Back when my company installed satellites, I had a member named Bob C. who would pass me leads. When I’d call one of his many leads, (and they were pretty much the same for each) the person who answered did not know Bob. So I asked him about one that I received and he told me that when he picked up his son from a friend’s house he noticed that they had cable. He would then go to his sons buzz book and give me their number so that I could try to sell them a satellite.

So, who’s at fault? Bob who did not know how to pass a good referral, or me who did not make it clear that I wanted a solid referral? After talking to Bob I explained that what he had given me was a cold call, and I hate cold calling. I could pick up any white pages and pick a name; what I needed was an introduction, what I wanted was someone to be waiting on my call.

Now, the way I teach referral giving is pretty simple; every referral I give is pretty much a done deal. For instance, one of my employees “Rob” needed a mortgage specialist. So I called Dawn from the Eureka Chamber and told her what Rob needed and asked if she could help, then I passed the phone to Rob. At this point they are trying to do business and it may work out and it may not. It is now out of my hands, but I know that I passed Dawn a solid referral.

The mistake most networking members make is that they wait to pass on their referral until the meeting; by then it’s too late. If I had waited for the meeting Rob would have found another mortgage person and Dawn might have lost a good referral.

Most people are too scared to tell their network what they are looking for when it comes to their referrals. The members of your networking group are your sales team. You would never hire a salesperson and not tell them what they are selling or how to sell it, so why would you not inform your members? Once you have an educated sales team you have to make sure that you do what you said you’d do, and that is follow up. Passing referrals and receiving referrals are two edges of the same sword. If you continually give poor referrals the person receiving them will stop calling your referrals, and if you do not follow up you’ll stop getting them.

“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.” Arnold H. Glasow

Deadwood (not the HBO western)

Deadwood on a ship will cause a ship to sink. It will also destroy a networking group just as easily. So many networking groups let poor members ride because they don’t want conflict. It’s easier to let them stay and hope they will just leave, besides, you only have to see them once a week or once a month. So what is the big deal? Just do not pass them any referrals and maybe they will just go away.

The thing to remember is that all we really have in networking is our reputation and people judge you by the company you keep. Before we go further let’s define a poor member. It can be someone who does not follow up, shows up late, leaves early, talks during meetings or takes phone calls during meetings. These habits will give you insight as to how the member will perform with your referrals. It can also be bad business habits like not finishing a job or poor customer service. If at anytime you have a member like this you must, and I mean MUST, try to counsel and correct that behavior; If that does not work, have them removed from the group ASAP.

My wife was working in the international division of Mallinckrodt and she told me that she needed holiday cards for the whole international division, over a thousand cards.

So I called Bob C., who was in the ad specialty business, and he came over with his books, and my wife found the perfect card. It had the globe in gold with every flag from every country. She placed and paid for the order in August, with a nice message “happy holiday to you and your families from your friends in the states.” We were supposed to have the cards by October 15th. On December 7th we received the wrong cards and without the inscription. Needless to say, we weren’t happy, and that is just an understatement. We later found out, when I shared this story with my leadership team, they told me that they would never do business with Bob because the same thing had happened to them last year. Their silence in not reporting this to the group was just as bad, if not worse, than Bob’s business practices. They knew who and what he was, and now because of their silence my wife could have lost her job, and was totally devastated because I recommended using Bob. My solution was pretty easy and clear cut; I fired him at the next meeting. I was not going to let members who were not privy to Bob’s business practices fall into the same situation because it was easier for me not to say anything.

When it comes to making money to house, clothe, and put food on my family’s table, I would never let that happen again. When I told the group this story and I also told them that I only wanted to be surrounded by good reputable business people, people that I could trust without question, and if they were not that type of person they could get out. This is not a social group, it’s a business group; we are here to make money. We are all struggling businessmen and women; if we were rich we would not need to be here. Therefore, in any business group that you belong to, you have to surround yourself with good honest people and cut out the dead wood.

“I'm in the business where you get the business all the time.” Cyndi Lauper

The ninety minute members

Every businessperson at one time or another visits some type of business group or a chamber meeting; some even join one or the other, however, most quit after a period of time. After seeing hundreds of members’ come and go, eventually you can begin to know the ones who will succeed and those who will fail. The ones who succeed are the ones who work the network and the failures are the ninety-minute members.

The easiest way to describe one is to tell you about one. We had a car salesman join our chapter. He would show up right on time and leave the moment the meeting adjourned. As the first few months of his membership passed his attitude became worse and worse.

It got to the point where our leadership team approached him and asked if he would stay for a few minutes after the meeting to talk. Unhappy with this request, he quickly informed us that he could not stay because it would put him behind schedule. So we arranged a lunch at his dealership.

At the meeting, we asked him about his bad attitude and he informed us that we had a lousy networking group, because “Other salesmen in different chapters were getting lots of referrals from their groups and in the months that he had been a member he had not received one referral, and belonging to this group was a waste of time.

We asked him why he thought he was not getting any referrals. He proceeded to tell us that our networking group did not work; if it did he would be selling more cars. He knew that three members had bought new cars and could not understand why they had not purchased their new vehicles from him.

Now it was our turn; “How many referrals have you given?” Answer, “0”.

“How many members have you had lunch with?” Answer, “0”.

“How much time have you dedicated to the group?” Answer, “90 minutes a week.”

“Really?” we asked. “So you really don’t know any of the members except what you hear from their sixty second talks?” “No.”

“Do you think any of them know you? Did you know that two of the three people who bought new cars have family members who sell cars? And that the third one thought you only sold Fords?”

Anyone who joins a networking group needs to know that the meeting is just a place to educate and help tally the business that is brought in. It is a place to become a successful 24/7 member. You have to always be thinking about your group and your group will be thinking about you. You have to show that you care about someone other than yourself. Members have stopped by my store just to say, “I did not know you did home theater” and my reply is always “why not I talk about it every week.”

After years of asking the same question the most common reply is that during the sixty second chat they are thinking about what they are going to say. So, are the meetings really worthwhile? Yes, but the meetings outside of the meetings are better. You really need to get to know a person one-one. In the BNI meeting you get a glimpse as to what they do, but not as to who they really are. The more you know about someone the easier it is to refer business to that person.

“Nobody cares what you know until they know how much you care.”

