Strengthening your business doesn’t just involve financial management, it includes strategies to maintain and broaden your customer base, keep morale high amongst staff and improve business practices. Chamber of Commerce figures show that three quarters of SME’s are concerned about the economy but few have plans in place to protect their business, if business takes a downturn for the worse.
Have a plan which outlines a comprehensive menu of cost savings which could be implemented in a downturn. Adapt products to be more suited to customer’s current needs, diversify to protect from the loss of a significant customer. These points were posed to members of the Business Exposure Group at their recent meeting.
Cash equals survival, does this need to take precedence over profit if business goes awry. Having a contingency plan to produce short term profit, despite a drop in revenue, can make all the difference. A decline of 10% in revenue could wipe out the entire bottom line and most companies have a relatively narrow margin for error.
So it is important to develop your forecast on optimistic, realistic and worst case scenario basis. But, who does? Businesses generally fail because problems are noticed too late, so thinking about vulnerabilities and opportunities early on can be a big advantage.
Identify and maintain your strengths and your best customers. Identify your highest-margin customers and understand what you are doing right for them. Instead of cutting costs, be ready to shift resources to retain high margin customers and continue to be creative in how you can add value for your customers without increasing costs. Look through your costs and identify what’s inefficient, what’s nice to have, what’s there historically, and what isn’t creating value like it used to.
Be ready to take a knife to anything that isn’t adding value.
So, how recession proof is your product or service – is it a necessity or a luxury?
Quite often banks have a level of credit granted but some levels may no longer be required, which may mean you should move them to other areas. If business is good consider increasing your line of credit and establishing new credit facilities, even if you don’t need them at present. Perhaps look into unconventional sources of finance as a fall-back.
Look at speeding up working capital to release cash. If sales fall can you respond so as to avoid excess stock? Review your sales forecasts, keep an eye on your stock inventory and reduce the number of slow moving products. Look at other sources of income such as sub- letting part of your premises.
Review and delay your expansion plans and the purchase of high ticket items. Categorise your company’s assets into, underperforming v high performing, and strategic v non-strategic. Try to lock prices with your suppliers to stabilise margins.
Look at buying optimistically or defensively a competitor to stop them falling into the hands of another competitor. Monitor advertising by competitors, if they are cutting down now is your chance to do more. It’s equally important for your business to find new markets.
In conclusion, the best time to prepare for a downturn is when the company is operating well. Plan ahead so that if needs be you can react in a controlled fashion.
Above is a snap shot of the comments made during the discussion at the Business Exposure Group meeting.
Many businesses have a sales machine, designed to replicate the star performer. But recently sales have been caught off-guard by a dramatic shift in customers buying behaviour; longer sales cycle time, lower conversion rates, less reliable forecasts, reduced margins. Has selling become harder and why?
This question was posed to the members of the Business Exposure Group at their recent meeting and the following points were discussed.
Process driven sales fall short because it gives the sales rep no room to exercise judgement and creativity when dealing with highly knowledgeable customers. Sales team should not just compete on price. It is not a good idea to have a price driven quick sale as opposed to a longer sale that offers a better solution and best value. Support your sales team rather than direct them; give them greater latitude. ‘It’s not the journey but the destination we have to focus on’. Reward the sales team for long term focus rather than short term deal volume. Do not let sales reps simply sell products rather than solutions, purely to boost their figures.
There is now a new world of sales
|Customer has a definite need||Customer is uncertain|
|Find someone with authority to spend||Find someone open to change|
|Demonstrate value in your solutions||Disrupt the customers thinking and assumptions|
Perhaps the answer is to have adaptive sellers who challenge customers with disruptive ideas and offer unexpected solutions-‘Insight selling’. Demand should be created early in the sales funnel rather than responding to it later on. Instead of making the sales rep work through a checklist of sales activities focus instead on the customer’s behaviour, and let the customer acknowledge that the status quo is not working. Verifying whether a customer is open to change is a prerequisite to pursuing a sale. It’s not enough to do a demonstration; you need to first establish with the customer that the existing approach is underperforming and that a new solution is necessary.
