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business tips

Plans vs. Planning

This article was written by Ed Hatton and first published as a Sanlam Cobalt Business Tips article during December 2010. Sanlam has valuable resources for entrepreneurs and you should consider subscribing to receive the Sanlam Cobalt articles if you have not already done so

….the simple plan

That they should take who have the power

And they should keep who can – Wordsworth

 

Will you be the growing business taking more market share? A defender of your customer base? Or one of those that lose ground to better planned and organised competitors? Do you have a plan to guide your business? Does it work for you?

Eisenhower famously said, “Plans are nothing, planning is everything”. The process of developing a good business plan will force you to think about your customers, competitors and the resources you need, and that thinking should drive your business in the future.

Assume you want to develop a plan for 2011 to defend your market share, or take new business. You may be tempted to download one of the excellent business planning templates and then concentrate on filling in the blocks. Some entrepreneurs, especially those starting out, will engage a cut-and-paste business plan developer. But there is a much better way:  Simply follow Eisenhower’s advice and focus on the process of planning. Continue reading

Why don’t we study failure?

pic courtesy of imagafter.com

If you look at the ranks of business books in any bookstore you will see lots of ‘how to’ books, and even more ‘how I did it’ guides. So if you just follow the route taken by Richard Branson or Robert Kiyosaki or Jack Welsh you too can be a success. Web sites (including my own business site) are filled with case studies of business successes. But where could you go if you wanted to study failure, if you wanted to avoid doing what caused the downfall of the failed entrepreneur?

Contrast that with learning to drive a car or fly an aeroplane. You may read stories of famous racing drivers or see films of daring fighter pilots, but that is not how you will train. Instead you will be taught how many ways there are to get it wrong, and what to do about it. Driving a car or flying a plane start with the belief that success is required, that failure is to be avoided. Business training seems to work on the basis that failure is expected, that success is for the few high priests of entrepreneurship, and we may be able to stave off disaster by following their lead. How peculiar. Continue reading

Fighting the lowest price

pic courtesy of imageafter.com

This is the first of a series of sales and marketing tips drawn from my long experience of trying different things. Some could call these street fighting ideas…

Say you operate in a market with many small competitors. Price will become a major decision factor and price competition will be fierce. Some competitors will pitch their prices at levels where they cannot give the service they promise, but they will establish a low price perception in the minds of customers.

People in courier services, stationers, web site development car repairs and a host of other business types will have experienced this problem.

Your company wants to be there for the long haul and give good customer service, but you cannot compete with the prices offered by those who promise the world and don’t deliver, or those new entrants who are still to discover how costly customer service is. How do you compete? Continue reading

Really free marketing ideas

How to improve your brand image and visibility at zero cost, or maybe even less than that

Things to do: (The Good)

In downtown Johannesburg a fast food takeaway used to bake large pizzas, and sell them by the slice.  Each time I bought a slice I noticed that the attendant chose the biggest available slice for me. As you can imagine, that made me feel really good. When a new pie was delivered for the oven the same rule applied – first sell the biggest slice. So the takeaway gained great goodwill and encouraged customers to come back. Maybe they sold 50 or 60 slices of pizza a day, that meant 50 or 60 customers feeling special, feeling valued.  What was the cost of this? Nothing. That’s right, not a cent.

What can you do to make your customer feel special and valued? Continue reading

The Brand New Ending

pic courtesy of freeimages.co.uk

If you, as entrepreneurs often do, are musing about how you can improve your business right now by doing something different and creative you might want to think about an interesting saying that I came across a while ago.

“No one can go back and make a brand new start. Anyone can start from now and make a brand new ending”. I have never managed to find the author (and if you know please tell me) but I salute the thinking.

If you wanted to apply this thought to your business you could imagine you were about to launch your business tomorrow or next week and re-experience the terror and excitement of a new venture.

 If you were truly able to put yourself in this mode you would walk on water to satisfy a potential customer requirement, you would speculate about what they were thinking endlessly and try to anticipate their needs. Continue reading

ABS for business safely

abs3In motoring terms ABS is the technology that stops wheels from locking under hard braking, which means that they do not lose grip and the car will not simply slide into an obstruction. The device has saved many lives and countless costs of repairs. It is a vital safety factor and no modern car should be without ABS.
In entrepreneurial business there is another, equally vital ABS:

Always Be Selling

As businesses develop the entrepreneur can slide into bad habits, where he sees more of his suppliers than his customers, where he spends more time on the accounts and records than on making his products more desirable to his markets. Although it is not as physically dangerous as being in a car sliding helplessly towards a stationary truck, it can be even more expensive in lost business opportunities or customer dissatisfaction. Continue reading

Priceless

image courtesy of imageafter.com

In which of these products and services would you choose the lowest cost option over all other considerations?

  • Legal services
  • Fast food
  • Motor vehicle maintenance
  • Carpeting
  • Wine
  • Computer printers
  • Office furniture

 

I would guess most people will answer ‘none of the above’. We value our safety, working environment and enjoyment to highly to compromise.

A scenario

Now picture this all-too-frequent scenario: you are called out in the early hours of the morning to your business. There has been a break in. With a sinking heart you see the smashed security door, notice that your delivery vehicle is missing (it is subsequently found abandoned and burnt out) and the premises are a shambles. All the computer screens are missing and so are the servers – a terrifying thought strikes; are the backups up to date? Will they work? Continue reading

Treading warily among the green shoots of economic recovery

pic courtesy of imageafter.com

pic courtesy of imageafter.com

The recession is technically over, with much debate among economists about a U, V or W shaped return to good times. The phrase ‘green shoots of recovery’ became an accepted part of business conversation six months ago, but many still feel the pain of the effect of the recession.

Should the entrepreneur now assume that the bad times are now just a fading unpleasant memory and that it is good strategy to go back to business as usual? Or do those ‘green shoots’ disguise sharp spikes waiting for an unwary entrepreneur to tread on them? Continue reading

Time to stab the wounded?

CrosshairsAn old saying is that auditors arrive after the battle and enter the battlefield to finish off the wounded…

The events of 2008 and 2009 were a serious battlefield in many business sectors, with lots of failed and severely damaged businesses littering the landscape. A colleague expressed it in these words: “Those that survived the downturn often did so by using their reserves. They now are in business but in a vulnerable position with little or no reserves to fall back on. The ones who had no reserves when the downturn hit are not around anymore.” A harsh analysis perhaps but with much validity in many areas of business.

The euphoria of the successful Soccer World Cup and the air of optimism about the end of the recession is a good time to reflect where your business stands. Are you still skating on thin ice, where any major reversal right now will destroy you? Are you so overburdened by debt you find it difficult to trade? Or are you in a better shape than that, with limited but positive cash flows and some reserves?

If you fall into that latter category you may choose to start right now with a major and aggressive marketing campaign designed to take market share away from those competitors who are worse off than you. Continue reading

Taking baby steps – a strategy to overcome disaster

pic courtesy of imageafter.com

pic courtesy of imageafter.com

Here is a familiar story. A good and profitable business sees a potential threat become reality and turnover falls suddenly. The former comfortable profit becomes a monthly loss.

The first imperative is to stop losing money which means that there must be more gross profit or lower expenses or both. Surprisingly tiny, almost insignificant changes will stop the company losing money. It’s the practice of taking baby steps instead of giant leaps.

For example: A business turns over of R1M per month before the crisis at a gross margin of 40% with operating expenses of R350K per month, leaving a net of R50K per month. To simplify the accounting this article will look at profit per month, as if this was a cash business and ignore tax. Say turnover shrinks by 20% after the disaster strikes, and the profit turns to a loss of R30K per month.

If, instead of making radical changes or retrenching staff, the company implements a careful strategy of tweaking several factors the loss can be eliminated without major change. Continue reading

How to panic sensibly – strategies for overcoming a business reversal

Pic courtesy of freeimages.co.uk

Pic courtesy of freeimages.co.uk

In most businesses there is always a risk of a sudden and serious reversal. A big customer stops buying, a supplier kills a product range, there is a strike in your sector, a major competitor appears, or any one of many potential threats occurs. Turnover slows and profits fall below breakeven and turn to losses.

Usually the business owner now exhibits some degree of panic. Common responses include the owner (male or female, the male gender is used only for convenience in this article) punishing himself by taking out less money, adding to his worries and possibly getting into personal debt. Then he delays paying creditors as long as possible and as a reward may have raw material or inventory deliveries being suspended because his account is not up to date. Often he holds off paying his VAT and incurs penalties. He may institute some special offers for new customers to regain the lost turnover, but this will affect his margins and alienate his regular customers who are paying a higher price. Continue reading

Starting a new business

pic courtesy of freeimages.co.uk

pic courtesy of freeimages.co.uk

Starting a new business is an exhilarating and scary step across a line that non-entrepreneurs will never experience or understand. It’s a bit like going solo if you trained as a pilot. Suddenly there is nobody to back you up, nobody to rescue you, nobody to ask. It is the most incredible sense of achievement and excitement, and a bit frightening too. You can create in the corporate world but there is something special about creating a new enterprise that moves the sense of satisfaction into a different league.

The pointers below are there to help new entrepreneurs to reduce their risk and increase their profitability and enjoyment. And to avoid tripping over things that have felled others – I trust they will be valuable.

    • Be passionate. If you believe you supply goods and services that are really great, and you love what you do, you reduce your risk and improve your enjoyment.
    • Don’t be a ‘me too’ business – If you are just another supplier doing the same as many others around then you are likely to struggle. Be different.
    • You will get scared. You will worry you won’t make it, or be afraid you are not good enough. You will be tempted to give up. Get used to all this, it keeps you sharp.
    Continue reading