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        Knowledge for the CommonWealth

Communication in the Small Business World:
"Perception is Reality"

Farm Management Update, December 1996 - January 1997

By Sarah M. Runkle, Dixie W. Reaves, and David M. Kohl of the Department of Agricultural and Applied Economics, Virginia Tech

Effective communication in the world of small business involves "having the right information, forming it into a clear message, directing it to the correct audience at the right time, determining if the message was received, and evaluating whether it generated the expected action" (U. S. Department of Agriculture, p. 48). In today's setting, a small business owner must effectively communicate with both employees and the general public. How employees and the public perceive the communications is directly related to employee performance and the public's purchase of goods and services. Thus, perception becomes reality, and reality is the success or failure of the small business.

This article will focus on three small business owners/operators and how their effective communication skills have made them a success in the world of small business. The first entrepreneur owns an ice cream and yogurt franchise. He is a 1994 graduate of the Business School at Virginia Tech. The second small business person owns and operates a greenhouse that, according to him, offers a "complete line of retail and wholesale greenhouse plants, nursery stock, and plant accessories." He received both his undergraduate degree in Agricultural Education and graduate degree in Horticulture from Virginia Tech. The final entrepreneurs operate a non-traditional livestock farm. The farm features a breeding operation and a general store that carries meat products and gifts. Additionally, the farm hosts and sponsors a community-wide auction and festival each year.

The entrepreneurs discussed the types of communication skills they found to be most effective for their employees, their present and potential customers, and themselves.

Make the customer feel important: "People tend to do business with people they have something in common with."

"Don't forget what makes your business work--the customers," said the franchise owner. He makes every effort to make every customer feel important by getting to know them. He acknowledged that this is fairly easy to do when owning a small business in a small town. However, with the tactics he uses, a big or small business in any location could charm its customers.

He makes conversation and small talk to make the customers feel at home in the store.

  1. He offers customers samples of his yogurt and ice cream selections to aid in their decision.

  2. He focuses on remembering regular customers' "usual" orders to let the customers know that their business is greatly appreciated.

Thus, the franchise owner's efforts to make each customer feel appreciated make his small business successful.

Be honest in all your business dealings: "Trust once violated negates the relationship."

"Be honest to everyone you deal with" is one of the "do's" of small business according to the non-traditional livestock farm operators. Honesty is good customer service. The operators are honest about each aspect of their business with each customer they encounter, whether it be a member of the general public or an animal grower or breeder. They are very candid about the high price of the meat, the care that must be taken when cooking the meat, and its healthy attributes. In fact, they teach people how to cook the meat and provide them with an instructional brochure. Additionally, they are up-front and honest about the condition of their animals, proved by health certificates being made available. In any industry, honesty is very important to keep customers coming back. And with the operators' "be honest about your product, no matter how bad it is" philosophy, meat customers and breeders will continue to be drawn to the farm.

Go the extra mile: "The customer is looking for a problem solver."

In today's society, it is the entrepreneur's job to "sell his service and give away his product," which can be accomplished by "going the extra mile."

At the greenhouse, the owner and his staff go the extra mile each day. At the close of each sale, consumers are reminded of the proper placement, planting, soil, temperature, and water requirements of each plant they buy. Additionally, each customer is given a guarantee policy. The policy guarantees the plant for up to one year, provided that the plant receives proper treatment. In the event of a problem, the owner has another fool-proof plan. If a customer has a complaint about a plant, he asks problem-solving questions to discern the problem. Usually 80 percent of all customers leave with their problems solved and are satisfied. The other 20 percent leave somewhat satisfied because he has "solved" their problems by giving them another plant. Incidentally, 96 percent of all customers with complaints remain loyal customers if their complaints are dealt with in a professional and timely manner.

The non-traditional livestock farm is also well known for going the extra mile. The operators guarantee that 100 percent of their female animals are pregnant. If they are not, the customer simply sends the female back and the operators will replace her. Additionally, they encourage people who buy from them to call if a problem arises. They are very willing to help and offer advice. Incidentally, customers are welcome to call 24 hours a day. Thus, giving away the product and selling the service really contributes to the success and reputation of any small business. It pays to go the extra mile.

Teach and praise in public, correct in private: "Makes for good employee relations."

Communication between the small business owner and his/her employees is very crucial to the success of the business. If employees perceive their employers' words and actions as derogatory, their self-esteem and job performance are likely to suffer. Fortunately, there are small business owners like the ice cream franchise and greenhouse operators who have developed tactics to avoid such miscommunications.

