Monday, June 17, 2013
Wednesday, December 7, 2011
All businesses lose some customers through no fault of their own. Customers move, retire, die, etc. You need new customers just to stay even. Therefore, no matter how good your business is today, you need to be always trying to acquire new customers. There is a right way to attract new customers and a wrong way.
The biggest mistake I see businesses making when trying to attract new customers is making a special offer to "New Customers Only." I have seen ads that offer special discounts to new customers, extra free services to new customers, etc. How do you think that makes the existing customers feel?
If I have been a loyal customer to a bank for 10 years and I see an offer for a higher CD interest rate to new customers, how am I going to feel? If I have been a loyal customer to an auto repair business for 10 years and I see an offer of a free oil change to new customers, how am I going to feel? If I have been a loyal customer to a CPA for 10 years and I see a special discount for tax returns preparation to new customers, how am I going to feel?
When customers have been loyal to a business, they deserve the special treatment. First, they feel they should be rewarded for their loyalty. Secondly, as a business owner, you know that you have had a loyal customer. The new customer who comes in for the free oil change may never come back again. Do you want to risk making a loyal, long-time customer unhappy for the chance (and it is only a chance) of getting a new customer?
My advice is to always take care of the known factors first. Take care of those who have been taking care of you. It takes a great deal of good business practices to keep a customer for many years. Don't let all that hard work and effort go "down the drain" on the chance you may get a new customer.
If you want to offer something special, offer existing customers an incentive to refer new customers. That is much more of a win-win situation.
Remember the old saying, "A bird in the hand is worth two in the bush."
Tuesday, August 23, 2011
"What is the best use of my time right now?" Those are the words that I had framed and placed on a wall in my office many years ago. They are powerful words. It is an important question - one that business people should be asking themselves numerous times throughout their day. Am I using my time wisely?
I believe there are two main factors to consider when answering that question. The first involves your focus. Do you - and your employees - spend your time focused on what has the greatest long term effect on the bottom line? Business owners need to focus on the revenue stream. An associate of mine owns a business that publishes a specialized newspaper. When you ask him what business he is in he will say, "I am in the business of selling advertising." He often says that it does not matter how good his publication is if he can't sell advertising. He can have the greatest publication in the country but if he does not sell advertising he will be out of business. I am not saying that he does not want to produce a good newspaper - he does. He has an excellent publication. But it is the advertising that keeps him in business. What do you think the best use of his time is?
The second factor is the direct trade-off between performing a function which can EARN money for your business versus a function that can SAVE money for your business. Let's start by looking at an extreme situation. If you are a professional baseball player for the New York Yankees, would you be smarter to stay home on Sunday to cut your grass so you do not have to pay the landscaper $100 or are you better off to play in the baseball game and earn the salary that a player makes for one game? The answer is obvious.
Many business owners are so concerned about not paying for a service that they do the work themselves. By performing the service themselves, they miss the opportunity to earn two, five or ten times as much money by making a sale. Often, I hear the excuse that they are doing "paperwork at a time when they could not be meeting with a customer anyway." But the question is still the same, "What is the best use of their time?" Maybe they should be writing or revising their marketing plan. Maybe they could be rehearsing their next sales call. Maybe they could be planning product improvements. Maybe they could be analyzing the competition. The answer to the question is "Perform the function that will produce the best long term results to the bottom line.
Sometimes the business owner spends time supervising a function rather than doing it herself. She has hired someone else to do it. The same analysis is required. Is she better off out-sourcing that function so she does not need to spend time supervising it or dealing with its problems? Even though the out-sourcing may cost more than hiring someone, the business owner must consider her time supervising that function as well as the other resources that the functions consume from the business.
As much as we want to take pride in what we produce and as much as we dislike paying others, we need to realize what adds to the bottom line. Many people believe that Studebaker made a fine quality automobile. Have you driven a Studebaker lately?
What is the best use of YOUR time RIGHT NOW?
Thursday, August 11, 2011
Most people only think about their health when they are sick. Fortunately, some of us are now beginning to learn to think about living a healthy lifestyle so we do not get sick. My message to you is that the wellness theory that applies to our personal health also applies to our business health.
As a business consultant, I get the vast majority of calls from clients when their business is sick. My phones rings when their sales are down, when their costs are too high, when their employees are not performing, etc. etc. etc. In some cases they call me when it is too late. I have had the misfortune of having to tell clients that it is too late for me or anyone else to help them. It is time for them to close their doors for good.
My advice to you is this. Just as it is important for you to live a healthy life style and to see the doctor for your annual physical BEFORE you are sick, the same is true for your business. The best time to call me (or anyone else for help) is BEFORE your troubles begin. We can look at what needs to be done to keep your sales from going down or your costs from going up. We can develop programs to keep good employees and to keep them motivated. We can do the things necessary to grow your business.
My business has increased significantly since the recession started. Why? Because when times were good, everyone was happy. No one was concerned about the health of their business. They were playing golf, fishing, and on vacation. No one felt that they needed any help. My, how times have changed.
Not only are times of prosperity the best time to prevent problems, but it is also the least expensive time to get help. Just as it is less expensive to pay an attorney to review a contract before you sign it rather than pay him or her to try to get you out of a bad contract, it is also cheaper to pay a consultant to review your business practices when times are good than to pay him or her to try to dig you out of a hole. And of course, when times are bad, there is always the issue of even having enough money to pay for help.
Don't wait until it is too late. Keep yourself and your business as healthy as you can.
Saturday, June 18, 2011
Business owners get many surprises. In my experience, the two biggest surprises - and the ones that hurt them the most personally – are (1) employee embezzlement, and (2) the employee who becomes the competitor. This posting is about the second item – the employee who becomes your competitor.
Have you ever noticed how businesses that are in the same industry seem to be in the same geographic location? Why does “Silicone Valley” exist? Why are all of these businesses in the same geographic location? The answer is quite simple. Employees leave their employer and start their own business “down the street.”
Here is the typical scenario. An employee sees the success of the owner. The employee has worked at the company for several years. She knows the product or service and the industry well. She wants to stop making the boss wealthy and start making herself wealthy. In many cases she feels she “runs the company” because the boss is always golfing or on vacation. One day she walks into your office and says, “I am giving my x days notice. I am starting my own business.” You can’t believe what she just said. She has worked for you for ten years. She has been to your children’s birthday parties and graduations. Now she is telling you that she is going to try to take business away from you? How can she possibly do this to you?
If you are a business owner and this has not happened to you yet, be prepared. It may. Although you can’t stop this from happening, you can make sure you have taken the necessary steps to minimize the effect.
First, make sure you do not lose contact with your customers. I am NOT saying that you should be the only one that talks to your customers. There is a fine line between keeping contact so they do not follow your employee to a new business and having the customer so dependent on you that you will never be able to sell your business. Encourage your customers to deal with your employees but never let then forget who you are. Have lunch with them. Play golf with them. Take them to the baseball game. In other words, socialize with them but let them place their orders through your employees.
Second, know what to say to your customers. Have a plan in place so you are not "on the defensive" and not acting on emotion. In many cases, the ex-employee has started working on his new business BEFORE he gave you notice. In addition, he probably contacted your customers and told them what his plans were in hopes they would become his customer when he opened his new business. The sooner you contact them the better. Do NOT say bad things about your ex-employee. Always talk about the positives of YOUR business.
Third, be prepared to compete. In my experience, the first thing that the employee says when he leaves and starts his business is, "I can do it just as well and SELL FOR LESS." Of course, competing on price is a mistake. In addition, chances are very good that the ex-employee has no idea what his costs will be. Nevertheless, he will sell for less. If you don't want to reduce prices (and you shouldn't), be prepared to let your customers know why they should continue buying from you at the higher price. You need to let them know why your product or service is worth the price.
Some business owners think that because their emloyees have signed non-compete agreements that this can never happen to them. I STRONGLY advise you to consult your attorney about any non-compete agreement. Many do not hold up in court.
You may never have an employee leave and become a competitor - but you do need to be prepared if it does happen.
Sunday, May 15, 2011
Can you change? You know your ideas are right. You believe in them. You just know they will work - someday. You just have to fine-tune them - bigger, faster, more, less, smaller - whatever it takes to make those ideas work.
The real truth is none of us have the correct answer for every situation. Unfortunately, we have developed what we believe to be the best solution and we keep using it over and over again. Even when it has never worked. Because we have been correct on many other matters, we feel we just have to be correct on this one as well.
It is difficult to swallow our pride and admit that maybe this time - maybe on this issue - maybe on this employee - maybe on this vendor - or whatever the situation is - maybe this time we are WRONG.
So what should we do? I believe there are five important steps. First, just as an alcoholic must admit that he/she is an alcoholic before he can solve the problem, the business person must do the same. Admit your idea or method is wrong. Say it a few times out loud. "I AM WRONG." Write it a few times. Make sure you believe and understand that you made a mistake. It does not make you a failure. Not even the greatest hitter in basball got a hit every time he went to bat. No quarterback completes 100% of his passes.
Second, review your objective. Make sure it is what you really want to achieve. Don't try to fool yourself. Do you really want to increase your sales force or does more sales people mean more headaches for you? Do you really want to open another office or does that mean you will have to travel more? Do you really want to expand your product line or does that mean more manufacturing problems that will keep you awake at night? BE HONEST WITH YOURSELF.
Third, develop the new method, process, solution or whatever you want to try. GET HELP if you need it. After all, if your last attempt was not successful, maybe you lack knowledge or skill in this particular area. It is not a sign of weakness or failure to get help.
Fourth, make sure everyone involved knows what the objective is, knows how to execute their tasks, and understand their responsibilities. Train, train and train some more. No team wins the championship without good coaching and plenty of practice. Finally, make sure everyone knows the consequences of not performing their tasks properly. If the team gets a trophy and bonus for coming in last, there is no incentive to come in first.
Changing a process or idea that you have believed in (and probably developed) is not easy. You need to leave your comfort zone. If you want to be successful, it is something you must do.
Tuesday, April 5, 2011
In December of 2008, I posted an article discussing the importance of being prepared for change. In that posting, one of the questions I asked was, "What will replace the TV remote control in five years?" Well, here we are two years later and we can change channels on our TV using our smart phone or IPad. If you manufactured or sold TV remote controls, would you have been ready for the change?
I remind clients constantly of the need to be prepared for changes in their markets. I am not saying that every market will go away, but during my 41 years of business experience I have seen some markets disappear and some significantly decrease in size.
There are business owners who say they are not worried because they do not sell a high-tech product. You need to keep two factors in mind. First, technology is not the only factor that makes a market shrink or disappear. Changes in lifestyle, trends, demographics and government regulations are just some of the other factors. Men buy fewer suits and sport coats today because dress is more casual than it used to be. Country clubs and fine dining restaurants are going out of business because of changing lifestyles.
Secondly, some products which were never associated with technology in the past, suddenly become part of the technological age. For example, until the early 1990s the words "golf equipment" and "technology" were never used in the same sentence. For many years, golf clubs and golf balls remained the same. Now, we use technology to change many factors of the design of golf equipment to make the game easier for both the pros and the amateurs.
Here are a few questions you should ask yourself so you can be prepared: