How Job Seekers Are Using Social Media for Real Results

Whether you’re looking for your first job, exploring a career change, or just setting yourself up for future success, social media sites have proven themselves as important platforms for facilitating connections, demonstrating passions and interests, and ultimately landing you the job you actually want.

We know it’s possible to land a job with social media know-how but the bigger question is how? In putting together this post we turned to those with the most knowledge on the subject matter: individuals who have secured jobs thanks to social media.

Because of these personal stories we were able to identify common trends and themes contributing to their real results. Keep reading to hear how job candidates are taking risks, discovering that their online presence has real value, and engineering their own success through social media.

---

Taking Risks

---

In our research on the subject one thing rang loud and clear — social media sites allow job seekers to take risks, and more often than not those risks are received well by potential employers.

Risks worth taking:

1. Put yourself out there:

The nature of social media is such that you could be conversing with important people in public channels at any given time. It may be intimidating to use Twitter or Facebook to communicate with an individual you don’t know, but taking the initial risk and putting yourself out there is the best way to show you’re serious about the position or opportunity you seek. If you can get past the initial fear of communicating with a complete stranger, you’ll have a much better chance of landing the job you want.

David Cohen took a risk and used Facebook IM to ping a contact — merely a friend of a friend — when he learned that the man in question had recently started his own Internet marketing agency. Prior to that small act of bravery, Cohen, a recent college graduate, had spent months looking for a job with no success. The social media maneuver, however, ended up making all the difference.

“I randomly hit up a guy on chat that I knew through some acquaintances who recently had broke off from his parent company to launch his own internet marketing business in early 2009,” said Cohen. “He basically told me to come on in and meet his partner and have a small interview … I am now the resident social media coordinator, blogger and general office helper for the small start-up company. This all happened because I took a risk and sent a Facebook IM to this man.”

2. Match application style to the position:

It’s definitely risky to take an unconventional approach to the typically staunch application process, but doing so might make you stand out from all the rest.

Scott James did just this when applying for a social media internship. He decided to try a somewhat unconventional approach to creating a cover letter and used Twitter-style status updates in his application email. James said that he “wanted to make myself stand out. Instead of a traditional cover letter, I figured, ‘Why not highlight my skills with a set of Twitter messages?’”

James’ unique style landed him the internship and he is now an in-house social media strategist at the company.

---

Social Savvy With a Touch of Serendipity

---

In reading through the many stories of those who managed to secure their current gig through social media, the biggest trend seemed to be that a chance tweet, Facebook post, or online connection made all the difference.

You could call these job seekers’ social media success stories serendipitous but the reality is that each of these individuals set themselves up for the chance happening with months, if not years, of intentional or unintentional online breadcrumbs that demonstrate their own unique savvy.

Here’s a sampling of people who were able to parlay their social media savvy into solid leads and careers after chance encounters.

Todd Armstrong stumbled on a new opportunity by paying close attention to Twitter and following up on a potential lead.

“Basically, I was “stuck” at my previous job in that there was no place to move up, and my job was morphing into something completely different than what I was hired for. So I was on the lookout. Submitted my resume to a few places, but never heard back from anyone. I had seen tweets from @nateritter for a couple of weeks that he was looking for a CakePHP developer. I knewPHP but not specifically the Cake framework. One day, while on the elliptical at work, I saw a tweet from him saying he needed a “PHP” dev. I DM’d him back saying something like “don’t you need a Cake person?”. To which he replied that he couldn’t find a Cake person so he expanded to just PHP. I said I was interested and met him later that week. Now I work with him and couldn’t be happier.”

Sue Spaight Moorhead inadvertently networked her way to her current position:

“I started on Twitter almost a year and a half ago, thinking it would just be a good way to get feeds of research, articles, etc. Then a friend who was on Twitter introduced me to the managing director of his agency, on Twitter. We had drinks. I interviewed. He offered me a job. It wasn’t quite right so I passed. But then that managing director introduced me to one of his friends, on Twitter. We had coffee, and became friends on both Twitter and IRL. That new friend-in-the-third-degree became a consultant for an agency. And when that agency’s President was looking for a new Director of Account Management and Digital, he asked the consultant for leads, and was referred to me. He contacted me via LinkedIn, not Twitter. ; ) We had lunch. I interviewed. And for the past six months I’ve been VP of Account Management/Digital Strategy at his agency. It’s been quite the chain reaction, and it continues today.”

