How Do I Increase Sales In My Business?

Tuesday, November 15, 2011

That’s the number one question for many small and mid-sized business owners and executives.

A poll by the National Federation of Independent Business (NFIB) listing the issues showed that sales concerns have grown from less than 10% in 2000 to nearly 20% in 2010.

 

As you can see from the table above sales and taxes followed by regulation are the top concerns.

As the saying goes “the only things certain are death and taxes,” so spending excessive time and energy on things out of your direct control aren’t really productive.

So how can you gain market share and increase sales? First you have to come to grips with understanding the problem.

Sales in most every market is a zero sum game. There is a limited amount of revenue to be had in the market. When the economy is poor the amount of money available shrinks making it even more competitive. Increased sales in one company usually means loss of revenue somewhere else.

So how then do you increase sales? Give your customer a clear and compelling reason to buy. I ask my clients to answer a simple question, “with all of the goods and services available to your customers in your market why should I buy from you?”

 The answer to that question is your value proposition. In absence of a great answer to that question you are seen in the market as the same as everyone else. If you’re the same as everyone else you’re a commodity, and that means you eventually get forced to compete on price.

There are really only a few ways to increase sales in any economy, and they all center around giving your customers a reason to buy.

• Lowest price
• Best selection / inventory
• Fastest delivery
• Best perceived value for the money

Of these lowest price is usually a short-term advantage. Unless you are a major player in a market with high volumes, volume based buying power, and high efficiency this isn’t usually a good business model.

High inventory and selection are again tied to volume; inventory sitting in your distribution chain is cash tied up that could be used for something else.

That leaves best-perceived value. The fact is most businesses don’t sell on perceived value because they haven’t taken the time to define it, they don’t understand it, and their sales people don’t understand it, so how can their customers get it?

In absence of educating your customer base why buying from you is the best decision the discussion always gets back to price.

When demand is high companies can get by with a poor value proposition, but when the market demand falls off the weaker companies lose market share, and the companies perceived by their customer base as offering high value for the investment retain a larger piece of a smaller pie.

Change Management Starts With Changing How You Think.

Wednesday, November 9, 2011

About a year or so ago I wrote an article entitled the “Biggest Problems Facing Small Business Today”. Based on the number of downloads and visits to my blog it was of significant interest and must have resonated with many business leaders.

I have since revised my thinking somewhat. The biggest problem most business leaders face isn’t what they think it is.

I listed the top issues at that time as:

• Lack of a clear plan– the SBA says that over 50% of businesses that fail don’t have a plan. I can say from my 30 plus years of experience not only is that number conservative, but worst many businesses don’t know how to plan.
• Ineffective leadership – this issue takes many forms. In my experience it is frequently in the form of depth of leadership. The founder of the company is hands- on and effective but has little or no management depth behind him or her.
• Sales / marketing effectiveness- this leads back to planning and leadership. Part of the planning process should include a very clear answer to one simple question, “with all of the products and service available to my customers why should they buy from me?”

• Lack of execution- this may be the biggest of all. Research has shown and my own experience backs up the following facts:

• Over 90% of strategies that are developed are never executed. % of improvement initiatives fail.   85% of leaders spend less that 1-hour per month on strategy.
•  Over 90% of employees don’t know the company’s strategy. (This is a direct result of top management not documenting and communicating it)
• Well over 90% of organizations don’t have meaningful performance measurements in place.

I said at that time execution may be the biggest issue of all. I was right.

The biggest problem facing business of all sizes today is the inability to execute. The issues I listed can all be solved through planning and execution.

Numerous studies have noted the very weak relationship of strategy formulation to strategy execution. Fortune Magazine stated “Less than 10% of strategies effectively formulated are effectively executed.” Companies large and small worldwide spend billions of dollars each year on strategy formulation. A search of the World Wide Web using Google took less than 1/3 of a second to return more than 1.3 million hits on strategy consulting, ranging from the “Big 6” firms to boutique firms specializing in strategy. Interestingly, a similar search for strategy implementation consulting returned less than 500,000 hits. Even allowing for overlap this is a significant disconnect.

I did some research on execution independently, looking for tools and methodology that I could offer my clients to help them.

I have since expanded my practice to include a proven execution process and methodology. Success of any methodology begins with how leadership thinks about their business.

I have refined my focus to and philosophy to: Everything I do is to get business leaders to think differently so that they can create more and better options for their organizations and stakeholders.

Change management starts with changing how you think about and see your organization.

 

change management, effective leadership, effective strategy execution

 

The biggest problem facing your business may not be what you think it is.

