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What Do High Growth Businesses Do Differently?

Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impa...

Monday 20 December 2010

Are You Worried That Your Business Will Fail?

For my last post of the year I thought I'd have another Guest blog. This is more as a help to an old friend who has recently published a book entitled 50 Essential Business Advice Tips To Help Prevent Your Business From Failing” This blog explains the thinking behind his book. You can get it as a free download and I'd encourage you to do so.

A happy Christmas to everyone and a prosperous 2011

Kind Regards

Laurence Ainsworth


There are over 4.5 million businesses in the UK and every year 400,000 are formed, with nearly as many failing. Most businesses stay small or plateau at a certain turnover without being able to grow - probably because business owners are working ‘in’ the business rather than ‘on’ it; making tactical day to day decisions rather than strategic ones.

No one wants to fail in business; however statistics show that 1 in 3 businesses fail in the first year of business and a further 50% of the remainder don’t progress after the third year.

So what distinguishes a successful business?

How about the following?:

     Knowing your strengths and weaknesses
     Having targets in place
     A business plan covering all aspects of the business
     Effective targets and measurements in place
     Ensuring that product and service offerings meet the needs of the market
     Ability to create a competitive edge
     Efficient, clear and consistent business processes
     Inspired and driven leadership

Whatever stage your business is at, you could probably benefit by getting back to basics and reviewing all aspects of your business to identify what is missing.

Consider that your business is covered by the following ‘pillars’ of business: strategy, finance, sales, marketing, operations, resources and personal issues - if you could look at each of these in turn and identify what changes are required to ensure the future success of your business, this could form the basis of a business plan for your business.

Once you  have identified those key areas in each ‘pillar’ that need addressing, the challenge is then to take action and improve the way that your business operates. The important thing here is to prioritise which actions to take from the list generated - what needs to be done ‘now’ and what can be done ‘next’? Then who is going to do what, by when and what is an indicator that this step has been achieved.

Finally put some appropriate targets and measures in place to ensure that this simple business plan is moving forward and impacting the profit and performance of your business.....leading to success not failure.

To help you with this task, a book has recently been compiled by Paul Green - “50 Essential Business Advice Tips To Help Prevent Your Business From Failing”. Available as a free download here: http://www.paulgreen.biz/success_tips.htm 

Monday 15 November 2010

Why Web 3.0 Marketing Isn’t the Silver Bullet

Mount Everest from Kalapatthar.Image via Wikipedia
You cant get to the top using the wrong tools
Almost every week I see some sort of marketing splurge about how cold calling is dead and how “web 2.0 or even 3.0” is the way to go. The latest and the reason for this article was the headline “Increase Cold Calling Success by 6-8 Hundred Percent” It’s message was by using Web 3.0 (can’t wait for Web 4.0) and social media best practises any salesman can increase their success by 6-8 Hundred Percent. At this point a stream of abuse and derision was about to leave my lips. However, I paused mainly in respect of those of a tender age and a delicate disposition, but realised that the writer had simply missed the point and was looking at the problem the wrong way, that is from the sellers perspective not the buyers.
I have recently been involved in selling a service to CEO, FD’s and Company Secretaries of the top 1000 businesses in the UK. What is abundantly clear is that using Web anything and social media as a way of contacting my suspects, is as likely to succeed in delivering orders as running backwards up Everest is likely to get you to the summit without falling off. The reason, simple, most senior executives of organisations of that size don’t use or need social media and many are surprisingly unskilled in the use of the internet. This is not only a function of their age but also the fact that they have been successful in establishing their own network using traditional face to face techniques. To them online techniques are irrelevant.
So what did work? Well cold calling, once we had made contact we could explain how our service was of benefit. We were able to generate a steady stream of meetings and sales. Why was that? After all according to many pundits call calling is interrupt driven and doesn’t develop the buyer seller relationship.  All of this may be true but for our market it (cold calling) was a communications method they understood and could relate too, consequently it was effective.
My point is that the mix of marketing and sales processes required to be successful changes in every situation. Your marketing mix must reflect the expectations of your targets. Whilst useful, web 3.0 or any other sub-variant of marketing is not a panacea. The hype that social networking changes everything is just plain wrong, it doesn’t replace common sense and it isn’t a Silver Bullet, its just another arrow in the thoughtful marketers armoury. 
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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.