Kasey Fleisher Hickey’s online penchant for discussing her food and music passions landed her a new gig:

“I got my job thanks to my food and music blog. A recruiter that was working with my company, Context Optional, happened to be a foodie that was familiar with my blog and was impressed with my social media know-how. Funny enough, a number of people at my company got their jobs through social media–our Community Manager, Lauren Friedman was also discovered through her blog, TheOffBeatReport, and Twitter.”

---

Social Engineering

---

When you don’t have time to wait for luck, engineering your own is the second best option. The job seekers we talked to found that social media enabled them to glean the information they needed about the position they were seeking or the individuals staffed at an organization in order to manufacture a bit of their own serendipity.

Kevin Thompson may no longer work at SuggestionBox, but the story of how he was able to use social media to engineer his way into a new opportunity is quite remarkable.

“I was living in El Centro with my soon-to-be wife, who had moved there to pursue a promotion, and her contract in El Centro was about to expire. As part of our preparation for the move back to San Diego, I began looking for a new position in web development. … I had begun to follow [on Twitter] a number of web professionals from the San Diego area.

Before long, I saw a tweet from Gema Torrones (@gemalynn) advertising a development position at SuggestionBox. I followed up with Gema on Twitter and asked a few questions about the position and the company, then proceeded to apply and send in my resume. Within 24 hours, I was contacted by Adam Levenson (@adamlevenson) by email to schedule a phone interview.

After the interview was scheduled, I, as I’m sure a number of web-savvy individuals would do, Googled my interviewee and I found that Adam was active on both Twitter and 12Seconds.tv. I caught up on some of Adam’s interests and activities, including a few tweets about loving waffles (random, I know, but it’s relevant). I also found a few videos from the SuggestionBox office that gave me a bit of insight into the personalities of other team members and the general atmosphere at the company. I followed Adam on Twitter and 12seconds.tv, and I remained active on both of those networks, expecting Adam to view my profiles to, in turn, learn a bit more about me.

I began to weave some of Adam’s interests into my activity streams including, among other mundane 12seconds.tv videos, a goofy video of me with a plate of waffles.

When the interview rolled around, I touted my experience and abilities (which alone qualified me for the position) and as the call progressed and became more casual, Adam mentioned that he liked my 12seconds.tv videos, and moreso, specifically named the waffle video.”

Have you used social media to land a job? Tell us more about your experience and tips you have for other job seekers in the comments.

---

Series supported by Gist

---

Gist helps you build stronger professional relationships by bringing together information from across the web for all your contacts and their companies giving you the right information at the right moment to get a first meeting, deliver an amazing pitch, or just find a better way to make a connection. Gist does all the work for you, assembling a dynamic collection of all your contacts and their companies from your email inbox, your social networks, or even your CRM system automatically building and updating their profiles as new content is published – by them or about them.

In The Limelight: An American Entrepreneur In China Talks About Startup Culture

Calvin Chin is an American entrepreneur who lives in Shanghai. He founded Qifang, a P2P lending site for Chinese student loans. You can read more about Qifang here. He attended the World Economic Forum in Davos, Switzerland this last week, where China was the center of attention. We asked him to write this guest post and share his unique perspective as an American building a startup in the heart of China.

Here at Davos it seems China keeps coming up in two ways – neither of them positive. One, with the worst of the crisis behind us, people are turning from last year’s hopes of China as economic savior to China as free-rider keeping its currency cheap, bullying its minorities and shirking its responsibilities in Copenhagen. Two, in the tech community, seems everyone is talking about Google, Chinese government hackers and censorship.

My view, and I think it’s one that many in China would probably share, is that while free access to information and the rest of the world is inherently a good thing, so is political stability. The Chinese government has earned a lot of slack for raising hundreds of millions of people out of poverty, and if things did go out of control a heck of a lot of people would get hurt. So even if they want China to be plugged in to the rest of the world to encourage innovation and Chinese tech entrepreneurship (which I think they do), they’d put that priority after getting most Chinese people better lives.

