This year has been a bad year for many companies – here is how to make sure 2017 is better
The past 12 months have not been a great time for many businesses. It started with the economy struggling to recover from the effects of the double change in finance ministers, was threatened by potential downgrades to sub investment grade by the rating agencies and characterised by shocks like Brexit, the Trump victory in America, local government elections, the #feesmustfall movement and the State Capture report. The serious drought saw food prices rocket and water restrictions added to the difficulty of doing business. All these issues make buyers nervous, and nervous buyers will delay all but essential purchases.
On top of all this the South African national pastime of sharing bad news brought a mood of pessimism and resignation. We know that water restrictions and high food prices will continue well into 2017 and the ruling party will have an elective conference which could be abrasive in the coming year. What, you may ask will make this year any better than the previous one? One of the answer to that question is you. There are many things you can do to shield your business from negative external events, and to seek the opportunities that any adverse event brings. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in October 2015 and is posted here by their kind permission
Concentrate your resources on the target to improve performance
It seems logical to spread your net as wide as possible, to develop all available sales opportunities and markets if you want to grow. This makes sense if you are the dominant player in the market with an abundance of resources, one who can afford to waste resources on loss making sales simply to deny them to competitors. For everyone else it is a bad idea. Military strategist von Clausewitz wrote “Where absolute superiority is not obtainable, you must produce a relative one at the decisive point by making skilful use of what you have”, echoing the much earlier Sun Tzu maxim of concentrating your forces where the enemy is weak.
This military strategy applies equally to business. If you concentrate your resources and focus on a particular target, you gain many advantages: Sales costs reduce, sales become easier through customer referrals. Salespeople become expert in the area and competitors recognise your expertise and go elsewhere, so your strike rate increases. Customer support and administration costs fall and service levels increase. Your company becomes the go to company in that market.
By contrast trying to hit everything that moves is costly; implementation and procurement complexity increases, as does the risk of cancelled sales. Your people become frustrated because they continually need to learn new industries and seldom re-use their expertise. Poor customer service is frequently an outcome and you lose the power of relevant reference customers. Continue reading
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2014 and is posted here by their kind permission
Should you tender or stay away? Some basic rules
Tenders are used by all levels of government and many companies to buy goods and services and issue contracts. The total value of tender business is enormous, so an immediate reaction is to get involved. There is a downside as many small businesses and start-ups have experienced. It is entirely possible to submit many, many tenders without success. The direct cost of preparing a tender is high, but the opportunity cost of conventional sales you could have made instead is higher.
I call these ‘me too’ tender submissions, where you have nothing special to offer, and the company never heard of you. Among the bidders will be existing suppliers, those having specialist skills in the area and those bidding the lowest price because they can. Your chances of success are almost zero. Instead of wasting your time, develop a specific niche expertise or technology then tell potential buyers about it. Your chances of winning subsequent tenders increases dramatically. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2015 and is posted here by their kind permission
Turn your whole company into an enthusiastic unit that aids and promotes your sales
It is in the interests of any employee to do anything they can to ensure the business makes sales, or at least not put sales at risk. Aside from loyalty to their employer, a healthy and growing business means everyone is better off and has improved prospects for promotion. Strangely there are employees, and some managers too, who damage the company through carelessness, incompetence or deliberate obstruction. They are hurting themselves as much as their employer.
Contrast that situation with companies where everyone is customer centric, and frequently attract praise from customers they have been in contact with. There are typically no unresolved complaints on consumer forums, and every employee seems to know why customers should buy.
To build a company like them, some introspection may be a good idea. Do you really deliver goods and services that meet customer expectations, or have customers had to lower their expectations to your standards? Think of the grudge purchases you make, or the times you have been distressed but did not change supplier after a bad experience. You cannot expect your employees to be champions if your company supplies shoddy products, uses untrained technicians and seldom delivers on its promises. Fix the real problems and you will be pleasantly surprised by the change in your staff. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in July 2015 and is posted here by their kind permission
Sensible outcomes from disputes
“The customer is always right” was originally coined in 1909 as a way of differentiating Selfridges Department Store from competitors. It was revolutionary at the time, when misrepresentation by retailers was common and “caveat emptor’ (let the buyer beware) was the usual response to customer complaints.
Customer disputes happen in any business. Unresolved disputes may result in loss of customers or groups of customers, refusal to pay, widespread and often biased bad publicity, loss of repute, legal action, and even damage to property and public protest. Minor disputes can quickly escalate into anger, recriminations, threats and violence. Staff complaints about abusive and unreasonable customers is another source of dispute.
Where does it start?
Customer perceptions of broken promises or products not living up to expectations are at the heart of many disputes. Rude, uncaring or incompetent service from employees is another frequent cause. You may initiate a dispute relating to slow or non-payment, unreasonable or bullying customers or continual changes to requirements but unwillingness to pay for changes.
Arguments will escalate quickly if either party feels they are not being listened to by the other. A simple request can grow to a blazing row when either party ignores the other or scorns their view. Many serious disputes could have been resolved easily if they were attended to sensibly, courteously and early. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in June 2015 and is posted here by their kind permission
Does unique mean it will make millions for you?
You have created an innovation; congratulations. It may be a unique product, a brand new service, a new way of distributing things, a unique business model or a combination of these – but will it fly? Hopefully it will be a success and reward you, but just because it is unique is no guarantee of commercial success. The great innovations are generally those where potential customers immediately see the value, and perceive the value to be higher than the cost. Think of prepaid airtime which opened cell phone use to those who could not afford a contract.
Innovations which struggle to get off the ground are often those where the entrepreneur is passionate about it and believes potential customers should share his or her passion. This is a good way to learn that even great and creative products must be sold. Many wonderful innovations have never been launched or failed when they were introduced.
Preparing to launch
Ask yourself: Is this innovation is in response to a real market need, does the market recognise this need or are they not aware of it yet. If you are in the second category be prepared to spend a lot of time and money convincing people they really have this need.
There are two key requirements for a successful launch of a unique product; reasonable certainty that customers will buy at the proposed price and sufficient money to develop and market the innovation. Please do not ignore the marketing costs. Commercial failure of many innovations stemmed from entrepreneurs who spent all their money on perfecting the product and had nothing left to tell the market about it. Marketing innovations is expensive; the market must be convinced that the innovation works, is cost effective and gives advantages over old ways of doing things. Do not underestimate marketing costs. Continue reading
This was the topic of Ed’s address to the recent series of Sales Summits around the country.
Most companies says they sell solutions to their customers, but they find it surprisingly difficult to explain the solution provided in recent sales; they often describe products sold instead. It is still harder to get answers about the value of the solution provided – what return in money or some other measureable did the customer enjoy as an outcome of the sale? And yet this is the very definition of a solution “A mutually agreed answer to a recognised problem, which provides a measurable improvement”. You might want to reflect on this and ask yourself – do we really sell solutions?
The formal methodology of Solution Selling goes way back to the 1980’s when a visionary ex Xerox sales training director Mike Bosworth launched a company to train salespeople in his methodology. He published a book in 1993 outlining his ideas, which revolutionised the basis of selling, converting technique and technology based feature / benefit selling to and more consultative customer and solution orientated approach. Arguably this was the foundation of all modern customer centric selling. Continue reading
The importance of getting people talking about your company
This article was published as the Sanlam Business Tips for Business Owners December 2014 edition. This publication is a great resource for entrepreneurs, well worth subscribing.
People telling others about their positive experiences with your company sends a far more powerful marketing message than any advertisement. Word of mouth is credible, personal and admiring. The best advertising cannot match that. Word of mouth is also free, so it is a great marketing medium and deserves more attention that it normally gets.
You cannot simply ask people to talk about your company. Larger organisations use ‘brand ambassadors’ to promote their products. The audience knows the brand ambassador is being paid to promote the products, so the message lacks credibility, it is not true word of mouth. Few of us will tell others about a reasonably good experience with a supplier, unless we are asked for a recommendation. How then can your company use this valuable marketing tool?
The best example I know comes from many years ago when I routinely bought lunch at a deli called The Shop Around the Corner in downtown Johannesburg. Their pizza slices came from large round pizzas, roughly cut into segments, and every time I bought one the counter hand would carefully select the biggest one on the tray for me. That felt great! I soon realised that every customer got the biggest available slice. When the slices ran low a fresh pizza was cut and the slices added; the process of serving the biggest slice first continued. I talked to many people about how wonderful their service was and I am sure many others did too I am still talking about it almost thirty years later. Total cost of this exercise – one pizza slice each lunchtime. The Shop Around the Corner is still there, through all the changes in central Johannesburg, under the same ownership. With that great customer service, good food and smart marketing I am not surprised. Learn from them. Continue reading
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in October 2014 and is posted here by their kind permission
Sales to huge organisations can be wonderful, but there are risks
Making a breakthrough into a giant corporate or a part of government is like finding the pot of gold for many entrepreneurs. If you have secured a contract rather than a single sale the excitement is even greater; the long-term profit generated allows the business to fund growth and regulates the cash flow. Beware though, this kind of business comes with some risks, and entrepreneurs should be aware that such contracts have destroyed businesses, and cost entrepreneurs everything they owned.
Making the sale
Large organisations, from government departments to mines are required to buy from small businesses, especially black empowered ones. We expect them to seek out entrepreneurial companies as suppliers, but it does not work that way. Little businesses have to fight hard to become suppliers. Large organisations are driven by budgets and the key performance objectives (KPIs) of the business unit which needs the product or service, so they will buy the products that fit the specification they prepared to suit those needs. This may not be the best product offered to them. Giants are risk averse and bureaucratic.
To win their trust you need to be aware of their style and needs and prepare your company and products to meet those. Pitch your sale in a way that will help the end users to do their job better. If there is ever a case of selling to the customer needs then this is it – you want to stand out from competitors and show why your company should become the supplier. Once you make the sale you must execute flawlessly all the time, and be instantly available to them at all hours. Continue reading
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2013 and is posted here by their kind permission
Early sales are vital for start-ups, early bad sales are dangerous
When you open the doors of a new business your immediate thoughts are likely to be about income producing sales. If it is a retail business you will be watching anxiously for the first people to enter the store, restaurant, hairdresser or filling station. If you sell business to business (B2B) you must build new prospects to develop early sales. Expenses mount up, and insufficient sales income means your business could run out of cash and be forced to close before it really got started. Making early sales is that important.
Low hanging fruit
Everyone has heard about ‘low hanging fruit’ and you, the new entrepreneur, should look for those sales which you can most readily close. ‘Low hanging fruit’ is usually understood to mean potential customers which are easy to start selling to, but there is a problem in trying to sell to anybody who will listen. If the prospect is obvious to you it is also obvious to competitors, and they are more established, have customer references and will be more assured than you. They will also be eager to shut out a new competitor.
To really be ‘low hanging fruit’ the prospects should be those which your new business can easily close. This means retail customers who buy rather than browse, and a high ‘strike rate’ – the ratio between sales cycles begun and closed – in B2B organisations. Continue reading
This article was written by Ed Hatton, the Start Up Coach for the South African edition of Entrepreneur magazine, as the My Mentor column published in July 2013 and is posted here by their kind permission
What makes your business the supplier of choice for your customers?
I occasionally ask groups of entrepreneurs why they think their customers buy from them. After an awkward silence some in the group will give answers about product uniqueness, price advantage or better location, or easily copied ones like good quality and better service. At least some entrepreneurs in the group will really not know.
Entrepreneurs who do not know why customers buy take a huge risk of customers drifting away for unknown reasons. The question is even more important for start ups. Anyone who plans to open a business and does not identify clear reasons why customers would buy risks opening a business which will make no sales.
Why customers buy
There is a huge body of research about buyer motivations which is good to study. In my view the most important business differentiators are uniqueness or competitiveness
Uniqueness may mean innovative products or services, but can also be the uniqueness of the business principal. Products like trousers, perfumes, sporting equipment and coffee bars have thrived from being driven by a famous sports or entertainment star. For the average entrepreneur who is not famous or an inventor there are still options to be unique. Businesses which use a unique pricing model will rent when others sell, offer last minute sales at incredible discounts, or develop other pricing innovations. They will not simply sell at lower prices. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in April 2013 and is posted here by their kind permission.
You have the expertise but where are the customers?
This entrepreneur had 26 years experience in the security industry when he started his own security company. For several years he has been unable to secure guarding contracts, and asks for help
Every start up entrepreneur believes that a sustainable and profitable enterprise can be built and this belief is reinforced by expertise in the product or service that the company will deliver. An expert in the chosen field has big advantages; he or she does not need to climb the product learning curve that affects so many start-up entrepreneurs. However as our questioner has discovered to his cost, expertise in the chosen field alone does not guarantee success.
A successful business must provide customers with services which they perceive to be more desirable and valuable than the services available from competitors. This perception is not just about the product or service; it covers the supplying company, people, styles, and brand association – the whole package on offer. The challenge for start up entrepreneurs is to create a business that provides the package which will attract customers away from alternatives – and then communicate the package to them. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in March 2013 and is posted here by their kind permission.
The subject must be important to potential buyers
This entrepreneur was the victim of a horrific motor vehicle accident that left him brain damaged. He has beaten the odds and gained several tertiary qualifications. He asks how he can turn his inspiring story, as well as information about brain injuries into a career as a speaker.
This entrepreneur is very passionate and knowledgeable about his subject and has researched the high prevalence and management of brain injuries. He believes everyone should be aware of this information. He also has an inspiring story to tell, of overcoming huge obstacles on his way to his qualifications. His problem is getting paid speaking assignments.
Many entrepreneurs have products and services in which they believe passionately, and think potential customers should share their enthusiasm, but consumers at every level have the choice of more products and services than they could ever buy. They select those which are important, which may not be the services the entrepreneur believes in so passionately. So they do not come asking for the entrepreneur’s services and that can leave the him bewildered and frustrated. Continue reading
You have the idea, but what are the steps needed to turn the idea into a business
I meet and communicate with many people who have an idea that they think can be turned into a payable business but do not know where to start, and many such ideas never become enterprises, which means no new economic boost or jobs, and we need both to take the focus from large organisations and ever increasing government bureaucracies.
So here are a few steps to convert ideas to enterprises.
Who will buy it?
Without sales there is no business and yet too many start ups have only an optimistic guess at sales income. To reduce the risk of early failure the target market has to be clearly identified, it has to have the disposable income to buy the product or service and it has to be one that the new business can communicate with and sell to.
Break that sentence down into its components and you will see the need for a whole lot of research, thinking and planning. The advantage of doing this is it is easier and less expensive to communicate the values of a product to a tightly defined market and much easier to attract them to the ‘storefront’ – whether that is an actual store, an internet site or a salesperson. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in August 2012 and is posted here by their kind permission.
Turning an idea into a viable business is not as difficult as it seems
This entrepreneur has a business idea which he thinks will make a viable business, but is unsure of how to go about commercialising the idea. He asks how to execute this transition.
Many people have a business idea. Very few ideas actually turn into commercially viable businesses. This is sad when our country so desperately needs all the new businesses possible to address the terrible unemployment situation. A part of the reason for this failure is highlighted by this month’s challenge; many potential entrepreneurs do not know which steps must be taken to commercialise an idea.
The first step is the business model, including the source of income. This entrepreneur will provide a service to a tightly defined market, and make his money from fees. In other enterprises the income could be commission on sales, sponsorship of an activity, rentals, royalties or from advertising income. The source of products for resale and other necessary services must also be identified. Continue reading