Image courtesy of entophile (http://www.flickr.com/photos/41060081@N03/)

Chad and I made the decision to change WebMedley from an entrepreneurially run company to a professionally managed company. The change will be positive for our clients, teammates, and for us personally. This post explains why we’re doing it, what’s involved, and how we’re going to share the details of this journey.

Why Make The Change?

The company is about to reach its third birthday under our ownership. When we bought the company (2008), it was in need of a serious resuscitation — you can call it a turn around job, if you like. Here’s what accompanied the business we purchased:

• Crazy books: some clients were being billed incorrectly or not at all
• Too many servers for the true volume of client need.
• Two content management systems. One was three years out of date and no longer being developed or serviced. Some clients want to stay with older systems — which is fine — and those who want to be current can now do so.
• No vision for what the company could be.
• From the end of 2008 until mid-2009, we cleaned up, transferred data, upgraded, etc…and turned it into a profitable company. From 2009-now, we grew the company through sales efforts and wonderful word-of-mouth referrals.

We find our time is spent wearing too many hats. This isn’t uncommon in small businesses. Everyone chips in when work needs to be done. When a company is in growth mode, this must occur and it helps everyone working together touch multiple parts of the business.

It could continue to work for us if we didn’t want to continue to grow and improve. It would be fine if we just wanted a general marketing company: one that paid everyone enough to live a simple life in Lexington KY. We’d turn into another local <10 person ad agency and coast into mediocrity.

And if we wanted that, I wouldn’t be writing this post.

When I was in my 20′s and had my first company, TransDigital, I got to ride the dot com wave. Everyone wanted web sites, systems, etc. We had good cash flow and were profitable. So I did what any 20-something would do: had fun traveling and spending. If I had used some of that cash to hire executives with more experience than me, I might still be traveling! Lesson learned.

This time around, it’ll be different and better.

We know we should focus our time on tasks we both want to do and perform with excellence. Am I the best HR manager? No. Who is? Let’s find him/her to work with us so we can do what we do best. Everyone in the vendor, company, client food chain will be better off for it.

One last answer to “Why?”: because I don’t want to look in the mirror in 2012 and be in the same place I’m in now. I want to be better.

What Does the Change Involve?

A change like this is subtle at first.

We started by interviewing for an operations person, a Chief Operating Officer (COO) for WebMedley. Chad and I reviewed what we want to do and what we are good at. Then we compared the list with what must be done in order to operate as is and where we want to go. It was quickly apparent neither of us want to run the day to day operation of the company and weren’t going to be good at it if we continue to grow. Time to find someone who wants to do it, is good at it, and has a demonstrated success in the ops area.

Luckily for us, someone was looking for just the right opportunity.

After a number of meetings, discussions about structure, spending, and vision, we agreed to pull the trigger with our new COO.

In less than eight weeks, we have a plan for the rest of 2011 and a project workflow that improves on what we were doing. More checks and balances to ensure our clients get a great experience and our team enjoys it. There’s more, but it’ll do to know these major parts for now.

Everyone inside the company will have more accountability, but its matched with empowerment. Everyone also has a financial interest, meaning bonus, if they hit their personal goals. And another one if the company hits its overall goals.

We’re on the lookout for sales hunters, graphic designers with web experience, and account managers.

Everyone becomes more efficient. We have a great culture. That can lead to hanging out together and talking about life, friends, family, etc. This won’t change. What has changed is the output of each person in fewer working hours. Why? I’m not sure. It’s just happening.

One of the personal changes is that I have to remember not to be involved with everything. When people inside the company bring me questions, I need to help them by asking only questions back. How does this help? It helps someone think through their original problem (opportunity ;^) ) and arrive at the solution on their own.

There’s a weird phenomenon going on inside my head: I’m accepting the change quicker than I thought.

Conclusion

Everyone should benefit from the changes.

It’ll be a fun ride.

I might have learned something since I was in my 20′s.

Chad and I have a goal: in six months we have transitioned from wearing too many hats to wearing only a few. It is our responsibility to work with our clients and mentor our team so everyone has a great experience with WebMedley.

This is an example of a bad customer service policy — and it’s not just an AMEX issue. Many companies forbid their overseas support teams from calling anyone. There may be good reasons to limit outbound calls, but to forbid them when a client requests a call is the wrong policy.

Well, I’d like to thank our clients for helping us grow, my team for putting in the time, and our contractors for filling out our needs.

