With the close of 2009 approaching, we sought insights from The Green Sheet Advisory Board to share with you, our readers, as you strategize for the coming year. We asked the following questions of our industry leaders about their business decisions in the past year:
Following is the second and final segment of their responses. "The smartest moves of 2009 - Part I" was published in The Green Sheet, Dec. 14, 2009, issue 09:12:01. Thank you to all advisory board members who participated.
2. Ask me next year.
3. The risks have been overwhelming. Being that we are relatively small and limited in human capital, I had to make a decision to divert my attention from marketing and growing sales to building our foundation. Our sales have suffered for that, of course. However, I know when we rebuild, our core will be strong and ready for most anything.
4. It's certainly something another company could duplicate; whether it's the right thing to do is yet to be determined. We all know a good foundation is key but, again, declining sales is a huge risk - especially in this market.
5. My next move? Focus on sales like we used to.
We did two smart moves. We adjusted and realigned staff so we had the right people in the right numbers for each aspect of our business. The second good move was to expand beyond CardWare's long-time core competence in the electronic transaction sector to nontraditional, nonfinancial areas that would benefit from our experience, infrastructure and technology.
It was a good move because the financial industry, which is closely aligned with the retail and service sectors, will take time to rebound. Opportunities outside these sectors are fertile and, in some instances, unplowed ground. For those that are familiar with the concept, it is a Blue Ocean move.
The risks really were learning new industries, new businesses and new lingo in some cases. It was and still is a learning curve.
It's making lemonade from lemons or, as I alluded to earlier, a strategic Blue Ocean move. It is what we've done four or five times in the course of our company, evolving from an imprinter sales and service company to a full service, merchant support company. You evolve or die.
Yes, any company can do what we did if it is willing to let go of the old and embrace the new.
An ISO selling card processing has evolved to offering a wide range of other financial and transaction services. So, it may be time now to look for new opportunities, possibly outside financial services.
Essentially, a company leverages what it has, what it is good at. It's not rocket science, yet the salesperson or business owner must have the courage to let go of that which is easy and comfortable. Then they must also love the challenge. It's a journey.
WAY Systems Inc.
Cutting the price on the way5000, which is a true multi-application wireless device, reset expectations for the entire mobile POS market for what a wireless POS device should cost and how mainstream it ought to be.
Particularly with the surprising rise of the mobile phone application in the United States, wireless POS manufacturers have got to bridge the distance between a cell phone device, which offers essential merchant features and functionality, and a full-featured mobile POS device, such as the 5000.
Of course, it required a resetting of minimum expectations on annual hardware profits and a forecast for greater unit sales because of it. WAY is both a product and service company.
Our service revenue has risen all year. Our product revenue has rebounded nicely, and we are set for a prosperous 2010 in both unit sales and hardware profits.
What it took was a bold vision and the willingness to do a difficult thing: lower profit margins on hardware.
I do not think other POS hardware manufacturers will have an easy time of it because their models do not include one-to-one revenue from a service along with a product. We have a recurring revenue stream. It was a decision we could make, were able to make and did make, and it is paying off for us and our customers.
Smart moves are defined by innovative action and risk-taking that pays off. Dumb moves are defined the same way except for the lack of a payoff (for example, New Coke). Innovative action is defined as vision on where your market is headed and deciding on taking a strategic risk.
At this point, the crystal ball is positioned for a widespread initial acceptance of the new cell phone applications. WAY is going to continue to drive home the difference that these cell phone apps, while attractive and very low cost, do not always offer the needed features, functionality and (in some cases) security of a wireless hardware POS device.
Our next smart move is to make our last smart move even more successful in 2010.
Why was it a good move? We took the down time to get our house in order: re-evaluated the current market conditions and our new product pipeline to help an expedited decision-making process and prepared strategically to come out the gate in 2010 with a well thought-out plan.
Did it require you to take risks? Yes, I had to learn quickly to trust my colleagues. As you know, making new teams work involves a considerable investment of time and energy; it also depends on the circumstances. We had to band together into a tight, cohesive team quickly.
Is it something other companies could duplicate or something only your organization could do? Yes, others could do this by hiring great talent who are forward-thinking and leaders in the industry.
What do you think your next smart move is going to be? We'll keep a close eye on the changes in technology and how to best leverage those changes to benefit our clients' businesses. We'll engage the clients in an early dialogue to be able to fine-tune our products to their specific business demands.
