Change, it is a blessing!

How many of you hate change?  Maybe hate is a strong word so let's just say resist or cringe a the thought of it.  Why?  Is what you are doing now working?  Is it enough?  Is it efficient? Hey, is it what your bosses (if you have one) looking for?

Shouldn't we embrace change?  Change leads to growth both personally and in most business cases.  However it requires us to be flexible which is hard and to welcome new ideas...  Whoa!  New ideas not that is a novel approach as well.  It might not even be my idea!

So let's set aside the pride, ego and authorship issues that surround many of us and instead look at the change from 40,000 ft.  Ask yourself is it good for me, my business, my time and my customers or employees (not necessarily in the right order but you get the point!!

Once you let go of the personal issues and look at it strategically or big picture wise you can objectively determine if this is something that needs to be pursued.  Don't spend time struggling with all of it, just take the old Big Chief Tablet, put pluses on side and minuses on the other and the course of action will be clear!

Growth Options, Am I Limiting Myself?

Your business is doing ok but you want more....  You feel there is more potential and you want to capitalize on your energy and drive while you can...  Are you in that position?  What are your options?

Each situation is unique as it varies by products or services, large or small products, your target market, maturity of the business, profitability, infrastructure and many more factors.  Let's look at some potential options.  The most obvious step is continue to do what you are doing as it works and just be more aggressive in defining your market, segment wise or geographically.  Ramping up the marketing and sales effort is generally the one thing that is tried first as it can be done with least additional expense and is just an expansion of the existing strategy.  In geographical expansion it may work with sales people working from their home until a customer base is established enough to justify some infrastructure.  This can be applied to an international expansion as well.  However, on the international side of things many more factors come into the equation and it is less comfortable and familiar combined with higher costs and additional paperwork associated with it. For example if you have need to maintain inventory in your target market, this leads to a relation with some form of storage facility either directly or most likely via a third party vendor and then you have to address all the control, documentation and paperwork issues for those products in that country.  Again depending on the nature of your product, you may be able to drop ship to your customers.

There are also other options via independent sales representation companies or agents in various locales, especially internationally.  However, caution needs to be exercised as they are generally very independent and performance oriented so agreements need to be constructed to provide the guidelines encouraging them to represent your company they way you envision.

Another area often overlooked is a merger or acquisition with a vertical or horizontal competitor or supplier.  It gets written off early on because of the higher cost associated with these transactions.  True, however, what is the return.  Before it is ruled out, analyze it with an eye toward the addition of their margin and what economies of scale on the expense side and potential cross selling on the marketing side. Where does this position your company? Now consider how I might pay for it and when I am paying for it?  How confident am I that it will work?  What am I willing to risk?  What if your business brings benefit the the other company as well, a synergy if you will, then it becomes a matter of finding the common ground where you both win.  Maybe the owners are older and looking to slow down or semi-retire or retire.  Then the focus becomes one of security and return to them.  Mostly they will be looking to cash out on their efforts and will need assurances that you can deliver and what are you willing to risk to bring it to fruition? In the past, I have seen these transactions work through some cash and a note.  The note was actually a convertible preferred debenture that was convertible into controlling ownership of the common stock with very clear performance provisions and rights to cure time frames.  This can be established for a potential succession plan as well.  In that there is a rate and payment plan structured in the debenture.  As long as the performance criteria are met then everyone is happy.  Yes, I know Murphy's Law always comes up.  Thus the right to cure provisions allowing you time to fix issues that may be just temporary.

The point here is that you never know if you do not open the dialog.  What if they have no family to succeed them and are looking for a strategy over say 5 years to cash out.  Can you capitalize on their customers and/or expertise to exponentially grow the combined business? What if you are acquiring a supplier and you can not only absorb their margin but improve upon it through efficiencies through combinations or cheaper locations?  The possibilities are endless.  The question to ask yourself is have I explored all my options?

Seeing Positive in Complex World

Wow!  It has been quite some time since I sat down and shared some thoughts!  Has your world been that busy and seems out of your control or that you are just going through the motions?  Probably the case for many of you who may work for or have your own small business.  So many topics, so many different opinions and a very small amount of real facts.  Everyone seems to be drawn to reality issues so the media saturates the airwaves and the market with any and all it can get its hands on.  You in the meantime are trying to filter your way through it to find items relevant to your needs today or next week and to best utilize the limited time and resources you have.

