Post-Recession Success: 7 Actions for Small Business Owners to Take Now

Feb 18, 2011 -

Have you heard? We're slowly moving out of the worst financial crisis many of us have ever experienced toward an optimistic time of recovery and eventual growth.


As a small business owner, this is the time you've been waiting for. Now it's time to position you and your business for post-recession success by doing these seven things:


1. Invest in education

Without spending too much, invest now in any education you need to make your post-recession business a success. Attend seminars online and in person, read books and trade magazines, and make sure you're reading what's on the cutting edge in your industry.


2. Pay off debt

If you can pay off any debt, now is the time to do it. Taking on debt during a recession is common; however, now that the recession is lifting, don't add to it. Pay cash for everything you need. Put your credit cards in the freezer.


3. Go "Zen" on extras

Now that money may be flowing a little more, resist the urge to splurge on extras you don't need. Think before you add all the bells and whistles to your business or cell phone. Think before you buy new technology. Do you really need that Starbucks' latte twice a day?


4. Follow the market

Read the papers or watch the news. Know what is happening and stay on top of it.


5. Renew contracts

Have your new clients sign a long-term contract and your current clients renew or extend their contracts with you.

6. Hang on to your property

While it may seem like a good time to sell your home or business property, don't. At this moment in time, you won't get top dollar and may still end up losing money. Instead, begin projects that will improve the quality (and eventual selling price) of your home or office
 
7. Don't cut prices

Right after a recession, it is common for small business owners to think that cutting prices will help them attract more clients and customers. Don't do it. Keep your prices steady, while offering your customers a coupon or a rewards program, to reward them for sticking with you during tough times.


These are exciting times we live in. Finally, we're seeing evidence that the U.S. economy is starting to recover. Now is the time for small business owners to jump to action. Don't wait.

Susan L. Reid

Small Business Expert and Business Catalyst
 
Susan Reid brings the gift of inner vision and insight to spiritually conscious businesswomen ready to run their business confidently, effectively, and fully aligned with their deepest inner principles.

Twice award-winning author of "Discovering Your Inner Samurai: The Entrepreneurial Woman's Journey to Business Success, Dr. Susan revolutionizes the way women do business in the world through the transformational process called discovering your Inner Samurai.

Source:  http://www.openforum.com/idea-hub/topics/managing/article/post-recession-success-7-actions-for-small-business-owners-to-take-now-susan-l-reid

3 Small Businesses to Watch in 2011

There's no dearth of predictions, trends and watch lists this time of year. Here is my nomination of three small businesses that have been making the news recently, along with a few thoughts on what makes them noteworthy.

ICON Aircraft, Los Angeles

In 2004, the FAA introduced a dramatic change in regulations by creating the Light Sport Aircraft category, a pilot license requiring just half the 40 hours of flight time for a private pilot license. Niche created!

Shortly thereafter, in 2005, ICON Aircraft was launched by Kirk Hawkins, a graduate of Stanford Business School, accomplished engineer, former U.S. Air Force F-16 pilot, and long-time motorsport enthusiast.

ICON Aircraft’s sole purpose has been to bring the freedom, fun and adventure of flying to all who have dreamed of flight. One look at the stylishly elegant A5, and it becomes clear that ICON is fulfilling its purpose. The plane is amphibious, with foldable wings, and easily stored in your garage. The plane was designed, engineered and developed by famed Scaled Composites, which created such record setting projects as Voyager, Global Flyer, the X-Prize winning SpaceShipOne and Virgin Galactic’s SpaceShipTwo.

Want your own? Place a deposit by credit card online at the company's website.

Key success factors:

    * Great team: In addition to deep design talent, ICON counts IDEO's David Kelley, Mastercraft CEO John Dorton, and Boeing CEO Phil Condit among its advisory team.
    * Design simplicity: The A5 keeps gadgets and gizmos like dials and levers to a minimum, favoring intuitive and user-friendly design.

    * Quick reflexes: Recognizing the opportunity to fill a niche, the ICON founders moved quickly and gathered an incredible team.

Indie Energy, Chicago

Solar and wind power as renewable energy are all the rage. Except at Indie Energy, which has in four short years built a thriving business and leadership position around the neglected stepchild known as geothermal energy. Indie creates investment-grade geothermal systems with its innovative engineering, construction and metering technologies, and won the 2009 U.S. Department of Energy funding award for transformational technology.

To make a transformative impact for businesses and the environment, entrepreneur and CEO Daniel Cheifetz knew he needed to break old patterns and challenge conventional thinking. He recruited a diverse team of leaders that blend expertise from the worlds of technology, engineering, product development, construction, finance and business.

"Reducing the amount of energy used to heat and cool buildings is one of the most meaningful ways we can increase building energy efficiency, lower operating costs and reduce our carbon footprint," states the company's website. "While geothermal systems have been used in rural locations for decades, the technology did not exist to implement systems in larger commercial buildings and in urban areas, with proven return on investment."

Added bonus: Indie Energy's Smart Geothermal systems also make it possible to utilize American Recovery and Reinvestment Act incentives to make geothermal systems affordable for most buildings.

Key success factors:

    * Close collaboration: Indie systems designers and engineers work closely with other professional resources involved in each building project, from architects, engineers, general contractors, to owners themselves.

    * Leverage constraints: Indie pioneered the production-scale harvesting of geothermal energy in space-constrained, highly-structured and tightly-regulated environments. Their innovative drilling system allows drillers to effectively harvest clean, renewable geothermal energy in spaces as small as 100 square feet. Not only are Indie geothermal drills are much smaller than traditional drilling rigs (12 feet in length vs. a typical 40-foot drilling rig), but they are track-mounted and remote-controlled to navigate better in small spaces.
Omhu , New York City

Omhu is Danish for “with great care.” Omhu is three people: Susy Korb (President), Rie Norregaard (Creative Director) and Susan Towers (VP, Sales & Marketing), along with freelance support. Founded on the belief that life is imperfect and beautiful, Omhu offers groundbreaking designs to support people’s abilities as they change throughout life.

As Susy says, “We started Omhu after searching in vain for well-designed products for relatives and friends who needed help with simple tasks such as walking, bathing or reaching overhead. Pooling our collective experience in design and fashion, we’ve created a brand for people like us—caregivers who want more inspired and inspiring choices for the people they love.”

Omhu celebrates good design because it’s life-enhancing, and fun. By creating more exciting choices of things that help, Omhu hopes to help change the way people feel about aging and ability.

Key success factors:

    * Understand market dynamics: let's face it, everyone grows old, and more of us are living much longer.

    * Product availability: In addition to buying on their site, Omhu products will be widely available at retail.

    * Inspired design: Omhu taps the talents of folks like Allen Zadeh and Ted Muehling.

Add these eight success factors to your company's arsenal for 2011... if you haven't already!

Tags: the shibumi strategy, best practices, matthew may, 2011, success, small business

By Matthew E. May
January 21, 2011 -

Matthew E. May is the author of The Shibumi Strategy: A Powerful Way to Create Meaningful Change (Jossey-Bass, 2010), In Pursuit of Elegance: Why the Best Ideas Have Something Missing (Broadway Business, 2009) and The Elegant Solution: Toyota's Formula for Mastering Innovation (Free Press, 2006). Matt works with individuals, teams and companies to guide change through a focus on design thinking and problem solving. He spent nearly a decade as a fully retained advisor, master kaizen instructor and jishuken leader for Toyota, a company that implements over 1 million new ideas each year. Matt is a graduate of the Wharton School and The Johns Hopkins University, but considers winning The New Yorker Magazine Cartoon Caption Contest among his proudest achievements.

Groundhog Day: 10 Mistakes that Small Businesses Make Over and Over

Feb 02, 2011 - 

By Barry Moltz

In the movie, Groundhog Day, Phil, played by actor Bill Murray, is forced to live the same day over and over again until he learns where he is making lifelong mistakes.

Many small business owners are also doomed to make the same mistakes over and over and over again. Here are the top 10 mistakes that are repeated by small businesses and how they can be solved.

1. They focus on profit not cash. 

We learned during the great recession that company financial statements can be pure fiction. Profit at the bottom of the income statement is meaningless if your business does not have the cash to pay its obligations. Your profit could be “stuck” in your accounts receivables, inventory, or work in process. Understand the cash flow statement to learn how "profitable” your business really is and how much cash it has to invest, save, or distribute.

2. They don’t diligently collect the money that is owed by customers.

Customers that do not pay aren’t really customers; they are collection problems. Have a strict process on how your business operates in this area. This includes setting mutually-agreed-to prices and payment terms, checking with the customer when your invoice arrives, and asking when it will be paid. If it is not paid on time, call to find out where it is. Remember, the squeaky wheel always gets paid first.

3. Lack of focus on what your business does. 

Many entrepreneurs early in starting their company want to be all things to all people. They believe they should not turn away any type of business from any customer. However, the successful company focuses on solving one pain first profitably for customers. They don’t expand too quickly to solving other related problems. To build a strong company, get boring and narrow real fast.

4. Expanding too quickly by increasing fixed and overhead costs. 

Many entrepreneurs hear that bigger is always better. After some initial success, they want to have more office space. This is only a way to “grow yourself broke." In order to grow profitably, keep as many expenses variable and available as possible. This will ensure that expenses only increase when sales grow at the same time.

5. Hiring the wrong people. 

Many small business owners have big egos. They routinely hire the wrong people for all the wrong reasons. This includes employees that are friends, relatives, or just not as good as themselves. This comes out of a basic fear that they will be overshadowed in their business. It is critical to hire people that are complementary to your skills. The only way to build a profitable sustainable business is to find leverage with people and processes.

6. Not firing employees quickly enough. 

Every business owner’s mantra needs to be “slow to hire and quick to fire." If a mistake was made in the hiring process, this will be evident in the first 30 days of employment. People have a hard time changing within a company. What is worse is that everyone knows who the non-performers are in the company and this holds the business back. Fire your non-performing employees today.

7. Knowing when to quit. 

The most successful entrepreneurs know “when to hold them and fold them." Will Rogers said that “if you find yourself in a hole, the first thing to do, is stop digging.” It is time to shut down your company if you run out of your passion and cash. In this case, there truly is not a way or a reason to turn the business around.

8. Not focusing on marketing and distribution. 

The biggest error in thinking for many entrepreneurs is that “if you build it, they will come." The reasoning goes that if “I build a better mousetrap," customers will automatically buy it. There could be nothing further from the truth. The most successful businesses execute a superior marketing and distribution strategy that finds the customers that have the money to buy the product that solves their pain. Unfortunately, the best products don't always sell the most.

9. Failure to systematically do marketing even while they have “too much work." 

We actually can’t sell anything to anyone; we just need to be there when people are ready to buy. This is why having a systematic and constant method to building relationships with customers, prospectors, influencers, and connectors is critical. Trust is built over a long period of time. Build relationships by consistently giving value freely. As a result, when a prospect or their friend has a problem your company can solve, they will call you.

10. Not consistently seeking help. 

Small business owners are a stubborn group. We want to do it alone and not ask for help, until it’s too late. Get one or more mentors for your business early on. This can come from hired professionals like bankers, lawyers, or accountants, or organizations such as SCORE or SBDCs. Better yet, join a mentor group and talk to other business people who have been where you are right now. You will be surprised how many will volunteer their help.

What other mistakes do you think small business owners make over and over again?

Barry Moltz

Small Business Speaker, Consultant, and Author Barry Moltz gets business owners growing again by unlocking their long forgotten potential. With decades of entrepreneurial experience in his own businesses ventures as well as consulting countless other entrepreneurs, Barry has discovered the formula to get stuck business owners out of their funk and marching forward. Barry applies simple, strategic steps to facilitate change for entrepreneurs, and get’s them growing their business once again.

Small-business advice: How to make more international sales

By Karen E. Klein
January 3, 2011

Dear Karen: I want to make more overseas sales in 20011. Do I need a foreign distributor?

Answer: It certainly helps, said Kathleen Brush, an international business consultant based in Seattle. "Finding a good local partner in the country you're targeting will help you understand business and legal details you would have tripped over," she said.

Brush recommended using the Gold Key Matching Service offered by the U.S. Commercial Service. "They do credit checks, criminal checks, they walk you through the distribution process and advise you about what you need to look for" in any country where you want to start selling, she said.

It is important to take your time and make sure you have found a good distributor before you ramp up international sales. "Small businesses often make mistakes because they are anxious and they want to make money right away. Be patient and get everything set up properly before you start," she said.

• Turning holiday customers into regulars

Dear Karen: My business was up over the holidays. How can I extend that momentum into this year?

Answer: Create incentives in the form of gift cards or discounts that encourage customers to return in 2011. Encourage those who are redeeming gift cards to reload them.
"Offer a bonus for customers who reload their gift cards after redemption. For instance, a free drink with a $25 reload or a $5 bonus on a $50 reload," said Barbara Roeber, senior vice president at electronic payment firm First Data.

Small-business questions? E-mail Karen at smallbiz@latimes.com.

5 Steps to Start a Business and Make it Work

Jan 10, 2011 -

I am often asked if I have found a secret -- or at least a consistent answer -- to successfully building businesses over my career. I've spent some time thinking about what characterizes so many of Virgin's successful ventures and, importantly, what went wrong when we did not get it right.


Reflecting across 40 years I have come up with five "secrets."


1. Enjoy what you're doing.

Because starting a business is a huge amount of hard work and requires a great deal of time, you better enjoy what you're doing. When I started Virgin from a basement flat in West London, I did not set out to build a business empire. I set out to create something I enjoyed that would pay the bills.


There was no great plan or strategy. The name itself was thought up on the hoof. One night some friends and I were chatting over a few drinks and decided to call our group Virgin, as we were all new to business. The name stuck and had a certain ring to it.


For me, building a business is all about doing something to be proud of, bringing talented people together and creating something that's going to make a real difference to other people's lives.


A businesswoman or a businessman is not unlike an artist. What you have when you start a company is a blank canvas; you have to fill it. Just as a good artist has to get every single detail right on that canvas, a businessman or businesswoman has to get every single little thing right when first setting up in business in order to succeed. However, unlike a work of art, the business is never finished. It constantly evolves.


If a businessperson sets out to make a real difference to other people's lives, and achieves that, he or she will be able to pay the bills and have a successful business to boot.


2. Create something that stands out.

Whether you have a product, service or a brand, it is not easy to start a company and survive and thrive in the modern world. In fact, you've got to do something radically different to make a mark today.


Look at the most successful businesses of the past 20 years. Microsoft, Google and Apple, for example, shook up a sector by doing something that had never been done and continually innovating. They are now among the dominant forces.


3. Create something that your employees can be proud of.

The people on your team are your biggest assets.


4. Be a good leader.

As a leader, you have to be a really good listener. You need to know your own mind but there is no point in imposing your views on others without some debate. No one has a monopoly on good ideas or advice.


Get out there, listen, draw people out and learn from them. As a leader you've also got to be extremely good at praising people. Never openly criticize people or lose your temper, and always lavish praise on your colleagues for a job well done.


People flourish if they're praised. Usually they don't need to be told when they've done wrong because most of the time they know it. If somebody is not working out, don't automatically throw him or her out of the company. A company should genuinely be a family. So see if there's another job within the company that suits them better. On most occasions you'll find something for every single kind of personality.


5. Be visible.

A good leader does not get stuck behind a desk. I've never worked in an office -- I've always worked from home -- but I get out and about and meet people. It seems like I'm always traveling, but I always have a notebook in my back pocket to jot down questions, concerns or good ideas that occur along the way.


If I'm on a Virgin Atlantic plane, I make sure to get out and meet all the staff and many of the passengers. If you meet a group of Virgin Atlantic crew members, you are going to have at least 10 suggestions or ideas. If I don't write them down, I may remember only one the next day. Get out and shake hands with all the passengers on the plane, and again, see if anyone has a problem or suggestion. Write it down, make sure that you get their names, get their e-mail addresses, and make sure the next day that you respond to them.


Of course, I try to make sure that we appoint managing directors who have the same philosophy. That way we can run a large group of companies in the same way a small business owner runs a family business -- keeping it responsive and friendly.


When you're building a business from scratch, the key word for many years is "survival." It's tough to survive. In the beginning you haven't got the time or energy to worry about saving the world. You've just got to fight to make sure you can look after your bank manager and be able to pay the bills. Literally, your full concentration has to be on surviving.


Obviously, if you don't survive, just remember that most businesses fail and the best lessons are usually learned from failure. You must not get too dispirited. Just get back up and try again!




Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson. To learn more about the Virgin Group www.virgin.com.