Ivan Misner

“If at first you don't succeed, failure may be your style.” Quentin Crisp

“The member who says that they can’t give referrals”

That’s a load of bull; everyone is capable of giving referrals, the member who says such a thing is lazy. In a lot of ways they are like the ninety-minute member. Usually, they have been a member for so long that they have become like fixtures in the meeting room. My answer to them is to learn how or get out. Can you imagine hiring a salesperson who says that they can’t sell? You don’t hire them, You fire them from your business that day. This is usually allowed to happen because of weak leadership, or leadership that just wants a large group. Quantity rather than quality.

I would rather have a great group of 8 to 10 members’ than a group of 30 mediocre members. It all goes back to my earlier statement; this is business, not a social hour. Which may sound harsh, but imagine if you replace that dud with a stud or that you replace that one person who can’t give a referral with someone who is putting cash into your hand each week? Your attitude would change completely, because it is fun to make money.

“In order to succeed, your desire for success should be greater than your fear of failure.” Bill Cosby

How to make more money networking

Lots of business people join a network group and do all the right things. They show up early, talk to visitors, stay after the meeting to network, they have meetings outside of meetings. Still they don’t know why they are not getting the referrals that they think they should. We always talk about thinking outside the box, and networking for some is outside of the box. If we take it a step further then your networking group or Chamber you can really have fun. By fun, I really mean making money.

Let’s start by looking at who is in your business group. Most groups have a real-estate agent, mortgage broker, financial advisor, attorney, banker, ad specialty person, and so on. Most people do well from this, but with a little more work you can do better. Do you know what a “contact sphere” is? A contact sphere is a group of businesses that work in your circle. For my home theater business it is anyone who is doing work in million dollar homes, because people who work in million dollar homes usually work in more than one. Those businesses are interior designers, high-end kitchen builders, custom cabinetmakers, custom closet companies, and so on. The way I learned this was like one of those V-8 moments “wow I could have had a V-8.”

I was in California talking to Mike Garrison, an executive director in BNI, and I was telling him how I was giving a home theater bid in this 5 million dollar home in Ladue. While I was waiting for the house manager to show up, I started to talk to the guy working on their stairway banister. The guy owned the company and all they did was handrails. When I am say handrails, I’m not talking the straight wooden rail like the one in my home. I’m talking about a 70-foot spiral handrail with the most beautiful stain that you could imagine. The house manager showed up and I told the handrail guy that it was nice to meet him and off I went.

Mike then asked the million-dollar question; “So did you get to have lunch with him?” I said no. “Well did you get his card?” Again I said no, and asked why? And, he said, “wouldn’t it have been nice if every home this guy was in that he would say ’you really should use Theatrical Concepts they are really great to work with.’” It never occurred to me until that moment that if I were to have developed a relationship with the handrail guy, whether it be a business group or just one-on-one, I could have made a lot of money. All it would have taken was just a few minutes of thinking out side of the box.

For each business, it is different, and for a very few it may not work at all. For me it started by thinking about whom my clients were spending money with. I then developed relationships with all sorts of companies. I found a company that did nothing but clean chandeliers; another was a shade company called Two Blind Guys, and a window tinting company call Pro-Tint. I developed relationships with house cleaning companies, interior designers and pest control guys. Now, I did not look for just anyone, I found companies that my high-end customers were using. I would ask my customers who they were using and if they had a card, I would then call and explain what I was trying to do. Some got it and some did not, but the whole point is that I could have just gone to my monthly or weekly meeting which is only 90 minutes out of my 60 hour work week and been happy with that or I could try to make the other 58.5 hours work for me.

“Obstacles are those frightful things you see when you take your eyes off your goal.” Henry Ford

“I can’t afford to join”

Over the course of years my attitude has changed. Looking back I now feel sorry for all of the people that were brought in as visitors and got to see a great meeting, but then found out that they could not afford it. Where would I have been if I could not have come up the money to join? Would I still be in business? So my message is that you do not have to spend money to be a part of a networking group. It does not have to be like the old saying “it takes money to make money.” Once you find a good networking group, you want to belong. However, they tell members when they are recruiting not to talk about the cost, both time and money, but to let the meeting sell itself. So after you sat through this meeting you’re told “Surprise, we need a check in the sum of $500 for you to join.”

A lot of small business people do not have any seed cash to drop into an organized business group; all they have is a dream. Look at my first ad, $35 in the Suburban Journal. I had nothing but a dream; I did not know that I could network on my own in order to gather referrals. . All I’m saying is that you don’t have to have money to network; all you need is the desire to succeed. With time will come money and with money you can join an organized business group or Chamber of Commerce.

“We can't help everyone, but everyone can help someone.Ronald Reagan

Be fun to refer to

A big key when you’re starting out is to be fun to refer to. I learned this at a BNI director conference in California. I was just an assistant director and I found myself sitting in on a meeting with Ivan Misiner, founder of BNI, and a round table of some of the first BNI executives. One of my mentors, Mike Garrison, stopped by the meeting and started asking me questions about my business. His first question was one that I have heard a thousand times,” Have you ever thought about working with builders?” I told him yes we had, but it had never worked out, and blah, blah, blah. For some reason he stopped my rant, and told me that I sucked to refer to. I was speechless sitting here with all of these executives. He proceeded to inform me that I was sitting with the world’s best networkers, and that I was not giving them a chance to help me. What could it hurt to listen to what he had to say? His point was that there are a lot of people with a lot of knowledge. By shutting someone down who is trying to help because I thought his first idea was not very good or that we had looked at it already, I was losing. He may have had other good ideas, but I made him feel “Why should I bother, Lee’s not fun to refer to.” If I had listened, Mike may have had a builder that was different than the rest. So remember to be thankful if you get someone who is interested and wants to help. You may have heard the idea before but the next one might be better.

“It usually takes me more than three weeks to prepare a good impromptu speech.” Mark Twain

Be prepared

Just like the Boy Scout motto, “Always be prepared.” You will see unprepared speakers every time you go to a meeting where the members’ get a chance to talk. They have spent money, and they have invested time, and the one time they get to talk they sound foolish because they did not take time to prepare.

If you had sixty seconds to talk on national TV during the super bowl, would you wing it? No, you would prepare. You never know when the right person hears you say the right thing then bam; you just made a big sale.

Remember in networking it is your responsibility to educate your sales team, if you cannot talk about your business, how do you expect others to? Another way to look at it is to imagine you walking into an elevator with your dream client, would you be prepared to give him a perfect 30 to 60 second sales pitch while you’re between floors? If not then learn to because the 5 “P’s” work “proper planning prevents poor performance.