 

How are jobs really created?

Wednesday, October 12, 2011

With all of the hype surrounding the stimulus packages and the estimates of cost starting at  $200,000 per job, I think it’s time we all understand where jobs are actually created.

First and foremost government doesn’t create anything. The simply fund projects paid for by taxpayers to ceate the illusion of employment. Most of these are short term and add little or no value to the economy.

So where are jobs created? In 2009, large corporations shed 700,000 jobs, small business employment was down 20% and startups because of their 50% failure rate inside of five years are a net zero.

According to studies done by the Small Buisiness Administration office of Advocacy, and a recent study by the Blueprint Growth Institue virtually all job creation in the past twenty years has come from “high Impact” firms.

High Imact firms are defined as:

• Those that double sales and employment in the most recent 4 year period.
• Are 25 years old on average, not startups in most cases.
• Represent less than 4% of all firms.
• Exist in all regions of the U.S. and in all indistries.
• Take about 20 years to reach high impact.
• In the 4 years after reaching high impact only about 4% “die.”

A ranking of all 50 states on the percentage of high impact firms as compared to all firms in the state has Tennessee ranked 25^th and Mississippi 47^th. South Carolina leads the southeast at 4^th overall.

Clearly the answer is find a way to create more of this level of growth from existing companies in the region. The term being used today is “economic gardening.”

Economic Development groups and business incubators focus on startups and attraction of companies from other locations. Toyota’s plant near Tupleo was a great boost for Northeast Mississippi, but net job creation for the country was zero because of the corresponding plant closure in Fresno, CA. The same can be said for Winchester in Lafayyette County, these jobs were relocated from Illinois.

There is no focused effort to grow existing companies with potential in this or any other region.

I’ve been fortunate to be able to receive the benefit of the study results from the Blueprint Growth Institute where they have identified 7 critical factors that growth companies employ. In fact they studied all companies that went public since 1980 and found that 100% of the companies that reached $1B in sales employed at least 5 of the 7 essentials.

They also found that the companies reached $1B in sales on 3 trajectory paths, 4, 6 or 12 years and 100% of the time these companies launched their growth trajectory from the level of $50M in sales.

Of all of the companies that went public since 1980 only 387 (4%) reached $1B in sales, and those 387 companies accounted for:

• 63% of employment
• 64% of total market value
• 72% of revenue and taxes paid

Our challenge is to grow more companies to the $50M level with the essentials built in to faciliate growth beyond that level.

There isn’t any secret forumla but there is a process that can be dulpicated.

Small business planning must include health care costs.

Tuesday, March 22, 2011

Based on what little is known about the new health care bill that was just passed it will have a huge effect on small to mid-sized businesses. One of the line items as reported in a summary by the Wall Street Journal is that in 2013 companies with over 50 employees must provide “affordable” health care or face a fine of $3,000 per employee. (Excluding the first 30 employees). It doesn’t state what “affordable” means.

In the same paragraph it states that the insurance industry must pay an annual fee of $8 billion starting in 2013 and rising in subsequent years.

I guess it’s lost on me how an industry can pay $8 billion in annual fees and still provide affordable insurance packages to small business.

I don’t know all of the intricacies of the proposed bill. I guess that makes me about as smart as the folks who passed it, they didn’t read it either. What I do know as a mid-sized company CEO for over 15 years affordable health coverage is in the eye of the beholder.

I cannot think of a single year where our health care costs were not increased to one of my companies. Every year we scrambled to try and balance plan benefits against rising costs while trying to keep employee contributions down.

Large corporations have bargaining power and volume, and are able to secure better pricing. The small and mid-sized business owner has no such advantage. While the new plan talks about Insurance exchanges to allow small business the opportunity to shop their coverage I don’t see that as any different than what they do currently. We had to shop our coverage every few years to keep costs in line.

The bottom line of all of this is costs for business will increase, and employers will take a harder look at hiring full time employees. Prudent companies will consider health care costs in their strategic planning process, deciding whether to make investments in automation vs. full time employees with an ever increasing cost base, It will make the playing field even more uneven with countries such as China where benefits and regulation are not a concern.

Health care reform is certainly needed. It’s unacceptable that so many Americans, especially the “working poor” as they are called, are without health care. The United States spends roughly twice as much as other developed countries on health care and millions are uncovered. There simply has to be a better way. But history has shown us that a government mandated and controlled program isn’t it.

One of the chief reasons why we spend so much on health care is the cost the insurance companies and health care companies absorb trying to deal with government bureaucracy. To see government health care effectiveness you don’t have to look any further than the VA and how our veterans are treated.

