What social networking sites other than Twitter do you use the most?

Given the rapidly changing landscape with social networks I set up a polls to ask the Twitter community a simple question. What social networking sites other than Twitter do they use the most?

The results largely predictable do show a couple of interesting trends. It is no surprise that Facebook is the favourite alternative to Twitter, but what I wasn't expecting was how close Linked In came in as a second, a mere 6 percentage points behind. Given the relative size of the respective networks I was expecting Facebook to be way out in front.

The other surprise was the performance of Ecademy, it can in a creditable third; given that it has a tiny membership compared with the other two. Having said that I do need to accept that the results must be skewed by the composition of my network on Twitter, which is primarily business as opposed to social contacts. Despite this Ecademy's position is still quite a surprise. The other alternatives make up the remaining 10%, a relatively small percentage. Suggesting that there is more stability in the social networking world than we may first have thought.

Taking Your Business to the Gym-How to be successful: Give your customers what they want -Positioning

Giving your customer what they want requires business owners to understand to which type of customer they are selling; this is called positioning. Positioning is one of the least understood tenets of marketing and is critically important in getting your business on the right footing to make the best of any given market conditions. It is surprisingly simple to understand the positioning of your business; at the very basic level you need to decide if you are going to be a value provider like say Asda, a broad middle market supplier like Tesco, or a premium provider like Waitrose. Now they all sell the same wide range of products but there is no mistaking in peoples' minds their positioning in the market.

Why is positioning important? Customers like to be confident that they are going to buy products or services from suppliers who have similar aspirations to them, so if you're interested in quality and service you'll be prepared to pay more for an equivalent product than someone who's mostly interested in price. More importantly someone who prefers Waitrose will be just as unhappy shopping in Asda as a person who prefers shopping in Asda would be shopping in Waitrose. This is a simple but really important concept especially as most business owners consider that pricing is the dominant reason for purchase decisions, when in reality it is not.

Let me give you a really extreme example to drive home this point. A kennel and cattery in a fairly poor area North East of England was struggling to make money and initially hired a manager to help with finances. However this new manager persuaded the owners to tap into the fact that pet owners love their pets more than anything. Consequently they went from positioning themselves as a non descript Kennel to a very up market "Pet Hotel". Obviously that meant they had to offer better services, but by tailoring their offering to each customer by having a menu of services they went from a struggling Kennel charging about £6:50 per night to a very successful "Pet Hotel" able to charge a base price of £40 per day in high season.

The moral of this story is to truly understand what you customers want, then you'll have tapped into a successful business.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business

3 Steps to Successful Sales Forecasting

In most businesses this (the 4^th) quarter is the busiest and much sales effort is focused on getting the best results from these critical weeks. However good sales managers are also preparing get to grips with next year's sales targets. This is an important activity because the earlier issues are identified the more time there is to adjust strategies to meet them. Whilst it is important to continue to focus on getting the numbers for this year, for sales management it is vital to understand the nature of the challenge for next year. This analysis is as relevant for the owner managed business where the MD is often the sales manager, as the larger organisation where is has a well developed sales function.

Often it takes a month or two to re orientate your sales activity and doing it now (in Q4) gives 12 months to shoot for next year's target rather than maybe 9 or 10 months if left till the first month of the New Year.

Putting together a simple forecast requires one to break projected sales down into 3 areas, Known, Seen and Unseen. So what do these 3 categories mean? What is their significance? Let us look at each one in turn. This forecasting method is really only applicable to B2B sales, retailers have to use a different method which will be the subject of a future article.

Known sales are those which come from your existing accounts, so you can, based on previous years, fairly accurately estimate your income for the coming period, whilst we all know that individual account incomes vary from year to year it should be possible to approximate the likely revenue. This number for most businesses this will represent a large % of the overall target

Seen sales relate to a category of sales which estimates income based on the long term pipeline and an estimate of what percentage of sales tend to come from new business. Typically this would be the total value of the pipeline factored by the likelihood of success.

Unseen sales comprise that proportion of the sales target where you have no indication of where these sales are coming from. These are, t0 paraphrase Donald Rumsfeld, "unknown unknowns" This element represents the risk in your forecast. The larger the percentage of unseen sales, the more risk there is in the forecast.

Once you have these figures it should also direct you where you need to concentrate your sales effort be that new business development or maximising revenue from your base accounts. If you're trying this for the first time don't be too cautious in forecasting revenue, there should always be an element of unseen in the forecast depending on the type of business it can vary between 10-35% as a norm, anything more than that would indicate that the forecast is too optimistic and is unlikely to be achieved.

Forecasts have to support management objectives but if they are too unrealistic the sales force will very quickly find this out and the target will be disregarded and there will be no real attempt to achieve it. Accurate forecasting is nonetheless an important component in managing your business and an important tool in how it will be developed.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing andMentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business

Are Social Media Businesses Viable?

My thoughts recently have been about the business model for many if not most of the major Social Media infrastructure sites around today. The question I have been asking myself is, how will Social Networking sites make money?

This is a serious issue, and the current hype over Social Media sites, reminds me greatly of the situation in the middle of the Dot Com boom, when everyone was so carried away with the idea of Internet based business that they forgot the basics of business, that is there must be a way of making money out of the business otherwise it Will eventually fail.

Parallels are everywhere, Twitter the current doyen of social networking sites, not only does not make any income; but further there is no facility in its current business model to make any money. Twitter, according to recent comment raised nearly $100m on top of the $35m raised in February, yet it still has no way of generating any income. The question we ask is what happens to investor sentiment when its astronomical growth figures inevitably slow: recent reports, in the USA at least, suggest this may be happening now.