“Courage is being scared to death, but saddling up anyway”

John Wayne

Stand up and talk

This should go without saying, but if you get a chance to talk about your business take it. This happens more at Chamber meetings than at networking venues. Most networking groups and especially BNI’s have a format, they make everyone talk. Everyone gets their sixty seconds of fame and someone each week gets to do a 10 minute presentation. Chamber meetings are way easier to get out of speaking at because the meeting is more about the whole than the parts. They are more about community and the businesses place in it, and not about business growth. As a businessperson you are the face of your company.

Everyone knows the saying about how most people would rather jump out of a plane at 10,000 feet than talk in public. However, you have made the decision to make money for yourself. You are your own best tool, and as with any tool if you don’t use it, you won’t be any good with it. Any opportunity that you get to talk about your self and do not seize is wasted time and money that you will never get back. So if you get the chance, look out the door of that plane and take that 10,000 foot jump. I guarantee you’ll come out better for it.

“I saw a subliminal advertising executive-but only for a second”

Steven Wright

“Nobody's a natural. You work hard to get good and then work to get better. It's hard to stay on top.” Paul Coffey

Go to the trainings and be willing to be trained

One of my biggest pet peeves in BNI was the fact that so many members would sign up and spend a lot to become members. Yet they would not go to the training classes. The people doing these trainings were more often successful business people who were willing to share their knowledge about how they succeeded, and the new members not wanting to take advantage of this shared knowledge were more than a little irritating to me, not to mention the networking opportunities that they were missing out on. Every time that I ran one of the BNI advanced trainings, I would usually get at least one referral, plus the knowledge that I learned from the members who attended.

Life is constant learning; everyone that you encounter everyday is teaching and learning, most just do not know it. The trainings that are sponsored by Chamber groups and networking groups are given by people who have made it, and just want to help other business owners the way they were helped by others in the past.

“To succeed, you need to find something to hold on to, something to motivate you, something to inspire you.” Tony Dorsett

Take time to be inspired

In the home theater business there has always been a quiet animosity between the sales force and installers with the clients. In quiet I mean they do not talk bad about a client in front of the client. This is something that is probably in every business where you have the “haves and have nots.”

I find it very funny that you will see salesmen making fun of clients who are spending more on electronics than the salesmen make in a year. What these employees fail to realize is that their clients probably worked very hard to get to where they are. This is one of the reasons that I chose my staff very carefully. I want employees that love what they do; I do not want someone who just wants a job. One of the things that I miss the most is spending time with my clients during the installation. When you get the opportunity to spend hours and sometimes days in a clients home you really learn a lot about who they really are and most are really great people with wonderful stories.

“If you treat people right they will treat you right... ninety percent of the time.” Franklin D. Roosevelt

Treat everyone like gold

You never really know whom you are dealing with or whom they may turn out to be. One of my early memories was growing up in Webster Groves, Mo., around the age of 13. I used to walk though old town to the Velvet Freeze and the Ben Franklin five and dime. Between these two stores was an electronics shop called Music for Pleasure. Looking though the window, it looked intriguing and very elegant. All the times that I walked by, I always wanted to go in and get a glimpse at my unknown future. As you can guess I finally worked up the nerve to go in and see what this store was all about. When I walked inside the store was filled with beautiful music. I had been looking around for a minute or two when an old man (At 13 everyone is old) came out from the back of the store. This old man turned out to be the owner, and the first words that he said to me I will remember forever and they taught me how to treat young clients that venture into my store. He looked at me and said; this is one of those perfect times for a cliff hanger because I know you are waiting to hear what words of wisdom this guy shared with me so I guess I will go ahead and tell you. This old man said “Get Out! You have no business here!”

I turned and ran out. Twenty-seven years later I still remember his message, and whenever any kids come in without a parent I kick them out. Just kidding, we have a lot of young kids come by just like I did and all of my employees have instructions to give them a full Star Wars demo. The kids love it. I have even had a couple of kids call their dads to come up and check out our store. I hope that one day these kids may remember me and come back. You never know one of them may even come back some day and be one of my biggest clients

Another instance, I had just finished up a presentation with a client that was going to spend around $50,000 with my business. As soon as he left I got a call from what sounded like an old guy with a thick country accent. He proceeded to tell me all about a Walkman tape player that he had gotten as a present from his kids. He wanted me to walk him though hooking it up to his stereo. He proceeded to tell me that it wasn’t a real Walkman, but it was a really nice tape player because his kids had gotten it from Wal-Mart. So after about 10 minutes of instructions and getting no where I asked him to come in and I would show him what to do for free. At this time he dropped the accent and identified himself as the client that had just left. He told me he always knew how people would treat him when he had money, but what really sold him was how a salesman would treat him if he were poor. I had passed his test and therefore we would be doing business. I could have blown the old man off because I knew that I was not going to make a dime, but I felt it was the right thing to do and I closed a $50,000 deal just by being nice.

“Constantly talking isn't necessarily communicating.” Charlie Kaufman

Shut Up and Listen

One of the hardest lessons to teach and even tougher to learn is to shut up and listen. Most sales people are so consumed with the knowledge that they have that they do not listen to their client. If you shut up you will find most people will tell you everything you need to know.

This is true in sales and in everyday life. We had a client who came into our store looking for a Samsung DLP TV. He told me he had just left one of my competitors and the salesmen kept trying to sell him a plasma TV which he had told him he did not want and he pushed it to the point this guy left and the salesperson lost the sale. So after I sat and listened to him I sold him the TV that he wanted, which was a very good TV.

With that said you have to remember that even though you are the expert you do have a responsibility to your client and what they want. And, just because you listen you do not have to let your client make a mistake because they think they know what they want. I have lost numerous sales because a client wants something that is just wrong. I had a client come into our store wanting a screen to fill a wall in a room that was 15’ by 20’ the screen that she wanted would have been 160”. Imagine sitting in the third row and having a screen that seemed larger than an IMAX theater. It sounds cool, I lost the sale, but I sleep well knowing that I did not make the sale just because I could.

“A bird in hand - is worth ten flying at large.”

John Heywood

Keeping a current client is easier than finding a new one.

Sometimes you can’t see the forest because of the trees. In BNI it is called a “BFO” this is a “Blinding Flash of the Obvious.” I was at the Eureka Chamber meeting where I met Drew Stevenson, a motivational sales speaker. I struck up a conversation with him prior to the meeting (we both happened to be there 30 minutes early and we were the only ones there). He asked the typical opener “how is business” and I told him that things were slow and I felt it had to do with the economy. He laughed and said if I have a client base already I should not be slow. I thought about this and it was a true “BFO.” In the last 15 years we have served several thousand clients. I have all of their phone numbers and addresses. So I called my sales manager and told him to start calling. And, to think that I am writing a book teaching everyone to “Remember the Little Things”. When I had trusting clients and all I had to do was ask them if they needed anything.

