Time and the Path Forward

I have posted about the top 3 things that make businesses fail.  Now I want to talk about the primary wake a business succeed:  Time!  I know that sounds a bit crazy.  But in the end, companies that use Time well are those that make great businesses.  Let us look at our 3 negative factors.

Capital is required to perform functions efficiently.  Underfunded Companies bottleneck themselves.  I was talking to a prospect the other day about challenges with his Marketing.  He expressed a Time Crunch to get the work done.  We talked about a part-time position that he could use a College Intern to do.  He had considered other options but they were all "too expensive".  Not Marketing efficiently is "too expensive".

Sales and Marketing are all about bringing good prospects to your business and converting them into Clients.  I had a client that was searching far and wide for customers but had a place of business right next to 250 ideal prospects.  I got her to understand that she should focus her marketing on that 250 before she expanded out to other audiences.  This helped make her business grow and thrive quickly.

People and Organization are all about scaling effectively.  I have a client who was always looking for entry-level employees.  I showed him a way of hiring higher end employees to manage sub-contractors.  This allowed him to expand his business by 3x in profit over 2 years.  Having the right people and having them do the right jobs is the way to build a path forward.

If you want a positive initiative, then build a living business plan (not just one that sits in a drawer).  You can write measurable objectives and hold yourself accountable for meeting them.  You can see where you are off-track and correct your course to hit your goal.  It is the right thing to do and will help you spend your time on the right things.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

http://www.jimsackman.com/

Do You have the Right People?

We have talked about the challenges of Finances, Sales, and Marketing.  Now, we come to the last of the big 3 company problems:  People.  For most companies, people directly contribute to about 70% of Operating Expenses.  That means having the right people and employing them properly is a top priority.

To start with, this means that the people in your business need to understand their job descriptions.  Many small businesses do not have formal job descriptions and employee handbooks.  You should consider that unless you tell people what you want them to do then they will what they consider is correct.  The first step here is to define the job and the rules of employment.  By doing this, you provide a shortcut to productivity increases.

The second thing is that there needs to be a model for delegation.  I prefer the Trust Model of Delegation.  This means that people are given more discretion and more freedom over time.  This needs to start with what I call Bright Line decision making.  When you have a new employee or an employee in a new situation, give them Bright Lines to make decisions with.  Things that fall out of those stark choices should be escalated.  This gives the employee a front row seat to you making decisions and the reasoning behind it.

Finally, on the topic of decision making, this is the place for Mission, Vision, and Values. By guiding your employees to what is important to you as a business, you make it more likely that they will make decisions the way you want them to.  Remember, they represent you in the public. You need them to represent you as you want to be represented.

If you are a sole proprietor, this extends to any partners and vendors that you have.  You need to be sure that they are clear on what you are doing and their role within it.

Have a great day!
 

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

 

Do You have Effective Sales and Marketing?

Last time, I talked about companies that may not have enough capital to succeed.  The second common way that businesses fail is around poor Sales and Marketing.  I want to differentiate the two functions.  The job of Marketing is to get people or businesses to express interest in your business.  This is the creation of Leads or Prospects.  The job of Sales is to take those Leads/Prospects and convert them into Customers.

A metric to think about in this mode is the "Cost of Customer Acquisition" (COCA).  The way to figure this out is to divide the spend on Sales and Marketing by the number of new clients.  If you spend, $10,000 on Sales and Marketing and have 100 Customers, then your COCA is $100.  This number is important because it defines how much value each customer costs you incrementally.  If you are selling a haircut for $20, then $100 COCA is a bad number.  If you are selling Luxury Yachts, $100 is an awesome Cost of Customer Acquisition.  A good COCA is very dependent on the business.

One thing to note is that various Networking and Referral Marketing systems are relatively low cost from an out-of-pocket standpoint.  However, time needs to be considered.  For example, I am a member of BNI.  BNI recommends that you spend about 3.5 hours a week on meetings with other group members.  If you have an hourly rate of $50/hour, then this costs $175/week or $700/month or $8,400/year.  Without pocket expenses, this is really $10,000 per year.  There is nothing wrong with spending $10,000 on Sales and Marketing if you get your money back.

So, when we are talking about having an efficient and effective Sales and Marketing process in your company, calculate your COCA.  You can break this down and see what your cost for different Marketing Channels is.  You can look at your Sales Conversion Rate for your Marketing Channels.  With that information, you can begin to understand if you are being effective.
 

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

 

Do You Have Enough Money?

We have been walking through why Small Business fail and this is one of the big questions.  In a technical context, I would argue that most startups are undercapitalized.  They don't really have enough money to start their company and struggle before it can become profitable.

Why is that?  So many people that I talk to don't have any financial background and have little interest in learning.  This means that they are unable to create an estimate for the startup costs of their business.  I normally run into them when they have an idea and ask me to work for a percentage of the company or for free/barter.  I know that you are now thinking, "Is it that he has not been able to demonstrate a value proposition?"  That may be true some percentage of the time, but I know many cases where they just did not have the money.

Let me give you an example.  I met with a Woman who wanted to start an Alzheimer's Care Center.  This center would be located on a farm so that they could grow their own food.  This was to provide the residents with animal interaction and organic food.  I asked if she had a property in mind.  I was not sure that such a property would be available for sale and she might have to build.  I also was unclear on the insurance and liability issues involved by mixing two industries as she wanted to.  Her plan was to keep her full-time job and run this facility.  She needed her job to pay bills while this facility was starting up.  In the back of my head, I expected that this would take $5M - $10M to start. 

Now I recognize that this is an extreme case, but I have a multitude of lower end examples.  They ask for my help in developing and sometimes writing the business plan.  When they find what I charge for this, they turn white and say thank you.  I know that I am not unrealistic in what I am asking.  They are asking for anything from 10 - 100 hours worth of work and want me to take less than $5/hour.  If you are in that situation and cannot afford to get professional help in areas like bookkeeping and website development, then you need to consider whether you are doing the right thing.

So, if you don't know how to create a budget and estimates for a 2 - 3-year ramp-up phase of the business, then expect to hire an expert (like me) to do them.  Unless you are my personal friend, don't expect my help for free.  If you cannot afford that help, do something else until you can afford it.

Thanks, and have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

 

Perspective

Last time I talked about the elements of Change and a model for evaluating Change.  This week I want to talk about Perspective.  There are two Perspective viewpoints that I think are really important here.

The first is Distance.  When I work with Business Owners, I know that they care deeply about their business.  This passion leads them down the day to day execution of what is in front of them.  It is one of my jobs to pick their head's up and look at the environment that the business is operating in.  Doing fine is fine.  However, if the economy and your industry are expanding, are you expanding faster, at the same rate or slower?  Here in Sonoma County, we have had 3 major changes over the past few years:  The opening of the Graton Casino, The expansion of the Sonoma County Airport, and the Wildfires in 2017.  Almost everyone has thought about this last.  I have run into few if any business owners if these other changes have been considered in their business.  I am not saying that there will be an impact that everyone can take advantage of.  But if someone is spending $1B in your county, you might want to think about how that will change things.

The second is Objectivity.  The passion that I mentioned earlier creates another problem.  The other external group that Business Owners need to evaluate is competition.  How does the business compare to its competitors?  Why do prospects buy from others?  I have seen many Owners declare themselves the best at what they do.  They then turn around and complain about the capabilities of their competitors.  I can help Owners see their business as the rest of the world views them.  This can be a harsh lesson for many people who view themselves in a very different place than they actually are.  How do the products and services really stack up in the market?  How do the company's policies and people compare to what else is out on the market?  There are many questions that Owners don't want to face.

The reason I can bring that is similar to the Bacon and Eggs analogy.  In a Bacon and Eggs breakfast, the Chicken is interested but the Pig is committed.  By having that detachment from the business, I can be interested in the success but not have the emotional attachment.  Emotion is the reason that many bad investment decisions are made whether that is in a single negotiation, an investment or in a business.  By being that cold splash of reality, it can help many Owners make good decisions.


 

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!

A Formula for Change

In pursuit of understanding why business owners are not always able to fix their businesses, I want to start with a Formula.  In fact, it is called Gleicher's Formula.  This is a way of judging whether any change will happen within an organization.  Let me use what is a simplified form called the Dannemiller Version:

D  x  V x  F  >  R

Where D stands for Dissatisfaction;
V stands for Vision;
F means Fist Steps;
and R is Resistance.

Now if I apply this formula to most business books, they are really clear on the Dissatisfaction.  Most of these books are single topic-oriented about how to grow a company or have better employees or have customers lining up for your products and services.  Readers will self-select books around topics that are of interest to them.  There are over 20 Millions solo entrepreneurs in the United States, so there is a good sized market.

The Vision is generally pretty clear as well.  "Would you like to be able to never advertise your Products, Click Here to Find Out How!".  Some books are not quite as clear about this, but they generally miss the point of Vision anyway.  Vision is all about how whatever change impacts the rest of your life.  Nobody wants to address this, because it is intensely personal.  A book can not interact with a business owner and find out how their life is different because of a change.  So, instead, it is all puppies and rainbows. 

Finally, most books are very unclear in First Steps.  They talk about a grand idea of some sort.  But leave the implementation of the idea up to the user.  It is one reason that I actually have a very small number of books that I recommend to people.  I want to recommend books that don't just sound good but give you a roadmap for implementation.  And it is an implementation where books very often fall short.  Well, it is not really their fault.  Books fall down because things happen in our business and our life.  Momentum gets lost and there is nobody to force us to carry on with implementing a change.  The change becomes forgotten and washes away.

So, you can see how many well-meaning books can simply fail to get results.  This is true even if they offer excellent ideas and information.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business - Change Your Life!