Large sales driven organisations monitor sales reps by KPI’s, especially cycle times and closure rates, smaller businesses can and should be more agile and flexible. We can track and report on a customer’s actions rather than on the sales reps activities, which would encourage the reps to focus on achieving outcomes with the best possible solutions.
Originally sales was about scheduling times with the decision maker; determining if they have a budget for the purchase and sending a proposal in writing. Now, find out if the customer has agreed that status quo is unsustainable; does the current approach expose them to risk; how much is in their budget; can we help the customer think creatively about funding if money is not available in this year’s budget.
The Institute of Directors state that only 17% of existing sales people score high on the competencies required for ‘Insight Selling’. ‘Hire people not in sales, but hire people who have good critical thinking and are willing to sell’.
If you used to recruit as follows –
‘Wanted experienced professional looking to maximise earning potential in a fast paced competitive sales organisation’.
Change this advert to
‘Wanted critical thinkers looking for an opportunity to exercise their judgement and assume significant responsibility for business growth’.
Businesses that continue to embrace the sales machine process are watching their margins fall. Our Business Exposure Group members agreed that it’s better to hire good people, create an empowering environment and then get out of the way.
Historically SME’s tend to hold back in the face of new technology. But with Artificial Intelligence the rules are different and holding back can be dangerous. ‘Think big, start small’.
What do we mean by Artificial Intelligence for small businesses, was the topic discussed by members of the Business Exposure Group at a recent meeting.
The history of technology is; Mechanics, Electronics, Information Technology and now Artificial Intelligence.
With Artificial Intelligence we can
- Evaluate customers and understand how much they are interested in buying from us before we talk to them.
- Fix problems for customers before problems even become obvious.
- Have the understanding to show customers more of what they want and be right about it more often.
However a member of the Group said ‘Artificial Intelligence is the next shiny thing, but until you can show me how it’s really going to work day to day in my business – I’m out’!
Artificial Intelligence has the potential for a low cost accessible way to get insights from data faster, enabling businesses to make better decisions. It is there to support the workforce, not replace it. Tasks that require information from multiple sources to make timely decisions are great candidates for experimenting with Artificial Intelligence.
But, how can Artificial Intelligence help your small business?
with Automation – it can prepare invoices / update customer records / send targeted promotions
with Customer Communications – chat bots, so that the frequently asked questions can be answered
with Staff Solutions – Artificial Intelligence personal assistants can arrange meetings / stay on top of deadlines / arrange business travel
with Email Efficiencies – Google smart reply scans the contents of your emails and suggests suitable replies
Many businesses have started using Chatbot, but many people still prefer to speak to a living customer service rep rather than a Chatbot. But the advantage of a Chatbot is that you don’t have to hang on for ages waiting for a call to be taken. Artificial Intelligence driven Chatbots are perfect for answering the most common questions that companies get asked time and time again leaving your staff to focus on the more pressing individual cases.
Artificial Intelligence gives you competitor advantage and it is more appropriate for back office functions. 60% of SME’s in the group felt that they were not yet ready to adopt Artificial Intelligence. They felt it was too complicated for what was needed. Yet for some small businesses, with limited time and resources, the ability to work smarter and automate basic tasks could be a life saver. So, spending hours sorting through spreadsheets, hunting down leads or tweaking marketing campaigns manually could now be a thing of the past.
SME’s with up to 20 employees cite ‘gaining better insights from their data’ as a top technology challenge, yet only 30% use analytic solutions. Business apps not only automate time consuming repeatable tasks, but also help detect problems and predict outcomes. Many members of the Business Exposure Group are already using some of these apps.
- Zero Accounting – Artificial Intelligence for accounting – Allows you to get insights into longer term decisions not just book keeping.