It’s kind of the same deal that Chinese startups all make, to try to do build cool stuff but while working within the system. So Tudou and Youku screen their videos and the fastest growing microblogging service is run by a portal that has the infrastructure from screening blogs to be able to screen tweets. All these companies are making the same decision that Google made to enter China in 2004 too (and stay for now), but for Chinese entrepreneurs they don’t have the option of not being in the China market. It’s what they know and where they have their best shot at success. And I’m sure if you’d ask them, they’d sincerely agree that eliminating poverty and keeping things stable comes way before access to a few articles in a foreign language about events that don’t mean much to them. I don’t think many non-Chinese would like the aggressively patriotic and self-important China that would probably be the outcome of democracy there today anyways.

The Chinese market for startups is growing so fast, is so competitive and is characterized by so many unfair advantages for the big players, that local entrepreneurs just keep their heads down and roll with the political and market changes. Take Digu for instance, they launched as a pretty simple copy of Twitter that focused on celebrity accounts, then pivoted to a social game model when all the startup microblogging platforms got shutdown and Sina (with a lock on celebrity blogs) launched Weibo, and are now back to straight microblogging with a better ability to keep the tweet streams “harmonized.” Digu didn’t whine, they just sucked it up and forged ahead.

This is typical for Chinese startups. Whether they are localizing an international hit, copy-2-china style, at a much cheaper price and a better UI like Kuukie. Or they’re a fit for Chinese net culture with a product that you don’t see elsewhere like Douban’s social network for talking about books (and now other media).

The thing is while the majority of Chinese netizens really don’t care that much about what’s going on outside of China, the ones who do care, people who would start companies, people who want international news, all know workarounds to use services they like or read about sensitive topics from other perspectives. They use Twitter clients like Bage or free (http://hotspotshield.com/) or paid VPNs. So much so that Twitter won in the grassroots Chinamode awards.

So actually, the Chinese government kinda gets the best of all worlds: most Chinese netizens are sufficiently inconvenienced so they’ll never stumble into places they shouldn’t, motivated innovators still find out about, get to, and can track any going on globally, and international companies that would otherwise compete for local market share get locked out.

http://feedproxy.google.com/~r/Techcrunch/~3/F03YAUwTVvs/

How to Protect Your Brilliant Idea

By COLLEEN DEBAISE

NOVEMBER 29, 2009, 7:34 P.M. ET

Adapted from the upcoming book THE WALL STREET JOURNAL COMPLETE SMALL BUSINESS GUIDEBOOK (Three Rivers Press, Dec. 29, 2009).

You want to spread the word about your business. But you also want to keep your innovative product or clever brand name safe from rivals, counterfeiters or rip-off artists.

What to do? Safeguarding your company’s intellectual property through patents, trademarks or copyrights will allow you to seek damages, a big deterrent to imitators. Here’s a brief overview of all three types of protection.

Getty ImagesShadow of businesswoman by projection screen

Patents. Issued by the U.S. Patent and Trademark Office(USPTO), a patent is easily the most expensive— and most valuable— protection for an entrepreneur with a innovative product or business method. A patent essentially gives you a mini-monopoly for twenty years. The application process can be a bit complicated, so it’s wise to use the services of a patent attorney. Costs generally range from $2,000 to $10,000, depending on complexity.

Trademarks. A word, symbol, logo or image that identifies a product or service can be trademarked, as can a scent, sound or color (such as Tiffany Blue). There are more than forty classes of goods and services, and you can register a trademark (for a fee) in more than one category. A pastry shop ower, for instance, could register a trademark in both the food class (in the goods category) and the restaurant class (in the services category). You can conduct a free search to see if a mark is already registered on the USPTO’s Web site using the Trademark Electronic Search System. The filing fee is $375 if done by paper and $275 to $325 if done electronically.

Copyright. A copyright protects original works, such as poetry, novels, movies, songs, computer software and architectural designs. A business, for instance, might want a copyright to protect its training manual. Original works on a website (such as writings, artwork or photos) may be copyrighted. Copyright law does not protect domain names; instead, the nonprofit Internet Corporation for Assigned Names and Numbershandles domain name system management. The fee for a basic copyright registration is $45 when you submit a paper application, or you can lower that fee by filing through the U.S. Copyright Office’s online system for $35.

Keep in mind that if you plan on selling or distributing your products abroad, you should consider filing with those countries’ intellectual property protection authorities in addition to those in the United States.