Thursday 4 November 2010

Taking Your Business to the Gym – Resolving Decision Overload

StressImage via Wikipedia
Decision overload condition, as I have described in an earlier article Recognising Decision Overload is simply where the business owner becomes so swamped by the amount of decisions and tasks he has to complete that it stops the business in its tracks.  This condition is often created by the business owner inadvertently training their staff that w
hen they come up against a problem, their best and/or safest course of action is not to make a decision, but, refer it to the business owner.
Having created, albeit unknowingly, this vicious circle the question is how do we create a virtuous circle?
The first step is to understand why business owners end up there in the first place. Often it’s because of the business owners lack of understanding that he shouldn’t attempt provide solutions for every problem, and second decision making should be “Fit for Purpose” and should not involve “gold plating the bathroom taps”. That is, don’t use a £100,000 a year man to make decisions on issues that can easily be made by a person paid £20,000 a year.
So how can this be achieved? The first step is to stop enforcing the vicious circle. Allow staff to make decisions. So when a member of staff says “I’ve got this problem; what do I do?” don’t rush to tell them but respond with “what do you think you should do?” Initially this will be met by a blank stare or even a look of amazement, but, fear not, this is the most important step. You could follow this up with  “why don’t you go away and think about it for a bit and come back with some ideas and we can talk about which one is best”
Initially it is going to make things a little harder and slow down overall decision making but it is critical to allowing you to work your way out of a job and to allow your staff to fill it. Once over the initial shock you’ll be surprised how quickly some of your staff will learn to take decisions. This is a difficult area for many business owners as firstly; they are uncomfortable delegators and secondly; are perfectionists (often confused with control freaks, although they can be that too) and expect that staff will make all the same decisions as they would. This won’t happen they will make more mistakes than you the owner; they may not be quite as good decisions but the additional time gained by the business owner in delegating these decisions will more than make up for these additional interventions.
Decision Making ChartImage by West Virginia Blue via FlickrThis simple act of delegation and management can be enormously liberating. I can quote a number of occasions where just applying this process has transformed the performance of small businesses. It has freed the owner from almost unbearable stress and allowed him to concentrate on issues more deserving of his attention and transformed employee from mere jobsworths’ to committed and hugely valuable assets.
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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.

Thursday 21 October 2010

How to Build a Sustainable Sales Process—without a Rock Star

Occasionally I have guest blogs on this site when I think the article is interesting and more importantly relevant to owner managed businesses. I have been recently running articles on structuring sales processes and building effective sales pipeline reporting tools. I read this article from Barbara Weaver Smith on her mission to help small businesses sell to big companies - "to" as they say "land whales"

Laurence Ainsworth


Elvis mugshot2Image via WikipediaPundits  are calling it “sales 2.0” or “the new world of sales.”  Whatever you call it, the story line is the same—Elvis is dead.  If you are going to make bigger sales to bigger customers, a rock star salesperson is not the way to go.
Chances are you built your company selling to companies with which you had some things in common—same region, shared friendships and associations,  maybe even similar size and years in business.  Almost like friends and family.
But to take your company to the next level, you need to venture out into new, unfamiliar territory, where you will meet tougher customers and much tougher competition.  To do that, you need a sustainable sales process  that rests on the performance of a cross-functional team, not a rock star.
Here’s why.
  • ·     Big companies (we call them “whales”) are afraid to do business with small companies.  They are afraid you can’t deliver, that you will run out of capital, that you don’t understand how big companies work, and that your operations and customer service teams are just not sophisticated enough.  No matter how much they want your innovative solution, they won’t buy it unless you alleviate all of those fears.  And your sales person can’t do that!  It will require participation of key subject matter experts, deeply involved in the sales process.

