Archive for category Business Planning
In today’s confusing economy many business owners are in need of a jolt – something that will help their company grow. But what are the ways to find an edge in a crowded market, to find new ways to sell your product or services?
This was the question posed to members of the Business Exposure Group at a recent meeting and they came up with the following points.
- Is the business truly scaleable? Is the demand for your products enough to sustain growth by focusing on either one product at a time, one new customer at a time, one new sector at a time? But often the key to scaling up is scaling down and become more efficient.
- Make sure you do your market research before scaling your business.
- Re-organise your company to serve customers better. Look at your inefficiencies and review where improvements can be made.
- Operate with integrity; don’t let money or greed get in the way. Strive for excellence and be different. The owner is the main sales ambassador, so get out and visit your customers. Focus on good customer service. Stay up to date with technology and up your marketing activities.
- Many small businesses run too lean for too long, putting all their investment into selling, but certain inefficiencies maybe things you can get away with in the early stages, but if you are serious about growing these ‘holding you back’ issues need ironing out.
- Don’t think just about tomorrow, at the expense of the long term.
- For some it is easier to carry on as you are, rather than developing skills to manage and grow your business. A leader’s job is to set the vision and a manager’s job is to set tasks and look after the operation. It is vital to position yourself correctly in the business.
Your business can either grow or stagnate, it’s your decision, but let me leave you with three interesting thoughts –
- Don’t become obsessed over ‘cool features’ as this will drain resources and will not increase your bottom line.
- Don’t over innovate because this will drive your customers away because your products and services become too complicated.
- Don’t wait until a product is perfect before you launch because you will have launched too late.
Remember growth is about having processes, being organised and delegating trust to others working in your business.
How do you provide your buyers with a complete understanding of what you do, what you sell and why your products or services are better than the competition?
This question was posed to members at a Business Exposure Group meeting and a lively discussion ensued.
Too many businesses are already generating all the leads and prospects they need but are unwittingly losing up to 90% of opportunities to convert them into sales.
It is important to consider the following:-
- The buyer is more interested in themselves than you, so, how do you remove the perceived risk of buying from you?
- Map your sales process. A step by step process to convert enquiries and leads into sales – the actions taken to prepare for each sale. How you overcome concerns. Build trust/understand the buyers goals/create certainty that your product meets their needs/ overcome fear of making the wrong decision/officially confirm the sale. Develop a process.
- There is value in trying to convert old and cold prospects. It may be time to approach another prospect in the target company.
- Qualify leads so you don’t waste time. If a prospect isn’t ready to buy don’t give them to the sales team. Provide useful mailshots and wait your time.
- Spend enough time researching the buyer’s needs, then offer the solution to win the sale. It is important to listen and find the solution for the prospect.
- Measure your conversion rate and always have a planned agenda for the sales meetings to keep you in control and set the appropriate expectations.
The Business Exposure Group members came up with the following points.
Offer content and information that educates, regular newsletters are the beginning of the process.
- Fish where the big fish are, don’t waste time trying to convince people to buy when they are clearly not interested or ready to commit.
- Establish a no communication deadline to remove redundant prospects from your pipeline.
- Follow up your initial call a few days later asking questions, eg, have you had a chance to go over the information and make a decision? 80% of all significant sales occur only after a minimum of 5 follow ups. Following up will apply pressure and open up dialogue to discover questions and concerns that the prospect may have.
- Have a list of scripted answers readily available for every possible objection/query
- Remind them that you have a solution that is going to make them more money
- Don’t adopt a one size fits all approach, target and segment, focus on the best prospects first
- Increase the skills of your sales force, make them appear helpful not pushy, and the overall product knowledge of your team will reduce the risk factor facing the prospect.
The future for any business is to develop a well thought out process to maximise the conversion of prospects.
Strategic business reviews are useful if you are
- uncertain about how well your business is performing
- if you want to know how to get the most out of your business or marketing opportunities
- if your business is moving in a different direction to the one you planned
- if the business is becoming difficult or unresponsive to market demands
But what are the questions we should be asking ourselves?
Members of the Business Exposure Group discussed these questions and came up with the following.
- If things are running well should you let it run or is it actually time now to plan again? Most thought that it should be a constant agenda item.
