I recently did a three part posting about hiring the first employee - taking the first major plunge into business ownership. Welcome to being the boss. And my suggestion for that first employee was that you may well need someone very similar to yourself. That will change as time goes on and the business grows. Too many of me around would be wholly unbearable.

Over the years here at Big Bang we have hired people from several different backgrounds and experience levels. Some were IT people, some were, and are still, as far from IT as you can imagine. The key issue for us though, is personality. A small business works like a family, except that you get to pick who's in it.

Rarely have we hired someone and had them do the exact job they were initially interviewing for. It's the advantage, or challenge, of a small business. The Boss isn't the only one that has to wear multiple hats.

Our interview and hiring processes have changed and evolved over time. We still ask the occasional odd question like, "Who is your favorite comedian?," or "What football team do you support?" (We hired a Bears fan here in Packer country. I'm still baffled by that!) However, there is one question that I will continue to ask that truly throws most candidates:

What do you want to make?

I let people know that I don't expect an immediate answer - they can think about it. Get back to me later. And, of course, we have a range in mind that we feel is reasonable based on the position and experience of the person.

I don't ask this question to make people uncomfortable or to put them on the spot. Instead, I ask it because it gives me great insight into how they think, what their motivations are, and how they value themselves. It is also an opportunity for them to take a look at themselves, and a little introspection goes a long way.

Here's how it plays out, (and I normally explain this to them after they get back to me with a number.) First off, I get to see their critical thinking skills in action. When someone gets back to me with a salary request, I then get to ask them, "Why?"

Interestingly, most people underbid themselves. Perhaps it's because we are a small company, so they expect less pay. Perhaps they have heard about our benefits, such as our open vacation policy including a vacation stipend. Perhaps they are looking to leave their existing job and consequently willing to take a pay cut. Regardless, it gives me insight. Also, in many cases, it has worked as a great morale boost, because if I can offer more than they asked for, all the better!

Perhaps they did research on the industry, and found that the average position in Milwaukee pays $X.00, and so they used that. Maybe they did that research, and feel that their experience is more or less than what the position calls for. It gives them the opportunity to explain their position, and me the opportunity to understand how they value themselves.

I've also been told, "I currently make $X.00, but I can come on for $Y.00," which is generally lower. Here I get to delve into whether it is a career change the person is looking for, or perhaps a location change instead? Why the willingness to take a pay cut?

One of my favorites was one of our temporary/contract employees, who wanted to split the difference between what he was getting from the temp company and what Big Bang was paying the temp company! Awesome answer, and justifiable. Of course, I then spent time with him explaining exactly what it costs Big Bang for an employee - employer paid Social Security and Medicare, Unemployment, Insurance - Health, Life, and Disability, vacation time, etc. Sadly, this is rarely explained to employees in detail. (Did you know when the government cut the Social Security tax employees pay from 6% to 4%, but they didn't change the employer contribution? The business still pays 6% on top of the employee portion. Did you even know that your employer pays into Social Security? Many people don't!)

We give everyone the numbers for their benefits so they understand their true cost. An employee costs about 50% above their salary, on average. Once we walked through that math, he accepted a salary less than requested, and has worked out incredibly well for us. I hope he feels the same.

The point is this. As an employer, I will establish what I feel comfortable paying someone, but that number has changed based on what they bring to the table. Establishing a specific salary for a small business employee doesn't work for me because depending on the person, I may change the job. Establish the salary up front, and you will only get people who are willing to work for that number. Instead, I like to get the best people I can find, and help adjust the job to them.

In principle, I have wanted to develop a referral program for our customers for years. The idea is solid and works for a variety of businesses – establish great relationships with great customers and convert them to loyal advocates who refer new customers, right?

The relationship building we excel at. The great product for great customers is dialed in. We even have loyal advocates and referrers and customers that take our product with them as they change jobs. But incenting other current customers to refer us to their colleagues and friends just won’t materialize and here’s why:

I have wracked my brain trying to figure out with what, or how to reward our current customers to refer new business. I have spoken with several of our most loyal customers to find out what “things” I might give them to make it worth their while to spread the word, but the answers are always the same.

What are my options?

Gifts – If I was so inclined to offer monetary or “schwag” gifts, which I am not for several reasons, most of our clients are unable to accept them. I feel gifts or rewards for purchasing cheapen the integrity of a product that stands on its effectiveness and ability to make their lives easier. In addition, the quality of such a gift would have to carry significant enough value to not insult the recipient which would then cut into our profit margin. We give away cheeky T-shirts at our trade shows for free, or sometimes as a thank you for a testimonial or case study, not as an incentive.

Discounts – I think that discounting our product as an incentive for a referral is not a good idea. First, aside from looking good to his/her boss, a discount on the product for which the referrer has already obtained budget dollars means very little. Second, the risk of the new reference asking the referrer the cost of the product and the referrer quoting the discounted license price is not worth the confusion. And Finally, and most importantly, we have a great product that sells very well at its current competitive price.

