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.

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!

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!

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.

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!

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!

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…!

New and different? I hope so..

New web site, new blog, new marketing campaign – exciting times! And what a busy few weeks it has been to get here!

We’ve tried to do things a little differently – that is, my friends at Star Digital and me – and hope it hits the mark with you. Do please let me know – good or bad, or downright ugly, for that matter! I am not one to wallow in mediocrity, so please be generous with your feedback, so we can create something of genuine value.

Has it all gone according to plan – hell, no! But in trying new things, we get to do and create things that might never have existed if we hadn’t had the courage to get out there and try. Of course you need to have the sense to know when something is working or when to pull the plug quickly and quietly (!), but if you never give it a whirl you will never know!

A couple of people I admire put it far more eloquently than I could:

“The definition of insanity is doing the same thing over and over again and expecting different results.” Albert Einstein

“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” Bill Gates

I am lucky enough to be surrounded by a great many business owners who share this philosophy – Roger at Star Digital being one – and we have great fun pushing the boundaries of what’s possible.

I do hope you will share this journey with me and my colleagues and that we can all achieve a great deal more for it!