Don't fall into the trap of being sucked in to the every widening search for "truth" or answers or more likely just "dump".  It previous posts I have talked about planning and execution.  Now it is even more important to have a plan (form is not as important as having a direction and steps to get there).  What is needed from you to attain that plan, today, next week over the next month?  Ask yourself does my product or service lend itself to social media participation?  Will it spread my brand identity translating into new customers or opening opportunities?  Or do I need a presence for feedback or for marketing?  Your energy and resources need to prioritize the best and most cost effective method to reach your market.  Social media can be cost effective but it consumes a lot of time ( a very valuable and scarce commodity).  Do I need to enlist a third party group to handle that and what about the cost?

Add to this mix the cultural and demographic spread that may exist in your market and how they are reached. The younger generations seem to thrive on the social media avenue and while some of the older generation embrace it, there is still leeriness when using it. Let's also mention that if your market is more global, what are the idiosyncrasies of some of the cultures or countries. There can be many factors that weigh in and they are different of course, depending on product or service.

In each and every case and in today's fast paced instant information age, corrections/adjustments can be made often as long as they are seen as more of a course adjustment and not a complete redirecting. So we come back to the planning side of things and how well you analyzed your market, selected your marketing approach and how effectively you monitor and manage your marketing strategy, prospects and customers.  This is not rocket science but it can be overwhelming.  Solid planning reduces the areas of concern and allows you to focus on implementation which is what translates into market presence and ultimately success.

So what is the first step?  I would say take deep breath, pull out a note pad and list what you feel needs to be done (irrespective of where the resources will come from at this point).  When you have completed the list, then go back and place a priority number on it (i.e. what's most important or should I say what you believe is most important), make notes besides those that you can about resources (people who can do it, in your organization or that you know) and then when you feel it needs to be completed.  You have a document that you can use to take the first step.  Now in some cases you may feel that you are weakest in this area and will visit with some friends or possible hire a professional to visit with you about your ideas and possibly offer alternative ideas or resources.  Whatever the case, many times action on even a rough plan will reduce the stress allow you to progress.  This is not a yes/no type exercise and it is dynamic as it should be ongoing quarterly or at the least annually and it should cover more than just marketing.  It does not need to consume days when it can be done in hours after the initial time when you have a better idea of how to work through it. One last note, there are many helpful hands out there who may have some valuable information for you, but you need to control the input, the cost and the time on your schedule.  It is your business!

Stress and the Small Business Owner

If you came to this article expecting a magical cure you came to the wrong place.  Stress is a fact of life in small business where the intent is to grow the business.  If you are satisfied with where your business is in terms of market, size and profitability then many of your decisions have already been made and you have developed a system of delegation and are not attempting to control every aspect of the business.  Too many owners are under the misconception that micro-management is a must since it is there business.  Now managing a business and micro-managing one are quite different.  An owner should know the ins and outs of his (her) business and be very familiar with all aspects of the business.  However, if you try to handle all  the sales, customer service, production if there is any or purchasing plus personnel issues you will never have enough time to do it right or to do anything else.

What is the key?  Just that! Determining what are the keys to success in your business.  Maybe it is the number of customers each day or week and so you have to insure that you get the word out.  Maybe it is done by demographics or by geography or by some other method of selection and thus you hit so many households or people and you get a certain percentage through the door.  Maybe it is calls on business to sell your service and you know if you call on 100 you will get 10 to listen and 2-3 will buy.  So now the sales or contact keys are establish and either an employee or maybe third parties can report their contacts to you and as long as it meets or exceeds your expectations, once less worry.  But wait, numbers are dropping?  Why?  Is it a stale effort?  Does it need re-energizing?  Re-Vamping?  More of it?  Temporary?  So clearly periodically you would need to re-visit the program and your expectations but not every day.  So determine the regularity of the analysis and look to something else.

No one seems to treat my money carefully enough so I do all the buying and have to check everything.  Stop!  Are you hiring the right people?  As I have said in previous posts are you going to cheap?  Have you made your expectations clear enough and established policies and procedures that reinforce the methods?  Take a look at levels of spending authority….  If you have established budgets that are consistent with the plan then it will lead you into what authority for whom….

