In a recent conversation I was having with a fairly successful business owner, we started talking about some of the goals he had for himself and his business when he first started and how they compared to his goals today.
As we discussed how his thinking had evolved in the 10 years he had been in business, we realized that as he had achieved one measure of success, time had also taught him to compromise on his bigger goals and ambitions. He felt comfortable where he was in his business and was loathe to overextend himself or his business to drive further growth. How many of us reach that plateau in life and in business?
We convince ourselves that what we have is good enough and there really is no point in trying to relive our dreams. Those dreams were of a forgotten youth when we didn’t understand how the world worked. The passion, energy and drive that first got us started in business and saw us claim success after success seem to be a thing of the past and long forgotten. What happens when you face the truth about what your business could really achieve if you started rebuilding it with the same passion, energy and drive that you first had. Only this time you also add to it the years of experience and best practice you have accumulated and the strategies that have worked for thousands of other businesses across the world?
In The Matrix, Neo (Keanu Reeves) is introduced to a mysterious man named Morpheus. Morpheus talks about the Matrix and the truth that Neo is just a small part of the Matrix and one of the Matrix’s “slaves”.
Morpheus then presents Neo with 2 pills, a blue pill and a red pill, and explains a choice to Neo: “This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland, and I show you how deep the rabbit hole goes. Remember, all I’m offering is the truth – nothing more.”
So the question for the business owner/ entrepreneur is whether reality, truth, is worth pursuing. The blue pill will leave us as we are, in a life consisting of habit, of things we believe we know. We are comfortable, we do not need truth to live. The red pill symbolises passion and drive along with risk and questioning the status quo. It forces us to ask ‘What if?’ and ‘Why?’ Asking these questions ultimately leads us to a choice. Do you continue to ask and investigate, or do you stop and never ask again? Neo chooses the red pill. Which one would you choose? Click on the red pill to get in touch with us for a complimentary strategic review of your business.
In 1996, a 20 year old Tiger Woods was named Sports Illustrated‘s sportsman of the year and the PGA Tour Rookie of the Year. In 1997, he won his first Masters with a massive 12 stroke victory at Augusta, becoming the tournament’s youngest ever winner. Then he changed his swing!
He called in Harmon, his coach, and told him that his swing was too reliant on timing. “Anybody can time their swing for a week, but I want to do this for a career,” he said.
Tiger wanted to build a system which would work under the extreme pressures of a world championship. “When the pressure’s on, good mechanics will overcome nervousness. At the same time, the guy who has good mechanics will get less nervous because he knows the other guys will break down first.”
Throughout 1998, Tiger Woods struggled and won only once. Still he stood by the new swing he was learning and practicing. At the Byron Nelson in 1999, Woods famously signalled what was to come with a phone call to Harmon from the range. “I got it,” he said.
Between 2000 and 2002, Woods won 19 times on the PGA Tour, with six majors, including a stretch where he won four majors in a row; the so-called “Tiger Slam.” Golfers today often talk about Woods’ Harmon swing as one of the greatest swings in the history of the game.
There are several ideas in the above story that apply to businesses. Here’re some that stand out:
Critically examine your success
Ask yourself what really has made your business successful. Often, business owners tend to look for reasons for whenever they fail and spend an incredible amount of time identifying the things that the business should not be doing. When things work however, they peg it down to their superb sales/ entrepreneurship/ creative skills. You need to constantly ask yourself what the actual reasons for your success are and how easy they are to replicate.
No business is immune to change. For a business’s long-term survival it is important to take a step back and re-evaluate how you deliver your core product/ service and message.
You can either reach acceptance through the cycle – Denial, Anger, Bargaining, Depression, Acceptance – or simply start there. Accountancy as a profession changed relatively little until the introduction of computers. Now as cloud based finance systems revolutionise the market, the profession is throwing up massive opportunities for those willing to embrace change.
Plan for change
The first step is to recognise the need for constant change. Every year, if not every quarter, set aside at least a few hours to analyse your business and the potential and likelihood for change. One of the oldest and most established tools for doing this is a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Look at what your customers and competitors are saying and doing. Ask your suppliers for input. You’ll be surprised how much competitive information they would have. Go online to research what people are saying about products and services similar to yours. When was the last time you googled for ‘I need a [your product]’?
Create a specific plan of action to implement the change. Remember that people rarely like the the idea of change, so there will always be a lot of pressure to keep things as they are and hope for the best.
Stick to the Plan
Often in every process of change, there is a dip before the really steep climb begins – in profits and in motivation levels. Remember that failure and success are not on two ends of a scale – they are at the same end of the scale – failure is right before success. The successful businesses are those that exhibit ‘grit’ in their pursuit of their goals.
Play for the long term
Pick the top things that you believe have worked for your business since inception, or for the last 20 years. Then list 3 reasons that threaten each of these things not working in the next 3 years. Build your business with the end in mind – robust systems and a good team should be running the business when you are ready to retire/ move on. If you are the majority of the strength that keeps your business alive, you need to rethink your business swing!