Dirty vendor tricks

By Dan Tynan

Created 2009-09-08 02:00AM

Enterprise software and service vendors are a tricky bunch. Like skilled magicians, they use sleight of hand and misdirection to pull cash from your company’s coffers.

How do they do it? It starts with the demo (which always works perfectly). Then they offer a price that sounds too good to be true (because they plan to make up the difference in change orders and maintenance fees). Once they’ve got you, they’ll lock you in using every tactic they can muster. Better check your bill, because odds are you’re getting charged for stuff you didn’t actually buy. And just when you’ve got everything running smoothly, you’ll be hit up for an upgrade — whether you need one or not.

We dove headfirst into this nefarious world and identified some of the worst practices. Due to the sensitive nature of this material, some people’s names have been changed. Though we don’t call out the specific vendors for their dirty deeds, you’ll probably recognize the tactics they employ.

Dirty vendor trick No. 1: The magic demo
Here’s a classic from the sneaky vendor bag of tricks. Whatever your company needs, their enterprise software package can deliver it — and they’ve got a sweet canned demo and an impressive collection of PowerPoint slides to prove it.

Yet you wouldn’t believe how many organizations — including Fortune 500 companies — fall for this, says Natalie Petouhoff, a senior analyst who covers CRM, customer service, and social media for Forrester Research [4].

“I think the software industry is kind of dirty,” says Petouhoff. “The people who are buying the software may only see this kind of dog-and-pony show one or two times in their careers. They don’t know that the demo is rigged. They think this is how the software actually works.”

Most vendors don’t start out intentionally trying to deceive customers, says Petouhoff. But they often find themselves competing with companies that do. And the vendor who does an honest warts-and-all demo risks losing that sale to another vendor that promises the moon, even if it can only deliver moon pies.

Some of the blame also falls on the customer, she adds. Many decision-makers don’t have the experience to know when they’re being snowed or enough interest in the technology to learn what it can and can’t do. And the stakes for confusing the demo with the actual product can be huge.

In March 2008, Waste Management — the largest garbage collection company in the United States — sued SAP for $100 million [5] after an ERP implementation went completely into the dumpster. In the suit, Waste Management claimed SAP faked the demo it used to convince its top executives to go with the SAP solution.

Five months later SAP countersued [6], claiming that Waste Management still owed it millions in maintenance and service fees. Last May the allegedly rigged demo mysteriously vanished [7], with each side blaming the other for its disappearance. Waste Management says it took a $30 million hit [8] on its first-quarter earnings this year thanks to the ERP failure.

“I don’t want to necessarily pick on SAP,” says Petouhoff. “The entire software industry needs to clean itself up. When companies are spending millions on your products, promising to deliver something you can’t deliver is fiscally irresponsible. If companies would just be straight and say something like, ‘Our software isn’t doing that yet, but we’re working toward that,’ at least customers would know what they were buying.”

Or as they say in the waste management business: Garbage in, garbage out.

Dirty vendor trick No. 2: Underbid, then overcharge
Hand in glove with the fake demo is the deliberate underbid. Enterprise vendors come in and offer an extremely tempting price to a customer, with every intention of making up the difference in added charges after the contract has been signed.

Petouhoff says she witnessed this firsthand when working for a major systems integrator early in her career. As someone who had to implement the solution, Petouhoff would regularly go on sales calls with the software vendor.

“Whatever the customer wanted, the salesperson said, ‘We can do that,’” she says. “One time a vendor bid on building an entire call center for a large entertainment company in Southern California. The salesman said they could do it for $250,000, when he knew the actual cost was $2.5 million. I said to him, ‘$250,000 won’t pay for the computers, desks, and headsets, let alone the software.’ My partner said, ‘Shut your mouth.’”

Petouhoff says she was told to make up the difference in change orders and blame the customer for changing the scope of the project as it went along.

“It’s like selling someone a car, and they come back and say, ‘This car you sold me has no wheels,’ and you say, ‘Oh, you wanted wheels? That will cost extra,’” she adds. “It was an embarrassment for the people inside that organization who had to go back up the chain and sell the changes to their bosses.”

And when vendors are counting on implementation to boost their profits — and the fees don’t materialize — they can get downright nasty, as Connie Elliott can attest. As owner of Data Net [10], a small maker of bar-code and RFID data collection systems, Elliott wanted to buy a CRM system to integrate with her firm’s accounting system. So a few years ago she spent about $5,500 for a CRM system from a small company that shall remain nameless.

“One of our requirements was that the system reside on top of an SQL database that we could set up and modify ourselves,” she says. “The vendor wasn’t happy about not getting lots of implementation money.”

First, they wanted her to buy service contracts, which Elliott was unwilling to do. Then they tried to force her into an upgrade to their new SaaS (software as a service) offering (see Dirty vendor trick No. 5: The forced upgrade march, below). When she said no again, things got ugly.

“Once we got the data importation problems worked out with the vendor, we found out that all the SQL tables were password-locked,” she says. “They wouldn’t give us the password unless we paid several thousand dollars for an upgraded version. We decided to not pay it. It wasn’t worth the headaches.”

Instead of an integrated CRM and accounting system, Data Net uses the software as a simple contact manager. Four years later Elliott says she still hasn’t found the right solution for her data problems and suspects she never will. “But I still think uncharitable thoughts about those folks.”

Dirty vendor trick No. 3: The customer headlock
Once some vendors have you, they will do everything in their power to keep you — even if that sometimes means crossing an ethical line.

“Vendor lock-in is a fundamental issue for companies that purchase enterprise software,” says Michael Krigsman, CEO of Asuret [11], which studies and prevents IT failures. “That’s because another term for ‘lock-in’ is ‘Grab the customer by the b**** and squeeze.’”

Krigsman, who writes a blog about what causes IT projects to fail [14], says a typical way software companies ensure customer loyalty is by making the cost of switching to a new vendor’s solution impossibly high.

“It starts when the company sells its software for a low price, but the buyer then has to spend lots of money to implement the software,” he says. “When it comes time to pay upgrade or maintenance fees, the buyer has already spent so much on implementation it really has no choice. That’s vendor lock-in at its finest.”

But sometimes vendors stoop to a new level of subterfuge. Just ask Bob Davis (not his real name), VP of marketing for a software vendor that competes against some of the biggest names in the networking business.

Davis says vendor lock-in can take several forms, not all of them exactly by the book. The first one happens when the networking vendor brings in its own system engineers to implement the software. Many organizations then become dependent on the vendor’s SEs to keep the network running.

Level two occurs when the engineers proceed to turn on every single proprietary network service, sometimes without the customer’s knowledge or consent. That makes moving to a new vendor nearly impossible without starting over from scratch.

Still, those are just hardball tactics, says Davis. The dirty tricks come in when the networking vendor’s personnel become so entrenched within an organization they become de facto employees, with badges and full access. Davis says he knows of several instances where reps from a well-known vendor attended sales presentations given by competitors, then tried to torpedo the deals later. And if an employee at the customer’s firm goes to bat for a competitor’s product, he or she may find himself looking for work.

“Sometimes these vendors will go so far as to mess with the careers with people who are advancing an alternate agenda,” says Davis. “They’ll go to the CIO and say, ‘Your network manager is really playing with fire by trying to get other vendors involved in the network.’ They’ve been known to go directly to the network manager and say, ‘Stop pushing this agenda or we’ll get you fired.’”

Davis says he knows someone whose job was threatened and another individual who was “shifted to the job equivalent of Siberia” because they tried to introduce a competing technology solution.

“Everyone overplays their specs and uses their feature set to their best advantage,” he adds. “That’s just part of the game. But messing with someone’s career is just unethical.”

Dirty vendor trick No. 4: The billing “mistake”
Sometimes it’s not what you bought that cost your company money; it’s what you didn’t buy but got charged for anyway. In the telecom industry alone, 7 to 12 percent of all charges [15] are a mistake, according to Aberdeen Research. There’s an entire industry devoted to finding errors in telecom bills and collecting a percentage of the money recovered.

Phil Stone (not his real name), director of IT operations at networking systems vendor, says his firm was getting billed $30,000 to $50,000 a month for a data circuit with a leading telecom provider. There was just one problem: His company didn’t have any data circuits with that provider.

“We get bills all the time from vendors for circuits that aren’t ours,” he says. “We had one that accrued to over $300,000 over nine months before we finally got it cleared up. It turned out to be a circuit used by some company in Texas. Two months later the charge started showing up again. Different circuit, same Texas company. The telecom company says it will be fixed in the next billing cycle. Sure, I believe that. Their billing is so bad we stopped using them even for voice.”

