Tuesday, April 28, 2015

Make Way for the CSO

Is yours a sales-driven organization? When asked this question, most business owners answer yes. When asked if they have a Chief Sales Officer (CSO) almost all of them admit that they do not.

To answer the CSO question for yourself, look at your organizational chart. Is there a representative of the sales department on your management team who is par with the CFO, COO and others at that level? Your sales team deserves to be involved at the strategic level where decisions for the future are being made.

While some organizations have found the CSO position to be a critical role, most companies still do not have a CSO. Here are the most common reasons:

  • We never had one before. Other C-Level positions, like Chief Technology Officer (CTO), did not exist in the past but the rapid and rampant changes in technology necessitated including the impact of technological innovations in decision making.
  • Salespeople are required to achieve the corporate objectives. “We decide; you implement.” In too many companies the salespeople are considered to be “different” in the way they are compensated but similar in that they are to achieve top-down driven objectives regardless of what customers want.
  • There is no training for the CSO. Libraries are being built now to give the CSO the information they need to execute their responsibilities.
  • There are no tools for measuring the effectiveness of the CSO. In fact, Extreme Sales Analytics (ESA) and Sales Resource Planner (SRP) software programs, similar to ERPs, are emerging. ROI, TCO and other calculators are giving way to sophisticated dashboards which are morphing into sales analytic cockpits (multiple, integrated dashboards).
  • Your customers do not need for you have a CSO. So why bother? You need to have the CSO for your customer relationships to grow. Customer relationships are dynamic, not static. Either you will drive the changes in the relationship or someone else will: your customer or your competitor. After all, if your competitor has a strategic-focused CSO and you do not, are they more likely to introduce the next new thing to your customers?

Is it enough to have a VP of sales? Why clutter the C-Suite and add to the leadership budget with yet another position? The title is not as important as the function. C-Levels are strategists; vice presidents are tactical. The difference between how the time and talents are deployed at the two levels can vary greatly.

  • The C-Level plans for the long-term future; the vice president thinks in shorter time frames. For instance, if the CEO, the corporate visionary, is thinking three years out, the C-Levels reporting to the CEO need to be thinking two years out. In that scenario, the VP level needs to be thinking one year out, the sales management team thinking one quarter and salespeople thinking one month out.
  • The C-Level invests their time in learning and evaluating what new processes and technologies are coming that will impact their business. VPs focus their time and talents on what current capabilities are viable for making more immediate improvements in sales activities and management.
  • C-Levels are rarely involved in the day-to-day activities while the VP is occasionally brought in to address pressing customer and market issues. The vice president of sales is likely to know the details of significant pending sales while the CSO is uninvolved with them.

Relationship selling is a redundant term; all selling is relationship selling. Companies don’t do business with companies; people do business with people.

An example of this occurred when a CSO found a new tablet-based technology that reduced a portion of their sales cycle from three weeks to three minutes. Think about that, three weeks to three minutes. 40 percent of their sales were in disaster recovery. When they approached a prospect that had lost, say, 20 percent of their capacity and offered to have them up and running again three weeks earlier than any other vendor, who did the prospect choose? Did the prospect make their buying decision on price? Of course not. In just over a year many of their competitors went of business because of this new capability.

Why was a CSO needed to make this decision?

  1. The VP Sales did not have the time to thoroughly investigate the new technology.
  2. A six-figure investment would be required – a decision that would have gone to the C-Level anyway.
  3. Agreements needed to be negotiated with the software vendor for market exclusivity.
  4. These activities were time-consuming and the VP could not have managed this quickly enough, if at all.

How does the CSO spend their day?

  • Evaluating new processes including Lean/Kaizen/Six Sigma for sales and discussing them with the other C-Levels, beginning with the COO.
  • Evaluating new technologies for planning and executing sales activities and discussing them with the other C-Levels, beginning with the CTO.
  •  Evaluating the applicability of new compensation concepts and discussing them with the other C-Levels, beginning with the CFO.

Why not just simply change the title of the VP Sales to CSO? Whether you have a CSO or not, you have the CSO function in your organization. Just as you have the CFO function in your organization even if you do not have a full-time CFO. If you choose to elevate your VP to the CSO position, be prepared to backfill the VP position; both are important.

So, what are the criteria the business owner needs to consider when bringing a CSO onboard?