- Quick Books – Which clients owe me money, it then tells the system to send reminders to clients to pay overdue invoices.
- Translation – Microsoft have developed a real time translation system in Skype to help bridge the language barrier during web conferences.
- Crayon – is a market intelligence platform that uses machine learning to scan millions of data sources, everything from web pages to customer reviews to tweets and it tells you everything it finds. did a competitor change how they are advertising a product / did they make an important change to their website.
Artificial Intelligence and machine learning solutions offer small businesses the means to offload mundane tasks to machines so that people can focus on more creative, value added activities to help their companies grow.
What is clear is that Artificial Intelligence is the future and any contemporary business must start to embrace the opportunities created by this next level of technology, because very shortly our competitors will, and business will get even tougher.
It’s the first quarter of the year and time for appraisals. Second only to firing, business owners cite appraisals as the task they dislike the most. Is anyone a fan of appraisals or is it old fashioned nowadays. A once a year review is too late and often comes as a surprise to the employee. How can people judge an entire year of work, some of our members felt that they were a waste of time with forced ranking eliminating great people and damaging the business culture.
This topic was discussed by our members at a recent meeting of the Business Exposure Group.
Are there any benefits of performance appraisals? Is it just documenting what is already known. Should we feel obligated to do appraisals just because everyone else does them? 70% of businesses conduct appraisals only once a year, but are appraisals just for the employer to clarify and articulate their vision.
Often an appraisal is just based on opinion and not on performance measurement. It can undermine harmony and fail to encourage personal best performance. Disagreement over judgement can create conflict that can fester for months which is counterproductive.
Most of our members felt that appraisals should be separate to the annual wage rise. “Appraisals should be a fair validated way for salary reviews / record of low performance when we let someone go / way of monitoring effectiveness of the manager”.
But for some it is political correctness gone mad. In sport you have a winner 1st, 2nd, 3rd. So, why is it such an issue in the workplace. Rather than talking about what the employees have learned and how they can grow, they instead resort to a number out of 5. The most valuable part of an appraisal is the development planning conversation; what can be done to improve. Yet, this is often left to a small bit at the end. And, if that happens, then the appraisal just becomes an HR box ticking exercise.
A regular ‘performance management’ system is better than a yearly appraisal. People are inspired by positive constructive feedback, and the appraisal process almost always works against this. New ways could include:-
Feedback rich culture for all employees
Separate discussion about performance from career development
Let employees create their own goals
Force managers to give ongoing feedback
Force employees to self-assess
Encourage high performance
Set goals regularly. Quarterly goals in businesses with performance management show 30% better returns and those that do monthly goals get even better results
Some business owners questioned whether it is worth the cost, eg a manager costs £50 per hour, employees £30 per hour. So say 3 hours each time allocated = £240 x say 20 staff = £5K in total to appraise 20 employees. Apart from taking up too much time, it can also be unpleasant to rate someone.
An appraisal / performance management certainly has value in building relationships between employer and employee. In many cases, it is the only time an employee gets uninterrupted access to their employer. One of our members commented that when appraising one of his employees they stated ‘In 10 years of working this is the first time anyone has even bothered to sit down and tell me how I am doing’. But, if we don’t do performance appraisals well, then we are better off not doing them at all.
These meetings are where you formalise the performance of the employee, not where you spring bad news on them. Forget feedback – it invites defensiveness. Use feedforward, it focuses on what you want the employee to do in the year ahead. It focuses on how they can do better, not what they have done wrong.
Employers are now starting to use cloud bases appraisals. The technology of sharing relevant performance will turn performance management into an ongoing process. It’s about targeting a specific area of weakness – not a career path, and it’s about inviting constant feedback from a variety of stakeholders who can have constant input into the work development of our employees.
Above are just some thoughts on how best to monitor individual staff performance!
