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Beyond the Business Plan: 13 Essentials You Won't Learn in Business School

Oct. 10, 2013
Learn about 13 foundational habits, including: Always ask yourself, How would I like this? Always keep in mind why you’re in business. Know the difference between customer service and complaint resolution. Hire people you like, then help them blossom, and Respect salespeople's time.

Michael Houlihan and Bonnie Harvey started Barefoot Cellars in the laundry room of a rented Sonoma County farmhouse. When they started their company in 1986, they knew almost nothing about winemaking or the wine business. But through innovative ideas and hard work, they built Barefoot Cellars into a highly successful nationwide brand and sold it to E&J Gallo in 2005.

Now in "The Barefoot Spirit: How Hardship, Hustle, and Heart Built America's #1 Wine Brand" (Evolve Publishing, $15.95), they share insights on how to grow a business and, hopefully, avoid some of the School of Hard Knocks lessons they endured. Frequent speakers at business schools, they collectively refer to their guiding principles as "The Barefoot Spirit," a system requiring entrepreneurs to put themselves in the other person's shoes. When you allow these principles -- not fear, greed, or the way other people did things -- to guide your decisions, teach Houlihan and Harvey, you can increase sales, reduce overhead, gain new loyal customers, and grow your brand.

Read on to learn about 13 foundational habits that (along with a healthy work ethic) will help you to become successful as an entrepreneur (or with an established business):

Always ask yourself, How would I like this? When you start your own business, you'll quickly learn that there's no class, book, case study, or industry standard that always gives you a clear answer to One Big Question: Will this choice sustain and grow my business? However, there is a simple formula that rarely steers you wrong. Your grandmother called it "The Golden Rule." Your mother said, "Put yourself in the other person's shoes." Today, Houlihan and Harvey ask, "How would you like it?"

"It's quite simple: Would you like to be on the receiving end of your actions?" Houlihan asks. "Would you work for you? Would you extend credit to you? Would you like selling to you if you were a vendor? As a consumer, would you buy from you? By putting yourself in the other person's shoes, you'll get an objective view of your business practices and how they might need to change in order for you to build a brand you'd be loyal to. Too often, entrepreneurs limit their success by allowing fear, greed, or the way other businesses do things to guide their decisions."

Pinpoint your strengths and weaknesses. We all tend to think that we can do more than we actually can. As a result, we're overscheduled, overtired, overstimulated, and overwhelmed. In the business world, this tendency to be "over" causes us to blow our skill sets, our capabilities, and even our products and services out of proportion. That's why Houlihan and Harvey recommend that you work with a third party who knows you very well.

"One of the keys to success is understanding what you have an abundance of and what you need more of -- and a trusted friend or mentor can help you make those distinctions," Harvey points out. "This person can help you determine how much time you have to commit to your venture and how much money you can safely spend, for example. He or she can also keep you honest about what you do and don't excel at, how you handle stress, and when you need to delegate tasks and call in help. It will be harder to make false claims knowing you are being held accountable."

Always keep in mind why you're in business. Before you open your doors for the first time, get clear on your values and goals as an entrepreneur. Ask yourself questions like: Why do I want to build this business? Is it simply to create a job for myself? Is it to create a legacy, or to build brand value that I can monetize at some point? What are my beliefs on how employees and customers should be treated? What lines do I never want to cross?

"Consider writing the answers to these questions down and looking back at them from time to time," Houlihan advises. "The reasons behind why you want to start a business in the first place will influence how you run it day to day. It's important to stay connected to your values and to make sure that time and momentum don't move you too far away from them."

Become a leader in your own category

There was a time before terms like "social network," "iPhone," and "Google it" were used. So today, Harvey and Houlihan encourage entrepreneurship students to create their own terms, define their own niches, and be leaders in their own new categories. Doing so can distinguish your company and lead your product to success.