Seek Best Practice
Often, business owners are so ingrained in their day-to-day, that they miss out the forest for the trees. The complimentary strategic business review we offer is to help you take a step away and look at your business alongside a business coach to identify areas and strategies where you can start the process of small and massive improvements. Drop us a line and someone from the team will get in touch to schedule this with you. Change your swing, then do it again!
I went into a McDonald’s yesterday and said, ‘I’d like some fries.’ The girl at the counter said, ‘Would you like some fries with that?’
As I was presenting at The Business Show last week, I delved once again into how small businesses consistently ignore the most obvious and best strategies out there to increase their sales massively.
One of the 5 Ways, working on increasing the Average £ Value, is used by almost every large company and yet small businesses consistently turn a blind eye towards these strategies. Two of the most popular strategies to increase Average £ Value are Up selling and Cross selling.
Upselling is suggesting your customer buys the more expensive model of the same product or service; or that they add a feature that would make it more expensive. With upsell you’re suggesting they pay more in exchange for a better product or service. Examples of this would be the customer buying a 42” TV instead of a 40”, or buying a branded product instead of an unbranded one.
Cross selling is when you suggest your customer buys additional products or services from a category that is different to the product or service they are purchasing. Examples of this would be buying a DVD player to go with a TV or paper to go with a printer.
Here’re a few quick tips on how you can start creating a system within your company to ensure cross selling and up selling opportunities are not being lost.
Perhaps the most important aspect of increasing average £ value is to have robust product knowledge with everyone who delivers the product. How is this product used? What would make it easier to use this product? What need are customers trying to fulfill by buying this product? This helps the sales person understand what products fit well with this product in the customers mind.
Price Vs Perceived Value
An up sell works best when the perceived value of the product being up-sold is significantly higher than the additional price that it commands. Remember, if the customer has already decided to buy a particular product, they have established an anchor for what they are willing to pay. Everything else is now going to be compared to this anchor price. Selling a £40,000 car to someone who has just test driven a £15,000 car may not work whereas presenting a £16,500 car which is a sports model of the £15,000 car may just do the trick.
What has the customer bought?
It’s important to understand specifically what the customer has agreed to buy. What are the key features of the product that really convinced the customer? When trying to up sell, it is critical to maintain these key features. The up sell should add other reasons to buy and not attempt to replace the current reasons to buy!
Make sure your team knows the key cross selling products
Some products work better than others for cross sell. Everyone in your business needs to know what the specific cross selling products associated with each product are. Think of your trip to the supermarket. You’ve done your shopping and you’re ready to complete your purchase and when you approach the payment aisle, you see chocolate bars, magazines, chewing gum, mints all lined up tempting you. Cutlery, flowers and frozen peas would hardly make you reach out at this point.
Cross-sell works better when the suggested items are half price or lower than the item being purchased. You’ll have more success convincing a customer to add a £400 DVD player to a £4,000 car, compared to trying to cross sell using an £2000 custom finish. Cross sell is also more effective when the original product is priced higher or requires more thought. Take a quick look at Amazon to see how intrinsic these strategies are to the way they do business. If you’re looking to buy a camera, you will be cross sold at every step of the process – ‘Frequently Bought Together’ and ‘Customers who bought this item also bought’ when you first look at the product, ‘Available Warranties for this item’ and ‘Make this a gift’ after you’ve chosen the product and ‘Amazon Prime’ or ‘Premium Delivery’ when you’re about to pay.
You may also be up sold through ‘More Buying Choices’ right at the beginning. Amazon reports that up to 30% – 40% of their sales come through cross selling and up selling! How much sale does your business generate through cross selling and up selling? Look at your own products and start to put these powerful average £ value strategies to work for you. If you’d like to bounce some of these ideas off me to make sure they will work, send me a mail with details of your product and the up sell/ cross sell strategy and I’d be happy to review it. One or our workshops later this month is also going to go into other strategies which form part of the 5 Ways that you can use to massively improve the profits of your business. Drop us a line to book your place.
We recently had a friend over for dinner and the conversation turned quite naturally to the Indian Premier League, the cricket league played out of India. He had been studiously avoiding watching any matches maintaining that the series was trivial from the perspective of cricket. Interestingly enough, he checked the scoreboard every day and knew which teams were doing well and in particular, how Eoin Morgan was faring.
I will not go into the long debate we had over how India had redefined cricket, but more interestingly from a business perspective, I wanted to marvel again at how much we take the scoreboard for granted in all sports and ignore it in the one sport where a lot of us spend a majority of our time – the sport of business!
