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North Bay Business Journal

Monday, January 4, 2010, 1:45 am

Commentary: 2010 year to be open, build employee assets and market

By Jim Andersen

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    Many of us who are careful readers, followers of economic indicators and business owners are somewhat concerned about what the immediate future may bring us:

    – Forecasted double-digit unemployment in California through 2012

    – Ongoing financial struggles by banks and other lending institutions, which make borrowing money and thus expanding our businesses difficult, at best

    – Spiraling health care costs with significant government interference that potentially could create more problems than solutions

    – In summary, it appears we are in a very slow crawl out of a devastating recession that has affected all of us in different ways.

    What are the smart moves that business owners can make to help mitigate all the negative press that we see? This is what is referred to as “short-term pain for long-term gain” or, converting “lemons into lemonade.”  My recipe for success is as follows:

    – The starting point is proactive and effective communication with your employees – every business’ most treasured asset.  The way you maintain a motivated and happy group of employees starts with honest and open communication. Employees need to know the facts; share information with them – good and bad.

    When you have communicated truthfully and upfront with your people they will be more sympathetic to layoffs and pay freezes.  What this will also do is “light a fire” under your staff; the cream will rise to the top and your good people will work harder, which will bring added efficiencies to your organization.

    – Now is a great time to hire people; there is a huge inventory of qualified people in the market place.  You may ask, “What do you mean – hiring in a down economy?”

    Remember the theory of Jack Welch, retired CEO of GE, of 20-70-10. In every well-run organization, Mr. Welch said, you have approximately 20 percent of your people who are stars.  The next 70 percent of your people are in the middle. The bottom 10 percent are often not doing the organization any good, or themselves, for that matter. By aggressively evaluating performance you open the door for great hires when an opportunity arises.

    – This recession has been a great educator for business owners about hiring and employee retention issues. The smart employers will run leaner and meaner. The smart employee will need to be patient and willing to accept less pay for more effort in the short run.  The employee may ask, “What is this all about?”  Real simple – if you hang in there with your employer now and are doing great work, a total win-win will take place. And if this doesn’t happen?  There will be better opportunities for you in the marketplace.

    After considering the most difficult and pressing issue in any business – the employee work force – what other opportunities are out there for us in the short run?

    Let’s start with company lease and facility issues. What a great time to renew a current lease, expand in your exiting premises or look for new space – and all of this at a rate that could be anywhere from 15 percent to 40 percent under what you are currently paying. My view is that commercial real estate will be sluggish for some time to come, and if you are close to the end of your lease this is a great time to renew at a substantially lower rate than you are currently paying.  If you are willing to be aggressive and expand in a tough market, this is a great time to do it.

    Now, a final comment – not necessarily an opportunity – but a necessity.  Market, market, market and then market some more.

    During tough times one of the dumbest things I see businesses do is drastically cut their marketing budgets.  I view this as a huge mistake. I think you need to be smart on how you spend your marketing and advertising dollars, but to slash the budget dramatically will have big negative repercussions for your organization in the long term.

    Make sure you evaluate your marketing program to come up with the best strategic plan for your company, and realize that this is a critical time for you to send a message to the public that you are doing great and will continue to do great.

    •••

    Jim Andersen is a partner in the consulting, business valuation and litigation practice areas of Burr Pilger Mayer (BPM) in Santa Rosa. For more than 20 years, Jim has been taking North Bay businesses through the business valuation and succession planning process. You can reach him at 707-524-6530 or at jandersen@bpmllp.com.

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