“Carpe per diem - seize the check.” Robin Williams

ABC’s - Always be closing

Just like Zig Ziggler says, it’s the ABC’s of any success, Always Be Closing. It’s one of the hardest things to do for most people, and that is asking for the client to sign the contract. I have clients that come in wanting to spend $50,000 to $100,000. They never want to leave their money, and I don’t want them to leave without giving it to me. So you’ve got to put them in a comfort zone where they want to give you money. This whole process is based off of you and you alone. Not everyone is selling high-ticket items, but when it comes time to write a check the client needs to believe in you. You have to instill trust, confidence and the belief that you are going to do what you say. If you have developed a reputation and do the right things you should never have a problem closing the deal.

A while back we had a client come in; he had been working with the Sound Room. He gave me

the proposal that his salesman prepared for him and told me that it was what he wanted, and wanted me to match everything. So I did as he asked and the job came to just under $30,000. Now, I love it when I get clients from competitors and I always have to ask the magic question “Why?” Well, I asked and he told me, “We had been working together for the last two weeks and he never once asked me for my check or credit card.” That was my sign, “I’d prefer a check, but I take credit cards and cash!”

It’s as simple as ABC, “Always Be Closing!”

“The definition of insanity is doing the same thing over and over and expecting different results.” Benjamin Franklin

Fax and email no-no’s

It’s the old saying “price before benefit equals no sale.” Most people are bottom-line buyers. If you send a proposal to your client I can almost guarantee that the first thing that they will look at is total cost. The one thing that you don’t want to happen is for them to think that you are too expensive. You want to be in front the client to explain your cost and if you are more expensive, why you are. There may be benefits as to why you’re more expensive. When you have a bottom line shopper they are not always comparing apples to apples, they are comparing totals. I had a relative who was an electrician, and I was giving him advice on how to start his business. We talked about networking groups, and the benefits of incorporating his company. After the first few months we were talking and he told me that he had submitted a lot of bids but hadn’t closed a single one. I found out that after he would scope out a job he would fax a bid over to the client. I told him by doing that he had lost control of the sale. He may have been the low bid, but one of his competitors may have low-balled him, or the client may not have known the reasons for the cost. Always close your deals face to face.

Money? How did I lose it? I never did lose it. I just never knew where it went.” Edith Piaf

Secret budgets

The biggest problem that my company and I face is the clients who have the secret budgets. The client has a budget, but they won’t tell you because they are afraid that you are going to use all of it. We take the approach of education. We tell the client that we know that he doesn’t know what his budget is, but he may know what he want to spend. From there I talk to the client about what I call the “point of diminishing return.” What that means is that everyone has a price point where it just becomes unaffordable to do. I don’t care who you are or how much money you have everyone has a point of diminishing return. So we tell them what everything costs and the benefits of each. We put the client in charge by not selling them but educating them. We spend a lot of time talking about the secret budget and how that when they see our proposal that they might be shocked, but not to fear. They are the boss and we can make the price fit their needs.

“Advertising is the science of stopping human intelligence long enough to get money from it”

Stephen B. Leacock


This is one of my favorite subjects. As you have read, I have tried almost everything when it comes to advertising; coupon guides, Valu-pak mailers, ads on the front of grocery carts (I did this because the business cards on the carts worked so well), magazine ads, and the things that I didn’t try, there was always someone trying to sell it.

At one time we were paying $1,700 a month to have a quarter page ad in the yellow pages. Then I had a V-8 moment; every time I went to the yellow pages to look up a business I was using a trick that I learned in first grade. It was called the alphabet. I wasn’t looking for business with the biggest ads. Well, needless to say my yellow page rep was not very happy with my revelation. So they gave me an ad with a special phone number so they could prove that pictures sell. After 3 months I was proven right and they were wrong. The tracking phone number on the ad produced zero phone calls. You would have thought that the rep would have at least called a couple times just in case. From that point on I started buying my advertisements the way I bought. This year we tried print again, this time it was a little nicer than my first $35 ad.

We’ve done a lot of radio over the years, we no longer do music stations, and the reason for this was so simple it was almost stupid. Whenever I was in a car with someone and the radio was on a music channel the moment a commercial came on, the channel got changed or turned down. So was I really paying for a radio spot that no one was hearing? I also noticed that when I was listening to talk-radio I would listen though all of the commercials so I could hear the result of the topic I was listening to. So now knowing my clients and the way I listen, we only advertise on talk radio. When it comes to your advertising you have to be smart, don’t let a salesperson sell you. If done right, your advertising shouldn’t cost you money, it should make you money.

Recently we had a young man come into my store and he had Robert Matt one of my salesmen, give him the grand tour. After wasting 20 minutes of Rob’s time he asked to speak to me; he has a grand opportunity to help grow my business here in Eureka. He proceeded to pull out a receipt from the local big chain grocery store. He wanted me to buy ad space on a register receipt. I informed him that I was not interested, and he asked why not? I have a sign clearly posted stating no solicitations, he had wasted my employee’s time, and now he wanted me to explain why I did not want to buy his ad. So now I am really mad and I decide he needs a little education. I tell him that it is great that he has a job and that his product may work well for the Chinese restaurant with a “buy fried rice get an egg roll free” business sector, but it does not work well for my business. He informed me that I could put a coupon on my ad that would assure me to get more business. I then asked him if he had sold this idea to Rolex or to BMW. I showed him the door where it says “no solicitation” and told him that was rude to pose a client to try to make a sale. If he really wanted a chance he should have called to make an appointment.

“The ladder of success is best climbed by stepping on the rungs of opportunity.” Ayn Rand

Remember the little things

Everyone in sales hopes for the customer that comes back again and again, and for some companies like the insurance industry, it’s easy, they always seem to have the repeat customer. For most companies it can be harder. With the internet, TV, radio, and print ad’s you need to take steps to keep “top of mind” when it comes to keeping former clients coming back again and again when they need your product. Lots of people talk about “word of mouth” which does work, but in the home theater business and many others it’s short lived. We realized long ago, no matter how much our clients rave about us, the old adage comes to mind “out of sight, out of mind.”

