What Are You Selling?

  A Flower....or Serenity?

Ask a business person what he or she sells, and you’ll most likely get a description of products or services. That’s just fine for a casual introduction. It’s really what you wanted them to tell you, isn’t it? Now you know what business they’re in.

 

The trouble is that most small businesses don’t have any other answers to that question, even when they know they’re talking to prospects. As a result, people who actually need their products and services are not motivated to buy from them. They end up deciding where to buy based on the wrong reasons. Worst case, they’ll flip a coin!

 

So how do we turn that around?

 

FEATURES ARE FINE, BUT…

Of course, any sales person should know, in some detail, the features of the products or services being sold. But knowing the features and details is not enough. 

 

Whenever I ask questions about details and see that the sales person doesn’t know the answer, I lose confidence. It’s not that I want them to be a walking encyclopedia. In fact, the real reason for my loss of confidence is that I don’t feel they understand what I need. How can they help me if they don’t have a solid knowledge about what they’re selling? If they understood what I needed, wouldn’t they know all about that product and how it answers my need? 

 

BENEFITS ARE THE REASON THEY BUY

Product or service features alone are not going to convince anyone to buy unless those features translate into a real benefit. 

 

What do I mean by “real benefit”? I mean something that really matters to the customer. Think family. Think happiness. Think emotion. People buy on emotion.

  

The important thing is to translate product or service features into benefits to the customer. Answer the customer’s question: “How will this make my life better?” or “How will this solve my problem?”

 

Here’s an example. A fictitious company called Pondtopia installs small, decorative ponds and other water features. A prospective customer walks in and says she’s thinking about putting a little pond in the backyard. The sales person says, “Great! We’ve been doing that for 35 years!” Seeing a tentative smile on his prospect’s face, he continues:  “We’ll come right out to your home and analyze the site in order to determine the best location, size, and shape of the pond. Then we’ll come back here and use our CAD-based software to map out all the details and develop a plan. We’ll review it with you and make adjustments based on your input, and then we’ll come out and do the job. It’s a pretty involved process, but we’ll get it done in just two days! We’ll bring out whatever machines we need. We’ll dig the hole and make it the right shape to accommodate your plants, fountains, and waterfalls, and then we’ll install a heavy waterproof liner. We bring in the water to fill the pond and then our experts will come in and install the plants (using the appropriate containers, planting medium, and fertilizer). If you’re looking for a fountain or waterfall, we have a full range of pump models to choose from, with all the latest features for performance and energy savings.”

 

Imagine being on the receiving end of this. It’s all important information, of course. But unless the sales person quickly gets to the real benefits of all this work and expense, the prospect may just listen patiently, ask about price……..and then thank the sales person for all the help and tell him she’ll think about it……and then leave.

 

Pondtopia’s sales person would get more sales by establishing rapport early in the conversation, asking why the prospect is considering a backyard water garden, and gently probing to get to the real “why” — the emotion that drove this person to come and inquire about ponds. The answer to that question will help the sales person shape the discussion around what really matters to the prospect. A backyard pond can become an oasis of serenity after a long day at work or school. It can be a beautiful focal point for social gatherings or family reunions. It can be the place where the kids enjoy feeding fish or catching frogs while Mom and Dad relax to the soothing sound of the waterfall.

 

Compare this approach — appealing to the buyer on an emotional level — with the earlier paragraph describing the technical details of the project. Which part of the discussion is more likely to turn a prospect into a buying customer?

 

THE BOTTOM LINE: IT’S ALL ABOUT THEM

Let’s face it, it’s normal to enjoy talking about ourselves and the things we’re interested in. But if you want to have a real conversation and establish even the simplest of connections, you have to be genuinely interested in what makes the other person tick.

 

The mistake that most businesses make when talking to prospects is to be blind to the other person’s real needs and wants.

 

If you’ve really thought this through for your own business or place of work, you look at the world (and what you’re selling) through your prospect’s or customer’s eyes. And then, in your marketing and sales, you communicate what you’re REALLY selling – the benefits that the buyer will enjoy after the sale.

 

Motivated Employees = Bigger Profits

Happy Workers 

Why do people love working for some employers and hate working for others? There are many reasons, of course, but today I am going to focus on a few things the boss can do to build trust and loyalty in the workplace, which will result in happier employees and a happier boss!

 

KEEP IN TOUCH

Some people are naturally shy. Let me correct that statement. Many people are naturally shy. And many somewhat shy bosses are not all that comfortable talking to people who work for them, so they seek safety in the privacy of their offices or just immerse themselves in work as soon as they walk in the door each day.

 

Then there are the bosses who love the idea of being BOSS – being “above” others. They behave in ways that show they’re “above” taking time out to talk with employees. These bosses and their time are too important for that!

