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I am an open book gal. I have practiced running a business in as transparent way as I could and I saw the magic with my own eyes. By that I mean that workers know and understand the vision, the mission and the numbers – all the numbers of the business. I also think that  I understand what makes people feel valued. People want to feel a part of the bigger picture. They want to be listened to. When we are working,  we want others to appreciate us for what we do and what we know.  It doesn’t matter what work you do. It can be highly trained professional work. It can be making pizza. It doesn’t matter. Because in the end our job satisfaction is about the team, not about the money.

But when I am teaching this. Often, business owners don’t believe me. They still want to command and control. They want an army of clones to deal with their business the way they do. So I am so happy to send you to this lengthy article published in this month’s Inc. Magazine. . Kudos to Sarillo for doing it right. And kudos to Inc. for telling the story.

Lessons From a Blue-Collar Millionaire

When Nick Sarillo launched his pizza business, he had one goal in mind: to create a corporate culture unlike any he had seen.

It’s Takeout Tuesday at Nick’s Pizza & Pub, and the air is thick with the smells of hot pizza crust, peppers, onions, and cheese. Eighteen young men and women — most of them high school age — form an assembly line between a row of worktables and a long bank of pizza ovens. The kids laugh and shout, even as they focus intently on their tasks.

Why not expand your business while you are slow? CNN Money watches The Alternative Board advise a small business on how to Expand your biz, despite the downturn.

By Emily Maltby April 6, 2009

FARMINGDALE, N.Y. (CNNMoney.com) — Like many business owners fighting the recession, Mark Rickard is looking for ways to draw in new customers. The challenge: How to expand beyond his firm’s traditional services without confusing customers or taking on more than his company is equipped to handle.

Rickard List Marketing is a direct mail marketing company that Mark and his sister have run since their father’s retirement. Rickard wants to use this slow period to rebrand the company, but he has questions about how to make the transition. He’s brought the issue to a gathering of The Alternative Board (TAB), a panel of seasoned business owners who meet monthly to swap advice on their business challenges.

“I believe our core clients would appreciate us making more connections for them, but I expect they would be skeptical about our ability to add value outside our comfort zone,” Rickard says. “I’m not sure exactly what services to offer initially or how to publicize the change.”

“It’s a no-brainer, because you already have the clients,” says Frank Kelly, president of Kelair, a heating and air conditioning company that is based in Port Chester, N.Y. “But what do you actually want to do?”

“I want to do search engine optimization, market research, circulation analysis, media placement, insert media, data managing and processing …”

“Wow,” interjects John Dugan, partner at Farmingdale Physical Therapy. “Rome wasn’t built in a day. You need to build a bigger umbrella before you put all these things under it. Pick the ones that are most secure in this market and the ones that you feel most comfortable doing.”

“Well, my plan was actually to outsource some of the things I don’t feel 100% comfortable doing to affiliates,” Rickard says. “I already have relationships in place with designers and copyrighters.”

Ask yourself what kind of firm you really want to be, advises Buonfiglio, president of employee benefit broker C&B Consulting Group in Syosset, N.Y.

“At one point we partnered with a firm to provide services we could not perform in-house,” he says. “Eventually the clients let us know our partners’ work wasn’t as good as ours, so we ended up creating those capabilities in-house, with far superior results.”

“Do you think I risk clients by expanding like this?” Rickard asks. “Will they think my eye is not on the task?”

Think about the long-term future, Buonfiglio says. Building up new lines of business will inevitably take some of Rickard’s time away from current customers and projects, but that temporary trade-off can be worth it if the expansion will pay off for the company down the road.

“You’ll have to consider opportunity cost versus reward,” he says.

Tapping new markets

One business owner who faced a similar problem chimes in with anecdotal advice. Dennis Labriola is the president and CEO of Impact, a Farmingdale, N.Y., firm that develops and supplies software to police departments in the metro area.

“We looked at two things,” he says. “The first was at our products – which were in-house that could address a new market? We decided that we could tap the campus security market. The second thing we did was look at all the services we provided that we weren’t getting compensated for, such as software updates and repairs. We productized those services, because we knew we were already comfortable with them.”

The best way to grow is through “baby steps,” Labriola emphasizes. “You don’t want to be too far from the core. Insulate it and expand into areas that are safe. Pick a few things off your list just to elevate who you are. It takes a long time.”

Rickard nods. “What about advertising the services? At what point can I portray that I’m doing more than just lists? I hate the idea of being disingenuous about what I can and cannot do.”

“Don’t sell anything you’re not prepared to offer,” says Owen Mester, president of bakery and distribution company O’Wayne New York Enterprises in Maspeth, N.Y. “You’ll definitely lose customers that way.”

“Actually, don’t think about marketing just yet,” Buonfiglio recommends. “You have a million ideas and directions. Take a holistic look and examine the risk factors associated with each idea. Look at where you are with each one today and where you want to go. Then, you can start to execute those ideas. And only then should you think about marketing.”

“Yeah, I definitely need to be more deliberate,” says Rickard.