An update is coming soon!

We know that its rare when someone does not have internet access. However, there are those times when you are in a plane (already changing in some planes), in a cave, or in the middle of the ocean. We build FanStream on the iPhone first because it has the coolest interface and a lot of “wow” factor. Each time you open the application, it looks for the latest content from our servers. If you do not have a net connection, it’ll still work fine — just without the up to the minute updates. If you do, you’ll have the very latest news, updated schedules (for when the TV station changes the time), and roster.

Here’s another cool feature for the iPhone users…we’ve integrated location-based services to find out where all the FanStream viewers are when they are using the application. Want to test it out? Take your iPhone, open FanStream (link to FanStream in the App Store), and choose any team’s news. Click on a News article and read the summary. Then, to read the full article click “View WebSite”. When you do this, the iPhone Safari web broswer will ask you if its OK to use your current location. Tell it Yes. This sends data back to us of the date, time, and location. We’re able to plot your location on a map and you’ll be able to see where other FanStream viewers are in real time.

Right now, you cannot tell who is exactly where since its not integrated with a user management system. Stay tuned…

Want to help make the app better? We’re looking for the following:

• Photos to be used for specific team backgrounds – these need to be taken by you or able to be used in our app (no licensed photos!)
• Game commentators – each game in our system needs a pre-game and post-game comment from fans. We want opinions from fans on both sides of the game.
• Your ideas: what would you like to see in the app? We’re sports fan and want FanStream to be your game companion.

If you have ideas, thoughts, etc, e-mail me or post it in our forums over at the site.

In a few more weeks, we’ll have FanStream for the BlackBerry and other phones.

If you want to be updated when we have more news, join our the FanStream Fan Page on Facebook. All Fans receive a scoring update for major games and all UK games (of course!) each Saturday.

I’m paraphrasing this comment:

…when someone does not correct you, that person has given up on you…

I don’t want anyone to give up on me, my family, or any of my dear friends.

The questions are straight from one of Buffett’s responses:

What if you could buy 10% of one of your classmates and their future earnings? You wouldn’t buy the ones with the highest IQ, the best grades, etc, but the most effective. You like people who are generous, go out of their way, straight shooters. Now imagine that you could short 10% of one of your classmates. This part is usually more fun as you start looking around the room. You wouldn’t choose the ones with the poorest grades. Look for people nobody wants to be around, that are obnoxious or like to take all the credit. If you have a 500 HP engine and only get 50 HP out of it, you’ll be beat by someone else that has a 300 HP engine but gets 250 HP output.

Professional investors, especially angel and VC’s, already ask themselves this. I suppose I do in one form or another. But, to add the mental correlation of buying or shorting a stock…well, that takes it up a level.

We’re offering a seminar on document retention and risk management on the 4th and 5th. One seminar is in Lexington and the other in Louisville. When brainstorming about valuable content to share, I thought this would be a good idea because so many businesses need to be organized. Will Montague and I are going to show our guests how to keep legal fees low and what to do to manage risk using a combination of policies and IT.

The cost is….wait for it…Zero.

Yep. of course Will and I hope we can generate business from people attending, but there’s no obligation.

I got burned by legal discovery fees once, was told I would win the case, but that the case would cost me everything. Don’t let that happen to your business. I was flabbergasted (yep, that extreme) when it happened. Caught totally offguard. Later, I found out it was cheaper for them to sue than to pay the bill for my firm’s professional services. Almost 8 years later, I still cringe from the situation. 

If you know of anyone who would benefit from a two hour session plus a free breakfast, tell them to contact me or sign-up at the site.

Once its printed, we probably stack it somewhere so it can attract dust. Let no desk surface be uncovered!

Then, we wonder where that dang printout of the schedule went. Didn’t I print it just the other day?

Well, wake up! There are easier ways to manage your docs and then find what you need.

I learned my lesson when I decided to sell TransDigital. We accumulated paper in all forms: plain ol’ wasted paper, signed contracts, technical specs for projects, project status updates, and so on. The prospect of physically moving all of it was not enticing. So, right after selling, we bought an eFax account and faxed it all to ourselves. This allowed us to do the following:

• Recycle the paper
• Organize all our important company documents and quickly recall them
• Store all company documents electronically
• Quit worrying about the “act of God” issues: flood, fire, etc.

I still follow the practice of scanning all important documents (home and work). It’s simplified my life.

Your company can do exactly what I did or do it a little more professionally. There are companies that exist to scan, sort, and store documents. (If you are using them, then this post is skippable!). There is also software that can help you with this.

We sell a system called Teleform (retails at $8000/desktop scanning station). It helps companies manage documents and is one of the industry leaders. When you combine a system like Teleform with internal processes, you can achieve the type of benefits I did. We manage all our POs, signed contracts, policies, etc through scanning systems.

If you are growing rapidly, you should look into software to help you manage the paper, routing documents, and develop a retention policy. Otherwise, you’ll end up buying a lot of filing cabinets, wasting employee time looking for documents, and being frustrated.

Some resources:

Amdoc , Teleform, VeBridge

First, let’s look at this question: “Should everyone in the company be eligible for a commission?” Yes. Everyone working at the company has an interest in its continued operation. People may not always think of the company and its well being, but once a person has a taste of the red meat of commission, a new desire is known. You could use a commission as one element in a strategy to convert people from thinking “I have a job” to “I’m building a career at this company”.

The sales team should happily give up a portion of its commission to the person who helps bring in new revenue.

Next, let’s look at the make-up of those involved in a sale and how they might be commissioned. Typically, a professional services firm will have various “levels” of consultants and no true “all I do is sales” people. Everyone is supposed to bring in business, but its the senior partners who are really in charge of this process along with other management responsibilities. These senior execs do not often handle the technical work performed though. We now have a situation where the following can occur:

1. Mr. Big lands an account while golfing with some club buddies
2. Mr. Next in Line scopes the work and performs the grunt work involved in contracting the account
3. Messrs. Just Hired and Just Got My Visa actually perform the work contracted.

So here are four people who should get some form of commission. These people also require administrative support and I believe everyone should get a piece of the contract if his part is successfully executed.

Here is what I’d like to see in a new project, new client deal:

These are examples related to a firm that has recurring business and does not desire to grow like a weed. The commissions are designed to give everyone a piece of a contract.

The thinking behind this plan is that Mr. Big is going to continue to look for deals, Mr. Next in Line wants Mr Big’s cash comp and will learn the ropes of contracting prior to promotion, and Messrs Just will try their darndest to make it a profitable project. Administrative support should seek to provide as much assistance possible and keep the number of their staff low so the commission is split with fewer people.

If this was not new project, new client, but rather new project, existing client then I would make sure to compensate the person who brought that client in to the firm originally, too, even if he is no longer servicing the client. Why? Because everyone should benefit from thinking about new sales. The commission should only be about 1-3% if he is no longer working with the client.

Next, what factors really affect the achievement of new revenue? Is it the number of appointments? Is it referrals from existing clients? Make sure to factor this into your compensation (not commission) plan. If its number of new appointments, then reward the person who is setting the most new appointments.

Next, what type of business do you want people to focus on? New sales, repeat sales, sales of things, sales of services, local sales, sales in an industry vertical, etc… Make sure you grant greater commission on the types you want and make it clear why. I met a guy who actually paid less on larger deals. Um, yeah, let’s keep the deal size small…

Next, do you need “pure hunters” — those people who only bring in new leads and close business deals? This is a sticky subject with some firms. The reason why is because they often make the most money and other staff perceive them as not working as hard since they are out of the office a great deal. This is a results-only position. Effort does not matter. I like the idea myself, but it is very difficult to do in a professional services firm where relationship building is critical. If you can do it, your company will reap the benefits of a successful hunter and rich client relationships.

(For those of you interested in the hunter’s perspective this video is a funny take on selling activities.)

Other factors to consider with commissions:

Do you pay a pure sales person full commission if a project he sold turns out to be a money-losing deal?

How long do you pay a commission? For the life of the account or for a finite time period?

Do you pay commission when a contract is signed or after the project is complete and profitable?

What do you do when a client is late in paying an invoice?

Brief Commission Examples

Small Company interested in attracting new clients

pay sales more for new clients; pay support for retaining business

Direct sales software firm interested in its stock price

pay higher commissions on sales of new licenses and support plans, but lower on professional services (this increases revenue without increasing cost)

Small professional services firm (10-50 people)

pay great commissions for new clients

Large professional services firm (over 100 people, but not a behemoth)

pay great commissions on recurring business with existing clients and new projects with new clients

I’d love to hear your thoughts on the idea in this post. If you are interested, I can dissect a real sales compensation plan for a small It services firm to give you an example of the pure hunter compensation.