Source:  http://www.openforum.com/idea-hub/topics/managing/article/5-steps-to-start-a-business-and-make-it-work-richard-branson

Small Business Isn't Celebrating Health-Care Reform

Evidence that the new health-care law has increased coverage and brought down costs has not materialized yet, says Scott Shane

By Scott Shane

In March, Congress enacted the Patient Protection and Affordable Care Act (PPACA), a 2,000-plus-page law designed to dramatically change how health insurance is provided in this country. The law might have been more aptly named the Small Business Health Insurance Act because its effects—both good and bad—will fall most heavily on small companies.

That's because we have an employment-based health-care system and small businesses are less likely than large ones to provide employee health insurance. In 2010, the Kaiser Family Foundation, which keeps tabs on health insurance coverage, reported that 99 percent of businesses with 200-plus employees provided workers with health insurance, as compared with only 68 percent of businesses with 3 to 199 employees.

Given these numbers, it's fair to focus on small businesses when looking at the impact of the new law.
While it's only been eight months since President Obama signed the PPACA into law, and many of the law's provisions won't kick in for several years, advocates of the legislation argue that it is already benefiting small businesses. Under the new law, the owner of a very small business can obtain an income tax credit against the cost of employee health insurance premiums. The Wall Street Journal reported late last year that "the number of small businesses offering health insurance to workers is projected to increase sharply this year … a shift that researchers attribute to a tax credit in the health law."

Tax Credit Incentive?

Many of the law's supporters are basing this assessment on data from the Kaiser Family Foundation, which found that the percentage of firms with three to nine employees offering insurance jumped from 46 percent to 59 percent between 2009 and 2010, driving the share of all firms offering health benefits from 60 percent to 69 percent.

However, the tax credit isn't responsible for this change. Sellers of small group policies report little change in demand for employee health insurance policies among small business owners. The sellers explain that compensation limits for employees make few small businesses eligible for the credit and that the low value of the credit does little to get business owners to provide employee health insurance.

The Kaiser Family Foundation reports that the uptick in the share of firms offering employee health insurance is an artifact of high failure rates of the most vulnerable small businesses (which tend not to offer employee health insurance) during the economic downturn. With more of the companies not providing insurance out of the sample, the share of those providing insurance has increased for purely mathematical reasons.

Moreover, other surveys show the opposite trend. American Express Open Small Business Monitor, which surveys approximately 700 small business owners with fewer than 100 employees twice a year, reported a drop in the share of small businesses offering employee health insurance from 66 percent in March 2009 to 45 percent in September 2010.

Premium Costs

Another claim is that the new law is bringing down health insurance premiums. Even if the law might, possibly, maybe, at some time in the future, bring down premiums, it hasn't done that yet. Trade publication Employee Benefit News explains that private companies' spending on health insurance is expected to have increased by 4.3 percent in 2010, a rise from the 2.5 percent expected the month before the PPACA was passed because of changes in COBRA policies.

The passage of the law also hasn't stopped companies from pushing a higher share of insurance costs on to employees. From 2009 to 2010, the Kaiser Family Foundation data show that the average employee share of health insurance coverage for a single individual rose from 13.9 percent to 15.1 percent. Moreover, most of the increase in worker contributions was at companies with fewer than 200 employees, which saw single-coverage worker contributions jump 38.4 percent over the past year, from $625 to $865 per year.
Given these patterns, has the PPACA done anything yet to change small business owners' health insurance costs or willingness to cover employees? The answer is no, largely because most of the major provisions of the plan—coverage mandates and penalties—don't kick in until 2014.

So why am I challenging the claims of the law's cheerleaders? Because its effect so far has been a net negative. That's because many business owners have formed negative expectations of the future effects of the law. For instance, a survey of 459 businesses conducted by Fidelity Investments in June revealed that 49 percent of small employers expect the new law to increase their costs. Many small business owners are responding to these expectations by passing on health insurance costs to employees, by changing the type of insurance they offer, and by planning to drop employee health insurance coverage in the future. (The same Fidelity survey reports that 22 percent of small business owners expect to drop health insurance in response to the law.) In short, any "evidence" that the PPACA has cut small business employee health insurance costs or increased coverage isn't real.

Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.

Management Flubs Made by Rookie Bosses

Some people start their own business to escape a bad boss. Albert Ko became one after launching his.
The owner of DealPerk LLC, a year-old coupon website in Irvine, Calif., Mr. Ko admits that he developed a habit of shouting at his three employees whenever they made mistakes, which created a toxic work environment.