Sometimes, says Stone, the “mistakes” are more deliberate. One time he negotiated a deal for some T1 lines with another telecom who quoted a price of $3,000 a month. In the process of signing the contract his attorney noticed his company was being asked to pay $60,000 per annum, or roughly $24,000 more than they’d agreed to. When Stone asked why, he says the telecom reps told him that its data circuits were so good they were sure his company would order more.

“I said, ‘I appreciate your optimism guys, but I don’t do business with companies that operate this way,’” he says. “I tore up the contract and went with someone else.”

The biggest problem with billing mistakes, genuine or deliberate, is that fewer than one in 10 customers notice the error, says Steve Roderick, CEO of GoToBilling [16], a payment management service for small businesses.

“The common statistic heard in the payment industry is if you misbill 100 people, eight of them will call and complain,” he says. In other words, companies that deliberately add false charges get away with it more than 90 percent of the time. Though Roderick says most companies in the payment industry are on the up and up, a few bad actors have given it an enduring black eye.

“Some of the abuses are outrageous,” he says. “I’ve seen payment processing companies charge businesses annual fees of $95, even though that fee is not stated anywhere in their contract. They’ll charge 30,000 customers $95 each and wait to see who squawks. When people call they say, ‘We’re so sorry, it was an accident, let us refund your money.’ Then they walk away with the rest. It makes it harder for companies that are trying to do the right thing.”

Dirty vendor trick No. 5: The forced upgrade march
It’s a subtle transition. One day you’re a valued customer; the next day you’re a cash cow ready to be milked. And one of the most common ways to wring more money out of you is coercing you to upgrade, even if your software is relatively new.

A few weeks ago Dave Jackson purchased a handful of licenses for a personal information manager for $400 apiece. As executive director for Awake in America [17], a nonprofit devoted to helping people with sleep disorders, he wanted the PIM to help manage donor lists and other data.

“We had spoken with the salesperson several times, as well as others inside the company, and had taken the product for a 45-day test-drive,” he says. “We spoke with the company about upgrades and updates, and everything sounded great. So I whipped out the corporate credit card, called the salesperson, asked a few more questions, and then placed the order.”

Three weeks later, he gets an e-mail. There’s a new 2010 version available and they want him to upgrade. They’re even willing to offer a $50 discount — $75 if he buys more than one copy. So he calls and asks why they never informed him a new version was imminent.

“One guy tries to pull a Sergeant Schultz on me and says, ‘I know nothing,’” he says. “Another person in senior management says it was company policy to not divulge such information because it could ‘give the competition an edge.’ I told them I’d stick with the ‘antiquated’ version until it breaks down and dies, or until the government comes up with a Cash for Clunkers program for software.”

Forced upgrades are fairly common, says Stone, but “it still chaps me no end. We’re working with VMware, who decided to end-of-life their Enterprise license and make us go to Enterprise Plus for another $26,000 a year. Our options are to go down to Advanced, which doesn’t have the features we want, pay the money to go with Plus, or convert to Hyper-V and put it on a Microsoft Server. We’re seriously discussing the latter option and might just bite the bullet and switch.”

Dirty vendor trick No. 6: The clueless customer
The last trick in our bag isn’t really a vendor trick at all. It’s what happens when customers put too much trust in systems integrators and vendors, and fail to do their own due diligence.

Most failed IT projects fall victim to what Michael Krigsman calls the “Devil’s Triangle”: the customer, the systems integrator, and the vendor, all of whom have their own, often conflicting, agendas.

Sure, the vendor may overpromise and the integrator might pile on charges, but the customers are hardly faultless, says Krigsman.

“Customers have their own internal schizophrenia. You sit down in a meeting with them and they present a unified front. They want A, B, C, and D. It all sounds great. When you drill down and talk to them, you realize that the IT department doesn’t have a clue what the sales or accounting departments need, while the sales and accounting departments are clueless about the technology. But they present this seamless RFP to the systems integrator and the software vendor, and they all sign the contract anyway.”

When projects go bad, it’s usually “a shared responsibility between customers, integrators and vendors,” agrees Forrester’s Petouhoff. “I think everyone in charge of buying software should work for a software company or a systems integrator at some point in their careers. If they actually sat in those seats they’d understand the secrets of both worlds and be better prepared to ask the right questions.”

