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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...

Wednesday 12 December 2012

Cold Calling or Lead Generation, Are We Missing The Key Point?

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Over the last few weeks it seems that the intensity of the debate about ditching cold calling and moving to digital lead generation has increased to a level of intensity where it is getting a bit absurd. It seems to me that proponents of both sides are trying to make unrealistic claims about the efficiency of their pet route to market, I decided it had all got a bit too extreme when I read the following quote: “And that’s when it hit me: Cold calling isn’t just a terrible idea during a recession, but may actually be contributing to the recession itself! Think about it…”
Cold Calling or lead generation
Cold Call (Photo credit: Alan R. Light)
Well I did and I thought it was just about the most ridiculous statement I had heard in a long long time. We have the collapse of Lehman Brothers, the Global Banking crisis, massive individual and corporate debt, and then we have cold calling. Nope, I just can’t get my head around that one.
So I thought I would go back to basics to try to bring some sense back into this debate. Cold calling as we know is a rotten job, I’ve been in sales and marketing for all the best part of 30 years and I can honestly count on the fingers of one hand those people who enjoyed making cold calls. Yes cold calling has its drawbacks; in particular cold calling in a B2C environment can be very difficult and counterproductive. Increasingly that type of intrusive marketing is getting a bad name, partly because telemarketing companies are having to make more cold calls per sale, and partly because of the damaging effect some of the “Cowboy” operators out there are having on the industry as a whole. Nevertheless the there are many situations when cold calling is effective.
Going right back to basics, a cold call, or lead generation through email marketing or even printed mail shots, are all attempting to achieve the same purpose; to identify if the recipient has a need for the product or service on offer. With a cold call you find out immediately because of the person at the other end will tell you “no” straight away. This is the essential problem with cold calling, as the vast majority of people can’t cope with being told repeatedly “no, I don’t want what you are offering.” We eventually get the same answer from a mail shot or an email but it is a much more comforting “no” as it is simply no response at all, that’s much less hurtful and much easier to cope with.
Also lead generation has volume on its side, it’s much easier to contact 10000 people by email than to phone 10000 people volume gives you a greater chance of success; and as George Bernard Shaw said, “God is on the side of the big battalions.”
What seems to have got lost in this argument is any form of analysis about what is the best way to contact your target market. In order to come to that decision, it seems to me, we just need to understand how people in our target market prefer to be contacted.  In the UK certainly many industry sectors work on the basis of cold calling, and this is particularly true of construction where main contractors will expect calls from a multitude of subcontractors who may be interested in using their specialist skills to deliver a small part of the overall solution. By contrast if you were to contact media companies many of the office based organisations, in particular, service companies, you might find that using lead generation techniques an effective way to contact your target prospects.
Cold Calling or Lead Generation
New Target Market (Photo credit: Intersection Consulting)
The essential point here is that we should be led by our prospects preferences and not be dictated to by the method of communication. So just remember put yourself in your customers place and try to understand what form of communication they are likely to respond to best. Now this isn’t easy and you will probably have to try a number of different routes which may involve using both cold calling and lead generation.
After all let’s face it, marketing, or at least getting marketing right, is hard. If it was easy we’ll all have very successful companies, and because it’s not we don’t. The trick is to engage your customer to either progress or close the sale, and from my point of view I don’t care which route gets me there as long as one of them does.
Exigent Consulting provides specialist services for High Growth BusinessesBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Monday 5 November 2012

Do You Have What it Takes to Run a High Growth Business?

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There is a lot of interest these days about growth in the economy and providing support for high growth businesses. The latest is the Growth Accelerator Programme, and the objective of this initiative is to drive employment growth; and this is based on one key statistic. That is high growth (read 20%+ per annum growth) businesses represent roughly 5% of all companies but drive about 50% of all employment growth.

10 Year compound Growth
As the economy remains sluggish, more and more focus is going to be placed on these companies as they are our best chance of dragging ourselves out of the economic doldrums we find ourselves in. Being a high growth business is not easy in fact its a challenging environment in which to live. There are none the less a lot of ambitious business owners who would like to have a high growth business.

