If The Economy Is Slowing, Is Your Business Growing? 12 Tactics To Ensure Your Business Does Well During A Slow Economy
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
By now, there’s no question the U.S. economy is mired in an economic slowdown. While your specific industry may actually be strong, slowdowns are epidemic in nature and have a way of leaking into otherwise solid sectors.
The simple fact is that expectations drive consumer behavior. A mindset of limitations is replacing an attitude of abundance. As a result, people are hedging their own bets and risking less.
All of this has put business owners in a precarious situation that they haven’t witnessed during the roaring ’90s. But that doesn’t mean your business has to stop growing just because the masses are taking a wait-and-see attitude.
Here are 12 tactics to help ensure your business doesn’t follow the downward trends.
Warranty and maintenance contracts that extend the useful life of the status quo.
Programs/products and services that promise reduced costs and greater efficiency will be more attractive than those promising increased sales.
Channel power will go to those with paying customers or the ability to retain their margins.
Loyalties and relationships of convenience/laziness will be broken. In times of stress, relationships either deepen or disappear. Pick and choose your partners on both the supplier and the customer side. You can’t be all things to all people.
The transition from having not enough people to having too many people may be sudden. “Bargain-price” human resources can help increase customer service or search for new customers.
The challenge of focusing on your best and highest use, your target market and your customer pain becomes all the more imperative. As demand slows down, every purchasing decision will be questioned. The practice of finding the best suppliers may be replaced by finding the one lowest cost supplier.
As people become more risk-averse to selling on the basis of fear, uncertainty and doubt will be effective.
Capital goods will be harder to get approved by customer finance departments. If so, they will be prioritized in the following order:
- Those that improve profits
- Those that increase sales
- Those that decrease production costs
- Those that decrease administrative costs
Technology factors. When tech capability greater than the market’s capability to absorb it, then price falls when everyone beyond the early adopters stop buying it. The minute the technology isn’t used, the value drops. Technology starts being given away and revenue streams devalued. Inevitably, the technology is adopted and price goes up, or more likely the next great thing replaces it as the cycle repeats itself.
Outsourcing may or may not decrease but the need doesn’t.
Leverage goodwill if you already created it with your customers.
Rethink the time versus money tradeoff. People may have more time to spend on tasks they formerly might have paid others to perform.
While there is no surefire way to avoid a slowdown, if you’re proactive in your approach odds are you’ll be better off then your not-so-prepared competitors.
Is Your Sales or Marketing Manager Too Big For His Britches?
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
The marketing manager of a client of mine recently told me, “My reps and I already sell everything our customers and prospects will ever buy.”
“How about offering your widgets to younger buyers who don’t buy through distributors?” I asked.
“I hate younger buyers, and so do my reps,” he replied.
Is your firm stifled by your sales/marketing leader’s comfort zone?
Your firm is stifled IF your sales and marketing manager ONLY:
- Focuses on the traditional sales channels he or she knows and works with, but won’t understand or consider the use of other channels like direct mail, social meet ups or educating key influencers so they become referral sources.
- Understands how to service existing buyers through long-term relationships, but not with emerging buyers or buying departments within a company.
- Complains about customers, but is unwilling to identify and respond to emerging customer needs.
- Blames the economy, the competition or customers for why sales aren’t up, despite competitors who are doing better.
- Believes in his own experience and is unwilling to let other people evaluate or provide objective market feedback.
- Focuses on old-school tactics, like creating brochures or relying on sales people to reach to new markets and prospects.
In sum, a great sales and marketing manager is intellectually curious, loves uncovering and meeting the emerging needs of existing customers and always remains open to prospecting for new customers with interesting and different needs.
How does your sales and marketing manager stack up?
Banking On Your Banker
Filed under: Business Growth, Pittsburgh, Profitable Growth, Top Line Growth, Uncategorized
Mention “banker” to business owners or “business owner” to bankers and you are sure to spark a reaction. Having worked with hundreds of each, I marvel at the state of such a critical and ancient relationship in this day and age. While bankers and owners need and value each other, few supplier/customers relationships are so complicated and fraught with angst. Owners vex over the strings, bureaucracy, and inattention that accompany the money they borrow from bankers. To many owners, most loan officers are seen as temporary caretakers who have neither the time nor incentive to understand their customer’s business.
Conversely, every bank president I have met, in spite of his or her regulatory and lending constraints, insists they are the bank for business owners and lead their lenders to do so. They lament over how “over-banked” and rate-driven their market is. And they are right that smaller businesses rarely understand banking, financial management, risk, or working capital.
Because of these disconnects, bankers and smaller business owners rarely
profit from the synergy of their respective positions. The shame is, together
they could become a powerful partnership. In our economy, an emerging business’
credit, deposit, and processing needs make them a bank’s best prospective
customers. And bankers can offer not just fair rates but provide needed counsel
and guidance to smaller businesses that are typically unsophisticated borrowers
and often less rate-sensitive. So why can’t business owners find lenders who
will provide more value? And why can’t lenders convince owners to look beyond
the interest rate and see how much more a bank can provide? With interest rates
still relatively low, rather than shopping for the best rate, smaller business
owners need to find the banker that will give them the time and expertise they
cannot afford to create internally. For their part, bankers need to be capable
and eager to provide far more expertise and understanding of the business
owners’ needs. So as an owner, here are my five key ways for you to bank on your
banker:
- Accept it is the bank’s money and not yours. A banker’s
first obligation is to protect and control their depositor’s money that they are
lending you. Bankers often finance up to 50% of their client’s balance sheets
but only 10% of the business’ costs. They can feel that they are more concerned
with protecting a company’s assets than the owners are. So be a good customer
and when you take their money, understand that much of the “paperwork” and
record keeping is a critical discipline to internalize. Your loan officer is
always evaluated first on how he protects his or her bank’s money. And, unlike
other investors, they won’t try to run your business as long as you do. - You are not a bank’s customer you are their supplier. Think
of yourself as the supplier (of a good credit risk) to your sales rep (the
lender) who must sell it to his customer (the credit committee) and your
expectations will be realistic. Furthermore, it is important to understand that
the decisions of the credit policy committee just as often are based on the
bank’s overall financial needs as they are on your credit worthiness so don’t
take it personally when their decision appears to disregard the obvious. No
aspiring lenders can or will ever jeopardize their career by going against
credit policies of their employer. - Bank on your loan officer, not his or her bank. As all banks quickly copy each other’s products and services, your contact makes all the difference. When deciding on a banker, pick the individual who has substantial tenure in their position and hopefully some business acumen outside of banking. The best lender for your smaller business is rarely the hard charging, most promotable, fast tracker, but rather the tenured expert who loves working with businesses more than his own political bureaucracy and may be perceived as a rebel within their own institution. Unfortunately, the average banker covers over 250 customers so it is harder to keep his eye on your business than to get the lowest interest rate. If your business is so dependent on debt service that even a ¼% can make or break your company, don’t blame this on your banker but rather examine if your Best and Highest Use® is sufficiently valued by your target market.
- Don’t settle for “service.” Demand expertise and advice. If
your banker is only a middleman and expediter, he or she may call this “good
service” but it doesn’t add value to your business. Worse yet, if you call your
banker after months of no talking, and frantically ask him to increase your line
of credit so you can make payroll, shame on you both! Your banker should be
proactively asking open-ended questions, such as how will you make payroll if
you lose an account or production capacity and follows that up with more
questions which lead to you and she agreeing on an overall financial strategy
and contingencies, you have the right person. - Buy on price when the value is not out there. If you can’t
get expertise you need in a lender, then shop for the lowest rate. Think of your
banking relationship as an outsource-before-you-in-source decision. As you grow
in financial sophistication and embrace the discipline your lender has taught
you, hire a treasurer or CFO with the expertise that will also bring your rates
down.
Over these last few years, credit has been scarce but virtually free in this
low-interest rate environment. While many banks say they are vying for your
business, demand a fair rate and the right banker. Or learn to live with even
less debt! If you can bank on your banker and you and your business will be
better off. Articles by Birol Growth Consulting are © copyrighted and all rights are
reserved. However, articles may be reprinted with prior written consent if
attribution is included as follows:
© Copyrighted by Andrew J. Birol,
President of Birol Growth Consulting, who helps owners grow their businesses by
growing their Best and Highest Use ®. Andy can be reached at (412)
973-2080, by email at abirol@andybirol.com,
or on the web at www.andybirol.com.
Advanced Referral Marketing
Filed under: Business Growth, Pittsburgh, Profitable Growth, Top Line Growth, Uncategorized
If you run a company, lead a sales and marketing team, or sell for a living, you know that referrals are your best source of new business.
- Nothing beats an introduction from a peer who knows what you offer to a prospect who needs your value now.
- No matter how strong your sales skills, marketing programs, or products and services, a referral to a qualified prospect most helps you close the sale.
- If most buyers turn to colleagues they trust for recommendations when making a purchase, who do yours turn to?
If referrals are your business’ best way to grow, why don’t we develop our referring skills and seek out more and better referrals? Instead, too many businesses lament the lousy referrals they get from well-meaning business friends. Whose fault is that? Rather than launch a costly and risky lead generation effort, why not improve your advanced referral marketing skills?
The Basics of Getting Referred
To review, there are some critical ingredients to getting a referral. You must:
- Provide specific value to a defined target prospect. If you do not have a Best and Highest Use® please define yours now or settle for being referred as a commodity.
- Be excellent. Always grow your track record of quality work and results.
- Stay in front of those who refer you. Communicate with them regularly and provide new and valuable information.
- Be trusted. Prove to your referral sources you will treat them and their referrals with respect.
While these fundamentals never go out of style, enough people practice these well enough now, that distinguishing your “refer-ability” takes even more effort.
Five Steps to Advanced Referral Marketing
To grow better and get more referrals, here are five steps you can take now:
- Determine Your Need for Referrals
- Understand Your Prospects’ Buying Process and Then Align Your Selling Process and Referrer’s Role
- Define the Ideal Relationship Your Referral Source Should Have With Your Buyer
- Give Referrals to Get Referrals
- Develop Specific Tools and Tactics
Here are the five steps in detail:
1. Determine your need for referrals. Are you clear on where in your sales and marketing process you need a referral and for what purpose? Do you need help finding, keeping or growing your existing business? Do you need an introduction, validation, or affirmation from your referral sources? At which point in your sales funnel are you most in need of their support? Is it in qualifying prospects or developing prospects? For help in determining this, review the PACER Process.
2. Understand your prospects’ buying process and then align your selling process and role for your referrer. Understanding your customers’ buying process is not new but applying this knowledge in obtaining referrals might be. Where can your referrers have the most impact?
If your business is a relationship or an anniversary business, your referral sources need to be constantly cultivating your prospects for you, but if your business is more transactional or event-driven, then you want your referees to be far more opportunistic and pounce when they see the chance to recommend you. Here are two articles to help you decide this. Click Events or Anniversaries: What’s Your Business? Or Relationships or Transactions: What’s Your Business?Once you understand the role your referral sources play in your prospect’s buying process, you will of course align your selling process to parallel their behavior. And the role that your referees need to play will be clear.
3. Define the ideal relationship your referral source should have with your buyer. What are the ideal referral sources for your business? For example, some businesses enjoy most of their referrals from law or accounting firms while others are best referred by suppliers or even their competitors. To determine who is best for you, understand the role your referral source plays with your prospects and why a prospect would accept their referring you to them. For example, a parts supplier is unlikely to refer a financial planner to a purchasing agent because this is not a likely topic for them to discuss. Consider whether your referral source has the sufficient trust and professional intimacy with your prospect to make such a referral. For example, a specialist can often refer another specialist while another specialist will seldom refer a generalist. Also, your referral sources must see you as a scarce commodity as opposed to being abundant. If every business broker is hounding every banker to refer them their next deal, how can anyone care or remember which one to refer to whom? The 80/20 rule applies just as much as to referees. A few will refer a majority of your leads and most will only refer you once. Understand who falls into which groups and why. Finally, make it as easy as possible to refer you. I provide any referral source with the following description of my target prospect and exactly why when and how they would hire me. Come up with your own example along the following lines as I have in my business.
A target prospect for Birol Growth Consulting is a majority owner/operator of a business who is:
A. Dissatisfied with his or her business’ level of profitable growth.
(as good or bad as it may be)
B. Impatient to grow their business to the next level
C. Is a
a. Services Firm
b. Wholesaler/Distributor
c. Manufacturer
D. Willing to take and apply advice by working with an expert who empowers optimism
E. Willing to pay for the value of outside advice that generates ten times the investment
4. Give referrals to get referrals. Apply the Golden Rule in your referral activities. Generously and freely give away as many referrals as possible. While many will disagree, I urge you not to take commissions or fees for referring business. The time you put into developing a fair scheme is not worth the loss of trust you face when your peers learn you are making money off of whom you referred to them. Despite many opinions to the contrary, do not enter into tying, exclusive relationships or “Circles of Influence” with only one referral source such as a single law firm. Your power in referring and being referred comes from being able to match the right people with the best skills and style. There is no one size fits all here. But most importantly, remember who did refer you, follow up and keep them posted on how your or their referral faired. There is nothing more disappointing to refer or be referred and never hear what happened. If you do refer someone constantly and there is never any reciprocity, ask yourself if you have fulfilled the basics as outlined above. Before getting annoyed with your non-responder, ensure you have refocused on the basics, if you have, then it is time to find new advocates.
5. Develop specific referral tools and tactics. Make it easy for your referral sources to refer you. One of the great tools is the reciprocal referral letter. Attached at the bottom of this article is a sample letter you can send, one-for-one, with a mutually referable source. Making it one-for-one is fun, as it challenges both parties to provide great referrals and then to hone their selling skills in obtaining as many appointments, proposals, and closed sales as possible.
Find ways to donate your services to charities so that your referral sources can place you in highly visible venues. Serve as a subject matter expert for their customers where you can showcase your expertise while helping your referral source’s clients.
Summary
Referral marketing can be one of the most enjoyable as well as the most profitable tactics in growing your business. Develop your skills and practices in this area and you will surely enjoy better clients, better relationships not only with those who value you the most, but most of all with people you like whom like you. And after all, isn’t this what business is supposed to be all about? For help in accelerating your referral marketing efforts, to explore how we can refer each other, or simply to learn more, please contact me at (412) 973 2080 or at abirol@andybirol.com.
Here is a sample referral letter you can modify for your business or, (with my gratitude) use to refer Birol Growth Consulting:
Mr. John Smith
President
Smith Products
222 Allegheny Blvd, Suite #4
Wexford, PA 15444
Dear John:
Growing my firm has always been challenging and risky. I often wrestle with questions of what to invest in and when. I wanted to pass on an intro of an exceptional business expert and friend of mine, Andy Birol, of Birol Growth Consulting. He is a published author (5 times I think), accomplished speaker and advises small to mid-sized operating businesses owners on effectively driving top line profitable growth.
- How has my marketplace changed its buying behavior and how should my firm respond?
- How can I create more profitable growth?
- What new channels for profitable growth can I pursue?
While you may not have heard of Andy, I know him personally and he has an extensive record of working nationally to great reviews. In his short time here in Pittsburgh, he has become a regular columnist for eTEQ Magazine and has been accepted into Leadership Pittsburgh.
I told Andy you were on my short list of must-visits and I’ve suggested he give you a call. He’s making a positive impact in Pittsburgh’s small business community. I’m sure meeting with him will be a good use of both your time. You can learn more about Andy before he calls, checkout his website at www.andybirol.com. His articles, client list and newsletters are particularly interesting. No doubt you’ll get an autographed copy of his latest book, The Five Catalysts of Seven Figure Growth, CareerPress, 2006.
If you have any other questions or need anything further please don’t hesitate to give me a call.
Thanks so much and take care,
Sincerely,
You
Your Company
Your Address
Pittsburgh, PA 15232
Are You a Contractor or Subcontractor? How Does Your Outlook Drive Your Business?
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
If your business outsources work to, or does work for another business, you understand contracting and subcontracting. But no industry knows contracting better than the one that invented it: the building trades. Last week, I was invited to lead a workshop/meeting for the Master Builders Association. As part of the program, I gave this hardened group of building- trade executives, those next in line to run their family businesses, an exercise whose results reveal valuable insights for any business.
Each participant was given the following key success factors that dozens of my building-trade clients have taught me matter most. The group was asked to rank the ones they felt were most critical to master in the next two years. Here are their ranked responses which could apply to your business too!
| TO SUCCEED AS A (SUB) CONTRACTOR YOU MUST: | Ranked as most important to master in next two years |
| Produce quality work | Second |
| Have a competitive price | First |
| Complete work on time | Twelfth |
| Get paid | Sixth |
| Operate safely | Fifth |
| Increase/maintain skills | Eighth |
| Use right equipment & technology | Tenth |
| Manage money | Fourth |
| Have great project scheduling / management | Seventh |
| Have great first line supervision | Ninth |
| Sell incoming work to match available labor | Thirteenth |
| Be good at job tracking and forecasting | Eleventh |
| Be good at estimating and job costing | Third |
What conclusions can we draw from these data and the comments of the group?
The (sub) contracting business remains a tough one where providing top quality at a competitive price is the key success factor.
- Managing projects, materials and labor is perceived as the next most important factor.
- The group is concerned that subcontractors who don’t manage these key skills will likely go out of business in the face of reduced project-funding sources and increased competition.
- In the face of government cutbacks, the sector is counting on private projects to take up the slack.
- The group understands that differentiated skills and services, like value-engineered solutions and LEED certifications produce better margins. Although they are hard to develop and protect from copycat competitors, new products, markets and technologies have historically ensured profitable growth for the industry.
My thanks to Brett Pitcairn of PJ Dick Construction and Jon O’Brien of the MBA for giving me the opportunity to present to the Master Builders Association.
5 Reasons to Believe in Your Business Confidence
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
What a time we’re living through! The economy is rebounding but shaky. Government’s broke and may—at best—repair its own damage. Our human, physical and social infrastructure is fractured, while America’s endless infighting continues despite real enemies lurking in the shadows. Is it too late? No! The last six months gives me great optimism for small business. Why?
Small business is growing confident again. As the saying goes, “What doesn’t kill you makes you strong.” After enduring years of scarce capital, government meddling, society demanding and large companies bullying, small business is adapting and regaining its mojo. Proof? Beyond the national data, every client, owner and audience I’m seeing is hiring, investing or at least thinking again in terms of years and not months. And after years of turning a blind eye, government, non-profits and large companies smell small-business’ success and are demanding more charity and favors.
Why are small businesses doing better? Here are five reasons why small business has regained confidence and conviction. Successful small businesses see their:
1. Worst fears are over, and they are better off. Small businesses have learned to run on lower credit lines and not to finance their customers. More and more are raising prices on unprofitable customers. The days of sloppy pricing and 90+ days of average accounts receivable are over.
2. Margins have grown when they sell expertise and a better customer experience. Small business can’t out save their competitors on purchased materials or hiring cheaper. They’ve learned to sell their expertise and the experience they provide their customers. Those who are doing this well are raising their prices.
3. Customer’ buying behavior is changing. Most companies have changed how they are buying or their criteria for buying. Most feet-on-the street sales people have learned to sell their smarts or face selling to voice mail.
4. Services grow, particularly as they support products. Buyers may demand low prices on the products they purchase, but the users they represent are demanding more service and support. Small businesses are learning to charge more and profit on their time and value.
5. The folly of doing good without doing well. Being green, sustainable and socially responsible is common sense but is no substitute for exchanging real value for a customer’s real money. The new economy is no place for businesses without a clear value proposition to rely on social entrepreneurism to replace paying customers.
So much is changing so fast for small business. But following these five reasons for success will lead to your business being much better off regardless of the world around you.
What Would You Do?
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
Do real-life stories hit home for you? Years ago, I had just been engaged by a partnership. After contracts and checks were signed, one of the partners waved me into his office and said, “There is something I need to tell you.” Closing the door behind us, he anxiously confessed his need to tell a secret. I responded, “OK.” Then he said, “I’m having an affair with one of my partner’s wives, is that going to get in the way of our growing the company?” Stunned, I responded, “You’re telling me this for a reason?” And he said, “I want you to know this because no one else here knows.”
What would you do if someone said this to you?
When I ask this as a case-study exercise in a workshop, most respond, “Void the contract and return the check.” Although this is the safe choice given that the client was trying to entrap me in his turpitude, there is a better win-win decision.
If you’re faced with a similar situation, don’t confuse the bad judgment of business leaders with the needs of the business. Despite the owners poor leadership, their company dearly needed a growth strategy to best support its customers, employees, vendors and their families and charities.
What happened? I told the irresponsible partner that I would not divulge his sin, but if asked I would not deny I knew. I took the project and helped grow their businesses, as it was clear their company needed to be split into two firms. Surprisingly, the other partner never discovered the unholy alliance.
The teaching moment: Small business serves many good causes and feeds many mouths besides the owners. Too often the brave, risk-taking intentions of owners get undermined by the actions they take (and don’t take) as ill-trained leaders. If you are running or trying to help another small business succeed, talk to the owners about the actions of their leaders, even if you are speaking to the same individual!
Three Tips to Managing Doctors and All Subcontractors: Lessons Learned From My Daughter’s Bedside
Filed under: Business Growth, Profitable Growth, Top Line Growth
You may know my daughter has cystic fibrosis. I’m not asking for a donation or sympathy, but instead, that you gain from my experience. I hope you never have a loved one in the hospital, let alone for months. Nonetheless , spending nearly a year in Pittsburgh and Cleveland’s finest health facilities have taught me how to manage doctors, and as it turns out, how to manage subcontractors. Here’s what working with doctors has taught me:
1. As the patient’s advocate, you serve the role of general contractor and treat the whole patient. The doctors, gifted specialists that they are, serve as the role of gifted subcontractors responsible for excellence in their specialty. Therefore assume and take responsibility for assuring that your patient (much like a client) is best being served by the subcontractors you oversee.
2. Hospitals must focus first on the patient and treating his or her problem. The burden on you as the advocate/general contractor to manage the process will be profound. Budget for and expect to have your notions of time, energy and resources stretched beyond reason.
3. Teaching hospitals have righteous but conflicting priorities which create a problem for you the general contractor. Indulging the apprentices (residents and interns) so they can report up to their fellows and attending (master craftsmen) does less for your loved one’s health care but more to further the body of medical knowledge. Expect them to have read the charts and respect your loved one’s needs.
Beyond the hardships and indignities both to the patient and you the general contractor, your doctors are brilliant selfless experts under constant pressure to see more patients, learn more science and avoid all mistakes. Still, both in the medical field as well as in the business world of subcontractors remember to delegate the task but not your responsibility.
After WikiLeaks, Are Your Secrets Sacred?
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
Just as Coca Cola has its formula for Coke®, we business owners have our own “secret sauce.” Whether it’s our patents, trade secrets or unique methods, we have tricks of the trade we’ve perfected and protected after years of trial and error. After all it’s how we charge and justify the higher margins we need to survive and thrive.
But now, after WikiLeaks, if Bank of America is worried, certainly someone can steal and share your secrets. Just for a moment, assume the worst; that your product, service, or technology has just been published on the Internet (and your lawyer says you can’t sue and win.) What can or should you do?
If you have just seen your best-kept secrets published on-line, ask yourself:
- Are they really my secrets?
- How can/will others leverage the information?
- How can I exploit the situation?
Are they really my secrets? Have others discovered the same thing? In an on-line world where knowledge is doubling every ten years, chances another one of your six billion virtual neighbors may have come up with the same idea. Between vendors, employees and customers, any number of individuals could have enabled someone else to stumble on to a similar concept. Perhaps your idea isn’t that new or different any more (which is why patents expire after 17 years.)
How can/will others leverage my information? They probably can’t. Having the same information rarely enables someone else to use it as well as you do. Remember that what makes you special and different as a small business owner is your Best and Highest Use®. What your business is good at, likes doing and has been valued for doing is unique and no one can do anything as well or just like you do it. You are probably pretty safe and sound for the time being.
How can I exploit the situation? You can snatch victory from defeat if you can turn your problem into an opportunity. Remember, imitation is the best form of flattery. First of all if you see that your idea is gaining traction, put your energy into making sure everyone knows it was your idea and then:
1. Market your business as the original and authentic provider of the product or service. The more companies knock off Apple’s products, the more valuable Apple’s are.
2. Re-brand some of your products as scarce if your original ones are commodities. Airlines now sell “extra legroom seats” after seeing that frequent flyers chose bulkhead rows when they couldn’t get upgraded to first class.
3. Re-version your services to meet current and evolving needs. When will restaurants feature “take-home food services in microwavable, servable and green packaging?” After creating special “curbside” parking spaces, isn’t this the next logical step?
Let’s face it; sooner or later we are all going to be “Wikileaked.” Just as the US State Department will survive their breach, so can you. The key is to be ready when it happens and exploit and leverage your thief’s actions to your own advantage!
Next Year Will Be Different, You Promise?
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
Just as predictably as the Times Square ball will drop, on New Year’s Eve, both consumers and business owners will make resolutions. Consumers will resolve to diet and exercise and business owners to hunker down and work on their business, wealth and lifestyle. Too often, the results for both consumers and business owners turn out the same:
January – March: Consumers starts personal regimen. Owner pushes him/herself and staff to work harder in the business to get better results.
April-June: Consumer loses some weight and prepares for warm weather. Business owner gets frustrated as current level of activity isn’t generating better results. Feels like Groundhog Day.
July-September: Distractions of summer vacations and increased activity distract both the consumer and business owner alike from their missions of getting in better shape.
October-December: Consumers get very busy going back to work, school and preparing for the holidays. Business works even harder to “save the year” by having a great 4th Quarter.
And then it’s New Year’s Eve again! Time for new resolutions!
I am no role model for fixing consumer behavior, but I have seen the following work for business owners who are ready to break out of their cycles:
Whenever your recession (and your customers’) started and regardless of whether your business is a leading or lagging indicator of a recession, it doesn’t matter when you’re in the middle of one. For many of us coping with this recession has been a lot like going through the four phases of loss namely denial, anger, self pity and acceptance. In this era, many of us are moving into acceptance of our new reality and are ready to take steps to make the best of our gifts and blessings. The more we reflect on the last few decades, the more we realize how much better and smarter we could have been when times were easier and now know that getting ever better and smarter is the difference between success and failure. In our recession there seems to be a fine line between success and failure. Success may be defined as not failing. And failure can come from simply or deviating from success. As we consider our circumstances and recognize that our business lives must go on, what can we do to grow and save our businesses during these times?
Here are three areas you need to triage, four areas where you should respond and three strategies on how to profit during these times.
Three Areas You Need To Triage.
Triage, when ER doctors and nurses determine who lives, who dies and who will be healed later, is exactly the right approach to take in your business as do in their jobs. Instead of patients you will be triaging your customers, projects and cash.
1. Triage your customer relationships.
o It’s going to be critical to decide which customers you can keep, which ones you need to renegotiate terms with.
o Fire your unprofitable or difficult customers now and use great discretion in choosing the prospects to pursue. Someone else may have fired them first.
o Most companies start first by providing extra value and service to their incumbent customers. During these times, their loyalty and fear of switching will keep them close to you if you stay close to them.
2. Reevaluate ongoing projects.
o Take a hard look at what you’re working on. Kill any project with an unclear payback or one, which will consume more resources than will plausibly make in the next 36 months.
o Restructure any project that’s critical but has no clear payback, accountabilities or resources.
o Prioritize and focus on completing any project with the ability to enhance revenue, reduce costs or protect wealth.
3. Manage your cash.
o With liquidity likely to be scarce at best, hoard what you have. Use cash as a reward for vendors, employees and others who are sacrificing for you or your goals.
o Use your cash or lack of it as a weapon in dealing with companies and customers who rely on you and previously expected you to finance receivables.
Four areas where you should respond.
Once you have triaged your customers, projects and cash, look to four areas where you can respond to your new reality. These are:
1. Price for profit and to avoid loss.
o Price your products and services in terms of the value they not only provide to your customers but how they help your customer’s customers profit. Learn where and how your products make others money and align your pricing with theirs.
o Where you must make sizable investments in raw materials, ensure your pricing terms allow you to recoup your investment as soon as you’ve made it.
o Reward your customer’s liquidity with favorable pricing. Those who can pay you up front deserve discounts.
o Finally, use your pricing to protect yourself from those who exploit you. Immediately raise prices on customers who pay slowly. Create collection terms for poor payment just as you would offer good terms for fast payment.
2. Manage your credit furiously.
o Do what you can to get more credit. If you can open a second line or other source of credit, do so even at a price you would not normally pay, especially if these are from confidential or “angel” sources.
o Use your credit prudently. Don’t assume you need to finance everything yourself. Get creative and aggressive in what you ask others to carry and fund.
o Thirdly, use other people’s money wherever possible. Many aggressive sellers and bargain hunters may have credit you can use in the course of doing business with them.
3. Lead decisively.
o Show your confidence in all you say and do. While you may not feel it, your optimism, confidence and conviction will be a beacon of hope for those who are more scared than you are.
o Motivate your vendors, staff and customers to stay committed, keep their promises and take the same risks you are in an anticipation of better times and the promise of deferred rewards.
o When times are tough, show your stoicism in the face of bad news and inevitable hiccups.
o Demonstrate balance in your short-term pursuit of survival and your long-term perspective for better times and deferred rewards.
4. Reinforce your Best and Highest Use®.
o Ensure that you and your company are focused on what you like doing, you are good at doing and your marketplace values you for doing.
o Bring as much value and enthusiasm to getting better and doing better at what you focus on.
o Take heart in knowing you are very good at what you do and this is a true advantage in these times where impostors are exposed, pretenders prove incapable and amateurs just give up.
Three strategies on how to profit.
After you have triaged your business and responded in four areas, turn your focus to new strategies to profit now and over time:
1. Take market share.
o Understand switching costs for the prospects you are trying to close. Make it easy for them to move their business to you and your superior value.
o Buy up your rivals for pennies on the dollar. Many companies today do not have enough sales to cover their overhead. Better yet, just buy the companies’ customers without the overhead of their failed companies.
o Grow your share of your existing customers. If you are trusted and invaluable, then ask for more of their business. Be quick to respond if another supplier stumbles, or is on the ropes.
2. Sell new value.
o Instead of selling just your product or service, take responsibility for your customer’s success and outcomes. Offer to warranty or insure that their success will come from your product or service.
o Recast your value proposition if your customers’ needs are changing. If so, rethink how you get paid, how you package your services and how you price your products.
o Realize you are going to work harder, spend more time, and possibly get paid less for serving the same customers. Consider it an investment in the future.
3. Invest for the recovery.
o Now is a great time for buying services and raw materials at a discount. If you can, invest now at a fraction of what it may cost to buy what you need when the economy picks up.
o With sales down, you probably can find extra time to work on the future. Take advantage of not being busy and get busy building your next success.
o Finally, as you come out of denial and self pity, push yourself into actions that will ensure your success and preserve your survival. Work harder and more decisively while your competitors are whining and paralyzed.
Our next year will continue to be hard as credit remains tight, new sectors of the economy are impacted, and the country adjusts to our new reality. You can grow your business during this recession if you triage, respond and develop strategies to profit. As the small guys in a world of goliaths, the recovery is largely in our hands as it always has been and will surely be again.