After a few weeks the novelty of your home theater starts to wear off; friends and family are used to seeing the theater, and the clients stop talking about us. It’s even worse with the rich; it seems the richer the client is, the more it is expected to have a nice theater room, so their friends don’t even ask “Who did your system?” So how do you keep “top of mind” with your clients? One trick that I learned was to “remember the little things.” I learned this trick from one of my sister-in-laws Wendy Nienhaus. Wendy is one of the top car sales people in Detroit, which is the car capitol of the world and there is no shortage of salespeople, just a shortage of good ones. While talking to her clients through casual conversation she finds out their birthday, their kid’s birthdays and their anniversary. She then, without fail, sends birthday cards, anniversary cards and every holiday card imaginable. She makes sure that she is top of mind by remembering the little things. Most of her business is from repeat customers, and in the car industry that’s pretty impressive.

Most salespeople that I know are more than happy to sit and wait for someone to just stop by. However, in my company we try to stay “top of mind,” but we have not gone to my sister-in-law’s extent; thinking of it as I write this I might have my sales team do it. What we do though is to send out thank you cards and we call and check if everything is ok, but our big “top of mind” trick is to get everyone’s email address and send out weekly blogs about cool things in the industry. It’s easier and cheaper to keep an existing client than to find a new one.

As a small businessperson, you have no greater leverage than the truth.” John Greenleaf Whittier

Word of mouth and the rule of 3 and 33

Word of mouth is a great thing as long as the word of mouth is good. I have found the “Rule of 3 and 33”, by Ivan Misiner applies to all of us. When someone does a good job for you, you may tell three people what a great job you’ve had done. But if you screw up, watch out there are people out there that will make it their life’s work to make sure everyone (or at least 33 people) know about their experience with you.

We have had a couple of clients that fall into the 33 group, and let me tell you, there is nothing worse that an irate customer. Especially when you have a store, and that client’s child takes dance lessons at the studio next to our store. Our whole problem with this client was due to a failure to communicate. Her husband had purchased a $12,000 home theater system from us the year before. The plasma we sold him developed some problems and he wanted us to exchange the TV. Well, after 30 days any problems fall on the products warranty. He felt that with the amount of money that he had spent, I should just give him a new TV. Why should I have to have my TV serviced, I’ve only had it for a year, you sold me a lemon. It was not long before his wife showed up at my store, and let’s just say that I think she waited until I had a couple of customers before she came in to visit. She came in with all guns blazing, she let it be known loud and clear that we ripped them off and that no one should do business with us. Luckily I was able to corral her into the office where I listened to her complaints, after letting her vent for what seemed hours, my wife and I were able to show her all of the calls that we had made regarding her problem and that we had not ignored her problem but, in fact the problem lay with her husband. This revelation quickly changed her tune. She did not know that her husband had refused to have the TV serviced and that the part that needed to be replaced was only 78-cents.

Working through the wife we soon had the problem rectified. But the damage that she could have caused had to be avoided in the future at all costs.

So, what to do to keep the 33’er at bay? We decided to add one sheet of paper to our clients invoice. On this piece of paper we listed what we will do within the first 30 days if there is a problem, and what happens after the first 30 days. I have even included a personal message where I state “it is our greatest hope that your system works for years to come, but if you do have a problem please do not yell at the members of my company. Be rational and we will take every step necessary to rectify the problem.” We then have the client sign that sheet stating that they understand.

“Everyone, at one time or another, has been at the fringe of society in some way: an outcast in high school, a stranger in a foreign country, the best at something, the worst at something, the one who's different. Being an outsider is the one thing we all have in common.” Alice Hoffman

Take time to talk to people

This is another of those no brainers. On Monday, Wednesday, and Friday mornings, Rob and I take Tae Kown Do classes. I have been going for about two years and Rob started at birth. Not long ago we were sitting and talking to a lady named Joanna who has been a member for years, and she was talking about someone that she worked with (not in a bad way). I asked what kind of work she did. It turned out she worked for a company that sold high definition antennas. Well, as it turns out I also sell high definition antennas and it turns out that the company she works for is two miles from my store. They also sell the same type of antennas that I buy from a company that’s 40 miles away. This was a great conversation that should have taken place two years earlier. Imagine that it all stemmed from a single question. To make things even better, a week later we had a client that came by and spent $35,000 because another member form the same studio heard us talking and told his friend about us.

“If you can build a business up big enough, it's respectable.” Will Rogers

Be small, think big

One of the biggest mistakes I see with small businesses is that they don’t think big. I don’t mean crazy big, what I mean is image big. You have all seen the business cards that I am talking about. They’re the ones with the emailme@aol.com, or yahoo, msn, hotmail. I don’t mean to sound snotty, but the impression that I get is that you are not really serious about your business. If I email you will I get lost between the Viagra and porn spam? I could understand this if it were five or ten years ago when it was rare to have an email address much less a web site. But this is your image, people need to know you are serious, and if you are a home based business, no one needs to know. I have called small companies and gotten the message “if you want to leave a message “for John press 1, Sue press 2, for Billy and Jeanie press 3, for the Widgets World Wide press 4”. People are already afraid to do business with small home based businesses because they are afraid that once you have their money you are going to disappear. The solution to this is simple and cheap. If you cannot afford a business line, then use your cell phone. The email is just as cheap, go on the web and secure your URL. This can be done rather easily at places like www.godaddy.com or other sites. Remember just because you are small, it doesn’t mean people won’t think you are big.

It may not always be profitable at first for businesses to be online, but it is certainly going to be unprofitable not to be online.” Esther Dyson


Just as with the proper business email address and business phone number, you have to think ahead in business. As soon as you can afford it you have to secure a URL. The reason for this is simple; if you are good at the business you are in, you probably won’t be small forever. If you grow into a formidable company and do not secure your name, someone will, and I’m pretty sure they will sell it back to you, but it will not be sold cheap.

A quick story, Howard Stern from the Howard Stern Radio show never thought that he would need a website or need one. Everyone had advised him that he such secure his name just in case. It would have only cost a couple of hundred dollars at the time, but he refused to do it and thought that he could do it when and if he needed to. When the time finally came he found that someone had already had the rights to his domain name and all of the variations. It cost Howard Stern over $500,000 to buy back his own name on the web. Lucky for him he could afford it.

“And so with all things: names were vital and important.” Algernon H. Blackwood

Picking a business name

This is one of the most serious decisions you as a business owner must make if you have not already. If you have and they do not coincide with my views do not get mad, these are just my views.

