…. Find it – Thomas Edison
The call for business to innovate, to improve is never ending, but what does it actually mean to the small and medium sized enterprise fighting to achieve the day-to-day objectives? What needs to be in place for innovation to happen?
Over the last few months I have realised my own need to “innovate” and have revisited the business proposition, what we offer and how it is communicated to our customers. I have engaged with a number of trusted colleagues, peers etc. and have asked them to help brainstorm ideas, challenge my thoughts and assumptions. The key word in the last sentence is trust. Without trust we could not have created the right atmosphere for us to collaborate in an open and honest process that, at times, was highly critical of my own performance (thanks guys). What became very clear is I / We needed to change.
Change is not just for changes sake. Innovation needs to be demand driven and our own need was driven not only by peer review but customer feedback, obtained throughout 2012. This has raised our understanding of the need to change until the point where it has now become an imperative.
Not that becoming an imperative means that something is naturally going to get done! Even the most progressive business recognised that innovation has many enemies. The three main ones are a) the pressure of day-to-day operations, the need to generate profit and fulfil customer expectations. b) The stress of not only implementing new ideas and fully imbedding them within the business, but also with dealing with the fallout that can result. Finally, c) market forces, which can change in an instant, throwing both the business and clients in another direction.
I recognise that to enable change and prepare for the obstacles in our path we need to properly plan our next steps. It’s going to be incremental, rather than a radical step-change, but it needs to be done. Over the next few weeks the plan will be reviewed, launched and I hope (budget willing) a revamped Gordian Solutions will start to appear.
For this blog I am grateful for the work done, researching Business Networking, by my good friend Liz Barnes http://uk.linkedin.com/in/lizzbarnes. This has formed the basis for my approach to this post, plus some extra observations of my own.
When I talk to start-up businesses there is often some reticence when it comes to Networking. Many people assume it is directly linked to selling, which it is not. Nor do they recognise that we have all networked from an early age. For example when forming friendships at school or later, when we are trying to form more “adult” relationships.
OK if Business Networking is not selling what is it? It’s not blowing your own trumpet either, nor just making superficial relationships or putting people on the spot. It is about establishing a mutually beneficial relationship with other business people and / or potential clients – over time. People buy from people and businesses they trust and this does not come from a cursory meeting or having a card thrust into their hand. This comes from regular contact that allows trust to develop. Often social trust is required before business trust can be established.
Word of mouth referrals are the strongest source of advice to potential buyers and I take the view that at any one networking meeting you are unlikely to find a client but in time and with regular attendance you will be able to build a formidable sales force. If you regularly network 40 people, who all know another 40 business people, then you are reaching out to 1,600 potential clients.
When attending your chosen Networking event, take an interest in the people you meet. Engage in the conversations; get them to talk about themselves and their organisations. People like talking about themselves and if you can make them feel good in your presence, so much the better. Don’t forget the little things, such as maintaining eye contact and adopting an open body posture. When I am invited to talk about myself I explain what Gordian Solutions can do for clients and what benefits we bring to clients.
Finally, don’t forget to follow up. If someone is of particular interest then after the meeting I will contact them and try to arrange to meet up for coffee, to continue the conversation. Or invite them to join up with you on LinkedIn. This gives you the opportunity to build on the initial contact and deepen the relationship.
Over time your networking will work for you, just trust the process. Just don’t ask when it will happen.
It has been a while since our last blog and now the business community has returned from enjoying the wonderful summer of UK sport, we have been developing the Gordian Solutions business presence through the various networking opportunities in our local area (Sussex) and further afield.
These days there are a huge number of opportunities to interact with the business community, face-to-face. Via breakfast meetings, lunch clubs, evening events, local business chambers, professional bodies and higher educational establishments, trade shows etc. Some are structured and may involve a keynote speaker, others are more informal. It’s impossible to attend them all, but just how effective are you in choosing the right ones to attend?
Before you start it is best to sit back and think about what you are trying to achieve by attending a particular networking event. It can be difficult to be prescriptive, does the event attract potential clients and even more importantly, does it attract those business people who already interact with your ideal or target clients? Are the attendees likely to be the key decision makers or someone whose recommendation (of your business) is likely to carry weight?
I recommend researching your chosen meeting before you attend. Speak to other business people who have attended and find out their thoughts? Check the website, see if there is an attendee list, maybe call the organiser and try to make sure your time attending is well spent. I ask exiting clients (the most profitable) where they network?
Our view of networking is that it’s predominately about building long-term business relationships. These are not created overnight, or through just one meeting at a networking event. Good relationships take time and people often need to trust someone socially before they can entertain them professionally and buy from them or recommend them to others. Can you attend that networking meeting regularly and is it even held sufficiently regularly to allow relationships to form?
In the next blog we will look at how to make the most from attending a networking event.
What key indicators do you use to measure how well your business is doing? Are they the right measures, the right Key Performance Indicators (KPI’s) to highlight the health of your company?
We use KPI’s in every area of our life, from the weighing scales in the bathroom, probe thermometers in the kitchen to the dashboard in our car. We use them to ensure we end up at the right place at the right time and with the right outcome, minimising the possibility of failure.
A lot of managers in businesses I see are not that robust in measuring how their business is performing. They may use management accounts or look at the cash in the bank. Others may use a sales chart, but these are the outcomes of decisions made months or years before, they are not an indicator of future performance. They lag behind what is happening now.
A true picture needs to be a combination of both leading and lagging measures. By leading measures, I suggest indicators of what customers think about the business, its products, service quality, and how likely they are to buy again in the future. How you stand in their estimation against your competitors. Another good measure to determine the health of your business is to look at your staff and their satisfaction and personal development.
Choosing the right measures for your company and how you use them does depend on where you want your business to take you. If you are clear on goals and objectives, the strategy, it is easier to find the required measures and what levels / benchmarks you need to meet.
There are a range of management tools that can be used to help. The one I use most frequently is the Balanced Scorecard, used by many leading companies across the world.
For a business to try and operate without the right measures, to steer it in the right direction, invites failure. It is akin to night driving without lights!
About two months ago I was sitting down with the owner of a small (and profitable) business on the south coast of England, helping her recognise the number of opportunities she has to grow her business into something substantially bigger and more robust. The direction for the business seemed clear and the actions to be taken were listed in front of us. Yet, every time we tried to identify an owner and deadline for the major tasks, there was hesitancy, an unwillingness to commit. She admitted that moving forward would take her out of her comfort zone and she was having second thoughts.
Growing a business has many obvious benefits, but it can also completely change the dynamics of a company. Start-ups are often begun by people with a passion for creating a product or delivering a service. It is in the creation and the delivery that they are identified, often by themselves. Growth can make it difficult for them to remain hands on and they may question whether they have the necessary skills to manage a larger business, or really want to.
The task of recruiting (good) staff, managing them, introducing the proper processes and procedures, moving premises, raising finance and increasing turnover to pay for it all can appear to be extremely daunting, unless it has been part of the plan all along. Often it has not and owners / managers can find themselves being overtaken by events and forced into taking decisions without proper consideration.
As part of the business planning process, companies should look at the impact of growth. Too often the only consideration is what it does to the P&L and not to the people, including management. By looking at all aspects of the business and imagining how things might turn out management can see the impact of growth, the resources that need to be obtained and the skills and processes required. Actions can be taken at an early stage and help and support mobilised.
A successful business does not operate in a vacuum and it does surprise me how often business owners and senior managers cannot provide up to date information about their own market, the companies operating in it and their key competitors. Even more surprising is how many of them do not fully recognise the risk this lack of knowledge poses to the financial health of their business.
When the Duke of Wellington, who was never defeated, was asked for the secret of his success he replied that “It was knowing what was going on the other side of the hill better than most men”.
Even the most successful business should be aware of what their competitors are doing. If you are making money, somebody will want to replicate your success or steal away your customers. If not, then who is making money and what are they doing to be successful? A superior knowledge of your competitors can provide your business with the opportunity to claim a clear competitive advantage, by identifying their strengths and weaknesses and then by taking actions to exploit this knowledge.
So do you know your key competitors, I mean really know? Who in your business is responsible for collecting and collating all the information you need to keep ahead? In my experience all the information is usually there, but fragments are often held by individuals and not collected in one place, where a clear picture can be drawn.
Start by drawing up a table, listing your main competitors across the top. Down the side list the key elements of your product or service that customers appreciate. These might be price, quality, customer service, financing, flexibility etc. Then fill in the table by comparing prices, getting feedback from your customers and suppliers, talking to your own staff – especially if they have previously worked for a competitor – not forgetting internet and media research. Eventually, you will have a completed table that allows a proper comparison to be made and for you to see if there is a proper competitive advantage in place.
But this is just the start.
This was the title of a report commissioned nationally by Business Link back in 2002. Questioning 1,002 small and medium sized businesses nationwide, it showed companies employing up to 250 staff that seek and use business advice typically make double the profits of those that don’t; but that most SME companies shunned experts.
There is no reason to suppose that that this has changed substantially over the last ten years – so does that mean that your business is missing out on potential benefits? This has obvious implications for the long term prospects of individual companies as well as the wider economy.
Back in 2002 the report showed that companies who remain open-minded about business advice get the best results. High-growth “entrepreneurial” businesses were the most likely to seek out strategic advice, with the 60% doing so reporting typical growth rates of 36% compared to the (then) average company growth of just 6%.
Of course many businesses that don’t take advice believe that they don’t need it. The report back in 2002 challenged this inertia and it would have been good to have an updated piece of work to see if attitudes had changed. However, no follow-up report was produced before the plug was pulled on Business Link.
Expense if often quoted as a reason for not taking advice, but the report back in 2002 suggested this could be a false economy. Back then, businesses that did take advice typically spent £4,200 a year on it and valued the resultant gross profit at £80,000 – a return of nearly 2000%.
If you want to know more about the kinds of business advice available to you and how it could deliver a clear and substantial payback to your company, please feel free to contact us for a phone chat or to arrange a meet for coffee, at no cost or obligation.
To exploit the opportunities raised by interesting times, the business needs to be in the right shape and have the right people on board. Have you?
Take a look at the processes operating in the business and ask the question “are they still fit for purpose”, do they stand up against the best of your competitors? It’s a good time to get rid of unnecessary operations and unnecessary costs. Take a long hard look (or get someone else to take a long hard look) at where your money is being spent and whether better deals can be negotiated with existing suppliers or cheaper alternatives identified.
When effecting change remember to engage with your staff. Decisions are easier to implement if people can understand the why and see the benefits.
Invest in the business by taking the opportunity to increase the knowledge within it. Slow economic times increase the availability of good people – actively look for them and recruit the best. Look to increase training for the current staff, it may hurt in the short-term, cost wise, but suppliers can have their arms twisted and the time taken has less of an impact on your business. Be ready for the good times, not be exposed by them.
If there are members of staff who are not contributing, then move them on. This cannot be a knee-jerk response, it is something that needs to be planned and you should have the processes and support in place to effect the changes and deal with any fall out.
Finally, “Interesting times” can be good times to identify opportunities. Be alert for competitors looking to sell or exit a market, potential customers may be more willing to receive your approaches. There are often bargains just waiting for you.
Goes the old Chinese curse and whatever we think of the world, these are interesting times for business. So what can you do to keep your firm strong enough to see off the lean times and ready to seize the opportunities that are out there, both now and when the economy picks up?
First of all make sure you are going in the right direction? Be clear on what the business needs to do and lay down the specific goals and objectives to be achieved for the business to survive and thrive. The more clearly you know what needs to be done (and why) the less chance you end up wasting time and treasure.
Take the opportunity to stand back and have a look at your customers. Who are the profitable ones and do they still love you? Just as importantly, reassure yourself that they will be around to place future orders. Try not to waste resources on customers where you don’t make money, cut them adrift.
Double check your competitors have not found the recipe for success. If they have, copy it and if they have not, keep looking.
If the money does not appear to be in your usual market, find out where it is. The UK may be bumping along between stagnation and recession, but elsewhere in the world things are booming. The Emirate of Qatar has plans to spend $125bn over the next five years and elsewhere China and India continue to grow rapidly, it’s a globalised word and you can be part of it.
Stand out from the crowd. Raising your business profile has been made easier and a lot less expensive thanks to social media. Exploit the opportunities presented by Facebook, Twitter, LinkedIn and the rest. If you are not doing it, your competitors will be.
One of my first assignments was working with a printing business, based on the south coast of England. The directors had requested a business health check report to be used in promoting the sale of their business. They were confident there were no issues to be addressed.
Within twenty minutes of starting my structured questionnaire we had discovered that Pareto’s Law was alive and well in this business. There were about 25-30 sizable customers, but only five of them supplied over 80% of the turnover. I asked about contracts being in place. There were none!
It appeared the relationships with those five customers were solely based on personal relationships, developed over the years, between my clients, the Managing Director and his Finance Director (the wife) and key individuals from the customers. Everything was done on a handshake and a promise. To make matters worse, there was no evidence that any other members of staff had ever dealt with these key accounts.
A valuation for the business had been made by their accountants and was based on current profitability and both Principals were looking forward to receiving this sum and enjoying a retirement in warmer climes.
At the end of my review, the main conclusion was the business had a high degree of risk and, in my opinion; there was no possibility of selling it for the current valuation. Who would buy the company when there was no secure pipeline of new business? Remove the Principals and there was no business!
OK someone might be prepared to buy, but surely would need to tie down the management with some form of “golden handcuffs”.
Unsurprisingly the review was not included in the sale document. However, it was a surprise to me that the business was sold within a year and with the key players exiting the business.
Two years later the business ceased to exist.