As a growth consultant for small businesses, I’ve enjoyed many opportunities to see how various small businesses function, especially those that have operated for a number of years. In an age of understaffed companies and conflicting and competing demands, most of these companies are so busy helping their customers that they don’t take the time to help themselves.

They tend to lose sight of what I call the extraordinary that lies at the heart of the ordinary in their operations–the characteristics that make them special and unique. Two such companies in Butler County are W.K. Thomas and Interstate Pipe and Supply.

The presidents of both companies lacked a formal marketing program and realized that traditional, relationship selling would not get them to where they wanted to be —in the scarce space of marketing and sales in their respective businesses. Now, they are both changing their companies to achieve that.

Thus far in our work together, they’ve focused on expanding their values and defining and honing what I call their individual Best and Highest Use®. Best is what they love to do. Highest is what they do really well. And Use relates to what their customers value and are willing to pay for.

Under the leadership of Brent Thomas, W. K. Thomas & Associates provides pre-engineered steel building and construction services to the commercial, industrial, community, and religious markets throughout Western Pennsylvania.  Brent’s father, Bill, now Vice President, established W.K. Thomas in 1974 as a custom-home builder and general contractor. Since then, the company has remained a privately owned, family company.

Other firms rely heavily on the service offerings of project management and estimating as commodities to drive business forward. They end up competing in a market where bottom dollar pricing and the resulting low-quality construction become the norm.  But Brent Thomas is linking the brand of W.K. Thomas to pre-engineered steel buildings as the company’s big differentiator and is driving revenues up. His company is growing a reputation in Butler County as the go-to company for these types of buildings.

“I’ve stepped outside of being jack of all trades,” says Thomas, “I’m focusing on pre-engineered steel buildings which is our Best and Highest Use, have taken on more responsibility for sales, and I’m reorganizing our team to help energize this new direction.”

Under the leadership of Brian McCarrier, Interstate Pipe and Supply specializes in water, steel, sewer, plastic, gas and culvert pipe and fittings, valves, tanks, and pumps. Brian’s father, William, founded the company in 1968 when he purchased a small, pipe-supply house in 1968 in Clintonville, Pennsylvania and gave the company its present name. He opened a second branch early in the seventies, and started the Butler, Pennsylvania branch early in the eighties. Late in the eighties, he opened a branch in Washington, Pennsylvania.

“I’m relying on our Best and Highest Use to move our business forward,” says McCarrier.
“We’re leveraging the culture of Interstate Pipe & Supply and our moral responsibility and
stewardship to better serve our employees, customers, and the community of Butler County.”

The result: As McCarrier’s competitors rely on cut-throat pricing to sell their commodity products, customers of Interstate Pipe & Supply now see the company’s differentiated
brand as worth more. 
 
When I began working with Brent Thomas and Brian McCarrier they both had strong, well-established businesses with great potential for growth and wanted to take their companies to the next level.  What made sense for them was my ability to find the extraordinary within the ordinary of their companies. My approach has been to find the characteristics that make them special and different from their competitors, and to cultivate these aspects into exciting opportunities to grow their businesses.

Working with them and their customers has led me to understand their product lines, how they add value, and how they develop special relationships with their customers, whose feedback is critical to our endeavor.

The upshot is that now W.K. Thomas and Interstate Pipe and Supply, are becoming more aggressive in proclaiming their value and more consistently educating their customers about what they can do to help them. Thus far, we’ve focused on expanding their values and defining and honing their individual Best and Highest Use®.

Throughout my years of consulting with businesses like W.K. Thomas and Interstate Pipe and Supply, I’ve deployed this approach to help more than 430 businesses owners identify the specific markets that’s right for them and their companies. This has had a $450-million impact on the economy.

Best and Highest Use also immunizes companies against the “Be All Things to All People” disease. This disease is as common as a cold, but it’s as deadly as the plague for small businesses.

When business owners fail to target specific markets in this way, a number of consequences occur, all of which are bad. Their companies aren’t special. They’re mediocre, forgettable, or worse. People can’t refer customers to them. Their companies attract unqualified prospects and waste resources on prospects who could care less about their offers. This, in turn, diminishes their efforts with regard to prospects who do.

What’s more, best use helps business owners to resolve the greatest pain or create the greatest opportunity for a narrow slice of a market. This creates a crucial intersection for them between their companies, their Best and Highest Use, and the needs of their customers.

Over time, I’ve had the privilege of learning, using, and teaching a variety of growth tools for organizations. We’ve used a variety of names for these processes, including strategic planning, management by objectives, sales management, and incentive compensation. Too often, these systems steamroller over the interests of the users. The fact is that old-fashioned, autocratic tools just don’t work anymore.

More than a few times, I’ve had people challenge my concept of Best and Highest Use, saying that it’s just another term for distinctive competence, one of the buzz words that periodically make the rounds of corporations and MBA programs. In one way, they’re right. Best and Highest Use is essentially distinctive competence for business owners. The difference – and it’s a large one –is that although distinctive competence speaks clinically of skill sets and marketplace advantages, Best and Highest Use involves an owner’s emotions, goals, and personality.

One concept I hear kicked around is the term, best practices. But this assumes that all firms start out and grow and stay completely equal. To center your business on best practices is to deny, ignore, and disrespect your Best and Highest Use^®. How can you ever tell if you are better or worse than you should be if you only judge yourself on the basis of the lowest, common denominator of other companies?

Working together, Brent, Brian, and I continue to focus on their individual Best and Highest Use to translate new customer demand into substantial, dramatic growth and confidence in their abilities.

In the short and medium term, we’re tailoring initiatives designed to achieve profitable sales growth. At the same time, both of these company leaders are experiencing a renewed excitement and passion for their businesses. At a time of economic hardships when competitors are pulling back or taking cover, their passion and excitement is giving them confidence to make it work.

As we reinforce the abilities of W.K. Thomas and Interstate Pipe and Supply to deliver higher value at lower cost, we’re decommoditizing both companies.

This is not to say it’s easy. For one thing, Brent and Brian have had to break old habits. That’s difficult. But my goal is to push them out of their comfort zones in a way that causes willingness to raise new behaviors while preventing them from making ultra-risky, bet-the-company decisions like introducing price changes to gain market share, hiring non-producing sales people, or getting rid of a sales force.

As I work with companies like theirs that have enjoyed years of success, I’ve enabled them to make course corrections a step at a time. The end result has been that they’ve sharpened their views on the kinds of businesses they want, the kind of services they deliver, and they’ve stopped trying to be all things to all people. These are hard choices that emerge from recognizing that everything they may be involved in is not a business.

Andy Birol is the Founder and President of Birol Growth Consulting, www.andybirol.com. You can reach him at 412-973-2080 or at abirol@andybirol.com.

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?

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

Even in an improving economy, why does the contracting industry still feel like the last frontier? As long as financing stays unpredictable, customers pay late and subcontractors/tradesmen slip up, does running your business seem like a series of showdowns at the OK Corral? After helping dozens of owners in the building trades, I’m clear that formal planning and forecasting don’t work in the face of erratic weather, desperate bidding, and poor project management. But good contractors survive.  And a few have learned how to adapt and actually thrive by creating scarce capabilities and unique services. And some builders have done it so well that they have, in a sense become “The Only Sheriffs in Their Towns” in the “Wild West of Contracting.”

Recently I personally met, spoke with and asked over 20 PA-based contractors what they needed to do to succeed in the next two years.  They said three factors mattered most:

1.      Competitive estimating/pricing

2.      Quality work

3.      Great project management.

But they agreed that these factors are not a strategy for long term success. In the short run, every contractor may survive by delivering quality work on time and on budget. But as labor and material costs grow and credit stays tight, only the largest or cheapest firms may succeed over time by doing more and charging less.

So what is the answer?  Focus, perform scarce services, and move with the market. Here are three “Wild West” strategies I’ve helped my contracting clients invent, develop, and implement.

1.       Focus on your Best and Highest Use^®. WK Thomas Construction has focused on being a leader in building Butler^® pre-engineered steel buildings.

2.       Invent and Perform Scarce Services. Menard USA is a design-build specialty geotechnical contractor offering expertise on ground improvement for sites with poor soil.

3.       Move as the market moves. FlorLine Group^® is expert in the design and application of industrial floor, wall and ceiling coatings for electrostatic and other regulated (FDA) environments.

So which strategy will you take to become the only sheriff in your own town? The first step is to decide which of your differentiated skills, expertise and services you can charge more for to generate better margins. Although new products, markets and technologies are hard to develop and must be constantly protected from copycat competitors, they will turn your “Wild West” into looking less like “F Troop” and more like “Bonanza!”

Andy © Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners create profitable growth by growing their Best and Highest Use^®. Andy can be reached at (412) 973 2080, abirol@andybirol.com or www.profitablegrowth.com

While you know how your company creates profitable growth, do others?

In spite of all your meetings, strategic planning efforts and company mission statements, are you sure your constituents get how your firm makes money?

Are all your internal departments making, spending and saving money towards the same goal? If not, many inside and outside your company may be squandering your resources or working at cross purposes.

Here are the 10 ways to tell if your company’s plan profitable growth is a secret. 

Is your growth plan a secret? Asks small business growth expert Andy Birol

1. Few of your management team and none of your employees understand your company’s business model or know how your business makes money.
   When asked, they revert to talking about how long you’ve been in business as proof that legacy means current success.
2. Your customers do not know why you cost more than the competition.
   After you explain all the disadvantages of buying competitors don’t provide, your customers still don’t acknowledge your added value.
3. Even you’re not sure what it costs you to find, keep or grow customers.
   In response to such questions, you find yourself dieseling, much like a jalopy that continues to sputter after the key is out of the ignition.
4. When asked by a reporter which market segments offer your firm the best opportunities for future growth, you don’t answer them, not because it’s a secret but because you aren’t sure.
5. Your sales force blames your high prices for not hitting their sales quotas while they brag about the excellent service they provide.
6. Your compensation plan doesn’t reward your executives for achieving your company’s profitable growth.
   Instead of planning to spend their bonus on a trip to Hawaii, you find out they’re booking a weekend in Topeka and not taking their kids.
7. One of your vendors suggests that if you dropped your prices you could sell a lot more of your products and thus buy more from her.
   Clearly they don’t see the value your firm is adding to what they are supplying you.
8. Your closest friends give you bad or unprofitable referrals.
   At a recent get-together, your friend tells you about meeting three of your most desirable prospects. But he didn’t think you would want to pursue selling them.
9. Your spouse cannot explain why your company is the premium provider.
   When asked by her or his friends to describe why your firm is so expensive, she or he turns to you to explain it correctly. And when you encourage her to do it alone, you constantly interrupt her to correct his or her mistakes.
10. The reasons your customers say they buy from you do not match the reasons your sales force says sells your customers.
    As the old saying goes, people don’t buy shovels, they buy holes. Sadly, you worry your customers are asking for premium swimming pools and your sales reps are selling low-cost excavations.

While stories of disconnected companies can be hilarious, they are not funny when they are about yours. When your plan for profitable growth is clear to your team, their actions are more likely to contribute to your objectives.

Convey how your company will achieve profitable growth and make sure everyone around you understands.