Small Business Advice (2 of …)

To continue the series of advice for small businesses seeking help in order to get to the next step, I have some additional history that might come in handy if a Naive American, owner of a small business, is about to experiences similar events.  It is always best to put all in writing before an attempt is made to bring in new partners or investors.  You know the old saying “Hind site is always 20 / 20″.

In the real life example I am about to describe, the company in question had in place a phone system.  The system included a main switchboard installed in the reception area and matching phones distributed all through the office.  A set of landlines came into the office.  The lines would be used and automatically routed as needed until all lines were in use.  At that point, the system would inform additional callers that all lines were busy offering the caller to leave a message for the person being called.  All in all a nice and simple phone system.

A receptionist would man the switchboard logging all received calls.  Initially it was done using stationary forms, but with time, all the caller information was entered into a Customer Relationship Management (CRM) system.  This provided a reference on who was calling, allowed to screen callers, and eliminated the need for the people receiving calls to collect information about the caller.  As a side benefit, customers through time would develop a relationship with the receptionist, which helped improve the bottom line.

The business managed its electronic mail by an in-house Microsoft Exchange Server system part of a small business package purchased form Microsoft.  Minimum overhead was required to manage it by a development engineer.  The company received and sent e-mail almost instantly.  On average, about once a year, an issue with the Internet connection would cause a temporary shortage.  The company never experienced an issue with Exchange Server.

All was well until the new partners decided to outsource the receptionist job to an answering service and move the e-mail for the company to a service provider.  The reasons for the changes were quite interesting and perhaps somewhat amusing.

In order to save the close to minimum wage salary of the receptionist, an answering service would provide customer coverage around the clock.  The company in question is based in Central Time Zone, quite convenient for callers in the East and West coasts.  Customer knew when to call during regular business hours.  Keep in mind that if a new customer would call off hours, the best that the answering service could do is take a message and possibly forward the phone.  One of the advantages discussed by the new partners was that the answering service could receive calls 24 x 7.  The company had never sold a 24 x 7 service support contract.  With time it was found that the answering service itself did not offer such service.  It was just in their expansion plans.  The answering service was somewhat less expensive than having a receptionist in the front desk.  On the other hand, they could not ask the answering service to help you preparing some packets to be sent to customers or help with visitors at the site.

The company kept the same number of phone lines.  The lines were hardwired to each phone.  These direct lines would be forwarded to the answering service as needed.  Programming the phones and making the changes was not done for free.  As changes occurred in the company, some offices did not have a phone line.  Employees had to use their cell phones, which could not be easily transferred or conferenced in with the landlines.

Most customers did not like the answering service.  Obviously they could not answer any questions regarding the company or products.  It was obvious to customers that calls were not being answered properly.  In many occasions the caller would be told that the person they were calling was not available when that was not the case.  Overall, the answering service proved it was not working a couple months after the switch.  So why was this done and kept?  Will get to that in a few paragraphs.

There were also changes made to the e-mail system.  The issues were as bad or worse than the ones with the phone system.  Several times during the day one would send a message or set of messages and they would sit in the outbox for hours or days.  One of the approaches that would work some times was to restart Outlook.  Very often messages would be received out of sequence.  Sometimes a message would come in the following day.  Keep in mind that the company had Microsoft Exchange Server and outsourcing e-mail had a monetary cost associated with it.  Issues with the capacity of mailboxes were common.  So why was this done and kept?

It was obvious that quality with the new approaches was not present.  Costs were at least the same if not higher.  The new reason given by the new partners was that procedures and processes were needed to grow the company.  What was previously in place would not scale.  Not sure what the logic behind such claims was.  When questioned, a new idea gradually evolved.  By eliminating anyone that could potentially access the phone and e-mail systems, the company would be protected.  The partners mentioned some obscure case in which an insider leaked some information before an acquisition and the Securities and Exchange Commission (SEC) (www.sec.gov) came after the Chief Executive Officer (CEO).  By this time owners and employees were wearing high boots (catch my drift).

All the changes occurred because the new partners did not want any record of what they were doing or what they were not doing for the company.  They did not want the original owners to find out who was calling and for what reason.  With time, the original owners found out that the office-building manager was instructed by the new CEO not to discuss business issues with the original owners.  The same held true for the company that managed health insurance for the business (talk about mutual trust).

This is another example of events and schemes to be aware of in order to protect the small business from questionable actions from partners and investors.  The best way is to get things in writing up front and retain and if needed regain full control if the partners or invertors do not deliver on their promises within some reasonable time frame.  It is not easy for Naive Americans to start and manage successful small businesses.  Do not let empty promises guide your decisions.