 

So the first tip I offer any boss is this. Make it a habit to greet every employee every day. Learn to do it in a way that will not take much of your – or their – time. Just be friendly and sincere, make eye contact, and exchange a few friendly words. Ask a question that shows you know something about their family or their hobby. Doing this every day will reinforce – again and again – that you care about them as people. Always remember, in this activity, it’s about them, not you.

 

IT’S A TWO-WAY STREET

A lot of bosses forget that employees often have great ideas and information. Smart bosses know that listening to employees is every bit as important as talking to them – if not more so. Build trust and loyalty by showing you respect and value their input. And don’t make them feel like giving their input is a waste of time – take action on concerns raised and great ideas presented, or let employees know why you’re not taking action. Employee meetings are a terrific way to facilitate the exchange and discussion of concerns as well as great ideas that can increase not only morale but the company’s bottom line. 

 

MAKE YOUR EXPECTATIONS PERFECTLY CLEAR

If you’re not clear in setting expectations, you are not being fair to your workers. They need to know how they are going to be measured. Without that kind of clarity, they can never be sure whether they are doing the job you want them to do.

 

Most people want structure in the workplace – guidelines, rules, responsibilities, schedules. Why? Because that kind of structure lets them know where and how they should be directing their energy. Take individual personality, experience, and skill level differences into account and give each person just the amount of direction they need so they’ll know they are meeting your requirements. And then write those requirements down and review them with the employee in a one-to-one meeting. Include both the “what” and the “when” that are required. Be open to suggestions to tweak and clarify what you’ve written. Above all, make sure you both agree on what’s expected. Smile as you both sign the document, and let them know when you’ll give them a formal review (which may or may not include a raise – be sure they understand what “review” means in your company).

 

GIVE THEM FEEDBACK – AND ACCENTUATE THE POSITIVE

Once the requirements and expectations have been agreed to, bosses need to remember that most employees like to get feedback on a regular basis. Communicate! Don’t let weeks go by without giving feedback. It’s not fair to leave them wondering whether you’re happy with their performance or not. Waiting until the formal review to tell an employee s/he’s underperformed is a recipe for distrust if not disaster.

 

And if the employee is performing well, why wait to tell them??? Positive reinforcement is the best way to build loyalty and trust in a valued employee. I don’t know who said it first, but The One Minute Manager by Ken Blanchard and Spencer Johnson is famous for its advice to bosses to catch them doing something right. In other words, always look for something positive you can comment on – even when you need to discuss something that’s not fun at all.

 

BE HONEST ABOUT UNDERPERFORMANCE – BUT SHOW RESPECT

Many bosses seriously underperform when it comes to dealing with employee underperformance. All too often, they simply avoid the issue, letting it fester and worsen. Or they show anger, lack of compassion, and even disrespect toward the employee. Unless an employee has done something unethical or unlawful, this kind of attitude on the part of the boss is not only unjustified but unwise. When an employee is not working out, supervisors must always consider the potential consequences of treating him or her badly. Negative word of mouth is, unfortunately, far more powerful than positive word of mouth.

 

In most cases, if an employee is not performing as required, it doesn’t mean it’s time to get rid of them. Hiring a new employee is not only costly but risky. Usually, clearer communication and/or training will lead to performance and attitude improvement. That being the case, the last thing you want is for the employee to become angry or resentful. If they quit, they can badmouth you on the outside. If they stay, they can poison the attitudes of even your best employees. Talk about costly!

 

So when an employee is not performing up to par, have a private meeting to discuss the situation. Listen to their side of the story. Be human without being angry. Let them know the impact they’re having on you and the other employees. If there are personal issues hurting their performance, try to understand and help without prying. Most of all, show them you want to work with them to find ways to help them produce the results you need. 

 

HAVE FUN!

This is a biggie. How many people actually enjoy their work? Not many. So how can your company get on the list of places where employees actually enjoy coming to work?

 

People like to work for companies that have a culture that encourages individual growth and at the same time provides a social fabric that fosters team spirit, positive reinforcement, friendship, and FUN.

 

Beyond being fair, honest, open, and respectful, bosses need to take it one step further and find ways to make sure their employees actually have fun at work. The first step is to set an example by having a good sense of humor. Bosses need to laugh at themselves. Allow themselves to be the butt of the joke from time to time, while maintaining their stature as boss. Use humor in meetings. Not take themselves too seriously. Keep it professional but light as much as possible. Establish a culture where employees will work hard but find appropriate occasions to relax and have fun in their interactions.

 

Special events can make work more fun, too. Listen, listen, listen……find out what kinds of things employees would enjoy – an annual picnic, a holiday party, a river cruise? Or perhaps a monthly informal breakfast at the workplace, with the boss providing the goodies? The key is to create enjoyable and memorable occasions that will help strengthen the bonds among all the individuals in the company.

 

THE BOTTOM LINE

The bottom line is that happy, motivated employees will stick with you through thick and thin, and they will ultimately help you improve your bottom line!

 

Busyness vs. Business

A Case for Time Management! 

Business is about the exchange of money for goods and services. It’s about sellers and customers. The kid selling lemonade on a hot summer day is in business. Small companies are in business. Big corporations are in business.

 

Busyness, on the other hand, is about being busy. It may or may not be related to business, but all too often people mistakenly equate busyness to business.

 

THE JOY OF BEING BUSY In our culture, we are conditioned and taught to keep busy. “Idle hands are the devil’s workshop,” we’re told. Most people feel happier if they are busy than if they have nothing to do, especially in a work environment. After a bout of busyness, we feel a sense of accomplishment – we got something done! And if we’re not busy, we feel that we’re wasting time.

 

KNOW WHAT MATTERS MOST Unfortunately, busyness is often a roadblock to real success. It can create an illusion of progress when it’s really the wolf of procrastination in sheep’s clothing.

 

Of course, this does not mean we should sit around doing nothing. Except for getting the rest we all need, it’s better to do something than to do nothing. The challenge is to make those “somethings” meaningful.   The truth is that time is priceless because it is limited for all of us, no matter how rich or poor we are. One fine day it runs out, no matter how much money one offers to buy more of it. It’s foolish to misuse time. It’s smart to spend time on things that matter.

 

Most of us need to earn money to support ourselves and our families. That matters. We also need family and friends. They matter, too – big time. We need to enjoy life by pursuing hobbies, being physically active, traveling, reading – whatever floats our boat! Helping others is another important part of life for most of us.

 

All these things matter. The trick is to get all the necessary chores done and still fit in the things that really matter in business and in life. 

 

KNOW THYSELF Self-awareness is key. Do you often find yourself at the end of the day saying, “What a busy day! Where did the time go? What did I do today?” If so, you need to get a handle on how you are spending your time.

 

I frequently recommend to my clients that they start by keeping a detailed log of their activities. It can be as simple as a notebook in which you write the start time and a phrase describing the activity. When you move on to something else, write the time you start that new activity and, again, a descriptive phrase. Write down EVERYTHING (well, almost!). Put an asterisk next to business calls and a double asterisk next to personal calls. The asterisks will help you if you need to go back and see when a particular conversation occurred. Also jot down the main points of each call and the phone number, so you won’t have to look it up if you need to call back. Here’s an excerpt from a fictitious activity log:

 

6:30 Exercise, shower, etc.

7:50 Breakfast

8:15 Drive to office.   

8:35 Greetings

8:45 Email

*9:15 Called Bill Williams. He is waiting for our estimate. Call him back tomorrow. 845-123-4567

*9:20 Called Cruella DeVille 914-123-4567. Will send us shipment on Friday.

9:25  Process orders.

**10:05 Call from Ever Green. 203-123-4567. Dad had heart attack in November.

10:30 Sales calls.

12:00 Lunch

12:30 Drive to Cat Stevens house.

1:10 Meeting

2:15 Drive to office

3:00 Talked to Stephanie about greeting customers.

3:15 Open mail.

 

Another thing you can do is insert an activity category right after the time, in capital letters, like this:

 

12:30 TRAV Drive to Cat Stevens house.

1:10 SALES Meeting

2:15 TRAV Drive to office

3:00 HR [or PEOPLE MGMT] Talked to Stephanie about greeting customers.

 

Take it one step further and use a column to the left of the start time column, to insert total minutes spent on the activity:

 

40           12:30 TRAV Drive to Cat Stevens house.

65           1:10 SALES Meeting

45           2:15 TRAV Drive to office

15           3:00 HR Talked to Stephanie about greeting customers.

 

If you keep a log for a typical week, you’ll start to get a pretty accurate idea of how much time you spend on various types of activities. When my clients start keeping a log, some alarming trends usually pop out. Some find out that they spend too much time on personal calls, or too much unproductive “chat time” with customers (it’s important to build and maintain rapport, but know when it’s time to let them – and yourself – move on to other things that need to get done). 

 

For those who work at home, there are so many distractions! An activity log can show you which distractions are truly impeding your progress and ultimate success. Perception is often not reality!

 

For those in a workplace with other people, an activity log can show you how much time that annoying co-worker actually is robbing you of. Do yourself a favor and mentally prepare some escape moves to get them out of your face and out of your space.

 

And then there are the big time wasters that are so easy to ignore in our modern, multitasking world. If you’re at your computer working, and you flip over to the email window and stay there for 20 minutes, you must record that in your log! That time does not count toward the activity you were in the middle of when you switched over to do a “quick check” of email. The same goes for time spent looking something up on the web….and then getting distracted by something and clicking that link, and then another link, and then another. Before you know it, you’ve lost another 15 minutes or another hour!

 

Carefully tracking your time will help you break destructive, time-wasting habits so you can win back precious time and apply it in ways that matter. When you review your log at the end of the day or the end of the week, ask yourself which activities in the log really don’t matter – the ones that, in retrospect, did nothing for you. Use a highlighter and mark those items. Then add up the time you spent on them. You may be surprised at how much time you could have been spending on things that matter.

 

THE BOTTOM LINE Busyness is often a roadblock to doing business or working on business in a productive way. Even when busyness is strictly related to the business, if an activity ultimately will not make a difference to the success of the business, why spend time on it? Eliminate useless activities and win back time to work ON your business or your career……or to spend time with your family. 

Money-Saving Tips for the New Year

 saving money 

The end of the year is a great time to look at where and how we’ve been spending our money. Compare your year-end cash flow statement with your budget from the beginning of the year. You’re bound to find a surprise or two, and some good indicators of where you can save some money next year.

 

First let’s take a deep breath and remind ourselves that there are some things we must spend money on in business. These are NOT the best candidates for cost cutting: Marketing, Sales, and Systems that make your operation more efficient. Protect those things! If your marketing or sales isn’t working, figure out why and spend those dollars more effectively. And systems save you time, keep customers happy, and improve productivity. Don’t eliminate or hobble systems that work.

 

That having been said, there are many areas where you can trim your costs and increase your profits. Here are some ideas to get you started:

 

REDUCE ENERGY COSTS. You know the drill. Just like at home. Turn off the lights where they’re not needed. Turn off computers and other machines at night. Get an energy audit and fix the leaks that are sucking cash out of your business. Adjust your thermostat a degree or two to reduce heating and cooling costs. Use energy-efficient appliances.

 

DON’T BE PENNY-WISE AND POUND-FOOLISH. Be alert for discounts, but don’t make the mistake of buying huge quantities to save unless you know you will use all that stuff! All too often, a bulk purchase ends up occupying expensive space for months or even years, only to be discarded long after the hard-earned money is gone.

 

TEAM UP WITH FRIENDS. It’s true that you should tread carefully before buying in bulk. However, you can get together with another business or two and take advantage of cost savings by buying in greater quantities with them. A fabulous side benefit is that you will gain much more from the business relationship than just saving money on some purchases.

 

GET MONEY BACK. Take advantage of cash-back arrangements offered on some credit cards. If at all possible, pay off your entire credit card balance each month to avoid those finance charges. When you’re out shopping for your business, always remember to tell sellers you have a small business and ask if they can give you a discount.

 

FRUGALITY PAYS. When the time comes to buy a costly machine, a vehicle, or office furniture, don’t insist on buying new. There are usually very good used items to be had at much lower cost.

 

HIRE SMART. Find people who are right for the job. Follow a process when you hire. Define the job, identify the skills and other requirements, and be selective. Consider alternatives to fulltime, onsite employees. If the job can be done from someone’s home, you can save money on facilities costs. Also consider virtual assistants and other remote support options. For temporary work, look to local colleges for interns.

 

INSURANCE. This is a big ticket item in any business budget. So don’t do what I did many years ago. Before I smartened up, I settled in with an insurance company for many years, never questioning the bill each year. They never even called me during all those years! Ask your friends and find an independent agent you can trust, someone who will check the rates for you every year and find the best deal to meet your particular needs.

 

LOWER YOUR TELEPHONE BILLS. This is an area where it’s so easy to just keep paying the bill month after month and year after year. But in today’s technologically advanced world, there are many different options available. Most vendors will be happy to analyze your bill and tell you how they can save you money. Give it a shot!

 

GO ONLINE. Was that a groan I just heard? Oh, sorry, I misheard – it was a cheer! A good website initially requires an investment, but once it’s launched, it’s one of the most effective and cost-efficient marketing tools any business can have. Get your business up on Facebook, too, and be diligent about updating that page. Yes, it can be a pain, but it’s very low cost advertising. LinkedIn is another good place to build your business connections and visibility. When you get your online advertising working, you can phase out some of the costlier marketing that you do.

 

These are just a few ideas. Take a look at where your money has gone this year and look for the “low-hanging fruit” – that is, the places in your budget where you can get the biggest cost reductions at the lowest risk and with the least effort.

 

One more thing. Put together a budget for the new year and do your best to stick to it!

Don’t Reinvent the Wheel!