"They were scared," says the first-time entrepreneur, who's since changed his approach to discipline. He now pulls offenders aside to discuss what went wrong and offers suggestions on how they can improve. "I could see that it hurt morale."
 
Being the boss is a difficult job for many business owners to master. Their expertise is typically in the products or services that they sell and not supervising others. As a result, entrepreneurs are often guilty of handling employee mishaps poorly—or for allowing such blunders to occur in the first place.

"They're in business because they have talent in their field, but it doesn't mean they're capable managers," says Rod Means, a district director in San Diego for SCORE, a nonprofit small-business mentoring and training organization.

The root of the problem is that entrepreneurs see the workplace differently than most workers, says Wayne A. Hochwarter, a professor of management at the College of Business at Florida State University. "When you're running your own place, you've got everything vested in it. It's an emotional thing," he says. But for the average employee, "it's just a job, and sometimes not a well-paying job."

Here's a look at other management mistakes entrepreneurs confess to having made—and how to avoid them:

Failing to check for competence. Jimmy Tomczak, founder of Paper-Feet, a sandal manufacturer and retailer in Ann Arbor, Mich., says an intern once incorrectly assembled 25 of his company's products, costing the business $500 in retail sales. He had showed her what needed to be done but failed to check if his instructions registered clearly. "Now I make sure that new hires can demonstrate competence before letting them go on their own," he says.

A simple way to prevent costly errors is to take the time to patiently teach employees how a job should be done, says Dr. Hochwarter. Too often entrepreneurs hire people without providing clear job descriptions or training, and instead leave workers to their own devices, which can lead to confusion and conflict, he says.

Lying to avoid hurt feelings. Ethan Fieldman, co-founder of Group Interactive Networks Inc., a software company in Gainesville, Fla., says he once severed ties with a contractor whose job performance wasn't up to par by telling him that the firm didn't have any more assignments available. But afterward, Mr. Fieldman says he and several employees at the company began regularly receiving emails from the laid-off contractor asking if any new jobs had opened up. It's been six years and Mr. Fieldman says the emails continue to spam their inboxes.

Though it can be awkward to deliver bad news, managers should be honest about why they're dismissing someone, says Daniel M. Murphy, co-founder of the Growth Coach, a small-business-coaching franchise in Cincinnati. "Giving the truth is good for the business and for the development of that person," he says. Any sort of lie "could spill down throughout the organization," resulting in the spread of false rumors.

Blindly trusting workers. When Wendy Maynard co-launched Kinesis Inc., a Portland, Ore., Web-design and marketing firm, in 2000, she says she and her business partner didn't create an employee handbook or even verbally express how they expected their staff to behave. "We made a big assumption that our professional norms were other people's professional norms," she says. Yet some of their first hires came to the office wearing low-cut jeans with underwear and tattoos showing. One staffer worked on freelance assignments for other companies while on the clock. "We quickly had to change things," Ms. Maynard says.
Entrepreneurs should define in writing what kind of behavior is allowed and what isn't in the workplace, says Janice Brown, founder of Brown Law Group, a San Diego law firm that specializes in employment litigation. The effort will not only deter employee misconduct, but also help a company fight wrongful termination lawsuits or false unemployment claims by former employees, she says.

Giving mixed signals. Hajo Engelke, founder of Custom Choice Cereal LLC, an online retailer in Durham, N.C., normally wears a t-shirt, shorts and flip-flops to work. Last summer, he teased a new recruit for showing up in a suit and dripping with sweat. Yet the very next day, Mr. Engelke walked into the office dressed in just the kind of formal outfit he criticized his employee for wearing the day before. (The reason: Mr. Engelke had a meeting with a potential investor, which he neglected to mention to the new recruit.) Upon seeing Mr. Engelke dressed this way, the employee's "jaw dropped," recalls the entrepreneur. "Every day after [the employee] would ask what he should wear to work."
Entrepreneurs need to remember that workers look to them for cues on to how to behave, warns Mr. Murphy. "As the owner, you are in charge of setting the tone for the environment and the culture," he says. "What employees want more than anything is clarity of what are the rules and expectations."

Write to Sarah E. Needleman at sarah.needleman@wsj.com