Do not name your company after letters. This only works for the big guys like AT&T, SBC, or MCI. When I was just starting out there was a company that opened up right after me that called themselves ATCS Satellites. I stopped by one day to inquire about their services; I asked the receptionist what the initials stood for she told me she did not have the faintest clue. If you do choose letters, it should be so clear that no one should ever have to ask what they mean.

Try not to name yourself after a region. This may limit you if you grow beyond your region. Regional names can make growth a little harder than it needs to be.

Choose a name that ties in with your business. Through BNI I met a guy that was in the home theater business. He called his business Faded Denim Audio. I asked him why he had chosen that name he told me that when his company grew that he wanted to have an atmosphere that was laid back enough that his employees could come to work in blue jeans. I asked him if he could have named his company after something that had to do with audio, and just let his employees where jeans? This did not make him terribly happy.

Think about the name itself. I chose Theatrical Concepts; I later had to incorporate the name “Theatrical Concepts the Ultimate Solution to Your Home Theater & Satellite Needs… Inc. The reason for incorporating the second name was due to the fact that an investor had incorporated the short version in hopes to force us into business with him. I had made several mistakes in choosing that name, the first of which was not realizing that every vendor that we would be dealing with would require us to fill out several forms with our full business name. Next was lettering of our shirts and hats. Sixty-nine total letters is a lot of stitches, which equals a lot of money in the monogram world. To make things even better, when we moved to our second location our new neighbor was a dance studio. Now, we were small and poor and did not have the space on our shirts and hats even if we could have afforded to have the whole name stitched on them. So we just went with Theatrical Concepts. Do you see any correlation between Theatrical Concepts and a dance studio whose sign just said “DANCE”? Well if you cannot, I can assure you that almost everyone in the dance world thought there was. It was years before most of the fathers of the dancers even ventured in, and to make things worse the mother who did come in swore they would never tell their husbands about us. We had more than our share of phone calls where someone called and needed 12 kilts ASAP or asked what kind of dance shoes we carried, or if we had tickets to a certain dance production. Again, I may not have chosen the best name, but it has worked out in the long run and in hindsight I could have chosen better.

Last, look at other companies that have made it. You will not find many that are named after a person. I have seen many companies come and go with names like Jim’s TV & Satellite Repair. Does that sound like a company that is going to be around forever, or is it the type of business that goes away when Jim does? There are other reasons in choosing the right name. What if Jim does make it and Jim wants to sell the business one day. Unless he sells to a guy named Jim he may be out of luck. Most investors who are going to buy a business are not going to want to change the name and have to go though the trouble of rebranding a new name. They might as well start from scratch. With that said, choose your company name wisely; hopefully you’ll have it for a long time.

“There is nothing so easy to learn as experience and nothing so hard to apply.” Josh Billings

Replicate yourself

In the tighter times of my business, I did a lot of satellites. Even though we no longer do satellites, I will give them the credit they are due. The satellite industry kept us afloat for a few years. Back in the day, I crawled around on a lot of roofs that would make a mountain goat sick. I needed the money, so I did what I needed to do to get it. Over the course of time and a few close calls, I realized that if I got hurt that I would be out of business and my wife and I would lose everything. I’m not saying that this is easy or affordable to do, but as business people you really need to think of the “what if” factor. Who can do your job if you get hurt? It took me years and a lot of luck, but several years ago I was able to hire some installers to do most of the work that scared me or that I just hated to do.

I remember taking phone calls while crawling around in an attic in the middle of August. We had one really bad January that I got a service call to realign a satellite dish. We had about six inches of snow on our roof. My wife wanted me to do the job because it would have been an easy $100. I explained to her that it would be better not to take the job than for me or my guy to get hurt so that someone could watch TV. As the head of your business, you want your business to be around for the long haul; you really need to replicate yourself. Within the last few years we have finally been able to take a vacation without closing the business. Needless to say, vacations are not really vacations when you know you are not making money, and when you get back you are going to have to hit the ground running.

“An expert is a man who has made all the mistakes which can be made in a very narrow field.” Niels Bohr

Be a master of what you know and not a jack of all trades.

In the home theater industry there are so many avenues that a company can branch off into. I have been told that I could make so much more money if we started doing central vacuums, phone systems, alarm systems, security cameras, intercoms, car stereos, etc. The only passion that I ever had was for home theater, I never had any desire to sell vacuum cleaners or any of the other stuff even if it could make me a lot of money doing it. I do not know or care about these things even though I could make money off of them. I have always believed in keeping to the straight and narrow. Do what you know and your business will grow. I do realize that business is tough, and there are times that you will do almost anything to make a buck.

That’s fine but there is really no need to announce to the world that you are a master of nothing. The guy who gave me this card was nice enough, but my question was what do you do? He told me that he could do anything. Well, I really had no use for him at the time even if I could figure out what he did. What I have always tried to do is to help find people more business. But if I don’t know what you do, I can’t help. His business card should have been clear and to the point.

“Blessed are those who give without remembering and take without forgetting.” Elizabeth Bibesco

Borrowing and lending money

There comes a time in almost every small business, when you find yourself in the position where you need to borrow money. Hopefully, this never happens to you but if it does be prepared. I had two instances where I had to borrow money from friends. One was good, the other not so much. The first key to maintaining your friendship is to make sure that if you have to borrow money that you pay it back. Put everything in writing, and don’t be offended if the person that you are borrowing from asks you to do this.

The first time that I borrowed money from my best friend Ray Whaley he actually put together a contract stating what the terms were, what would happen if I defaulted, if I did not pay, and so on. My first impression was that this really sucks that he is asking me to sign a contract; I did not realize that he probably felt the same way because I had asked him to lend me money. Ray’s procedures actually worked out better for both of us and we are still best friends to this day. I have made several small short-term loans from Ray over the years; I feel that this is great because I would have hated to lose a friend over money. The second time I borrowed money from another friend it did not work out so well.

We have borrowed $5,000 from two friends that we met though our BNI networking group. Everything was great; we paid them back in full 120 days later. When things turned sour was years later when we set up a sound system in a new house that they built. When they went over budget on the house (and I mean really over budget) they felt that they should not have to pay for labor because they had helped us out when we needed money. They felt that we owed them because they felt they had saved our business. I never realized that by borrowing from them that I was expected to become an indentured servant.

