Posts
Faced with an economic downturn, many businesses cut advertising and marketing spend. But it's their biggest commercial mistake.
The Financial Times have just launched a very unusual poster/bill-board campaign in which the bill-boards have been stripped back to the bare boards and with just a small copy panel posing the question: "Global downturn. What's the first mistake businesses make?"
The posters direct people to a page on the FT website www.ft.com/budgets which includes details on a number of Independent studies that all show that advertising in a downturn gives you increased share of voice, increased market share and increased profitability over time. Here are some of the highlights:
McKinsey study:
The companies who increased their spend in a recession were the only ones whose profits rose substantially when the economy recovered.
Read the McKinsey study
Patrick Barwise, London Business School Professor of Management & Marketing:
The advantages of maintaining or increasing marketing effort are greater than the short-term benefits of reducing spend.
Read Patrick Barwise's report
Hillier analysis of 1,000 companies on the PIMS (Profit Impact on Market Strategy) database after the early 1990s recession:
The companies who had cut their marketing budgets saw ROCE (return on capital employed) decline by 0.8% after the recession.
Those who increased their marketing activity saw an increase of 4.3%.
McGraw-Hill research, analysing 600 companies from 1980-1985:
The sales of companies who had kept advertising during the 81-82 recession had risen 256% over those who had not.
In every recession of the past 90 years, independent studies show that the businesses who increase their advertising spend are the ones who survive the tough times and thrive afterwards.
Still planning to cut that spend???
Thursday, 4 December 2008
Friday, 21 November 2008
These are interesting times
This is an article written by my good friend and colleague, Gordon Berry, whose sentiments I share 100%. I hope you find these wise words of value.
At the time of writing this note, we are undoubtedly going through some very interesting and challenging times.
Indeed, if we were to choose to believe what we read in the newspapers and hear on the television, then one would be forgiven for thinking that the sky is falling in. What is important to realise straight away is: that is how they sell newspapers or get their viewing figures up. The media know that the more they can scare people, the more people will buy newspapers or listen to the news. It has been said of course that the media have predicted 18 of the last 3 recessions. For months now they having been pawning recession, even though we are not actually in one. Now that they are close to creating a self-fulfilling prophecy (if you scare everybody enough to think that hard times are on there way and they must stop spending - then guess what happens), they have started talking about deflation – even though we do not have deflation.
Now, please understand me. There is no doubt that if it is your job that is genuinely at risk of redundancies, then I can understand your concern. Or if your livelihood relies entirely upon the lending markets, then there is a specific issue there.
However, two things: firstly most of the people reading this are self-employed and there is an argument that self employment is far more secure than employment – because at least you are in control of your own destiny! Secondly, if you do have a fear about the security of your position – is it founded on reality– or are you worrying yourself unnecessarily? You see, that is my definition of anxiety – it is using your present moment to worry about something that might not happen in the future so that you can get to feel bad now! and crazy as that sounds when you think about it – we all do it to some degree, don’t we. Some people are so good at it they make themselves ill. Some simple advice if you will allow me….Stop it. Stop spending your hours worrying about what you cannot affect and go and take action on what you can affect. Speak to your Boss and find out if there are any grounds for concerns and probably more importantly, find out how you can make yourself indispensible to your employer. The same could be said of the self-employed. Go and speak to your customers, find out what they need, what they want, what their concerns are, show them that you are the provider that cares and make yourself indispensible to them.
Again, understand me, I do realise that there are some Industries that have been very much affected by this credit crunch. However, if you are not in an Industry that is genuinely affected by what is predominantly a credit crunch, then what has changed for you. Probably not that much should have changed if you are prepared to be brutally honest about it. Look, if you are not reliant on credit and your clients are not reliant on credit then nothing much has changed – except maybe peoples expectations and the fears in their heads that things might one day, somehow, get bad for them. They are not sure how, exactly - inflation is low, their incomes are, if anything higher than they were last year, they are busy at work, but hey, they keep reading in the newspapers and hearing on the television that we are heading for hard times, so it must be true, therefore, I’d better just keep my money in my pocket and hang on to it, …..just in case.
If you genuinely believe that the current climate does affect you directly then please, please, please come in and speak to us and we will happily give you our time to help you examine what can be done to assist you. There are a number of things that can be done and we will touch on some of them here, but far better that you come in and see us and let us look at your specific circumstances.
In the meantime, switch the television off. That electronic income reducer that has people in trance on average 7 hours every night, and stop reading the garbage that they print in the newspaper. (apparently, on average, we spend 15 years of our life just watching television!! And yet the biggest complaint today is not having enough time!) Filter out those dreadful, sensationalised, scaremongering stories. Ask yourself, is this going to be helpful to me, and if the answer is no, then don’t read it. Stop scaring yourself unnecessarily. It does nothing for your business, it does nothing for your health and it does nothing for your peace of mind. If you don’t believe me that the television news deliberately highlights the negative, then just test it one last time tonight, listen to the flowery sensationalised language that they use in their delivery and ask yourself why.
One final thing that they do, before I get of my soapbox, is they generalise wildly. They find one person, or one business or one whatever that is negatively affected by whatever is making the news currently and then they extrapolate that across the board and apply it to the entire population.
So what can you do about this (other than switch the television off, now)?