Business Systems

  

Entrepreneurs love to build things. That’s what starting a business is all about, isn’t it? You start from scratch with the goal of building a business. Once you get started, you find that there are also systems and processes that need to be built within the business. Building systems and processes is less exciting to most people than building products and services. But it’s something that really has to be done.

 

SYSTEMS ANY BUSINESS NEEDS

Marketing is, in many ways, the lifeblood of any business. Without customers, there is no business. So you need to have a real marketing process that defines how and where to find people who might actually be interested in buying from you, what to say to them, how to get the message to them, and what to do when they call.

 

The reason we need customers, of course, is to bring in money. Anyone who starts a business needs to figure out how to do the money stuff – where to keep it, how to collect from customers, and how to keep track and pay taxes in a way that will keep the IRS off their back. 

 

Once you have customers, you need to have policies and procedures for customer service. How will you make sure they’re happy? If your services are projects that take time, how will you manage those projects? How will you handle customer questions and complaints? How will keep track of customers and the individual services or products they purchased?

 

There are many other systems and processes that a business needs, but these are the three biggest areas every business needs to get a handle on.

 

FIGHT INERTIA

Setting up systems and processes can be overwhelming. I worked with a new business owner last year who was so overwhelmed by the idea of setting up the systems he needed that he just kept avoiding the whole issue. He kept himself very busy chasing after leads that came along, doing whatever he needed to do for his customers, and fighting every fire that flared up. Sounds like a lot of action, but I call this “business owner inertia.”

 

The reason I call it “inertia” is that a business owner who behaves this way is really not doing anything as a business owner. He or she is stuck in one place just doing a job, acting like an employee. Any business owner who stays in this mode will most likely either be forced to go out of business or quit the business voluntarily. It’s just too stressful and draining. Even worse, it can ruin a business owner’s family life and relationships.

 

So you have to fight inertia. Take the bull by the horns and figure out how you’re going to do all this marketing and back office stuff before your business takes over your life in a very bad way.

 

THE GOOD NEWS

The good news – actually the really great news – is that all of this setup work has been done thousands of times before by other business owners. Sure, everyone has to tweak things to make them fit their own unique business. But the basics are out there. In this age of information, it’s easier than ever to find the how-to for whatever you need to do. 

 

DON’T REINVENT THE WHEEL!

I used to work in an environment where we had to make the difficult mindset transition from building everything ourselves (which was challenging and fun but took a lot of time) to buying ready-made solutions if they were a good fit. We learned that it’s not smart to ignore the rest of the world and assume you must figure everything out on your own. If you choose to do it all on your own, chances are you will be stuck in that unproductive state of inertia, never really getting ahead.

 

The first step is to take some time to work ON your business. Start by doing some research online. Let Google, Bing, or Yahoo be your friend. You’ll find lots of information and ideas to help you set up those systems and processes. There are also many books available on setting up business processes.

 

You may also want to find out whether there are professional or trade organizations for your specific type of business. These groups are often a fantastic source of information and guidance for business owners from startup to well established, from struggling to successful.

 

Don’t be a loner. Network with other business owners and learn from them. Give back whenever you can. If you’re really stuck in that busy state of inertia, consider hiring a professional who can help you jump-start things so you can get the basics in place and charge ahead with enthusiasm from there.

 

Whatever you do, don’t try to invent your systems all by yourself, without tapping into the knowledge and experience that’s available. You’ll lose too much of your very limited and very valuable time.

 

Ready . . . Aim . . . Market!

Target Marketing

  

Marketing is a challenge for most small business owners. It’s not that these entrepreneurs don’t know what they’re selling. It’s that they often don’t know how to get the right message to the right people.

 

You owe it to yourself not to market by trial and error.  It boils down to doing a little thinking, analysis, and planning – and then executing the plan. Here are some steps to take for more effective marketing.

 

READY

First, ask yourself what really makes you stand out from your competition – in your prospects’ and customers’ eyes. Write down the answer to this question:  What do you do for your customers that they really care about – things that no one else does? It may be related to products, services, skills, or customer service. Make sure your answer focuses on things that your customers and prospects value, and the more you can touch their emotions, the better.

 

AIM

Next, look at what you just wrote down and write the answers to these questions: Who are the people who will most appreciate the thing(s) that set me apart? Where do they live? How old are they? What gender are they? Where do they hang out? How can I reach them?

 

Now that you know who your best prospects are (your target market), you need to craft a message that will communicate to those people exactly what you can do for them. Write it down in plain English. Later on, you’ll tweak it so that it catches your prospects’ attention. You may end up with multiple versions of it for different locations, different seasons, or different products or services that all will be greatly valued by your target market.

