I ran accross an excellent slide show from on Inc.com called 10 Things Every Entrepreneur Needs to Know.

My favorite is #1: “Numbers run a business. If you don’t know how ro read them, you are flying blind.”

This is so true for many small busniness owners. It is amazing to me at how few small business owners actually review their numbers often enough so that they may use them to make postive impact on their business.

I do not particularly agree with #6, “You have no friends in business, only associates.” Especially after reading the additional dialogue they put at the bottom. Any one who has ever read any of Jeffrey Gitomer’s books or one of his audio seminars knows this can not be further from the truth. Successful business is built on relationships and the cornerstone of any relationship is friendship. If you don’t make friends with your customers, do not expect them to hang around for the long term.

Seth Godin wrote a great post about his terrible experience with Verizon during his current move. To those unfamiliar with Seth Godin, he is a bestselling author of many business and marketing books, including Meatball Sundae, The Purple Cow, and most recently, The Dip. Apparantly (to no surprise), Verizon’s customer service sucks. I find that this is not just the case with Verizon (or other large phone companies) but also with many large companies, especially banks.

Why is it that these companies have such large marketing budgets yet seem to cut corners and try to make the expense of servicing their exisiting customers so small? It is apparant that many of these companies are viewing the cost of servicing these customers as an expense – not as an investment.

If they did not view these cost as expenses, why would they farm my call out to someone in India who speaks broken English, can not understand my request, and does not have any authority to do anything about it when they do? The fact is that many of these large companies are viewing the cost of customer service as an expense and are trying to reduce it to fatten the bottom line. What ends up happening is that customers do not get the exceptional service that they deserve, and quite often go elsewhere?

An example of this is banking. I do the majority of all of my banking at Clover Community Bank. It is a small local bank that can do 95% of the stuff that a big national bank can and offers fantastic customer service. The tellers and managers actually know who you are when you go into the bank. You are not just another person that needs to be serviced. They seem to get it. They are making an investment in my customer service experience – and are a big reason I am so loyal to them. Why would I go elsewhere?

If you own a small business, how do you treat customer service? Investment or expense? Do you invest enough in your employees to make sure that they are providing spectacular service? This can obviously relate to the wages that you are paying them, but also the training and the tools they use to service your customers.

If you have a plumbing business, how do you customers get in touch with you? What happens during “off” hours? I know several times I have needed plumbers in the past, and been unable to get a machine to leave me a message. I even got a hateful sounding woman one time that told me I would have to call back because he wasn’t there. Why is he spending money in the Yellow Pages if he has no acceptable means to receive the calls when they come in.

I recall an upholstery shop nearby that I attempted to call for days on end – no one answered and there was no machine. This was odd considering their advertisements were all over the place advertising the phone number. While an answering machine may not be the optimum device to use to achieve spectacular service, it would have been a major improvement for this company.

My point is that from a small business perspective, there are often many little and inexpensive things that we can do to dramatically increase the level of service our customers receive. Let me know your thoughts or examples of how small businesses may be improved.

Can your business survive a $200,000 embezzlement or other fraud scheme? What is that scheme was spread out over 10 or 15 years? Would you notice?

Denise, a $35K a year bookkeeper, for a small trucking company in Alabama is facing several years in prison for embezzling over $550,000 from the company. What did Denise do with all this money? She spent it on cosmetic surgery, new cars, luxury vacations, and jewelry. She was living the high life.

I am sure most of us remember the name Gus Gorman. He was the character played by Richard Pryor in Superman III. How did he get caught? Well, he was stupid. He showed up to work in a new Ferrari. Unfortunately, most fraudsters do not give themselves up like this and many employers may not even notice.

Denise got caught not because of the huge sums of money that she was wiring out of the company account into her own, but because she changed her annual salary from $35K to $38K. When the owner of the company noticed this small discrepancy, it was the beginning of an investigation that kept growing and growing.

