Dianne taught me the business power of silence.

In Japan, she said, a long pause during a negotiation was traditionally can a sign of respect. It was a way to show that the matter is important and the proposal just made is worthy of thought.

To Americans, on the other hand, a long pause during a negotiation is an awkward silence. The longer the silence, the more uncomfortable it becomes.

Imagine a conference room in Tokyo. A team of Americans are negotiating a deal with a team of Japanese. “We can do that for $100,000,” the Americans say. The Japanese say nothing. They wait in silence for two minutes.

“How about $90,000?” The Americans broke the silence by lowering the price. The Japanese were going to say yes to $100,000.

That’s just one example of the power of silence. It’s not just about Americans and Japanese. Waiting before responding is generally a good idea in lots of contexts. Call that thinking first. And, I’m sorry to admit, I’ve also learned (the hard way) the dangers of responding without thinking. And in a negotiation context, especially, silence can be golden, not awkward.

(image: peskymonkey/istockphoto.com)

From Small Business Trends

How Silence Can Be Golden, Not Awkward

I hesitate to wade into this subject because so many people have so many definitions. And you’d think it was obvious, but then suddenly I find myself in meetings, or on the phone, and I’m wondering whether we’re all on the same page. And the point here isn’t exactly getting something right or wrong, but having growth percentages mean the same thing to everybody. Let’s get on the same playing field.

Here’s a quick quiz:

1. sales grow from $100 in one year to $150 in the next. How much growth is that?
2. And what if sales grow from $100 to $150 over three years. How much growth is that?

Maybe I’m wrong, but I’ve had what I learned in business school confirmed for me many times by accountants and analysts.

Calculating Simple Growth

To calculate simple growth, subtract the final number from the starting number and divide the result by the starting number. Then multiply by 100 if you want to show it in percentage. So, for the example above:

(150-100)/100 = 50/100 = .5

((150-100)/100)*100 = 50%

And you can see that as a spreadsheet here to the right. C2 shows 50 because it’s the product of subtracting A2 from B2. Then the formula divides that by A2, to generate .50. Or, if you multiply by 100, 50%.

There is also a simpler formula that also works. Divide the more recent by the previous, and subtract 1. That gives the same result.

You can see that in the second illustration here.

Calculating Compound Growth (CAGR)

CAGR stands for compound average growth rate. The active word there is “compound.” It means that the growth accumulates, like interest. So if you grow 10% per year over four three years you’ve actually grown from 100 in the first year to 133 in the fourth.

There’s a formula that calculates the CAGR over a period of years (or months). It’s hard to explain, but easy to use. What’s especially awkward is the ^ sign in spreadsheet formulas stands for “raised to the power,” so 4^2 (four squared, which is four raised to the second power) is 16, and 2^3 (two cubed, which is two raised to the third power) is 8.

When the CAGR formula is written out, it’s:

(last number/first number)^(1/periods)-1

Which is probably easier to see if you look at the spreadsheet illustration here to the left. The first row has the first year and last year plus the CAGR formula. The second row shows the result when 100 grows at 22.47% over three years. And the combination illustrates and awkward point about how many years are involved: it would be easy to call that two years of growth, but the “periods” number here is three, not two. And you can see the spreadsheet formula clearly here, I hope. And the 22.47% growth from 100 to 122.47, and then again to 150.

Maybe it helps on that point to show the same thing for growth from 100 to 150 over four years. That’s another simple spreadsheet, and the calculation shows that the CAGR for growth from 100 to 150 over four years as 14.47% per year.

Conclusion: maybe it’s just that I like numbers, maybe that I use them a lot, perhaps too much … but it’s nice when the growth figures we talk about mean the same thing to one and to all.

From Small Business Trends

Getting Your Growth Rates Straight: Annual Growth And CAGR

It wasn’t about earning power. I quit the  fancy high-paying MBA job I’d recruited into just a few weeks after graduation. I went back to the consulting firm I’d worked with while I was at business school, before I graduated. And I was self employed less than two years later, and I’ve never worked for anybody else since then. I was an employee of the company I founded and owned.