So what are the key things to have in place to give yourself the best chance of making it as a high growth business?

The first thing is ambition, no ambition, no growth it's about as basic as it gets.
With ambition comes the drive and the will to change things and to take that step into the unknown.

Having some sort of vision for your business. Its great if you can articulate it clearly and succinctly. A colleague of mine says that if you can't describe your business (why you do what you do) in 10 seconds there you don't understand it enough. I'm not sure I entirely agree as I have met many high growth business owners who are somewhat surprised to themselves heading such businesses. Nevertheless knowing where you are going and why you are going there will provide a focus to your activities

Third is leadership. The ability to inspire others be they your staff or customers. You act as a lightning rod for their ambitions and desires and so carry them forward. Even when things look dark and foreboding people will follow you as you can convince them that this is the right way. You create loyalty amongst your staff and customers which is necessary to underpin long term high growth.

Fourth and lastly at least in my book is Management. The high growth environment is relentless is its pursuit of weaknesses in a business. To survive and be successful you need to have the talent in your management team to take the business forward. This is particularly relevant as the business owner will become more and more remote to the business detail as it grows and will become increasingly reliant on his management team to deliver the goods.   

This list is by no means exhaustive but these, are for me at least, the key attributes that a company needs to be successful as a high growth business. What do you think?

Exigent Consulting provides specialist services for High Growth BusinessesBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Thursday 25 October 2012

Get Profit from your Sales

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English: Cost-Volume-Profit diagram, showing b...
English: Cost-Volume-Profit diagram, showing break down of Sales into Contribution and Variable Costs. (Photo credit: Wikipedia)
A recent blog post on pricing reminded me that we tend to forget how important it is to make a profit and often how little room for manoeuvre there is when playing around with prices.

The average profit for all limited companies across the UK before 2008 was 7%, yes that's £7 out of every £100. I'll accept that many smaller businesses typically owner managed will depress their reported profits in order to reduce their tax liability.  Having said that there's not many businesses that regularly report profit before tax of 10% or better. What that really means is that pricing and getting it right is really important.

So point number 1 you need to understand fully what it costs you to produce your product or service. I don't mean guess it I mean know it intimately and in detail.  Recently I went to what appeared to be a reasonably successful retailer who were struggling financially. Superficially things appeared OK nevertheless I asked them to fill out a detailed spreadsheet itemising all their costs and not surprisingly their situation was much worse than they anticipated. What it had done was to get the business owners to focus on what it really took to run their business and that pricing was a much more important than perhaps they first realised, as a result now everything is priced on the basis that it makes a profit in its own right and in some cases that has meant a significant increase in individual product prices.

 For companies with a sales team, this message often gets lost, particularly as most sales people are rewarded against sales revenue and not profit per sale. Consequently if sales people are in a sticky position they automatically reach for the price lever and drop the price, after all a 10% discount on a 100k sale is only 10K  and that's relatively easy to find. The fact that it may have completely wiped out the profit on the sale is not on their radar.

So point number 2 get your sales team to focus on profit and not turnover. How can yo do this? Well how about giving them a little bit of training so they understand the mechanics of the business, and you could reinforce this by rewarding them on profit not turnover.

I've only be able to do this once but boy is the impact immediate. No more is there the argument that we had to sell this with a big discount to give us a foothold in this new account, nor is there the plea that "if I didn't give him that discount(and its usually a big one) we wouldn't have won the sale."  Why, because sales people don't want to go through all the effort needed to win a sale and end up getting no commission.

Interestingly what you do get are rather more searching questions like what does it cost us so much make this stuff, what else can we offer if we cant move much on price? This should lead both you and your sales staff to examine and really understand your company's value proposition and discover how to best promote them, which is no bad thing.

The important messages are that as a business owner, profit should be your prime motivator when selling. In order to do this you need to understand what your true costs of production are before adding in your profit and only after that setting your price.

Motivating your sales using profit has some beneficial side effects in forcing them and indeed to you really understand and to be able to justify why you sell what you sell at the price you sell it.

Exigent Consulting provides specialist services for High Growth BusinessesBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Monday 15 October 2012

Social Networking How To Stop it Becoming a Time Sink

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Over the past 5 years, yes it's really that long, social media or social networking has moved from the fringes of marketing to centre stage. At the same time industry pundits are recommending that we engage with people across more and more platforms. Yesterday for example I was sent and an email entitled "the 9 must use social networks". 9! This is clearly getting out of hand, how am I going to do any work?

Social Networking How to stop it becoming a time sinkNow even a dinosaur like me recognises that I need to utilise this route to market but how can I  keep our social networking under control. We all know that the beauty of using social networks for marketing it is that it's free. The bad news is that using social networks for marketing is free. What do I mean by this? Because using social networks is free we tend to ignore one of the key measurements for successful marketing that of return on investment! All to often we become seduced by the fact that we can connect with all sorts of people without ever asking ourselves the key question what am I getting out of this effort. In this way social networking can easily become a time sink, where we are spending increasing numbers of hours without really looking at the returns.

If by contrast I send out a sales letter it's pretty easy to work out the leads from that mailing. The problem I have found, at least, for most businesses is that returns from social networking are a bit like wait for a bus, nothing much happens for a long time and then suddenly 3 turn up at once. 

Faced with this situation I wanted to come up with a few key questions I used  to help me and subsequently my clients work out how important the use of social networking might be as part of their marketing mix, and therefore how much time should be committed to social networking. The list is by no means exhaustive but it short at least help people get social networking into some sort of perspective, they are:-

1 What do I want to get from my social networking effort? More leads, more profile or more sales?
2 Are my prospects active on social networks? If not why bother?
3 Are my products/services something that is currently actively marketed through social networking? If not. Is there a good reason?
4 How widely spread are my potential customers. Does it matter that there's billion users on Facebook if my customers base is limited to 3 miles from where I live?
5 How much time can I reasonably spend on social networking? 30 mins  or 3 hrs a day?
6 Do I understand enough about social networking to use it effectively, if not, do I have the desire to learn through training?
7 Which social networking platform is best suited to my needs?
8 Do I understand that using social networking is for life. Not just for Christmas.

So what do I use?
Twitter daily, LinkedIn daily, Blogging twice monthly, Email marketing twice monthly and a bit of Facebook but mostly social stuff, it is meant to be social networking after all.

Exigent Consulting provides specialist services for High Growth BusinessBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Tuesday 2 October 2012

Pricing objections - what they really mean

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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?

The problem with owner managed business is that they assume that they must be the cheapest to survive and are often very reluctant to raise prices, even in the face of ever rising overheads, just think of energy, fuel and courier(UPS) costs to mention a few. If I had a £1 for every time I've heard a company owner say "if I raise my prices I'll lose all my customers so I have to keep them as they are" I'd be very rich – sadly I'm not.
Gas Prices Are Up!!! Feelin' the Pinch...
Gas Prices Are Up!!! Feelin' the Pinch... (Photo credit: Clan UiBriain)

Why do so many people think like this? Much of it is conditioning, whenever we are not satisfied with a company for whatever reason we complain about the price. 

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 I don't see a reason to buy this" or do you say "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,or do you say "I'm sorry but I just don't think you're trustworthy" or do you say "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 you don't understand my problem so I'm not interested" or do you say "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 you're the last person I'd buy anything from" or do you say "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 what does this tell us? The first thing is that raising your price is nothing to be afraid of. The second is that if pricing is seldom the real issue, raising your prices even in a recession wont frighten off your customers. Why? because the reason they are staying with you are not price related, it could be that you're convenient, they like you, they love your brand, you've helped their business, you are reliable, and so on....

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 most small companies are selling their product or service too cheaply because they've been conditioned to this as those people who don't want to buy from him use price as the objection.

Realistically as a small business owner you should understand that price is only factor among many people assess before purchasing and its by no means the main factor. Your price should reflect your costs and be sufficient to give you a decent profit. 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 with pricing is that your sales price is 2.4 time manufacture costs, it's still a rule of thumb and likely to lead to a guess-timate of costs which will almost always be less than the real costs.

You should be increasing your price at a minimum annually to keep in step with the inevitable rise in your costs and additionally if 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 down there is no customer loyalty.

So remember that pricing objections are more likely a cover up for other deficiencies, so don't be afraid to raise your prices and ask those price objectors what they're really unhappy about.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Wednesday 12 September 2012

1 Day High Growth Training Course Harrow London 26th September

High growth knowledge pilot course on 26th September in Harrow. It is an intensive 1 day course designed to provide coaches and consultants knowledge of what it is like to operate in a high growth environment, what pressures it puts on Owners and company management and some best practices to enable businesses to operate successfully in that environment

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Thursday 23 August 2012

The Stresses and Challenges of Managing a High Growth Business

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Choosing to follow a path of high growth is not always a conscious decision. I have met many businesses who find themselves in a phase of high growth and whose owners are looking around wondering how they got there. However in order to continue to achieve high growth they must get to grips with the business and understand why they are successful. This can be stressful in its own right because, if they don’t know why they are successful, they won’t know what to do to rectify the situation if things suddenly start to go wrong.

Operating in a high growth environment is living with relentless pressure, as high growth will seek out any weakness in a business and magnify its defects until resolved. The pressure for all high growth businesses owners is akin to that of patrolling the perimeter of a large defensive position, where one is constantly on the lookout for breaches and attempting to repair them as quickly as possible to prevent further problems later.

One of the most common causes of stress is where the owner is not in full control of the business. I often recognise this when the owner comes out with statements like “I feel the business is running me” or “I’m running through treacle, the harder I work the less progress I make”. As decisions and issues pile up, the business owner starts to become more and more reactive and as such, loses the ability to direct the business. Sadly this situation, if left unchecked, has only one result. There will come a point where the backlog of issues create a tipping point and the wheels come off; often in the most spectacular way, with growth hitting a virtual brick wall resulting in little, none or even negative growth in the following 12-18 months.

Another common reason for stress in high growth businesses is that the underlying rate of growth in the business tends to towards a similar rate of change as new positions, recruitment, and management structures are implemented to support the underlying growth. This means a lot of decisions have to be made to drive the business forward and the business owner will, without doubt, make some bad decisions. This in itself creates the need to take more decisions to correct mistakes. Many business owners need to realise that it is more important to make a decision even though it might be wrong, than to sit on it and hope the problem goes away. It never does, and like many things in life, consciously doing nothing only makes the situation worse.

The key challenge for any high growth business is for the management to be able to look forward and foresee potential issues and problems. In order to do this effectively a number of things need to be in place, the business needs sufficiently detailed information to understand and monitor the key linkages in its business and that this information is available in a timely manner. By that, I mean very quickly. In the business I worked in, for example, we had what we called a flash (rough cut) sales figure for the previous month available on 1st of the following month. Detailed management accounts were available by the end of the first week of the following month.  For many businesses this might either been seen as the Holy Grail or unnecessary, but it is fundamental to the success of a high growth businesses.

One of the less obvious but nonetheless significant challenges to assist management to look forward and make the appropriate decisions is one of culture. A healthy culture is absolutely fundamental to a successful high growth strategy, as individuals and teams need to grow rapidly to support and continue to promote the strategy of business growth. Staff and management will be in an almost continuous state of learning and development – that means more mistakes. In order to learn and develop, the culture must promote a team approach and not condemn people for getting things wrong. In a recent article I explained at last that there were hard numbers which reinforce what we always suspected; that healthy cultures deliver better business performance.

This article might have given you the impression that you would have to be slightly mad to want to choose a high growth strategy. There is no doubt that a high growth environment is a challenging place to be, it does however have its rewards for those who successfully master the conditions. Those who succeed in a high growth environment represent the best of business leaders and managers and whilst successful high growth businesses represent only 6% of all businesses in the UK, they contribute 45% of UK employment growth. Such companies are a vital resource, that need to be supported and encouraged and whilst difficulties are many the potential rewards are much greater.