Similarly Bit.ly the default url shortner for Twitter has no method of generating income neither has budurl or tiny. These are key infrastructure players in the social media landscape yet they have no workable business model. Further there is a host of apps for the likes of Twitter and Facebook which are free. I find it rather disconcerting to think that much of the infrastructure platforms that underpin Social Networking don't have a viable business model. It's also somewhat ironic to think that those same platforms are filled with users propounding the benefits of monetising social networking and exhorting who ever will listen to do the same.

Once they hype cools and sentiment becomes more cautious, or realistic depending on your viewpoint, then investors will be looking for a quick return i.e. a trade sale, failing that, they'll curtail and then stop further investment as the prospect of a reasonable returns diminish. The worrying aspect to this is two fold firstly, who exactly will buy them: I cant see Facebook, the only Social Network business with the muscle to pay the prices that are likely to be demanded, going on a spending spree, it doesn't need too. Google could of course, but currently seems to have its attentions elsewhere and its previous foray into Social Media with Orkut was a dismal failure. So wherelse are the buyers? The omens aren't good; outside of the industry no purchase of a large scale social media business has been successful. One thinks of Fox's purchase of Myspace and ITV's purchase of Friends Reunited as classic examples.

Secondly, any difficulty in getting further funding could lead to radical shifts in service and costs for participation as survival takes precedent over funding. This could mean either a wall of advertising, or subscription; neither model is frankly appealing. You need a lot of advertising to payback about $150million and support the infrastructure and make ongoing profits. Subscription would stop growth dead, since buyers wouldn't want to pay to talk to potential sellers, when everywhere else it's free

The warning is therefore not to take "free Social Networking" as a given; there is a real possibility that one of its key benefits "that it is free at the point of sale" may become a thing of the past.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business.

5 Steps to Building a Social Networking Strategy

The Economic recession has been one of the unseen forces driving growth in social networking for business. The explosion in social networks is a response to the desire to find new routes to a more competitive market. The decline in performance of traditional SEM and e-commerce generally and the seduction in the perception of "free" marketing all helped to drive the social networking revolution. These were by no means the sole drivers of this shift and the confluence of technology and a critical mass of users were also major factors. Social Networking is here to stay and businesses need to make good use of it. It is nonetheless a complicated and for the new entrant, a daunting prospect. There are a few easy steps which will help you develop a social networking strategy and prioritise it as a route to market.

To build a strategy you need to ask yourself a number of questions.

Step 1 Do my customers have a footprint on the Social Media Landscape?

This is a fancy way of asking am I likely to find my target market using social networks. Well it tends to vary by sector. Social Networking is well suited to businesses which have intellectual capital, so consultancy, finance, and to a lesser extent accountants and solicitors are good examples. Social Networking is also an excellent platform for selling to products to consumers and small businesses.

So what's not well suited? Well engineering and manufacturing are obvious candidates, as are businesses that sell large ticket business to business items be that capital goods or say software.

Social networking works best for markets that have a short sales process and low ticket items where you can get ready access to the decision maker. Geographic concentration is also an important factor the bigger the geographic spread of potential customers the better suited to social networking.

Step 2 What are my objectives?

Brand Recognition, Customer Service, Sales, Improved customer feedback, New product development /verification, Developing Expert Status.

May companies use social medium to improve their relationship with their customers and have a more conversational customer support relationship, so let's not prejudge and say that sales is the most important or indeed only objective for social media marketing.

I accept that much of the hype is around the incredible sales opportunities Social Networking presents, but let's not forget how at the turn of the century the "dot.com" boom got so out of hand that even experienced businesspeople forgot the basics. That is, underlying each model there has to be a sound business case.

Step 3 Which is my best Social Media Mix?

There social media market is a complex topology covering Wiki's, Major Social Networking sites, Micro blogging sites, Forums, Blogs, Article Sites, Photo Sites, Podcasts, Video sites, Social Bookmarking and many more.

Faced with this bewildering array of options how do you proceed? There are two aspects that are important, firstly you need to take into consideration where your customers are most likely to to be residing in the social media landscape and especially if you are a smaller business what areas of social networking you find interesting. If we remember that much of social networking is about building trust and developing a community it is very, very, hard to do this through a medium you dislike.

Step 4 How do I manage my resources?

What resources do I have available? How much time can I dedicate to this effort? Is this for internal and/or external networking? How much maintenance effort is there?

Maintenance work is one of the real hidden costs in social networking, which is by and large time intensive. As most people and indeed businesses are time poor this is a significant issue.

Now I know particularly with twitter there are "bots" you can use to automate much of your postings you need to spend "face time" to build conversations and relationships. A simple idea is to build a social network diary which sets out which social network will be accessed on which day(s) and how much time will be spent on each. Think not of now when you have the first flush of ideas, but rather 1 year down the line when you're into you 50^th blog posting and 1000^th plus tweet or facebook entry.

I regularly see businesses over invest in Social networking only to have to pull back because they have significantly underestimated the ongoing effort needed.

Step 5 How do I measure progress?

What Metrics work best? Hits per site? Growth in followers? Reduction in complaints? Increased conversion rates? Feedback process to change what is not working?

Any kind of strategy implementation needs a review and change cycle, so it is with Social Networking. The advantage is however that online activities it is relatively easy to quantify and the results of your efforts. This makes the management of your social networking strategy much more effective as numbers don't lie, 50 hits is 50 hits, not as many as us optimistic would say; well I think its nearly 100.

