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Leading With Revenue© - #3

by Rick Baker
On Dec 8, 2009
There are simple ways to ensure profitable business.
 
One way is Leading With Revenue, which I have talked about in my last 2 blogs.
 
From the last blog, we know Leading With Revenue can add Value whether we are dealing with new products and services [inventions] or existing products and services [which aren’t selling as well as we would like]. The key is obtaining Client input… and a revenue-generating purchase by a Client is powerful positive feedback.
 
I promised some Leading With Revenue success stories.
 
Here are a couple of success stories…again, I have altered the details to ensure confidentiality.
 
Example 1:
 
Dave was approached by a large local company to provide consulting services under a short-term project.  Dave was flattered by the acknowledgment of his expertise, confirmed by the attention offered by the large company. However, Dave declined the offer and provided a counter-offer. Dave’s counter-offer consisted of a multi-year contract providing a Value-adding service that included the consulting but also included a clear and expert solution to a major problem well-known to exist at the large local company…at least, well-known to Dave. Dave’s counter-offer contained pricing and other terms that reflected Dave’s senior-level Value. Result – the large company accepted Dave’s counter-offer and both parties enjoyed the Value-exchange that followed.
 
Example 2:
 
Jim and Sarah run a local manufacturing company. One of their larger clients came to them and requested a price discount, to match the competition. Jim and Sarah were somewhat puzzled because the relationship had been strong with the client and Jim and Sarah’s company had a habit of over-delivering with quality. After some discussion, it became clear there was a disconnection between the Value as seen by the client and the Value as seen by Jim and Sarah. To satisfy the client’s price-discount request, Jim and Sarah would lose money. They discussed this with the client. Jim and Sarah confirmed they would not drop their price.
Now, there are two alternative endings to this example…the choice of ending depends on which ‘Jim and Sarah’ we are talking about…both happened:
Ending 1: The client checked with his head office and confirmed to Jim and Sarah that no price discount was required. Since that event, there has been no further discussion of price discounts.
Ending 2: The client took his business to a new supplier. That supplier went bankrupt in 6 months and the client had no choice but to return to Jim and Sarah. The client then accepted the price increase offered by Jim and Sarah. Since that series of events, there has been no further discussion of price discounts.
 
The next blog will be the last in this Leading With Revenue series…

Tags:

Leaders' Thoughts | Marketing

Leading With Revenue© - #2

by Rick Baker
On Dec 3, 2009
There are simple ways to ensure profitable business.
 
One way is Leading With Revenue, which was summarized in my last blog.
 
From the last blog we know Leading With Revenueis not easy. While it is simple [straightforward] to describe, it is not easy – it requires work and disci pline. It requires some thinking followed by set action steps. The most important part of the work is – Listening to Clients [starting as early as possible in the process].
 
In the summary, at the last blog, the Leading With Revenue process started with a product or service Idea, backed by Specialized Knowledge. That happens when an inventor comes up with a new mousetrap. Leading With Revenue should definitely happen then. It also should happen when one of our sales people comes to work tomorrow morning and wonders – What shall I do today?
 
Leading With Revenue will add tremendous Value in both situations. That Value includes:
  • Higher profit
  • Lower stress
  • Higher work satisfaction
  • Lower staff turnover
Here are a couple of real-life examples I have experienced during the last year. I have changed the names of people and companies and been vague about products to ensure confidentiality.
 
Example 1:
 
Joe invented a tool. He spent hundreds of thousands of dollars and years of time de-bugging the product, creating top-notch packaging, creating a good sales presentation, and manufacturing samples. He visited numerous prospective buyers, distributors who could serve as future buyers.  These folks said, ‘the product looks great’. Joe gave hundreds of samples away so the distributors could display them and promote them to consumers. The result was - very few sales and very little feedback about ‘why so few sales?’.
 
Example 2:
 
Jane had a well-established, profitable business with hundreds of clients. Jane felt changes were required to improve sales. A new CRM system seemed to be the right answer so steps were taken to select a new CRM and a company to install, de-bug, and get it operational. After many months and tens of thousands of dollars, the CRM is almost operational. The results – zero increase in sales.
 
Obviously, those were not the Leading With Revenue success stories.
 
Leading With Revenue success stories will be presented in the next blog…

Tags:

Entrepreneur Thinking | Marketing

Leading With Revenue© - #1

by Rick Baker
On Dec 1, 2009
There are simple ways to ensure profitable business.
 
WARNING TO READER
I did not write – There are easy ways to ensure profitable business.
[Work is required]
 
There are simple ways to ensure profitable business.  I call one of those simple processes Leading With Revenue.
 
ANOTHER WARNING TO READER
I am assuming here, money is an issue.
If you have no issue with money – if you have more than plenty – this blog may not be of any Value.
 
Leading With Revenue summarized:
  1. Start with a product or service Idea, backed by Specialized Knowledge
  2. Test your thinking – This Idea Should Work! [if that’s what you think then go to next step]
  3. Do a little product/service development work [to proof your Idea]
  4. Come up with a Value Proposition, which answers – Why will Clients want to buy this?
    • Start with a suspicion of what you think Clients may want to buy
    • Select some trusted best-prospect Clients [real people, not paper-demographics]
    • Meet, talk, but mostly Listen as these Clients tell you if this Idea will work for them
  5. If these Clients give concrete positive signals  - Yes, I will buy - then go to the next step
  6. Fine-tune the Value Proposition to align with what Clients have told you they want to buy
  7. Set Pricing to cover cost/benefit and risk/reward [for all parties]
  8. If problems arise at that last step – from your or the Clients’ perspective - then go back to at least step #4
  9. Ensure everything meshes with your company’s Unique Selling Proposition…or go back to at least step #4
  10. Quickly, set simple marketing & sales action plans
  11. Quickly, take action to sell to those Clients whom you have been told [or you believe] want to buy
  12. Watch, Listen, and Monitor sales results…the Clients’ actions will tell you what you need to know
  13. Fine-tune the product/service as required to match what Clients show you they want to buy
  14. If product/service fine-tuning is not possible or practical then go back to at least  step #4
Over the last two years, we have seen some folks Leading With Revenue.
 
And, we have seen lots of folks not Leading With Revenue.
 
I will provide examples of each at the next blog…
 
Link to another, more-theoretical blog about Leading With Revenue
[August 4, 2008 blog]

Tags:

Entrepreneur Thinking | Marketing | Sales

A Lesson on Cold Calling

by Rick Baker
On Jul 6, 2009

Last week I met a fellow...an entrepreneur.

As we exchanged information about ourselves, he mentioned doing business with Disney.

I asked - how did you get that done?

He told me the story...

Several years ago, he and his partner were enthusiastically going about building a business. They met regularly on Sunday evenings to strategize for the upcoming week. One Sunday night they were discussing the difficulty they were having 'making contact' with Disney. They had made numerous attempts to connect with the 'key contact', who happened to be female.

Numerous attempts, phone messages, etc - zero success.

Then, one Sunday evening as they were strategizing, they decided they would send a bouquet of flowers to the lady with a note 'From the guys who have been bugging you for a meeting'.

They sent the bouquet of flowers the following day.

That generated a positive response.

They met the lady at Disney.

Then they did the deal with Disney.

[What a nice little story and lesson on cold calling.]

 

 

Tags:

Entrepreneur Thinking | Marketing

How should we view and analyse a Market Sector?

by Rick Baker
On Jun 5, 2009

A few decades ago, Michael Porter presented a way to analyse an industry sector…ie, a marketplace.  

He recommended Five Forces Industry Analysis”...see Michael Porter, ‘Competitive Strategy: Techniques for Analyzing Industries and Competitors’, [1980].

 

Porter’s Five Forces are:

  1. threat of new entrants
  2. bargaining power of suppliers
  3. bargaining power of buyers
  4. threat of substitute products or services
  5. degree of rivalry among existing competitors

It is wise to consider the Five Forces described by Procter…[perhaps after almost 30 years that’s now considered common sense]. 

It also makes sense to look at your choice of business sector from different perspectives.

This note is about a different way to think about your market niche…the sector where you are doing or will do business. 

Last year, Fernando Trías de Bes presented some different thinking in his book ‘The Little Black Book of Entrepreneurship – A Contrarian’s Guide To Succeeding Where Others Have Failed’ [2008].  

The book focuses on why businesses fail. Rather than talking about only KSFs [Key Success Factors] it recommends we consider KFFs [Key Failure Factors]. The author answers the question – “Why?”…”Because in order to apply the success factors, you need to clear the terrain of failure factors.” 

Is that contrarian?  [What about the W and the T of SWOT?] 

According to the author, one reason entrepreneurs fail is poor choices of market sectors. The author believes the root of the problem is many entrepreneurs do not consider the market sector to be a decision. Rather, they consider it to be a consequence of a random idea.  

The chapter on market sector is titled ‘ROUND NINE - No Novice Ever Won a Nobel Prize’ 

An example is given: a vacationer sees a new type of shoe while visiting a foreign land. The vacationer – the entrepreneur – knows that shoe is not available at home. The entrepreneur’s random idea is: we could sell that shoe at home. And the consequence of that random idea is: we will go into business in the shoe sector.   

Another example is given: a fellow became enthralled with a particular fast-food outlet. He spent six months studying the business of that fast-food outlet but failed to ask himself if he had a real interest in being in the fast-food sector. 

The author believes entrepreneurs often fail because they ‘back into’ the market sector because they are convinced they have a good idea for a product or have a good idea for a specific business.  

The way I’m looking at it, Fernando Trías de Bes tells us what we better think about before we follow the ‘process-analytics’ advice provided by folks like Michael Porter.  

Fernando Trías de Bes provides the following advice:

“The choice of the market sector for your business venture must be the result of a considered decision.

Choose your sector or product because it appeals to you.Go into a sector you know.

If you don’t know the sector, either take time to learn it or surround yourself with people who do know it.

You must bring something new into the market sector you choose to do business in.

Innovate by knowing the rules so you can break them.” 

 

***

Some Additional Thoughts: 

Fernando Trías de Bes at the cover of his book describes himself as a contrarian. It is sometimes difficult to tell the traditional from the contrarian.

One section of the Introduction of The Little Black Book of Entrepreneurship – A Contrarian’s Guide To Succeeding Where Others Have Failed’ caught my attention. At page 3 of the Introduction the author describes an on-line exercise he did using the words ‘key success factors’ and ‘key failure factors’. The author states,”Out of curiosity, I typed ”key success factors” into a search engine and found 636,000 pages; a search engine for “key failure factors” yielded only 119 pages.”

Last December, I performed an exercise using a few combinations of words like “Why Businesses Fail” and “Why Businesses Succeed”. My results, at least , my views about my results, are certainly contrary to those of the author. I feel I obtained the opposite result. For my search, I was not interested in the number of pages search engines found. I was interested in what the first 10 pages [using Google] contained for each search [see www.google.com]. My goal was to find 10 lists where writers provided their views about “Why Businesses Fail” and 10 lists where writers provided their views about “Why Businesses Succeed”. I was astonished to find a huge amount of free on-line articles and summaries covering the topic of  “Why Businesses Fail”…it was easy to find free-information and compile numerous lists of  “Why Businesses Fail”. Going from memory, I believe the first 12 websites contained 10 lists…so, my task of generating the 10 ‘failure lists’ was done quickly. Conversely, I had to read through almost 100 websites to find 10 ‘success lists’…and, I had to cheat a bit to get that done. I had to cull the ‘success’ verbiage to create lists while the ‘success’ writers volunteered simple lists…some numbered, some with bullet points.

