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SME’s say marketing is critical to growth, but measuring return on investment (ROI) holds them back. Has it held you back?
This was the question posed to members at our recent Business Exposure Group meeting.
If ROI is difficult to measure for a marketing activity, then don’t do it, was the view of one member. Others felt that they did unplanned marketing activities with no certainty of ROI and not included in the marketing budget. Research shows that businesses that develop and use a marketing plan go on to outperform those that don’t, by an average of 30% and every £1 spent on advertising benefits an SME eight times as much as it would benefit a larger company (Deloitte).
Marketing is important to SME’s but, lack of budget, lack of expertise and time are barriers. Some of our members see marketing as a cost, not an investment in the future, and only 20% of SME’s believe that increased marketing spend will be their path to growth.
However, those businesses which seem to be flying are marketing led. They have the marketing budget at the top of their business agenda – if you are not spending you are not gaining customers!
Tracking where the enquiries are coming from is crucial. It is easier to track ROI from a digital campaign rather than a traditional one. Always ask an enquirer where and how they found out about your business. Is your record keeping system good enough to make sense of where to spend your money? Understanding, ROI is important, but some felt that measuring ROI was futile because most marketing is about creating long term brand recognition.
68% of SME’s say it is difficult to get customers to take action as a result of marketing, questioning how much should be invested.
Consider a ROI formula? ___ROI ____ x 100 as a percentage, so you can work out
whether one medium generates 15% and another 50%, then clearly you know where to invest your money. When you spend £1 on marketing how much should you expect in return? A good return thought by the members was in the region of 5/1.
If a marketing activity can’t be measured perfectly, it doesn’t mean it shouldn’t be considered, but don’t throw money across the whole marketing mix without deciding quickly what works and what doesn’t.
All the members concluded that they needed to spend more time on the question of ROI when glibly doing ‘appropriate’ marketing.
This was the topic discussed by our members at a recent meeting of the Business Exposure Group.
As a business you need to know how you are performing. Should the management pack consist of a one page summary, or should it be more extensive, and what should be included in it?
Most businesses include KPI’s/ Action plan and corrective action/ Profit and Loss showing period against the budget/ Aged Debtors/ Staff headcount/ Cash at bank/ Capital expenditure / Cash Flow forecast.
These are all essential pieces of information needed to enable you to get an overall picture of what is happening in your business at this particular moment.
The figures should be monitored on a regular monthly basis, say 5 days from the month end, with time set aside in the diary to study them and ask questions. This is the best way to monitor your working capital and decide whether you need to invest more time in chasing payments. Armed with the information you can get the business to perform better – control costs/ improve margins/ boost cashflow/ reduce risk through better management.
Management accounts are used to help plan and control activities of the business and to assist in decision making. Information should be shared with staff members, as it will help them understand where to focus their energy and avoid big surprises at the end of the year. Often visual graphs make the figures easier to understand, and can highlight both positive and negative trends.
Information can be obtained to identify seasonal differences, plan dividend payments and other remuneration.
One of our members felt that his management accounts produced figures that were too focussed on the present, but it’s up to you to interpret them and spot trends. Consider burn rate, ie how long can you last if no more sales were achieved beyond those already known, therefore unnecessary costs must be dumped.
Looking at management accounts should not be seen as an additional administrative burden. All this information is there to help you decide about – adjustment of stock levels, hiring of extra staff to meet demand, investment in marketing, discounting or discontinuing certain product lines or services. Nowadays with the common use of Xero accounting software there is no longer a need to wait a full month before knowing the financial position of your business. The use of accounting software allows companies to produce information on demand.
Our Business Exposure Group members were all aware of the value of regularly reviewing their management accounts and agreed that they were important for the business to progress, but some felt they did not give sufficient attention to the definitive information available.
How to motivate staff without paying them huge salaries was the main topic for discussion at a recent Business Exposure Group meeting.
It’s easy to find an employee but not easy to find help. Help is when you pay money and get back more than you laid out. So, how do you attract the right employee? Don’t hire people on a recommendation or just because you know them. Take time to select the right person for your company, and let them loose so that they can do what they do best.
The usual job ads don’t work – ‘salary commensurate with experience’ is boring, ‘competitive wage’ ie, you pay the same as everyone else – will not attract amazing people. Good candidates want – no management, no bullshit, and no idiots – that would attract great people. So, come up with your own unique version to attract good people to your company.
As an employer you must not play God, employees do not like being talked down to, nor is it good for motivating them. Bad bosses bribe their employees with high salaries. Amazing bosses motivate their staff by saying ‘this is where the company is going’ and ‘let me take you on a journey’. Only give pay rises commensurate with the success of the business, don’t bribe staff to stay – they must be motivated. Create a ‘map’ and show employees what they are working to achieve.
Make your staff feel they are part of the success. Does putting KPI’s on the computer so staff can see how well the company is doing in comparison with last month, energise and motivate your staff, or is it dangerous if the business performance takes a dip?
Have you got a good environment for people to work and flourish? They will be motivated to do better if they are recognised for going that extra yard.
So, how do you ensure that your staff want to be part of your business rather than just turning up every day with an attitude that they are making you money and not seeing anything for themselves. They must buy-in to being part of the bigger picture.
Don’t hire people to do the jobs you won’t do. It begs the question why would someone else want to do it? Mundane jobs are okay if you introduce some variety, consider flexible working practices.
Giving people a job title often limits the role they carry out, eg receptionist – only answers the telephone. That is probably not a fulltime role. Everyone should share the job responsibility, but this only works if staff are motivated,eg techies who are happy to deal with customers. Keep staff motivated and have a share in the collective work. Get staff to do a bit of each other’s job when needed, ie to cover absence. Introduce cross-training. Employees like to do more and be involved. Staff will take pride in their work if they feel part of the business. Also clients like to talk to people who know about other areas of the business and can add value.
Good employers have a vision of what needs to be done, which is not done by having rules. Employees should be following your vision and solving problems, not obeying rules.One of our members who has a cutting edge business explained that ‘the fact that other businesses hate that we exist’ is what makes my staff excited and motivates more than pay.
The younger generation enjoy the competitive environment but this is not limited to financial gain. Quality of life is the big motivator these days. It is important to move away from the boss to employee relationship towards an alliance for success.
These were some of the points raised by our members during the meeting.
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.