This precise measure enables you to take quick and appropriate action to improve your performance. This in turn leads to you having a much greater chance of success, which is, of course, what we're all trying to achieve.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.We help Business Owners improve the profit performance of their business

Taking Your Business to the Gym - Managing Creditors

When you are in a situation where you cannot pay all your current creditors you must start to prioritise who you pay, and when you pay them. If you are a retail business for example; then your suppliers are the most important since without them you have no products to sell. If you have credit terms try to extend them, if not, at least attempt to maintain your existing terms otherwise your cash position will get worse. Some may be prepared to offer you extended credit terms for a payment schedule but it must be your judgement call what to ask for and you must be confident that you can manage any agreements. Nothing annoys a creditor more than having agreements continually broken.

In order to make this strategy work you must have a clear and detailed breakdown of your exposure by creditor. You ought to be able to get this from your accounts system. If you don't have this information then you must get it as soon as possible as without detailed understanding of your financial position you will not be able to manage your creditor position. It will require you however, to manage your cash flow a very tightly. I would recommend that if you haven't already you should subscribe to the Internet banking. This why you can see your available funds on a daily basis and can apply them knowing that you have funds available to pay your creditors. Often making weekly payments to creditors' works well as it's often easier to find £250 a week than a single sum of £1000

Based on the fact that you can now identify all your costs you will be able to see easily, your regular payments. In common with most businesses suffering cash flow difficulties the creditors which tend to suffer first are Rent, Rates and Government. It is not surprising therefore that Landlords' tend to get very aggressive with delinquent payers. They will however accept, albeit reluctantly, some variations in how are you pay. So in dealing with your Landlord, I would suggest that you deal with them direct and not through their agent.

Most rent is paid quarterly in advance; you should ask your Landlord if you can pay on a monthly basis. This will be much easier on your cash flow in circumstances where you are likely to be at or near your overdraft limit, and therefore working out of the cash flow generated by your business. Creditors can only be paid against money that has been received. Under these circumstances it will be advisable to cancel as many of your standing orders and direct debits as you can. This will prevent you from going overdrawn and suffering the embarrassment of returned cheque payments, or excess overdraft fees.

The UK Government currently is quite lenient towards tax and VAT arrears as it doesn't want to be seen to be pushing companies into liquidation. However expect this to change in 2010 where the pressure to collect tax revenues outweighs the political pressure to keep companies working.

The most important piece of advice is to talk to your creditors; you won't be the only company they've got who's in trouble but if you explain your difficulties and most importantly have a plan to get out of it you'll most likely get a sympathetic hearing.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing andMentoring to the Small and Medium Business.

We help Business Owners improve the profit performance of their business

5 stages to a sales call - Are there more?

My thanks to Robert Middleton for bringing this to my attention, Robert as many of you know runs a very successful online business called Action Plan Marketing; find him at http://actionplan.com/. Specifically, having read my article on "The 5 stages of a sales call" Robert asks about 3 other stages in the sales process Desired Future, Challenges in Getting There, Present Your Services and then close.

Finding your prospects desired future is key to making successful sales, this is an essential part of the qualification process. Your questioning should try to uncover both your prospects personal & business aspirations. This is particularly relevant for senior staff and especially business owners, as their business aspirations will tend to be subservient to their personal aspirations. The better you are at uncovering personal needs and wants the more sales you'll close.

Highlighting the challenges in getting there is also part of the qualification process, since you're attempting to get your prospect to uncover all the problems he faces and most importantly get him to talk about the consequences of not overcoming them. You must however concentrate on areas where you product provides a solution therefore increasing the value of your offering. Only once you are sure you've uncovered all his obstacles do you venture to offer a solution. If you go in too early you devalue what you're selling.

Present your Services fits neatly between the qualification stage and the close in my model. It is nevertheless an important point to only present your services when you're clear what problems the prospect has. You solution should be couched squarely at you prospects specific needs starting with what you think is the most important. This way you get you prospects buy in early and so making the close easier.

I see the first two as an essential part of the qualification process, but recognise that they are an excellent aide memoir in getting sales people to focus on particular groups of questions as they progress through a sales call.

Why Buyers Ask for Proposals to Pick Your Brains More Than to Buy

I have decided to add a guest writer for my latest blog post. It relates to that common misconception that by asking for a proposal a buyer is somehow predisposed to buy from you. Often nothing could be further from his mind.

Sadly, huge effort and intellect is wasted on proposals because the prospect has been poorly qualified. The most important point to recognise is that writing a proposal requires a great commitment from you (the seller), and no commitment from him (the buyer).

To make the most of a sales opportunity a proposal must be an integral part of your sales strategy. The more complex the sale the more important this becomes. Personally I never write a proposal without first having a date in the diary with the prospect to present it, and no I don't send it to him prior to the meeting.

So here it is. Its written by Dan Seidman at www.salesautopsy.com

Proposals are the foundation of business building for many salespeople. How many of us constantly invest precious sales time to draft a proposal, actually pouring years of experience and expertise into this written gamble at acquiring business? Too many of us spends lots of time proposing because we don't employ a qualifying system before designing these documents.

One reason most of us are so quick to accommodate potential clients is that we really do want to please people. Think of how ridiculous it would sound if you refused to provide materials to your prospect! So you and I are very likely to assume that a request for a proposal is a yes indicator. It reinforces our hope that we've just moved one step closer to closing the sale. There is, however, the prospect's perspective. If we don't understand what might really be going on with that request, we could spend endless hours creating and delivering documents for people who have no intention of buying our products or services. And here's why:

Prospects love free consulting. They give you their biggest smile and drain your brain of all its problem-solving knowledge before you understand their true intentions. And they love it even more in print than in person. If you don't have a strategy for dealing with proposal requests, you're at the mercy of every potential client. Over the past twenty years, I've analyzed many of the top sales training organizations (see some recommendations in the appendix). It's interesting to note that virtually all the great training systems have the wisdom to recognize and teach how critical it is for a salesperson not to give everyone proposals simply because they are requested. To help you understand the dangers of proposal writing, here's a list you'll learn from.