 

You may have different target markets for different products or services. In that case, do this whole exercise separately for each of these markets.

 

MARKET!

 There are so many ways to market! This part requires a little planning before you charge ahead. Too many business owners skip the planning part and end up shooting from the hip and wasting their marketing dollars.

 

First, decide how much money you can spend on marketing – your marketing budget. If you have more than one target market, you’ll have to split your budget accordingly.

 

Once you know how much you can spend, look at the many different ways to market your products and services and select the ones that will give you the biggest bang for your buck. Keep in mind that you need to “touch” your prospects many times before they’ll seriously consider buying. Here are just a few of the many ways you can reach out to your target prospects:

  • ONLINE – website, blog, electronic newsletter, facebook, google places, superpages, etc.
  • OFFLINE ADVERTISING – business cards, newspaper ads, magazine ads, radio, direct mail, yellow pages, billboards, flyers, promotional items, etc.
  • NETWORKING – Chamber of Commerce, BNI, holiday parties, etc.
  • VISIBILITY EVENTS – trade shows, speaking engagements, press releases, etc.

With so many options, you need to choose carefully! Select marketing activities to communicate your message that will (a) reach your target prospects and (b) appeal to them. Write down an outline of your marketing plan – what you will do and when. Then write down how much each activity will cost, and refine your plan as needed to ensure you’re staying within your budget.

 

TWO KEY POINTS TO REMEMBER WHEN MARKETING

 1. In marketing, never forget that we all buy on emotion, even if we think we’re being analytical and smart in making our buying choices. This means you must engage your prospects on an emotional level. Your marketing message should be about things that touch them deeply – their family or their happiness, perhaps. For example, a financial planner could promise to help prospects take steps to increase their net worth. A more effective message would be to promise to help prospects realize their dreams – send their kids to college, retire early and travel the world with their spouse, etc. Translate the benefits of your products and services into results that are meaningful to your prospects.

 

2. Keep in mind that when it comes to marketing, it’s all about THEM. Don’t waste your marketing dollars telling them all about yourself and your company’s history. Spend those dollars wisely, telling them what you are going to do for them. You will convert them from prospects to customers only by involving their emotions and letting them see that you are the one who will solve their problems.

 

What Are Your Measurements?

SMART Goals

Every business owner wants to be successful. But when someone tells me they want to be more successful, I ask them, “What does success mean to you?”

 

Usually their answer starts out with warm, fuzzy statements about living comfortably and taking care of the family. Vision stuff. This is a necessary and very important conversation, as I outlined in my last post. But we need to progress from vision to actions that will eventually lead to making the vision a reality. How do we figure out what actions to take? As I ask more questions, we eventually get down to goals.

 

Goals can’t be written in general statements. If they are, how will you know whether you’ve met them or not? How will you know how close you are to each goal? Goals must be specific and measurable.

 

Make sure your goals are measurable in two ways. First, the goal must include a target number for something directly related to what you are trying to accomplish for your business. The second part is attaching a specific target date to the goal.   

 

Here’s an example. Alexy is the sole proprietor of a yard maintenance business. In August, she decides to implement a marketing campaign that will encourage homeowners to call her and arrange for fall cleanup services. Her goal is to get a postcard mailed to 5,000 homeowners. When she’s about to get started on the project, she suddenly finds herself with several new customers that require immediate attention.

 

You guessed it – the postcard project ends up on the back burner. But as soon as she has some time, Alexy gets back to it, working with a graphic designer to get the card put together. It takes longer to get this step done than she had expected. Some new obstacles pop up even after the card has been designed. But on October 15th, Alexy is proud and happy to tell her friends that she has mailed out 5,000 postcards. She’s met her goal!

 

Three weeks later, Alexy is feeling discouraged. She’s gotten only 3 calls. Her marketing campaign is not going to generate the revenue she was hoping for. What happened? She had a goal and she met it, didn’t she?

 

There are 2 problems with Alexy’s goal. First, her goal was to mail 5,000 postcards. That’s a specific, measurable goal. But it’s not measuring the right thing. Who cares how many postcards Alexy mails (unless she runs a mailing service!)? A more relevant and meaningful goal for her would specify the number of fall cleanup jobs (sales) the campaign shoud generate. Alexy wasn’t focusing on her real goal. She was very busy doing something that made her feel productive, but she hadn’t thought through how this activity could get her the results she really wanted.

 

The second problem is that Alexy’s goal did not specify a deadline. By the time the postcards landed in mailboxes, Alexy’s target prospects had already found another solution and no longer had any use for the services she was promoting.

 

How to fix it? Focus on what really matters in the business. Alexy’s goal could have been rewritten as follows: 

                                               Close 30 fall cleanup sales by 10/15/12. 

 

This new goal statement is about revenue-generating sales being closed by a certain date. That’s what Alexy really cares about!  Her new goal statement doesn’t even mention postcards. Mailing 5,000 postcards by 9/1/12 would be part of Alexy’s action plan in support of her fall cleanup sales goal. Getting those postcards mailed is an important and measurable sub-goal (a step in her project plan), but it is not her ultimate business goal.

 

Don’t fall into the trap of feeling productive just because you and your people are busy. Make sure you start by setting goals for your revenue and your profit. Only then are you ready to write the sub-goals and action plans that will help you measure progress and achieve those primary goals for your business. And, for every goal and sub-goal, remember to be specific about what will be measured – and when – to prove success.

 

  

The Vision Thing

What’s this “vision thing” and why does it matter?

Business Plan - VisionHaving a vision gives you something important to aim for. If you don’t know what you’re trying to accomplish, you will probably (like many people) spend your life trying one thing after another, perhaps wandering aimlessly along until you run out of things to try – or until you run out of time. Not a pretty picture!

 

Vision is about the really BIG picture. Envision what you want your life to be like 10, 20, or 30 years down the road. What is your family like? Where do you want to live? What do you want to be doing? Who do you want to be with? What will be making you feel fulfilled, happy, productive? 

 

The answers to these questions are the kinds of things we’ve all dreamed about since we were young. It’s important to dream, and to zero in on which dreams we really want to turn into reality. Many people have a long-term life vision that includes the elements of family, friends, hobbies, and helping others. Our life vision is our WHY – the reason we work and the reason we make the choices we make along the way.

 

The work you do, whether it’s running your own business or holding a job or being a stay-at-home parent, is a key element in making your life vision achievable. That’s why having a vision for your work is also essential if you want to keep moving forward, closer and closer to your life goals.

 

What constitutes a business vision? Again, it’s about the BIG picture. Ask yourself some questions. If you’re a business owner, what is the passion that drove you to start this business? Who are the customers you want to serve? How will you make their lives better? What will make your business really stand out from all the rest? How big will your business be? How many people will be working for you? What do you want to do for them? How will your business be seen by your customers, your employees, and the community at large? How will it be seen by your competitors? And on and on.

 

So many questions! That’s why it’s important to take the time to focus on them and write down the answers. Then sort through those answers and identify what really matters to you, and how your business will provide satisfaction and fulfillment to you. Think outside of the box and don’t worry about what’s possible and what’s not! It’s amazing what you can accomplish when you believe in it and you believe in yourself. Find a friend who can brainstorm with you – and stop you when you start imposing unnecessary limitations on yourself and your vision.

 

Finally, create a vision statement that captures, in just a sentence or two, the meaningful essence of what you want your business to be. Here’s a fictitious example: 

Yum-Yum will create incredibly      delicious desserts that will amaze and delight our customers and their      guests throughout the United States. Our employees will be top-notch      performers and we will earn their loyalty by providing extraordinary      growth opportunities and a fun, vibrant work environment.

 

Why is a vision statement important? Because it provides a guidepost for everything you and your employees do in the business. The people that work for you will be more positive and motivated if you tell them (over and over) what the company’s vision is and how important they are to making it a reality. And when you hit a bump in the road or you feel down about the way things are going, you can go back to your vision statement and remind yourself where you’re headed and why. That vision statement can make the difference between (a) feeling defeated and (b) just picking yourself up, dusting yourself off, and moving on to new heights.

 

The Price Is Right?

Business owners often wonder if they’re charging the right price. This can be a tough question.

 

First of all, if they’re charging the lowest price compared to their competitors, the answer is NO. Competing on the basis of price is a losing proposition. For today’s consumers it’s all about value. Good marketing will show consumers what they’re going to get for their money. So price becomes only one of many factors for them to consider. They’re smart people. If you give them enough information, they’ll figure out where they’ll get the biggest bang for their buck – no matter what the price.

 

So that’s a start – don’t offer the lowest price. Now what?

  

Do you know what your prospects and customers are willing to pay for your products and services? If others in your area sell the same things you do, find out what they charge. But remember, it’s not just about price. It’s about value. You need to know what your competitors offer beyond the product or service itself. What are the special customer service touches they provide? How do they communicate with their customers? What do they do to make it easier or more pleasant for their customers to do business with them? What are the extras they throw in that add value? Knowing the answers to these questions is the first step in understanding whether your prices are too high, too low, or just right. 