  • ·     The buyers in big companies (end users or purchasing agents) will never lose their jobs over a conventional choice of vendor.  But they can definitely lose their jobs if they award a big contract to an unknown provider and the project tanks.  You will have to win them over with the strength—breadth and depth—of your team.

  • ·     The corporate environment is getting much more stringent about the nature of relationships between their buyers and all sellers.  They want to increase the distance between buyers and sellers and  reduce familiarity.  They want to avoid even the appearance of collusion or any improper value exchange.  Your rock star salesperson, charismatic hail-fellow-well-met, is likely to have serious difficulty in making this transition.

So, what is the alternative?  Go from a solo act to an orchestra.  You need to develop a  disciplined, systematic sales process, overseen by senior management, in which each pursuit of a large sale is directed by a skilled sales person who is not a rock star but a conductor guiding the performance of a cross-functional team.  
The Whale Hunters Process™ advocates a plan of three stages—Scouting, Hunting, and Harvesting.  The plan is designed to get your company positioned to sell deals at 10 to 20 times your current average account
The “scout” stage involves creating a Target Filter—a profile of your ideal customer—r researching the most promising companies, watching their behavior over time, and calling on them when they may have a propensity to buy.
In the “hunt” stage, train key subject matter experts to participate in the sale and develop a systematic process of discovery and disclosure that becomes your core sales process.
The “harvest” stage becomes important after you land a big account, but you can’t wait until them to implement best practices for bringing a new account on board.  Be sure your team is as ready to deliver the services as it is to make the sale.
By following these steps, you will develop a disciplined process for marketing,  sales, and delivery that will give you a considerable competitive advantage.  It will not accommodate a rock star but will elevate the performance of ordinary people, well trained and seriously committed to the growth of your company.
You will have a process that you can measure, replicate, improve, scale, and teach to a stream of new hires.

Barbara Weaver Smith
October 2010

The Whale Hunters is a strategic sales coaching company that helps small businesses achieve explosive growth by landing bigger deals with bigger customers.   The question is how can small businesses grow at a rate that will show results sooner rather than later?  That’s where The Whale Hunters comes in – and we invite you to register for a free account which gives you access to the wealth of information on the new expanded Whale Hunters website– http://www.thewhalehunters.com - Barbara Weaver Smith founder The Whale Hunters

Wednesday 13 October 2010

Taking Your Business to the Gym – Recognising Decision Overload

The activity that most business owners find the most difficult is managing staff in particular delegating responsibility.  Firstly owners need to understand that the most if not all their staff see working for a living as a way of earning a living at not as most business owners see it as a calling. They are not going to work long hours of overtime for nothing or commit wholly to a business in which they don’t have a stake; nonetheless they have skills which are often overlooked by Owners. It is also fair to say at this point that most independent businesses owners are not professional managers and have no experience of managing people.
A typical scenario is asking your staff to undertake a task and then deciding that they’re not doing the way you’d do it and either take it back entirely or get so involved with it that the staff member feels like you now own it.  If this happens regularly then you the business owner are making the situation work by inadvertently training his staff to recognise that he is the solution to any problem. After all why make a decision on something that the boss may disagree with – better, don’t make a decision at all and pass it back to the boss. The result, the business owner gets more overloaded and ends up making decisions on all sorts of matters in which the business owner shouldn’t be involved. The result is increasing frustration on behalf of the owner who’s under pressure and now on a shorter fuse leading to more reinforcement to the staff that their best course of action is to leave it to the boss diverting yet more decisions and creating a paralysis in the business. This is what I call the decision overload condition, where simply the business owner becomes so swamped by the amount of decisions and tasks he has to complete that it stops the business in its tracks.  
This condition is surprisingly common in owner managed businesses, and is often allowed to develop because owners are interested in progressing the business, well naturally and that because when they started they did everything they lose the understanding of the relationship between the job or activity and the market price for a person doing that job. By way of an example I was with a company owner who insisted on doing the route planning for his collection vehicles, his argument was that his staff couldn’t do it as well as he did.   My response was to ask him would he pay somebody a salary similar to his (it was high five figures) to run route planning.
 “Don’t be silly” he said “of course not I’d only pay about £25,000.”
“Then why” I asked “are you insisting on doing that job when you pay yourself almost 4 times the going rate. Doesn’t that mean your expectations are based on someone massively over qualified for the job at hand? Its no wonder you’re so overworked, what other jobs do you do that your over-qualified for?
You know I could almost hear the clank as the penny dropped.
Like an addiction, acceptance is the first step to a cure, but this is the subject of another article.