The franchise owner makes a habit of praising and putting confidence in his employees. Praises such as "good job" and incentives such as added responsibilities boost his employees' self-esteem and job performance: adding up to a successful small business. The greenhouse owner teaches in public and corrects in private. If an employee at the greenhouse is unable to handle a situation with a customer, the owner is there to lend a helping hand. In the presence of the customer, he talks and teaches the employee through the situation. After the customer leaves, he privately discusses the situation with the employee again, giving him/her pointers on how to handle it differently the next time.

Work side-by-side with employees: "Manage by walking around."

Relating to and understanding employees' daily tasks are another part of being a good communicator. One way to relate is working side-by-side with employees. A boss who works one day each month on the "front line" gets a feel for what is going on from the customer/employee perspective. The franchise owner does just that. By working along side employees, the owner has gained respect from his employees. Additionally, he gets to know what his employees do and do not do well by working so closely with them. As a result, he can delegate responsibility without feeling the need to be constantly looking over the employee's shoulders. Additional responsibility leads to employee self confidence.

The greenhouse owner practices the same philosophy. He works with his employees in the day-to-day work. In doing so, he is available to teach and share his knowledge while also learning about his employees' strengths and weaknesses. Thus, relating to and understanding employees is a powerful means of communication.

Don't wait for the public to come to you, YOU go to them: "Proactive marketing."

Small business owners must constantly keep their product or service in the public eye. At the greenhouse, that is easy: the owner jumps at the opportunity to educate the public about his products and services. The following are just a few of the groups that he has and will continue to speak to: local elementary and high school students, Master Gardeners, Rotary, beautification groups, Neighborhood Watch groups, and Crime Watch groups. According to him, these speaking engagements facilitate word-of -mouth promotion and open up new markets for his products and services. In other words, they directly contribute to his success.

Effective advertising and promotion: "Neighbors telling neighbors."

"Advertising can be defined as the paid communication of a product or business, whereas promotion is a free form of communication" (Marketing for Small Business The ABC's of Building a Competitive Edge). Both forms of communication can be used effectively in the small business world. In fact, 70 percent of all marketing and selling is neighbors telling neighbors.

In the greenhouse owner's case, his effective advertising and service has lent itself to word-of-mouth promotion of his business. His most effective means of advertising is the local newspaper, which enables him to focus on his target market (35 to 50 years of age, second-time homeowners) and invest in the community at the same time. Along with advertising in the local paper, the owner has his own radio talk show. The talk show not only encourages the customers to come out to the greenhouse, it reassures them of the friendly, helpful service they will receive when they get there. And, when the customers get to the greenhouse, service is what they get. The greenhouse prides itself on having well-educated employees who go the extra mile: a method which results in positive word-of-mouth promotion. The owner relies heavily on word-of-mouth promotion. "After all," he says, "if the people are not talking about you, you are in trouble."

The non-traditional livestock producers also like people taking an interest in and talking about them. That is why the owners carry handouts and brochures about their business everywhere they go. Their philosophy about their product is to "keep it in front of people." As a result of this belief, the operators utilize a whole host of media. Their advertising media include trade magazines, billboards, mailing lists, local country radio stations, and brochures. This advertising intensifies as their specialized auction and festival draws near: radio stations give away passes to the tenth caller; brochures are printed and sent to previous festival-goers; and posters are posted throughout the area.

Networking: "They just talk to each other."

Contacts are indispensable in the world of small business. Not only do they serve as a source of new information and ideas, they can be a source of new business. When asked if he used networking, the greenhouse owner enthusiastically responded, "YES!" He cited three specific reasons why he used it. It allows him to stay up-to-date on industry happenings by focusing on what is new in the industry and how it works. He keeps his business costs and customer prices low through contacts. Networking at conferences, trade shows, and speaking events enables him to meet new growers (possible wholesale customers) and potential retail customers. Thus, utilizing contacts and networking leads to success.

From these various communication strategies, the franchise owner, greenhouse owner, and non-traditional livestock farm operators have made successes out of their respective small businesses. By continuing to utilize common, effective communication skills with both their employees and their customers, they will continue to be successful.

U.S. Department of Agriculture. Cooperative Communications. Agricultural Cooperative Service. Report 1, Sect. 11. Washington, D.C.: 1988.

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