Well first of all, most of your competitors are tempted just to slash prices in order to continue to attract customers and to slash all their costs by laying off staff and cutting back on marketing costs and every other cost they can attack, then they hold of paying all their suppliers for as long as they possibly can. Presumably, thinking this will increase their profits and save their business. But if their only strategy is to cut everything to the bone, then what is their strategy next year? They then find that they: cannot attract customers because they are not marketing; they cannot convince them to buy because they approach them with a mindset that communicates that they don’t expect them to buy; they cannot service the customer and treat them well because they have cut back on staff to look after the customer, so the customer has a terrible experience, meaning they won’t come back; furthermore, they can’t actually provide what the customer wants to buy, because their suppliers will not supply goods as a result of not being paid and anyway they have cut their prices - so now there is no profit margin in it and no point selling anything; or they find that they have to work so much harder now because they have to sell more goods just to make the same profits as they did previously.
You must maintain your margins! Do not be tempted to slash your prices to attract custom. Let your competitors do that and then watch their service levels go out the window as they try to service sales when they have no margin. What you can do is check that you are competitive (but you do not need to be the cheapest), make sure you are efficient in your purchasing and delivery, but do not, I repeat do not just slash your prices out of fear. You can and should do the following:
1. Understand that people do not generally buy on price. They buy what they perceive to be a fair exchange of value for the money they are being asked to pay. A 2007 survey of customers had price rank only the 5th most important issue to customers. Only 14% said it was the most important buying factor. So 86% did not perceive price as the most important issue affecting their buying decision.
2. Realise that customers simply have the same fears that you do and all they want is somebody to reassure them that they are making a sensible decision to buy from you. That any fears they have are just that and that you will look after them.
3. Understand that for a large percentage of your customers, nothing has changed. I will make some sweeping generalisations here myself, but probably 20% of your customers are badly affected by the current climate; 60% are largely unaffected but could do with some reassurance and 20% could not care about price, it simply is not an issue for them. So what customers should you be focusing your efforts on?
4. Be aware that people buy on emotions not logic (despite the fact that they would argue that point). I know of businesses who are deliberately increasing their prices at this time and have simply come to people like myself for some guidance on what language to use to make sure that they are selling features, not benefits. Or have deliberately introduced new more expensive products to cater to the percentage of people who are not affected.
5. Recognise that your competition has no other strategy than to slash prices and they have nobody to turn to get better advice. You can come and speak to us.
6. Consider increasing your marketing! If there is only 80% of the trade out there, but your competitors have their head in their hands and are only trying 50% as hard – could you actually increase your market share? There are a number of inexpensive marketing methods that you are probably not utilising at the moment. Come and speak to us to find out what they are.
7. Speak to your customers. Find out what they want and need and what their concerns are. Let them know you care.
8. Speak to your suppliers. Make sure that they know that everything is well with you and that you are reliable.
9. Speak to your bank manager and let them know that everything is well with you and that you are reliable.
10. Take tax advice from somebody you trust, like Berry & Co, and look to see if there are any areas where you are unnecessarily volunteering monies to HM Revenue & Customs, and then stop it!
11. Examine where there is waste and deal with it.
12. Take a step back and look at how you manage your processes. If you can, give yourself some time away from the business, even just a half-day, just to think about how you do what it is that you do. Is there anything you are doing that is inefficient and that you only do because that is how you have always done it. Are there any new markets that you could tap into.
13. Make it easy for your customers to pay you. Accept every form of payment that you reasonably can and be prepared to offer terms if appropriate.
14. Chase up old debts and get the money into your bank account.
15. Clarify your terms of payment and follow up rigorously.
16. Invoice as quickly as possible. It astonishes me the length of time that some businesses take to get an invoice out, even though they know that they probably will not be paid until they do.
17. Think about outsourcing (delegating) the things you do not like doing, if your time could be more productively spent doing the things you do like doing and that brings in more than it costs you to outsource.
18. Make sure your money is working for you. If you do have cash in the bank, is it earning the best rate of interest. If you don’t know then call your bank manager and find out.
19. Are there any old stock items that you could be selling off at this time.
20. Can you use any free time now, to spruce up your premises and/or your materials to make it more attractive for people to visit you.
21. Could you attract any PR by getting a story into the local newspapers.
I could continue, but a far better idea would be for you to take the time to come and meet with us and discuss your specific business with us.
And remember that your body language is 55% of the message that you give to your customers. There is an old Chinese proverb that says “man without smiling face should not open shop”. Your customers will look to you to see how they should act. Treat them wisely and always act with their interests at heart and they will continue to buy from you time after time and it is almost certainly not in their best interests to hear another scare story from you.
Mark Twain said that kindness is the language that the deaf can hear and the blind can see. I would want you to understand that it would do absolutely no good for me to peddle any negativity (there are more than enough people doing that already). There is a section of the medical community who believe that such negativity, which drives a feeling of not being in control, is the root cause of much of the dis-ease we see in society today. There is action you can take to survive and do well in the current climate, you can take back control. Henry Ford famously said, “whether you think you can or you think you can’t, you get to be right”.
I repeat that we are happy to talk about your specific business and industry. We want to help you be successful in these interesting time. Use it, take the time to come and talk to us.
These are testing times, but the tests in life are meant to make you, not break you. If you can come through this healthy then you will come out the other end stronger for the experience. Make sure that you are around people that can help you and support you and not those whose only purpose is to peddle doom and gloom.
I wish you every success in business and look forward to speaking to you soon
Gordon Berry
Berry & Co
Helping create businesses that work… so that you can choose not to
P.S. Ghandi was once reported as saying that he used to meditate for 2 hours every day – and then he became so busy that he had to meditate for 4 hours every day. It can help to take some time out and get some distance from your business and the help of a facilitator to examine the business plan as a whole. If you would like our help in undertaking a business-planning day then please contact Gordon Berry for more information.
P.S. “If you want to test your memory, try to recall what you were worried about one year ago today.” A Rotarian
41 High Street, Kirkcaldy, Fife, KY1 1LL
Tel: 01592 267849 | Fax: 01592 267849 | Email: advice@berryandco.net
27 Canmore Street, Dunfermline, KY12 7NU
Tel: 01383 740261 | Fax: 01383 740261 | Email: advice@berryandco.net
At the time of writing this note, we are undoubtedly going through some very interesting and challenging times.
Indeed, if we were to choose to believe what we read in the newspapers and hear on the television, then one would be forgiven for thinking that the sky is falling in. What is important to realise straight away is: that is how they sell newspapers or get their viewing figures up. The media know that the more they can scare people, the more people will buy newspapers or listen to the news. It has been said of course that the media have predicted 18 of the last 3 recessions. For months now they having been pawning recession, even though we are not actually in one. Now that they are close to creating a self-fulfilling prophecy (if you scare everybody enough to think that hard times are on there way and they must stop spending - then guess what happens), they have started talking about deflation – even though we do not have deflation.
Now, please understand me. There is no doubt that if it is your job that is genuinely at risk of redundancies, then I can understand your concern. Or if your livelihood relies entirely upon the lending markets, then there is a specific issue there.
However, two things: firstly most of the people reading this are self-employed and there is an argument that self employment is far more secure than employment – because at least you are in control of your own destiny! Secondly, if you do have a fear about the security of your position – is it founded on reality– or are you worrying yourself unnecessarily? You see, that is my definition of anxiety – it is using your present moment to worry about something that might not happen in the future so that you can get to feel bad now! and crazy as that sounds when you think about it – we all do it to some degree, don’t we. Some people are so good at it they make themselves ill. Some simple advice if you will allow me….Stop it. Stop spending your hours worrying about what you cannot affect and go and take action on what you can affect. Speak to your Boss and find out if there are any grounds for concerns and probably more importantly, find out how you can make yourself indispensible to your employer. The same could be said of the self-employed. Go and speak to your customers, find out what they need, what they want, what their concerns are, show them that you are the provider that cares and make yourself indispensible to them.
Again, understand me, I do realise that there are some Industries that have been very much affected by this credit crunch. However, if you are not in an Industry that is genuinely affected by what is predominantly a credit crunch, then what has changed for you. Probably not that much should have changed if you are prepared to be brutally honest about it. Look, if you are not reliant on credit and your clients are not reliant on credit then nothing much has changed – except maybe peoples expectations and the fears in their heads that things might one day, somehow, get bad for them. They are not sure how, exactly - inflation is low, their incomes are, if anything higher than they were last year, they are busy at work, but hey, they keep reading in the newspapers and hearing on the television that we are heading for hard times, so it must be true, therefore, I’d better just keep my money in my pocket and hang on to it, …..just in case.
If you genuinely believe that the current climate does affect you directly then please, please, please come in and speak to us and we will happily give you our time to help you examine what can be done to assist you. There are a number of things that can be done and we will touch on some of them here, but far better that you come in and see us and let us look at your specific circumstances.
In the meantime, switch the television off. That electronic income reducer that has people in trance on average 7 hours every night, and stop reading the garbage that they print in the newspaper. (apparently, on average, we spend 15 years of our life just watching television!! And yet the biggest complaint today is not having enough time!) Filter out those dreadful, sensationalised, scaremongering stories. Ask yourself, is this going to be helpful to me, and if the answer is no, then don’t read it. Stop scaring yourself unnecessarily. It does nothing for your business, it does nothing for your health and it does nothing for your peace of mind. If you don’t believe me that the television news deliberately highlights the negative, then just test it one last time tonight, listen to the flowery sensationalised language that they use in their delivery and ask yourself why.
One final thing that they do, before I get of my soapbox, is they generalise wildly. They find one person, or one business or one whatever that is negatively affected by whatever is making the news currently and then they extrapolate that across the board and apply it to the entire population.
So what can you do about this (other than switch the television off, now)?
Well first of all, most of your competitors are tempted just to slash prices in order to continue to attract customers and to slash all their costs by laying off staff and cutting back on marketing costs and every other cost they can attack, then they hold of paying all their suppliers for as long as they possibly can. Presumably, thinking this will increase their profits and save their business. But if their only strategy is to cut everything to the bone, then what is their strategy next year? They then find that they: cannot attract customers because they are not marketing; they cannot convince them to buy because they approach them with a mindset that communicates that they don’t expect them to buy; they cannot service the customer and treat them well because they have cut back on staff to look after the customer, so the customer has a terrible experience, meaning they won’t come back; furthermore, they can’t actually provide what the customer wants to buy, because their suppliers will not supply goods as a result of not being paid and anyway they have cut their prices - so now there is no profit margin in it and no point selling anything; or they find that they have to work so much harder now because they have to sell more goods just to make the same profits as they did previously.
You must maintain your margins! Do not be tempted to slash your prices to attract custom. Let your competitors do that and then watch their service levels go out the window as they try to service sales when they have no margin. What you can do is check that you are competitive (but you do not need to be the cheapest), make sure you are efficient in your purchasing and delivery, but do not, I repeat do not just slash your prices out of fear. You can and should do the following:
1. Understand that people do not generally buy on price. They buy what they perceive to be a fair exchange of value for the money they are being asked to pay. A 2007 survey of customers had price rank only the 5th most important issue to customers. Only 14% said it was the most important buying factor. So 86% did not perceive price as the most important issue affecting their buying decision.
2. Realise that customers simply have the same fears that you do and all they want is somebody to reassure them that they are making a sensible decision to buy from you. That any fears they have are just that and that you will look after them.
3. Understand that for a large percentage of your customers, nothing has changed. I will make some sweeping generalisations here myself, but probably 20% of your customers are badly affected by the current climate; 60% are largely unaffected but could do with some reassurance and 20% could not care about price, it simply is not an issue for them. So what customers should you be focusing your efforts on?
4. Be aware that people buy on emotions not logic (despite the fact that they would argue that point). I know of businesses who are deliberately increasing their prices at this time and have simply come to people like myself for some guidance on what language to use to make sure that they are selling features, not benefits. Or have deliberately introduced new more expensive products to cater to the percentage of people who are not affected.
5. Recognise that your competition has no other strategy than to slash prices and they have nobody to turn to get better advice. You can come and speak to us.
6. Consider increasing your marketing! If there is only 80% of the trade out there, but your competitors have their head in their hands and are only trying 50% as hard – could you actually increase your market share? There are a number of inexpensive marketing methods that you are probably not utilising at the moment. Come and speak to us to find out what they are.
7. Speak to your customers. Find out what they want and need and what their concerns are. Let them know you care.
8. Speak to your suppliers. Make sure that they know that everything is well with you and that you are reliable.
9. Speak to your bank manager and let them know that everything is well with you and that you are reliable.
10. Take tax advice from somebody you trust, like Berry & Co, and look to see if there are any areas where you are unnecessarily volunteering monies to HM Revenue & Customs, and then stop it!
11. Examine where there is waste and deal with it.
12. Take a step back and look at how you manage your processes. If you can, give yourself some time away from the business, even just a half-day, just to think about how you do what it is that you do. Is there anything you are doing that is inefficient and that you only do because that is how you have always done it. Are there any new markets that you could tap into.
13. Make it easy for your customers to pay you. Accept every form of payment that you reasonably can and be prepared to offer terms if appropriate.
14. Chase up old debts and get the money into your bank account.
15. Clarify your terms of payment and follow up rigorously.
16. Invoice as quickly as possible. It astonishes me the length of time that some businesses take to get an invoice out, even though they know that they probably will not be paid until they do.
17. Think about outsourcing (delegating) the things you do not like doing, if your time could be more productively spent doing the things you do like doing and that brings in more than it costs you to outsource.
18. Make sure your money is working for you. If you do have cash in the bank, is it earning the best rate of interest. If you don’t know then call your bank manager and find out.
19. Are there any old stock items that you could be selling off at this time.
20. Can you use any free time now, to spruce up your premises and/or your materials to make it more attractive for people to visit you.
21. Could you attract any PR by getting a story into the local newspapers.
I could continue, but a far better idea would be for you to take the time to come and meet with us and discuss your specific business with us.
And remember that your body language is 55% of the message that you give to your customers. There is an old Chinese proverb that says “man without smiling face should not open shop”. Your customers will look to you to see how they should act. Treat them wisely and always act with their interests at heart and they will continue to buy from you time after time and it is almost certainly not in their best interests to hear another scare story from you.
Mark Twain said that kindness is the language that the deaf can hear and the blind can see. I would want you to understand that it would do absolutely no good for me to peddle any negativity (there are more than enough people doing that already). There is a section of the medical community who believe that such negativity, which drives a feeling of not being in control, is the root cause of much of the dis-ease we see in society today. There is action you can take to survive and do well in the current climate, you can take back control. Henry Ford famously said, “whether you think you can or you think you can’t, you get to be right”.
I repeat that we are happy to talk about your specific business and industry. We want to help you be successful in these interesting time. Use it, take the time to come and talk to us.
These are testing times, but the tests in life are meant to make you, not break you. If you can come through this healthy then you will come out the other end stronger for the experience. Make sure that you are around people that can help you and support you and not those whose only purpose is to peddle doom and gloom.
I wish you every success in business and look forward to speaking to you soon
Gordon Berry
Berry & Co
Helping create businesses that work… so that you can choose not to
P.S. Ghandi was once reported as saying that he used to meditate for 2 hours every day – and then he became so busy that he had to meditate for 4 hours every day. It can help to take some time out and get some distance from your business and the help of a facilitator to examine the business plan as a whole. If you would like our help in undertaking a business-planning day then please contact Gordon Berry for more information.
P.S. “If you want to test your memory, try to recall what you were worried about one year ago today.” A Rotarian
41 High Street, Kirkcaldy, Fife, KY1 1LL
Tel: 01592 267849 | Fax: 01592 267849 | Email: advice@berryandco.net
27 Canmore Street, Dunfermline, KY12 7NU
Tel: 01383 740261 | Fax: 01383 740261 | Email: advice@berryandco.net
Tuesday, 11 November 2008
Acres of Diamonds – Russell Conway
So successful was Russell Conway with this speech that he was asked to give it over 5,000 times.