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.

Saturday 25 September 2010

How to Build a Structured Sales Pipeline

Following on from my earlier article “Developing a structured pipeline – The Issues” this article describes how to build the all too elusive, structured pipeline.
So to recap: what should a structured pipeline report aim to achieve?
Firstly, it should enable you to view each sale in a consistent manner.
Second, it should clearly identify if a sales opportunity has progressed or stagnated.
Thirdly, it should contained a factoring index which will more accurately reflect the true value of the pipeline
Fourthly, it should provide sales and/or company management with a consistent and reliable prediction of business that should be closed in the forthcoming period.
Fifth, it should be simple and relatively easy to complete (salespeople as a breed are poor at filling in reports).
Sixth, it should be focused on numbers rather than opinion.
To build a consistent view of each sales opportunity take the sales cycle in your business and break it down into discrete milestones.
So for example,
Milestone 1 is a lead or an enquiry who has identified desire to purchase your product or service.
Milestone 2 to progress the sale you need to demonstrate the product
Milestone 3 they have the budget to pay for your product
Milestone 4 you have submitted a proposal
Milestone 5 you’re on the shortlist
Milestone 6 you have a verbal order
Milestone 7 you have a written order.
The next step is to put percentages against these milestones for example, 1) 5%, 2)10%, 3) 20%, 4)25%, 5) 50%, 6) 90%, 7)100%. This approach allows you to build a factored pipeline i.e. the value of the opportunity time the percentage milestone. Don’t get hung up about whether the percentages should be this or that number what we are building is something that will give you a consistent view across all your sales opportunities and not something which reflects the precise chance of winning per opportunity. The progress of the sale can be shown in any way you like; this could be as a table, a graph, or a set of traffic light colours going from red to green as you move along the sales process. Other information you need is simple the prospect name, if it is a new or existing customer, the value of the opportunity and a projected win date.
By constructing what I have described you’ve gone a long way to getting a grip on your sales performance, you’ve now turned sales reporting into a set of numbers which over time you can analyse. For example you’ll see which sales have stagnated because they wont have moved along the pipeline for a period of time, you’ll be able to identify how overoptimistic you sales force are by comparing the projected win date with the actual win date. Most commonly this is between 3-6 months.
Now that you have a factored pipeline you can start to build up metrics on the relationship between the size of your pipeline and your monthly sales. It also now enables you to look forward because as your factored pipeline rises and falls to will your sales, thus you can act early as soon as you see your pipeline numbers dip.
You’re now at last starting to get some sensible numbers to enable you to plan your business and you have moved from a jolly nice chat to a shorter focused and more effective sales meeting. As the Meerkat would say “simples”.

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.