"What is your new term for defining your product or service?" Harvey asks. "It just might catch on. Don't be afraid to name your own tune! And don't let initial resistance or skepticism stop you. Believe me, Barefoot caught a lot of flak from the traditional and conservative wine industry when we began to use terms like ‘personal house wine,' and ‘velocity price point.' But today, those terms have caught on -- and are now used throughout the industry."

Always OVERdeliver. As a (probably cash-strapped) entrepreneur, at times you may be tempted to cut corners in order to save a minute, a hassle, or a buck. Don't. Remember, most consumers look for products and services that provide good value for the price. If you want to gain your customers' loyalty, you have to offer them exactly that -- and you need to make sure that they have consistently positive experiences with your company.

"When products meet or exceed customers' expectations, they are more likely to remain loyal and recommend your brand to friends, family, and associates," Houlihan confirms. "At Barefoot, we always strove to overdeliver by meeting and exceeding customers' expectations in quality, quantity, and customer service. We validated the consumer's decision to choose our brand by publicizing all of our awards, accolades and endorsements. And we took every opportunity to get feedback on what people liked about Barefoot, and how they thought we could make it better."

Know the difference between customer service and complaint resolution. These days, most companies have anything ranging from one person to a whole department dedicated to so-called "customer service." But in reality, many of these departments should be called "complaint resolution," because that's what happens: Customers express their displeasure, representatives try to resolve the problem as soon as possible (often relying on a script), then move on.

"Instead of handling complaints formulaically and trying to sweep them under the rug, see customer service as a way for your company to get real and timely feedback about your goods and services from the people who are using them," Harvey recommends. "Remember, for every customer who chooses to engage with you about your product or service, many more may be quietly taking their business elsewhere!

"Treat each customer on an individual basis," he continues. "Ask about the customer's experience with your product and really listen to the answers. Pass helpful insights and ideas on to production and marketing. And most importantly, stand behind your product. Don't rest until the customer has something good to say about your company."

Don't treat your employees like commodities. Rarely is employee turnover talked about in business schools -- and you won't see it as a line item on a business plan, either -- but it has the potential to be one of the biggest costs for your business. When a member of your team leaves, you don't just lose that employee; you lose her hours of training, her institutional knowledge, her relationships outside the company, and (in the case of salespeople), you can lose customers who are more loyal to your former employee than the product she represented.

"It's simple: How you treat your employees directly correlates to how successful your business will be," Houlihan states. "If you treat them like a commodity -- if you're stingy with pay, recognition, and benefits -- they'll do only the bare minimum to keep their jobs, and eventually, they'll leave.

"Never forget that people work primarily for income, recognition, personal time, and security," he adds. "When Barefoot began paying for performance (monetarily, as well as with days off, publicly recognizing employee achievements, and more) rather than attendance, we found our best people didn't leave because they benefited from their own production. Those who were less productive were paid less and could not afford to stay."

Hire people you like, then help them blossom

In other words, don't hire solely based on someone's technical skill set. You can always teach that. Instead, hire people with foundational qualities you can build on: integrity, enthusiasm, a willingness to learn, a sense of humor, and a sincere interest in your business, to name a few. A good way to test this is to give job candidates a verbal run-down of the position, your company's challenges and your expectations for the position. Then, have the candidate send you a one-page summary on a deadline. This will tell you volumes.

"You can always train good people later, after you've made them a part of your team," Harvey assures. "And be sure to create an environment where your trusted team members can feel free to grow, take risks and even make mistakes. Employees who aren't supported and who are afraid of doing something wrong will never live up to their full potentials.

"Lastly, to really get the best out of your people, find out what they excel at," he advises. "Then, redesign their jobs to fit those skills. Ask others to pick up the aspects of the former job that still need to be done. You might be surprised at the positive response. Don't put the square peg in the round hole. Build a square hole."

Meet deadlines (and when you can't, be the first to call). It goes without saying that you should do everything in your power -- such as work longer hours and ask for help -- in order to meet deadlines to which you've previously agreed. But sometimes, it happens to the best of business owners: Despite your best efforts, there's just no way the product, service or payment will be ready on time.

"When that's the case -- and especially when it is related to paying a bill -- call ahead and let the other party know that you'll be late," Houlihan instructs. "Explain what the holdup is, extend your sincere apologies and explain how you're going to make things right. If the other party has to call you, they'll have a much more negative feeling about you and the situation. I remember during Barefoot's early days, Bonnie and I had to tell some of our creditors that we wouldn't be able to pay on time. And several of those creditors extended our credit on the spot. They said we were the kind of customers they wanted!"

Respect salespeople's time. Dealing with salespeople isn't high on most business owners' lists of priorities. These owners often brush salespeople off or leave them waiting for long periods of time. They may even treat salespeople with annoyance or disrespect. Don't make that mistake. According to Houlihan, the salespeople who call on you have much more to offer than the products and services they represent. They are a gold mine of information and are in a position to significantly help your business.

"For instance, the salesperson calling on you may have special ‘pocket' deals to help close new customers or gain larger orders, such as reduced interest rates or extended terms," Harvey points out. "Even if she can't offer you a deal outright, she can still be your advocate for better terms with her company and give you insights on how to maneuver successfully.

"And that's not all," he continues. "Salespeople can also help you to anticipate a competitor's move, or to be prepared for a new opportunity or a change in laws or business practices. After all, it's part of their job to stay on top of the ever-changing marketplace. Why let your competition get the latest industry information, best deals, special closeouts and credit terms just because you treat salespeople poorly?"

Don't have preconceived notions about bankers. Often, entrepreneurs think bankers don't care about their businesses, and as a result, don't make an effort to develop positive relationships with them. But the reality is, bankers usually aren't unaccommodating bad guys. They're anxious because they don't know how you'll behave when times are tough.

"You certainly wouldn't want to increase terms or make concessions to someone who might blindside you with the information that a payment would be late -- or might not pay at all," Houlihan points out. "Once you realize that bankers and creditors have fears and goals just like yours, it will be much easier for you to be friendly, transparent, and informative. And when you are, you'll see that these professionals are more likely to help you out. The truth is, they want you to succeed because when you grow, they grow."

Don't be afraid to ask for help

Sometimes, entrepreneurs have an "I'll do it myself or not at all" mentality. They believe that asking for help reflects badly on their capabilities, and they don't want to seem weak. They may not want to risk proving naysayers right or appear to be a bad investment. But the truth is, unless you're independently wealthy with a team of experienced, trusted advisors to guide you right out of the gate, you'll need some type of help sooner or later.

"In the case of all vendors and creditors, and other strategic allies, honesty regarding where you are and what you need is the best policy," Harvey confirms. "Also, don't be afraid to ask for advice, guidance, and aid from mentors and other industry professionals. When you're starting a business with a tight budget, you literally can't afford to make mistakes -- and that means there's no such thing as a dumb question. I'll never forget asking one supermarket chain's gruff wine buyer what our logo should look like. In colorful fashion, he told me exactly what to do and what to avoid. Turns out, that advice was solid gold, and I didn't have to pay a dime for it. All I had to do was ask a question."

Have heart. Heart isn't something you can learn from a book, class, or seminar. It's not a skill you can master. Instead, it's something you have to find within yourself. And when you tap into this wellspring, you'll have grasped one of the most valuable tools you can possess as an entrepreneur.

"Heart is what drives you," Houlihan explains. "It's the way you look at the world around you. Heart is about your belief in your own eventual success, regardless of the odds, the naysayers, or the time it takes. It's the tenacity that keeps you going. Heart is having a sense of humor in the face of hardship and not taking yourself too seriously. It is about being true to your core values by supporting causes that are near and dear to you. It is helping your community improve itself, thereby giving others a social reason to buy your product. Heart is what makes you feel good about what you do."

"Finally, remember that it's easy to do the right thing and act with integrity when business is good," Houlihan concludes. "It's when you're really strapped for cash, between a rock and a hard place, or facing some other major or minor crisis that you'll be tested. And make no mistake: Customers, employees, vendors, and others will judge you by how you conduct yourself and lead your business when the going is toughest.

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