The Top Ten Reasons A Prospect Demands A Proposal (The impact to you is in parentheses)

10. They need to keep their current vendors honest (what a surprise—you never had a prayer of getting the business)
9. They want a fair range of prices for the type of service you offer (thanks for the quote, the business is going to the prospect's brother-in-law, at just below your rate)
8. They want to keep themselves up-to-date on the latest business processes and technologies (thanks for the education, goodbye)
7. They think your product or service simply sounds interesting (but they have no intention of buying!)
6. They need new and better ideas—to make their own changes (thanks for your free consulting; that really hurts, doesn 't it?)
5. They just wonder how much it would cost (wow, you're really expensive!)
4. This request will get you off their back (oops, you forgot to qualify the prospect, didn't you?)
3. They can look good when they pass your information to the real decision-maker (did you spend all that time with the wrong person?)
2. They honestly need their problems solved (too bad you don't know whom the other eight proposals are from, what they charge and maybe what they're saying about you)

And the number one reason prospects make you pour your blood, sweat, and tears into a proposal:

1. A prospect can lie to a salesperson and still get into heaven!

Final Thoughts:

Preparing proposals can offer false hope to all sales pros. Do you really believe that everyone asking for a customized, written solution is ready to buy?

Please, please, stop wasting your time jumping through hoops to design proposals for everyone that nods his head or grunts into your telephone. Qualify first, and then begin to work with your best potential clients. Your organization should have some criteria for what defines a good prospect. Use them, or immediately create your own to save yourself from sales heartbreak. If you don't quickly sort the good prospects from the time wasters, bad prospects can sabotage your income. Your expectations of who will buy from you will be inaccurate. One good method might be to charge a fee for a proposal. Obviously, a prospect who's not serious won't pay for it. If this works for you, implement it.

However, your organization might not choose to use this strategy, so get a grip on what looks like a realistic buyer and craft your plan without giving away all your solutions.

The lesson here is that you need to set guidelines to determine which prospects are worth investing your time in proposal design. Otherwise, you'll waste lots of time showboating in print for prospects who have no intention of doing business with you. If you don't weed out the weeds, you'll have very little time to find, smell, and pick the flowers.

Dont We Qualify Prospects Anymore?

I’ve been struck over the past few weeks how few people recognise the importance of properly qualifying sales prospects. The current vogue for focusing on closing has almost completely ignored the critical role qualification plays in managing the sales process and improving your chances of closing sales and more importantly stops you wasting your time with those companies that have no real intention of purchasing from you. I recall a specific example of a London based business that was struggling for sales going to Manchester to bid for a in a market that they never before won a deal. Surprise, surprise, they didn’t win the deal, when I asked them why they went their answer was well with the shortage of prospects we have to chase down everything.

How much did it cost you to go? I asked “well only about £300 in travel,”

"and the amount of preparation? “About a day each” was the response

“Did you spend much time in finding out what they wanted and how much they’d be prepared to pay?” They said “well we knew we were more expensive but we thought we might swing it.”

I then asked “wouldn’t you have been better spending the time and effort uncovering and nurturing prospects in an area where you could win rather than chasing prospects in an area you can’t.” Their response was a mixture of resignation and embarrassment.

In times of recession prospects are harder to uncover and you need more of them as with increased competition your win ratio declines. Under these circumstances a salesperson will have to choose from a wider pool of prospects to find the deal they can win. Also this has to take place in an environment of greater internal pressure on the sales force and greater external competition. In order to be able to survive in this climate a salesperson must qualify rigorously to separate time wasters from real buyers. It requires a real strength of character to ask difficult questions in this environment but in order to succeed you must ask them.

So what sort of qualification questions do we need to ask? The most important group of questions in this environment is about money, especially in a B2B sale if the money isn’t allocated then you can’t make the sale. The larger the organisation the more rigid the budgeting process is likely to be so the more critical it becomes to understand not only if the money is budgeted but what the budget includes when can it be released and what is the process for doing so. Next you need understand how important the purchase is to the business, again because of the recession the ROI has to be very strong if it’s not again it’s unlikely that the purchase will be made.

The two groups of questions above address the question will the prospect buy. Next you have to identify the likelihood of prospect buying from you.

Your questions now need to centre around the solution the prospect seeks and to get an understanding if their requirements put your product or solution at an advantage or disadvantage. Clearly the questioning needs to try to draw out circumstances where the prospect has issues but where you consider that your prospect or service has a competitive advantage. The more of these you can identify and more importantly get the prospect to accept as important them more likely they will buy from you. You should also get an understanding of the competitive landscape, what your seeking to identify is if there is a bias towards one particular supplier, the stronger that bias (assuming its toward another company) the more you should consider if it worth continuing with the sale.

Poor qualification is at the route of many a lost sale, and it comes from two areas firstly, from not asking qualifying questions systematically when meeting prospects and secondly; commonly weekly qualifying a prospect by avoiding asking those tough questions which might result in you qualifying out a sale.

I would recommend companies to be even more aggressive in their qualification process so they stop wasting time on business they can't win so that they can concentrate on business they should win.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.

We help Business Owners improve the profit performance of their business

The 5 Stages in a Business Restructure- Taking Your Business to the Gym

Most Businesses at some time or another will need to restructure their business. In times of recession this becomes an important priority as a business restructure is often the key to survival. In truth all businesses should plan a restructure review to keep their organisation "light & agile" to quote Jack Welch. These past 8 years business conditions have been particularly benign and as a result many businesses have not felt, sufficiently, the cold wind of competition to encourage them to restructure. Now faced with a veritable storm of fierce competition the need for a business restructure becomes urgent.