Personnel issues, wow do you have to handle them all.  Even if you have a shop or such, can you not have shift leaders or managers responsible for insuring they have coverage and listen to all the attempts to stay home?  Remember it is back to hiring the right people and being clear about expectations and the policies and procedures which are applied equally.

Customer complaints are an area where you certainly want to be in the mix but not until others have had a chance to satisfy the customer.  Think about the complaints, many times it is because they were not treated right in their mind (employee training resolves this issue as well as the way the leadership deals with each issue).  Sometimes they just want to be heard or so many minor things that do not need to be a distraction. 

Cycle back to the keys that is where you spend your time.  Businesses grow because the employees (irrespective of their ownership position) connect with prospects or customers on an ongoing basis.  It is a relationship that has to be nurtured and one where the seller (you) have to constantly be in front of your customer at the right time or at least they know you have what they need.  Retail operations revolve around location, the right inventory and employees who can connect the customer with a need that brought them there originally.  In wholesale or manufacturing it is more about finding who are target and the correct decision maker and again satisfying a need.

Stress is what we do to ourselves for many reasons!  You probably have heard the expression, “They Can’t Eat You”.  Many sales people and debt collectors will use all their extensive training to convince you to buy or pay. Guilt, intimidation, lying, misrepresenting procedures are all tools of the trade for them.  However, what if you just ignore it or should I say them?  But they keep on?  Their job is to get you talking and to move you from defensive to cooperative.  They take it one step at a time and they will get you to buy in at each step by asking you to agree.  You can feel the stress just piling up!  However, just say no or goodbye and what happens?  Your shoulders relax and you breathe again.  My point is you let them get to you.  Don’t let someone bring the fight to you.  No, you take the fight to them!   You might find this funny but the most effective way to resolve any dispute is just like the Bible says in Matthew 18.  No gossip.  No stress.  No Lies. Just direct honest talk face-to-face.  You look whoever in the eye explains where you were coming from and the issues listen to his side and go from there.

Reduce your Stress!

Sales as it should be!

Why aren’t people standing in line to buy from me?  We have a good product or we provide a great service.  These are comments I often here from people who start a business without some type of plan.  Hey, I am not talking about a telephone book size plan.  I am talking about taking the time to answer some simple questions

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• Who can use my service or would benefit from my product?  And why (what is their benefit!)
• How do I get me message to them?  Personally, media, word of mouth, door-to-door, email, billboards?
• What is my message to them?  What about my service or product distinguishes me from other choices?
• What order is the best method and most expeditious in getting my message out to the right people?

Simple questions that may lead to not so simple answers.   How do I begin to define the market?  You can hire someone to do the research for you or you can go to someone like D&B and buy so many leads based on some criteria you provide them.  You may be able to find leads on the WEB by searching for free listings or join organizations that include people who are your market.  You may have to just go to each business and/or house in certain areas to tell them about your service or product?  There are many different ways to accomplish this aspect and no one way is the only way.  In fact, you may decide to pursue it on many different levels.  You may advertise on TV or a billboard. Maybe for you, a mail out campaign with some type of offer brings people in to you facility or store or makes them aware of what you have to offer.  This definition and communication of your business is the most critical aspect to being successful.  You may be able to go to your local business magazine and acquire a list of certain types of companies in your town with all the information you need.  Now you have to develop the campaign to tell them your message and lead them to acquiring your product of service.  In this process, many times people get so focusing on selling that they lose their identity.  For example you promote your business as being higher quality than those currently in the market and yet you discount the price below that of your competitor because you are impatient or in a hurry.  Another reason to develop a plan and understand it such that you maintain your corporate and product/service identity and integrity.

Having touched on your message, let’s remember that marketing materials can be of a wide range of quality and sources.  You can pay to have them designed and used high quality materials or maybe you just do them yourself.  Again they need to be clear and carry a message both about who the company is and what the product/service can do for them.  In today’s marketplace, many business figure if I can call on enough people I will get sales.  This can be true if you are not targeting a specific geographical area say like a restaurant or retain store.  If you are incorporating the internet into your program and you can deliver the service or product to the end user then by all means proceed.  Determination and effort can overcome a lot of things to drive a business to the success point.  My point, define how and to whom you plan to sell.  Determine how they make their decisions and utilize the appropriate method to deliver the appropriate message to them. 

