Sunday, May 5, 2013

How to run a small business

Yesterday I dropped off my wife's car for an oil change.  My mechanic is a small independent one.  He is a typical small business owner.  He always has greasy fingers and runs between his tiny 6-by-6-foot office and the next door repair shop.  When the office phone rings, he is the one picks up the phone to talk to the customer.  Often despite his best efforts he answers the phone after several rings because he has to rush to the office from the repair shop.

When I dropped off the car, the shop was busy as ever.  There were three customers waiting to speak to him.

After waiting for my turn, I asked him.

Me: Time to open a new shop.

Him: No, I don't plan to. Let me tell you in a bit.

[He had to run out to get another customer's car ready.  After he returned he asked about what I wanted him to do on the car.  Then he picked up the topic.]

Him: So about the new shop.  I am not thinking of opening a new shop because I will then have to hire another service manager.  Then I won't get to talk to my customers.  All I will be able to see is numbers at the end of each day.  You come to me because I treat you like my family members.  If I open a new shop, it won't be the same way anymore.  Because it will all be about numbers, new service manager will be encouraged to sell what's not needed to customers.

Me: Right.

Him: That's why service managers in dealership become dishonest and sell you things that you might not need.  That's why people call it stealership instead. [chuckle]

Me: You know, I may quote you there.

What my mechanic described was two classic challenges that any small business including startup entrepreneurs run into all the time:

  1. Ultimately business is built on the trust and relationship with customers.
  2. It is damn difficult to scale a business and keep the same level of customer service.

It's easy to forget that we like buying from people that we trust and have relationship with.  And it is even easier to forget that the same applies to enterprise software business.  In any purchasing decision, there is a customer who is willing to invest in the relationship and trusts the software vendor.  Key is to make sure that the customer feels that the relationship growing and the trust is built upon.

When customers can engage with the vendor and can see that the vendor's care for them, they will come back.

But often what ends up happening as we scale is that we the vendor forget why we are in the business in the first place.  As we scale and make new hires, we tend to chase the quota and numbers.  We let our eyes off of the most important metrics, our customer's satisfaction.

It is a very difficult problem for all organization.  I haven't seen any startup advice that doesn't talk about the importance of hiring the right people and keeping the culture of excellence.

My mechanic knew that difficult challenge.  His solution was to stay small and invest on strengthening the existing customer relationships.

I have to mention that he also offered to lend me his own car when I decided to keep it in the shop to take care of the low brake pads.  No questions asked.  Now that's a customer service that you won't see from a dealership.

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