The full impact of this bill on business is unknown, even by those who passed it.

Invent your future with better strategic planning

Thursday, June 24, 2010

I read a quote somewhere a few years ago that really made me think. The author said “the future is an invention anyway, you might as well invent a good one”.

If you stop and think about it, it’s really, true the choices and decisions we make throughout life accumulate to determine where we are and what we’re doing.  How many times have you hard someone say, if we knew then what we know now.

Well what if we did know then?  What if you actually had a vision of where you wanted to be in five or ten years, and made decisions and choices based on attaining that vision? You really would be inventing your future. Many successful people employ goal setting as a regular part of their lives. Goal setting focused on a clear vision.

Most people just don’t do that. They spend more time and effort planning a two-week vacation than they do determining what they are going to do with their lives. You wouldn’t begin a road trip without a map, why would this be any different?

Many of us look back one day and realize life just happened and they are where they are by _______________. You fill in the blank, luck, fate, breaks, whatever word you choose.

Well experience has taught me that organizations function in much the same way. The choices and decisions they make everyday accumulate to determine where they are in their market, and how well they’re doing. If those decisions are made with reference to a clear vision and direction, they would find that they are indeed creating their own future.

Chapter two of my book, “Bottom Line Focus” is entitled “Start with the end in mind”. It’s aimed at helping organizations and leaders develop a better strategic planning process, drive execution, and ultimately produce better bottom line results. The point of the chapter is before you start a planning process, sit down with all of the stakeholder and determine exactly where it is you want to go.

I don’t mean some vague statement saying I want to double sales, or double margins, but a clear crisp vision of what your organization will look like in five years. What businesses will you be in, what market share, what your market differentiator will be. It should be clear enough you can articulate it to everyone. Next step is sharing it with stakeholders often.

Once everyone understands the vision clearly, all decisions, processes, incentives, investments and other resources should be aligned to attain that vision. It makes decisions easier by simply answering the questions does this take me closer or further from my vision.

If you think about it you are inventing your future. You are clarifying what you want, and taking measured steps to get there. Of course it takes a few other things like honestly and objectively determining where you are now, and developing crisp goals to get from here to there. I could put a plug in here like hiring a great business coach to facilitate the process is a great help.

The point is, invent your future by making it happen rather than letting it happen.

Strategic planning for the real world

Monday, June 21, 2010

Strategic planning has gotten a bad rap, and probably deservedly so. If you believe the research more than 50% of organizations don’t have a documented strategic plan. My view is, of those that do the majority aren’t worth the paper they are printed on.

Why? Because most organizations simply don’t know how to plan.

There is usually a mission statement developed to please all stakeholders and to ultimately be placed on the company website and brochures for marketing purposes. After that there is usually some futuristic stuff based on revenue and sales forecasts that talk about growth. No real direction and not much talk about how the sales forecasts will be accomplished.

A strategic plan for the real world has to be better than that. It has to have clarity, goals and be used to drive accountability. Think of it as planning a vacation road trip. First decide where you want to go, determine where you are now, and then write down what it will take to get you from point A to point B.

Start with a clear vision, what will your business look like in five years? How many people and locations will you have? What markets will you be in? What will be your unique selling proposition? Take all of that and boil it down to a few sentences that you can keep in front of all stakeholders all the time.

Acme manufacturing will double sales from $10MM to $20MM in the coming 5 years and will be a world-class manufacturer of rubber ducks is not a vision statement. It’s more of a wish statement.

Acme manufacturing will develop a seamless sales and distribution network that will facilitate sales growth by at least 100%. We will be known as the highest quality on-time manufacturer of rubber ducks and other complementary bath leisure products in our industry.

Now this is somewhat better. It speaks about what you want to be, and what you need to provide to get there.

After developing the vision statement, you do an in-depth S.W.O.T analysis to determine where you are now and what’s keeping you from being the world’s top selling supplier of rubber ducks.

You boil the S.W.O.T analysis down into 5 or 6 critical goal categories, and develop clear crisp timed goals to be accomplished over the next twelve to eighteen months to get you on the road to your vision.

You meet on a regular basis and review progress to goals. Are they on track, if now what needs to happen to get them on track? Are the assumptions still valid? Does everyone understand the vision and buy into it? Regular review and reinforcement is paramount to execution.

When the goals are met in 12 to 18 months sit down and review the plan, you should be well on your way to achieving your vision. You are a perhaps a third of the way down your chosen path, is it still valid? Did your market assumptions for rubber duck sales hold true? What other products or services will be a good fit?