Finally, what are you expectations?  How soon do you expect to close the first sale on best and worst case basis?  Have a budgeted for the worst case basis and worked for the best case?  Have I quantified the sales expectations into short and long term?  Have I put together the resources to provide for the opportunity to succeed or have I pinched pennies and maybe need to stretch out my expectations.  Many times we are blinded by our own brilliance or maybe it is naïveté or somewhere in between.  However, this needs to be the most realistic conversation and plan you can have.  You need to be clear on what the worst can be and am I willing to risk that?  Or if it goes bad, what can I do?  If it goes better than expected, what do you do?  Increase production, hours, staff, raise prices or just turn down excess orders or business.  Hopefully, you are beginning to see the importance of the sales or market analysis and planning.  It is not about the format or how pretty it looks, it is about the meat.

Business Planning and Budgeting

How many times do you hear, “where is your business plan?  Do you wonder what does it matter to them?  Or will they understand it?  Or why should I write one I know what I am doing…….  Oh yeah and the “I can’t afford it!”  Well I hate to break it to you, but you can’t afford not to have one.

Business plans are meant to provide a tool that focuses thoughts and ideas and translates these thoughts and ideas into practical “stuff” throughout your business.  First and foremost it provides you with a roadmap as to the what, how, when and where necessary to determine your markets, needs, strategy and financial aspects of your business to increase the odds of success.  As we have talked about previously, a good business will quickly outgrow a good entrepreneur and get out-of-control.  Now this does not have to be an encyclopedia and the detail will depend on the business, the management team, the market and financial position.  However, it is critical for each business at conception to articulate the plans and then define the steps, timing and resources required to get there.  Optimally, this should be a living process that looks 3-5 years out with a monthly or at the least quarterly budget for the upcoming year and it reviewed, revised if needed and rolled out another year annually.  This should be a process that involves the whole team.

In conjunction with this, the key members of the business lift their collective eyes up to corporate goals and objectives.  This serves many purposes from a planning point of view but also provides significant team building benefits.  In business with long lead times the process is critical and more difficult as those lead times are subject to many factors that change for more reasons than we have time to go into for now.  Maybe at a later date we can delve into the fine points of planning.

Everyone has heard all the publicity about having a mission statement and getting the whole corporation or business to buy into the corporate mission etc.  These are great when you have staff’s that have missions as their business.  For most business, you may hire someone to drive the process and to be a 3^rd party asking the questions so you and your management team can focus on the answers.  Then from your discussions the plan would be created and you have the main aspect of it ready to move to the next step. However, first let’s just briefly mention some of the areas of importance. First and foremost what is your market?   Who are your customers going to be?  Describe or define your typical customer.  Who fits the profile in the market place?  Be specific and develop a list of companies with the contact information.  Now if you are having to multi-layer sell due to complexities of products, you may in fact have a strategy for each prospect outlined or at least noted.  Who is your competition?  How do the channel their products and/or services to the market?  What are their strengths and weaknesses?  How do you compare?  What about pricing?  Delivery of service or product, how?  Spend time on this as you, your management team and your sales team need to understand the market in detail.

Manufacturing companies will need to spend time working backwards for sales forecast to productions schedules. This will mean considering raw material availabilities in what locations and comparing deliverability with price and stocking needs to maintain a smooth flow through of product.  It also means maintenance has to be factored in, as well as security of resources, potential technological advances, allocation of resources for research and development and of course, personnel and cost of production.

Service companies have less to consider but it is also more elastic on the demand side created more uncertainty and adding the need to consider in depth explosive growth and potential valleys.  However, you can still work through the process of cost to deliver the service and it needs to include the corporate overhead allocated across all the services.

Now the process moves to personnel and those expenses that are not related to producing a good or to provide a service directly.  Items would be related to accounting, overall advertising, employee benefits and other similar costs.  These are usually straightforward and relatively easy to forecast.

So now you have defined you best ideas on what you sales/revenues will be this year and with less certainty further out to at least 3-5 years down the road.  You have worked through the costs and developed a 5 yr plan and rolled it back into the budget for next year.  Most people are glad to get to this point and never looked back.  However, I say slow down, get the key players together and each of you talk about the pluses and minuses of the plan as you see it.  It is the time for candid conversation but appropriate and focused on having a solid consensus of where the company is headed and why?  Now it is also time to roll it out to the company at large and then each management team leader should explain the plan to his personnel.  The team should get back together at least quarterly to review progress and see what if any events have influenced the company’s performance.