So was it worth it? Yes, many times over. Because of business school, as I developed my own business, I had a general idea of all the parts and how they came together. I knew enough about finance, accounting, marketing, sales, and administration to do it all myself in the beginning. Later on, as the company grew, I had experience and some knowledge about each of the key functions in the business.

Nobody taught me entrepreneurship. I didn’t learn that in school. What I did learn, though, was enough about business to make starting, running, and growing a business conceivable.  Maybe I would have made it anyhow, but I doubt it. Knowledge is power. And it gives you the confidence to take risks and move forward.

Is the value of an MBA degree the income with the degree less what it would have been without the degree, less the cost of the degree, and the earnings sacrificed while studying? What’s education worth? Do you measure it in salary? The value of studying literature is the earning power gained? Fine arts? Philosophy? What about business or engineering?

I don’t think so.

From Small Business Trends

What’s An Entrepreneur’s MBA Degree Really Worth?

1. Map the different species. Different experts have different standard behaviors. Some experts do the work for you, some tell you what to do, some help you do it. Some are obvious, like the accountant filling out the tax forms for you, the lawyers writing the legal documents, the designers designing, and the graphic artists drawing. But the lines get blurry. Accountants and lawyers, for example, don’t just do things, they also give advice and charge you for it. Coaches and consultants have some obvious differences. Know who does what.
2. Define your real needs. So you have to think through whether you’re looking for somebody to actually do things, or to help you do them, or maybe just deliver a consulting report and walk away. In business planning, where I’ve spent most of my career as an expert, people don’t understand that they need planning, not just a plan; having somebody do a plan for you is as smart as having somebody do your exercise.  In graphic arts and design, where I’ve been a frequent client, you want the finished work, not just coaching.
3. Find multiple candidates. Never hire any kind of an expert without first looking into three or more candidates.
4. Research those candidates. Get recommendations, search the web, and always check references from past clients. Insist on a client list: not just one happy client you can call (that’s too easy to fake), but enough to keep them honest. Check the references, don’t assume anything. And as you talk to possible candidates, be fair about not asking them to give you their expertise for free, and work into the discussion that you are talking to more than one. Don’t be shy about rates and terms.
5. Know what you really want and communicate that clearly. If you’re not sure and you’re looking for advice, say so. If you are sure, say for example that you want coaching not consulting, you want help not reports and instructions, you have to say so.
6. Make your timing clear, and your scope realistic. If you don’t know fairly well what you’re talking about, then listen first. For example, when prospective clients go to programmers wanting a morph between Facebook, Amazon.com, and Google, for $5,000, smart programmers run away. When prospective PR clients start expecting to be in the Wall Street Journal, New York Times, Huffington Post, and TechCrunch all at once, smart PR people run.
7. Get it in writing. A written understanding protects both sides. Agree on the scope, timing, and fee schedules, write it in plain English in a short document, and sign it. Don’t try to foresee all possible problems and put in a clause for each. Assume reasonable is good enough, avoid legalese, and put it in writing.
8. Use letters not contracts. (Attorneys please skip to the following point. Do not read this.) Contracts with professional vendors are a waste of time and money on both sides. Disputes will be solved by negotiation, not contract; and in the worst case, mediation. Just make sure that both sides of the relationship understand the main points. Avoid legalese. Save the contracts for deep fundamental stuff, long-term ownership, long-term employees, alliances, etc.
9. Start simple. Think in Steps. Don’t do the equivalent of agreeing to scale all of the stories of a 40-story building if you can agree to a simple first-step engagement that gives you and the experts a chance to work together and get to know each other. I use the term “abandonment point.” As a consultant I always scoped a job in a way that allowed me and the client to fall out quickly and drop it soon. That makes it much easier to sell, and much easier to buy. Make your first agreement a simple step one.
10. Manage: review, evaluate, communicate. Find a happy medium between driving your expert crazy with repeated meetings and hand holding, on the one hand, and leaving them alone with no feedback or communication for way too long, on the other. The more time that goes buy without reviewing progress, the more risk of disappointment and problems. You have to give feedback. You’re the client.