Imagine two teams playing for the whole day with no scoreboard to keep track of who’s winning. At the end of the day, they’ll congratulate each other for a good game played and go home, then come back again the next day to repeat the show. After a week of doing this, how keen do you think the captain is going to be to keep motivating his team? How excited is the team going to be to get out of bed everyday and get to the field? Can you see the spectator stands in the second week? Are they bursting with people cheering the teams on?
As absurd as it may sound, this is how most business owners play their sport. And then they wonder why their team is not motivated, why the banks won’t lend to them and why customers are not flocking to their doorstep. Most will glance at their profit and sales figures at the time of the year when their accountant tells them they are legally obliged to do so. They will also keep an eye on their bank balance to make sure they can pay today’s bills and come back for another day of play. Is this really enough?
Many of the systems that are really required for a good business scoreboard don’t require anything other than simple personal discipline to test and measure, every day, every week and every month. It seems like a major undertaking at the start but like many tasks, when organised, established and routine it takes just a few minutes a day. This scoreboard once built, will give an instant perspective on your business’ performance for the previous week.
The content will vary from business to business, however typical content might be as follows for the past week:
How many Leads did you receive?
Where did they come from by source? (eg Referrals, Website, Telemarketing, Local Newspaper Advertisements)
How many Sales did you make? What was your Conversion Rate?
What was the Value of your Sales?
What was the Average Value per Transaction?
What were your Invoiced Sales?
What was your Gross Profit?
What were the Cash Receipts?
What was the Bank Balance at the close of the week?
How many Debtor and Creditor Days did you have at the close?
How many Direct Labour Hours were available for production or service delivery?
How many Direct Labour Hours were invoiced this week?
What is the Measure of Time Expected versus Time Taken on jobs and tasks?
What is the Percentage Right First Time?
What was the value of Wastage?
Most businesses can actually put a skeleton of a scoreboard together quite quickly and improve it as they go along.
If however, you need a template to get started, send me a mail back and I’ll send you one. The important thing to focus on when you have your scoreboard is a regular review to reflect on the wins, challenges and learning for the week. It makes sense to set time aside to do this at a regular time each week and compare the results with pre-set targets which are stretching yet achievable and realistic. Some of these might be “Key Performance Indicators” looking at activity, whereas some will be outcomes or “Key Results Indicators”. Some of these measure may be more complex that others but once these are captured, there will often be some obvious massive improvements which could be made to the business to improve the bottom line.
Whether there’s a need to focus on more sales activity, sales performance, more marketing effort, better cash collection systems, or operational efficiency, the old adage applies: “You can’t manage what you don’t measure.” Without a scoreboard, you are not really managing your business. My team is sitting down with a few business owners this month to do a complimentary strategic review of their business. If nothing else, this should give you a great head start to identifying and measuring the key indicators in your business and building your business scoreboard. If you are willing to spend around ninety minutes sitting down with us, working on your business, give us a call and we’ll schedule a convenient time.
“Because it’s there!” – George Mallory in response to the question “Why do you want to climb Mount Everest?”
Assume for a moment that you decide to climb Mount Everest. The first thing you would need to know is how high it is – 8,848 meters. This is usually where most people would give up the idea and get on with their daily lives. What if you knew the secret recipe to climb 8,848 meters. Would that help? Would it make the trip less difficult?
Now think about a ladder exactly 12.12 meters high. Do you think you could climb this? Could you climb this again tomorrow? How about everyday next week? next month? next year? With perhaps a bit of help from a friend or a coach, most people could do this.
Now consider this – If you climb this ladder every day for two years, at the end of the 2 years, you would have climbed exactly 8,848 metres, the height of the tallest mountain in the world. So what happened here? Did the height decrease? Did the secret recipe help? By breaking it into bit sized pieces, the unachievable even absurd target all of a sudden became quite achievable.
The only trick really then, is to set the goal and start putting a foot on the next leg of the ladder, consistently over two years. Knowing this neat little trick, however is only about 10% of the battle. There are scores of people who decide to stop at different levels of the mountain, either satisfied with the ‘progress’ they have made or giving up the battle all together. As a business coach, one of my primary responsibilities is to define alongside my clients their Mount Everest, break it down to 5 year, 3 year, 1 year and 90 day plans, and then work with them weekly to make sure we keep putting one step in front of the other.
Sometimes, when I sit down with a business owner, and help them define their BHAG, they think I’m being naive in my understanding of their industry, their competition, their products and services, their environment etc. etc. They are convinced that the audacious goal we are defining together is not possible. And often, they have 20+ years of industry experience to prove exactly that. I may not be an expert in every industry, but I most certainly know how to set aggressive goals and help business owners achieve them.
Of course, now you know the secret too. Usually, when broken down into bit sized goals, it is surprising what business owners can really achieve in their business if they are fully committed to their goal. If you are ready to sit down with me for a couple of hours to go over what is really possible in your business, from an informed outsider’s perspective, give me a call. It may be the best investment you ever made for your business. Massive success in your business is ‘there’. You just need to make a decision to go ‘there’.