  • Hire for tomorrow, not today. Find someone who is comfortable with the changes that are happening in your market, industry, technology and management processes.
  • Look for a strategic mindset. Rather than someone who knows how to get things done, look for someone who can determine alternatives for moving the organization forward.
  • CSOs think about “who else?” and “what else?” Look for a creative thinker who knows how to find and solicit new ideas.

The role of the CSO is here. Someone in your organization is filling that role. Are they doing it intentionally or by default?

Chuck Reaves, CSP, CPAE, CSO, is a consultant (chuckreaves.com) who helps companies raise their prices and volumes through innovative processes, tools and training.

Monday, April 20, 2015

Lead Through Example

The textbook definition of leadership is the action of leading a group of people or an organization. At the 30,000-foot level that definition covers it, but when you are the ground level where snow is pushed and ice melted, leadership has a far wider and more relevant meaning. “Leadership is about being a role model, a coach and a mentor,” says Jason Dickey, director of operations for Schill Grounds Management in North Ridgeville, Ohio, just outside of Cleveland. “Knowing when to step in and when not to, and, most importantly, supporting and putting your people in the best position to succeed.”

Born and raised in Minnesota, Dickey moved to Ohio when he was a sophomore in high school after his father was transferred for work. The move to the Buckeye state was offset by the fact both his parents were Ohio natives, graduates of The Ohio State University and their families lived in the state. “My dad was offered two options when he told he was getting transferred and one of them was Cleveland,” Dickey says. “It was a pretty easy decision at that point.”

Dickey was a standout hockey player in Minnesota and took his talents to a Cleveland-area high school powerhouse. He renewed his hockey career at Penn State University, but realized that a future in the sport was not in the cards.

He returned to Cleveland and enrolled at Baldwin Wallace University and earned a degree in accounting while still enjoying lacing up the skates in recreational leagues. It was during college that Dickey had his first exposure to the snow industry working for a local snow removal outfit.

Following graduation Dickey interviewed with several accounting firms, but could not see sitting behind a desk doing tax returns or auditing books for the rest of his career. In his first industry job, Dickey worked both inside and outside combining his accounting skills and his enjoyment of being out in the field where the action was. “I enjoyed the challenge of clearing multiple parking lots during a major event and the satisfaction of getting the site ready to go for the client by the next day,” Dickey says. “I wasn’t going to find that in accounting.”

Dickey credits working with three different snow and landscape management companies for accelerating his learning curve as a leader. “Each company approached their operations differently and that has been very beneficial to my development as a leader,” says Dickey, who on occasion still jumps behind the wheel of a salt truck to relieve one of his crew during a major snow event.

While managing both the landscape and snow divisions for Schill puts a lot on Dickey’s plate, he makes sure to follow a lesson learned early in his career and that a leader must be able and willing to do what it takes to get the job done. “You can’t lead without having the knowledge and being able to transfer that knowledge,” Dickey says. “The biggest failure in leadership is not supporting your people.”

Dickey says giving employees the right equipment, personnel, training and account information is the responsibility of a leader, and if you don’t, then you have set that person up to fail and the fault belongs to the manager. “How you carry yourself and perform during a major snow or ice event is important because your employees’ eyes are on you,” Dickey says. “If you have your act together and display confidence, your team will pick up on that and respect you for it.”

Earning a teammate’s respect is nothing new and is something the former college hockey standout learned from his first coach – his father. “My dad was my first hockey coach and my role model,” Dickey says. “He was a Vietnam veteran who was very open about what he went through. He taught me that nothing is handed to you in life and that hard work is the recipe for success.”

At Schill Grounds Maintenance they follow the mantra of “being hard on the process and soft on the people.” If something goes awry during an event, instead of pointing the finger, they take a wider view and look at the process to see where it may have come up short.

Just like in athletics they go back and “look at the film” and review the steps that led up to the event and where the process can be strengthened or adjusted. “We have several large property management companies with properties scattered across Cleveland’s diverse snow areas,” Dickey says. “There are different processes for each location and we always want to be able to communicate why we handled an event a certain way at one property but a different way at another.”

Dickey says no two snow events or clients are exactly alike and that is why the process is continually reviewed and improved.

When asked to describe his own personal leadership style, Dickey says it is an ever evolving work in progress. “Early on in my career I felt the need to be very hands-on and I did that to earn the respect of the crews I was managing,” says Dickey. “You are only as strong as your weakest link and I would work with the new guys or ones who needed a little extra help to get up to speed with the rest of the crew.”

Today, Dickey sees the bigger picture and focuses on making sure the processes that are in place work for the benefit of the client, company and employee. “I am always asking can we do it better and did I do enough to put my people in the right position to succeed,” he adds.

As a company that prides itself on establishing and adhering to sound operation processes, the ISO certification process is one that Dickey sees as an opportunity for Schill and the industry to raise the bar on standards and professionalism.

The ISO 9001/SN9001 quality management certification process addresses various aspects of quality management within a company and set standards that need to be met. The standards provide guidance and tools for companies that want to ensure their products and services consistently meet customer’s requirements, and that quality is consistently improved.

Companies seeking the designation must provide extensive documentation and submit to a pre-assessment inspection as well as a final audit. Dickey says Schill has gone through the pre-assessment and is working toward its final audit.

“Earning the ISO certification will not only help our company but the industry as a whole,” he says. “We want to dispel the ‘one guy in a truck’ perception the industry is sometimes stuck with and focus on the important role snow and ice professionals provide to clients.”

For Dickey and Schill, raising the profile of the services they provide and the value it brings to the table is evident with one of the company’s largest clients. The mixed-use center in suburban Cleveland features more than 1.5 million square feet of retail, residential and office space spread across nearly 100 acres.

And the complex continues to grow with the addition of a hotel, additional residential and retail space, and the construction of greeting card giant American Greetings’ corporate headquarters.

Dickey says his team has earned a seat at the table with the developer as plans are being made for the facility’s expansion. They are sitting in on meetings to discuss the impact the expansion will have on the facility’s snow and ice management plans and if there are design elements that can be added to maintain a smooth operation even during the roughest of Cleveland winters.

From the location of plant beds and trees in parking areas where snow often needs to be piled to the location of drains to allow for piled snow to melt, Dickey and his team’s advice is being incorporated before construction begins.

“When we started with the account five years ago they wouldn’t have given pre-planning for snow a second thought but after committing to educate them on what we do and how and why we do it we have earned their trust and confidence to help them manage this aspect of their growth,” Dickey says.

Jason not only leads his team for Schill Grounds Management, he also leads in life, says Kevin Gilbride, executive director of the Accredited Snow Contractors Association. “His on-going commitment to youth hockey in the greater Cleveland area is unmatched,” Gilbride says. “As a winter sport, you can only imagine the challenges Jason faces, but he is committed to leading in all aspects of his life.”

When Dickey is not overseeing the diverse operational requirements of Schill’s snow and landscape operations, he can probably be found leaning over the boards coaching his son, Brennan’s, youth hockey team or along with his wife, Heather, watching his daughter, Kaylee, play travel softball.

“We all work hard to enjoy family time and coaching or watching our kids play is something I enjoy very much,” he says.

When asked where he sees himself in five years, Dickey says he plans to be working to help Schill Grounds Management continue its growth but also be in a position where its employees are growing right along with it.

“We have unlimited opportunities to grow and need to further develop the processes and people to tap that potential,” Dickey says. “It is our job as leaders to make that happen.”

Jeff Fenner is a Cleveland-based writer and frequent Snow Magazine contributor.

Wednesday, April 15, 2015

Green Means Go

Interest rates remain close to their historical lows but financing for many snow removal contractors and businesses continues to be elusive. One problem: lower interest rates have translated into lenders and investors being more selective. How then, can snow removal business owners hope to fund the expansion of their operations?

Any quest for expansion funding, must begin with an understanding of the various types of financing, where that funding can be found, and at what cost? What type of funding can best help your expansion dreams become a reality? Generally, there are two basic ways to fund expansion: debt financing or equity financing.

With debt financing, capital is received in the form of a loan which must be paid back. With equity financing, capital is received in exchange for part ownership in the snow removal business.

1. Equity financing
Equity financing can come from a variety of sources, including the snow removal operation itself, the owner’s pockets, as well as from private investors. Remember, however, keeping control of the snow removal business is more difficult when outside investors are involved.

Equity financing for growth or expansion is more straightforward than debt financing as the investor or investors need only be persuaded that the expansion will increase the value of their share of the operation above the price the investor is purchasing his or her equity today.

2. Angels
Getting expansion funding from venture capital firms is a long shot for most snow removal businesses. There are a number of other sources, however, including so-called “angel” investors, that can be tapped for equity financing.