Let’s suppose you’ve done your research and you’ve determined that you need to change your prices. Proceed with caution! Raising prices might send so many people running to the competition that your profit drops. Lowering prices, on the other hand, might attract more buyers but not enough to make up for the per-sale loss in revenue. (There are other issues involved in changing prices; see “one more thing” at the end of this article).  Here are two examples:

  • Ian is a computer programmer. His profit margin is 40%. He thinks his prices may be too high, so he’s going to try reducing them by 10%. What he may not realize is this: Just to maintain the same profit, he will have to increase the number of sales he closes by 33% (one third). That’s quite a jump! Reducing prices could generate more invoices and make Ian feel good. But he needs to know how many more sales he now needs, and he needs to be confident that it’s a realistic target to hit.      
  • Kathy is an interior designer. Her profit margin, like Ian’s, is 40%. She’s getting so many customers that she has a waiting list. She decides to raise her prices. She figures that fewer sales at a higher price will give her some relief while still generating the same profit (or more!). So she increases her prices by 10%. It turns out that Kathy needs to make sure the number of sales she closes goes down by no more than 20% if she wants to maintain her profits. Like Ian, she needs to know this new sales goal and feel comfortable that she can meet it.

 

Before you try changing prices, take the time to understand the impact on your bottom line. Then adjust your sales goals and make sure you’re comfortable with them. Otherwise you’re probably better off not making that price change! 

One more thing...and it’s a biggie. Before you change any prices, give serious thought to the reaction of your customers. 

 

  • A price hike at the wrong time can leave a very bad taste in their mouths.
  • A drop in prices might make them wonder what’s going on….are you going out of business or something? With very few exceptions, I’m not in favor of permanently cutting prices unless there is a problem that can’t be addressed by increasing value and/or improving marketing.

When a Handshake Isn’t Enough

It happened again last week. I was talking to a business owner and he said, “I’ve never used contracts before and I never had a problem. Until now. I’m gonna lose a lot of money on this job.” This unfortunate fellow had told his customer what would be included in the job and gave her an estimate listing the main items. But he never put the details in writing. You guessed it – once the work got underway, the customer expected a lot more work to be done than the business owner thought he had promised. Rather than start a big fight and risk his reputation, he did the work and lost thousands of dollars.

  Unfortunately, many small business owners learn their lesson the same hard way. When they start their businesses, they’re excited about jumping in and being entrepreneurial. They want to get going and sell their products and services, so they can make money. They focus on what’s needed to generate revenue, and they get very involved in the day-to-day sales and operations.

  These enthusiastic new entrepreneurs feel they have no time to worry about risk. As they go through their very busy days, contract agreements are about the last thing on their minds. In fact, most people starting their first business just don’t realize the risks they’re taking by doing everything on a handshake alone.

    So what are these risks? Here are just a few things that can easily go wrong if you don’t sign agreements with your customers and your employees:

  • YOU CAN END UP DOING A LOT MORE WORK THAN YOU THINK YOU PROMISED YOUR CUSTOMER – without being  paid for it.  This is the situation I described above. A written agreement, signed by both parties, needs to provide enough detail to prevent expensive misunderstandings.      
  • YOU CAN LOSE YOUR COMPETITIVE EDGE. Employees might divulge confidential information that can tip off your competitors in a way that hurts you. Chances are that these employees won’t even realize they’re doing something that might damage your business. The solution is an easy one. Have them sign a confidentiality agreement (also known as a non-disclosure agreement). Make sure you explain what’s OK to discuss on the outside and what’s not.      
  • YOUR EMPLOYEE CAN BECOME YOUR COMPETITOR. Remember when you decided to start your own business? Is starting a business an idea that might appeal to your employee? Many business owners have found themselves investing time and money to train an employee and then losing that employee. On top of that – adding insult to injury – they find out that the employee has opened the same kind of business in the same area. When that happens, the business owner learns the hard way to have all employees sign a contract including a non-compete clause. This clause prohibits the employee from opening a competing business (or working for a competing      business) for a specific period of time after leaving the company.

 

“I can’t afford to pay a lawyer for all these contracts,” some say.  To those people, I respond, “How much money can you afford to lose?”

   Running a business without written agreements is really risky. If you’re lucky, everything will be fine. But if something goes wrong, you can lose a lot of money or even your business and possibly your home, too. So don’t be penny-wise and pound-foolish!

  Even business owners who are really strapped for cash can afford written agreements. DIY is seldom the best way to do things, but at times it’s all we can afford. There are sample agreements available on the internet. They need to be tailored to each particular business, and it’s still best to have an attorney review them. This approach may be less costly than having the attorney start from scratch.

  But when money is just too tight to bring in a professional, it’s better to have an imperfect contract than none at all. It may just help get the business around the corner that makes an attorney affordable!

  One more thing. Using written contracts with your customers and employees improves the image of your business as a serious, professional enterprise. That can improve your sales and help you attract and keep great employees.