- A simple planning cycle can greatly enhance your ability to make changes in your business routine.
- It is vital to review the progress of your business, but how are you measuring success and is your annual business strategy fit for purpose? Most thought that a review should take place every time a game changing event happens.
- What are your markets now and in the future and how do you gain market advantage? There is no point in going head to head with the competition, try to find a niche.
- Which of your products/services are succeeding and which are not performing as planned? Spend more time on the latter.
- How effectively are you marketing your goods/services to your customer’s needs? Have you reduced the risk of them placing an order with you?
- Conduct competitor analysis. Find out what they offer. How they price their products/services. What is their competitive advantage. What was their reaction to your entry into the market. Who are their biggest customers. With this information your business can be more robust and targeted.
- How often do you review your financial position? Have your requirements changed recently? How frequently do you review costs and new ways of doing things? These questions are crucial.
- How often do you review and update your website? Don’t let it sit there reflecting the old times.
There is a benefit to have an outsider question your thought processes periodically. They will ask questions that you never even thought of. There will be many external factors which may affect your business’s ability to compete and it was generally felt amongst our members that is was vital to review your business periodically, especially if legislation changes, new technology is introduced, a significant customer is lost or a new competitor enters the market. It has to be a disciplined ongoing process.
Most business owners dream of growing their company. Greater revenues are a measure of accomplishment. Larger companies are trusted more and getting bigger makes it easier to get even bigger!
But, being big creates problems – the business becomes less flexible, less customer centric and all the aspects of being small are jettisoned: agile, frugal and responsive. So, can you stay small but continue to grow? This was a question posed at a recent Business Exposure Group meeting. It’s important as the business grows to keep thinking like a small company. So, consider:-
- Does adopting the formal trappings of a large company in order to appear more credible actually reduce performance?
- Employees function better when the rules and procedures are short and simple.
- Adding more staff often creates more problems, and it increases staff turnover.
- Working with fewer people creates conscientiousness and keeps everyone more involved.
- Employees wherever possible should be rotated between tasks, so everyone can multi-task.
- Decisions take longer to make in a large company. There are too many managers who create bottlenecks.
- Do we need constant regular meetings? There is often a mis-alignment between when meetings are scheduled and when a conversation is needed. So, be more flexible. Big businesses have too much reporting, too many meetings, too much training. Create a culture of action and hire people who get things done!
- Customers are happier when there are fewer layers of management and procedures. Several layers of management depersonalises the customer experience.
- Eliminate useless work practices, don’t issue a companywide rule that only applies to a few – eg everyone must write a report, but it’s only relevant to one employee who doesn’t communicate well.
- As the business grows the agenda will change, make sure everyone is working to the same project. Don’t let people continue on old projects when the needs of the business have changed. There is nothing quite so useless as doing with great efficiency something that should not be done at all
These points were raised at the Business Exposure Group meeting. It was felt that keeping teams small and agile with little bureaucracy, a flat organisation and smart employees was the appropriate model for a contemporary business.
The simple way to expand your business is through hard work, there is no short cut to growth. However, growth through acquisition maybe appropriate for small and medium sized companies looking to achieve rapid expansion.
What do you think of when you want to grow your business?
- Catch your competitors off guard
- Instant market penetration
- Eliminate a competitor through acquisition
- Is rapid growth too risky in a fast moving business world
- Will staff cope
So, is organic growth too risky in our fast moving business world? This was a question raised at a recent Business Exposure Group meeting.
It is easier to finance growth via acquisition than other routes of expansion. Lenders are more impressed with real financials than projections. Banks prefer to finance acquisition rather than projected traditional growth.
Ask yourself – does acquisition complement our services/does it align with who we are and what we want to become/does it enhance our profile. For a business to be well positioned for acquisition it needs to be doing well, have a strategic business plan, a strong management team and access to capital before the deal takes place. Is your foundation sound enough to acquire? Will your key employees stay?
Acquisition is about getting skills and technologies faster or at a lower cost that they can be built from scratch. Acquisition is even better than having a super-charged sales effort.
Acquisition is lower risk – expenses are predictable, but how do you find a company who wants to sell?
