Your Weaknesses

Motivating Workers & a Cash Flow Crunch

The Entrepreneur: Rob Gelphman; Gelphman Associates; San Jose, California
The Expert: Arlene Vernon; HRx Inc.; Eden Prairie, Minnesota
The Problem: Motivating workers

In the throes of the technology slump, publicist Rob Gelphman finds high-tech clients aren't biting on proposals. That's leading to some lethargic workers at his Silicon Valley PR agency. "Everybody's very frustrated," he says. "They don't want to go the extra mile." Another hurdle Gelphman, 44, faces in lighting workers' fires is that they all telecommute.

Arlene Vernon sees the problem as one of motivating. The workers need to be committed. She suggests one-on-one meetings with each worker to probe their interests and desire.

One solution for motivating workers is to hold a companywide brainstorming session. Vernon recommends that Gelphman fly in his one worker who lives in St. Louis and bring everybody together face-to-face to discuss companies the agency should target.

"You want it to be their idea," Vernon says. Extrinsic motivations are also important, so she wants Gelphman to establish a bonus system that rewards employees for landing new clients.

The bonus program can also encourage workers to put articles they write for Public Relations Society of America publications under the Gelphman name ("Jane Doe is a senior counselor at Gelphman Associates"). This re-establishes their link to the firm, while reinforcing the company's brand within the community.

Most important, however, Vernon asks Gelphman to re-examine his hands-off management style. While he feels it gives his seasoned pros the breathing space they deserve, it doesn't leave them with any backup. They may want support with difficult clients. "You're not managing the employee," Vernon notes, "you're managing the client and the account."

The Entrepreneur: Joe Donnelly; Donnelly Display Inc.; Farmingdale, New York
The Expert: Howard Van Auken; Pappajohn Center for Entrepreneurship, Iowa State University; Ames, Iowa
The Problem: A cash-flow crunch

Over the past 10 years, Joe Donnelly and his wife, Linda, have become a classic success story manufacturing hangers that display names of stores or lines of clothing. They also produce mannequin parts--torsos that display sweaters, rather than entire bodies.

In the past year, however, Donnelly has been cash-starved as vendors have cut back on terms, including five that represent 70 percent of his purchases. They're citing the slack economy. Donnelly's customers, however, won't speed their payments. That's leaving him with a nasty cash crunch.

Howard Van Auken understands the problem intimately. He ran a family business before becoming a professor. Van Auken feels that the business's family nature could be the trump card. The Donnellys invite their customers to barbecues at their home as part of their marketing. They could benefit by using the same approach with suppliers. "If you do this relationship-building with the vendor, they may show flexibility," he says.

The Donnellys moved into a new 15,000-square-foot facility a year ago to accommodate growth that never came. Van Auken suggests trying to lease out the space currently not being used as a way of increasing income.

He also fires off several suggestions Donnelly has already tried. Factoring accounts receivable? Factors charge too much because the firm does less than $3 million in business, says Donnelly, 35. Offering discounts for early payment? Customers don't see a 3 percent discount as worth the hassle. Adding a line of credit? Already done.

Van Auken then suggests getting creative. He proposes that Donnelly use a corporate credit card to extend his company's float by 30 days and examine his production process for ways to improve it. "If you could save a day, you could get your receivables a day earlier," Van Auken says.

Finally, he suggests that Donnelly just find time to plan. "When I ran a business, I didn't have time to think, to talk to people, to get contingency plans," he says. "I sometimes found it's good to get away."

Donnelly and the rest of our entrepreneurs only had an hour on the phone with these consultants. Hopefully that gave them a chance to ponder some new ideas--and taught you a thing or two along the way.

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This article was originally published in the January 2003 print edition of Entrepreneur with the headline: We Shall Overcome.

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