U.S. Merchant Systems
2. It makes the company more profitable, and you don't lose sleep over merchants that priced too low to attain or lost to a price competitor.
3. Yes, it required some risks. Stay the course and believe in the program, even when you feel like you are losing a merchant to the competition.
4. If other companies can't do it, then they need to try doing something else.
5. Stop doing business with companies that do not deliver on their promises with regard to products and services that we resell. Also hold all companies that we have a contract with to the terms of the agreement.
Charge Card Systems Inc.
Technology: We continue to invest our capital into our systems and technology in order to make our agent and merchant experience the best possible. It's a never ending process, but we feel we are making significant strides with regard to our Agent Portal, the systems behind it and our agent offerings.
New hires: Even in this difficult economy, CCS continues to hire good people to support our sales partners. One significant hire was the addition of Jeff Cohen, our Director of Marketing, whose mission is to provide marketing and advertisement support to our sales agents. Within the past year, his contribution has grown exponentially, and our agents are employing him in a myriad of ways, whether for association marketing, prospecting, and so forth.
Investing with our "active agents": Like every business, there is the 80/20 rule where 80 percent of your business comes from 20 percent of your salespeople. We take great pride in all of our people, but we have begun to make financial investments in the top 20 percent to help these agents develop an infrastructure with their offices, administrative support and working capital.
The payoff has been tremendous. We will continue this program into 2010 as well.
Stay the course: We haven't panicked and continue to open accounts and service our merchants. So many ISOs panicked last year and tried to make a quick fix; we didn't. The economy has cycles, and although 2009 was difficult, our business is based on solid fundamentals. The economy and merchants will rebound, and it's those ISOs and agents that believe in the long-term that will enjoy the success of our business model.
I lie awake every night thinking of our next best move; hopefully it will come to us. If not, I hope to improve my golf game in 2010, which is more difficult than selling merchant services.
2. Allowed me to shelter hundreds of thousands of dollars annually tax free.
3. Absolutely. Technically, you need to match your number annually.
4. Anyone can use this.
5. A charitable remainder trust combined with the right type of insurance.
Fast Transact Inc.
Hiring an operations manager created a good buffer between upper management and employees.
The employees felt more comfortable in expressing their point of view and it helped upper management stay more focused on what they needed to accomplish rather than be bogged down with employee concerns.
After one year, in retrospect, it became one of the best decisions we made. The daily tasks of management are running extremely smoothly, issues are being addressed in a timely manner, and the overall atmosphere is positive and enthusiastic. Things are being accomplished and followed through on.
The biggest risk was overcoming the fear of losing control. Allowing yourself to trust that the person you hire has the same dedication and attachment to your business as you do is a big chance you take and requires a leap of faith.
It is something that everyone should consider once they have reached a certain size. When the daily tasks are overwhelming and you are noticing that things are falling through the cracks or forgotten, then it's time to hire someone either as an operations manager or a program manager to track progress on your efforts.
Next move: Expanding our database system by adding new modules to it.
GO Direct Merchant Services Inc.
There could be lots of different answers here, but I keep coming back to one main underlying theme: hiring the right people. In addition to finding and hiring the right account executives, our best move this past year has been the hiring of GO Direct District Manager Thomas J. Schuyleman.
Why was it a good move? For us the district manager is the "wearer of many hats" (just ask Tom). And it requires a person with a varied skill set.
Some of the attributes we were looking for was a manager who has been in the trenches as a merchant level salesperson, someone who has bank experience, someone who can interface with account executives as easily as with our merchants, someone who has strong knowledge of pricing, someone who can "think on his or her feet" and be a dedicated worker. Those are just a few of the qualities that Tom has used to create outstanding initial growth for GO Direct.
Did it require you to take risks? For sure. The reality is hiring is not a perfect science. Sometimes you go out on a limb and take some chances but, of course, try to minimize your exposure as best as possible. Our district manager's job is one with high visibility.
If so, what were they? On many days our district manger is the face of the corporation. If he has a bad day - we all do. If a hire of this magnitude does not meet your expectations, or worse, and more harm than good ensues, said new hire may be hard to recover from. You are now back to ground zero for hiring, plus you must deal with the new reality of damage control.
Is it something other companies could duplicate or something only your organization could do? As I previously mentioned, hiring is not a perfect science. Look for your "Tom." Do your best due diligence, and roll the dice.
What do you think your next smart move is going to be? A running joke we have at GO Direct is, how can we clone Tom?
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