As more vendors move to delivering software as a service, says Petouhoff, some of the problems will go away. With SaaS, customers can see how applications really work, and they can back out of a bad fit without sacrificing a huge investment.

“To be fair, you have to blame the business owner too,” says GoToBilling’s Roderick. “They don’t like to read the fine print on agreements. And even when faced with the truth, they still sometimes go off and agree to something that sounds too good to be true.”

All in the family

The pros and cons of family-owned businesses

By Troy Sympson

The business world is a cutthroat place. Owners need good people behind them — people whom they can trust no matter what. Since good help is always hard to find, one way companies can ensure that they’re filled with trustworthy people is by keeping the business in the family.

Family-owned businesses can be great because, theoretically, family members will always be loyal and dedicated to the company. But, sometimes, family interests conflict with business interests, opening up a whole new set of business problems.

“Within the next five years, 40 percent of closely held and family-owned businesses will be changing hands and be in transition due to the baby boomers retiring,” says Carmen Bianchi, director of the EMC Business Forum of the Entrepreneurial Management Center at San Diego State University. “The keys for these closely held and family-owned businesses are having a succession plan in place and creating some kind of governance structure for the successful continuance of the ownership’s legacy.”

Smart Business spoke with Bianchi about family-owned businesses, what makes them unique and how to put a proper succession plan in place so that the business stays in the family for generations.

What are the pros and cons of a family-owned business?

Being intimately familiar with the company and its staff can be very beneficial. Having good backup and a built-in support system around you ensures you’re never going it alone. Also, usually families will be more lenient when it comes to schedules, on-the-job judgments and decisions, and mistakes. Other advantages include long-term stability, shared values, loyalty, commitment and inherent trust. Families are usually willing to sacrifice more for the business.

On the other hand, personal interactions and emotions might affect working relationships, which could lead to distractions. Decisions on how to run the business could be very different across generations, which may lead to conflict. Beware of family members feeling entitled to enter the family business. Just because someone is a member of the family doesn’t mean he or she will be a good fit for the family business. On the flip side, just because the parents love the business doesn’t mean the children will. Also, family businesses can make rapid decisions, as opposed to public companies that have to think about the shareholders.

What are common problems a family-owned business faces?

When close relatives work together, emotions often interfere with business decisions. In some family companies, control of daily operations is a problem. In others, a high turnover rate among nonfamily members is a problem. In others, growth is a problem because some of the relatives are unwilling to put profits back into the business. In the end, however, problems that the manager of a family-owned business faces are the same as those at any company. What makes it all complicated is the aspect of working with relatives you have to deal with your whole life — in and out of the office.

Still, the biggest problem a family-owned business will face usually has something to do with succession planning.

What are important things to consider in succession planning?

A succession plan is as important as having an estate plan, financial plan and strategic plan. Good succession should encompass all four plans. Every family-owned business should have an exit strategy. Is your exit strategy written down or is it in your head? Are you willing to sell your company? If not, why? Could it be that your company is your legacy and that your dream is to perpetuate it through the generations? But, whose dream is it? If your successor does not have that fire in the belly, he or she won’t succeed or successfully steward the company through to the next generation. Also, primogeniture is passé — the most competent person should be the successor.

Once you establish who the successors are going to be, the next stage is leadership development, where successors acquire the needed leadership skills and experience and are acknowledged by employees and clients. This will lead to a natural and seamless transition.

Finally, you should create an ‘ethical will.’ This is a tool that will communicate the most sensitive issues of succession, issues that deal with retirement, death, legacies, family values and love. These issues are then passed on through the generations.

What are some of the structures that can be put into place to promote success?

One thing is a family council: a platform where family members can voice their opinions and be heard by those who work in the business. You’ll also need a code of ethics or family creed — a set of values by which a family business conducts its dayto-day business. Another structure is a family employment policy, which outlines criteria for family members in the business. Along with that, you’ll need entry and exit criteria, which are the rules and regulations on how family members enter and exit the business.

CARMEN BIANCHI is the director of the EMC Business Forum of the Entrepreneurial Management Center at San Diego State University. Reach her at cbianchi@projects.sdsu.edu or (619) 594-4949.

Source:

http://www.sbnonline.com/Local/Article/13477/186/162/All_in_the_family.aspx