Originally, a term used to describe investors in Broadway shows, “angel” now refers to anyone who invests his or her money in an entrepreneurial company (unlike institutional venture capitalists who invest other people’s money). Angel investing has soared in recent years as a growing number of individuals seek better returns on their money than they can get from traditional investment vehicles. And, contrary to popular belief, most angels are not millionaires.

Often classed as angels, are those who provide services to the snow removal operation, such as lawyers, insurance agents, or accountants. Angels may also be business associates or those that the business or its owner, are in regular contact with, such as: suppliers/vendors, customers, employees and even the competition.

3. The ESOP option is no fable
Selling stock in a snow removal operation does not have to involve strangers. Selling company stock to the operation’s employees through an “Employee Stock Ownership Plan” or ESOP is an often overlooked and usually misunderstood option.

With an ESOP, the incorporated snow removal business issues new shares of stock and sells them to an ESOP. The ESOP then borrows funds to buy the stock. The snow removal business can use the proceeds from the stock sale to its own benefit – say growth or expansion.

The company repays the loan by making tax-deductible contributions to the ESOP. The interest and principal on ESOP loans are tax-deductible which can reduce the number of pre-tax dollars needed to repay the principal. Remember however, the tax shield does not help with S corporations as they don’t pay corporate income taxes. Capital gains deferral, however, can make ESOPs attractive to these pass-through business entities.

4. Do-it-yourself
A surprising number of businesses today have funds available after paying all of their bills – including taxes. One use for those unused profits is to distribute earnings to shareholders in the form of cash dividends. Seldom, however, are all earnings paid out as dividends. Usually a portion is kept to finance future growth.

Unfortunately, and far more often, retained earnings are largely wishful thinking. In fact, expanding with internally generated funds can be a very difficult process to plan for and implement. The main consideration, obviously, is whether the business has sufficient internal cash flows to pay for expansion outlays.

Growth often requires additional working capital to finance accounts receivable that all-too-often grow faster than payables, putting the snow removal business in a tight cash position. If this growth follows historic patterns, and is built on business relationships roughly similar (at least as to creditworthiness) as the operation’s current base, an existing, revolving line of credit can generally be expanded to accommodate the new credit needs of the business.

5. Loans to fund your dream
Raising expansion funds by borrowing allows the business to benefit from the principal of leverage – a technique of increasing the ratio on investment through the use of borrowed funds. As long as earnings exceed interest payments on borrowed funds, the application of leverage allows the snow removal business to increase the rate of return on stockholders investments. But leverage also works in reverse.

6. Borrowing for expansion
In addition to those loans that a business often receives from its owner, there are a variety of other types of funding available from a number of lending sources. A bank is probably the best-known source of funds for most snow removal businesses – even in today’s uncertain economy.

Typically, banks are the place to go for short-term lending, usually secured by tangible assets. In other situations, however, banks often help in either of two basic ways.

First, commercial banks can help a business increase production or output by providing funds to secure new equipment, machinery, vehicles and other instruments and devices.

The second area where banks can help is with working capital lines of credit needed to expand the new volume of cash flow.

7. Uncle's helping hand
Often thought of as a lender of last resort, the U.S. government is actually an excellent source for a wide variety of economical financing. After all, the federal government has a vested interest in encouraging the growth of small businesses. As a result, some loans, particularly those of the Small Business Administration have less stringent requirements for owner’s equity and collateral. In addition, many SBA loans are for smaller sums than most banks are willing to lend.

8. Funding locally
One of the best sources of assistance – and in many cases funding for expanding snow removal operations – are the many state, regional and local economic development agencies. There are nearly 12,000 economic development groups in the U.S. The purpose of these groups is to provide economic growth and development in the areas they serve. They generally encourage new or expanding businesses to locate in their area – or to remain in the area.

Even those who are aware of public funding often have misconceptions about who will and will not qualify. Many of these programs are looking for businesses with proven track records. The state, regional and local agencies are willing to help them expand their sales, which in turn will help expand the tax base as well as increase employment.

While not always a source of expansion financing, a state’s office or agency of economic development can be a guide to regional and local funding.

Obviously, financing the growth of a snow removal business is a complex affair. Funding to help grow and expand the snow removal operation is, however, widely available to those contractors and business owners willing to do their homework. Comparison shopping for lenders, rates and terms is strongly recommended.

Mark E. Battersby is an Ardmore, Pa.-based financial writer and frequent Snow Magazine contributor.