Like this trucking Company, most small business lack fundamental controls to prevent and detect fraud. Denise was responsible for all of the accounting and bookkeeping functions except the physical signing of checks. Denise would periodically wire funds from the companies account to her own account. When the bank statements came, she would reconcile them, burying the wire transfers into an expense account and then destroying the evidence – the bank statements. Since the owner did not review the bank statement – he was none the wiser.

What are some steps that you can take to prevent fraud in your business?

1) Education: Educate yourself and your employees. You can do this in house or have a fraud specialist come in and provide the training for you.
2) Internal Control Review: It is critical that all businesses have the proper internal controls relative to their size. Depending upon the size of your company, you may not be able to segregate all of the duties, but you should segregate as much as possible.
3) Cash Reviews/Reconciliations: It is important that cash is reviewed and bank statements are reconciled by a party that is not involved in the other aspects of the accounting process.
4) Pre-screen Employees: Because of the perceived cost and time involved, many small businesses do not properly screen employees prior to hiring them. This could include checking work references, criminal records, credit reports, drug screening or other screening procedures.
5) Balance Trust properly. Ronald Reagan called it, “Trust, But Verify.” Mark Twain said, “Trust everybody, but make sure you cut the cards.”
6) Seek Professional Assistance. As your company grows make sure that you setup the proper controls to safeguard yourself. If you are unsure about how to do this, consult with a professional.

There are two things that must exist for an employee to be driven to commit fraud – motive and opportunity. As business owners, we must set up a proper system of internal controls to limit the opportunity as much as possible.

Motive is difficult to set controls around. According to legend, there was a loyal bookkeeper that has been with a Company a number of years. He requested a $100 per month raise and it was denied. The bookkeeper methodically stole from the Company for the next 20 years, until he retired. His replacement discovered an amazing fact. The retired bookkeeper has pilfered exactly $100 a month.

Did you ever wonder how the trainers at SeaWorld are able to get the oceans top predator to perform with such excitement and enthusiasm? How do they get the whales to swim and jump on cue in one of the most sensational shows ever?

Whale Done! explores the training programs at SeaWorld and uses modern management theory to relate those same techniques into our relationships with other people. The SeaWorld trainers work to catch the whales doing things right and reward them…thus making it desirable for the whales to continue to do things right.

In our lives, we typically manage by what the authors call the “GOTcha” approach. Do your employees only hear from you when you catch them doing something wrong? Do you make a conscious effort to catch the people in your life “doing things right” and reward them for it? Far too often, I catch myself using the GOTcha approach rather than the “Whale Done!” approach.

It was also interesting that much like people, every whale preferred different types of reward. Some of the whales liked to be rubbed on the head while some preferred completely different types of affection or to be played with. Humans are similar in that some employees just like to be recognized for their efforts, some may like some extra time off of work, or some may be simply motivated by money. The point is that everyone is different and it is important to find out what motivates the people in your life.

Since the book was first published in 2002, many companies have used the Whale Done! philosophy to establish recognition programs for employees. One such company is Bob Parks Realty in Smyrna, Tennessee. At this firm, winners of the award are chosen by the agents in all of their offices who vote on the employee who is the most helpful to others and has the most positive attitude. You can read more about this award and congratulate Kathy Tyson, this year’s winner on her blog.

Whale Done! is a great book for anyone who has to deal with other people on a daily basis – which is just about everyone. The lessons that are learned will help the reader to better manage their relationships with employees, co-workers, friends, spouses, or children. I especially recommend this book to small business owners who need to be able to leverage the power of positive relationships to maximize the effectiveness of their companies.

The book was co-written by Ken Blanchard, who has written multiple best sellers in the area of management and leadership. His co-authors also included top SeaWorld trainers Thad Lacinak and Chuch Tompkins. The 128-page parable is especially a quick and easy read. I think most readers will find the “story” enjoyable in comparison to many of the dry books out there on management theory.