An old African farmer had heard about people who had gone off into Africa and discovered Diamond Mines and become fantastically wealthy.
So he sold up his Farm and decided to go off into Africa and crown his life by discovering a diamond mine and becoming fabulously wealthy, and so he wandered the vast African continent for 12 or 13 years and finally tired, broken, broke, along, sick exhausted, he threw himself into the ocean and drowned.
Meanwhile back on his Farm, the new farmer that bought it, was out watering a mule in a stream that cut across the farm and he found a rock that threw off light in a remarkable fashion. It was later found to be a diamond of inestimable value and the person who identified it as a diamond asked the new farmer to take him out to where he had been watering the mule when he found the rock. He took him back out and lo they found another and then another and then another and then they found that the old farm was literally covered with acres of diamonds. The old Farmer had gone off seeking diamonds somewhere else without ever looking under his own feet.
And the moral of the story is that the reason the Farmer went off looking for diamonds somewhere else is that he did not realise that diamonds didn’t look like diamonds in their rough form. That diamonds in their rough form just simply looked like rough rocks, burned fragments and charred remnants of coal and that a diamond in order to become a diamond must be cut and shaped and polished and set in order to bring out it’s very best value and that our major opportunities in life also come to us like rough diamonds.
They say the reason why people miss their major opportunities in life, is because, in the words of Thomas Edison, “most opportunities are disguised in work clothes and look like work”.
Our major opportunities to achieve everything that we want to accomplish lie right under our own feet. Not only in our own talents and abilities, but also in our own towns and in our own industries, our own interests our own education, our own background our own connections. Everything that we want, everything that we hoped for is probably very close at hand, but it does not look like a diamond in its rough form it will require work and planning and preparation and effort. It will require getting down there with our own hands and creating and polishing and buffing and setting.
Don’t think that you have to travel across the country or change industries or go back to school. In setting goals, look right where you are and start where you are right now. Most millionaires become millionaires from the very town in which they grew up. They recognised the opportunities from what was all around them and right under their own feet.
An old African farmer had heard about people who had gone off into Africa and discovered Diamond Mines and become fantastically wealthy.
So he sold up his Farm and decided to go off into Africa and crown his life by discovering a diamond mine and becoming fabulously wealthy, and so he wandered the vast African continent for 12 or 13 years and finally tired, broken, broke, along, sick exhausted, he threw himself into the ocean and drowned.
Meanwhile back on his Farm, the new farmer that bought it, was out watering a mule in a stream that cut across the farm and he found a rock that threw off light in a remarkable fashion. It was later found to be a diamond of inestimable value and the person who identified it as a diamond asked the new farmer to take him out to where he had been watering the mule when he found the rock. He took him back out and lo they found another and then another and then another and then they found that the old farm was literally covered with acres of diamonds. The old Farmer had gone off seeking diamonds somewhere else without ever looking under his own feet.
And the moral of the story is that the reason the Farmer went off looking for diamonds somewhere else is that he did not realise that diamonds didn’t look like diamonds in their rough form. That diamonds in their rough form just simply looked like rough rocks, burned fragments and charred remnants of coal and that a diamond in order to become a diamond must be cut and shaped and polished and set in order to bring out it’s very best value and that our major opportunities in life also come to us like rough diamonds.
They say the reason why people miss their major opportunities in life, is because, in the words of Thomas Edison, “most opportunities are disguised in work clothes and look like work”.
Our major opportunities to achieve everything that we want to accomplish lie right under our own feet. Not only in our own talents and abilities, but also in our own towns and in our own industries, our own interests our own education, our own background our own connections. Everything that we want, everything that we hoped for is probably very close at hand, but it does not look like a diamond in its rough form it will require work and planning and preparation and effort. It will require getting down there with our own hands and creating and polishing and buffing and setting.
Don’t think that you have to travel across the country or change industries or go back to school. In setting goals, look right where you are and start where you are right now. Most millionaires become millionaires from the very town in which they grew up. They recognised the opportunities from what was all around them and right under their own feet.
Monday, 13 October 2008
Time to sharpen your axe?
Heard the parable about the two lumberjacks in a wood-chopping contest? One Lumberjack worked furiously over the long day, never stopping to rest.
The second lumberjack also worked hard, but he took a 15 minute break each hour and yet he still won. When asked how he could have done it even though he took several breaks, the winner replied, " I wasn't taking breaks to rest, I was taking time to sharpen my axe."
The moral of the story is clear. A sharper axe cuts faster. In the long run, taking the time to sharpen your axe is much more efficient that just working harder and faster.
If things are slower than you’d like, sales-wise, it’s a great time to sharpen your axe by optimizing your Sales Process.
The second lumberjack also worked hard, but he took a 15 minute break each hour and yet he still won. When asked how he could have done it even though he took several breaks, the winner replied, " I wasn't taking breaks to rest, I was taking time to sharpen my axe."
The moral of the story is clear. A sharper axe cuts faster. In the long run, taking the time to sharpen your axe is much more efficient that just working harder and faster.
If things are slower than you’d like, sales-wise, it’s a great time to sharpen your axe by optimizing your Sales Process.
Tuesday, 30 September 2008
A spot of Tesco bashing anyone?
Well, amidst the relentless succession of bad news – another nationalisation, nose-diving stock markets, the Powers that Be in disarray over what to do about it – at least one company appears to be faring OK under the economic onslaught.
So will we celebrate this news, grasp it as evidence that you can manage your business to be successful even in such difficult times, draw strength for our own particular set of circumstances?
Of course not! This is Tesco we are talking about – that giant aunt sally of an organisation that cannot do right for doing wrong. It is a national sport to engage in Tesco bashing at every available opportunity, so why waste this one?
So what has Tesco done so badly wrong to incur our wrath in this way? Well, been successful really. Very successful.
It is a curiously British thing, this suspicion of success. As business owners, we aspire to it and yet seem to resent those who have achieved it. To my mind, this is very much a victim mentality.
Victims blame circumstances, other people, in fact anything outside of their control for their lack of success – their destiny is anywhere but in their own hands! The higher the profile of the supposed “cause” of their failure, the better – Tesco, the credit crunch, global warming, the wettest August since 1066, whatever.
Victors, on the other hand, take full responsibility, ownership and accountability for their own success.
Whatever, your personal views on Tesco, they most certainly fall into this category. Have they always been this mighty juggernaut? No, they started from nothing as we all do – in 1919 selling surplus groceries from a market stall in the East End of London, to be precise. Have they always been this successful? No –remember when Sainsbury’s dominated the grocery market?
What they have done is to really understand their customer and offer true value to them (Clubcard is a fantastic example of this), anticipate market developments (e.g. tesco.com, Tesco Personal Finance) and deliver with a high level of operational effectiveness.
They are by no means perfect and have made many mistakes along the way – and will continue to make them as they trial new initiatives and enter new markets. But that is the essence of good business.
You can learn a great deal from a company such as Tesco, if you choose to, and utilise it to grow and develop your own business. Or you can bemoan their success and every other external factor that keeps you from facing reality.
It's your call.
So will we celebrate this news, grasp it as evidence that you can manage your business to be successful even in such difficult times, draw strength for our own particular set of circumstances?
Of course not! This is Tesco we are talking about – that giant aunt sally of an organisation that cannot do right for doing wrong. It is a national sport to engage in Tesco bashing at every available opportunity, so why waste this one?
So what has Tesco done so badly wrong to incur our wrath in this way? Well, been successful really. Very successful.
It is a curiously British thing, this suspicion of success. As business owners, we aspire to it and yet seem to resent those who have achieved it. To my mind, this is very much a victim mentality.
Victims blame circumstances, other people, in fact anything outside of their control for their lack of success – their destiny is anywhere but in their own hands! The higher the profile of the supposed “cause” of their failure, the better – Tesco, the credit crunch, global warming, the wettest August since 1066, whatever.
Victors, on the other hand, take full responsibility, ownership and accountability for their own success.
Whatever, your personal views on Tesco, they most certainly fall into this category. Have they always been this mighty juggernaut? No, they started from nothing as we all do – in 1919 selling surplus groceries from a market stall in the East End of London, to be precise. Have they always been this successful? No –remember when Sainsbury’s dominated the grocery market?
What they have done is to really understand their customer and offer true value to them (Clubcard is a fantastic example of this), anticipate market developments (e.g. tesco.com, Tesco Personal Finance) and deliver with a high level of operational effectiveness.
They are by no means perfect and have made many mistakes along the way – and will continue to make them as they trial new initiatives and enter new markets. But that is the essence of good business.
You can learn a great deal from a company such as Tesco, if you choose to, and utilise it to grow and develop your own business. Or you can bemoan their success and every other external factor that keeps you from facing reality.
It's your call.
Saturday, 27 September 2008
Don’t take my word for it!
Following on from my previous post, I thought I’d share a few quotes on leadership..
“Leaders should only do what only they can do." - Sir John Harvey-Jones
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” - John Quincy Adams
“The key to successful leadership today is influence, not authority.” - Kenneth Blanchard
"Being responsible sometimes means pissing people off." - General Colin Powell
"I believe the real difference between success and failure in a corporation can be very often traced to the question of how well the organization brings out the great energies and talents of its people." — Thomas J. Watson, Jr. A Business and its Beliefs (1963)
"The task of leadership is not to put greatness into people, but to elicit it, for the greatness is there already." — John Buchan
I hope this inspires!
“Leaders should only do what only they can do." - Sir John Harvey-Jones
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” - John Quincy Adams
“The key to successful leadership today is influence, not authority.” - Kenneth Blanchard
"Being responsible sometimes means pissing people off." - General Colin Powell
"I believe the real difference between success and failure in a corporation can be very often traced to the question of how well the organization brings out the great energies and talents of its people." — Thomas J. Watson, Jr. A Business and its Beliefs (1963)
"The task of leadership is not to put greatness into people, but to elicit it, for the greatness is there already." — John Buchan
I hope this inspires!
Tuesday, 23 September 2008
Does your business depend on you?
Many owners go into business because they want to be their own boss, doing what they do well and reaping the reward for themselves. This often leads to a business that is inextricably linked with its owner - if he stops working, the business stops.
Does this sound familiar? Well, be aware that it is a pretty risky state of affairs, for a number of reasons:
1. If you become ill or otherwise indisposed, business suffers. You might be able to deal with this over a few days perhaps, but if something happened to prevent you working long term, the business would be in serious trouble.
2. The demands on your time can quickly become overwhelming, leading to stress, ill health and a business that will ultimately suffer things begin to fall through the cracks.
3. Business cannot continue to grow if capacity is limited because of you. This is an artificial state of affairs and amounts to little more than a job in reality anyway!
4. A business that is inextricably linked with its owner has little value to potential buyers, so won’t provide much of a pension plan for you.
So, what can you do if you are in this situation?
Well, immediately take steps mitigate the risk through insurance – critical illness cover and key person insurance in particular. Private medical cover might also be advisable.
Then, begin work on extricating yourself from the business whilst maintaining your ethos and values. Firstly, go back to basics: Review and restate your vision for the business what it stands for.
Then, set about putting the right elements in place to help you to achieve this vision. Understand how the business needs to be structured and begin to build this. Understand what is required of your people and put the systems and processes in place to support them in their part in your vision. Put a plan in place to bring in the support you require to move you ever closer to that vision.
Once you have the key infrastructure in place, begin to leverage the value you have built through smart sales and marketing.
Lastly, be proud that you have built a sustainable business that remains true to your values – and take a well-earned holiday!
Sunday, 21 September 2008
Vulnerabilities in your customer base
We have all heard of the 80/20 rule, where 80% of your revenue comes from just 20% of your customers. This is not too much of an issue if you have a good number of customers in that 20%. But what happens if that 20% equates to just one customer?
One, your business survival is at risk should anything happen with that customer – perhaps the relationship sours, their business takes a nose-dive for some reason, they get a better offer elsewhere, key personnel change or any number of other events that can impact on their custom with you.
Two, because your very survival is dependent upon that customer, they hold all the cards. They can constantly beat you down on price whilst simultaneously increasing their demands on you. This is just not sustainable long term.
This is extreme end of the scale – but still not at all uncommon for many small businesses. However, even if your 20% is made up of more than one customer, reliance on individual customers for significant proportions of business is risky.
Does this sound familiar? Then act fast to reduce this reliance and the risk to your business.
1. Build your business within existing smaller customers. Explore opportunities to cross- and up-sell.
2. Expand your customer base. Be clear on your target market and why they buy from you, so you can effectively communicate your value to prospective new customers.
3. Give excellent service to and maintain regular communication with the important few. This will help to identify early on where business might be at risk.
4. Keep a tight control on overheads and other costs to minimise the risk to the business should a significant revenue stream dry up.
Next time, we will look at a very common area of risk within small businesses – over-reliance on the business owner.
One, your business survival is at risk should anything happen with that customer – perhaps the relationship sours, their business takes a nose-dive for some reason, they get a better offer elsewhere, key personnel change or any number of other events that can impact on their custom with you.
Two, because your very survival is dependent upon that customer, they hold all the cards. They can constantly beat you down on price whilst simultaneously increasing their demands on you. This is just not sustainable long term.
This is extreme end of the scale – but still not at all uncommon for many small businesses. However, even if your 20% is made up of more than one customer, reliance on individual customers for significant proportions of business is risky.
Does this sound familiar? Then act fast to reduce this reliance and the risk to your business.
1. Build your business within existing smaller customers. Explore opportunities to cross- and up-sell.
2. Expand your customer base. Be clear on your target market and why they buy from you, so you can effectively communicate your value to prospective new customers.
3. Give excellent service to and maintain regular communication with the important few. This will help to identify early on where business might be at risk.
4. Keep a tight control on overheads and other costs to minimise the risk to the business should a significant revenue stream dry up.
Next time, we will look at a very common area of risk within small businesses – over-reliance on the business owner.
Friday, 19 September 2008
Reduce your risk exposure
A common theme throughout the series of shocking news stories this week is exposure to risk. We have all read the reports on the latest victim of the financial crisis, HBOS, which has high debt exposure in the beleaguered property sector.
There are many areas of risk within business – and, if they are not carefully managed, any one of them can severely damage your ability to trade, or even cause you to go out of business. We have seen a number of examples this week of how this can happen to some mighty corporations – as small businesses, we can be much more vulnerable.
So, what are some of the key risks facing us and what can we do about them?
Finance/funding
In the wake of the Lloyds/HBOS merger announcement, commercial property investors are now worried that their facilities will be under threat as Lloyds seeks to reduce its exposure to the sector. They have good reason to worry. Personally, in just the last couple of weeks, I have heard of two small businesses in this sector where finance has been withdrawn or refused. Until alternative sources of funding are in place, neither business can move forward.
And it is not just the property sector that is suffering. A small car leasing company I know is finding trading increasingly tough, as finance providers are tightening the terms on which they will offer finance, resulting in much fewer successful applications. I have many more examples as I am sure do you.
So what can be done to minimise the impact of such shifts in the market?
Where possible, spread your risk in this area – do not just rely on one lender or type of finance. If appropriate for your business, consider the role of less traditional types of finance, such as factoring and asset-based lending. Often, more innovative solutions can be found in this area as more traditional forms of finance dry up.
Beware, however – not all providers in these areas are created equal, so seek good advice from a respected source to help ensure you make the right decisions on both the type of finance and the lender. My friend and colleague Adam Thwaites, from Infinity Finance, is an expert in this area and I would highly recommend that you contact him to seek advice in this area. You can contact him via www.infin.co.uk or drop me a line and I will put you in touch.