Monday 13 September 2010

Developing a structured approach to sales pipelines - The Issues

Of all the activities in the sales area this seems to be the most difficult for businesses to implement. I have to say I’m at a loss to understand why. Having consulted with organisations from very small to large, there appears to be a blind spot where building a structured sales pipeline is concerned. So what is a structured pipeline and why is it important?
Let’s go back a step and see what most commonly happens with pipeline reporting.
For many businesses, particularly small companies, it’s simply nonexistent which leaves them hopelessly exposed when business hits a downturn. They have no idea what shape they’re in or, more importantly, be able to quantify what sales they need to get back on an even keel, how much activity needs to take place to generate the requisite sales, or the length of time it takes to get from first contact to order. This lack of knowledge is a major contributor to why many smaller businesses fail.
Very many companies have sales reporting and even have pipeline reporting but these are often completely ineffective. They tend to be unstructured and soon degenerate into “a jolly nice chat” allowing sales people to waffle and produce lots of information which is partial, biased and is ultimately there to justify the salesman’s position whilst at the same time giving the sales(or company) management little useful information. I can’t tell you how many long, tedious and ultimately pointless sales meeting I’ve had to endure on a client’s behalf. Many lasting 3-4 hours when they could and should last about 1 hour. What you get is a long narrative from each sales person talking about who they’ve seen, why it was an interesting and/or important prospect and then at the end the sad unexpected of surprising reason why this company is no longer a prospect or at least why they won’t be making a decision to buy this month. Worse still each in turn feels it necessary to talk for longer about his or her prospects than the preceding salesperson.
Consequently the pipeline is just as unstructured with a loose general format being used which allows the salespeople to view their pipeline using their own judgement rather than a standardised approach. Typically under these circumstances the quoted pipeline is huge and the amount of business closed is a very small percent (less than 10) of the total. This is made worse because there is little or no correlation between the size of the pipeline and the sales closed thus making very difficult to predict future revenue streams.
So what should a structured pipeline report aim to achieve?
Firstly, it should enable you to view each sale in a consistent manner.
Second, it should clearly identify if a sales opportunity has progressed or stagnated.
Thirdly, it should contained a factoring index which will more accurately reflect the true value of the pipeline
Fourthly, it should provide sales and/or company management with a consistent and reliable prediction of business that should be closed in the forthcoming period.
Fifth, it should be simple and relatively easy to complete (salespeople as a breed are poor at filling in reports).
Sixth, it should be focused on numbers rather than opinions.
A subsequent article will give you a simple format in which to achieve all this so making your sales function more effective

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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.

Wednesday 18 August 2010

Are you Working for a Madman?

As the owner of a small business you are responsible for everything. You will have discovered by now that running a business is a lot more complicated than you first thought and producing your product is only a small part of running a business.
Typically businesses are started for two reasons firstly because the owner was made redundant  and secondly because the you thought you could do better than your current owner in making it, delivering it  or providing the service.
Now that you've started your new business you really start to get stuck in. You've got to find orders so you go out and sell, process the orders arrange to have you product and or service made and delivered. Next you've got to arrange to invoice for it the to make sure you get paid, chase debt, provide information to the authorities on profit and earnings; take on and manage staff (never easy), set manage and review the company strategy. To keep the company successful you must keep this cycle moving 
Pretty soon you're actively involved in all these areas, yes you've employed staff but they don't seem to have the drive or the enthusiasm to get it all done, so you cover.
You've had your business now for 2-3 years its bigger but your working harder and harder to keep on top of things, your get a reasonable salary but probably if you dare calculate it you are the lowest hourly paid in the company. You get less time off and your working weekends.
If this looks like you -  then you're working for a madman: and the madman is you!
So how do you bring back sanity?
Well the first thing to do is to find a way to change “insanity” as they say “is doing the same thing today as you did yesterday but expecting different results”
Change is what is required and it starts with you.
So the first thing to do is to put some clear structure down for your business and do some business planning. Next identify which functions you are best suited to best and give those your least able to do to others. Third get some structure and processes into your business, yes but you say I already have that. Then ask yourself can this process run smoothly without your intervention and is there a step by step guide. If the answer is no which I suspect it will be then you don't have a process.
Fourthly, work your way out of jobs, that is to say once you've got a structure and a process mapped out give that work and responsibility to someone else, your job is to manage them not do it for them.
Whilst this is straight forward it is not easy, the day to day problems caused by your lack of structure will not immediately go away but if you're persistent you'll see tremendous benefits.
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.

