One of the most expensive costs companies have to face is employee turnover. Not only is it expensive to replace a departing employee, but it also affects the morale of the rest of the team. These are seven ways you can keep your employees happy.

Understand It’s Not Just About Money
Money is an important factor; you can’t pay someone 50% of their market value and expect them to be happy. But, money is not everything. People want to learn, be part of something bigger than themselves and they want recognition. If your employees are unhappy and you think paying them more will solve the problem, think again.

Learn to Say “Thank You”
A simple “thank you” can go a long way. Call your best employees and thank them for being so good at what they do. Show them how their work has contributed to the company achievements and thank them for it.

Use Positive Talk
Instead of saying, “This report is wrong”, try saying, “Thank you for finishing this report so fast. Let me show you how you can make it better next time.” Do you see the difference? You’re focusing on how it can be done better, not how wrong it is now.

Make Congratulations Public and Reprimands Private
Have you ever been recognized by your boss in a room full of people and everyone started applauding your performance? It feels great, doesn’t it? Do the same thing for your employees.

If they screw up, call them into your office, tell them what they did wrong and how they can do it better next time. There’s no need to embarrass them in front of others.

Pay Attention
Get out of your own little world and pay attention to the people around you. If someone looks depressed, ask her what’s going on and how you can help. Care about your people and they’ll care about you.

Be Flexible
If someone is more productive working from their home, let them. If someone wants to come in and leave an hour later, let them. Different people achieve their maximum potential in different conditions.

Make Them Feel Part of Your Project
Share your company goals with your team. Explain to them how what they do fits into the plan. Show them how their work impacts the bottom line. Someone who has to fill out spreadsheets eight hours a day for four months will be a lot more motivated if he can see that those spreadsheets are part of a presentation that will get the company a few million dollars in external financing.

Allow Yourself to Be Vulnerable
Some bosses feel that they need to yell all the time and be mean so other people respect them. They feel that if they show themselves as vulnerable, they’ll lose the respect of their subordinates. This isn’t true. When you’re going through a tough moment, talk to your employees and let them know what’s happening. They’ll be able to support you, they might even help you and they’ll appreciate your honesty.

Lead with the Example
Do you ask your employees not to abuse the company credit card and that’s exactly what you do? Do you ask them not to be late and you’re late yourself? Your employees are always watching you; show them that you’re a great leader and put your actions where your mouth is.

Help Them
Most managers think, “What can my employees do for me?” I encourage you to think, “What can I do for my employees?” Take them out for lunch and ask them about their goals. Maybe they want to learn a business skill and you can mentor them. Maybe they’re trying to get into school and you can write a recommendation letter for them. Ask, listen and help.

Google Wave and Google Buzz are two new tools that Google launched.

Google Wave
Google Wave is a real-time communication and collaboration tool that will change the way we do business very soon. Right now you need an invitation to start using the tool but you can request one from here.

This video will show you what you can do with Google Wave.

Google Buzz
Google Buzz is a new social networking “site” that is integrated within Gmail. You can share updates, videos, photos and links. Google Buzz integrates with Twitter, Picassa, Flickr and Google Reader. This is a great short video that will show you everything you need to know about Google Buzz.

Do you work from home? These tips will make your days more productive.

Start Each Day with a Plan
I know early in the morning what I’ll be working on that day. A lot of people start by checking their email and then do whatever comes to their minds next. You should spend at least 10 minutes every day to answer yourself this question, “what is the ONE thing I need to get done today that will put me closer to my goal?” That’s your top priority; work on it first.

Set Up a Functional Workspace

• You need your own room. You can’t work in the kitchen with the kids running around.
• Have all the elements you need at hand. You shouldn’t have to stand up to pick up a notepad or go to the other room to print a document.
• You should work in a pleasant environment. Make sure it’s noise-free, the temperature is adequate, your stuff is organized and you have a glass of water next to you.

Create a Schedule and Stick to It
This is extremely hard to do; especially if you own your own business. But, mastering this skill will make you and your family happier. Decide what your work hours will be and stick to your schedule. I usually carry a notebook with me and if I get an idea outside business hours, I write it down and do it the next day.

Learn to Say No
If your spouse wants you to pick up the kids from soccer because “you are home”, remind him or her that you are working, not “relaxing at home”. Learn to say no.

Set Small Goals and Don’t Take Breaks Until You Accomplish Them
I like working in chunks of one hour each. If I need to email 100 people and each email takes me five minutes, then I know that I can email 12 people per hour, so I make that my goal and I don’t do anything else until I’m done. I don’t check my email, answer the phone or cook myself lunch. When I’m done, I take a break and do whatever else I need to do. If an idea comes to my mind while I’m working on the 12 emails, I write it down for later and continue working on the emails.

Take Care of Yourself
Just because you work from home doesn’t mean that you shouldn’t shave, shower, work out or eat well. Looking good makes you feel good and when you feel good you are more successful.

Analyze Each Day
This exercise will only take you five minutes and it’ll make you much more effective. Whenever you feel you haven’t had a very productive day, write down everything you’ve done that day. Figure out what the biggest time drainers were and how you can stop them from happening again. Don’t be too hard on yourself; working from home isn’t easy. Just learn from your mistakes and move on.

Who said you need a lot of money to start a business? You don’t! These are some tricks I learned that allowed me to start eight businesses with less than $1,000 each.

You Don’t Need Everything from Day One

• You don’t need to incorporate from day one.
• You don’t need an office.
• You don’t need a fax machine, fancy business cards or that desk you really like.

Don’t feel like your business has to look like a “real business” from day one. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.

Have Contractors, not Employees
Having contractors has many advantages:

• You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
• They don’t need a desk or office space.
• When work is slow, they get paid less. When there’s a lot of work, they make more money. Try to do that with an employee.

Pay for Results
It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals.

Use Relationship Marketing to Your Advantage
This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?

1. Find the people that have access to your audience.
2. Offer them a commission for referring business to you.
3. Let them market your company at no risk to you.

Let’s say you offer city tours in Paris. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to millions of travelers and that’s your target audience. Pay front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.

Be Smart About Your Inventory
These are two great pieces of advice I learned from my mentor:

• Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
• Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.

Do As Much as You Can Yourself
Build your own website, design your own business cards and write your own marketing copy. This won’t look as great as work done by professionals, but it’ll free and fast. Once you’ve sold a few thousand dollars worth of products, you can always re-do your website, business cards and marketing copy using experts.

Barter as Much as You Can
Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.

Leverage Other People’s Businesses
You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.

Good Enough is Good Enough
There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t work with a web-based application that is $5 a month because it doesn’t have all the features they want. They can’t stand using a template for a website; they want a custom-made site. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.

Bonus Tip: Don’t Quit Your Job Yet!
Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there. Several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.

This is the fifth part of the “Is Your Business Making These 10 Mistakes?” series. Part 1 can be found here, Part 2 is here, Part 3 is here and Part 4 is here.

Plan the Next Six Months, Not the Next Five Years
I’m sure a lot of people will disagree with me on this one, but I don’t recommend spending a lot of time planning your long term goals, because things change too fast and too often. This is what I do for myself and it works out great for me.

1. I think of where I want to be in six months.
2. I reverse-engineer the process to come up with an action plan. For example, if I want to launch a new line of products in six months, I write down all the milestones I need to accomplish and their deadlines.
3. I take the first milestone and break it down into actionable steps. “Find manufacturers” isn’t an actionable step because it isn’t something you can do without having to break it down into smaller pieces. “Search Google for ‘deodorant manufacturers’” is an actionable step because it’s something very specific I can do.
4. I plan each week and decide what I need to do this week to be on schedule for my plan.
5. I plan each day.
6. Every day I get the actionable steps done and I move on with my plan.
7. I adjust the plan of action every week because things change every day. That’s why you don’t want to sit down and plan the next five years.

It’s All About the Back-End
A front-end offer is the first product a customer buys from you. Back-end is everything else you sell them. One of the most valuable lessons I learned through the years is that the money is in the back-end. People that bought from you in the past are a lot more likely to buy from you more often and buy more expensive products (assuming their first experience with you was great).

Ninety-five percent of all businesses stop marketing to their “old customers” after the first purchase. This is insane! After they bought a cell phone from you, sell them extra batteries, airplane chargers, cases, upgrade their plans and sell them broadband Internet.

When a customer places his first order with you, that’s where your real marketing should START, not end.

This is the fourth part of the “Is Your Business Making These 10 Mistakes?” series. Part 1 can be found here, Part 2 is here and Part 3 is here.

Be Good at Delegating
One of the hardest things for entrepreneurs to do is to delegate. We think that we can do everything better than everybody else. Most of the time, this is true, because we know our businesses better than everybody else, we care more about them than everyone on our team and we have a broader set of skills than our employees.

However, just because we are better than other people at something, it doesn’t mean that we have to do it. If you make chocolates, take orders and deliver them, you’ll hit saturation point very soon. That’s bad for your business and your health. This is a lesson that took me a long time to learn.

First of all, let me start by saying this: there ARE people out there that are better than us at what we do. But, there are two problems:

• When you’re getting started, you can’t afford them.
• Entrepreneurs have a wide range of skills and we tend to look for someone that has the same skills but is better at them than we are. This is almost impossible because different people have different skill sets. The solution: find ONE person for each skill. Maybe you’re great at web design, copywriting, sales and finances. It’s not very likely that someone out there has the same skills and is better than you at them. But I can guarantee that you will find a better web designer than you. You’ll find a much better copywriter too. Don’t look for all the skills in one person.

OK, we talked about why you need to delegate and how you can find the right people to delegate tasks to. Now, let’s talk about effective delegation. These are some tips that will help you become really good at delegating:

• Give SPECIFIC instructions.
• The outcome should be MEASURABLE.
• The goal should be REALISTIC.
• There should be a DEADLINE.
• Give people all the MATERIALS they need to complete the task or tell them where they can get them from.
• Explain the REASONS and goals. People work a lot better when they understand why something is being done.
• Tell people whether they have FREEDOM to choose how to do something (as long as it’s done) or if you want it done in a specific way.
• Give people FEEDBACK on their results.
• UNDERSTAND that the process will get better and better as you work more with those people and they learn how you like things done.
• Ask for INPUT. Ask the people on the trenches how you can improve the process.
• Make yourself AVAILABLE for support.

How to Become a Great Problem Solver
There are great books written on problem solving, but my approach is a lot simpler.

1. Is there really a problem? What is the worst thing that could happen if I do nothing about this?
2. If I decide there is a problem and it needs to be solved, I take a pen and a notebook, and create three columns: problems, reasons and solutions. In the problems column I write down what’s going on. In the reasons column I write down why I think it’s happening. And, in the solutions column I write a step-by-step plan of action to solve the problem. For example, last month I had very little free time to finish a very important project. In the problem column I wrote “little free time”. In the reasons column I wrote “John Doe calls me five times a day and we stay on the phone for half and hour each time he calls”. In the solution column I wrote “1. Figure out a nice way to tell this client that I can’t keep doing this anymore. 2. Call client and communicate my decision to him.”
3. Don’t get hung up for weeks trying to find the perfect solution. Act now and correct later if necessary.

If you have a hard decision to make, I have two suggestions for you:

1. Sleep on it. I’m not saying you should wait two weeks to make a decision, but one or two days is OK. Don’t think about the solution all the time. Think about something else and often the solution will come to you (yeah, it sounds a little spooky, I know, but it really works this way).
2. Talk to other people. Sometimes outsiders have a much better perspective than you.

I hope your liked this article. Look out for Part 5 of this post tomorrow.

This is the third part of the “Is Your Business Making These 10 Mistakes?” series. Part 1 can be found here and Part 2 is here.

Meditate Often
Do you know how they say outsiders have a better perspective of your problems than you do? That’s because as a business owner, you’re so involved in the details of your business that it’s often hard to see the full picture.

This is one of my favorite quotes: “In business and in life, doing things right is not nearly as important as doing the right things.”

We, business owners, often get caught up doing the wrong things. That’s why meditation is so important. When you get away from work, you start analyzing everything you do. You don’t get caught up on HOW to do things better; you start thinking IF WHAT YOU’RE DOING IS WHAT YOU SHOULD BE DOING.

As a business owner, your goal should be to SPEND YOUR TIME DOING THE HIGHEST INCOME-PRODUCING TASKS ONLY. (Read this sentence again. It will change your life.)

I’ve read several meditation books but I have to admit that I don’t use most of the techniques I learned. All I do is to lie in bed with my eyes open and think. I think for an hour about the things I do and whether those are the things I should be doing. I always take a notebook and a pen and I write down my thoughts.

If you think you can’t afford to spend an hour per week meditating, let me tell you something: you can’t afford NOT TO.

Be Consistent
Every day there’s a new “get rich fast opportunity”. Stay away from the “latest thing”. Be loyal to your business model. Work hard and smart. Trust your instinct. If something looks like BS to you, it probably is. You know your business better than anyone else. Most book writers make less than $50,000/year. You make much more than that. Why would you do what these gurus tell you when you know you should do something else?

I hope your enjoyed this. Look out for Part 4 of this post tomorrow.

This is the second part of the “Is Your Business Making These 10 Mistakes?” series. Part 1 can be found here.

Trust Your Instincts
This one is hard to explain. Some people believe in instincts and some people don’t. All I know is that every time I followed my gut, I made the right decision and every time I didn’t, I screwed up. I don’t know how it works, but I know it does work.

A lot of people will disagree with me, but my advice to you is, “if all the data in the world is telling you that you should make a certain decision but your instinct is telling you the opposite, follow your instinct.”

What do you think? Do you agree?

Something Good Done Today is Better than Something Perfect Done Tomorrow
A very successful entrepreneur told me this story once:

“When I was starting my business, I needed to order shelves. They had three sizes: small, medium and large. My partner started doing all the calculations to figure out how many of each we needed. A week later, he was still working on it. Finally, I said, ‘let’s order 25 small ones, 50 medium ones and 25 large ones’. We placed the order and moved on.”

I asked, “how did that work out for you? Was what you ordered exactly what you needed?”

“Kind of”, he said. “A month later we had to order two more large ones and there were four small ones that weren’t completely full.”

“So you made a mistake rushing that decision”, I said. “You should’ve waited for your partner to finish the calculations, right?”

“No, absolutely not”, he responded. “You need to make decisions and move on. You can adjust your decisions later. But, something good done today is better than something perfect done tomorrow. We had a business to start and we needed to focus our energy on getting new clients and growing our company. We had no time to figure out the perfect order for shelves. We had important stuff to do.”

This was one of the most important lessons I’ve learned in my life.

1. Figure out what are the top 2-3 priorities in your business (if you think choosing the right color for your website is a priority, let me tell you: “it’s not!”)
2. Get your top priorities done very well.
3. Everything else should be done as fast as possible and you should move onto the next thing.

I hope you liked these lessons as much as I do. Look out for Part 3 of this post tomorrow.

Last week I was asked to put together a presentation for a group of entrepreneurs. They asked me to talk about some of the most common mistakes entrepreneurs make. I shared with them 10 very important entrepreneurship lessons that I learned the hard way.

Because this one ended up being a very long blog post, I decide to break it down into 5 parts and I’ll post one part every day of this week (from Monday to Friday).

Work in the Industry You Want to Take Over
My friend Matt told me this true story.

Acton has one of the best entrepreneurship graduate programs in the US. A few years ago, Acton had this extremely bright student. He was the best of his class and his teachers knew that he was going to make it big.

A year after his graduation from Acton’s program, a couple of his old teachers went to Starbucks to have a cup of coffee and saw this student working as a cashier. The teachers talked to each other about this and realized that if the best student they’ve ever had was working at a Starbucks after graduating, Acton must have been doing something very wrong.

They called the kid and invited him to meet with them and the director of Acton’s entrepreneurship program. They told him that they were very concerned that their best student was working at a Starbucks and asked him what they could do better in the future to avoid this from happening again.

The kid laughed and then answered, “I’m about to open a huge coffee store chain in Mexico. I’m working at Starbucks because I want to learn the business. I’ve worked two weeks in each area of the company for the last six months. I’ve done everything from serving coffee to planning marketing strategies. I feel I’m much more prepared now to run my new business.”

This guy is a true genius. If you want to start a business in an industry you don’t know, either work in it for a few months or partner with someone who understands the business very well.

Learn From Your Competitors
There seems to be a huge stigma around copying your competitors. I think there’s nothing wrong with it and that you should do it as much as you can.

Visit your top 10 competitors and learn from them. Learn from what they do right and what they do wrong. Survey their customers. Find out what are the top three complaints they have and build a business around that value proposition. For example, let’s say that you want to open a bakery. You then go to the top bakeries in your town and after talking to their customers you realize that they all complain about the bread never being “fresh from the oven”. There you have your tag line, “Fresh-from-the-Oven Bread 24/7″.

That’s what will make you unique and you shouldn’t copy someone else’s Unique Selling Proposition (USP). But you can copy everything else. Some examples:

• If 9 out of 10 of your competitors offer newspapers to their customers, it must work. You should do the same.
• If your competitors have a display right next to the checkout line, it must work. You should do the same.

Your competitors have been in the market for a long time. They’ve tested pretty much everything. Piggyback from their experience as much as you can. Don’t try to reinvent the wheel with everything you do. But remember: you should have your own USP.

Look out for Part 2 of this post tomorrow.

On Monday I wrote about my favorite Internet marketing books. Today I’m going to share with you the 10 entrepreneurship books that shaped me as an entrepreneur and even as a person. I believe that these books can make you a more successful business person and, more importantly, a happier person.

Ready, Fire, Aim
Michael Masterson is my hero. The guy is a very successful serial entrepreneur and teaches some of the most important business lessons ever in his book Ready, Fire, Aim.

Go Big or Go Home
Wil Schroter has a way to approach business that makes him unique. Don’t even think about starting your own company without reading this book first.

The Knack
I really enjoyed reading this book. Norm teaches a lot of great business lessons using stories, which makes the book very fun to read.

The 4-Hour Workweek
Tim Ferris is like no other guy I know and his book is certainly unique. What I like about The 4-Hour Workweek is how it’s all about making enough money to be happy (and then spend the rest of your time living your life) instead of making as much money as you can. This book will make you re-think a lot of your assumptions about priorities and life.

StartupNation
Jeff and Rich Sloan are two very successful entrepreneurs and the founders of StartupNation.com, the #1 online community for entrepreneurs. Their book shares a lot of great stories that will give you the inspiration you need to grow your company.


The Big Book of Small Business
I really liked Tom Gegax’s approach to business. He talks a lot about being a great leader and building remarkable teams. Highly recommended.

The Art of the Start
Guy Kawasaki is one of my favorite people in the whole world. He’s smart, funny and overall a great guy. The Art of the Start has some of the brightest business lessons I’ve learned in my life.

The Toilet Paper Entrepreneur
Mike Michalowicz did a great job writing this book. It’s all about how entrepreneurs overcome obstacles and achieve their goals. This book is full of great ideas for the small business owner.

Go It Alone!
Go It Alone! is fun to read, full of stories, tips and step-by-step guides.

Flying Solo
A great book that will teach you how to balance work and life and how to put your priorities in order. If you’re a business owner, you have to read this book.

What are YOUR favorite entrepreneurship books?