This article was first published in the Sanlam Business Tips for Business Owners newsletter of December 2015, an excellent resource for entrepreneurs distributed free by a wonderful company. Entrepreneurs would do well to subscribe to this newsletter.
Comparing actual performance against planned results pays dividends
At year end many companies take stock of all inventory items. Taking stock of how your company performed against your plan is even more important. Pull out the business plan you completed earlier and make a comparison between what was planned and what actually happened. Of course if you never did a business plan cannot do this, and you should take note of Dave Ramsay’s wise words “A goal without a plan is just a dream”. Stop dreaming, plan and implement
The easiest way to do this is to develop a spreadsheet or table with the targets from the plan listed. Be as comprehensive as you can be. Obvious items are sales, profitability and cash flow forecasts, customer and staff retention, staff and management development, customer service levels, planned marketing campaigns, planned product development / improvement and competition monitoring and reaction. If those were not in your plan take this as a good reminder about what should be included when you do your plan for the following year. Now you should enter the actual results and show variances.
When you compare actuals to plan be brutally honest. If your plan had a non measureable goal like “give great customer service” assess honestly how well or badly you did, ask a few customers, and not only the friendly ones. 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 November 2014 and is posted here by their kind permission
November and December offer many opportunities for alert entrepreneurs
You will all have experienced it – the dreaded November slowdown, with many anticipating the year-end holidays before South Africa shuts down sometime in December. Entrepreneurs complain that it is impossible to sell at this time of the year. Many can’t wait for the start of the holidays.
How much are you contributing to this business slowdown? Are you demotivated by decisions being deferred to next year? Have you gone into pre-holiday slowdown mode, and repeated that this is an impossible time of year for marketing or sales? If you have then you are part of the problem, and this is a self-inflicted limitation on doing business.
Can you really afford to have one quarter of the year, from the beginning on November to the end of January as a time of minimal sales? Is it really true that nobody buys at this time of the year? The truth is there is an enormous volume of business available at this time, but it will not come to you if you ignore the opportunity.
There is an old saying that “everything comes to him (or her) who hustles while they wait”. Many successful entrepreneurs have had great successes during the slowdown by catching competitors napping in preparation for the holiday, or being the only bidder for profitable business. Tenders are published now to limit the number of bidders – really awake entrepreneurs take advantage. To get a slice of the millions spent in the next couple of months you must be alert, work hard and look for opportunities. You should also plan and execute an assertive sales campaign. 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 April 2014 and is posted here by their kind permission
A seriously valuable marketing tool – and it is free
Good customer information held in a structured system will tell you whether customers are growing with you or reducing purchases. It will have a record of every meeting, sales order, complaint, compliment, reference given, products purchased, payment history, budget cycle, nature of their business, basic credit information and key contacts. All of these are stored somewhere in your company records anyway, but are they accessible in an effective customer information system?
If you have a good system you can research target markets, make individualised tempting offers to customers, cross sell products and plan campaigns in target market niches with a high likelihood of success. What a great marketing tool, and its free.
Using the information
One way of using this information would be to list of all customers in a particular line of business, and list which products all or most of them are buying. Now you could do a survey among them to find out how they are using the products, their degree of satisfaction with those products, and any needs which are not being fully satisfied by the products. With this information you can: 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 June 2013 and is posted here by their kind permission
Entrepreneur optimism in sales forecasting
Entrepreneurs are natural optimists; they have great belief in themselves and their products, they see even ordinary products as being irresistible to potential customers. There is nothing wrong with self-belief; without that we would see few new businesses being launched.
Optimism in sales forecasting is much more serious. There could be disastrous consequences if the venture fails to make unreasonable sales targets.
Before the entrepreneur even thinks about forecasting the sales volume he or she must define the target markets; groups of people or businesses most likely to become customers. These groups must see a good reason to buy from the new venture rather than their existing suppliers, and be able to learn about the goods and be motivated to buy. The entrepreneur must identify the processes to achieve these requirements. Please do not skip these steps. The belief that ‘everyone will want this product and my website will bring enquiries’ has produced many poorer and embittered ex-entrepreneurs. Continue reading
Working smarter to plan increased turnover without needing new business
Most businesses would like to increase their turnover, but often struggle to do so. One reason is businesses simply set a growth target with no focus on where that growth should come from, or why people would buy more from the company. Increasing turnover means more sales to existing customers, more new customers or higher prices, and for now I will focus on growing existing customers.
Selling more by being a great supplier
Before you even start to think about selling more to customers you have to examine if you really understand your customer’s goals, plans, needs and likes, and if the communication channels are open at the right levels. If you are dealing only with a junior buyer who gripes continually about your quality, prices and service don’t expect any of the stuff below to work. Start again and build a relationship of understanding their culture, needs and systems. Then deliver what meets those requirements. Get the communication channels working effectively at the right levels and address their concerns promptly. Then you can think about growing your business with them.
In an economic downturn, as the world experienced recently, many small business owners react in peculiar ways. They will tell anyone who will listen about how bad times are while ignoring the depressing effect these words have. While they are usually skilled decision makers they often panic and retrench skilled staff, cut back on customer support and otherwise cut costs but have no plan to review these changes in the future. They avidly read case studies of businesses that have found a wonderful solution to their plummeting sales and therefore become recession proof; and then desperately try to find a similar ‘magic wand’ answer for their own business.
Some operate in the hope that the bad times are a temporary blip on an otherwise smooth growth path; an inconvenience which will disappear soon. They believe that at worst it may mean retrenching a few unwanted workers. They will prepare highly optimistic forecasts for the future, anticipating that ‘things will get better’ in a few weeks or months time.
A better way
There is a better way to weather these bad times. But first the small business owner has to face a few facts: Continue reading