Stage 1 of a Business Restructure is to establish a baseline. Before imposing change the company would need to understand what is working well and what is not. So to confirm this it is important to perform an audit on the business covering all the main operational functions and in addition we'll look at Strategy, and management strength.

Stage 2 of a Business Restructure is to prioritise the issues identified and set out a timeline for their implementation. At this stage of a business restructure its important to achieve some quick wins as this builds confidence in the process.

Stage 3 of a Business Restructure is to revise the business strategy based on the outcomes from Stage 2 which will identify weaknesses and gaps in your current strategy. This part of the business restructure process is critical as it will lay the foundations for the long-term success of the business. The difficulty, particularly in a recession is that there are serious time pressures. In order to prevent a long drawn out soul searching process we have developed techniques to get to the nub of the matter in a few short hours and within a couple of days we can have a new and more relevant strategy in place.

Stage 4 is the most difficult part of any business structure and that is implementation. This is the point at which most businesses fail, why? Because it is at this stage that the rest of the business experiences significant change. Everybody, with the exception of a few souls, is resistant to change. It is at this time one needs to be clear about what individuals say and what they do. To improve your chances of success a detailed implementation plan needs to be established.

Stage 5 of a Business Restructure is to assess the success of the restructure by measuring the results of decisions made. This review and measurement system should cover all aspects of the business but concentrated on a relatively small number Key Performance Indicators. In addition the company should seek to ensure that the benefits identified that the beginning of this process are achieved.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketingand Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business

Taking Your Business to the Gym – Pricing for Profit

I was giving a seminar recently and it included a section on pricing. What really shocked me was how few people understood how to price properly and just how many businesses were almost paralysed with fear about raising their prices. Now i understand that we're the worst recession for at least 20 years, but at least 50% of my audience had not increased prices for more than 2 years. Their argument in a nutshell was that they couldn't increase their prices because they'd lose too many customers. I asked them if any of their suppliers had increased prices to them in that time, not surprisingly many of them complained just how many times suppliers had raised prices over the period. When I asked if they had changed suppliers as a result of these price increases they said, without exception, no. In fact they seemed rather surprised that I should even suggest it. My question was then if you've accepted price increases from your suppliers why won't your customers accept price increases from you. At this point there was a lot of murmuring and a few brave souls suggested because they were small companies there would be less loyalty and their customers would move. I simply can't except that as a valid argument and experience shows that most customers are immune to price increases.

I decided then to demonstrate how raising your price delivers more profit even if some of your customers leave.

No of units	10	9	11
Price per unit	10	11	9
Sales Total	100	99	99
Fixed cost	30	30	30
Variable Cost@£6 per unit	60	54	66
Profit	10	15	3

The table above explains what I mean. Let's assume you sell ten units of a product at £10 each giving you a sales income of £100. Of that £30 was fixed cost and the variable cost was £6 per item sold equalling £60 which when subtracted from your sales total gives a profit of £10. In our second case we raise our prices by 10% which leads to a fall in demand of 10%> So we now sell 9 units at £11 pounds each total sales are £99, fixed costs remain at £30 and variable costs are only £54 leaving a profit of £15. In our third scenario we reduce prices by 10% which in turn leads to a 10% increase in sales. We still only have £99 in sales however variable costs have gone up to £66 leaving a paltry £3 profit.

So what conclusions can we draw from this situation, well firstly to price for profit you MUST increase your prices, if you hold you prices whilst your suppliers increase their you are in effect offering a hidden discount and putting pressure on your margins as your variable costs are increasing. In the example above a 10% discount means you have to increase sales by 33% to maintain your profit. By contrast if you increase sales by 10% sales have to fall by more than 20% for profits to suffer. The most important thing however is to understand is that in reality most people are price insensitive, for example on Accountant client I worked with increased their prices on simple tax returns by 100% and lost only 5 out of 80 clients delivering over £15000 in extra profit.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Cold Calling Is Alive And Well - Its Just Got a Bad Name

I was very interested to read Jeremy Millers article “Sales People Don’t Cold Call”. Now I agree with much of his views in particluar if you're late into the buyers purchasing process, you're pretty much wasting your time and you really should be engaging with your prospects much earlier in the sales process. It seems to me that the core of Jeremys argument with respect to cold calling is predicated on accepting his stats, which I don’t, and so with a few small changes we generate vastly different success rates, to wit:

Industry standard numbers are for a contact with a prospect (in the UK) is every 4 -5 dials not every 8.4. Lets call it 5 as a compromise

The metrics I used for my sales force was 1 meeting for every 10 prospect conversations, not 1-50; frankly that’s just a rubbish number and if you think that’s representative of sales staff generally, common sense should slap your face and tell you that it would be impossible to sell the number and variety of products or generate anything close to a developed countries GDP at 12.5 customers per year. So my recommendation is, Jeremy, fire them then fire yourself and get some decent sales staff and a half decent sales manager to show you how it’s done.

Enough of my rant; let’s move on to see what else might change. I’d expect a close rate of around 30% not 25%, plugging in these numbers you get a vastly different outcome of 1 sale for every 165 calls, at 50 calls a day that’s 1 sale every 3 and a bit days. So with those few small changes cold calling becomes, as it always was, a viable option. I know it’s increasingly fashionable to pooh-pooh cold calling but it is a fact of sales life and particularly in tough economic times it stands up well to the “lets never make a cold call again” brigade. There are also industries where cold calling is the expected method of selling and connection. In the UK this is true of the construction sector and much of the manufacturing and engineering sectors and where, frankly, using other marketing techniques as the primary source of lead generation would be about as useful as a chocolate teapot.

Now being over 50, I might be a bit of a dinosaur, but, what’s clear is that even with all this new technology led marketing, lead generation and networking, sales results are no better than they were 25 years ago, and in many cases worse. One of the reasons for this, I submit, is because sales people and their managers have let themselves be seduced away from cold calling, not because it doesn’t work, but because it’s the most unpleasant part of the job.