Exigent Consulting provides specialist services for High Growth BusinessBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Wednesday 11 July 2012

Make Better Management Decisions In a High Growth Business

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The most common issue that business owners and managers face in a high growth business is the lack of time to make decisions or consider situations. As I have repeated on many occasions business owners as managers find ways to make time not by working harder but by working smarter. We all know that high growth puts relentless pressure on a business and it will seek out any weakness in management or the business and mercilessly exploit that weakness until it is fixed or it ruins the business.

The problem for management in this environment is that decisions and problems arrive all to frequently and they can't be left to fester. How does management cope with this onslaught. The answer is to try to grade the importance of the decisions they have to make. The problem with many firms is that the management team will tend to deal with the issues with giving much thought to priority. This often that means the easy decisions are made quickly but those more difficult and complex decisions are left, this results in a backlog, of often, very important issues.

Having faced this problem myself I have of found this simple chart has enabled me to get to the most important decision first, and not to get distracted by the constant stream of the quick and easy.

Important actions, managing high growth

I give this diagram to all my clients although it is most relevant to those managing high growth businesses. The objective is to get you to think about the type of tasks you undertake and if they are really necessary.

Taking the two left hand boxes it is obvious that undertaking urgent and important tasks are necessary, and it should also be clear that items that are neither important or urgent should be ignored. However we commonly find that a surprising number of people are doing work in this category; because it tends to be full of quick, easy and repetitive tasks so that it can appear that you've got through a lot of work, unfortunately they are of little value. You should avoid these type of tasks at all costs as they are time wasters.

Of the two right hand boxes the Urgent but not Important quadrant is where we spend too much of our time. We tend to assume that if something is urgent it is naturally important. This is not the case. You should try asking yourself “what are the consequences if I don’t do this”? In a surprising number of cases the answer is not much. If that’s your conclusion then focus on tasks that are really important.

The Important but not Urgent category, is by contrast, where we spend less time than we should. A typical example is creating a strategic plan or a marketing or business plan. Yes it’s important but somehow we never get around to it soon enough because it is rarely urgent, and so we fill our time up will urgent tasks instead.

I have had many clients who have found that using this analysis before launching into their activities has transformed the effectiveness of their effort enabling them to make a much stronger contribution to the business by focusing on what is really important rather an what is urgent.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Tuesday 26 June 2012

Do You Get Business From Social Networking?

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Back in January of 2011 I released the figures from a poll which asked users a simple question; Do you get business from social networking? The figures were interesting. The biggest category was those who would like to get business from social networking but had not some 43% of all respondents. At the beginning of this year I thought it would be the right time to see what if anything had changed. Like my 2011 survey I put it out through a number of social networking channels, including my blog, a survey on Linked In in some of the bigger groups in which I was a member, and I regularly asked for responses via Twitter and Facebook updates. I've ended up with a similar number of responses about 200 which in itself is interesting as my own social media footprint is substantially larger now than it was in 2011 when I first ran it.

What struck me was how similar the results were only now it seems its even harder to make Social Networking pay with 50% of respondents saying that "no they had not yet got any business from social networking although they would like to do so".

It seems that even the must use channels take a lot more effort and a lot more time than people realise to generate business. I recognise that the sample is small and potentially unreliable. I would argue that, if anything, my results are biased toward the social media world because that was the community into which I put the survey.

Let me have your comments.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Monday 28 May 2012

How Not to Lose Money on Fixed Price Work

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Fixed price work seem to be a problem for many of you. In recent discussions with a variety of professional services businesses, ranging from accountants, through consultants, to IT businesses it is clear that for you fixed price work is rarely profitable, and often a source of problems and most times a situation where you lose money. Yet despite this you seem to ignore your experiences and through gritted teeth continue to offer fixed priced work to clients.

Fixed Price tariffs: are they still a good deal?
Fixed Price tariffs: are they still a good deal? (Photo credit: uSwitch)
Lets be honest fixed price work is very appealing to your clients and prospects; it gives them confidence because they get a firm price for delivery of a project (web site) (IT system) or a combination of services ( accountants, consultants). So why is it so easy to lose money on this type of work? Simply as a result of three problems, first most businesses and especially professional services businesses aren't sufficiently detailed in their analysis of what work needs to be done, secondly as a result of poor communication and management of client expectations and last a lack of commercial awareness. Following a few simple steps you can turn these troublesome children which lose money into profitable business with happy clients.

The first problem is is not having a handle on the amount of effort involved in providing the service you are offering. This is often the root cause of you losing money fixed price work. Why? because you tend to be too optimistic about how long it will actually take to complete the work. Also as there is no clarity on what effort it will take because there is no detailed scope work. Not doing this basic estimating first creates a problem for you because you cant clearly define the limits of what you will do for the price and as a result your customer can drag you into doing much more work than you expected but all within the original quote for the fixed price work.

The second problem comes from that dangerous word "assume". That is you assume that your customer understands the basis on which you are quoting and how much effort you are going to put into your fixed price work. Your customer by contrast assumes that you can read his mind and understands his assumptions, which of course only come to light when you think you've finished the work and he thinks there is a lot more for you to do. So stop putting yourself in a position to lose money by writing down exactly what you will do and to what level of detail. This is a particular problem if you are a professional services business because it is very rare for you to consider the depth to which you will undertake a service rather just saying it will be addressed. So don't assume anything, let you client or prospect know IN WRITING clearly and up front what you will be doing and in how much detail . Then get them to sign that off. Once you've done this you have an agreed baseline.

The third problem is lack of commercial awareness. I'm surprised how many professional services companies for example will offer fixed price work more cheaply than you would charge on a time sheet basis. This makes no sense; ask yourself this. Who is taking the risk, well in fixed price work it is you! so you should be charging a premium not a discount. For many of the larger professional services businesses this would be anything from 15 to 33% depending on the level of risk. 

The other issue is stage payments. So many professional services businesses offer something like 50% up front and 50% on completion. Its great for you to get 50% up front but stupid to leave 50% of the fees on the table when you will have completed all the work. It is particularly bad because it puts you in a week negotiating position as when you get to the end you'll really want that 50% so you'll end up giving in to every little demand and variance your client wants to include and believe me with a commercially astute client there will be plenty of them. I suggest, actually i'd like to insist, instead that you ask for stage payments that give you 80-90% of your fixed fees before work is completed. For example 30% up front 30% when design or other milestone is agreed 30% on delivery of the work and 10% after acceptance or when the report etc is accepted.

Its easy not to lose money on fixed price work, you just need to be a little more organised in your approach to your prospects.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Thursday 26 April 2012

Healthy Culture Delivers Better Business Performance

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Business performance and culture have always been linked, although its tended to be anecdotal evidence rather than hard statistics. I myself as part of our High Growth Programme spend some time on the importance of understanding your culture and analysing if it is suitable and desirable for your business going forward. I wrote about these issues on using culture as a support to high growth and culture as a weapon for competitive advantage. Whilst there is little doubt the having the right culture is an important factor in improving your business performance it remains an area that most smaller business owners tend to avoid. It is fair to say that much of this is because business advice and support tends to look at the process driven solutions for business rather than addressing the more difficult area of people, their values and motivations. 

It has always been my contention that getting your organisational culture right will improve your competitive performance and support a company's high growth aspirations because they empower people to be courageous and offer sultions and challenge norms without fear of reprisals or blame. 

Up until now there has not been any hard numbers to support this view. However last June an article was published in McKinseys Quarterly which had actually put numbers to the importance of culture in business performance. As can be seen in the diagram above business performance addressing change plus a healthy culture outperformed poor cultures by as much as 2.2x. This is I expect the first of many such studies as the recognition thart culture plays an important part in supporting a companys success becomes a topic at the centre of a CEO's radar.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Wednesday 4 April 2012

Culture - Finding Out What You have

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Recently I wrote about the importance of culture in supporting high growth persistent businesses. I've had a couple of requests from business owners if there was somewhere they could get a sample list of questions which they could use as a starting point for a survey on culture. Not having found anything immediately available I put together a list of 20 sample questions that I thought might be useful.

