After last month’s piece in the Pittsburgh Business Times,  (read it HERE), a Pittsburgher challenged me; “You can’t be serious!  Topography can’t be why Pittsburgh has thrived relative to Cleveland!” Seriously, I believe Western PA is mostly thriving because it’s mustering energy, creativity and commitment to keep climbing out of its valleys and avoid falling off its mountains. I’m finding Pittsburgh’s business community to be focused on innovation, science, and applying what they have learned to help new customers rather than fixating on politics and the economy. There is a steep learning curve for those uncomfortable with change but every day I’m meeting more businesses who are driven to understand and solve new problems of their customers and create more profitable growth. In this month’s newsletter you will read about the best practices I am seeing and a story of one local entrepreneur I’m watching succeed through his Junoon. Give me a piece of your mind publically here on my blog.

Here’s to your profitable growth!  – Andy.

Six Ways to Tell if You’re Getting Your Money’s Worth:

Despite many experts who insist that “Sales and Marketing are different,” why aren’t they just as accountable as Finance is for accurate results and Production is for working products? When good products and services are well marketed and sold smart, profitable growth happens. But when they are not, it’s a disaster.  For example:

• A distributor negligently promises to sell a manufacturer’s new product line to her current buyers without learning that different employees at the customer make these decisions
• A manufacturer says that his research shows buyers consumers want new improved products. Their outside rep company agrees to get paid on commission and invests months of selling only to learn that the research was never done.
• An ad agency develops a campaign to reposition a services firm based on bad historical sales data only to have it flop and fight to get paid.

Despite “everyone’s” best efforts, why do 95% of new products and services fail, and why do so few manufacturers, distributors, wholesalers and services firms feel that their sales and marketing arms got their job done?

When was success impossible and when is a sales and marketing leader deficient? How and when can a business leader know that their sales and marketing leadership simply didn’t do the job or even try? Here are six key responsibilities any P & L leader should demand are completed and done well.

1. Understand, agree on and communicate your firm’s Best and Highest Use and product/service features, benefits and advantages. Provide your firm’s Best and Highest Use to your partner in writing and demand they do the same for you
2. Define, quantify and target a niche of buyers assuming reasonable market penetration of a sizable, addressable market. Expect and confirm you can identify at least 100 prospects for each buyer you must close.
3. Devise a simple growth strategy reflecting a clear understanding of your buyer’s behavior. Ensure you agree on exactly who your buyers are and the simple process you know they will follow to buy from you.
4. Develop and execute thoughtful, practical and cost-effective sales and marketing tactics. Have measurable programs for finding, keeping and growing your customers.
5. Build and your through a practical budget and timeframe for implementation by accountable individuals. Budget and adhere to hard costs of finding, keeping and growing your customers.
6. Stay disciplined to capture and analyze feedback of your results. No program ever goes as planned, but failure to respond to market feedback equals failure.

Will taking these steps ensure that your sales and marketing programs work for you and your partner?  No, but if these steps aren’t taken, its failure was a function of negligence in addition to incompetence. Need help telling the difference between negligence and a good effort that can be fixed? Contact me at 412-973-2080 or at abirol@andybirol.com  for more of my help.

I am sitting here facing a deadline to write this article on innovation!  Isn’t it ironic yet obvious how innovation, stress and deadlines always seem to go hand-in-hand! Everyone needs and craves innovation, yet the more we chase it, the more elusive discovering the next “it” or “thing” seems to be. Most of us have cut all the costs we can and are already working harder than ever. In this stagnant, doubtful economy, innovation seems be the best path to success. What breakthrough can we create to enhance our results and profits? But given the choice, innovation always seems to take a back seat to whatever is immediately needed or can be quickly done. 

Given my procrastination in writing this article, I have to approach writing it spontaneously rather than by first reviewing the vast body of work on the topic of innovation. Simply stated, I see innovation as an individual’s or organization’s response to a condition, stimulus or demand that we face in the course of our work. The condition is uncontrollable and can be good, bad or boring. We can however choose innovation as a controllable reaction in the face of actions we cannot. So just are we seek to understand before we are understood, let me suggest we try to understand what kind of innovation we must respond with and then proceed to create it.

For me, innovation falls into three categories.

1. Premeditated: Opportunity-driven and optimistically embraced. A proactive innovation happens when an individual, group or company sees a way to create or add value that improves some aspect of their clients’ or their own condition. Apple’s IPhone and IPad are great examples. Teams were assembled to build Steven Jobs’ vision. Their goal is to improve the lifestyle of a mobile, social populace. Artificial deadlines and real milestones were set to assure ongoing progress and profitability. The results continue to enhance millions of customers’ lives and spur development teams to create more and more innovation.
2. Reactive: Crisis-driven and fearfully approached. A reactive or fear-driven innovation occurs when someone or some organization is confronted with a real or perceived threat to their well-being. BP’s Mexican Gulf oil fiasco demonstrates this. Society has put BP is on the defensive to take all steps possible to mitigate and repair the damage it has caused. Until but only until the economic, political and health threat to BP’s future is eliminated, we have the corporation’s full attention. Without public oversight and pressure, most would agree that BP’s efforts to solve the crisis might wane and would end as soon as they discovered the most expedient solution.
3. Spontaneous: Serendipitously discovered. An accidental connection is made despite someone’s primary focus being elsewhere; perhaps as a result of being distracted or perhaps bored. Silly Bandz, the silicone rubber bands formed into animal shapes and worn as wristbands exemplify this third category. According to Wikipedia, “the idea was inspired by shaped silicone office products that were created with the hopes of being a green product. They did not work as companies did not want to spend much money on rubber bands. They were then made larger to fit as bracelets and rebranded as Silly Bandz.” Interest in such innovations is always limited to the consumers’ attention span and need to be immediately and constantly cost-justified accordingly.

So the next time you are asked to be innovative, try to understand what kind of innovation you are being asked to create. Your understanding of the demanding party’s reasons will help you determine what kind and how much innovation they will pay for, embrace and sustain. And keep asking for!

“So, Andy, why is business better in Pittsburgh than in Cleveland?”

After repeatedly being asked, I wrote an article for today’s Pittsburgh Business Times answering this question. 

While I can say the answer has to do with topography you can click HERE to read it now if you are a subscriber, or send me an email requesting a free copy when its available in 30 days or simply call me at 412-973-2080 and I’ll be glad to share my thoughts in person.

To your profitable growth!   
Andy

I’d like to point you to a piece I’ve just written titled, “Is Your Business World-Cup-Worthy?“ In this piece, I posed a question to you, the reader.  And that question is,

If your company was a World Cup team, how would it do in terms of. . . :

• Preparation
• Coaching
• Fans
• Commentators

Is your company focused on common goals?  How does your team do when the pressure is on?  Do your customers really like you or is it just business as usual?  And lastly, how has your company been portrayed in the public eye?

Small business owners share many of the same dynamics that world cup teams do.  So now that you have a picture of the concept I’m referring to . . . how does that picture look?  Is your business a contender?

*NOTE: This article is originally published at Small Business Trends*

Pricing has always been one of the greatest games in business. In times of scarcity, this is ever so true. The price you offer has to reflect value, convey trust and cover costs of sales, delivery, and unfortunately, collections. And you have to be able to get your price.

How do you know when a price is right?  Let’s say that you meet a prospect for lunch in an attempt to close a deal.  When you finally come to the point of stating your price, one of three things happens:

• Your prospect immediately says no, stands, and walks away.
• Your prospect immediately says yes, shakes your hand, and treats you, the waiter, and everyone at the surrounding tables to champagne.
• Your prospect contemplates the offer.  The long silence feels like an ocean in your head until you hear that magical word: Yes!
In two of the three situations you closed the deal, but only in the third have you done it right.  If the prospect rejects the offer out of hand, he believes the price is too high, which means that you have failed to sell the benefits of what your company provides.  If the prospect takes the offer immediately, you have given away too much value for too low a price; your prospect feels like he’s discovered a Van Gogh original at a garage sale!  You know you’ve got it right when your prospect accepts your offer only after some deliberation.  In this case, he knows the value he is losing if he says no.  Ultimately, your price is your demonstration of value. If you are getting your price in difficult times, congratulations, for you are truly valued for your value.

Are you interested in profitable top line growth for your small business?

If yes, where can you focus first? What can you do now?

Try these ten keys to profitable top line growth.

10 Keys To Profitable Top Line Growth by small business growth consultant Andy Birol.

1. Your customers’ growth is key to your business profitability.
   The more you increase the average spending of your customers, the quicker your business will be more profitable.

2. Your growth is related to your profitability.
   Assessing your customers by how profitable and by how much they are growing gives you the tools to grow the right ones for the most return.

3. Accurately balance your resources between your existing and new customers.
   Knowing how much to spend on your existing customers vs. how much to invest in your new ones maximizes your efforts and your rewards.

4. Identify and accelerate your revenue from your most profitable customers.
   Give your customers great reasons to pay you sooner is the most logical way to generate the best revenue now.

5. Study your customers’ buying habits to reset your selling methods.
   If your customers have changed any aspect of how they buy, then you must change how you sell to them.

6. Brand and differentiate your business to grow your margins.
   There is just no way to profitably grow your small business as the low cost provider so you must be unique and known to be such by your customers.

7. Repackage your products and services to grow your customers.
   If your customers won’t buy beer by the glass and if they still like beer, serve it to them over dinner or offer them a keg.

8. Use existing sales and marketing channels differently to reach more customers.
   Too often a sales force only calls on their familiar customers and advertising only speaks to those who hear the same old message. Refocus both and attract more customers.

9. Embrace new sales and marketing channels to reach existing customers more profitably.
   If you have younger, indifferent or detached customers serve them on-line and less personally and grow your margins quickly.

10. Introduce value without introducing cost.
    Profitability is greatest when you can deliver the perception of “new” and “more” at the same price.

Each of these ten keys can unlock your door to profitable top line growth.

While financial gamers, schemes and scams have enabled many companies to avoid either profitable growth or a sale for years…

… ultimately one of these options is inevitable.

• A company that is profitably growing is controlled by passionately committed owners and investors.
  Their firm is financially and operationally self-sufficient. There is no need to merge or look for investors. Its leaders can reduce its credit line and pay down outstanding loans. The company has customers who are happy to pay for its valuable products or services. Over time, the company will build up retained earnings and become a creator of wealth. As long as its owners are confident and passionate they should never think of giving up their independence in running it or cashing out. Life is good!

Your company either profitably grows or is sold says small business growth consultant Andy Birol.

• A company that is not growing profitably has flat or declining sales.
  Its costs and expenses are fixed or rising and it starts to lose money. The company begins to consume more cash than it generates. Owner, banks or investors have to subsidize the company through credit or by tapping any retained earnings. These leaders lose passion for their business as it is no longer self-sufficient. Clearly, its customers cannot or will not pay enough for the firm to delivery its products and services. First, the company runs out of cash, then out of credit and finally must be sold.

There are only two buyers for a company that is not profitably growing:

1. New owners and investors with ideas, cash and passion to return the company to profitable growth.
2. Bankruptcy trustees who sell the company for whatever they can to pay creditors pennies on the dollar.

So companies either profitably grow or they are sold.

What’s it going to be for your company? Do you agree or disagree?

Simply put, a business has a profitable top line when its revenues cover both its variable costs of producing its products or services as well as its fixed costs of overhead.

Revenues are the sales price charged times quantity sold.

Overhead consists mainly of SGA, Sales, General and Administrative expenses.

A company becomes profitable when its sales exceed its breakeven point. The breakeven point is where a company’s sales cover both the inescapable fixed costs of running the firm as well as the escapable variable costs of producing a given quantity at a given unit cost.

Why is it so difficult for a business to consistently keep its top line profitable?

How To Profitably Grow Your Top Line by Andy Birol

The four main reasons are seen in how it reacts to marketplace demand for its wares or increases in its costs when:

1. It cuts price to sell more quantity.
2. It cuts quantity to maintain a higher price.
3. Its direct costs of producing its product or service (direct labor and direct materials) grow so high that its selling price must be raised beyond what its market will pay.
4. Its overhead grows so high that no achievable level of sales can cover its expenses.

To profitably grow its top line, a company must raise prices and sell more. Its costs and expenses must be managed but nothing ensures a company’s profitable growth more than being able to price higher and still sell more. Pricing higher than the competition means its products are seen as differentiated and selling more means its products are in high demand.

Most companies successfully do so when:

• Their products and services can be produced and delivered at high profit margins
• Their customers believe what they buy is valuable and scarce and they need to do so in order to succeed in their lives, jobs or business
• The company can choose when, where and how it sells and markets its products and services

Profitably growing ones’ top line gives a small business the power, control and flexibility to do business as it chooses. Over time, it provides the company with security and predictability, and its owner with discretion and wealth. No wonder it is so hard to achieve and difficult to maintain!

Coming in future posts, I’ll further define profitable top line growth, dissect it and discuss how to diagnose it.

In any economy we fight hard to find, land, and satisfy customers.

In this economy it’s twice as hard, but twice as satisfying to know you really helped your client move forward or save money.

But how does it feel when they tell you they aren’t paying you? Nowhere else in business are one’s feelings more confused! You care about your customer, but they have misled you and stolen your value. Once you have collected your emotions and your thoughts, what is one to do? A non-paying customer is the biggest liability your business can have as you must throw good time and effort after bad to be made whole.

When Bad Customers Happen To Good Providers by Andy Birol, Profitable Top Line Growth

When what your customer says is no longer true, all you can do is watch what they do and remember what they did. Here are some ideas

Make concessions based on joint accountability.
If they are asking you to compromise, demand a similar giveback in return. For example if a business owner is asking for relief, have they first taken a pay cut before they are asking you to do the same?

Don’t change your terms because your client changes their mind.
If he or she suddenly makes the excuse your products or service no longer solve their pain or create new profits they are distancing themselves from keeping their promises. Stand your ground and take legal action.

Watch what your customers do and not what they say.
If they aren’t cutting back everywhere or still taking vacations, don’t subsidize their bad judgment or unwillingness to sacrifice.

Credit their Credible Behavior.
If they have kept previous promises you should trust the same individuals to do the same. Beware of the same bait you have taken in the past. Learn only to get screwed in new and different ways.

Don’t assume any accountability for their dysfunctional behavior.
Bad times expose impostors. Learn all the reasons why your customer is in hot water. The chances they will cut the same corners or shirk their responsibility again are much greater in bad times.

Prepare the “MIL’s” that you Must, Intend and Like to get through every negotiation and establish your BATNA (Best Alternative To A Negotiated Agreement) where it’s better to walk away than settle.
The book Getting To Yes by Fischer and Ury is a must-read for preparing for any negotiation.

Stand firmer on receivables in a transactional business than you would a relationship business.
Lawyers and accountants usually let their receivables slide because they know they can bill their clients for years to come. If you have no chance to make it up in the future do not compromise in the short run.

Negotiate as a peer, never as a subordinate.
When a customer informs you they are breaking a promise, its no time for them to be heavy handed with you. They made an agreement and cannot live up to it. If they are telling you and not asking you for relief they think they can squeeze you; so squeeze back.

Keep reminding them of their commitment.
Most debtors are good people who want to pay up. Follow up persistently and incessantly. The squeaky wheel gets the attention and paid first.

Getting paid equals respect.
If you are known as a tough cookie, you are more likely to get paid. If you are known as a pushover, well…

Tough times will bring the best and the worst out of people. While past behavior is usually a good indicator of their next actions, desperate people in denial will do anything. Keeping close to your customers, doing reference checks on prospects (just as they do them on you) and providing high value based on your Best and Highest Use is the best defense. Always being this tough has a final benefit. It allows you to subsidize creditors you believe will survive and who will remember you for reaching out to them in their time of need!