Monday 2 August 2010

8 Steps To Successfully Dealing with Negative Online Reviews

Two coincidental events lead me recently to think about handling negative online comments. Firstly, there was a reference to it in a recent episode of the "Hotel Inspector"; and secondly one of my clients had a run in with a customer who subsequently orchestrated a campaign of negative comments across a wide array of  review sites. 

The risk of negative reviews is highest in retail businesses where customers can get very angry about perceived poor or downright bad service. It is often these businesses who are least able to effectively combat such publicity. So What should you do.

Well obviously the first thing is to monitor the web to see what reviews if any have been posted about you. Once you've identified relevant review sites bookmark them and review them every week. Now as the saying goes "you can't please all the people all the time" so you will at some point get some negative feedback- whether its justified or not. 

Your second action is to get some reviews on to those sites, so ask your friends and best customers if they could write a few words about why they like your business. This pre-emptive action will also naturally act as a counterbalance to any negative comments. 

When you finally get some negative feedback its vital that you "Stay Calm". I know if you're like me you take any criticism of the business personally but getting emotional and either slagging off the complainant or the review site in general will only make things worse. Certainly don't do what my client did and make direct contact concerning the complaint as far from calming things down it added fuel to the fire!

Don't expect help from the review site. They don't know who's telling the trust and frankly they don't care. There view is the more activity and controversy on their site the more traffic they'll get and the more advertising revenue they'll obtain. Shocking isn't it they're doing it to make money.

So how do you respond? 

1. Don't respond immediately. If you can copy the complaint into a word file for consideration later. 

2. Give yourself 24 hrs to reply, view at their complaints and comments as many times as you can but don't start to respond until you stop getting emotional when you read it.

3. Stopped getting emotional? Yes? Its only at this point you should consider responding as by this point you'll be able to view the review objectively and reply in the same manner. 

4. Draft your response and review it properly to make sure it addresses their concerns and also that it can't be mis-construed.

5. Get someone else to review it. Only ask a member of staff if you are confident that they will be strong enough criticise your response if they don't think its appropriate. Otherwise ask someone not connected with your business.

6 . Only now its been reviewed should you submit your response

7. Since review sites are set up like blogs, that is with the latest response first, try to get some of your friends to add positive comments to counter balance the negative reviews.

8. Learn from the experience

Oh and 9. rinse and repeat if and when it happens again.

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.

Thursday 15 July 2010

Taking Your Business to the Gym: The 4 ways to Grow Your Business

There are only four ways to increase a company's revenues. They are:
  1. Acquire another company
  2. Find new customers to buy from you
  3. Get existing clients to spend more at each visit
  4. Get existing customers to visit more frequently and spend money
Option 1 is really only relevant in specialised circumstances, and most businesses with not acquire another at all during their lifetime. So businesses should concentrate on the other three. This option anyway is the most risky given that statistics suggest only 33% of acquisitions are successful.
Which of the remaining options you chose depends on who your customers are and what your business sells. For example many businesses offer products or services with a very low percentage of repeat purchases so Option 2 becomes critical to their survival. These kinds of businesses can only support growth by new business development. That is getting more new customers. This is the most difficult to achieve. It is generally accepted that it takes 7 -10 times as much effort to get a new customer to buy from you than to get an existing customer to buy more. Unsurprisingly this type of business is generally much more sales focused and tends to fair less well in recessionary times as conversion rates fall.
Get your customers to purchase more at each visit. This is very common strategy in a B2C environment and works best where the business has a range of products for purchase. Supermarkets are great exponents of this where they offer a discount for multiple purchases. This is very often for the same product but can often be used to cross sell related or complimentary products. These products are carefully analysed to connect products with high margins. If you can't do that; try offering more goods and/or services for the same price rather than giving away a discount. This is a common on big ticket items where for the purchase of a particular product you get another free. This strategy is based on the premise that the perceived value (sales price) of the free item is significantly more than its cost. For example mobile phone accessories which are purchased by the retailer at a very small fraction of their retail sales price.
Option 4 is about getting repeat sales more frequently; this may be achieved by visiting customers more frequently. An example of this is home delivery freezer food company Eismann. In our area they used to visit us every 4 weeks suddenly it was every 3 weeks. We tended to buy a little bit less on each 3 week visit but over the year we spent significantly more. In the UK you'll also have noticed the increased use of time limited discount vouchers by the big supermarkets; these are all designed to increase the frequency of your visit. B2B businesses use CRM data to manage the frequency with which they contact customers or prospects, as well as buying habits. If you haven't got one, even a very simple one, its going to make increasing revenues a lot harder and in these difficult times you need all the help you can get. So spend a little time understanding which of these options are best for your business and start implementing you approach now.