By the way, I conceived of this post after I saw eConsultancy’s post listing the five clients you should avoid like the plague. I was amused by the taxonomy of client types, but it also struck me that there are two sides to that question. It isn’t just about avoiding annoying clients; it’s also about understanding both sides of the relationship. You don’t want to be one of those client types.

Trite but true: there’s no such thing as a win-loss business relationship. You both win or you both lose.

From Small Business Trends

10 Tips for Working with Outside Experts

I’ve got 4 GB of memory, 1.4 Ghz CPU speed, and 128 GB of flash memory SSD storage. I paid $1,239 for it at an authorized Mac store (not an Apple-owned store), but it would have been $1,299 without the university faculty discount.

I hesitated to get the smaller version MacBook Air. I’ve had a couple years now with an earlier MacBook Air, the first model, with the 13” screen and 64 GB of SSD memory. But I liked the various versions of the Sony Vaio very small laptops for years, and I guess I’ve gotten used to the advantages of smaller and lighter.

I’m particularly enjoying this smaller screen right now because I’m on the plane, and it sits on my lap comfortably despite the lowered seat back of the guy in front of me. With my old one, with the larger screen, I’d have had to assume that scrunched-up pose you see, laptop not fully open, arms bent, to manage to type in a small space. And the smaller screen also has the advantage of smaller to stow in a briefcase, and lighter. This one is only a coupe of pounds. So maybe I’m just rationalizing getting the slightly cheaper one – I rationalize as well as most people – but I’m glad for my choice right now.

While I like my Macs – this one, and my iMac at home – I’m not a quasi-religious Mac fanatic. I use Windows 7 on my office desktop and I have no problems with it, so I’m not particularly anxious to switch to all Mac or, for that matter, all Windows. I bought Parallels to give me a Windows option on both my Macs, I upgraded to the new Parallels version 6, and that works fine for me. Most of my work is on the cloud or using bilingual Mac-Windows software, but I have two Windows applications that I cannot do without: Windows Live Writer, for blogging; and Business Plan Pro, for business planning (disclosure and bias alert: I’m the main author of that product, and my company publishes it).

The cross-platform trick, adding Windows using Parallels and running my applications in coherence mode, works fine for me. Coherence mode means that my Windows Apps operate in Mac windows, peacefully coexisting with my Mac apps. And the 4 GB memory, which is double what I had in my previous MacBook Air, is enough. It feels smooth and fast.

The 1.4 Ghz CPU speed on this one is actually less than the 1.8Ghz speed of the one it replaced. I don’t notice the difference. I assume that’s because of the doubled memory.

I’ve learned with the MacBook to manage the settings to preserve the battery. I use my brightness keys to take it down to about 3 of 10. I turn off my wireless and bluetooth reception (this plane doesn’t offer wireless), and I close the applications I won’t be using.

I use a laptop as an accessory, not my main computer, so 128 GB of storage is fine for me. I had the one I just replaced for two years and still had half of its 64 GB storage available. I’m tempted to use it as my main iTunes hub for my iPhone and iPad, because it’s got double the storage; but I use a lot of hard disk space for movies and such, so I think not. My experience is that all computers get really slow when the hard disk space gets more than about three quarters full.

For the record, I’m a happy iPad owner but I have to say that the iPad doesn’t substitute for a laptop computer. Instead of reducing my travel weight, the iPad effectively increases it; I need the computer to work, and I love the iPad for its entertainment value. Occasionally it doubles as a laptop, for a meeting or a half-day visit somewhere, but on real trips I need both.

And as I finish this post, I’ve been working for about 30 or 40 minutes, and my battery life is showing barely five hours now, but still vacillating between that and higher reading. It was showing 11 hours a minute ago, and now it’s back to five. I haven’t opened any new apps, and I haven’t changed the brightness, so I’m guessing it’s not the most reliable indicator. Still, the flight from Atlanta to Denver is about three hours, so if it really has five hours left, I’m okay.

From Small Business Trends

Traveling with New 11″ MacBook Air and Windows

And in a recent post on business etiquette in the American Express OPEN Forum, small business expert Steve Strauss wrote:

“Email is now the dominant form of business communication and should be treated as such. Some uniform policies help everyone stay on track.”