Keep your providers in the picture, so they can have confidence in your business performance. This is particularly important if things don’t go quite according to plan! Proactive communication will reassure your lenders that you are in control of your business and help you to identify early on if any of your sources of funding are at risk. Surprises in this area are bad news!
I will leave your to get on with your Friday now, but I will be back tomorrow to look at vulnerabilities in your customer base.
Have a great day!
There are many areas of risk within business – and, if they are not carefully managed, any one of them can severely damage your ability to trade, or even cause you to go out of business. We have seen a number of examples this week of how this can happen to some mighty corporations – as small businesses, we can be much more vulnerable.
So, what are some of the key risks facing us and what can we do about them?
Finance/funding
In the wake of the Lloyds/HBOS merger announcement, commercial property investors are now worried that their facilities will be under threat as Lloyds seeks to reduce its exposure to the sector. They have good reason to worry. Personally, in just the last couple of weeks, I have heard of two small businesses in this sector where finance has been withdrawn or refused. Until alternative sources of funding are in place, neither business can move forward.
And it is not just the property sector that is suffering. A small car leasing company I know is finding trading increasingly tough, as finance providers are tightening the terms on which they will offer finance, resulting in much fewer successful applications. I have many more examples as I am sure do you.
So what can be done to minimise the impact of such shifts in the market?
Where possible, spread your risk in this area – do not just rely on one lender or type of finance. If appropriate for your business, consider the role of less traditional types of finance, such as factoring and asset-based lending. Often, more innovative solutions can be found in this area as more traditional forms of finance dry up.
Beware, however – not all providers in these areas are created equal, so seek good advice from a respected source to help ensure you make the right decisions on both the type of finance and the lender. My friend and colleague Adam Thwaites, from Infinity Finance, is an expert in this area and I would highly recommend that you contact him to seek advice in this area. You can contact him via www.infin.co.uk or drop me a line and I will put you in touch.
Keep your providers in the picture, so they can have confidence in your business performance. This is particularly important if things don’t go quite according to plan! Proactive communication will reassure your lenders that you are in control of your business and help you to identify early on if any of your sources of funding are at risk. Surprises in this area are bad news!
I will leave your to get on with your Friday now, but I will be back tomorrow to look at vulnerabilities in your customer base.
Have a great day!
Monday, 15 September 2008
Further shocking news from the financial sector –but what can we do?
What a scary news day! Lehman Brothers, Merrill Lynch, AIG – who’ll be next? And what can we do about any of this anyway?
Well, individually, we probably couldn’t have done a great deal to avert these particular situations, but how we respond to them is in our control. So let’s draw some positives by at least learning from the events of recent days.
1. On a practical note, the ripples from these stateside events will reach our shores pretty quickly. So, if you thought our banks’ lending criteria were tight before, be prepared for them to draw the belts in another couple of notches. If you need finance, act now – and provide robust justification for your requirement.
2. Remember that market confidence is key. As Tony Lomas from PWC said today: “If no-one wants to trade with you…there’s no way back.” Never under-estimate the importance of customer satisfaction and your reputation in the marketplace.
3. Whilst belts are undoubtedly being tightened, trading will not cease altogether. People and businesses still need to spend on goods and services – they will just be more selective about which they buy. So, understand why people buy from you and ensure that you offer consistently great value.
4. Be positive and confident in the future. Be open to opportunities and solutions to problems that might be facing you at the moment. This too will pass – make sure you come out the other end the stronger for it!
Well, individually, we probably couldn’t have done a great deal to avert these particular situations, but how we respond to them is in our control. So let’s draw some positives by at least learning from the events of recent days.
1. On a practical note, the ripples from these stateside events will reach our shores pretty quickly. So, if you thought our banks’ lending criteria were tight before, be prepared for them to draw the belts in another couple of notches. If you need finance, act now – and provide robust justification for your requirement.
2. Remember that market confidence is key. As Tony Lomas from PWC said today: “If no-one wants to trade with you…there’s no way back.” Never under-estimate the importance of customer satisfaction and your reputation in the marketplace.
3. Whilst belts are undoubtedly being tightened, trading will not cease altogether. People and businesses still need to spend on goods and services – they will just be more selective about which they buy. So, understand why people buy from you and ensure that you offer consistently great value.
4. Be positive and confident in the future. Be open to opportunities and solutions to problems that might be facing you at the moment. This too will pass – make sure you come out the other end the stronger for it!
Wednesday, 10 September 2008
Phew – that’s done! Now let the hard work commence…..
Well, thank goodness we are through all that! My friends at Star Digital and I have been working silly hours to get the new email campaign and web site together – but it is thankfully done!
Well, not really – it is started, but not sure it will ever be done as such.
You see, the thing with online stuff is that you get feedback all the time from people – by virtue of their posts, responses and interaction with it – so you get a feel for how it is working. This, coupled with the fact that you can make adjustments as you go – and get more feedback – turns it into a kind of ongoing work in progress!
That is all to the good as far as I am concerned - as I said in my previous post, I am not a fan of mediocrity, so bring on the feedback!
The site as it currently stands is a start point and I will add whatever offers genuine value – so please share your thoughts.
For now, I think I will relax this evening and raise a glass to my hardworking colleagues at Star…!
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