The Road To Unprofitable Growth Is Paved With One Dollar Fajitas
Today I met an old friend for lunch at Chili’s.
We had years of catching up to do.
But not before our caffeinated waitress hawked every feature, pushed every special and described each of her favorites on the menu! First, we ignored. Then we resisted. Ultimately, we succumbed and ordered “her” mushroom steak fajita special. At last, we could share our business/family trials and traumas.
What's your one-dollar fajita story from the business world?
But no! Our waitress burst in to tell us that for a dollar more we could each get a second fajita order, packaged to go no less.
Fine, we shrugged and she left.
But yet again, she returned, crestfallen with news that her manager would not let her offer the mushroom steak fajitas for a dollar more, so out came the menus to pick different fajitas.
I think you get the picture, but Chili’s doesn’t. For me, lunch is about connecting not cuisine.
Why would any business cut its returns by 50%? Devalue its product line? And harass its customers in the process? Of course, your business wouldn’t do any of this. Right?
But are you sure? Have you thought about sending secret shoppers into your business? They might just help you discover how to save money, upscale your products and delight your customers.
Back to my Chili’s experience.
Continuing through lunch our waitress brought out three rounds of soft drinks. Lining them up she said, “In case we ran out.” Then she gave us two checks so that we wouldn’t fight over them.
This reminds me of some business owners and entrepreneurs.
What assumptions are we making about our businesses? What assumptions are we making about what our customers really want and expect from us?
What silly story can you add to mine? Come on, I know you have a one dollar fajita story crying to be told!
An Anonymous Case Study of Survival and Profitable Growth
Recently, I had lunch with a partner of one of my national and very private clients who I hadn’t seen since the November 2008 election. He gave me permission to recount his story.
Last Fall, he was disenchanted, dismayed and worried that his processing and services businesses could not survive the perfect storm of bankrupting clients, a government regulatory beat-down and a no-credit economy.
His outlook disturbed me since he and his family were savvy, intelligent and highly committed operators. Hell-bent on creating organic growth. As individuals, they are personally accountable and walk their own talk of practicing the Golden Rule.
After small talk about our families, I took a deep breath and asked the obvious, “So how is your business now?”
He took grinned and said, “While it has never been so tough I did what I needed to and I have good news.”
My jaw dropped as I listened to his story.
“Last Fall, my business was in deep trouble. My customers were dying, my Best and Highest use was commoditizing and my overhead was unaffordable. Here’s what I did and too bad we didn’t do it any sooner.”
- Reviewed every paying customer and determined what proprietary value I was providing. I revised pricing where I was and where I wasn’t.
- Cut my head count by 1/3, which was tough but my new mantra is to ask, “What’s my return on every dollar invested?”
- Accepted that we could not cost-cut our way to profitable growth and refocused our development efforts.
- Developed new services and products which leveraged Obama’s social agenda and regulations. Who knew there would be opportunities?
- Stopped making cold calls and pursued referrals. If someone we do business with has entrée into a target prospect, we request an introduction and remember who helps us.
- Recognized that there are now two kinds of buyers; transactional and relationship. Transactional customers get no frills and pay as they go. Relationship buyers get full service and lots of frills.
- Overhauled my health insurance benefits, while maintaining its costs and service levels. My litmus test was ensuring that the handicapped children of my staff remain covered and I could hire any employee I wanted regardless of their health issues.
He concluded that he remains heads-down focused on his business and is no longer thinking about transition or succession. What a wonderful role model for every business owner!
Unfortunately, I cannot share the name or face of this small business hero. But as I left the meeting, I could only ask myself why can’t more businesses be heroes?
What can you implement in your business? Please share what you are doing in your business?
Defining Profitable Growth In The New Economy
Small business owner, how do you define profitable growth?
I believe that in this new normal, the new economy, profitable growth has a new definition. Watch my video to understand how I define profitable growth in the new economy.
How do you define profitable growth?
DIY, DIWM, DIFM: What Can You Do?
If it’s painful watching another small business struggle as the economy rebounds. It’s torture if it’s yours.
Why won’t your customers buy from you when they are increasing their spending with others?
When will they realize that imitating your value, products or services “in-house” is penny wise and pound foolish?
The economy may be recovering but not in the same way as in the past. Most of the buyers I’ve interviewed for my clients are buying again but with new criteria. Instead of reverting to their old ways they are pursuing total cost of any solution. And if they believe they can do it themselves, they will. So instead of fighting against the tide, why not accommodate your buyers and get them to pay you for doing so?
Here are three ways:
- Provide a Do It Yourself (DIY) Option.
Some of your customers have more time than money. Help them "DIY."
Now, more than ever, there is segment of customers who have more time than money. They want to do all the work themselves. They want to accept all the burden of learning and doing by trial and error.
QuickBooks Software is an excellent example of this. For less than $200 a business can keep its own accounting. What can you offer in your business that allows a customer to do it all?
One suggestion: Offer an entry-level service or product. Let your customers adopt your product or service in its simplest form. Then you can graduate them to a more robust version where they will need your help.
- Offer a Do It With Me (DIWM) Option.
If a customer really wants to do it themselves but can’t, they might be interested in your guidance as they produce your product or service. If you can teach someone to fish and feed themself, make it a money maker for you.One example is a Jo-Ann Fabrics sewing class. After purchasing a dress pattern, you can have a teacher guide you and your project, reducing errors on your road to success.One sign that your prospect may want the DIWM option is if they have an equal amount of money and time to invest in working with you. Don’t offer them your entry level DIY service here, but clearly one for those who are ready for slightly more. But save your advanced expertise for the next option. - Always offer the DIFM (Do It For Me) Option.
While DIFM is not as popular now as when credit was free-flowing, many businesses will once again realize that they should refocus on their Best and Highest Use® and leave everything else to experts. When customers realize that they have less time than money, they will outsource tasks to vendors whose clear value justifies spending the extra cash.An example of this would be how most firms still outsource all their transactional HR needs like payroll, drug testing and 401(K) reporting.Always keep this option open because as the economy improves there will be buyers that have more opportunities to outsource work sooner than others.
So here are your three ways to help your customers to spend money with you:
- DIY (Do it Yourself)
- DIWM (Do it With Me)
- DIFM (Do it For Me)
While, it will always be tough to run or watch a business lagging behind in profitable growth, now you have one more tool to offer to a prospect who respects your value.
So when are you going to start DIY, DIWM or DIFM in your business?
Feeling Like Oliver Twist In The New Economy
In talking to so many business owners, I can report that most feel like Charles Dickens’ young Oliver Twist with his nose pressed up against the dining room window filled with people and good food.
Do you feel like Oliver Twist in the new economy? Image from http://www.charlesdickenspage.com/illustrations-twist.html
“Can I have some more?” he asks, only to get pushed away.
While the economy is improving and a few owners are eating well again, most are still watching with envy.
But there is no question that phones are ringing, inquiries are coming in, and wallets are opening slowly. If you felt the recession earlier in the cycle, you should be coming out of it faster! Please realize that if the Gross National Product is growing and your business isn’t then someone else is eating your lunch.
So please, Ask For More!
What are you doing today to ask for more? Share with us.
Les Miserables, Life, Death And Small Business Ownership
Last night I saw my favorite play, Les Miserables, again.
Les Miserable
In Victor Hugo’s epic story of good, evil, love and faith, the hero Jean Valjean saves the life of his nemesis, Inspector Javert. Javert had pursued him for years after Valjean steals bread to feed his family.
In the play’s defining moment, Javert cannot accept the truth of Valjean’s goodness and kills himself rather than accept that his institutional thinking was imperfect and flawed. Conversely, Valjean’s acceptance of grace and pursuit of truth saves his family, business and legacy.
And then I realized it. Recently, I witnessed a similar but far less dramatic example of two business owners confronted with truth. One took the right path after seeing the light. One did not.
The first business owner runs a good business that could be better. But there has always been distractions preventing the firm from achieving sustained profitable growth. The recession, the credit crunch, the family legacy, and an inflexible sales force have led to survival being an acceptable alternative to profitable growth.
We had discussed his objectives, action plan and progress towards profitable growth goals. Clearly there was a disconnect. His objectives were clear. His action plan was good. But his progress was insufficient.
Frustrated, he said to me, “It’s easy for you to focus on profitable growth, because you are a consultant. It’s different for me, I have to run a business!”
I asked him, “What other reason is there to run a business than to achieve profitable growth?”
He started to respond and said, “You are right. There is no other reason. And from this day forward my job description has changed. My job is profitable growth.”
The second business owner has run a very successful firm which has suddenly been slammed with an opportunity to double and triple sales. The phones are ringing. Internet inquiries are increasing. New distributors are eager to sell the company’s product.
Faced with runaway demand, the owner is swamped. She is out of her comfort zone and needs to bring in professional marketing, customer service and technology support. Yet, it seems daunting to her because it will force her to create a new organization and better processes.
She chose to pull back and continue to run the business in its traditional way, as it has always been done. Her opportunity to maximize profitable growth is taking a back seat to imperfect and flawed institutional thinking.
Business ownership may not be as dramatic as life and death during the French revolution.
But when it comes down to it, wouldn’t you rather be Jean Valjean whose vision of truth set him free that Javert whose slavery to tradition was his downfall?
Which would you choose? Share your thoughts with me.