After performing the above free-information-search exercise, I reached two conclusions:

  1. People who write about “Why Businesses Succeed” want to be paid for their opinions…so, they don’t write them out the way others write about “Why Businesses Fail”. Rather, when you search those business-success words you end up at sites that sell books…and 
  2. People who do express free advice about “Why Businesses Succeed” make far more subjective claims than do people who write about “Why Businesses Fail”. For example, they state things like business success is linked to long-distance running, meditiation, etc whereas the people who write about failure focus almost entirely on business reasons such as poor marketing, inadequate finance, etc. 

My December 2008 exercise coupled with the author’s differing view about on-line searches cause me to think two things:

  1. Many people think other people will pay for business-success education, so business-success information is not offered as freely as is business-failure information. There’s a good argument to be made this is all about packaging… and 
  2. I’m not sure Fernando Trías de Bes is a contrarian. His search-engine test...I struggle with that.

Injecting Value - Systemizing Your Business

by Rick Baker
On May 31, 2009

Over the past month, not by sheer coincidence, I have participated in many discussions about ‘business systems’.

 

People have differing views, ranging from ‘the need’ for systems to ‘the design’ of systems.

 

I am not writing about my personal views at this time. However, I’d summarize them this way: with respect to ‘the need’ I am of the view business systems are essential and with respect to ‘the design’ I am of the view business systems should be comprehensive yet user-friendly and containing user input, automated within reason, simple to follow yet sufficiently detailed, and crystal clear.

 

Business systems must be taught and they must be learned. They must be embraced.

 

Here is one way to look at business systems…it is an introduction to the good work Brad Sugars is doing with his business-consulting company ActionCOACH…for more information visit www.actioncoach.com.

 

As part of his ‘INSTANT SUCCESS’ series, in his 2006 book titled ‘Instant Systems’, Brad Sugars wrote about “The  Nine Steps to Systemizing Your Business”. While one needs to read the book to understand the strength of Brad Sugars’ 9 points, the following summary illustrates his approach to business systems.

 

1.      Step 1: VISION – this is a long-term [Brad says a 100-year view] of the grand picture of what your business will be like when it is finished. The Vision should be clearly understood by everyone at your business. Brad provides his company’s Vision, which is captured in 5 words.

2.      Step 2: MISSION STATEMENT – this states how you are going to accomplish your business Vision. It should clearly explain: who you are, what business you are in, who your customers are, and what makes you different than your competition. Brad provides his company’s Mission Statement, which is described in one page.

3.      Step 3: CULTURE STATEMENT – Brad says this is usually a 14-point statement covering: the company leader’s 4 most-important values, the team’s 4 most-important values, and the customers’ 4 most-important values. At his company, Brad covers these using the following 14 points: Commitment, Ownership, Integrity, Excellence, Communication, Success, Education, Teamwork, Balance, Fun, Systems, Consistency, Gratitude, & Abundance.

4.      Step 4: GOALS – your Goals help you achieve your Vision. Your Goals should be SMART, consider the end point, ie, your exit from the business, and provide direction and focus.

5.      Step 5: ORGANIZATIONAL CHART – again, consideration must be given to the end point.

6.      Step 6: POSITIONAL CONTRACTS – using Brad’s words, ‘It’s very important to tell your people what they’re supposed to be doing.’ And, ‘Spell it out in clear, unambiguous terms.’

7.      Step 7: KPIs – Key Performance Indicators for every position. Brad recommends 5 to 10 KPIs. He ties pay-for-performance bonuses to each person’s KPIs.

8.      Step 8: HOW-TO MANUALS – written down, video- or audio-taped…whatever works.

9.      Step 9: MILESTONES – you must consider the main stages your business will go through from infancy to maturity.

 

That’s a summary of a concise set of instructions for setting up Business Systems. Perhaps, the most striking piece is the step called Culture Statement. Many businesses have given little thought to culture. Based on our discussions with many businesses, the first three steps – Vision, Mission Statement, & Culture Statement – appear to be the most difficult.

Tags:

Business Contains Only 3 Things | Entrepreneur Thinking | Marketing

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