Your comments please.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Take Your Business To The Gym – Managing Staff Costs

Even the most well run businesses will have to face the prospect of having to lose staff as a way to reduce ongoing costs. This is even more likely in businesses where salary costs represent a high percentage of overheads, typically this would be in service industries like IT, manned guarding and finance. Faced with this situation what options does a business have? Most likely, only two, making staff redundant or getting staff to accept a temporary reduction in salary. Even this limited choice is dependent on the employee profile of the business. The relevant parameters are the level of staff salaries, the length of service of the higher paid staff and the ease with which redundant staff could be replaced.

So taking an extreme position a manned guarding firm is likely to have no option but to go for staff redundancy, this is because the vast majority of staff will be low paid, many of whom will be at national (UK) minimum pay. You cannot, therefore, ask these members of staff to take a pay cut. It is also true to say that it would be relatively easy to recruit replacement staff when the upturn comes. An aeronautical engineering business, by contrast, will have very many highly paid staff and asking staff to accept a pay cut is the much preferred option. It also has the added benefit of keeping highly skilled staff within the business. This was a harsh lesson that we in the UK learned in the recession of the late 80's and early 90's where our manufacturing sector was decimated. The wholesale redundancies made in this sector resulted in highly skilled staff finding other work and consequently they were not available when the upswing came preventing those businesses left from taking advantage of increase orders because they were unable to re hire suitably skilled staff.

So how should a company consider when making this difficult decision? Firstly, it should be taken sooner rather than later, procrastination is the biggest killer of businesses I know. Secondly, the business must look at its mix of staff, the severity of the crisis facing it, the speed of implementation and their view on when the upturn will arrive. Salary reductions are quick to implement but there is a limit to how much you can reduce people's salary, this is especially true if you're a smaller business you couldn't, for example, ask staff to take a 50% pay cut, realistically the maximum is likely to be in the region of 20%. Thirdly, get detailed numbers on the cash flow implications of your decision as this will help them decide what is the best course of action. Fourthly, any decision needs to be couched in terms of what is the best way to save £'sX and not what can we save, as the latter course almost invariable leads to a watering down of actions because businesses always find reasons why they shouldn't make person A or B redundant.

This is one of a series of articles about dealing with the downturn and what you can do to get your business fitter to survive, whilst many of your competitors may fail. The idea of Taking Your Business to the Gym comes from the view that over the last 8-10 years things have relatively speaking been easy. Company liquidations have been at low levels both consumer and business to business markets have been strong and companies have had no real pressure to look at themselves and seek improvement. Many have but most have become a little complacent over optimistic and so flabby. This recession has through an assault course in the way and you've got to get fit quickly to make it through.

See more at www.exigent-uk.com/business%20restructure.html

Contact me at Laurence@exigent-uk.com

Who's Making Money from Twitter - The Results

This was one of the most frustrating polls I’ve undertaken, mainly due to the length of time it’s taken to get a reasonable response to my question. It did occur to me that one of the reasons for the poor response was people’s reluctance to admit that they’d made little or no money from Twitter; particularly given the hype surrounding Twitter as the place to be for cutting edge Social Network Marketing. More realistically, however, we shouldn’t be surprised at how few respondents actually made any money from Twitter as it is still a new medium and most of us are still learning how to use it.

The bald facts are that 63% of all respondents have made no money from Twitter, and a further 23% less than 1000. Only 14% of respondents have made more than 1000 and 8% have made more than 10000. I'd be interested in your comments.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Take Your Business to the Gym - Pricing

This is one of a series of occasional articles about dealing with the downturn and what you can do to get your business fitter to survive, whilst many of your competitors may fail. The idea of Taking Your Business to the Gym comes from the view that over the last 8-10 years things have relatively speaking been easy. Company liquidations have been at low levels both consumer and business to business markets have been strong and companies have had no real pressure to look at themselves and seek improvement. Many have but most have become a little complacent over optimistic and so flabby. This recession has thrown an assault course in the way and you've got to get fit quickly to make it through.

Pricing is perhaps one of the most misunderstood issues in business, if used properly it's one of the simplest ways to help you maximise your profits. Easy then, so what's the problem?

Simple question: who sets your company's prices is it determined by you or the market?

All those who said the market – Your Wrong – it's YOU! It's one of the most basic misconceptions about business whilst the market might dictate general pricing levels individual companies set their own prices. The problem with owner managed business is that they assume that they must be the cheapest to survive. If I had a £1 for every time I've heard this I'd be very rich – sadly I'm not.

Why do so many people think like this? It's conditioning, let me give you some examples

You're visited by a salesman who can't articulate the benefits of his product. What do you tell him when he asks for the business, I'm sorry but it's too expensive.

You're visited by a salesman who you just don't like. What do you tell him when he asks for the business, I'm sorry but it's too expensive.

You're visited by a salesman who just doesn't get the point you're trying to make. What do you tell him when he asks for the business, I'm sorry but it's too expensive.

You're visited by a salesman who's too pushy. What do you tell him when he asks for the business, I'm sorry but it's too expensive.

You should be getting a message by now pricing is rarely the issue, price objections are mostly a cover for some other objection. So why is it we know we're not telling the truth when we hide behind price, but assume others are telling the truth when they tell us we're too expensive. I really can't explain I can only assume that we just don't want to face the real issue so we accept pricing as the issue.

So now you know let's look at what you can do. Well one thing you could try is to increase all your prices by 1% immediately. Why, because you can; if you're selling something for £100 pounds people aren't going to stop buying it because it now costs £101.