The same rules apply when it comes time for you to loan money to someone in the same position. Get everything in writing. The two rules that I have always lived by when lending money are simple. First do not loan money that you cannot afford to lose. Second, do not expect to be paid back. Every time that I have loaned money, I look at it as me helping a friend and I never expect to get paid back. If I do great, I helped a friend and I got my money back. After reading this please do not ask to borrow money from me because it just is not going to happen.

P.S. Don’t hold this over their heads if you want to remain friends, remember you did this because you were friends in the first place. More often then not, a friend may not pay you back. Not because he doesn’t want to, it’s probably because he can’t.

“Most people return small favors, acknowledge medium ones and repay greater ones - with ingratitude.” Benjamin Franklin

Favors for friends

Of all the business rules that I talk about the favors for friends seems to be the touchiest. When it comes to working for friends I’ve developed the motto “no good deed goes unpunished.” That is why we no longer do favors for friends. Being in the electronics business everyone who thinks they are your friend expects a deal. What they don’t realize is that at the end of the day I have to pay bills and put food on the table. I have, in the past; given products to certain friends at cost and then have their spouses claim that they could have gotten it cheaper over the internet. Or if there happens to be a problem with the product I get a rash of angry phone calls. Then that product, that I didn’t make any money off of, costs me a lot of time and a friend in the long run.

I had one friend get mad when I told them that it was going to be an extra 2.5% because they were going to use a credit card. Can you believe that they thought I should eat 2.5% of the cost because they were my friend? So this is a small problem that I have had to deal with, which you may never have to encounter. But be prepared to draw that line in the sand if it should happen. Keep business business and friends friends.

“If the career you have chosen has some unexpected inconvenience, console yourself by reflecting that no career is without them.” J. Fonda

Be positive

This was one of my favorite things about BNI being surrounded by positive people each week. There were times when I would get depressed because business was slow and I was worried about how I was going to make ends meet. I would sit looking at all of the other businesses and wonder how everyone else was making it.

One of my old general managers once told me that no matter what, when someone asked how business was, I was to smile and say, “Great, we couldn’t be busier.” The reality was that most of the time my stomach was in knots.

Then one day at one of the BNI meetings. I showed up about 30 minutes early as usual. I found a good friend of mine, Earl sitting there by himself, looking quite depressed. I asked what was wrong and he told me that business was so slow that he was scared. But you just told me the other day that things were great, what happened since last week? Well, his reply was that things had been bad for a while and he did not want to bother anyone with his problems. He proceeded to tell me that he was going to quit the chapter because it bothered him that everyone else was doing so well while he was failing.

I started that meeting with a simple question that I wanted answered in their sixty-second infomercial. The question, “How business really was?” I started off by answering that my business was slow and I was scared that I might not make through the end of the year. To my surprise almost everyone felt the same way. What none of us knew was that everyone else was struggling to make it. To me this was very gratifying to learn it was not just me, I had begun to feel that maybe I was a bad business person, but the reality was that things are always hard for the small business person. So, in my BNI chapter we came to lean on each other because we knew that we were all in the same boat.

What my general manager had right was that in the store and in front of clients you always needed to be positive. In sales you have to be up beat no matter how down you feel. Nobody in their right mind is going to want to spend money with a businessperson who is worried about their future. Think about this, “If you were going to buy a swimming pool and the business owner tells you he needs this sale to keep afloat are you going to give him a $20,000 deposit?”

Always keep a positive attitude in the face of adversity.

“Giving frees us from the familiar territory of our own needs by opening our mind to the unexplained worlds occupied by the needs of others.” Barbara Bush

Givers gain

No two words work better together in the business world than “givers gain”. This is the main principle behind BNI. The more you give freely of yourself the more you will receive in return. This is a complete change in the mindset that we have learned as adults. As children we were always taught to share, but as adults we have adopted the attitude of “Whoever dies with the most toys wins.” The thing I liked most about the “givers gain” attitude is that in its simplicity is the one tool that, if used right, will make you richer on more than one level. I know that every time that I try to help someone else; they know and recognize the fact that I tried to help. By stepping outside of my little world to help someone else I have acquired an advocate. Now, I may never receive a referral from them, but hopefully I have made an asset, someone who will think fondly of me and my business for the free help that I have given. Do good things for good people and good will come back to you.

“I always wanted to be a stand up comedian. I never tried because I was afraid no one would laugh.”

Lee Kropp Jr.

The safe training ground

I preach to everyone who has a new sales person or is new to business to get involved in a business group like BNI. It can be a Chamber of Commerce, but if you can, try to get into a BNI chapter. As you read earlier, I was not very good at public speaking when I first started, but then who is? The best thing about BNI, outside of making money, is that it gives you a safe training ground. You get time to practice your sales pitch without the worry of losing a sale if you screw up. Everybody involved is very understanding because they have all been in the same boat. Over time you will become a better, more confident speaker with better selling skills. It just takes time to become a good speaker. Even today, I talk in front of a lot of business groups and I feel that I screw up a lot. The best thing about messing up is that it makes you human; it makes you approachable.

“Everyone has a plan 'till they get punched in the mouth.” Mike Tyson

BYB - Branding your Business

Branding your business is taking an honest look at whom you are and what your advertisement needs are. Who are your clients? What do they think of when they hear your name? What are your clients watching, listening to, or reading? Then, how do you effectively reach them through advertising? The long and short of it is that it does not matter how good you are or how great your business is, if no one knows who or where you are. You will not survive. You have to advertise your business if you want to grow.

For us it took years to figure it out, but when we did, business began to take off. Our clients were mainly guys, almost any age, but guys nonetheless. So we went to where the guys were. Sports radio for us was the place to be. The problem we had was not the guy; the guy’s were easy. Electronic toys for big boys. The challenge was the wives, so we turned to our secret weapon. My wife Donna was put in charge of the interior design of our third location. To set ourselves apart from other home theater stores we had to make the store some place where the guys could come play and the wife’s would feel comfortable. We called this the “wife factor.” Giving the guys the toys they wanted, while putting this into a home that the wife’s would approve of. Too many businesses advertise in areas where their clients aren’t or they just do it wrong.

We have an acquaintance that has a restaurant that is struggling to stay open. He finally decided to put a full-page ad in the local coupon guide. What do you think the one thing is you need in a coupon guide? Well, as you can guess he forgot to put a coupon in the coupon guide. Struggling to make it, he forgot to place a coupon in his ad. He was in the right place with the wrong ad. Years ago we were approached by a newspaper called the Bena Brith. This was a weekly Jewish publication; the sales person assured us that we should do quite well with the readers. When we got our copy we found that over three quarters of the other ads were from Chicago or Kansas City, so I wasted over $1,000 on an ad but I did not check on the demographics. 10,000 readers saw my ad 7,500 of which could not use my services. If you wish to brand your company properly, you have to know your company and your clients and how you want to be known to them.