The next steps

In the weeks after the meeting, Rickard has a brainstorming session with his sister, and together they make a list of the most viable services to naturally expand on what they are already doing. Then he takes the list to Steve Davies, the facilitator of the TAB group, to talk through the options.

For more than an hour, Davies and Rickard look possibilities. SEO (search engine optimization) campaign management, while a hot-button topic right now, would be a tough area to expand into considering how crowded that space already is. But data processing is more feasible.

“All our clients do data processing differently,” explains Rickard. “And our personal relationship with them is already set up to help address their goals.”

Rickard and Davies also settle on the idea of helping clients with copywriting and with strategic partnerships. “We already know how to identify customers, so we can marry that expertise with the creative process required to reach them,” Rickard says.

Two weeks ago, Rickard arranged a meeting with one of his clients.

“I basically approached them and said, ‘Hey, we know your customers, how about letting us take a stab at providing copy services?’ Then I showed them what we’d be able to do,” he said. “They took my offer seriously and decided to take us up on it.”

See this article on CNNMoney.com

I am such a geek. I am reading about gross profit and getting very excited.

Before you move on, consider this: a local business owner wants to know if he should double his prices. I’m interested in what others think because there is a very good argument that if he makes twice as much from half as many hours worked, he increases his profits and decreases his stress. On the other hand, times are tough. People are price shopping. We live in a small community with a limited amount of customers. And after all, sales are sales and we all want those.

Those that have done this doubling of price successfully swear by it. Why is it so scary?

According to Bo Burlington (and Norm Brodsky) in his book The Knack it is because we have a salesperson mentality. We believe that sales trump everything else. But what he explains so eloquently is that gross margin trumps everything.  Of course!  The amount of sales that it takes to create cash flow is most important. That ratio should be– as few as possible to maintain your margin. That is the only way to create viability.

So instead of thinking “How many sales can I get?”  We have to return to “Which sales are the right sales?” ” And only the sales that make your margin are the right sales. The sales that don’t make your margin will cause you to lose money, weaken your cash flow and eventually put you out of business.

While it is hard to say no to a sale it is a habit that we have to get back to practicing. The race to the bottom really is lined with dead bodies.

I knew that our local business magazine Business News had changed ownership. But it took three issues to finally see Katy Hight’s mark. As a graphic designer she has added her style but by the last issue she also changed content. I am glad to see it. The new issue is themed. She covers local businesses that have incorporated recycling into their business as well as those businesses that can help us all to recycle. Now if only she expands that info to the web she will really make this info convenient .

I had the opportunity to have coffee with Katy. Here’s what she’s up to.

Podcast: Play in new window | Download

My 2009 book list looks like the New York Times bestseller list. I guess that all those readers can’t be wrong.  How agreeable is that? I read a lot!  If you have the least inclination to read books in the business genre (with generous boundaries…) these are my  top six recommendations:

Barbara Ehrenreich – Bright-Sided (How Relentless Promotion of Positive Thinking has Undermined America)
I am so sick of The Law of Attraction that I can scream. That’s why, I not only bought the book,  but soaked up every irreverent word.  From The Secret, to Mega churches to the National Speakers Association, no one is sacred. This is a brilliant deconstruct of our financial industry’s failure as well. Bless you Barbara.

Levitt and Dubner- Freakonomics
These guys are the rock stars of Behavioral Economics. Entertaining as heck and a great intro to this seemingly new science. They are describing experiments they’ve done that lead to conclusions about work, cheating and the people behind crimes. I still have “Super Freakonomics” their second book on deck to read. I hear it is just as entertaining.

Dan Ariely – Predictably Irrational
More Behavioral Economics. Ariely touched me more deeply than the authors of Freakonmics because he discusses the behavior of accountability. He proves that do better when we have an authority figure telling us what and when to accomplish. But suggests, as do my clients, that while having an authority figure may be more effective, a blend of authority and free will is best. He also does an informative bit about the irrationality of marketing that gave me more marketing ideas than any one else all year.  Except….

Chris Anderson- Free
Like Thomas Friedman before him, this new tome is a technical analysis, appropriately told in terms even I can understand, of how the internet, digital technology and marketing have truly changed in the last few years. I learned a dozen things to immediately implement in order to not only stay cutting edge but to be politically correct in advancing business initiatives.

Patrick Lencioni – Three Signs of a Miserable Job ( A Fable for Managers)
Lencioni always has a way to take complicated subjects and distill their simple parts as a story. This is a quick ditti that packs a lot of punch. What do people want from their work? We want to be recognized. We want to know that what we do matters. And we want it measured. I agree! If we can practice this everyday we can all be successful.

Thomas Friedman – The World is Flat; A Brief History of the 21st Century (updated and expanded)
Friedman updated this tome in 2006 and still it is a must read for anyone who wants to understand why the world has changed. If you haven’t read this yet, get a new understanding of technology,  “the Triple Convergence”, free trade and globalization. You may not agree with Friedman’s conclusions, but the history lesson is important. You must be dedicated to reading this but the payoff is immense. I had no less than 10 aha moments.

My top picks for 2008