Do the S.W.O.T. analysis based on the updated information and start the goals process again.

Effective strategic planning is a process not a one-time exercise. Understanding that change may be necessary and leadership and accountability are needed to drive execution are key first steps to effective strategy.

What’s the difference between a business coach and a consultant?

Thursday, June 17, 2010

I get asked this question often, and it’s confusing because some people use the terms interchangeably.

The best way I can describe the difference is to explain what I do with my clients.

A consultant is hired to study a process or specific issue within the company, whether it’s cycle time reduction, cash flow, or whatever. He of she comes into the business, conducts interviews with the appropriate staff, and learns how the process is being completed now. The consultant then looks at what the outcome is expected to be, compares it to what it is now, and develops recommendations.

A business coach on the other hand does not take the time necessary to become a subject matter expert. He or she believes that the company management knows more about their business that he or she will be able to learn in a reasonable amount of time. The business coach facilitates a process that brings the management team together to solve the problem or issue.

Which way is better? A consultant is actually better if the problem is new to the business and the expertise, skills or experience doesn’t exist within a business. An example would be perhaps converting to a Lean Manufacturing System where outside guidance is needed for initial development and training.  Hiring a consultant for a general business issue or strategic planning is perhaps not the best way to go. The consultant will need to take the time to study your market; your industry, your product and depending on the complexity this could take a lot of time. You as the business owner are paying for that time while he or she learns what you already know for the most part.

A business coach uses proven tools and processes to facilitate the outcome by using your internal knowledge and challenging you and your staff to defend your assumptions and directions. An experienced business coach will use his or her knowledge gained from other markets or industries to lead you toward new and different ways of looking at your business. This is usually much faster and less expensive. In addition the solution to the problem or the development of the strategic plan is yours, you own it and you’ve developed it with outside help. It’s not something that is presented to you in a formal document and left with you as someone else’s solution.

I do both coaching and consulting depending upon the application and the problem. If the business doesn’t have the knowledge internally I, or one of the members of my network will help them develop it. I till try to facilitate ownership of the solution to insure better execution.

For things like strategic planning, diversification, improving bottom line profits I take a coaching role. I use the knowledge available internally and provide my experience and tools to help them look at things differently and to develop custom solutions that are right for their organization.

Be careful when choosing with a coach or consultant. It’s relatively easy to get business cards printed and call your self one or the other. Look for background and a solid track record.

WIIFM for better leadership results

Monday, June 14, 2010

In order to get the most from your employees, and from your staff you need to learn and communicate WIIFM. (What’s In It For Me). In order for employees to embrace organizational goals they must view them as their own. To do that they must clearly understand how meeting the goals of the organization is tied to achieving their personal goals.

It is much more difficult to separate personal and professional lives than it was even twenty years ago. Money alone is not the primary motivator but a short-term benefit quickly absorbed and forgotten. With the commonality of the two job household, work is a huge part of personal conversation and thought.

Leaders who take the time and make the effort to understand employee wants and needs, and helps the employee set personal goals that complement organizational goals will find better leadership results very achievable.

Goal setting is not a common practice among most of us. It starts by defining what you want in clear and crisp terms. Most of us have great difficulty in understanding or accepting what we want. Needs are easier to define, I need $500 more per month, I need a new car. Once the need is met the problem goes away and along with it the motivation.

Wants are very difficult to define. If you haven’t tried it you may be surprised. One of the exercises in our Leadership Development program is to develop a “dream inventory”. It’s a list of anything and everything you want to achieve or own or whatever your dreams are. We tell the participants to stop at fifty.

I have seen very few got even ten.

We are programmed to take care of needs and forget about most wants. If you can understand your employees wants and tie the achievement into attainment of organizational goals, you have a long term recipe for leadership results.

WIIFM starts with your personal goals and ties into your professional goals why should it be different with your employees?

Leaders need to encourage goal setting on a personal and well as professional level. Most people don’t have a plan for their lives, they just allow life to happen. They give more thought and planning to a two-week vacation than they do for the most important journey of all the journey through life.  If you can help your direct reports understand this and set goals, then have them take it down throughout the organization, how effective do you think that might be?

Explaining your organizational goals so al understand and giving everyone the opportunity to buy-in and develop personal goals that they can achieve through attainment of your goals is a win-win for everyone.

Where should you use a return on investment criteria?

Thursday, June 10, 2010

When most executives think about return on investment they think about a formal justification for a large capital investment. Usually in a large company it’s expenditure over a preset limit of say $25,000.