1. use your accountant/lawyer
2. contact the owner direct
3. look for people around retirement age
4. direct networking with business owners
With organic growth businesses, growth should be restricted to 5-20% per year. So acquisition assists to go beyond that with control.
If you don’t have the money to buy
- use the seller’s assets
- buy with someone else
- lease with an option to buy
- assume liabilities or decline the receivables
One of the Business Exposure Group members who acquired last year said ‘Keep the businesses separate for 18 months and let the teams develop – if buying the business, but if buying the talent then integrate them into your business quickly before they leave. Respect the existing product and/or services otherwise the newly acquired team will feel embarrassed and worthless’.
According to KPMG, on acquisition 15% of staff leave. If more than 15% this will affect the DNA of the team that you have just acquired.
The discussion at the meeting finished with an agreement that time should be set aside each month to work on the business and consider if an acquisition should be targeted, but note that acquisitions usually stem from the sellers desire to get out rather than the buyers desire for a purchase
Other than financial . . . . . value creation is the essence of business. Value is what attracts and keeps customers, attracts and maintains relationships with investors and suppliers who are critical to the businesses long term success.
It is a mistake to look at your business from within – better to look at your value propositions through your customers’ eyes, because the biggest differentiator on valuations of a business is the intangible value placed on business reputation. So, therefore
- Make and keep realistic promises on service, quality and delivery
- Use IT to improve transaction speed and information sharing
- Develop staff decision making practices
- Spend more time and money on the important areas
- Build capability within your business
- Build enthusiasm with your staff
Value is all about creating a ‘serving mission’ for your customers.
There are 9 things that will make your business worth more than your competitors in the same industry.
1) Recurring income
2) Provide something different
3) Show growth at a pace
4) Be seen as a ‘trendy’ innovative company
5) Ensure no customer is responsible for more than 10% of your revenue
6) Be able to predict business conversion rates
7) Have a second in command
8) Be able to demonstrate happy customers
9) Remove complexity and duplication in your business processes
If you can tick a number of theses 9 facts you are well on your way to creating and building an enhanced value for the future.
And looking to the future. Stop thinking about ‘making products’ and start thinking about experiments. Because it is one of the experiments which will be the one opportunity that will make your business fly!
Companies are being challenged as never before to adapt at speed in the face of relentless innovation.
So how do SME’s stay ahead when the competition is accelerating? Not merely by adapting to changing conditions, but doing so quickly and decisively.
One of our Leeds members stated, at a recent Business Exposure Group meeting, that he is fine with his products and services for the next 2 years, but is fearful for the future as he has no idea which of his products and services will be relevant in 5 years’ time and this is a worry when he runs a £2m turnover business with 19 employees. It’s quite a responsibility!
The discussion at the group meeting centred around five key questions:-
- How much growth do we need and how fast?
- How much growth is left in our core markets?
- How secure are we in our core market?
- What opportunities do we have to grow existing business?
- What new market opportunities do we have?
Some of the points raised were as follows:-
- It is fundamental to understand your competitor environment
- We must use customer insight to drive growth
- The trick is to be agile and persistent, but with a realisation to exit flat business ideas, rather than holding on and hoping they will turn good
- If you can’t comfortably hit your 5 year business plan with your core business, then you need a second act, one which operates beyond the core business
- Embrace the non-conformist in your business, because although they are difficult to manage, they often show the most promise and can help the business adapt at speed
Although fast, innovative business seems to be flavour of the month, it was commented that innovation often has a short shelf life and goes sour like milk. With that as a backdrop many of our members felt that a more ‘controlled expansion’ was appropriate to their businesses, so that cash flow was not put under pressure, staff remained happy and not overburdened, systems were able to cope, quality was maintained and complaints were kept to a minimum. The reality is that core values diminish as a business grows, and if it happens too fast then cracks start to appear. But, whatever your stance, it’s important for your business to be agile, with a rapid cycle between strategies and feedback. Between an idea and having it in the market, in order to work out what works and what doesn’t.
The Monday morning sales meeting historically talked about how the business did last week. Now, we need to discuss how we did by customer segment and by product segment so that we can push our limited resources in the direction where we will get the quickest wins allowing growth at a speed we are comfortable with.