“I always have trouble remembering three things: faces, names, and - I can't remember what the third thing is.” Fred Allen

Memory hooks

What is a memory hook? If you have ever been to a BNI group you’re guaranteed to have heard one or two. If you ever listen to the radio or watch TV you would know one or two hundred. A memory hook is a little tool to help keep you on top of the minds of the general public. If it is done right you do not even need to be a client to remember it. I have never had to use Fredrick Roofing but their hook still rings in my mind. For a hole in your roof or a whole new roof call Fredrick Roofing. It does sound a lot better with the music in my head, but you get the point. It is not as easy as it would seem and every business is different with a different message. In my years with BNI, I became a master of the memory hook. I can listen to your 60-second infomercial and have you a great hook in a matter of minutes.

“Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.” W. Edwards Deming


At the end of every BNI meeting they have what is called the “Referrals and Testimonial” portion of the meeting. What you may find with some of the undeveloped members who don’t have referrals they will give weak testimonials. I would rather have you say nothing about my company than give me a lame testimonial. An idea of what a lame testimonial sounds like is this; Lee’s company came out and did a great job for us.

The way it should sound if you really care and want to help grow my business, is Theatrical Concepts came out and took care of whatever it was I wanted. I was really impressed with the way Lee’s employees really made sure that I was happy. You all really need to stop by and see Lee at Theatrical Concepts.

Can you see the difference between the two? The difference is that the second one requires some work, whereas the first is nothing but a copout. Giving proper testimonials are every bit as important as a good referral. Weak ones come from weak members. No one strives to be weak, but they generally lack the drive to be great.

“For a lot of people, the weekly paycheck is "take-home pay" because home is the only place they can afford to go with it.” Charles A. Jaffe

Listen to the numbers not the employees

If you are in charge, you have to keep control. You are in charge of your own fate and the fate of your company is in your hands. Most employees, and I mean most but not all employees, will take the path of least resistance. To them this is a job with a paycheck at the end of the week. Over the course of time you will find opportunities that have the potential to make money but will create more work for your employees. The key is to do what you feel is right for your business and not what is going to make your employees happy.

I had an acquaintance that owned a restaurant. He decided to have karaoke on Wednesday’s. Every Wednesday for the first month the place was packed. One month to the day he stopped having karaoke night. I asked why he stopped and he replied that his employees claimed that it was entirely too much work and that they felt it was not worthwhile. The same restaurant would have the all you can eat fish fries during Lent. He was so busy that you could not find a spot to park. He stopped the fish fries on the last day of Lent and business would drop to nothing. Again I asked why he stopped and he told me that Lent was over. Now, I am not in the restaurant business but if I was filling my parking lot every Friday I would have fish fries and karaoke until the people stopped coming. He has since gone out of business, but it makes you wonder if he had listened to the numbers and instead of what his employees were telling him, would he still be in business?

“If you don't drive your business, you will be driven out of business.” B. C. Forbes

Keeping control

Of all the mistakes that I have made, I think one of the worst one’s was to allow my company’s image to fall into the control of one of my employees. About seven years into our business I had the opportunity to hire a gentleman who had a radio presence in the home theater industry. The company that he was working for went out of business so I hired him on the spot. Everyone who listened to sports radio knew him, so I figured I could benefit off of the branding the other company had established. He was older and I was quite a bit younger so naturally when my clients came in they always thought the he was the owner.

The mistake that I made was that I did not mind what they thought as long as they left their money with me. What I had done was short sighted. I let him do all of the radio spots and become the front man for my company. Having someone who is known be the image of your company is not a bad thing at all. What is bad is when your front man leaves your company for another. All of a sudden he was doing radio spots for the competition.

I then had clients who thought that I had gone out of business. Luckily I had a good relationship with my main radio station and I was able to keep my on air spots. I took over doing the radio commercials and started the long process of rebranding my company with my own image.

For some reason it never occurred to me that my employee would leave, so why not let him be the face of my company? In retrospect what I should have done was to let him do the radio spots and over the course of time I should have slowly taken over the spot thus using his image to brand myself. This is like the old saying “don’t put all of your eggs in one basket.” No matter what you do, you cannot allow any one employ to have too much power over your company be it advertising, accounting, or technical skills. Do not allow any one person to become too valuable that you cannot afford to lose them.

“By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day.” Robert Frost

Turning it off

The age-old question for business owners is when is your day over? This was one of those problems that came to light when my wife and I fought over money and business matters late into the night. Business was starting to affect our relationship and it seemed that we were happier when we were both employees of a corporation. We did not have the stress then that we have now because each week we knew without fail that we would have a pay check, and each year we would get a raise and we would have a set number of vacation days. Now, we were responsible for payroll for other people and if we did not make sales there was no money.

We were in a time of feast or famine. In the times of famine we would fight. Fortunately, we made a conscious decision to save ourselves from our business. At the close of business each day we would turn off the business sign and turn off business. There really was no point in worrying about things that were out of our control.

It was like the long sleepless nights. We could not sleep because we were worried about tomorrow. In reality what could we do at 2 am to help our business? The only thing we were doing was losing sleep. When I was fighting with my wife after work what was the benefit? All we were doing was straining our relationship by fighting about things that were out of our control. So we decided that from 6pm to 8am we would not talk about business. We would take that time to try to enjoy our lives, because what was the point of being the master of your own destiny if in the end you were unhappy.


Since you have chosen the path of the of the businessperson what you do is up to you. You can be the type who just sits and waits for business to fall into your lap or you can be the type that takes charge and goes out make it happen. None of the stories that I have written here are gospel. They are just some of the experiences that I have dealt with over the years.

I do know for a fact that if you try hard everyday you might succeed, but then again you might not. The one thing to keep in mind is that in order to succeed you are going to have to define what success is to you. For some it is a big house with a pool and a nice car. For others it’s being able to have time to spend with family. When you compare your success to other people’s success just remember that the playing field is not always fair, and to truly see someone else’s success you also need to know where they started in life. In my eyes a man who starts with nothing and gets to where he wants to be is more successful than the man who starts off as a millionaire and ends up a millionaire, is he really successful?

“A successful man is one who can lay a firm foundation with the bricks life has thrown at him.” David Brinkley

No comments: