With All the Business in Technology, Where’s the Technology in Business?
Filed under: Business Growth, Profitable Growth, Uncategorized
Business people are fascinated by the benefits, profits and potential of technology. Just visit any tech event and witness the financiers, service providers and the media networking with techies to discover “the next business thing.”
But despite all this “technology-transfer”, why isn’t there more technology in business? After 15 years of consulting with more than 430 firms and presenting to or interviewing another 10,000 business leaders, I’m dismayed by how little technology actually makes it into most mainstream, medium and small businesses:
- Most inventories are still managed without RFID or other systems tied into the POS. Despite this decade-old technology being “so easy,” I still see many companies doing it by hand.
- Few companies have good CRM systems. While this software works, few customers integrate their systems with their own sales culture and process or ensure sales force commitment, crippling many users from benefitting from such new technology.
- True cost-accounting information is scarce. Ask business owners what their product or service really costs to make, sell and service and few honestly know. If they had more knowledge, they could more confidently limits test new offers and features.
- Knowledge businesses still communicate with tools from the 1900′s. Despite the many better ways to present and engage their audiences, the gap between what companies say they sell and what customers hear and buy remains enormous. Too few businesses are developing mobile apps or distance learning.
Here’s why there isn’t more technology in business:
- The culture of technology clashes with mainstream business. The technology culture values perfection of their means while mainstream business struggles to convert these means into profitable ends.
- Tech people are schooled to woo investors and grants not to sell to customers. Inventors and startups believe they must write plans to get financing before they approaching and selling customers. Customers need to be understood and served but investors want to be bought out and move on. Who is more important to business longevity?
- Associations and business-plan contests reward planning skills not results. Our schools, associations and governments reward techies more for their thinking than for their sales and profits.
- Social media often encourages engagement without closure. Blogging and tweeting without closing business is like having a fiancé for five years without a marriage.
Why should you in the technology community react or even care? Because mainstream businesses need you, your value and they have money to pay you.
Consider these 3 ways to help you put more of your technology in business:
- Make your “thing” work manually before you try to make it work with technology.
- Understand how your customers use your thing to make money, and whether it’s by selling more, spending less, saving time, reducing risk or improving their lifestyles.
- Sell some version of your product or expertise from the start while you seek investors.
Technology companies have big shoes to fill in sustaining the Western Pennsylvania economy beyond steel. Doing so takes driving their products and services deeply into mainstream business.
Through this column, I will provide you with ways and ideas to do so. Together, we can put more of your technology into business.
Get Your Loving at Home; He’s No Hugger!
Filed under: Business Growth, Pittsburgh, Profitable Growth, Uncategorized
Have you ever wondered what would happen if you cut out all extra service and personal touches from your business? Would customers still come if you were excellent but detached? My recent shoulder surgery was an in-your-face experience of how this works.
After enduring shoulder pain for a year, an MRI confirmed that my rotator cuff was ripped apart. I found Pittsburgh’s best surgeon, and after a 15-minute consult, he booked me. 90 days later, I arrived for the surgery, and was quickly processed, IV’d, gurneyed and staged for the operation. No visit from the surgeon, little small talk from the nurses, and no remorse for their 2-hour delay in pre-op.
When I objected, they sedated me to ensure my compliance and placed me in the queue. The surgeon never visited before or after the procedure, and three hours after the operation, I was sent home to heal. A week later I had my ten-minute follow-up with the surgeon. Running out of time with more questions to ask, I tempted him with the only lure I had. I suggested that he operate on my other shoulder. At this, he gave me another ten minutes, satisfied all my concerns, and recommended scheduling the next one before the summer.
How did this make me feel? Am I a happy customer? What business lessons did I take away from this experience?
I am happy with my surgeon and the results to date. Yes, I felt deprived until I accepted that when it comes to surgery, I’d better get my loving at home. My surgeon and the procedure have my highest recommendation. If anyone needs a shoulder surgeon, call me at 412-973-2080, and I’ll put you in contact with the best one I know.
So what lessons can we learn on running our businesses in a cost-constrained marketplace where raising prices or offering more value is impossible? How do you provide your value when your market won’t pay you for it?
• If you offer a small part of the total package your customer is buying (surgery vs. a fully recovered shoulder), you must be efficient at delivering the only part you can.
• If you have to run a high-volume operation, focus all your resources on maintaining quality and efficiency at the highest volume possible and cut out any and all distractions.
• Spend your non-delivery time on generating more customers.
• Have faith that factors you can’t control — like physical therapy and patient commitment to rehabilitation — will make your work (surgery) speak for itself.
Many years ago, when I was a corporate manager, I sat in on an esprit de corps meeting during which a furious debate ensued over the impact of some corporate policy on how some employees might feel. After listening to this debate, my favorite executive stood up and said with exasperation, “For God’s sake, they can get their loving at home, we run a business here.”
Perhaps there’s a lesson for many of our businesses. Despite every efforts we make to cushion and enhance the experience we offer, sometimes it’s only about focusing on your best and highest use and letting your customers meet their other needs on their own.
Assess Corporate Culture When Choosing Your Next Customer
Filed under: Business Growth, Profitable Growth, Uncategorized
It is standard practice to qualify a prospect on the basis of time, need, authority and money, but why not by corporate culture as well? We all find it easier to work with some companies just as we prefer working with some employees more than others. In fact, as a result of outsourcing, with more and more work going to suppliers instead of employees, perhaps the supplier-customer relationship should (and will) start to mimic the employee-employer relationship.
If this is so, then as suppliers, we should start to assess our prospect’s corporate culture just as we did when deciding to accept a company’s job offer. While I’m not recommending pre-relationship psychological testing, we may need to run a relationship check just as we would a credit check. Since people still buy from people (as opposed to companies) some level of compatibility is essential. After all, customer-supplier relationships fail most often because expectations were not set, agreed upon and then met. Some relationships may be already doomed from the start!
So let’s take a few moments and decide whether we are picking good long-term partners or “one-time sales stands.”
- Does the decision-maker communicate like you do?
- Does he/she share some basic values with you?
- Does his/her company make decisions like yours does?
- How are disputes resolved, if they are resolved?
- Is it a conservative or progressive environment in terms of risk-taking, communications, problem solving, partnering?
While sales goals have to be hit, they are rarely accomplished through the first order. Therefore, developing an ideal customer profile before closing that first deal will help ensure that more will follow. Taking a few minutes when moving qualified prospects through the developed or proposal funnel stage before closing them will only enhance the chances of successful long-term partnerships. This profile can easily be added as part of your qualifying customer or pre-proposal questionnaire. Feel free to contact me if you would like some further thoughts on how to do this.
Connecting Engagement to Profitable Growth
Filed under: Business Growth, Profitable Growth, Uncategorized
For years, I have wrestled with what role social media role really plays in creating profitable growth and wrote a rowdy piece for AMEX on it here. But building relationships or “engagement marketing” is critical to creating profitable growth. And recently, when Constant Contact asked me to speak at their engagement conference on profitable growth, I presented the following 5 findings:
Five Key Findings
1. Customer Engagement
+ Your Firm’s Value
==============================
Profitable Growth in the New Economy
It is nice to chat online with communities and prospects, but it is crucial to speak in terms of your firm’s value and expertise. Whimsical topics may generate awareness and interest, but they must create live conversations where buyers can build interest and take action that leads to closed business and your profitable growth? Just like in marriage, unless engagement leads to committed customers it’s a waste of time and effort.
2. To ensure your engagement efforts generate profitable growth:
- Do your math. Determine your how many engaged prospects you must generate and how many of these you must convert into buyers to make your money.
- Focus your engaged prospects on your Best and Highest Use (BHUTM.) When you know your firm’s BHU and inject this into your conversations, your best prospects will respond to you in these terms.
- Convert customer engagement into profitable growth. Budget your engagement activities all the way through to your profitability.
3. Confirm that your engaged customers stay profitable.
• Measure exactly how much money your engaged customers are spending.
• Track your cost of engagement and never let it exceed customer profits.
4. Watch and ensure that your profitably engaged customers are paying you:
• Measurably and predictably
• Because of your social media/marketing
• Based on your firm’s value
5. Discover the specific ways how profitably engaged customers are paying you:
• They buy samples, trials, assessments and diagnoses
• Then they buy more
• And they refer your company to their peers who do the above
Customer engagement is a new word for building relationships, which is as critical as it is imperative. But social media and networking, without a connection to profitability, is a new word for monkey business. Make it your business to do it right!
5 Steps to Refocus During Tough Times
Filed under: Business Growth, Pittsburgh, Profitable Growth, Uncategorized
Whether it’s the economy, your family, business, community or society, probably some part of your world has suffered over the last five years. Unfortunately, there are enough signs show that the next few years will continue to challenge even the luckiest, blessed and oblivious among us. Even as we strive do “right and good,” what do we do if: demand for what we sell, access to resources we require, or our energy and drive simply dwindles?
If you need a pep talk, read on.
- Recognize bad signs fast. As it’s been said, once is a coincidence, twice a trend, three times, a certainty. If something isn’t working, figure out why ASAP. The world is changing faster yet most people can’t change at all. Every day I speak to people who feel trapped in so many ways. They have become what they tolerate because their pain of changing remains greater than their pain of not changing. In business, however, your marketplace (customers, employees and vendors and investors) will tell you the truth. For the other parts, get the personal, professional or spiritual support you need to accelerate changing your bad to good.
- Take stock in your value; Your Best and Highest Use® Accept quickly that your expertise and your firm’s experience are your greatest treasure. They remain yours forever and always the ingredients and foundation of your renewal.
- Keep your eyes open; seek opportunity. Wherever there is pain, need or hope, you can find and make opportunity. Follow your heart and your head. Your internal voices are ever more righteous as you mature. When most people take a hit, they lose faith in their judgment, impact and options. Stand apart and stay confident.
- Refocus, regroup, repurpose. Take your BHU and the opportunity or pain you uncovered and link these and then find customers who will value your repackaging. Activity matters so keep trying new versions and push forward. Try giving away your reinvention or better yet sell it right away. In facing setbacks such as bad timing, backward thinking and an ADHD society, rely on your passion and conviction to drive you to success. Remember your BHU is portable and deliverable. If you doubt where’s the demand for your value, go where you:
- Are getting human and viral response
- Have raving fans
- Are scarce
- Stay focused/don’t blink. Anything you create takes 3-6 months to generate reaction/awareness in the marketplace and 1-3 years to take root. Create the opportunities for quick wins and the metrics to prove your wins are real. Before you can generate market success and profitable growth, remember to create prospects, and qualify and develop them into buyers.
- Connect online as much as you can
- Get seen, heard and interviewed
- Identify and nurture allies, referral sources and champions
- Make your viral marketing portable; avoid investing in fixed costs, particularly of traditional sales and marketing.
Whether or not this all makes sense to you, think about the parts that do and put them to good use in refocusing your business in tough times. Email me at abirol@andybirol.com.
Companies Either Grow or They Are Sold
Filed under: Business Growth, Profitable Growth, Uncategorized
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!
◦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?
Making Money on Marcellus: First Lessons Learned
Filed under: Business Growth, Marcellus, Pittsburgh, Profitable Growth, Uncategorized
If you own a business in Western PA/Eastern Ohio, the more you learn about the trillion-dollar business opportunity called Marcellus Shale, the more you may wonder how you can best profit from it. But unless you’re selling directly to gas drillers or energy giants, you are probably wondering what to offer, who to approach and how to go to market. As I’m helping my clients and workshop attendees do this, here’s the first in a series of lessons I’ve learned:
First Lessons Learned on Making Money on Marcellus:
- Make Marcellus your rising tide; not your tsunami: Find a portion of the overwhelming demand you can profitably supply and make sure you can deliver on any business you close. As tempting as it is, don’t let any one customer become more than 20% of your business. My friend Shaun Seydor’s seminal report ” The Economic Impact of the Value Chain of a Marcellus Shale Well” *is a must-read and linked here with his permission and my gratitude. Read it and think about where your can catch the wave.
- Follow the money and bring your “A” game: My early advice to clients is to avoid the big players (Range Resources, EQT, Chesapeake, Exxon/Mobil etc.) and sell to the companies who sell to these big boys. Stay one step removed from the “tier one” companies, and you can keep more control over how you do business. But it’s still a fast and furious world and strong contracts are imperative. Put your best foot forward and never forget: with all this opportunity you are competing in the big leagues. Fortunes will be made and lost. This is a great time to Recharge Your Best and Highest Use®
- Stake out your value and place in the food chain. Learning where and to whom you offer the greatest sustainable value is critical. There are many ways to slice the Marcellus marketplace. Identify your ideal target buyer and know their buying process. Build a selling process that matches their buying process. Here’s an article to help you think about this http://profitablegrowth.com/shout-out-or-shout-at-your-sales-force-is-it-generating-sales-growth-in-the-new-economy/ Also, decide where your business fits into these two graphs from the Marcellus report: Figure 1 – Types of Economic Impacts (p 4.) and Figure 2 – Phases and Key Steps in Developing a Marcellus Shale Well Site (p.10).
- Timing is everything. Many business owners I’ve met operating in the Marcellus tract complain that the “out of towners” won’t hire local companies or that “the money is yet to show up.” Make sure what you sell is ready to be purchased. Watching what your customer’s customers are buying is one way not to make your move too soon or too late. Here’s a piece I wrote in a different context but has some good tips on figuring out your best timing http://profitablegrowth.com/is-your-demand-down-or-distribution-dying/
- Chase transactions or relationships Most companies working in the Marcellus space can be split into transactional firms who do business one sale at a time (e.g. gas stations) and those relationship companies growing over the long term (e.g. cleaning companies.) Match how your business profits best to the right kind of kind of customers that you should do business with. To help you decide which you should focus on, here’s an article for you http://www.andybirol.com/DisplayContent.aspx?MenuID=626
Unlike the great Oklahoma Land Rush where everyone got a fair start at the same huge opportunity, Marcellus is much more complicated and tricky despite the trillion-dollar economic windfall it is. Stay tuned. This is the first in a series of pieces I will write as I learn lessons with my clients and workshop attendees on making money on Marcellus.
Do you have questions on how your business or audience can make money on Marcellus? Call or email me and let’s talk about it.
*By Heffley, Seydor, et al & the Katz Graduate School of Business at the University of Pittsburgh.
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.
