Street Smarts

by Norm Brodsky

  But most good lawyers have no trouble with my conditions. My longtime lawyer, Howard, is one of the best. He does exactly what a lawyer should do for a business client. He explains what various legal provisions mean. He clarifies what my legal obligations are and what they would be if I took a particular action. He makes me aware of any risks I’m taking, and he points out the conflicts I might have with other commitments I’ve made—my bank covenants, for example.

  That’s the kind of input I believe al businesspeople should get from their lawyers. Yes, there wil be times when you need business advice. If so, get it from an experienced businessperson. Not only wil the advice be better, but you probably won’t be charged for it by the hour.

  Ask Norm

  Dear Norm:

  We want to add experienced businesspeople to the staff of our small company. We’ve tried local SCORE chapters, word of mouth, and some Internet searches— with no luck. What should we do now?

  Donald

  Dear Donald:

  I can’t offer you a quick, reliable solution, but you shouldn’t be discouraged. It always takes time to find good people. Here’s a tip: the people you want are probably not looking for work. They may be retired. They may be between projects. They may just be bored with what they’re doing. If they’re looking at al , they’re networking with their friends. You should do the same. Talk to your customers, your suppliers, your bankers, other businesspeople you know. Eventual y, someone wil turn up.

  —Norm

  The Steady-Income Rule

  The need for help from experienced businesspeople doesn’t go away as your company grows, but many of us have a problem getting it on a day-to-day basis. I was able to solve that problem at one critical point in the growth of CitiStorage. I did it by applying an important rule of business. The rule is: you can do almost anything as long as you have a steady income. The income doesn’t have to be as much as you want, or even as much as you need. What matters is that you can count on it week after week and month after month. Without that regular flow of funds, you’l be constantly getting distracted from your goals. With it, you’re free to focus on the things you enjoy most and do best.

  You might think everybody would know that rule, but a lot of people miss it, including some of the smartest and most capable business practitioners around. I’m talking about the type of people most of us would love to have on our payrol . They’re executives who’ve run businesses and done deals and who have the knowledge, contacts, and experience to lift a company to another level—if you can afford them, that is. Most smal -business owners assume they can’t.

  I’ve found, however, that—with the help of the steady-income rule—you can sign up the kind of talent that would otherwise be far beyond your means, and it won’t cost you a dime. How’s that possible? Because people of that caliber pay for themselves many times over, provided you give them the space they need to perform.

  I’l tel you about Ben Zitron, who came to see me after a couple deals he’d been working on went bad, costing him a smal fortune. With tuition payments due for two kids, he suddenly found himself desperate for cash and in need of a job. He wanted to know if I’d hire him. Ben was one of the best deal makers I’ve even known, a guy who’s made mil ions putting mergers together, helping companies go public, finding capital, and the like. He’d owned and run a variety of businesses over the years. He could sel . He could negotiate. He could do everything I could do, but he’d never learned the steady-income rule. As a result, he was always just a couple bad deals away from disaster.

  Now that disaster had final y struck, I was of course going to help him, but I knew right away it would never work to bring him in as an employee, at least not in the usual sense of the term. Ben was a free spirit. Even if I could come up with the money to pay him what he was worth—probably somewhere in excess of $300,000 a year—there was simply no way he was going to devote his ful attention to any job I might find for him. Sure, he’d give it a shot, but before long he’d be off working on his own deals, pursuing his own agenda, and I’d be fuming. We’d start arguing. Other employees would start grumbling. It would be a mess.

  So I thought it over and came up with an offer. I said, “Look, Ben. I know you. You don’t need a job. What you need is a steady income that wil al ow you to get back to what you love—doing deals. So I’l hire you, but I won’t hire you ful -time. I’l give you certain projects to do for me. You’l work out of my office, and you can set your own schedule. As long as you take care of my projects, you can do al the outside deals you like. In return, I want a percentage of any deals you close.”

  I wasn’t just being a nice guy here. I knew that—even if Ben were part-time—I’d be paying him an annual salary in the low six figures, and that kind of expense had to make financial sense for the company, or I couldn’t bring him in. I’d have to find another way to help him instead.

  But it so happened that I’d recently landed a contract with the New York State court system, worth about $250,000 a year in sales. I needed someone to expand our business in that area, someone who could meet with high-court officials and sel our services to other parts of the system. If Ben hadn’t come along, I’d have had to hire a salesperson for $50,000 a year. From that perspective, I was overpaying Ben by a substantial amount. Then again, I knew the result I was going to get, and I ful y expected that, over the long term, he’d return three or four times whatever we paid him.

  He didn’t disappoint me. Within eight months, he’d expanded our sales with the court system enough to cover his salary, and he continued to pay us big dividends thereafter. In four years, that part of our business grew from $250,000 to more than $1 mil ion a year, largely through Ben’s efforts.

  Meanwhile, he landed two very big customers and got us our first round of financing. Without him, I’d have had to hire an outsider to do the deal—at a cost of about $50,000. He also came up with more than $800,000 for a new warehouse from a state program to promote employment in the inner city.