The question on culture are as follows, fell free to use them as you wish. The most important factor to consider is that answers should be anonymous otherwise your employees will be too busy trying to second guess what they think the answer should be rather than what is the truth.

1. Is the pressure to perform unreasonable?

2. Are targets set by managers unreasonable?

3. Would you prefer to work for a fast moving innovative company or a slow moving cautious company?

4. Is it sometimes difficult to ask questions or raise concerns?

5. Are we a  quality company?

6. Is bad conduct rewarded, tolerated or punished?

7. Is there a close tie between performance and rewards?

8. Do employees consider that the company understands and sufficiently care about the needs of its customers?

9. Is the quality of products and/or services a high priority?

10. Are employees proud of our products and/or services?

11. Do we sell our products based on price or quality?

12. Would you get more criticism for violating an ethical principle than not meeting a deadline or target?

13. It is safe to voice your opinion…true or false?

14. The company turns a blind eye to unethical behaviour if it means getting a sale...true or false?

15. There is one code of ethics for everyone....true or false?

16. We are encouraged to admit mistakes and learn from them...true or false?

17. Are you asked to perform tasks that your mangers would not be prepared to do?

18. Do you ever feel let down by your colleagues?

19. Are your mangers supportive?

20. Which words do you think best describes the company culture as Open, Oppressive, a Meritocracy, Political, Supportive or other?... please specify.

Once you have this information you can follow the steps from my article Culture - getting the one you want on how you can implement changes.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business. 

Friday 23 March 2012

The Board Meeting How a Functioning Board Works

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Having recently written about the problems of dysfunctional board meetings it seemed logical to put together an article about what functioning board looks like. Without stating the obvious a functioning board meetings are the opposite of a dysfunctional board.

Lets remind ourselves that a board meeting is about strategy and policy its about looking out and forward. Operational management issues are kept for the management meeting. 

Typically a fully functioning company board will have developed a clear strategy for moving the business forward. Strategic planning will have been evidence based and discussed and agreed. This give the board meeting a common purpose and a framework and context in which to hold discussions.
English: Muhtar A. Kent, Chairman of the Board...
Image via Wikipedia

Attendees come fully prepared for the board meeting. This means that reports on topics of interest or key issues for the business will have been prepared and published in advance of the meeting ideally at least 48 hours before. This allows other board members to review the information prior to the board meeting. The benefit is that the discussions now focus around the issues rather than simply seeking information about the issue.

The board meeting will have a standing agenda, which typically includes a report from the Chief Executive and each functional executive director. Often fully functioning board meetings will have standing agenda issues to be reviewed on a semi annual or annual basis, for example salary policy, marketing plan, budgets, and health and safety. These agenda items support good governance of the business and keep the discussions at strategy level.

Clearly a strategy is nothing without implementation and a functioning company board will exhibit confidence in their management team and delegate implementation to them but with director oversight. 

It is importance that companies use board meetings as an opportunity to get an external view of their business; external advisers or non executive directors are a valuable addition. Their role is to provide knowledge of  the industry or extensive business knowledge that can be used to support or challenge the executive members of the company board. This kind of expertise is extremely valuable especially for owner managed business where there tends to be a shortage of trained management. It does not have to be a formal appointment it needs to be some who you trust and from who you would accept criticism. 

The key to a successful company board meeting is open discussion. This allows all issues to be aired and all proposals properly challenged.  In this environment healthy respect of each members position is vital. Board meetings work best when there is a consensus view of the actions going forward and to do this it requires open discussion.

Another obvious but often overlooked matter is the need for a minute taker at the board meeting who is tasked with publishing the minutes and actions arising from the meeting in good time. Normally less than a week after the meeting.

So to sum up board meetings should be about strategy and not operational matters. They should be open and drive actions for the rest of the business.

Exigent Consulting provides specialist services for High Growth Business Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.