In business what does success mean to you? High income, title, prestige, awards and accolades, enjoyment of work, pride, connection with colleagues, meaningful company mission. This was the topic discussed by members of the Business Exposure Group at our recent meeting.
Financially a business that exhibits 10% growth each year is considered success orientated – they have to be future focused. But, what is success? Is it money, or sales, or the influence your actions have on the environment around you? The goal simply is to keep the business afloat until you have figured out how to achieve success.
Some of our members suggested the following as indicative of success.
- Company culture – attracting and hiring the right staff who fit into and drive behaviour
- Having a Business plan with financial / differentiators/ product strategy / employee retention strategies
- Discipline to stop overreacting to market changes and adjusting your core strategy to keep up. Saying No is fundamental to success
- Creating predictability with business processes
- Understanding the pains your clients are experiencing and providing a much needed product or service
- Continuous change needs a culture of continuous training for staff development
- Greater use of technology to achieve business goals
Businesses need to embrace continuous innovation to make sure they offer something more than their competitors. 43% of SME’s consider a strong customer focus as the most important element to a successful business. Understand where all your customers are coming from as this allows you to scale your business; it empowers you because it tells you what works and what doesn’t.
Businesses need to create and maintain a culture of accountability. An optimally run business will outperform a business running at maximum performance. Choose security over growth. Narrow your horizons and become an expert, focus on markets which are growing or stable and look beyond your geographic location. In times of change, experience can be your worst enemy. Be willing to change even if it means plunging part of the company into confusion for a while.
According to the Institute of Directors there are 10 characteristics of a successful business:-
Leadership / culture / financial literacy / systemise / staff development / everyone sells / dress work environment for success / compensation growth / strong brand / give back to the community
But further comments by our members suggested success to you as a business owner means –
-delegating and paying others to do all the stuff you were doing for the last 10 years
– the business can be sold
-you can go away on holiday and earn money at the same time, leaving competent staff in charge
-the company has made it onto the first page of Google, without paying for the privilege
-you can now pick and choose your preferred customers
Business success is not all about growth. But many feel pressurised into constantly pushing for growth. One of our members explained that one of his worst decisions recently was to take on a volume contract, which had a low margin. His business turnover increased by £1m, but the problems of taking on this added revenue were far worse than the benefits. Staff problems, quality problems and cashflow to name but a few.
One of the Business Exposure Group members said ‘By the time we hit 6 years our team was smaller, our revenues were down but our brand was solid and we were more focused than ever, but, I felt like a failure because we weren’t bigger and making more money’. But he was on his own in the Group. For the majority, turnover was one thing, but profit and contentment were the true indicators of success.
Make sure you celebrate your successes, even the little ones. Build something you believe in and prepare to be copied, it’s a great recognition. Never give up control until you sell the business and remember, if you don’t smile on a regular basis then recalibrate, because business has to be fun!
You can divide business owners of the world into two groups: those who have had a serious setback and those who are about to have one!
How resilient are you? – was the topic discussed at a recent meeting of the Business Exposure Group.
As a business owner you need to live higher up the resilience scale than the average person, with the ability to adapt to stress and adversity. Resilience is one of the key things needed to build a healthy and successful business.
The following points were made at the meeting –
- Focus on what’s in your control
- Understand and accept the situation
- Become more creative
- Learn from the opportunity
- Solve rather than avoid problems
- Step outside your comfort zone
- Build a support network
- Regulate your emotions
- Persist rather than give up
- Look after your workforce
When times are tough sharing your struggles with colleagues can help. A support team is vital and often sharing can put things into perspective. But many business owners keep far too much to themselves.
How quickly can your business recover from setbacks in the sales process – don’t look at the sales record as just one good or bad deal or a good or bad week. Learn from your failures, is your pitch right, did you contact the right people, etc.
Eliminate the things from your business schedule that drain your energy. Create daily rituals that don’t let you nose dive. One suggestion was to look at businesses that are a little bit ahead of you – ‘walk a mile in their shoes’, and take inspiration from their approach. See every challenge as an opportunity for you to expand.
Resilience in business could be called a new style of crisis management. Resilience makes you more thoughtful about growing the business and as your business matures a cool almost pessimistic reality is needed to be resilient. Clearly you have to be confident saying no.
Stand by your business vision even though there are lots of external influences. Embrace difficult conversations with customers/suppliers/colleagues, and don’t take on a victim mentality. The most resilient of us demonstrate on a daily basis – stability. We need to keep confident and be a strong stable rock in the business.
After cash flow issues, research shows that 75% of SME owners believe that the biggest drain on their resilience was managing difficult people and office politics.
Most people step into denial as a coping strategy; the key is to develop resilience and stay motivated in the face of constantly increasing work demands. A back up plan will always be helpful for when things go wrong.
It is important to deal with stress at work, acknowledge and show gratitude to others, don’t expect perfection and only worry about what you can control. Find a routine and stick to it, delegate and forgive mistakes quickly.
Don’t make a big deal of problems. Stay focused and maintain your confidence, believe in your yourself and stand by your decisions, and adopt the 5 traits of business resilience
- Appreciate business trends
- Communicate the vision of the business
- Be risk aware even on a small scale
- Embrace flexibility within your business
- Maintain high working integrity and ethics
Although business appears to be harder these days, without exception, all the members of the groups felt that time away from the day to day minutia of the business was vital for the resilience of the business, and so that work issues do not impair other important areas of your life
Companies typically run their sales operations on either model. Inside sales have sales people report daily to their office and make sales via phone or web. Outside sales includes reps that travel for more personal face to face meetings.
Which one do you use and why? – This was the question posed to members of the Business Exposure Group at their last meeting.
There are pros and cons for both inside and outside sales. Should you choose one model or have teams doing both.
A sales rep can only do so many appointments in a day. Is it about quantity v quality and the size of the sale.
Inside sales teams are centered around low cost products, lower complexity, small scale orders. An inside sales rep makes 7+ more pitches but an outside sales rep converts 40% of prospects. Inside sales reps close new business 18% of the time and for every one field rep hired, 10 inside reps are hired.
Small business customers can react badly to having to take time out of their day for face to face meetings. 75% of buyers would prefer not to spend time in meetings. Therefore do inside sales better cater for today’s customers?
Customer acquisition costs money, inside sales teams can bring in new customers for 40%-70% less than a field rep. If you spend more time in the office you can deal with all the admin of the sales process quickly so you are more efficient, but is it different if you are going for major accounts as the core of your sales commitment.
Is the field rep an outdated sales approach? Outside sales require far more business intelligence, situational awareness and planning. Inside sales, whilst equally demanding, requires persistence, research and back end work.
Many of our members thought that their inside sales may be underutilised as traditionally the field rep drove strategy and execution of the account and inside sales reps provided the support function. But recently has the emphasis of sales changed, particularly with the impact of PPC technology on the buying process.
The sales model that a business adopts is often influenced by the business owners’ perception of which sales model would be the most effective. Is inside sales telemarketing or something more? Nowadays inside sales people are highly skilled and knowledgeable. Yet they get paid a fraction of their higher paid, harder to manage colleagues in outside sales. The average B2B deal takes an average of 5 decision makers – so inside sales allows the business to touch base more times with email, etc and keep the prospect warm. No longer is the quarterly call by the sales rep fit for purpose.
In our meeting 80% of business owners said it is easier to take on board new sales people and share best practice with an inside sales team.
But one of the biggest challenges is how do you get the two different sales teams to work together? The answers from the Group were as follows –
Define the differences / support each other on different size of deals / reward fairly / have a common sales manager / have all-inclusive sales meetings with both teams so that they are not in conflict competing for the same customers.
This discussion left the members of the Business Exposure Group with food for thought as to the future role of their sales operations.