Your market has become saturated. Your clients’ needs have shifted. Your industry has been wiped out by technology. Is it time to pack it in? No — it’s just time to change. In fact, small-business experts point to change as the foremost ingredient of a flourishing company. Whether it’s a spin-off, a new product, an original twist on an old product, or a service completely separate from its parent, change in business should be ever-present, says Arnold Brown, chairman of New York City-based Weiner, Edrich, Brown Inc., a consulting group that specializes in the management of change and trend analysis. The key is the timing. “Everybody has to become a trendspotter,” Brown says. The French aristocrats knew it was time to change when they started getting their heads chopped off. By then it was too late.” Fortunately, small businesses are uniquely qualified to act fast and adapt quickly to change. In contrast to a conglomerate that needs layers of approval and stacks of paperwork just to switch to a different brand of coffee in the break room, a small company can switch directions on a dime.
To help you keep your head-and make sure your business heads in the right direction-we asked top experts for advice and talked with three entrepreneurs for whom change is a welcome caller in the workplace.
Tune in to Clients’ Needs
Travel agent Stanley Dalnekoff always prided himself on customer service: He installed custom printers in clients’ offices throughout the country to make issuing tickets more convenient. He added a courier to his staff to deliver tickets throughout Connecticut, where his company, New Haven Travel, is based. And he set up a 24-hour, toll-free reservation service.
So it was all the more frustrating when Dalnekoff kept coming up short when trying to offer customers the cheapest fare for airline seats, which were often the ones that became available the night before a flight.
“We would sell a ticket for the cheapest price available at the time of purchase,” he recalls. “But then clients who were wait-listed would call the airlines and if somebody in Oshkosh had canceled a seat at the last minute, a cheap seat would become available. It made us look foolish.”
Customer perception is crucial to maintaining business, points out Jack Burke, author of Creating Customer Connections (Merritt Publishing) and owner of Sound Marketing Inc. in Thousand Oaks, California. “In the marketplace there are only three niches where you can position your company,” Burke explains. “You either have to be the best in technology, the lowest in price, or the best in some value-added area, like customer service.” Dalnekoff’s customers’ perception that the agency was unable to secure the best price could have resulted in clients taking their business elsewhere.
What’s worse, customer dissatisfaction often takes entrepreneurs by surprise. “The average successful business owner has a tendency to get complacent”‘ Burke maintains. To stay on top, get in your car and visit your 10 largest accounts and find out how they view you. If the average business owner did this, he or she would be in for an awakening. The companies that remain successful over decades [have realized] that customers know what they want, and the company has to respond to that.”
Respond Dalnekoff did. The Scottish-born entrepreneur, an accountant by trade who was a systems analyst before his entree into the travel business, embarked on a mission to find a better way to meet his clients’ needs.
“I flew out to look at a new reservations system coming on the market. Then I figured out a way to automatically dial in to it. After two days, I knew it was going to work,” recalls Dalnekoff.
Dalnekoff formed Promised Land Technologies in 1990 and hired a programmer; nine months later, FlightClear software was born. The program automatically called airlines continually, checked flights for which Dalnekoff ‘s customers were wait-listed, and counted the number of times it tried. Typically, it found and booked a cheaper seat after 600 tries. By the following morning, about 50 percent of New Haven Travel’s wait-listed customers were booked for cheaper passage. The passengers embraced Dalnekoff; the airlines threatened him; and American Express offered to license his product for three years. Dalnekoff accepted.
Brainstorm on a Regular Basis
In time, the airlines changed their ticketing policy and American Express wrote its own reservation and booking software. Meanwhile Dalnekoff, who had already hired a second programmer for his sideline business, was making a tidy profit customizing and re-engineering software for other businesses. In the process, Promised Land Technologies discovered another void: user-friendly neural networks.
Neural networks enable users to predict outcomes based on data relationships. Trouble is, the process depends on mountains of information and demands an excellent historical database. During one of the business’s regularly scheduled meeting of the minds, Dalnekoff and his staff hypothesized that the task would be simpler if inputting data was easier.
Brown extols the benefits of such meetings where staffers pitch pie-in-the-sky ideas, then devise ways to implement them. “Have an internal skunk works,” he suggests. “Go out for a drink once a week or something like that. Come up with a variety of what-if scenarios. Have several people keep a diary. Every time you or they encounter a situation in which you’re frustrated because you don’t have something you need, write it down.” In that way you discover voids your company might be able to fill, and you also show your employees that you value their input.
As a result of their idea-generating session, Dalnekoff’s team designed a clone spreadsheet into which users could input data. The resulting program, Braincel, filled an immediate need. Now it works as an add-on to Microsoft Excel, and customers range from a doctor who uses it to help diagnose breast cancer tumors to Fortune 500 companies and entrepreneurs who use it for financial forecasting.
In addition to staff brainstorming, don’t forget about your own brain. “You’ve got to take part of your day — at least 10 percent — and reposition yourself for your future,” urges Brown. “Many heads of small companies say, ‘I can’t take 10 percent of my time to think about the future.’ But you must. You don’t have to be in the office. You can be driving or in the shower. Focus on what you can do in the future to make your business grow. And subscribe to at least one publication that infuriates you. It keeps your mind open.”
Take Time to Test New Waters
Mary Diffley had a tough time keeping an open mind about computing. She was an accountant working at a New York commodities firm in the late 1980s when she suddenly found herself heading up a project to automate records of the whole trading process. “I’d never even had a computer science course,” she recalls. Nevertheless, she was responsible for implementing networked computers throughout the offices and for convincing traders to input their data electronically.