It takes some time but provides benefits on so many levels and we did not get into how much easier it is get funding from institutions or investors when you have a plan and have compared your performance to it.

Logistics, Simpler and Effective

For those in the service business with a clearly local flair, this may not be an issue.  Unless, of course, you plan to expand your business by opening up new markets.  Maybe your business lends itself to capitalizing on the advancements in technology and services provided by a efficient logistics company. Do you have or plan to have existing or potential clients send you goods or materials to analyze, repair, duplicate, or some other service and then you return it to them.  For others, it may entail full 40 foot container loads of goods.

In today’s marketplace, you really have to look at the size and weight of the shipments combined with frequency and whether international is a factor today or will be in the future.  So let’s begin with a discussion about shipping smaller lighter items.  This is a market once controlled by the US Postal Service until FEDEX used bar code technology and standard packaging sizes to develop a system to meet the more time sensitive needs of business.  They wanted both a system that would be user efficient but one that could handle very high volumes.  We could digress and discuss their philosophy but while several have tried to compete with them, it really has come down to two, FEDEX and UPS.  There are strengths and weakness of each but the basic principles apply.  Initially they just wanted to be your shipping company and now they want to be your logistics solution.  To compare the two we would need a specific examples and that would defeat the purpose of this to provide insight to a wide range of business about ways to enhance their business via a logistics solution.  TIP:  Both firms have relationships with organizations that have discount arrangements that can be significant and in excess of the annual cost of membership.  What kind of impact would it have if you could be delivering goods or services physically by 10 am the next day.  In major cities you only have to get it to certain locations by 8 PM. When a day or so is not a factor then you really can see competitive pricing as even the US Postal Service enters into it with one price boxes for anywhere in US.  Again you have to price compare and match it to your shipping objectives.

If you plan is for quick turnaround and you are dealing with items and services where a $10 difference in shipping is not significant or it is option at customer expense, it can change your markets and possibly even your services.  Technological advances in communication now make it easier, faster and more reliable to keep track of shipping status from a smart phone and on a close to real time basis.  With a little discussion and planning, you might be able to arrange all this to integrated right into your QuickBooks (or other accounting software) and/or Outlook thereby minimizing typing each label and address.  Think about how it works on eBay. 

So begin by asking yourself these questions:

• Does my business lend itself to capitalizing on this technology? Can I gain a competitive edge in my target market from better logistics?  Can it be additional revenue with various choices for the client?
• What are my margins? What are the costs?  How much are the fixed or more likely setup costs?  How much will it be on a per item basis to ship?  What is my break-even point if I were to add this logistically system?  Is it offset in whole or in part the time and effort savings of my employees?  They are good at what they do and mistakes are rare indeed.
• Where is my market?  Would this allow me to redefine my market? How does my competition handle it?

Many different options and factors enter into a decision of this type of decision. No one thing jumps out as the key. As we talked about last time, you need to evaluate in depth your people resource dedicated to logistics? What are your options and the associated costs and savings? Where do you plan to be in 3 years? Globally? Logistics and technology lead the way in that arena and provide tremendous cost savings. Consider that the marketplace is globalizing, competition will escalate, market boundaries will expand while costs are attacked making quality of service more of a challenge and an opportunity for separation in the marketplace. Savvy business planning ahead, constantly challenging themselves to be proactively efficient and staying up with the technology will have an upper hand in the battle.

There are a whole myriad of choices for that business shipping the smaller items.  This can apply on items up to a size that is say, lifted easily by your customer.  International markets have stabilized and logistics service has become readily available and affordable.  Once into the international market, you see a whole new slate of challenges issues that need to be addressed from who is best provider, import restrictions or duties, in-country competition, political status of the country and its stability. Additionally, once you move to larger items, say pallet loads or container loads, you need customized service and solutions that are geared toward that arena.  Generic solutions are less likely to be applicable when you are shipping larger and/or heavier items as with the size comes higher costs that ripple through all areas.  

So what do you look for?  Do you have experience in this market?  With these service providers, I mean freight forwarders?  Customs Brokers?  Transport Companies?  Are you aware of the new advanced reporting requirements for materials coming into US?  Are you shipping material that may be classified as hazardous?  Or it might be hazardous for air but not via ship?  Just a few of the questions that leap out at you when you talk about bigger items.