I can't we're in the middle of the worst recession in living memory you must be nuts – you say.

I say – no, its your conditioning that says that. I can in all honesty say that in almost every company I work with; one of the first things I do is to get them to increase their prices and having done so they are surprised that they don't lose any customers in the process. Yes even in the worst recession in living memory. Why? Am I a genius – I hope so – but no. Am I a magician – no. The answer is almost invariably, because companies are selling their product or service too cheaply because they've been conditioned that "Cheap is Good".

Realistically as a small business owner you should understand that whilst price a factor in purchasing its by no means the main factor, people tend to buy more on quality brand capability and service. Your price therefore, should reflect your costs and be sufficient to give you a decent profit. So in order to price correctly you should have a detailed analysis and understanding of your costs. This is something that many businesses don't have, only by understanding what and how your costs are made up in detail can you accurately set your prices over the long term. Whilst the general rule the sales price is 2.4 time manufacture costs, it's still a rule of thumb and likely to lead to a gestimation of costs which will almost always be less than the real costs.

As a general rule you should be increasing your price at a minimum annually to keep in step with inflation and also when there is a major change in the price of components. Don't worry if you are not the cheapest because it is rare that you will be as there is always likely to be a business with a lower price. Anyway you don't want to be the cheapest because at those levels there is no customer loyalty.

Finally your price should reflect your product position. Simply put you can't offer a Rolls Royce product or service for the price of a Ford, unfortunately many business owners believe that's the only way they can survive which is often the very reason they don't.

You can contact me at www.exigent-uk.com for more information on how I can help you manage your pricing more effectively.

 

Twitter is not for Accountants – Yes it is

I just had to write this after a response by BookMarkLee to my previous blog "Can Twitter work for the smaller business?" I'm grateful to Mark for writing such a controversial blog and setting off this healthy debate. His response was to refer me to an article he wrote here.

It should be obvious by now that I disagree with the contention that Twitter is not for accountants and here's why.

Marks first assertion is that there is no pressing need for them to use twitter, so therefore why bother. They don't need it, true, but the same argument has equal validity with Tax Advisors or commentators, or like, me consultants. Following this line of argument; just who does have a pressing need to use Twitter? - well, not many actually, which rather defeats the object of a social network marketing site.

We then get list of business issues where Twitter won't help; well to assume that Twitter was ever designed to address any of these specific issues is tantamount to putting it in a blue cape and red underpants. So lets be clear Twitter is a social network not a panacea for company issues. I would say further, having coached a number of accountants as well as other businesses that the list could be applied to almost any business. So is Mark suggesting that virtually no business should explore Twitter as a business tool, seems a bit extreme to me.

So why should accountants use Twitter? Well firstly lets not forget that Social Networking is big, really big.

More than two-thirds of the world's online population now use social networks and blogs, according to research firm Nielsen Online. This makes it the fourth most popular online category after search, portals and PC software, putting it ahead of personal email for the first time. More importantly, their usage is growing more than twice as fast as any other of these leading categories: last year it accounted for 9.3% of all times spent online around the world, which is half as much again as the previous year.

The UK is one of the most enthusiastic adopters of social media: Facebook has a greater market penetration in the UK than anywhere else, while social networks and blogs more generally now account for one in every six minutes spent online in this country. We're also more likely to access these sites via our mobile phones than anywhere else in the world. If you think this is hype, note that ASDA, Debenhams, Carphone Warehouse, Ebuyer, Dixons and Ebay UK have very recently entered this market, especially in using Twitter. It is now in the mainstream.

You use social networking to build your brand, reputation and build a community, by increasing your profile you'll also encourage recommendations and business. On the specific point about gaining more business I ask why not. If you set out to have fun and play then you'll most likely have fun. If you set out to get more business then you'll get more business. The results from Twitter depend on your focus not Twitter itself. Fortunately because of its ease of use and simplicity there are a number of add on programs which can help users make the most of Twitter; to name two there Twitter Local an application where you can monitor activity in say a 25 mile radius from your business office, and the recently launched exectweets which focuses on business rather than social Twittering.

I can't say how successful people will be using because it depends on how you use Twitter and if you use it in isolation or in conjunction with other social networking activities like blogging (something else Mark doesn't think is for accountants) or articles. It will be a difficult transition for many accountants who are actually artisans rather than business managers but the world and future clients are moving to social networking, they should not be as so often happens on the trailing edge of this change.

How We Use Twitter

Following a number of comments recently about how we or others use Twitter I set up a simple poll asking four questions. Do you use twitter for Purely Business, Purely Social, Mainly Business or Mainly Social. This is how you answered:

Not surprisingly it seams that half of us use it mostly as a business tool, whats interesting I think is that that it is only 50%. The hype around twitter would suggest more. 5% of us use it purely for business which is significantly larger than some commentators have suggested and 32% use it as a purely social network.  Admitedly the sample was small only 120 participants. However I intend to run the same poll next year to see how we might have changed our usage patterns.

I look forward to your comments

What Is Quantitative Easing?

As it is the topic of the day, I thought you may like to see this explanation. It is kindly provided by Peter Kelly of Pegasus Funding a finance brokerage specialising in providing financing options for SME's in the UK.

 

What is quantitative easing?

 

Usually, central banks try to raise the amount of lending and activity in the economy indirectly, by cutting interest rates.

Lower interest rates encourage people to spend, not save. But when interest rates can go no lower, their only option is to pump money into the economy directly. That is quantitative easing.

The way the central bank does this is by buying up assets - usually financial assets such as government and corporate bonds - using money it has simply created out of thin air.

The institutions selling those assets (either commercial banks or other financial businesses such as insurance companies) will then have "new" money in their accounts, which theoretically should boost the money supply.

 

How would it work?

