Monday, September 26, 2011

Building Your Business. . One employee at a time!

imageThis article was written by Barry McKinley, SCORE Orange County Management Counselor

The most important asset of your business will be your employees. Whether you have one employee or 100 they represent your company and are the first ones that will project your company image. You can have the most beautiful offices but if your employee does not make a good first impression, your beautiful offices mean nothing! Remember first impressions!

In a previous newsletter article, I discussed hiring practices and the importance of asking good probing questions. I have found in counseling over 1,900 clients that many are no better prepared to interview a perspective employee then the employee is prepared to be interviewed. It is virtually impossible to evaluate a potential employee for preparedness when the interviewer is not prepared!

A key ingredient in the interview process is listening to the potential candidate’s questions. Their questions will give you a much better idea of their:

Communication skills

Interest in the job

Long term goals

Confidence level

Ability to grasp new concepts

Interest in the field

Intelligence level

Hot buttons

As the interviewer, you need to watch how the candidate handles themselves in the interview. Are they constantly moving around, sneaking peeks at their cell phone, not paying attention, or asking unimportant questions. Some of the most common mistakes that potential candidates make are:

Not being prepared

Knowing little or nothing about the company or industry

Not able to communicate well

Too wordy- or short abrupt answers

Not being on time

Having lack of eye contact

Unaware of surroundings

Not showing much, if any, excitement

Chewing gum

Poor body language

Not asking what the next step is

In a recent article written by Brad Remillard, he quoted the VP of Human Resources at Rockwell International as saying he always looks for the four A's:

Appearance: This does not just refer to their clothes or style but body language, handshake, the appearance of the cover letter and resume, presentation skills and, unfortunately, physical appearance.

Assertive: This will measure how they handle their self during the interview. There is a big difference between being assertive and aggressive. Aggressive can be offensive to most interviewers and many times will shorten the interview and interest.

Affable: Is the applicant outgoing, do they seem relaxed in the interview? Are they interesting and easy to communicate with?

Articulate: Is the candidate a good listener? Are their answers clear and to the point? Does the candidate speak well and clearly? Does the candidate ramble-on trying to cover every point?

Investing time in the interview process will reward the business owner with staff members that fit in and will project a favorable company image. You will know with proper training, support and motivation that each new hire will quickly grow to their potential in creating a career rather than a job! In simple Business Terms: Good Hires - - Increase Bottom Line Profits!

Starting Your Business

clip_image002Author Nellie Akalp is CEO of CorpNet, her second incorporation filing service based on her strong passion to assist small business owners and entrepreneurs in starting and protecting their business. She has formed over 100,000 corporations and LLCs across the U.S. Reprinted by permission

Another summer is officially over. It’s time to start trading in beach towels for some warmer clothes. For the busy entrepreneur and business owner, September marks the perfect time to focus on goals. September is your month…and it’s time to turn your dreams into reality.

Whether you’re considering starting your own business, or your business is already in full swing, the start of fall is a perfect time to take stock of what needs to get done–because, believe it or not, the New Year is right around the corner.

What to think about if you’re considering starting a business:

For those of you dreaming of starting your own business one day, now’s the perfect time to focus on turning those aspirations into reality. More entrepreneurs are coming into their own as business owners. And that’s a good thing. After all, small businesses are the backbone of our economy. According to the Small Business Administration (SBA), small firms are responsible for generating 64 percent of net new jobs over the past 15 years. And our economy could use more jobs right about now.

Fall is a great time to start putting a plan in motion to launch a new business for 2012. You’ve got three months to create your business plan, assemble whatever resources you need, and research your legal and tax obligations for starting a business.

As an entrepreneur myself, I understand that legal paperwork doesn’t always rank high on the priority list. But getting your legal ducks in a row will help you grow more smoothly, avoid legal pitfalls in the coming years, and yes, maybe even help you save money on taxes.

Here’s a quick rundown of the laws and regulations you need to consider for your startup or small business.

