This article is by the legendary Warren Buffett, whose simple homespun philosophy has made him the worlds richest man. His company Berkshire Hathaway has a price per share of a staggering $100,000 per share, thats right, $100,000.
This article demonstrates, if ever we needed reminding, that there are opportunities for us, even in the darkest of times.
New York Times Article by: Brad Holland Times Topics: Warren E. Buffett
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
Monday, 15 December 2008
Friday, 12 December 2008
Qualification, Qualification, Qualification 4 critical steps to successful selling
Fed up with closing too few sales? Keep coming up against surprise objections? Use qualification best practises to improve your close rates.
The qualification process in sales calls seems to have fallen out of favour recently and there’s an almost unnatural preoccupation with “the close”. Whilst there’s no denying the importance and the sheer pull of closing. If you don’t qualify properly “the close” will tend to become a painful and an increasingly fruitless experience. Simply put; by qualifying better you’ll close more business.
Step One - Do Some Planning!
Now before you roll your eyes and think to yourself “here we go again”, do you really think that this article sprung miraculously out of my head just as it sits on the page. No of course not; I planned out what I was trying to achieve working on the structure and presentation before I put a word down on paper. You know your product or service; think about what questions you’ll need to ask to properly qualify your prospect. Take a prepared crib sheet of questions if it helps.
Step Two – Understand your prospects issues and their consequences
Too many untrained sales people on hearing an answer that indicate the prospects needs their service or product rush straight to “Well Mr prospect our XYZ thing can solve your problem because it does....”. Don’t do it, just resist that temptation. Back to bit of Psychology, we all have problems, how do we deal with them? Mostly by putting them to the back of our mind and closing the hatch on them. That way for the most part we can try to ignore them. What you want to do is to keep asking questions such that this problem you can solve is unlocked from the back of your prospects mind and the full horror of it is brought home to him. This is best done by asking him questions about why it is such a problem and what the consequences are if it doesn’t get fixed. The more questions you ask like this and the more your prospects talks about it, the bigger his problem becomes and the more valuable your solution will appear to be.
Step Three – Act as a (responsible) journalist
Your prospect will in all likelihood, not have the answers to all your questions so he’ll “guess” some of the answers. Your problem is you won’t always know when he’s guessing. Furthermore there will be some issues which he will not want to talk about so he’ll adjust the truth to make his responses more palatable (at least to him). To identify this you need to be able to ask for the same information in different ways rather as a journalist does by using separate sources. This is an important but largely ignored part of qualification. After all you don’t want to find out that the critical information on which your subsequent sales pitch rests is based on either guessed or incorrect information.
Step four – Summarise your prospects needs
You’ve now spent a large portion of the meeting (say 40 minutes in an hour) uncovering the consequences of his problem. You should now be able to list a number benefits that your solution will offer and demonstrate how it’s going to take all that pain away. You can now head for “the close” with confidence, but that’s a subject for another time.
The qualification process in sales calls seems to have fallen out of favour recently and there’s an almost unnatural preoccupation with “the close”. Whilst there’s no denying the importance and the sheer pull of closing. If you don’t qualify properly “the close” will tend to become a painful and an increasingly fruitless experience. Simply put; by qualifying better you’ll close more business.
Step One - Do Some Planning!
Now before you roll your eyes and think to yourself “here we go again”, do you really think that this article sprung miraculously out of my head just as it sits on the page. No of course not; I planned out what I was trying to achieve working on the structure and presentation before I put a word down on paper. You know your product or service; think about what questions you’ll need to ask to properly qualify your prospect. Take a prepared crib sheet of questions if it helps.
Step Two – Understand your prospects issues and their consequences
Too many untrained sales people on hearing an answer that indicate the prospects needs their service or product rush straight to “Well Mr prospect our XYZ thing can solve your problem because it does....”. Don’t do it, just resist that temptation. Back to bit of Psychology, we all have problems, how do we deal with them? Mostly by putting them to the back of our mind and closing the hatch on them. That way for the most part we can try to ignore them. What you want to do is to keep asking questions such that this problem you can solve is unlocked from the back of your prospects mind and the full horror of it is brought home to him. This is best done by asking him questions about why it is such a problem and what the consequences are if it doesn’t get fixed. The more questions you ask like this and the more your prospects talks about it, the bigger his problem becomes and the more valuable your solution will appear to be.
Step Three – Act as a (responsible) journalist
Your prospect will in all likelihood, not have the answers to all your questions so he’ll “guess” some of the answers. Your problem is you won’t always know when he’s guessing. Furthermore there will be some issues which he will not want to talk about so he’ll adjust the truth to make his responses more palatable (at least to him). To identify this you need to be able to ask for the same information in different ways rather as a journalist does by using separate sources. This is an important but largely ignored part of qualification. After all you don’t want to find out that the critical information on which your subsequent sales pitch rests is based on either guessed or incorrect information.
Step four – Summarise your prospects needs
You’ve now spent a large portion of the meeting (say 40 minutes in an hour) uncovering the consequences of his problem. You should now be able to list a number benefits that your solution will offer and demonstrate how it’s going to take all that pain away. You can now head for “the close” with confidence, but that’s a subject for another time.
Thursday, 27 November 2008
A recession provides opportunities as well as challenges
Many small business owners are experiencing a downturn for the first time; and what a downturn to start! Nevertheless there are a few simple rules that they can follow which will help them survive and even thrive in this most difficult of business environments.
In describing what can be done I've employed the analogy of a football team which simultaneously has to employ both good defensive and offensive strategies to win.
Let's look at those activities that are defensive in nature. These will protect their client base against other competitors and will assess the fitness of their organisation. Secondly, there are those activities that can be considered offensive, in an attempt to win more business or win more customers.
Defensive actions can be split into external facing and internal activities. Externally they need to be looking to strengthening and at the very least maintaining their relationship with their best customers. Obviously this can be initiated by phone calls, but must include more face to face visits, and more overt proactive activity which can be in the form of newsletters, emails or calls. Also its worth considering particularly in the service industry whether you can get you clients on some sort of regular payment plan. Inevitably this will mean that they start paying for service in advance, making it much more difficult for them to be poached by competitors. Moving out to the next level of customers they need to be undertaking similar activity. Clearly less important customers warrant a lower level of investment but once you've categorised your customer base all those you want to retain should benefit from increased sales and marketing activity. The priority is clearly best customers first, the least important customers, last. Customer importance should be related to the opportunity of income growth as well as the amount of business you currently get.
Internally business owners should be reviewing all their business and management processes. My experience is that for most businesses their internal processes are at best passable, but very often for SME's they're hand crafted and reliant upon the knowledge of the current personnel to make them happen making them clunky and often counter intuitive and hence very inefficient. If we treat the recession as a get fit regime, then we need to be removing the inefficiency from all our internal processes to get to the cost of production down and increase gross profits. So review all internal processes from sales and marketing to credit control and it will be possible to quickly discover where the business is inefficient and free those improvements across the board to extract additional profit for the firm. This is not an easy process as people are resistant to change. It requires conviction and dedication to implement these new processes but the results can be staggering.
Let's turn now to offensive actions. Most of these activities relate to business development. The business needs to organise, systematise and implement regular sales and marketing campaigns in its chosen areas. Initially it will meet increased competition as all savvy business in their market will be doing the same. In addition struggling firms will be attempting to stay afloat by "buying" business. This classically leads to a situation when revenues come under pressure and marketing costs rise. Successful businesses resist the temptation to slash sales & marketing budgets as that creates a vicious circle of decline. However, as the recession bites, those firms who can't manage the fitness regime will fall by the wayside reducing competition and opening up more new business opportunities for those left.
For those businesses with a strong constitution, there is also the opportunity to grow by acquisition. There are bound to be a significant number of businesses that would be only too pleased to run into the arms of a competitor rather than face extinction. As an alternative build up a relationship with some local insolvency practitioners who may provide opportunities for cheap acquisitions post failure.
http://www.exigent-uk.com/
Exigent consulting has been providing specialist advice to small and medium businesses since 2002. Its founder Laurence Ainsworth has successfully managed businesses through the recessions of the early 90's and 2001-2.
In describing what can be done I've employed the analogy of a football team which simultaneously has to employ both good defensive and offensive strategies to win.
Let's look at those activities that are defensive in nature. These will protect their client base against other competitors and will assess the fitness of their organisation. Secondly, there are those activities that can be considered offensive, in an attempt to win more business or win more customers.
Defensive actions can be split into external facing and internal activities. Externally they need to be looking to strengthening and at the very least maintaining their relationship with their best customers. Obviously this can be initiated by phone calls, but must include more face to face visits, and more overt proactive activity which can be in the form of newsletters, emails or calls. Also its worth considering particularly in the service industry whether you can get you clients on some sort of regular payment plan. Inevitably this will mean that they start paying for service in advance, making it much more difficult for them to be poached by competitors. Moving out to the next level of customers they need to be undertaking similar activity. Clearly less important customers warrant a lower level of investment but once you've categorised your customer base all those you want to retain should benefit from increased sales and marketing activity. The priority is clearly best customers first, the least important customers, last. Customer importance should be related to the opportunity of income growth as well as the amount of business you currently get.
Internally business owners should be reviewing all their business and management processes. My experience is that for most businesses their internal processes are at best passable, but very often for SME's they're hand crafted and reliant upon the knowledge of the current personnel to make them happen making them clunky and often counter intuitive and hence very inefficient. If we treat the recession as a get fit regime, then we need to be removing the inefficiency from all our internal processes to get to the cost of production down and increase gross profits. So review all internal processes from sales and marketing to credit control and it will be possible to quickly discover where the business is inefficient and free those improvements across the board to extract additional profit for the firm. This is not an easy process as people are resistant to change. It requires conviction and dedication to implement these new processes but the results can be staggering.
Let's turn now to offensive actions. Most of these activities relate to business development. The business needs to organise, systematise and implement regular sales and marketing campaigns in its chosen areas. Initially it will meet increased competition as all savvy business in their market will be doing the same. In addition struggling firms will be attempting to stay afloat by "buying" business. This classically leads to a situation when revenues come under pressure and marketing costs rise. Successful businesses resist the temptation to slash sales & marketing budgets as that creates a vicious circle of decline. However, as the recession bites, those firms who can't manage the fitness regime will fall by the wayside reducing competition and opening up more new business opportunities for those left.
For those businesses with a strong constitution, there is also the opportunity to grow by acquisition. There are bound to be a significant number of businesses that would be only too pleased to run into the arms of a competitor rather than face extinction. As an alternative build up a relationship with some local insolvency practitioners who may provide opportunities for cheap acquisitions post failure.
http://www.exigent-uk.com/
Exigent consulting has been providing specialist advice to small and medium businesses since 2002. Its founder Laurence Ainsworth has successfully managed businesses through the recessions of the early 90's and 2001-2.
Friday, 21 November 2008
Grumpy Old Man on Behalf of Sissies!
I was looking through the multitude of information and articles that stream across my desk - mainly because I have this butterfly mind and its much easier than concentrating on one thing; when I came accross this article
Downsizing is for Sisses: Putting My Money Where My Mouth Is! by Jim Gilbert
It was to me like putting a red rag to a bull and I just couldn't help myself here's my reply I think I'm right well I would wouldn't I
"Hi Jim,
Sorry, I have to say what a load of old twaddle!
Layoffs aren’t for sisses, making redundancies is a very unpleasant thing to have to do. Neither is it done through lack of imagination, its done through lack of other alternatives. Most business turnarounds require an element of crisis management, where the company, and this is where I agree with you, has through poor management allowed their position to deteriorate to the extent that they need external help to keep it from going under.
Under these circumstances in 9 times out of 10, the company has insufficient cash resources to maintain and support its current debt burden. Whether that be salaries or payment to creditors or bank loans. In simple terms in this situation no self respecting creditor is going to wait for payment on the chance that you might be able to increase sales at some indeterminate point in the future such that they can get paid. In most cases a creditor will demand some concessions from you for its continued support. These concessions are typically proof that you have cut down your expenditure. In most businesses the largest single variable cost is labour. Therefore that is where you have to go to find the savings to allow the business a chance to succeed.
In any turnaround two things typically have to happen; firstly the need to reduce your cost base and secondly you need to try to increase sales. This in turn is crucially dependent on two things; firstly the relative competitiveness of your product or service and; secondly the state of your marketplace. At the risk of stating the obvious if you are in banking you are unlikely to want to substantially increase your loan book in these highly volatile times.
Having said all that, I had to agree that too many businesses do not explore the sales and marketing opportunities available to them. This is particularly true in the smaller business sector where owner-managers have built up a business based on the fact that they are good at what they do, rather than because they are good at running businesses.
Rgds Laurence Ainsworth
Exigent Consulting
Business Turnaround Specialists since 2002 "
Downsizing is for Sisses: Putting My Money Where My Mouth Is! by Jim Gilbert
It was to me like putting a red rag to a bull and I just couldn't help myself here's my reply I think I'm right well I would wouldn't I
"Hi Jim,
Sorry, I have to say what a load of old twaddle!
Layoffs aren’t for sisses, making redundancies is a very unpleasant thing to have to do. Neither is it done through lack of imagination, its done through lack of other alternatives. Most business turnarounds require an element of crisis management, where the company, and this is where I agree with you, has through poor management allowed their position to deteriorate to the extent that they need external help to keep it from going under.
Under these circumstances in 9 times out of 10, the company has insufficient cash resources to maintain and support its current debt burden. Whether that be salaries or payment to creditors or bank loans. In simple terms in this situation no self respecting creditor is going to wait for payment on the chance that you might be able to increase sales at some indeterminate point in the future such that they can get paid. In most cases a creditor will demand some concessions from you for its continued support. These concessions are typically proof that you have cut down your expenditure. In most businesses the largest single variable cost is labour. Therefore that is where you have to go to find the savings to allow the business a chance to succeed.
In any turnaround two things typically have to happen; firstly the need to reduce your cost base and secondly you need to try to increase sales. This in turn is crucially dependent on two things; firstly the relative competitiveness of your product or service and; secondly the state of your marketplace. At the risk of stating the obvious if you are in banking you are unlikely to want to substantially increase your loan book in these highly volatile times.
Having said all that, I had to agree that too many businesses do not explore the sales and marketing opportunities available to them. This is particularly true in the smaller business sector where owner-managers have built up a business based on the fact that they are good at what they do, rather than because they are good at running businesses.
Rgds Laurence Ainsworth
Exigent Consulting
Business Turnaround Specialists since 2002 "
Lets suck it and see
Well this is my first attempt at a blog.
I'm hoping to balance information with humour and the odd rant to reflect how I cope with being a small business attempting to establish itself in a highly competitive market.
I'm happy to answer any questions on issues for the smaller business where I can and - have some fun.
So feel free to attack what I say or why I say it after all theres nothing worse than no response.......
Happy Weekend
I'm hoping to balance information with humour and the odd rant to reflect how I cope with being a small business attempting to establish itself in a highly competitive market.
I'm happy to answer any questions on issues for the smaller business where I can and - have some fun.
So feel free to attack what I say or why I say it after all theres nothing worse than no response.......
Happy Weekend
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