I would rather our marketing and sales team work on the communication with our existing customers to determine additional leads. We certainly track referrals, but I don’t see an effective way to encourage future referrals for our company.

Would love it if someone would disagree so I had something to use.

There are so many wonderful things about working for yourself. Not having a boss. Scheduling your own time. The freedom and flexibility. The cash! But as a friend would say, "Ah, horseshit!"

Please don't get me wrong. The potential is there for all those things, but the perception associated with being a business owner can be, shall we say, highly entertaining. Depending on the status of the business - independent contractor or small business - the reality and perception not only change over time, but can be vastly different depending on who is doing the looking.

My personal favorite perception of a small business owner is that life must be grand because I don't have a boss! To an extent that's true, and I wholeheartedly admit that I would make a terrible employee after ten years of independence. However, the truth of the situation is that every customer is essentially my boss. Especially when first starting out, or working independently, the customer is the ultimate boss and arguably more difficult to work for than in a normal employee-employer relationship. Our customers demand more of us as contractors or vendors than they ever would of their own employees. Think about it this way - you will happily try to get better terms from a vendor or contractor. Do you ever negotiate with an employee? Not a chance! So, as business owners, our bosses (customers) are always demanding the most while trying to pay the least. Great fun!

Now, Big Bang is in a comfortable spot for me as the owner, because our customers love our product and tend to be very reasonable. Add to that a growing group of awesome employees, and I do currently live the life of not having a boss, wife excepted. But, if Big Bang continues to grow and eventually considers something like investors or a public offering, suddenly the board of directors, investors, and shareholders become my boss. Here's to growing organically, and never having to deal with those headaches!

And what about the freedom and flexibility? I can make my own schedule, set the path for the business, golf when I want to! Again, that has become a bit more of my reality as the business has grown and I am incredibly grateful for that, but for the first several years that was certainly not the case. Technology deals aren't made on the golf course in my reality. Might I golf with my banker once a year? Sure. But as the owner, you are continually pulled by employees, customers, product development, outside interests, etc. I can't tell you how many times I have received a call to play hooky because of the perception that I've obviously got the freedom to do anything at any time. When independent, perhaps I could put work off until "after hours" or the weekend. If you have a family or deadlines though, that may not be an option. In my opinion, this is the greatest misperception people have of small business owners. Many, perhaps even most, small business owners put in far more time than anyone ever knows.

The most difficult perception to deal with though is the one associated with the financial state of the business, and the perception can go either way. For example. my grandfather is perpetually worried about me as we grow. But at 83 years old, and as someone that worked for one company all his life, when he sees us buying property and an office for Big Bang and doing renovations and hiring employees, he sees the risks I'm taking. For him, those risks are huge, arguably overwhelming. The numbers are bigger than he can fathom. So I do what I can to explain the business and the money and the risks to him so he's comfortable with what we do here. He worries and I appreciate it. It reminds me to evaluate what we're doing from a different perspective.

The flip side of that coin is the perception of financial success. Of course, that term means something different to everyone and changes over time - a topic for another time. But it is amazing how people and organizations perceive you and the business as it prospers and gains traction. The best example I can offer is from when Big Bang was awarded a Future 50 award for the Milwaukee Metro area a couple years ago. We were subsequently bombarded by people and organizations wanting us to buy virtually everything and donate to every cause under the sun. I have actually been yelled at and chastised for not being willing to donate to a cause that I have no knowledge of or connection to, by random phone solicitors! It still amazes me.

Whether an independent or an owner, the perception of you and your business will vary dramatically depending on the viewer. The perception will likely not match with reality, and that can be incredibly difficult to deal with because it is very personal. Remember though, most people have no experience as a business owner. My suggestion is to help teach them what you can.

When I set out to write a blog post, I diligently do a bit of research to see what is being discussed about my current post topic. Largely to gain any insights on current ideas, but also to make sure I’m not unintentionally lifting any content, or coming across as foolish. When researching for this post I was really quite surprised at the lack of comprehensive coverage of ‘how to define an ideal customer’.

I define a customer as one who has purchased something from Big Bang and everything that goes along with said purchase. A customer was at one point a prospect/lead, but all my prospects are certainly not customers.

So I was quite surprised when almost every item I found when searching for ‘defining ideal customer’ dealt exclusively with defining an ideal prospect.

I think this is woefully shortsighted. As essential as defining a target market/demographic/prospect is to gaining a customer, the buying habits, satisfaction with product, and most importantly, customer loyalty, are necessary to defining an ideal customer.

In order to successfully do this, Big Bang needs to understand not just what caused a prospect to become a customer of our product, but how that product improved their image cloning and deployment program, what features can we add to make it even more efficient, how their environment changed over time, how effective was support, why they did, or did not renew after their first year, how long they have been a customer, etc.

If I don’t understand these essential qualities of a customer, how can I possible define one, let alone make the necessary adjustments in order to build a lasting relationship?

After all, if I can continue with our current software renewal rate of 92% with each new customer, the long-term revenue implications are obvious compared to a single purchase with no renewal.

Target prospect + purchase + customer satisfaction/duration = Ideal Customer