 

Even economists who agree with the quantitative easing policy often disagree on how exactly it will work. But there are two main ways it could boost the economy, which are really two sides of the same coin.

The first channel is through the direct effect on the banks' bank accounts. With more money sloshing about in their accounts, the banks may decide to lend more to businesses and individuals, and increase the amount of activity in the economy that way.

The second channel is through the effect on the cost of borrowing. When the Bank buys bonds, it reduces the supply of those bonds in the economy. That should increase the demand for new bonds and, at the same time, make it cheaper for businesses to borrow.

Having taken very short-term interest rates as low as possible, the idea would be for the Bank to push down longer-term rates as well (which are the rates that companies and individuals borrow at).

 

Are there any risks?

 

Quantitative easing is a high-risk strategy. If it is not done aggressively enough, banks will remain unwilling to lend and the crisis could drag on. To some extent that is what happened in Japan when this was tried 10 years ago.

Like old-fashioned money printing, QE also runs the risk of going too far: pumping too much money into the economy and causing high inflation - even hyperinflation - as seen in 1920s Weimar Germany and modern-day Zimbabwe.

But in those cases, the government was printing money simply to pay the government's bills. They were not responding to the risk of deflation as the Bank of England is today.

 

Is this printing money?

 

Of course, these days the Bank of England doesn't have to literally print money to do QE. It's all done electronically.

However, economists would still argue however that QE is the same principle as printing money as it is a deliberate expansion of the central bank's balance sheet and the monetary base.

Why is it different from Weimar and Zimbabwe?

Printing money can be defined as the central bank financing of government debts. This is what happened in both Weimar and Zimbabwe and what the British government will insist it is not doing, although the short-term effect is similar.

According to the Maastricht Treaty, EU member states are not allowed to finance their public deficits by printing money. That is one reason why the Bank of England will buy government bonds from financial institutions, not directly from the government.

The Bank believes this form of QE is different because they are "printing money" as part of monetary policy - to prevent deflation. They are not printing money to help the government finance its deficit. Also, unlike Zimbabwe, this is a temporary policy: the Bank expects to sell the government bonds back into the market when the economy recovers.

How do we know if it has worked?

If QE works, credit growth will pick up and businesses will find it easier to get credit. That, in turn, should help stimulate the economy and help push inflation back up to the Bank of England's target figure of 2%, thus staving off the threat of deflation.

 

Pegasus Funding Resources,

01932 244810

www.pegasusfunding.co.uk

Thanks, look for further updates soon Laurence Ainsworth www.exigent-uk.com

Can Twitter work for the Smaller Business?

When I started using Twitter I had two objectives. One was to see how Twitter functions as a social media marketplace and the other was to get a sense of how smaller businesses could use it as a channel to market.

Despite the hype around it Twitter still seems to me to be a niche product. That is based on the composition of its members. It reminds me of all those speed networking events that were so popular, their limiting factor was that it was predominantly sellers who attended and what we really need is buyers. I don't pretend to suggest that Twitter will die out as speed networking has but it does suffer from this phenomenon of too many sellers.

There are some areas where Twitter is well suited. The B2C environment for one, and there is certainly anecdotal evidence that companies have generated real revenue from Twitter and those providing digital products have found it a regular source of new business. It is however fair to say that this is not a quick win, it does take time and effort to build up a reputation and presence on Twitter. Mostly however its time; for those who are involved in delivering digital services, this is not an issue since using online environments is their natural marketplace. For those offering physical products and services it's a more challenging environment. However, if you're selling into the B2B or SoHo markets then it can still be an effective route. Essentially the fact that you can readily communicate with the decision maker and that the sales process is simple and short means that using Social Media Marketing (SMM) works well and having good visibility on twitter will certainly generate interest.

At the other end of the scale major corporates' have the time and resources to dedicate the man hours necessary to regularly insert their message and build that vital link of trust with their customers and prospects. So you can see many of the worlds largest businesses using Twitter including, Dell, Ford, etc. Dells assertion that it obtained $1million in revenue from Twitter has been well publicised. We must however accept that larger businesses already have an advantage since they've built a level of "trust" around their brand long before Twitter came along and they leverage that advantage further now.

One should not forget also that Twitter is more attractive to business because postings are necessarily short and unlike Facebook, You Tube or MySpace is text based. Interestingly this will make it more readily adopted by the professional in a higher age group and therefore more suited to today's decision makers.

The more difficult question is how "Fred Bloggs of Bloggs Joinery" can use Twitter. B2B business is not necessarily well suited to Twitter and many owner managers don't have the time to devote to develop a network, and quality is still as important as quantity. This is ignoring the import question of whether they "get Twitter" which is likely to be a major hurdle in itself. I have spoken to a number of small business owners who just don't "get it" and have subsequently stopped using it before they really had a chance see what it could do for them. So what options are open to them, well firstly assuming there is sufficient marketplace on Twitter for their product (something that is seriously open to question), they could encourage all their staff to join Twitter and use a collection of voices to build up a following or secondly, outsource. This may seem an extreme step or even heresy in Social Marketing, but to me it's an inevitable consequence of how social marketing works. SMM agencies will naturally develop enormous power simply by having several clients each with several users promoting several products. With that infrastructure its becomes almost inevitable that they would harness all the voices from all the clients to cross promote each new product growing in power and effect each time they add new clients. The next logical step is to dispense with real voices and create surrogate voices after all it's relatively easy to create persona's which people can use as templates. If true it would completely undermine the concept of Social Media Marketing as we know it.

These are surprisingly radical conclusions but supported, I think, by strong logic. I dont presume to know that this is true and I'm looking to you to tell me what do you think? Let me have your thoughts.

Laurence Ainsworth www.exigent-uk.com