“I had to struggle quite a bit to figure it out myself,” Diffley says of her plight. “I have to remember today how difficult it was to comprehend some of the concepts behind automation.” That struggle is what makes Diffley so understanding when it comes to dealing with businesses that are trying to get computerized. In 1992 Diffley turned her preparation into profits by founding New Directions, a company that introduced systems management to businesses in Rockland County, New York.
Then, while her technicians — a team of outside contractors — were busy putting computers in these companies and adding a host of productivity tools, Diffley immersed herself in her next project, learning about the Internet. “I started by looking at the capabilities of electronic communication, then set up my own bulletin board service. Shortly after that, the whole Internet took off and I fell in love with it,” she recalls. “I was investigating how this new medium could help my client base in Rockland County and I found there was very little info available. So I published a county directory. I earned nothing, but it was a lot of publicity and promotion, enough to get the ball rolling. Then I started to do training and showing companies what the internet could do for them.”
It was a natural progression, one lauded by experts. “If you’re bored with your business, or if you’re getting a little burned out, or if you’re in an area you like but you just need something different for yourself, the solution sometimes is to just bring new things into the business,” says Nancy Drescher, the Phoenix, Arizona, author of Which Business? Help in Selecting Your New Venture (The Oasis Press). “If it’s an area you really love, maybe you just need to change your focus.”
Inevitably, companies asked Diffley how they too could get on the Net. She referred them to the only provider in town — TZ-Link Internet. Soon Diffley and the provider found themselves in a constant state of referral. They decided to merge and in April 1996, United Computer Specialists was born. Now Diffley, partner Drew Morone, four staffers, and a host of outsourced consultants provide services in four distinct divisions: Internet access, Web site design, training, and hardware and software solutions.
Keep an Eye on the Crystal Ball
With the ever-changing nature of technology, Diffley envisions a future full of customers at her one-stop shop of technology solutions.
“It’s not so much about being ahead-it’s about being current with a focus of five years into the future — but I can see clearly to 18 months,” says Diffley. “Sure, I’ll get hit with surprises every day. You have to experiment with different products, but there is tremendous growth potential in this industry.”
Diffley’s approach is a sound one, says Bruce Tulgan, founder of the New Haven, Connecticut, management consulting group Rainmaker Inc. and author of Work This Way (Hyperion). “Can you predict what markets will be around in five years for your goods and services?” he asks. “Maybe you can’t, but you should project out as far as you can. Try to anticipate what’s going to change in your market and what the implications will be for your services, what new markets will open up, and what skills and services you already have that will be transferable.”
It might be a matter of repackaging your knowledge and skills. Tulgan reports that many entrepreneurs, like Diffley, are continually reinventing their product and service lines. “They’re looking at all the resources they have. Maybe they ask themselves, Do we have a database we can use in more ways than one? Are there skills our employees have that we’re not using to provide additional services?’ If you’re always looking for those synergies in a rapidly changing environment, you’ll be ahead of the game,” Tulgan says.
Find the Silver Lining
Often it takes some digging to discover the real value of your resources. Bud Levey spent thousands of hours in a Phoenix warehouse searching for pots of gold. But although recycling gold and silver stripped from the circuit boards of old mainframes was fruitful enough to pay the bills, it never filled up a treasure chest.
“In the old days when gold was $40 an ounce rather than $400 an ounce, a lot of it was used in mainframes,” reports Levey, a chemical engineer who worked a stint in the family radiator business before starting Electronic Materials Recovery Inc. in 1986. “But, as it turned out, I ended up getting in at the wrong time.”
By the time Levey entered the business many of the dinosaurs had already been buried. Still, there were companies that offered up their fossils, agreeing to part with them in return for a percentage of the riches. Often during Levey’s door-to-door prospecting, he came across heaps of equipment too obsolete to use but too good to throw away. He started buying these too and reselling them to equipment refurbishers out of state.
“You couldn’t cherry pick what you wanted,” Levey says. “You’d have to buy a large lot. They would put furniture in with these lots. Monitors, terminals, any kind of electronic widget and gadget you’ve ever seen in your life.” Not being one to pass up an opportunity, Levey got a bigger warehouse and started a new line of work.
“We put all the onesies and twosies into our warehouse and eventually had so much we opened it to the public. Highly technical people love playing with that kind of stuff. Before we knew it, the retail business took up half of our 6,000-square-foot warehouse,” Levey recalls. “Then we started getting PCs and they started selling very fast.”
Levey and partner Bill Woosley added personal computer repairs and sales of refurbished PCs to their metal-stripping, office-furniture-recycling business. This too burgeoned, and a full-scale retail business was close behind.
Today, Levey heads the 4,500-square-foot retail store Electronic Materials and Computers, which sells new computers at prices competitive with the big chains. Woosley runs the 4,500-square-foot warehouse, where customers still lose themselves for hours in search of the $25 oddball part that completes their home machines.
A key to the pair’s success is “preserving the assets,” says Tulgan. “Whether it’s the customer or the staff or whatever, don’t abandon what you have.” Another is directly observing the habits of customers, which Brown believes is a crucial component that many entrepreneurs overlook in favor of such methods as sophisticated focus groups and market research surveys.
Today, Levey’s $2 million, 13-employee company still recycles gold, but these days it’s sent out to strippers. And he still picks up old gadgets collecting dust at area corporations. “We keep our eyes open and listen to the needs out there,” says Levey, who recently started a monitor-repair business after the death of a contractor who repaired Electronic Materials Recovery Inc.’s shopworn monitors.
“It sort of happened the same way everything else happened. We needed to find someone to repair monitors and we called around and said, ‘Whom can you recommend?’ They said, Well, we deal with so-and-so. But could we recommend them? I don’t know.’ My partner and I said this is a major problem. Well, if there’s a problem, there’s got to be an opportunity,” says Levey. “We’ve been doing [monitor repair] for three months now. Business is outrageous.”