Make sure you’re legally permitted to use your business name:

Before you start ordering business cards, make sure that your great new business name isn’t infringing on the rights of an already existing business. For example, calling yourself “McDonalds” won’t work; choosing the name “McDowells,” on the other hand, should be OK, unless you’re going into the restaurant/food business. In most cases, you don’t need an attorney for this task, as you can perform a free search online that looks at business names registered with your secretary of state. You should also conduct a trademark search to see if your name is available for use in all 50 states.

Register your DBA (“Doing Business As,” aka Fictitious Business Name):

If you have a sole proprietorship or general partnership, a DBA registration must be filed when your company name is different than your own name. For an LLC or corporation, DBAs must be filed under the corporation or LLC whenever you conduct business using a name that’s different than your corporation or LLC name. Depending on your state, DBAs are filed at the state and/or county level.

Incorporate or form an LLC:

Forming an LLC or corporation is essential to protect your personal assets (such as your personal property or your child’s college fund) from any liabilities of the company. Depending on your specific circumstances, you can choose among an LLC (great for small businesses that want legal protection, but minimal formality), an S corporation (great for small businesses that can qualify), or a C corporation (for companies that plan to seek funding from a VC). It’s relatively easy and inexpensive to legalize your business these days. And unless your business is particularly complex, you should be able to incorporate your business or form an LLC online, without having to retain a business attorney.

Get a Federal Tax ID Number, a.k.a an “EIN” or “Employer Identification Number:”

To distinguish your business as a separate legal entity, you’ll need to obtain a Federal Tax Identification Number, also referred to as an Employer Identification Number. The tax ID number is issued by the federal government. It’s similar to your personal Social Security number and allows the IRS to track your company’s transactions.

File for trademark protection:

You’re not actually required by law to register a trademark. Using a name instantly gives you common law rights as an owner, even without formal registration. However, you should consider registering your trademark in order to properly protect it — after all, you’ve spent untold hours brainstorming the ideal name, and you’ll be putting even more effort into cultivating brand recognition.

Educate yourself on employment law:

Do you have a staff or future plans to bring employees on board? Your legal obligations as an employer begin as soon as you hire that first employee. I advise spending time with an employment law professional to fully understand your obligations in such areas as federal and state payroll and withholding taxes, self-employment taxes, anti-discrimination laws, OSHA regulations, unemployment insurance, workers’ compensation rules and wage and hour requirements, among others.

Obtain business licenses and permits:

Depending on your business type, you may be required to have one or more business licenses and/or permits from the state, local (city and county) or even on the federal level. Such licenses include: a general business operation license, zoning and land use permits, sales tax license, health department permits, and occupational or professional licenses.

What to think about if you already have a business:

The next few months present a perfect opportunity to tie up any loose ends that you may have put off throughout the year. For example: Did you file a DBA (Doing Business As) for your business name? Do you need to file for a trademark? Did you get a Tax ID number (or Employer ID Number)? Are all your necessary licenses and permits in order? Have you still not incorporated or formed an LLC for your business?

Most importantly, don’t forget to celebrate each accomplishment, no matter how small. As a small business owner, you’ve got an exciting journey ahead of you; don’t forget to enjoy the ride!

8 Ways to Lose in Business

By John C. Maxwell September 12, 2011, reprinted by permission

clip_image002What’s holding you back in your business or career? It may be something you are doing now and don’t even realize it.

The seed of this lesson comes from the former president of Coca-Cola, Don Keough. He wrote a satirical article about ways people lose in business. A few of the points that I will share with you today come from that article.

So let’s get started. Here are some rules and attitudes to follow if you want to lose in business.

1. Quit taking risks.

“A ship in the harbor is safe… but that is not what ships are for.” Isn’t that a great saying? Anybody who has been in business realizes that risk is a big part of it. The moment you decide not to take a risk is when your competitors will pass you by.

It isn’t the incompetent who destroy an organization. The incompetent never get in a position to destroy it. It is those who have achieved something and want to rest upon their achievements that are forever clogging things up.

2. Rely totally on experts and research to make decisions for you.

Charles F. Kettering said, “Research is an organized method of trying to find out what you are going to do after you cannot do what you are doing now.” There are some wonderful consultants out there who add value to our businesses. The key word above is totally. When one allows what the experts say to totally govern decisions, that’s when trouble arises.

3. Always ask yourself, “What would the founder have done?”

The simple fact is that no one knows what a great leader would do in a new set of circumstances—except that he would not lose. There simply is no eternal formula for success handed down through generations.

4. Concentrate on your competitor instead of your customer.

I’ve read everything that has been written by the late John Wooden, the legendary basketball coach of the UCLA Bruins. Not only was he an incredible coach, but he was also an incredible teacher to his players and others who knew him.

In an interview he was asked how he prepared his team for the next game. It was widely known in the basketball coaching circles that Coach Wooden wasn’t one to send his staff out to scout teams that were coming up on their schedule. He said, “The way to build a team isn’t to worry about your competitor; the way to build a team is to play to your strengths. If we play our game right, they will be playing our game. We won’t play their game.”

Coach Wooden realized it’s much better to spend time making your team better than trying to anticipate what the other team was going to do.

Remember that the customer is king. The following customer service truths are the results of research conducted at the Tyler International Research Institute Inc., as well as that of the Technical Research Assistance Institute and other supporting research organizations.

> Poor service is the No. 1 reason American companies lose business.

> The average dissatisfied customer tells nine others of their dissatisfaction.

> Conversely, the average satisfied customer tells only five people.

> It costs between five and 10 times more to attract a new customer than it does to keep an old one.

> Customers pay more for better service.

5. Administrative concerns take precedence over all others.

When the organization becomes bogged down with administrative issues and bureaucracy, growth can screech to a halt. Zimmerman’s Law says regardless of whether a mission expands or contracts, administrative overhead continues to grow at a steady rate. Isn’t that the truth!

In the article that I referenced in the beginning from Don Keough, he has some scathing things to say about the cost of administration: “Look at any well-oiled bureaucracy. Innovation is never permitted to get in the way of the preservation of the organization. Such bureaucracies have something in common: Most of them are consistent losers or soon will be.”

6. Be inflexible.

A wise person once said, “Inflexibility is one of the worst human failings. You can learn to check impetuosity, overcome fear with confidence and laziness with discipline. But for rigidity of mind there is no antidote. It carries the seeds of its own destruction.”

Generating this flexible thinking requires an emphasis on high quality and strategic thinking, a commitment to principles, and a focus on learning. It also helps to have a cultural bias toward improvisation and innovation, within your framework of principles and a coherent strategy.

7. Look to someone else to do your thinking for you.

Author Gordon MacDonald calls this “mental flabbiness.” He writes, “In our pressurized society, people who are out of shape mentally usually fall victim to ideas and systems that are destructive to the human spirit and to human relationships. They are victimized because they have not taught themselves how to think, nor have they set themselves to the lifelong pursuit of the growth of the mind. Not having the facility of a strong mind, they grow dependent upon the thoughts and opinions of others. Rather than deal with ideas and issues, they reduce themselves to lives full of rules, regulations and program.”

8. Memorize the motto, “That’s good enough.”

Nothing is changed by a mediocre performance.

Complacency is a blight that saps energy, dulls attitudes and causes a drain on the brain. The first symptom is satisfaction with things as they are. The second is rejection of things as they might be. “Good enough” becomes today’s watchword and tomorrow’s standard. Complacency makes people fear the unknown, mistrust the untried and abhor the new. Like water, the man who is complacent follows the easiest course—downhill. He draws fake strength from looking back.

Excellence is not a policy decision. It is a mindset, an attitude, a way of thinking and behaving. We create a mindset of excellence in our businesses, our sports teams, our churches and our homes not merely by demanding excellence or preaching excellence, but by modeling excellence, just as Walt Disney did. Once we have created a climate where quality is not just something we do but a feature of who we are as an organization, then the people in our organization will be inspired to go far beyond policy, far beyond duties and job descriptions, in order to maintain the organization’s reputation for excellence.

Forecast for Startups

By Pauline Estrem, June 9, 2011, reprinted by permission

The economic climate for small business startups shows immense and never-before-seen potential.

“We tend to be very optimistic about small business in general,” says Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council. “If you’ve got a solid idea, then it’s always a great time to start a business, whether it’s good or bad economic times. Now continues to be a great time.”

Dane Stangler, director of research at the Ewing Marion Kauffman Foundation, agrees: “It is never really a bad time to start a company. There are always opportunities to be created and exploited, inefficiencies to correct and sectors of the economy to disrupt.”

In fact, many of today’s most successful, innovative corporations got started during economic downturns.

Both Kerrigan and Stangler agree that it does pay to be aware of external factors to maximize your chances of success—either to plan for challenges or to spur you to take advantage of opportunities. Consider the following factors influencing today’s entrepreneurial climate.

Money

While access to money has always been an issue—even in great economic times—financing conditions are slowly improving. “Recent data suggest that the financing environment for small and mid-sized companies is strengthening, although the nation’s biggest banks have almost completely moved out of this, leaving it to regional and community banks,” Stangler says.

Banks are in the business of loaning money, after all, and Kerrigan points out that “for the business owner who can demonstrate profitability in their model, has sound financials, can walk through their business plan and can provide solid projections on growth, banks do want to loan money.”

According to the SBA, in mid-2010, commercial banks began to ease the tight lending conditions on small businesses that had begun in early 2007. And credit has continued to flow, as loans under $1 million totaled $695 billion in fiscal year 2009. Also, after declining over the past few years, venture capital investment dollars increased in mid-2010.

The key to acquiring funding is equal parts persistence, patience and passion, Kerrigan says. “For individuals who keep looking and are very driven, there still are angel investors, venture capitalists and individuals out there who do want to invest in solid business plans.”

Technology

One variable that will continue to improve for entrepreneurs is technology, which will enable today’s small-business owner to do more than ever before.

“It’s much easier, much more affordable and more efficient for individuals and businesses to market their products, to network and to collaborate with business partners with social media,” Kerrigan says. She points specifically to the game-changing effect that broadband technology has had on the business world, including mobile apps, cloud computing tools, online business resources and social media.

These advances have also increased access to the rich global marketplace—a major advantage for today’s small-business owner.

“A new company can be global on Day One,” says Stangler. “And, as we all know, the strongest economic growth right now is in emerging countries. Theoretically, at least, new companies in the United States should be better able to capitalize on access to global markets and the strong economic performance in other countries.”

Kerrigan agrees that the convergence of technology and globalization provides new and exciting opportunities for businesses large and small. “Ninety-five percent of the world’s consumer base lives outside of the United States, so it’s easier to sell your products and services abroad,” she says. “You not only have to look locally, regionally or within your country for a base. You can look outside.” She adds that the prospect of exporting goods is becoming less and less risky as entrepreneurial markets in foreign countries are maturing and becoming more sophisticated.

Technology also encourages better communication among business owners, which, especially in today’s economic climate, can lead to mutually beneficial collaboration, says Kerrigan.

“Entrepreneurs are looking at ways they can team up with other businesses in partnerships and alliances, and I think this culture of collaboration is growing. So, for those who feel like, ‘I can’t do this on my own. Is there someone I can partner with where it makes sense to do so, where we can accelerate our growth quicker, reach markets and bring our resources together to operate more efficiently and reach goals more and more quickly?’ So that is another really positive thing that many business owners can take advantage of today.”

Consumer Confidence

Stangler and Kerrigan both say that, while still low, consumer confidence is steadily improving. In fact, in February, thanks to the slowly recovering market and growing personal income levels, consumer confidence reached its highest level in three years.

Costs

One of the biggest concerns for small businesses is inflation and the cost of “raw goods, energy and inputs into the business that chew away profitability, particularly if you have tight margins,” Kerrigan says. “Of course, for small to midsize businesses, it’s difficult to pass these costs on because of competition, and you’re always trying to give the consumer a good value for a decent price.”

Changing Policies and Laws

Very small firms with fewer than 20 employees annually spend 36 percent more per employee than larger firms to comply with federal regulations, according to the U.S. Small Business Administration. These very small firms spend 4.5 times as much per employee to comply with environmental regulations and three times more per employee on tax compliance than their larger counterparts, the SBA says.

Understandably, another concern for small-business owners are policy changes, especially where taxes and health care are concerned. “The big unknown is what are policymakers going to do on key issues that impact entrepreneurs? Most of our business owners just want stability when it comes to policy,” Kerrigan says. “Sometimes policies are made—whether in Washington or on state or local levels—that present barriers. Whether it’s taxes or certain regulations or mandates that essentially take away business resources or drive up cost of capital and that take capital off the table in this country and maybe drive investment overseas.”

However, she says bipartisan efforts over the next three to five years should fix the tax code and other issues, bringing some stability back to the small-business economy.

“Once there’s some certainty, then you have an environment for entrepreneurialism in general across the country,” she says. “There won’t be these government-imposed barriers. Everyone will be encouraged.”

So, overall, small businesses will continue to face some challenges and uncertainties as economic conditions continue to climb back to healthy levels. But Kerrigan remains optimistic—and encourages entrepreneurs to think positively as well. “The optimism of most business owners will help them thrive and survive,” she says. “And that’s what makes our country great.”

How I Do It

By Brenna Fisher, in Entrepeneur.com, reprinted by permission.

When you hear that online retailer Zappos.com is expected to make more than $1 billion in gross sales this year, you might imagine this large company is the very model of traditional corporate America—a well-oiled moneymaking machine. While Zappos.com is the ever-expanding No. 1 online shoe retailer, profits aren’t the top priority.

Zappos CEO Tony Hsieh, 35, makes a paltry $36,000 a year. Of course, he did sell advertising network LinkExchange, which he co-founded, to Microsoft for $265 million in 1998. So he’s not hurting for money. But Hsieh will be the first to tell you he’s not motivated by money, but by the prospect of creating something different. He talks to SUCCESS about the Zappos culture.

What were the first steps the company took to make customer service the No. 1 priority?

It was already important, but definitely not the No. 1 priority. Basically, what we found was that as we kept making improvements to the customer experience—and that was through a number of different ways—the more loyal customers were, the more word-of-mouth occurred.

Which customer-service elements make Zappos.com stand out?

It’s free shipping both ways. We have a 365-day return policy. We promise customers that they’re going to get their shoes in four to five business days, but actually, for almost all of our customers, we do a surprise upgrade to overnight shipping. We run our warehouse 24/7, which isn’t the most efficient way to run a warehouse, but it gets the orders out to customers as quickly as possible.

We run our customer loyalty team, which is our call center, 24/7. Most call centers have this concept of average handle time, which is all about how many customers a day each agent can talk to—and the more the better. But that just ends up translating into, “How quickly can we get the customer off the phone?” which we don’t think is great customer service. We don’t upsell the customers. Everyone is trained so that if their customer is looking for a specific pair of shoes, and we’re out of stock in their size, then they look at three other competitor Web sites. If they find that shoe in stock, they are supposed to direct the customer to that Web site.

How did you manage to hang on to such expensive business practices for so long without making a profit?

The year 2007 was the first where we made a significant profit. It was roughly 5 percent operating margins off of our net sales. Several years prior to that, we ran the company at break-even in order to maximize our growth. We could have made a profit in any of the previous three years, but we decided, whatever profit we did make, to reinvest it back into the business.

We didn’t always have all of those [expensive practices]. As an example, we used to ship everything ground, and then, when we could afford it, we would ship everything in three days as a surprise. Then, finally, we got to the point where we could afford to ship everything overnight as a surprise.

How has this investment in customer service affected your sales in the long run?

Basically, over a nine-year period, we’ve gone from zero to $1 billion in gross merchandise sales. And the No. 1 driver of that growth has been repeat customers and word-of-mouth. On any given day, [repeat business] is about 75 percent of our orders.

How do you train your employees?

It’s a four-week program. We go over company history, our philosophy about customer service and the importance of company culture, which is actually our No. 1 focus for the company (not customer service). It doesn’t matter which position you [accept]. You can be an accountant or a lawyer, and you still go through that same training that our call center representatives go through…. If we want our brand to be about customer service, then customer service needs to be the whole company, not just a department.

Is it true that you don’t have your own office? And if so, why not?

We figure the best way to have an open-door policy is not to have a door in the first place. I think, for employees, it’s good because they can just walk by and say hi or ask a question. For me, it’s good just because I can overhear conversations that are happening nearby, and that gives me a feel for what’s going on in the business.

Why is the personal connection with employees important?

I think it helps humanize all of us and makes us more approachable. We have, for example, happy hours for different departments and the new classes, and I try to attend as many of those as possible. I also host a New Year’s party and a Fourth of July barbecue at my house every year, and all the employees are invited. In Vegas, it’s about 800 people. This past Fourth of July we probably had about 300 show up.

What advice would you give to other business owners?

The traditional thing has been that you want to separate work from personal, and we really just view it as one blended thing. We actively encourage our managers to spend 10 to 20 percent of their time outside the office with their teams because when teams get to know each other as people and get to see them in different environments and perspectives, it really helps with communication and trust inside the office. We’ve asked, “How much more efficient are [your] teams because [you’ve] known each other outside the office?” The answers range anywhere from 20 percent on the low end to 100 percent on the high end, in terms of increased efficiency. If you’re able to do that with your team, it should be viewed as an investment, and it will more than pay off in terms of overall productivity.

How do all these activities and benefits, including daily free lunches and full medical and dental coverage, affect your employees and, ultimately, the business?

I think that happier employees lead to happier customers, and happier customers lead to better business overall.

May We Never Forget

imageThis article was written by Jim Roberts, SCORE Orange County Management Counselor

Editor, SCORE Orange County Newsletter

Editor’s Note: Earlier this month, our nation paused to observe the 10th anniversary of the 9/11 attacks on our country. This was a defining moment for our nation, and all who watched the various events that were part of the ceremony were touched as we reflected upon the sacrifice made by the nearly 3000 ordinary working Americans who were struck down that day. We grieved as we watched the thousands of families enter the 9/11 memorial to locate the names of their loved ones etched into the memorials built into the footprints of the World Trade Center towers, the grounds of the Pentagon, and the meadows of Pennsylvania. For me, a particularly powerful moment occurred when one of the speakers read a letter written a long time ago to a Mother who lived in Boston and who lost her five sons in the horror that was the Civil War. The lesson contained in the words of this letter provides an eloquent tribute to all those who have given their lives for our freedom and speaks an everlasting testament to the spirit of America bolstered by the strength of will of its people. May we never forget.

Dear Madam,

I have been shown in the files of the War Department a statement of the Adjutant-General of Massachusetts, that you are the mother of five sons who have died gloriously on the field of battle.

I feel how weak and fruitless must be any words of mine which should attempt to beguile you from the grief of a loss so overwhelming. But I cannot refrain from tendering to you the consolation that may be found in the thanks of the Republic they died to save.

I pray that our Heavenly Father may assuage the anguish of your bereavement, and leave you only the cherished memory of the loved and lost, and the solemn pride that must be yours, to have laid so costly a sacrifice upon the altar of Freedom.

Yours, very sincerely and respectfully,

Abraham Lincoln

How I Do It

By Brenna Fisher, in Entrepeneur.com, reprinted by permission.

When you hear that online retailer Zappos.com is expected to make more than $1 billion in gross sales this year, you might imagine this large company is the very model of traditional corporate America—a well-oiled moneymaking machine. While Zappos.com is the ever-expanding No. 1 online shoe retailer, profits aren’t the top priority.

Zappos CEO Tony Hsieh, 35, makes a paltry $36,000 a year. Of course, he did sell advertising network LinkExchange, which he co-founded, to Microsoft for $265 million in 1998. So he’s not hurting for money. But Hsieh will be the first to tell you he’s not motivated by money, but by the prospect of creating something different. He talks to SUCCESS about the Zappos culture.

What were the first steps the company took to make customer service the No. 1 priority?

It was already important, but definitely not the No. 1 priority. Basically, what we found was that as we kept making improvements to the customer experience—and that was through a number of different ways—the more loyal customers were, the more word-of-mouth occurred.

Which customer-service elements make Zappos.com stand out?

It’s free shipping both ways. We have a 365-day return policy. We promise customers that they’re going to get their shoes in four to five business days, but actually, for almost all of our customers, we do a surprise upgrade to overnight shipping. We run our warehouse 24/7, which isn’t the most efficient way to run a warehouse, but it gets the orders out to customers as quickly as possible.

We run our customer loyalty team, which is our call center, 24/7. Most call centers have this concept of average handle time, which is all about how many customers a day each agent can talk to—and the more the better. But that just ends up translating into, “How quickly can we get the customer off the phone?” which we don’t think is great customer service. We don’t upsell the customers. Everyone is trained so that if their customer is looking for a specific pair of shoes, and we’re out of stock in their size, then they look at three other competitor Web sites. If they find that shoe in stock, they are supposed to direct the customer to that Web site.

How did you manage to hang on to such expensive business practices for so long without making a profit?

The year 2007 was the first where we made a significant profit. It was roughly 5 percent operating margins off of our net sales. Several years prior to that, we ran the company at break-even in order to maximize our growth. We could have made a profit in any of the previous three years, but we decided, whatever profit we did make, to reinvest it back into the business.

We didn’t always have all of those [expensive practices]. As an example, we used to ship everything ground, and then, when we could afford it, we would ship everything in three days as a surprise. Then, finally, we got to the point where we could afford to ship everything overnight as a surprise.

How has this investment in customer service affected your sales in the long run?

Basically, over a nine-year period, we’ve gone from zero to $1 billion in gross merchandise sales. And the No. 1 driver of that growth has been repeat customers and word-of-mouth. On any given day, [repeat business] is about 75 percent of our orders.

How do you train your employees?

It’s a four-week program. We go over company history, our philosophy about customer service and the importance of company culture, which is actually our No. 1 focus for the company (not customer service). It doesn’t matter which position you [accept]. You can be an accountant or a lawyer, and you still go through that same training that our call center representatives go through…. If we want our brand to be about customer service, then customer service needs to be the whole company, not just a department.

Is it true that you don’t have your own office? And if so, why not?

We figure the best way to have an open-door policy is not to have a door in the first place. I think, for employees, it’s good because they can just walk by and say hi or ask a question. For me, it’s good just because I can overhear conversations that are happening nearby, and that gives me a feel for what’s going on in the business.

Why is the personal connection with employees important?

I think it helps humanize all of us and makes us more approachable. We have, for example, happy hours for different departments and the new classes, and I try to attend as many of those as possible. I also host a New Year’s party and a Fourth of July barbecue at my house every year, and all the employees are invited. In Vegas, it’s about 800 people. This past Fourth of July we probably had about 300 show up.

What advice would you give to other business owners?

The traditional thing has been that you want to separate work from personal, and we really just view it as one blended thing. We actively encourage our managers to spend 10 to 20 percent of their time outside the office with their teams because when teams get to know each other as people and get to see them in different environments and perspectives, it really helps with communication and trust inside the office. We’ve asked, “How much more efficient are [your] teams because [you’ve] known each other outside the office?” The answers range anywhere from 20 percent on the low end to 100 percent on the high end, in terms of increased efficiency. If you’re able to do that with your team, it should be viewed as an investment, and it will more than pay off in terms of overall productivity.

How do all these activities and benefits, including daily free lunches and full medical and dental coverage, affect your employees and, ultimately, the business?

I think that happier employees lead to happier customers, and happier customers lead to better business overall.