I say that even with the “e” in front of it, it’s still mail. It is your business communication. It’s not just sales. And our being immersed in quick-and-careless text communications doesn’t mean we shouldn’t pay attention to our own emails. And if you’re going to do it – and face it, you are – do it right. I think my list here is nothing we don’t all already know, but we may need the reminders. I hope this helps:

1. Keep it short. We’re all busy. Most of us are skimming our emails, looking for the key points, and trying to get in and out of them quickly. I’ve never written anything that wasn’t more useful when cut to half its length.

2. Make the subject line a summary. This one seems obvious, but scan your own emails and you’ll find most of the subject lines are haphazard at best. We have threads that grow like snowballs attached to the subject of the first message, a subject that has long since been changed. We have come-on subjects like headlines, trying to trick us into reading further. Don’t sound like a spammer. Describe your message in your subject line.

3. Start and end with “you.” This is one of the fundamentals of business letter writing: Address your reader’s self interest. Start your first paragraph with the word “You” and include something like “you asked me…” or “you wanted… ” or “you mentioned” or “you need.” Start your last paragraph with “you” again and stress what your reader will get out of doing whatever it is that you’re asking.

4. Only one topic per message. You’ll find your actual results of emails go way up when you break your emails into a single message for each topic. Those additional messages you’d like to include are much more likely to get lost. Break the messages up.

5.  Use appropriate tone. Be careful and be correct with tone. Sarcasm, parody, and irony are hard to put into cold hard black and white text. Tones are very easily misunderstood. Don’t ever write an email that could be misinterpreted and forwarded on to somebody out of context. Never write an email that would be embarrassing if quoted.

6.  Don’t send extra copies. It’s a message, not an archive or a vault. We all hate those cover-your-backside extra copies going all over email to anybody who might vaguely someday accuse you of not having sent something, or handled something, or followed up. Send your email to the people it’s intended for, and nobody else.

7.  Respect spelling and grammar. Use a spellchecker at least, but recognize as you do that spellcheckers don’t catch a lot of glaringly bad errors. Using “there” for “their,” for example, or the very common confusion of apostrophes and plural, as if every plural word needed an apostrophe. Try this google search or my personal favorite, 10 common misspellings at oatmeal.com. These errors do to your communications what a big piece of spinach caught in your teeth does to your smile.

8.  Remember it’s not private. Your company email belongs to the company, and your personal email can get called up in court. People who want to and know how can snoop in email. Never write in email anything that is embarrassing to you or your recipient, inappropriate, bigoted, illegal, or stupid.

9.  Email isn’t for arguments. Angry words are not biodegradable. Never argue in email. Walk down the hall or get on the phone. I’ve learned this myself the hard way, thinking my brilliant use of the English language could somehow make a point better than I could with old-fashioned talk. It never does. Email almost never wins a point or stops an argument. It almost always makes things worse, not better.

10. Mind those threads. Most of our email software builds long emails like kids build snowballs rolling downhill. Each new email is gathered up below in the thread. Is there anybody out there who hasn’t at least once realized in dismay, too late, that you’ve accidentally emailed a long thread that included too much information or some embarrassing comment about somebody along the way.  Don’t you hate it when that happens? And then, aside from that problem, there is just the plain glut of useless information as every new email in the thread includes all of the previous emails. Think of how much sludge we’re sending through the pipeline. Does everybody need to be reminded in every email about everything that was said in all the related emails?

From Small Business Trends

10 Old New Rules for Business Emails

Nonlinear lets you import a PDF or PPT file and then jump around. It’s not for building slides, it’s for navigating them, and even includes a way to drive an external monitor in a clever way.

…  I jumped onto the app store to find it. And I’m glad I did. After I figured out how to get my files to it, it ends up giving me a very powerful tool for managing the slide deck while I’m delivering. Let me show you with the illustration here:

What you see there is one of the views I get on the iPad. The highlight in red there, which is my addition for emphasis, is where I point the output to the projector via the VGA dongle. And what doesn’t show up well in the screenshot here, but does in practice, is which slide I’m on. And what the audience sees, through the projector, is that slide only.

That highlight in red is the icon that tells NonLinear to send the output to the projector as an image of a slide.

And this next illustration, to the right,  is what I see on my iPad if I choose a single slide. As with the context above, the audience is looking at the slide, which appears exactly as it is supposed to look. Notice that I can navigate, using my finger, to the next slide, or previous, or up or down or diagonally. And of course I could go back to the view above, with the whole slide deck. It’s cool, and it’s powerful, because it makes jumping around the norm, which, in my opinion, makes a better presentation for the audience.

… And now the bad news

First: I was taken aback at first by the the reviews on the store. Apparently a lot of people are disappointed by problems getting the appropriate files onto the iPad; and a lot are disappointed by Apple’s VGA $29.95 output dongle that puts the iPad visual onto a projector. Still, it was $9.95, which is what I pay for a sandwich these days, and it’s a work tool, so I figured what the heck, try it. And even with the Apple VGA attachment, it was still less than $40.

(Aside: is it only me, or is it amazing how cheap apps are in the new world. $1, $2, $5 and $10 for a working app? It seems like nothing. And some people complain!)

Second: It took me a while to figure out how to get my slide decks from my computers to my iPad. As far as I can tell, the import works only with PDF, JPG, and MOV files, not PPT. After fussing with PPTX files for a while, I gave up that effort and I just exported from my PowerPoint 2007 on Windows 7 to PDF slide presentation files. I saved them to my DropBox account, then opened the DropBox app on my iPad, copied the URL, and pasted it into the input field in NonLinear to get the files in.  And once they’re in, they’re in.

Third: Also, the Apple VGA output dongle: it’s annoying that it doesn’t just automatically project whatever is on the iPad to the projector. It doesn’t. The built-in video works with it. I got my Penultimate note taker to work with the dongle, turning the iPad into a magic whiteboard. And I managed to get GoodReader to work with slides to project a PowerPoint file, but (unless I worked it wrong) I couldn’t get QuickOffice to do the same.

Conclusion: I’m glad to have it. It pays for itself with a single presentation next week. The iPad is fun, so it’s doubly nice to see that it has its business uses too.

From Small Business Trends

A Cool New Tool for Presenting Slides on the Ipad

The biggest surprise here, in my opinion, is that slightly less than half the readers believe small business drives the economic recovery. I would have thought that was true. I’ve seen research showing that small business generates most of the new jobs in our economy.

The closest statement to truth, as voted by Huffington Post readers, was that the government favors large business. Frankly I was surprised to see so many people thinking points two and three were true; I don’t.

I did set it up to be skeptical. I believe that most of the talking points we get (ad nauseum) during national election campaigns are half-baked half truths. I think the voting there confirmed that.

So my question, for you and me, here, on Smallbiztrends: what do you think? What key points should be added here? Does small business drive economic recovery? Does government policy make or break small business? Do we (small business owners) vote as a bloc?

From Small Business Trends

How Many Small-Business Half Truths Make a Whole?

My colleague Jeff Pfeffer and I have argued for years that implementation, not strategy, is what usually separates winners from losers in most industries, and generally explains the difference between success and failure in most organizational change efforts, sales campaigns and so on.

Bob has a lot of good stuff in that one short post. Consider this one:

It could be that strategy is very important to the success of firms, but it does not explain differences among firms in an industry because following the right strategy is required to stay alive and that executing strategy explains the differences in performance among living firms.

So you could say this is a matter of survivor bias; we only here about the winners, which, presumably, had effective strategy. The losers don’t have a voice. That’s an interesting thought.

But I also think most good business strategies are relatively obvious, particularly if you look at entrepreneurship and small business. Do a SWOT (strengths, weaknesses, opportunities, and threats) analysis. Look at how your company is different. Look at how you match that difference with what you offer, and to whom you offer it. And then bear down, get realistic, and focus on your keys to success, and what you can actually do well. Presto, business strategy.

And how about this one:

Better to have a mediocre long-term strategy consistently applied for years than a series of brilliant but contradictory strategies that never last long enough to matter. (Sorry, quoting myself again here; couldn’t resist.)

Bob and his colleage Jeff Pfeffer are onto something: developing creative new innovative strategy is fun, but most good strategies are sort of boring, particularly when you keep to them over the long term. Implementing strategy is work.

From Small Business Trends

Developing Strategy is Fun. Implementing It Is Work.

But meanwhile, good as that advice is, I can’t resist adding some warnings about old-fashioned implementation, particularly as corporate culture applies to small business.

1. Culture isn’t Corporate in small business

We shouldn’t write about corporate culture in small businesses because small businesses do have their unique cultures but they aren’t corporate. There’s a real difference between culture as you and I deal with it in small business, and corporate culture in larger businesses.

Larger companies can create and manage corporate cultures over the long term because they’re a mosaic of strategies and policies. When I consulted with Apple Computer, IBM, Xerox, and Hewlett-Packard in the 1980s and early 1990s the cultural differences were obvious, even though they were all big companies in the same industry. It’s not for nothing that research and the academic discussion focuses on culture in larger organizations. Corporate culture is something the upper levels of management can decide on and dictate, if they’re effective, throughout the organization. Not that it’s easy, but it’s possible.

2. You can’t fake it

While maybe the big companies can influence culture over time with high-level decisions, in startups and small business the culture is determined by owner-operator-manager actions, period. It’s actions, not words. It’s what ideas win, and whose ideas win, who and what rises and who and what falls. Do you give that customer a replacement product? Do you refund that money? Does the person who’s always late get held accountable? Do you listen to suggestions?

You don’t get to read a list of corporate culture tips and decide to change yours. You have to change yourself first.

3. Just being nice doesn’t cut it

This one is subtle, hard to explain well, but also critical. The literature on corporate culture is a lot about humanizing the large corporation because there’s the assumption in larger organizations that the individuals, personalities, beliefs and such get lost in the larger numbers. Since business metrics and cold analysis are assumed, culture in business literature sounds like counter culture: Lisa Baron’s advice, for example, includes “abolish hierarchy, support mistakes, and give people access to information.”

In small business, in contrast, we tend to emphasize the personal and forget the metrics and analysis. Most of us confuse small business culture with me being liked. As I look back on may own small business management between 1995 and 2007, the 1960s counter-culture values I have didn’t optimize the business side of small business culture. I wasn’t comfortable enough with wielding authority. It seemed like everybody liked me well enough, but we needed more hard-nosed management. We missed the real work ethic at crunch times. Well, actually, we missed the crunch times. My daughter is doing a better job at this, but it’s hard. We needed to be more hierarchical, harder on poor performance, and more careful about access to information.

It would be nice if everybody loved their work, but nobody loves it like you do, and business has to go on, whether they like it or not. What does your small business culture say about that?  I’m not saying that nice guys (guys is both genders in this case) finish last, like the cliché would have it but they don’t finish first that often. To  make a team work, you need to be somewhere in the middle between nice and hard-nosed, and to waver between the extremes with a lot of fine tuning, and a lot of change.

4. Leadership and management styles don’t generalize well

And it gets worse. This is an offshoot of point #3 above. The right mix of hard-nosed and humanized will work for one person, but not the next. Some people need no reminders at all, and others need constant pressure.

It’s not just people who are so annoyingly individual, unpredictable, and hard to categorize; organizations, and groups within organizations, have that same quality. One kind of leadership works for one person, in one job, and not at all for the next person, or the next job. Your creative people need inspiration and flexibility, except for those who need constant badgering. Your on-the-phone with customers people need tough scheduling and discipline, plus empathy, except for the ones who don’t.  You, meanwhile, are the same person all the time, and that’s what determines your small business culture.

What you do will be imitated in alarmingly unpredictable ways.

5. Businesses, people, and needs change over time

Sad but true: the self starter of 10 years ago might be the problem today. That person who didn’t need management back then might need a lot of management now. And it’s 10 times harder to do right after you’ve established your styles and relationships and expectations, spoken or not.

So the culture that got you there might not be the one you need to keep you there. Have you noticed how often the founders who built the company aren’t the same people to take that same company up the growth ladders? This is part of the reason why and why not.

From Small Business Trends

5 Warnings About So-called Corporate Culture