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.

Sunday 4 July 2010

Manage For Growth or Profit Not Both

There’s a simple rule which says that you can either manage your business to maximise profits or you can price for growth. You can’t do both. This simple rule is misunderstood by many business owners, because they fail the relationship between bottom line growth (profit) and top line growth (sales).
Managing your business for growth means actively planning to grow your business, to do this you’ll need to get your resources; people, product and organisation ready to support sales growth, but each of those three areas have a different time lag between the decision being made and the results implemented. Let’s look at a simple case of recruiting a member of staff. Let’s assume that he’s paid monthly, that generally means a month’s notice before he can start. We also expect that the selection process takes a month. So we need to start the process a minimum of 2 months before we think we need them. If that person also needs training or familiarisation then we need to add that time on so let’s also assume it takes 1 month to bring them up to speed. Our decision point is now 3-4 months ahead.
This time lag also increases the risk, as we have to be confident that our sales will be at a level where we need this person or at least close to it. When driving for growth these decisions like this are taking place right across the business. This typically results in resources being pulled in ahead of time so that they are in place to support growth, which in turn increases costs and so reduces profit. Supporting high growth requires a detailed understanding of the mechanics of your business and the marketplace in which it operates. This detailed knowledge needs to translate itself into a comprehensive financial forecasting model on which to assess the performance of the business as a whole and its individual components. It also requires a degree of risk taking that many owners don’t want to take for fear of getting it wrong.
Pricing for profit is taking the view that we maximise the performance of each component of the business before adding further investment, whilst this has the advantage of having the business run efficiently it puts a cap on growth because resources are only acquired after its it certain that they are needed rather than in anticipation of their need. We therefore assume that pricing for profit is better since were making, or at least should be, profits at all levels of turnover.
In real life things aren’t so simple. Profit and growth are two ends of a see saw, businesses need to decide for themselves where the balance point falls as the trade off between them will be a function of many things including management strength, funds available for investment, market characteristics, risk aversion of owners/directors.
The truth is that pricing for profit tends to be adopted after the business has gone through its growth phase, although many businesses suffer low growth not because they’re pricing for profit but because they’ve hit the limit of their management capability, which of course is another story completely....

Tuesday 15 June 2010

Inappropriate Use of the Fword

Many consultants consider that providing some Fr** consultancy will assist them in developing a relationship and therefore work with a client. I have a real problem with the Fword in that it gives all the commitment and risk to the provider and none to the buyer. Typically it’s treated with less respect by the buyer because it doesn’t matter as its F***. With all consultancy and advice once you've given it you can’t take it back. Sometimes the clients problem is so basic that as a consultant you can provide the solution in a few words, don’t because you'll end up with a very happy lost prospect whose had his problem solved for nothing. Providing Fr** (there I still can’t say it) consultancy undervalues what you're offering.

However for those with an empty pipeline or who are weak closers Fr** is a way of engaging the customer. If you feel you must offer something try the following "lets meet up for X hrs next week. Lets agree now that if you don’t get value from that meeting we will shake hands I'll walk away and you'll owe me nothing, if, however, you do get value then you agree to pay me £X." When I've used this line as a close and it’s been accepted I've always got paid for that meeting getting paid for subsequent meetings or projects is then a non issue.

Thursday 10 June 2010

UK Grant Cuts - First Evidence Emerges

The first real clarity on the Impact of the Cuts on Grants has emerged from the South West RDA as below:

In summary Grants will be cut by 20%; and operating costs trimmed back by 10%;

England's RDA network (outside of London) has been asked to make savings of £270 million in their investment programmes in this financial year, as part of the coalition Government's priority of cutting the budget deficit and reforming public services.

That cut amounts to about 20 per cent of the network's programme budget for the year. In addition, the RDAs will also have to make further savings of at least 10 per cent from our running costs this year.

How those savings will affect individual regions is still under consideration, but for South West England this will mean at least a £23 million reduction in the money available for projects in the region. This will inevitably impact on businesses and communities.

All the RDAs are currently reviewing their funding commitments and will be discussing the implications and the next steps with BIS (the Department for Business, Skills and Innovation). Recent comments from the Secretary of State for Business - Vince Cable - indicate that the level of cuts will be deeper in the South and East of England, which is likely to include the South West, as the North and West Midlands are to be 'relatively protected' from the cuts this year.

Jane Henderson, chief executive of the South West RDA, has pledged that the RDA will make the strongest possible case for protecting key investments and levels of support in the region.

Content was kindly provided by Bob Watson at www.support2business.co.uk

Should you want to ask questions about any Grant Assistance, please drop me an email at laurence@exigent-uk.com

Tuesday 11 May 2010

Survey: How Much Time We Spend Social Networking Each Week

This survey has been taken from visitors to my blog and shows just how much we've become attached to social networking. Of the respondents a third spend less than 5 hrs a week social networking with 14% spending over 20 hrs a week thats between 3 and 4 hrs a Day depending on whether you spread it over 5 or 7 days. Thats a lot of commitment!

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.

Friday 26 March 2010

The Lasting Effects of Quality

I wanted to use two stories the show how different views towards providing quality product or service can leave a lasting impression on your customers.

Some five years ago we bought a settee from Laura Ashley. It was quite expensive for us but we liked the design so we bought it. The company also offered a five year guarantee. After nearly five years one of the legs of the settee failed. We phoned up Laura Ashley who promptly set out their customer service representative to look at the situation. On her arrival she had agreed without hesitation that yes indeed the settee was faulty and she would have arranged to have it replaced. Cheekily I asked if he would be possible to change the material on the replacement setting since the old material clashed with our new decor and didn't appear to wear that well. The customer service lady said that wouldn't be a problem and we would only have to pay for the difference in grading of the new material as compared to the old material. Eight weeks later our new settee arrived. Since then, and whenever we can afford it we buy Laura Ashley products.

By contrast when we first got married we went to a very friendly and cheaply priced furniture store called Cantors; which by the way, sadly no longer exists. We bought a lovely settee at a cheaper price. The company arranged to deliver it within six weeks. We were duly informed it was ready for delivering, about 3.30 PM I've got a distressed call from my wife yes the settee have been delivered but it was quite big and the delivery men had struggled to get it into a hall. At which point they said the settee had been "delivered" and promptly left, effectively blocking the front door as an exit to the house. So on my return from work I spent an hour or so struggling to get the settee from the hall into the lounge and set up. We did love that settee, but we never did buy anything else from Cantors again.

The moral of this story, is of course, that you get what you pay for. The reason why Laura Ashley could offer such a high quality service was because they had included it in the price of their product. It should be clear from this that as a business owner you can either provide limited customer service for a cheap price, or an excellent service at a high price. What you can't do is to provide an excellent service at a cheap price.