My experience has taught me that much more money is spent everyday with little or no accountability and without thought to return on investment (ROI).

Business executives must demand a return on investment for every resource in their organization.

As a business leader, you have a responsibility to ensure that the assets of your company are used in ways that provide the highest possible return to stakeholders. That applies to all assets, including your human resources.

I have seen numerous managers over the years that pride themselves on being frugal. Sometimes they go so far as to refuse to purchase something that may aid productivity on the pretense of financial responsibility. Yet, many of these same managers continue to compensate underachieving subordinates without saying a word. They don’t seem to understand that employees are critical and expensive resources. When I question them about the obvious disparity, most are unable to see the connection.

When you tolerate poor employee performance, you violate the trust placed in you as a business leader to generate maximum return on investment. You place an unfair burden on other employees who must pick up the slack, or even worse, must correct the errors and deficiencies in poorly completed work. As an effective leader, you must expect excellence. Tolerating mediocrity is toxic to your organization.

The cost of poor performance can be staggering when you consider poor quality, returned goods, rework, overtime to make up lost production, and the negative impact is has on other employees. Many executives fail these dollars as an investment and they treat the cost symptoms rather than the root cause.

To realize a return you must first invest. Leadership development and training your people  is an investment opportunity.

Unfortunately, most companies don’t see it that way. They’ll invest in new equipment long before they’ll invest in their people.

Not infrequently these companies will promote people from the technical and production ranks to roles as supervisors and first level managers without any additional training. Some of the good traits that set these individuals apart, such as dedication and work ethic, are directly transferrable to their new roles. But other needed skills in the area of leadership may be new and foreign to them.

As a result, many upper management initiatives are not effectively transmitted from the boardroom to the shop floor. And much valuable information from the production floor is incorrectly filtered before it reaches upper management.

As wages and health care costs continue to rise, management must invest ever more wisely, consistently, and generously in human resources. Investing in effective leadership development and communications programs pays big dividends in terms of  –

• Higher productivity.
• Lower employee turnover.
• Better quality products.
• Customer loyalty and satisfaction.

Be prudent about where you put your time and money. Invest in employees who have demonstrated a willingness to learn and grow.

Improved leadership results start with changing culture

Thursday, June 3, 2010

I recently wrote an article on achieving better strategic planning results. It was a look at how Toyota became number one in the auto industry through effective long term strategic thinking and execution. It touched on the subject of culture but didn’t go into any real detail.

Just this week I asked a group of people why they thought Toyota had enjoyed so much success and growth. The answer was of course their Toyota Production System (TPS), lean manufacturing and attention to detail. That is exactly what General Motors came away from the Toyota / GM joint venture at NUMMI. Learn the TPS and we’ve solved our problems. And it’s exactly what most U.S. companies feel, that lean manufacturing, or Six Sigma or some other program will make them world class.

They are all missing the point.

Toyota recognizes that the TPS is an excellent tool but is not a silver bullet. Real excellence comes from developing a culture that engages and empowers employees.

This was further emphasized by conversations with a friend that works for a large Fortune 1000 company. He told me about the repercussions he got from escalating a problem with a major account. The company actually put him on a communications improvement plan to work better with his peers, even after the major account told his VP that the performance of one of his peers was preventing them from doing more business together. The old “shoot the messenger” adage is alive and well.

Toyota has a carefully cultivated culture of employees being expected to report problems. Development of that culture begins with the hiring process and continues through training and constant reinforcement. In Japan it is actually considered shameful not to report a problem when it’s noticed.  However saying you want to have employees report problems and actually being receptive and following up on problem resolution is where most managers and executives fall short.

Toyota’s culture employs a term called “Genchi Genbutsu”, translated as go and see for yourself. Employees are expected and required to report problems and managers and executives are expected to go to the source and see for themselves. They are taught not to rely on hearsay.

That’s as far from “shoot the messenger” as you can get.

If you truly want high quality products, excellent customer service, engaged and empowered employees, leadership has to “walk the talk” every day.

The overall culture of the organization has to clearly and visibly support open communications, and a blameless approach to problem solving.

In my book, “Bottom Line Focus” I talk about my own experience with continuous improvement training and implementation. I worked for a then Fortune 500 computer manufacture and was sent to an expensive training session on Total Quality Improvement. The very first time I tried to implement it back at the plant I was told “ship it, it’s month end and we need the sales”. That attitude prevails in the majority of companies I’ve been associated with.

If you really want to see improved leadership results, be a better leader. Don’t just say something live it.