  Later I used the same approach to hire Sam Kaplan. It was an easier sel with him than with Ben, however, because Sam already knew the steady-income rule. He paid for himself in about five minutes. I asked him what we should do about a new facility we wanted to build but couldn’t get financing for. He looked over the plans and suggested a few simple changes. We had a financing deal in two months. Without his input, we’d have had to lease the additional space we needed. Right there he saved us at least $100,000 a year for ten years. You know the rest.

  So I wound up with two top-notch people providing the kind of advice and service that would normal y cost a company hundreds of thousands of dol ars. Granted, it helps to have been in business for thirty years and to have friends like Sam and Ben, but people with similar credentials are al over the place. These days, there are very few parts of the country where you can’t find cashed-out company owners who aren’t yet ready to retire, or experienced businesspeople looking for a base from which they can do deals.

  Those people represent a source of talent that most smal to midsize companies overlook. I’m not talking about start-ups and very young businesses here. They need the kind of help you get from a mentor, or maybe a board of advisers. But in established companies of a certain size—

  for service companies, I’d say $5 mil ion and up—you want executives who can implement as wel as advise, and whom you can talk to as insiders about the big issues facing your business. The hard part is keeping them, which sometimes requires you to put aside your own needs and focus instead on theirs. You have to create a situation in which they’re going to be happy. They won’t stick around out of gratitude or loyalty, after al , or because they need the job. They’l stay only if they’re making money and having fun.

  Think of them as one-person businesses. When you hire them, you’re investing in a company. To get a return, you have to give them the leeway they need to run their business—which you may find difficult. I certainly did. I often got furious with Ben.
He came in when he wanted to. He had his own schedule, his own ideas, his own way of doing things, and it drove me crazy. I’d go home and rant to Elaine, “That moron! It’s stupid what he’s doing.” Putting up with his ways was the hardest part of the whole experience. Funny, isn’t it? We bring in talented, creative people because we want fresh thinking, and when they offer it to us, we have trouble accepting it.

  Eventual y, Ben went off to develop his own projects, but by then he had already made enormous, long-lasting contributions to the company. Sam, on the other hand, decided to stick around and become my partner.

  The Bottom Line

  Point One: When you’re struggling with a problem, get an outside perspective to make sure you’ve identified the real one and come up with a solution that’s going to address it.

  Point Two: Accountants are good for explaining what has happened in the past, but don’t go to them for business advice. Talk to an experienced business owner instead.

  Point Three: Your lawyer’s job is to tel you the potential legal consequences of a decision or a course of action—not to give you business advice.

  Point Four: Yes, your smal company can afford to hire world-class executives as long as you’re wil ing to create a situation in which they can make money and have fun.

  CHAPTER SIXTEEN

  When the Student Is Ready, the Teacher Appears

  No matter how far you go in business, no matter how much you learn, you never know it al . Business is an adventure that never quits and an education that never ends. I’ve had more teachers than I can count over the course of my career. Some of them have been mentors and advisers.

  Some have been people I’ve met, and some have been experiences I’ve had along the way. They’ve al left me with lessons I’ve used to improve myself and my businesses.

  Take, for example, the routine I fol ow with people who visit me in my office in Brooklyn. When they have to leave, I put on my jacket and walk them to their cars. Often the visitors wil say, “Oh, that’s not necessary. You’re too busy. I can find my own way.”

  I say, “No, it is necessary, and I’l explain why on the way down.” Then I tel them about my meeting with King Hussein of Jordan.

  It was in the mid-1990s, during a trip to Jordan that had been arranged by the Simon Wiesenthal Foundation, on whose board of directors I was serving at the time. The king had invited us to see his country and to meet with him and his wife, Queen Noor. Seven board members—led by Rabbi Marvin Hier, the founder and dean of the Simon Wiesenthal Center—had traveled to Amman, the capital of Jordan. We’d been there a few days, taking tours in limousines provided by our host, when word came that the king was ready to see us.

  Our chauffeurs drove us to the royal compound at the appointed hour, and we were shown to a room in one of the buildings on the property. In the center of the room was a large, oblong table, with a chair at the head for the king. As we awaited his arrival, the chief of protocol arranged us in a sort of receiving line. “The king wants to meet each of you personal y,” he said.

  A few minutes later, King Hussein, Queen Noor, and their entourage showed up, and the introductions began. Working his way down the receiving line, the king greeted us by name. “Oh, Mr. Brodsky,” he said when he came to me. “You’re a businessman from New York, I understand.”

  I had two reactions. First, I was deeply flattered. It made me feel warm and fuzzy al over to think that the king of Jordan knew who I was and what I did. Second, I was floored. I figured he must have twenty or thirty such meetings a week. Did he prepare for each one as he’d obviously prepared for ours?

  Fol owing the introductions, we took seats around the table and for the next hour or so chatted with the king and queen. Final y, the king said, “I’m terribly sorry, but I have another appointment that I must go to now. I want to thank you al for coming. Please enjoy the rest of your visit to my country.

  Let me show you to your cars.”

  Now, I’d never been shown to my car by a head of state before. In this instance, moreover, we had a fairly long walk. King Hussein strol ed along, talking with us, as we went down a hal way and descended a flight of stairs. Outside, in front of the palace, he stopped to let us take pictures before sending us on our way.

  “This is unbelievable,” I said to the chief of protocol.

  “What’s unbelievable?” he said.

  “The king walking us to our cars,” I said.

  “It’s only common courtesy,” he said.

  I thought about that comment for days afterward. If it was only common courtesy for a king to walk me to my car, and only common courtesy for him to find out who I was before we met, couldn’t I do as much for people who came to see me? King Hussein had made me feel about him and his country exactly the way I want my customers to feel about me and my company—warm and fuzzy. I want to send the message that I care about them personal y. That’s how you develop long-term relationships.

  So I returned from Jordan with two great business tips in addition to a lot of wonderful memories. Henceforward, when people I didn’t know would come visit me, I would make sure that I had some background information about them, just enough to establish a bridge I could use to begin building rapport. And at the end of our meeting, I would walk them to their cars.

  That’s typical of how I get my business ideas. I pick them up wherever I go. I regard everyone I meet as a potential source of tips to improve the way I do business. Not that I pump people for suggestions, but I watch careful y what they do and how it affects those around them, including me. As a result, I’m constantly discovering new things I can do to reinforce the relationships we have with people inside and outside the company.

  Here’s another example. A while back, I found myself in Princeton, New Jersey, and I decided to check out a local clothing store. I hate to shop, but I love to watch salespeople in action. It doesn’t matter whether they’re good or bad. I can learn from them al . I even enjoy going to vacation resorts and listening to the pitches of time-share salespeople. For me, it’s pure entertainment.

  The Princeton store turned out to be nirvana. The salesman who waited on me was one of the best I’d ever seen. He wasn’t pushy; he had a friendly, easygoing manner; he made me feel that he real y cared about having me look my best. I’m general y a finicky clothing shopper, but when I get a good salesperson, I’l buy anything, whether I need it or not. In this case, I bought two suits and a sport jacket, which I had shipped to my office.

  We exchanged thanks, and I left.

  Three days later, I received a note from the salesman, thanking me for coming in, expressing his pleasure at helping me, and inviting me to let him know if he could be of service in the future. It wasn’t a form letter. It wasn’t computer generated. It was a personal, handwritten message from him to me. I showed it to my wife, Elaine. “Isn’t this fabulous?” I said. She said, “We have to start doing this.” I agreed. Thereafter, Elaine wrote personal notes, by hand, to al of our new customers, welcoming them to the company and urging them to contact either one of us directly should the need arise.

  Some people, I know, wil question the importance of such gestures. Does it real y matter, they’l ask, if you walk people to their cars or send them handwritten notes? Customer relationships are based on price, service, and benefits. If you can’t compete on those issues, you’re not even in the game. I don’t disagree, but there’s more to a long-term relationship than the basics. Anyone can match, or beat, your price and benefits, and everyone promises great service. If you want to hold on to customers, you have to do more. You have to give them reasons for staying with you. One of the best reasons is that they like you, trust you, and want to do business with you. There’s no magic formula for creating those bonds. It’s a matter of doing the simple little things that build loyalty and trust—cal ing customers, visiting them, caring about them, treating them as wel after five or ten years as you did when the relationship was brand new.

  Problems, Problems
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  Problems can be another great source of management wisdom, provided you’re wil ing to learn. Unfortunately, people often deal with problems as onetime occurrences, without looking for the root causes. As a result, they don’t learn the lessons that the problems are trying to teach.

  Consider an experience Elaine and I had at a fancy seafood restaurant in Dal as a few years ago. Although the restaurant was crowded, and we had no reservation, the maître d’ said he thought he could seat us in twenty minutes or so. We went to the bar, and Elaine ordered a shrimp cocktail. Before it was served, the maître d’ came over to tel us he had a table available in the balcony overlooking the main dining room.

  “I just ordered a shrimp cocktail,” Elaine said.

  “No problem,” said the maître d’. “I’l have someone bring it to your table.”

  The shrimp cocktail arrived right after we did. Elaine tasted the sauce and found it too spicy. Intending to dilute it a bit, she reached for a bottle of ketchup on the table. As she turned the cap on the bottle, there was a loud pop, and ketchup came shooting out, covering her sweater, her blouse, her skirt, her whole arm. Elaine sat there stunned, drowning in ketchup. Our waitress came running over. “Oh, I’m so sorry,” she said, handing us napkins. “Let me help you.” She worked feverishly to clean up the mess. “If you bring me your clothes tomorrow, I’l have them cleaned for you,” she said.

  Ask Norm

  Dear Norm: